LIBAN V.

GORDON
G.R. NO. 175352, JULY 15 2009

FACTS: In 1947, President Roxas signed R.A. 95, otherwise known as the Philippine
National Red Cross (�PNRC�) Charter. The Republic of the Philippines, adhering to
the Geneva Conventions, established the PNRC as a voluntary organization for the
purpose contemplated in the Geneva Red Cross Convention.

The PNRC is a non-profit, donor-funded, voluntary, humanitarian organization, whose

mission is to bring timely, effective, and compassionate humanitarian assistance
for the most vulnerable without consideration of nationality, race, religion,
gender, social status, or political affiliation. The PNRC provides 6 major
services: Blood Services, Disaster Management, Safety Services, Community Health
and Nursing, Social Services and Voluntary Service.

Liban et al. are officers of the Board of Directors of the Quezon City Red Cross
Chapter. In 2006, during Gordon�s incumbency as a member of the Senate, he was
elected Chairman of the PNRC Board of Governors.

Liban et al.�s position: In Camporedondo v. NLRC, it was held that the PNRC is a
GOCC. In accepting and holding the position of Chairman of the PNRC Board of
Governors, Gordon has automatically forfeited his seat in the Senate. Incumbent
national legislators lose their elective posts upon their appointment to another
government office.

Gordon�s position:
(1) He has been working as a Red Cross volunteer for the past 40 years. He was
already Chairman of the PNRC Board of Governors when he was elected Senator in May
2004, having been elected Chairman in 2003 and re-elected in 2005.
(2) PNRC is not a GOCC
(3) The prohibition under Art. 6, �13 of the Constitution does not apply in the
present case since volunteer service to the PNRC is neither an office nor an
employment

ISSUE: Whether the office of the PNRC Chairman is a government office or an office
in a GOCC.

HELD: NO. PNRC IS A PRIVATE ORGANIZATION PERFORMING PUBLIC FUNCTIONS.

The PNRC is a member of the National Society of the International Red Cross and Red
Crescent Movement (�Movement�). The Fundamental Principles of the Movement provide
a universal standard of reference for all its members. The PNRC, as a member, has
the duty to uphold the Fundamental Principles and ideals of the Movement. In order
to be recognized as a National Society, the PNRC has to be autonomous. The reason
for this autonomy is fundamental. To be accepted by warring belligerents as
neutral workers during international or internal armed conflicts, the PNRC
volunteers must not be seen as belonging to any side of the armed conflict. The
PNRC cannot be seen as a GOCC, and neither can the PNRC volunteers be identified as
government personnel or as instruments of government policy. Otherwise, the
insurgents or separatists will treat PNRC volunteers as enemies. Thus, the PNRC
must not only be, but must also be seen to be, autonomous, neutral and independent.

The following are proof that the PNRC is not a GOCC:

(1) The PNRC does not have government assets and does not receive any appropriation
from Congress. The PNRC is financed primarily by private contributions.
(2) The PNRC is not controlled by the government. Under its Charter, only 6 of the
30 members of the Board of Governors are appointed by the President (of the 24
remaining, 18 are elected by the chapter delegates of the PNRC and the other 6 are
elected by the 24 members already chosen). The PNRC Board of Governors elects the
Chairman and all its other officers. Gordon was elected, as all PNRC Chairmen are
elected, by a private sector-controlled PNRC Board
(3) The PNRC Chairman is neither appointed by the President nor by the head of any
department, agency, commission or board of the Executive, Judicial or Legislative
branches. Hence, 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.
(4) The PNRC board�s decisions or actions are not reviewable by the President.
Neither can the President reverse or modify the decisions or actions of the
Chairman, it is the Board that can review, reverse or modify the decisions or
actions of the Chairman. This proves again that the office of the Chairman is a
private office, not a government office.

In the Camporedondo ruling, the 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, it failed to consider the definition of a GOCC in the Administrative Code.

A GOCC 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.

Section 16, Article XII of the Constitution provides:

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.

Congress cannot enact a law creating a private corporation with a special charter.
Such legislation would be unconstitutional. Private corporations may exist only
under a general law. If the corporation is private, it must necessarily exist under
a general law. Under existing laws, the general law is the Corporation Code, except
that the Cooperative Code governs the incorporation of cooperatives. The
Constitution authorizes Congress to create GOCCs through special charters. Since
private corporations cannot have special charters, it follows that Congress can
create corporations with special charters only if such corporations are government-
owned or controlled.

Thus, although the PNRC is created by a special charter, it cannot be considered a

GOCC in the absence of the essential elements of ownership and control by the
government. In creating the PNRC as a corporate entity, Congress was in fact
creating a private corporation. However, the constitutional prohibition against the
creation of private corporations by special charters provides no exception even for
non-profit or charitable corporations. Consequently, the provisions of the PNRC
Charter, insofar as it creates a private corporation and grants it corporate powers
is void for being unconstitutional.

POLITICAL LAW REVIEW | ATTY. JACK JIMENEZ | MARK JOREL O. CALIDA