G.R. No.
175352 accepting and holding the position of Chairman of the PNRC Board of
DANTE V. LIBAN, REYNALDO M. BERNARDO, and SALVADOR M.
VIARI, Petitioners,
vs.
RICHARD J. GORDON, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition to declare Senator Richard J. Gordon (respondent) as
having forfeited his seat in the Senate.
The Facts
Petitioners Dante V. Liban, Reynaldo M. Bernardo, and Salvador M. Viari
(petitioners) 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.
Petitioners cite Camporedondo v. NLRC,2 which held that the PNRC is a
government-owned or controlled corporation. Petitioners claim that in
Governors, respondent has automatically forfeited his seat in the
Senate, pursuant to Flores v. Drilon,3 which held that incumbent national
legislators lose their elective posts upon their appointment to another
government office.
In his Comment, respondent asserts that petitioners have no standing
to file this petition which appears to be an action for quo warranto,
since the petition alleges that respondent committed an act which, by
provision of law, constitutes a ground for forfeiture of his public office.
Petitioners do not claim to be entitled to the Senate office of respondent.
Under Section 5, Rule 66 of the Rules of Civil Procedure, only a person
claiming to be entitled to a public office usurped or unlawfully held by
another may bring an action for quo warranto in his own name. If the
petition is one for quo warranto, it is already barred by prescription
since under Section 11, Rule 66 of the Rules of Civil Procedure, the action
should be commenced within one year after the cause of the public officer’s
forfeiture of office. In this case, respondent has been working as a Red
Cross volunteer for the past 40 years. Respondent 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.
Respondent contends that even if the present petition is treated as a
taxpayer’s suit, petitioners cannot be allowed to raise a constitutional
question in the absence of any claim that they suffered some actual damage
or threatened injury as a result of the allegedly illegal act of respondent.
Furthermore, taxpayers are allowed to sue only when there is a claim of
illegal disbursement of public funds, or that public money is being diverted to
any improper purpose, or where petitioners seek to restrain respondent from
enforcing an invalid law that results in wastage of public funds.
Respondent also maintains that if the petition is treated as one for
declaratory relief, this Court would have no jurisdiction since original
jurisdiction for declaratory relief lies with the Regional Trial Court.
Respondent further insists that the PNRC is not a government-owned or
controlled corporation and that the prohibition under Section 13, Article VI of
the Constitution does not apply in the present case since volunteer service
to the PNRC is neither an office nor an employment.
In their Reply, petitioners claim that their petition is neither an action for quo
warranto nor an action for declaratory relief. Petitioners maintain that the
present petition is a taxpayer’s suit questioning the unlawful disbursement of
1
funds, considering that respondent has been drawing his salaries and other
compensation as a Senator even if he is no longer entitled to his office.
Petitioners point out that this Court has jurisdiction over this petition since it
involves a legal or constitutional issue which is of transcendental
importance.
The Issues
Petitioners raise the following issues:
1. Whether the Philippine National Red Cross (PNRC) is a
government- owned or controlled corporation;
2. 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;
3. Whether respondent should be automatically removed as a
Senator pursuant to Section 13, Article VI of the Philippine
Constitution; and
4. Whether petitioners may legally institute this petition against
respondent.4
The substantial issue boils down to whether the office of the PNRC
Chairman is 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 Constitution.
The Court’s Ruling
We find the petition without merit.
Petitioners Have No Standing to File this Petition
Petitioners allege in their petition that:
4. Respondent became the Chairman of the PNRC when he was
elected as such during the First Regular Luncheon-Meeting of the
Board of Governors of the PNRC held on February 23, 2006, the
minutes of which is hereto attached and made integral part hereof
as Annex "A."
5. Respondent was elected as Chairman of the PNRC Board of
Governors, during his incumbency as a Member of the House of
Senate of the Congress of the Philippines, having been elected as
such during the national elections last May 2004.
6. Since his election as Chairman of the PNRC Board of
Governors, which position he duly accepted, respondent has been
exercising the powers and discharging the functions and duties of
said office, despite the fact that he is still a senator.
7. It is the respectful submission of the petitioner[s] that by
accepting the chairmanship of the Board of Governors of the
PNRC, respondent has ceased to be a Member of the House of
Senate as provided in Section 13, Article VI of the Philippine
Constitution, x x x
xxxx
10. It is respectfully submitted that in accepting the position of
Chairman of the Board of Governors of the PNRC on February 23,
2006, respondent has automatically forfeited his seat in the House
of Senate and, therefore, has long ceased to be a Senator,
pursuant to the ruling of this Honorable Court in the case of
FLORES, ET AL. VS. DRILON AND GORDON, G.R. No. 104732, x
xx
11. Despite the fact that he is no longer a senator, respondent
continues to act as such and still performs the powers, functions
and duties of a senator, contrary to the constitution, law and
jurisprudence.
12. Unless restrained, therefore, respondent will continue to falsely
act and represent himself as a senator or member of the House of
Senate, collecting the salaries, emoluments and other
compensations, benefits and privileges appertaining and due only
to the legitimate senators, to the damage, great and irreparable
2
 injury of the Government and the Filipino people.5 (Emphasis
supplied)
Thus, petitioners are alleging that by accepting the position of Chairman of
the PNRC Board of Governors, respondent has automatically forfeited his
seat in the Senate. In short, petitioners filed an action for usurpation of
public office against respondent, a public officer who allegedly committed
an act which constitutes a ground for the forfeiture of his public office.
Clearly, such an action is for quo warranto, specifically under Section
1(b), Rule 66 of the Rules of Court.
Quo warranto is generally commenced by the Government as the proper
party plaintiff. However, under Section 5, Rule 66 of the Rules of Court, an
individual may commence such an action if he claims to be entitled to the
public office allegedly usurped by another, in which case he can bring the
action in his own name. The person instituting quo warranto proceedings in
his own behalf must claim and be able to show that he is entitled to the office
in dispute, otherwise the action may be dismissed at any stage. 6 In the
present case, petitioners do not claim to be entitled to the Senate office
of respondent. Clearly, petitioners have no standing to file the present
petition.
Even if the Court disregards the infirmities of the petition and treats it as a
taxpayer’s suit, the petition would still fail on the merits.
PNRC is a Private Organization Performing Public Functions
On 22 March 1947, President Manuel A. Roxas signed Republic Act No.
95,7 otherwise known as the PNRC Charter. 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.8 The PNRC provides six major services:
Blood Services, Disaster Management, Safety Services, Community Health
and Nursing, Social Services and Voluntary Service.9
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. 10 The Whereas
clauses of the PNRC Charter read:
WHEREAS, there was developed at Geneva, Switzerland, on August 22,
1864, a convention by which the nations of the world were invited to join
together in diminishing, so far lies within their power, the evils inherent in
war;
WHEREAS, more than sixty nations of the world have ratified or adhered to
the subsequent revision of said convention, namely the "Convention of
Geneva of July 29 [sic], 1929 for the Amelioration of the Condition of the
Wounded and Sick of Armies in the Field" (referred to in this Charter as the
Geneva Red Cross Convention);
WHEREAS, the Geneva Red Cross Convention envisages the
establishment in each country of a voluntary organization to assist in caring
for the wounded and sick of the armed forces and to furnish supplies for that
purpose;
WHEREAS, the Republic of the Philippines became an independent nation
on July 4, 1946 and proclaimed its adherence to the Geneva Red Cross
Convention on February 14, 1947, and by that action indicated its desire to
participate with the nations of the world in mitigating the suffering caused by
war and to establish in the Philippines a voluntary organization for that
purpose as contemplated by the Geneva Red Cross Convention;
WHEREAS, there existed in the Philippines since 1917 a Charter of the
American National Red Cross which must be terminated in view of the
independence of the Philippines; and
WHEREAS, the volunteer organizations established in the other countries
which have ratified or adhered to the Geneva Red Cross Convention assist
in promoting the health and welfare of their people in peace and in war, and
through their mutual assistance and cooperation directly and through their
international organizations promote better understanding and sympathy
among the peoples of the world. (Emphasis supplied)
The PNRC is a member National Society of the International Red Cross and
Red Crescent Movement (Movement), which is composed of the
International Committee of the Red Cross (ICRC), the International
Federation of Red Cross and Red Crescent Societies (International
Federation), and the National Red Cross and Red Crescent Societies
(National Societies). The Movement is united and guided by its seven
Fundamental Principles:
3
 1. HUMANITY – The International Red Cross and Red Crescent
Movement, born of a desire to bring assistance without
discrimination to the wounded on the battlefield, endeavors, in its
international and national capacity, to prevent and alleviate human
suffering wherever it may be found. Its purpose is to protect life and
health and to ensure respect for the human being. It promotes
mutual understanding, friendship, cooperation and lasting peace
amongst all peoples.
2. IMPARTIALITY – It makes no discrimination as to nationality,
race, religious beliefs, class or political opinions. It endeavors to
relieve the suffering of individuals, being guided solely by their
needs, and to give priority to the most urgent cases of distress.
3. NEUTRALITY – In order to continue to enjoy the confidence of
all, the Movement may not take sides in hostilities or engage at any
time in controversies of a political, racial, religious or ideological
nature.
4. INDEPENDENCE – The Movement is independent. The National
Societies, while auxiliaries in the humanitarian services of their
governments and subject to the laws of their respective countries,
must always maintain their autonomy so that they may be able at
all times to act in accordance with the principles of the Movement.
5. VOLUNTARY SERVICE – It is a voluntary relief movement not
prompted in any manner by desire for gain.
6. UNITY – There can be only one Red Cross or one Red Crescent
Society in any one country. It must be open to all. It must carry on
its humanitarian work throughout its territory.
7. UNIVERSALITY – The International Red Cross and Red
Crescent Movement, in which all Societies have equal status and
share equal responsibilities and duties in helping each other, is
worldwide. (Emphasis supplied)
The Fundamental Principles provide a universal standard of reference for all
members of the Movement. The PNRC, as a member National Society of the
Movement, 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 and must operate in conformity with the Fundamental
Principles of the Movement.11
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. In the Philippines where there is a communist
insurgency and a Muslim separatist rebellion, the PNRC cannot be seen as
government-owned or controlled, 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 when the volunteers tend to the wounded in
the battlefield or the displaced civilians in conflict areas.
Thus, the PNRC must not only be, but must also be seen to be,
autonomous, neutral and independent in order to conduct its activities in
accordance with the Fundamental Principles. The PNRC must not appear to
be an instrument or agency that implements government policy; otherwise, it
cannot merit the trust of all and cannot effectively carry out its mission as a
National Red Cross Society.12 It is imperative that the PNRC must be
autonomous, neutral, and independent in relation to the State.
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
Philippine Congress.13 The PNRC is financed primarily by contributions from
private individuals and private entities obtained through solicitation
campaigns organized by its Board of Governors, as provided under Section
11 of the PNRC Charter:
SECTION 11. As a national voluntary organization, the Philippine National
Red Cross shall be financed primarily by contributions obtained through
solicitation campaigns throughout the year which shall be organized by the
Board of Governors and conducted by the Chapters in their respective
jurisdictions. These fund raising campaigns shall be conducted
independently of other fund drives by other organizations. (Emphasis
supplied)
The government does not control the PNRC. Under the PNRC Charter, as
amended, only six of the thirty members of the PNRC Board of Governors
are appointed by the President of the Philippines. Thus, twenty-four
members, or four-fifths (4/5), of the PNRC Board of Governors are not
4
appointed by the President. Section 6 of the PNRC Charter, as amended,
provides:
SECTION 6. The governing powers and authority shall be vested in a Board
of Governors composed of thirty members, six of whom shall be appointed
by the President of the Philippines, eighteen shall be elected by chapter
delegates in biennial conventions and the remaining six shall be selected by
the twenty-four members of the Board already chosen. x x x.
Thus, of the twenty-four members of the PNRC Board, eighteen are elected
by the chapter delegates of the PNRC, and six are elected by the twenty-
four members already chosen — a select group where the private sector
members have three-fourths majority. Clearly, an overwhelming majority of
four-fifths of the PNRC Board are elected or chosen by the private sector
members of the PNRC.
The PNRC Board of Governors, which exercises all corporate powers of the
PNRC, elects the PNRC Chairman and all other officers of the PNRC. The
incumbent Chairman of PNRC, respondent Senator Gordon, was elected, as
all PNRC Chairmen are elected, by a private sector-controlled PNRC Board
four-fifths of whom are private sector members of the PNRC. The PNRC
Chairman is not appointed by the President or by any subordinate
government official.
Under Section 16, Article VII of the Constitution,14 the President appoints all
officials and employees in the Executive branch whose appointments are
vested in the President by the Constitution or by law. The President also
appoints those whose appointments are not otherwise provided by law.
Under this Section 16, the law may also authorize the "heads of
departments, agencies, commissions, or boards" to appoint officers lower in
rank than such heads of departments, agencies, commissions or
boards.15 In Rufino v. Endriga,16 the Court explained appointments under
Section 16 in this wise:
Under Section 16, Article VII of the 1987 Constitution, the President appoints
three groups of officers. The first group refers to the heads of the Executive
departments, ambassadors, other public ministers and consuls, officers of
the armed forces from the rank of colonel or naval captain, and other officers
whose appointments are vested in the President by the Constitution. The
second group refers to those whom the President may be authorized by law
to appoint. The third group refers to all other officers of the Government
whose appointments are not otherwise provided by law.
Under the same Section 16, there is a fourth group of lower-ranked officers
whose appointments Congress may by law vest in the heads of
departments, agencies, commissions, or boards. x x x
xxx
In a department in the Executive branch, the head is the Secretary. The law
may not authorize the Undersecretary, acting as such Undersecretary, to
appoint lower-ranked officers in the Executive department. In an agency, the
power is vested in the head of the agency for it would be preposterous to
vest it in the agency itself. In a commission, the head is the chairperson of
the commission. In a board, the head is also the chairperson of the board. In
the last three situations, the law may not also authorize officers other than
the heads of the agency, commission, or board to appoint lower-ranked
officers.
xxx
The Constitution authorizes Congress to vest the power to appoint lower-
ranked officers specifically in the "heads" of the specified offices, and in no
other person. The word "heads" refers to the chairpersons of the
commissions or boards and not to their members, for several reasons.
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.
Under Section 17, Article VII of the Constitution,17 the President exercises
control over all government offices in the Executive branch. If an office is
legally not under the control of the President, then such office is not
part of the Executive branch. In Rufino v. Endriga,18 the Court explained
the President’s power of control over all government offices as follows:
Every government office, entity, or agency must fall under the Executive,
Legislative, or Judicial branches, or must belong to one of the independent
5
constitutional bodies, or must be a quasi-judicial body or local government
unit. Otherwise, such government office, entity, or agency has no legal and
constitutional basis for its existence.
The CCP does not fall under the Legislative or Judicial branches of
government. The CCP is also not one of the independent constitutional
bodies. Neither is the CCP a quasi-judicial body nor a local government unit.
Thus, the CCP must fall under the Executive branch. Under the Revised
Administrative Code of 1987, any agency "not placed by law or order
creating them under any specific department" falls "under the Office of the
President."
Since the President exercises control over "all the executive departments,
bureaus, and offices," the President necessarily exercises control over the
CCP which is an office in the Executive branch. In mandating that the
President "shall have control of all executive . . . offices," Section 17, Article
VII of the 1987 Constitution does not exempt any executive office — one
performing executive functions outside of the independent constitutional
bodies — from the President’s power of control. There is no dispute that the
CCP performs executive, and not legislative, judicial, or quasi-judicial
functions.
The President’s power of control applies to the acts or decisions of all
officers in the Executive branch. This is true whether such officers are
appointed by the President or by heads of departments, agencies,
commissions, or boards. The power of control means the power to revise or
reverse the acts or decisions of a subordinate officer involving the exercise
of discretion.
In short, the President sits at the apex of the Executive branch, and
exercises "control of all the executive departments, bureaus, and offices."
There can be no instance under the Constitution where an officer of the
Executive branch is outside the control of the President. The Executive
branch is unitary since there is only one President vested with executive
power exercising control over the entire Executive branch. Any office in the
Executive branch that is not under the control of the President is a lost
command whose existence is without any legal or constitutional basis.
(Emphasis supplied)
An overwhelming four-fifths majority of the PNRC Board are private sector
individuals elected to the PNRC Board by the private sector members of the
PNRC. 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.1avvphi1
Although the State is often represented in the governing bodies of a National
Society, this can be justified by the need for proper coordination with the
public authorities, and the government representatives may take part in
decision-making within a National Society. However, the freely-elected
representatives of a National Society’s active members must remain in a
large majority in a National Society’s governing bodies. 19
The PNRC is not government-owned but privately owned. The vast
majority of the thousands of PNRC members are private individuals,
including students. Under the PNRC Charter, those who contribute to the
annual fund campaign of the PNRC are entitled to membership in the PNRC
for one year. Thus, any one between 6 and 65 years of age can be a PNRC
member for one year upon contributing ₱35, ₱100, ₱300, ₱500 or ₱1,000
for the year.20 Even foreigners, whether residents or not, can be members of
the PNRC. Section 5 of the PNRC Charter, as amended by Presidential
Decree No. 1264,21 reads:
SEC. 5. Membership in the Philippine National Red Cross shall be open to
the entire population in the Philippines regardless of citizenship. Any
contribution to the Philippine National Red Cross Annual Fund Campaign
shall entitle the contributor to membership for one year and said contribution
shall be deductible in full for taxation purposes.
Thus, the PNRC is a privately owned, privately funded, and privately run
charitable organization. The PNRC is not a government-owned or controlled
corporation.
