PUBLIC CORPORATIONS (2019) the PNRC during the meeting of the PNRC board of
directors.
I. General Principles
A. Corporation
1. Definition: An artificial being created b operation
of law having the right of succession and powers,
attributes and properties expressly authorized by
law or incident to its existence.
2. Classification: Public, Private and Quasi-Public
(i) Public- Organized for the government of
a portion of the state
(ii) Private- Formed for some private
purpose, benefit, aim or end
(iii) Quasi-public- Private corporation that
renders public service or supplies public
wants.
3. Criterion to Determine Public Corporation: The
relationship of the corporation to the state, that
is, if created by the state as its own agency to help
the state in carrying out its governmental
functions then it is public, otherwise, it is private.
4. Classes of Public Corporations: Quasi Corporation
and Municipal Corporations
(i) Quasi-Corporation- Created by the state
for narrow or limited purpose
(ii) Municipal Corporations- Body politic and
corporate constituted by the
incorporation of the inhabitants for the
purpose of local government.
Notes:
Elements of Municipal Corporations:
1. Legal Creation or Incorporation- There must be a law
creating/authorizing the creation or incorporation of a
municipal corporation
2. Corporate Name- Name by which the corporation is
known
3. Inhabitants- People residing in the territory of the
corporation
4. Territory- land mass where the inhabitants reside
together with internal and external waters and air
space above the land and waters.
Cases:
Liban v. Gordon (2011)
Facts:
 Liban et. al. (Petitioners) filed with the Supreme Court
a petition to declare Richard Gordon (Respondent) as
having forfeited his seat in the senate.
 During Gordon’s incumbency as a member of the
senate of the Philippines, he was elected chairman of
 Petitioners contend that Respondent, by accepting
the chairmanship of PNRC board of governors, he has
ceased to be a member of the senate as provided in
Section 13, Article VI of the constitution.
 Responded contends that PNRC is not a GOCC and that
the prohibition in Section 13, Article VI does not apply
in the present case since volunteer service to the
PNRC is neither an office nor an employment.
Issue: Whether or not PNRC is a GOCC
Ruling and Ratio:
NO. PNRC is a private organization performing public functions.
The Republic of the Philippines, adhering to the Geneva
Conventions, established PNRC as a voluntary organization for
the purpose contemplated in the Geneva Convention of July 27,
1929.
To ensure and maintain its autonomy, neutrality and
independence, the PNRC cannot be owned or controlled by the
government. Indeed the Philippine government does not own
the PNRC. The PNRC does not have government assets and
does not receive any appropriation from the Philippines
Congress. It is finance primarily by contributions from private
individuals and private entities obtained through solicitation.
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 employee of the Executive branch since his
appointment does not fall under section 16, Article VII of the
Constitution. Not being a government official or employee the
PNRC, as such does not hold a government office or
employment.
**The court further held that the PNRC charter is void insofar
as it creates the PNRC as a private corporation. The PNRC
should incorporate under the corporation code and register
with the SEC if it wants to be a private corporation.
Boy Scouts of the Philippines v. COA (2011)
Facts:
 COA issued Resolution No. 99-011 stating among
others that BSP was created as a public corporation
under CA 111 as amended by PD 460 and RA 7278 and
that in BSP v. NLRC, the SC ruled that BSP as
constituted under its charter was a GOCC.
 BSP sought reconsideration of said resolution stating
the ff. grounds: The cited case has been superseded
by RA 7278 which eliminated the substantial
government participation in the national executive
board by removing the President, and executive
secretaries (except for the Education Secretary) and
 the appointment and confirmation power of the
President as chief scout over the members of the
board.
Issue:
Whether or not BSP falls under the COA’s audit jurisdiction
Ruling and Ratio:
YES. BSP is a public corporation and its fund are subject to
COA’’s audit jurisdiction. It is a public corporation under Par. 2,
Art. 44 of the Civil Code:
“The following are juridical persons:
1. The state and its political subdivision
2. Other corporations, institutions and entities for public
interest or purpose created by law; their personality
begins as soon as they have been constituted
according to law
3. Corporations, partnerships and associations for
private interest or purpose to which the law grants a
juridical personality, separate and distinct from that of
each shareholder, partner or member. “
Under the Administrative Code of 1987 recognizes the public
character of BSP by the fact that, along with the girl scouts of
the Philippines, it is classified as an attached agency of the DECS
under EO 292 or the Administrative Code of 1987. It is an
attached agency of DECS/DepEd
As an attached agency of DECS it enjoys operational autonomy
as long as policy and program coordination is achieved by
having at least one representative of government in its
governing board.
PSPCA v. COA (2007)
Facts:
 PSPCA was incorporated as a juridical entity by virtue
of Act No. 1285 (January 19, 1905), by the Philippine
Commission.
 At the time of its enactment, the corporation law and
the SEC was not yet in existence.
 To enhance its power in promoting animal welfare,
and enforcing laws for the protection of animals,
petitioner was imbued through its charter the power
to apprehend violators of animal welfare laws. They
also get ½ of the fines imposed and collected. Later
this power was recalled by CA 148 enacted by EO 63
(1936)
 Petitioners content that (1) although they were
created by special legislation, this came about prior to
the enactment of the corporation law or any other
general law under which it may be organized nor an
SEC which would have passed upon its organization
and incorporation. And (2) EO 63 deprived the
petitioner of the power to make arrests and they
therefore lost its operational fundings and that it
exercises no governmental functions. In fine the
government itself by its overt acts confirmed PSPCA’s
status as a private juridical entity.
Issue:
Whether or not PSPCA qualifies as a government agency that
may be subject to audit by COA.
Ratio and Ruling:
NO.
First, the charter test cannot be applied because it is predicated
on the 1935 constitution, Section 7, Article XIII and it cannot
apply to PSPCA which was incorporated by virtue of Act 1285
on January 19, 1905.
Charter test is as follows:
“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….” (Baluyot v. Holganza;
Camporedondo v. NLRC)
Second, The charter of PSPCA how 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
petitioner in accordance with its by-laws, and may exercise
those powers generally accorded to private corporations such
as the power to sue, be sued, use a common seal and etc.
Third, the employees of PSPCA are registered by the SSS and
not by the GSIS.
Fourth, the contention of COA that PSPCA is a body politic
because its primary purpose is to secure protection and
welfare of animals which, in tur, redounds to the public good is
specious at best. It does not by that lone circumstance make
the entity a public corporation.
**Criterion to determine whether a corporation is public is
cited in this case.
Province of North Cotabato v. RP Peace Panel (2008)
Facts: