DANTE V. LIBAN, REYNALDO M. BERNARDO and SALVADOR M.

VIARI, Petitioners,
vs.
RICHARD J. GORDON, Respondent.
PHILIPPINE NATIONAL RED CROSS, Intervenor.

G. R. No. 175352 January 18, 2011

A government-owned or controlled corporation must be owned by the

government, and in the case of a stock corporation, at least a majority of its
capital stock must be owned by the government. In the case of a non-stock
corporation, by analogy at least a majority of the members must be
government officials holding such membership by appointment or
designation by the government.
Note from the digester, person making the digest? ,: I think the case referred in the assignment was the
first decision not the reconsidered/clarified case . The latter does not discuss any legislative topic. It
merely clarifies the status of Philippine National Red Cross (PNRC). Unlike the former case, it discusses
the constitutional prohibition of the members of the Legislative, any ways I will just relate the two
decisions.

FACTS:

The case started when Dante V. Liban, Reynaldo M. Bernardo, and

Salvador M. Viari filed with this Court a Petition to Declare Richard J.
Gordon as Having Forfeited His Seat in the Senate. Petitioners are officers
of the Board of Directors of the Quezon City Red Cross Chapter while
respondent is Chairman of the Philippine National Red Cross (PNRC)
Board of Governors.

During respondent’s incumbency as a member of the Senate of the

Philippines,1 he was elected Chairman of the PNRC during the 23 February
2006 meeting of the PNRC Board of Governors. Petitioners allege that by
accepting the chairmanship of the PNRC Board of Governors, respondent
has ceased to be a member of the Senate as provided in Section 13,
Article VI of the Constitution, which reads:
“SEC. 13. No Senator or Member of the House of Representatives may hold any other office or
employment in the Government, or any subdivision, agency, or instrumentality thereof, including
government-owned or controlled corporations or their subsidiaries, during his term without forfeiting his
seat. Neither shall he be appointed to any office which may have been created or the emoluments thereof
increased during the term for which he was elected.”

ISSUE:

1. Whether Section 13, Article VI of the Philippine Constitution applies to

the case of respondent who is Chairman of the PNRC and at the
same time a Member of the Senate

2. Whether PNRC violative of the Constitutional Proscription against the

Creation of Private Corporations by Special Law? (SC discuss and
ruled such issue even petitioner did not raised it, just read the entire
digest to be enlighten)

3. Whether PNRC is a GOCC?

HELD:

1.) No, the constitutional provision does not apply to the respondent.

The President does not appoint the Chairman of the PNRC. Neither
does the head of any department, agency, commission or board appoint
the PNRC Chairman. Thus, the PNRC Chairman is not an official or
employee of the Executive branch since his appointment does not fall
under Section 16, Article VII of the Constitution. Certainly, the PNRC
Chairman is not an official or employee of the Judiciary or Legislature. This
leads us to the obvious conclusion that the PNRC Chairman is not an
official or employee of the Philippine Government. Not being a government
official or employee, the PNRC Chairman, as such, does not hold a
government office or employment.

The PNRC Board exercises all corporate powers of the PNRC. The
PNRC is controlled by private sector individuals. Decisions or actions of the
PNRC Board are not reviewable by the President. The President cannot
reverse or modify the decisions or actions of the PNRC Board. Neither can
the President reverse or modify the decisions or actions of the PNRC
Chairman. It is the PNRC Board that can review, reverse or modify the
decisions or actions of the PNRC Chairman. This proves again that the
office of the PNRC Chairman is a private office, not a government office.

2.) No, PNRC is not a GOCC.

A government-owned or controlled corporation must be owned by the

government, and in the case of a stock corporation, at least a majority of its
capital stock must be owned by the government. In the case of a non-stock
corporation, by analogy at least a majority of the members must be
government officials holding such membership by appointment or
designation by the government. Under this criterion, and as discussed
earlier, the government does not own or control PNRC.

Petitioners anchor their petition on the 1999 case of Camporedondo

v. NLRC,22 which ruled that the PNRC is a government-owned or controlled
corporation. In ruling that the PNRC is a government-owned or controlled
corporation, the simple test used was whether the corporation was created
by its own special charter for the exercise of a public function or by
incorporation under the general corporation law. Since the PNRC was
created under a special charter, the Court then ruled that it is a government
corporation. However, the Camporedondo ruling failed to consider the
definition of a government-owned or controlled corporation as provided
under Section 2(13) of the Introductory Provisions of the Administrative
Code of 1987.