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
6
definition of a government-owned or controlled corporation as provided
under Section 2(13) of the Introductory Provisions of the Administrative
Code of 1987:
SEC. 2. General Terms Defined. – x x x
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions relating
to public needs whether governmental or proprietary in nature, and owned
by the Government directly or through its instrumentalities either wholly, or
where applicable as in the case of stock corporations, to the extent of at
least fifty-one (51) percent of its capital stock: Provided, That government-
owned or controlled corporations may be further categorized by the
Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of their
respective powers, functions and responsibilities with respect to such
corporations.(Boldfacing and underscoring supplied)
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.
The PNRC Charter is Violative of the Constitutional Proscription
against the Creation of Private Corporations by Special Law
The 1935 Constitution, as amended, was in force when the PNRC was
created by special charter on 22 March 1947. Section 7, Article XIV of the
1935 Constitution, as amended, reads:
SEC. 7. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations, unless such
corporations are owned or controlled by the Government or any subdivision
or instrumentality thereof.
The subsequent 1973 and 1987 Constitutions contain similar provisions
prohibiting Congress from creating private corporations except by general
law. Section 1 of the PNRC Charter, as amended, creates the PNRC as a
"body corporate and politic," thus:
SECTION 1. There is hereby created in the Republic of the Philippines a
body corporate and politic to be the voluntary organization officially
designated to assist the Republic of the Philippines in discharging the
obligations set forth in the Geneva Conventions and to perform such other
duties as are inherent upon a National Red Cross Society. The national
headquarters of this Corporation shall be located in Metropolitan Manila.
(Emphasis supplied)
In Feliciano v. Commission on Audit,23 the Court explained the constitutional
provision prohibiting Congress from creating private corporations in this
wise:
We begin by explaining the general framework under the fundamental law.
The Constitution recognizes two classes of corporations. The first refers to
private corporations created under a general law. The second refers to
government-owned or controlled corporations created by special charters.
Section 16, Article XII of the Constitution provides:
Sec. 16. 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.
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. Private
corporations may exist only under a general law. If the corporation is private,
it must necessarily exist under a general law. Stated differently, only
corporations created under a general law can qualify as private corporations.
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 government-owned or
controlled corporations 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.24 (Emphasis supplied)
7
In Feliciano, the Court held that the Local Water Districts are government-
owned or controlled corporations since they exist by virtue of Presidential
Decree No. 198, which constitutes their special charter. The seed capital
assets of the Local Water Districts, such as waterworks and sewerage
facilities, were public property which were managed, operated by or under
the control of the city, municipality or province before the assets were
transferred to the Local Water Districts. The Local Water Districts also
receive subsidies and loans from the Local Water Utilities Administration
(LWUA). In fact, under the 2009 General Appropriations Act,25 the LWUA
has a budget amounting to ₱400,000,000 for its subsidy
requirements.26 There is no private capital invested in the Local Water
Districts.The capital assets and operating funds of the Local Water Districts
all come from the government, either through transfer of assets, loans,
subsidies or the income from such assets or funds.
implement the Philippine Government’s treaty obligations under Article 4(5)
of the Statutes of the International Red Cross and Red Crescent Movement,
which provides that to be recognized as a National Society, the Society must
be "duly recognized by the legal government of its country on the basis of
the Geneva Conventions and of the national legislation as a voluntary aid
society, auxiliary to the public authorities in the humanitarian field."
In sum, we hold that the office of the PNRC Chairman 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.
However, since 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 Securities and Exchange Commission if it wants
to be a private corporation.

The government also controls the Local Water Districts because the
municipal or city mayor, or the provincial governor, appoints all the board
directors of the Local Water Districts. Furthermore, the board directors and
other personnel of the Local Water Districts are government employees
subject to civil service laws and anti-graft laws. Clearly, the Local Water
Districts are considered government-owned or controlled corporations not
only because of their creation by special charter but also because the
government in fact owns and controls the Local Water Districts.
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.

Just like the Local Water Districts, the PNRC was created through a SO ORDERED.
special charter. However, unlike the Local Water Districts, the elements
of government ownership and control are clearly lacking in the PNRC.
Thus, although the PNRC is created by a special charter, it cannot be
considered a government-owned or controlled corporation 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
PNRC Charter, insofar as it creates the PNRC as a private corporation and
grants it corporate powers,27 is void for being unconstitutional. Thus,
Sections 1,28 2,29 3,30 4(a),31 5,32 6,33 7,34 8,35 9,3610,37 11,38 12,39 and 1340 of
the PNRC Charter, as amended, are void.

The other provisions41 of the PNRC Charter remain valid as they can be
considered as a recognition by the State that the unincorporated PNRC is
the local National Society of the International Red Cross and Red Crescent
Movement, and thus entitled to the benefits, exemptions and privileges set
forth in the PNRC Charter. The other provisions of the PNRC Charter