3.) Yes, PNRC’s Charter is Violative of the Constitutional Proscription

against the Creation of Private Corporations by Special Law. (Not final rule)

Under the Constitution, Congress shall not, except by general law,

provide for the formation, organization, or regulation of private corporations.
Constitution emphatically prohibits the creation of private corporations
except by general law applicable to all citizens. The purpose of this
constitutional provision is to ban private corporations created by special
charters, which historically gave certain individuals, families or groups
special privileges denied to other citizens.
 The Constitution emphatically prohibits the creation of private
corporations except by general law applicable to all citizens. The purpose
of this constitutional provision is to ban private corporations created by
special charters, which historically gave certain individuals, families or
groups special privileges denied to other citizens. In short, Congress
cannot enact a law creating a private corporation with a special charter.
Such legislation would be unconstitutional.

The dispositive part of the decision read as follows:

“WHEREFORE, we declare that the office of the Chairman of the Philippine National Red Cross
is not a government office or an office in a government-owned or controlled corporation for purposes of
the prohibition in Section 13, Article VI of the 1987 Constitution. We also declare that Sections 1, 2, 3,
4(a), 5, 6, 7, 8, 9, 10, 11, 12, and 13 of the Charter of the Philippine National Red Cross, or Republic Act
No. 95, as amended by Presidential Decree Nos. 1264 and 1643, are VOID because they create the
PNRC as a private corporation or grant it corporate powers.”

Hence this motion for clarification/reconsideration contending that the

issue of constitutionality of Republic Act (R.A.) No. 95 was not raised by the
parties the Court went beyond the case in deciding such issue.

ISSUE:

Whether or not the Charter of the PNRC is void and is it a private

corporation?

HELD:

No, PNRC’s charter is not void nor it is a private corporation.

There is merit in PNRC’s contention that its structure is sui generis.

The auxiliary status of [a] Red Cross Society means that it is at one and
the same time a private institution and a public service organization
because the very nature of its work implies cooperation with the
authorities, a link with the State. In carrying out their major functions,
Red Cross Societies give their humanitarian support to official bodies, in
general having larger resources than the Societies, working towards
comparable ends in a given sector.

That the purpose of the constitutional provision prohibiting Congress

from creating private corporations was to prevent the granting of special
privileges to certain individuals, families, or groups, which were denied to
other groups. Based on the above discussion, it can be seen that the
PNRC Charter does not come within the spirit of this constitutional
provision, as it does not grant special privileges to a particular individual,
family, or group, but creates an entity that strives to serve the common
good. The Republic of the Philippines, adhering to the Geneva
Conventions, established the PNRC as a voluntary organization for the
purpose contemplated in the Geneva Convention of 27 July 1929.

In addition, this Court recognize too the country’s adherence to

the Geneva Convention and respect the unique status of the PNRC in
consonance with its treaty obligations. The Geneva Convention has the
force and effect of law.21 Under the Constitution, the Philippines adopts the
generally accepted principles of international law as part of the law of the
land.22 This constitutional provision must be reconciled and harmonized
with Article XII, Section 16 of the Constitution, instead of using the latter to
negate the former.

By requiring the PNRC to organize under the Corporation Code just

like any other private corporation, the Decision of July 15, 2009 lost sight of
the PNRC’s special status under international humanitarian law and as an
auxiliary of the State, designated to assist it in discharging its obligations
under the Geneva Conventions.

(Judicial review discussion)As correctly pointed out in respondent’s

Motion, the issue of constitutionality of R.A. No. 95 was not raised by the
parties, and was not among the issues defined in the body of the Decision;
thus, it was not the very lis mota of the case. This Court will not touch the
issue of unconstitutionality unless it is the very lis mota. It is a well-
established rule that a court should not pass upon a constitutional question
and decide a law to be unconstitutional or invalid, unless such question is
raised by the parties and that when it is raised.

The PNRC Charter and its amendatory laws have not been
questioned or challenged on constitutional grounds, not even in this case
before the Court now.