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Liban v. Gordon
[G.R. No. 175352] | [July 15, 2009] | [CARPIO, J]

Petitioner/s: DANTE V. LIBAN, REYNALDO M. BERNARDO and SALVADOR M. VIARI

Respondent/s: RICHARD J. GORDON

Applicable provisions:
Sec. 12 (13), Administrative Code of 1987
SEC. 2. General Terms Defined. — . . .
(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.

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CASE SUMMARY

Trigger word/s: Red Cross

FACTS: Petitioners filed with the SC a Petition to Declare Gordon as Having Forfeited His Seat in the
Senate alleging that by accepting the chairmanship of the PNRC Board of Governors, Gordon has ceased
to be a member of the Senate pursuant to Sec. 13, Art VI of the Constitution which prohibits legislators to
hold any other office in the government including GOCCs without forfeiting his seat.
ISSUE: W/N the office of the PNRC Chairman is an office in a GOCC covered by Section 13, Article VI of
the Constitution – NO
HELD: The PNRC is not a GOCC.
1. It is not owned by the government – The definition of GOCC in the Administrative Code of 1987 provides
that it is owned by the government directly and in the case of a stock corporation, at least a majority of its
capital stock must be owned by the government. However, the PNRC does not have government assets
and does not receive any appropriation from the Philippine Congress. The PNRC Charter provides that it is
financed primarily by contributions from private individuals and private entities.
2. It is not controlled by the government – The PNRC Chapter provides that only 6 of the 30 members of
the PNRC Board of Governors are appointed by the President of the Philippines. An overwhelming majority
of 4/5 of the PNRC Board are elected or chosen by the private sector members of the PNRC
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FACTS

 Petitioners Liban, Bernardo and Viari are officers of the Board of Directors of the Quezon City Red
Cross Chapter
 Respondent Gordon is Chairman of the Philippine National Red Cross (PNRC) Board of Governors
 Petitioners filed with the SC a Petition to Declare Gordon as Having Forfeited His Seat in the Senate
alleging that by accepting the chairmanship of the PNRC Board of Governors, Gordon has ceased
to be a member of the Senate. They invoked/cited:
o Section 13, Article VI of the Constitution.
 o Camporedondo v. NLRC (1999) – held that the PNRC is a government-owned or controlled
corporation.
o Flores v. Drilon - held that incumbent national legislators lose their elective posts upon their
appointment to another government office.
 Respondent’s Answer (topic-related):
o PNRC is not a government-owned or controlled corporation
o the prohibition under Section 13, Article VI of the Constitution does not apply since volunteer
service to the PNRC is neither an office nor an employment
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ISSUES AND HELD

1. W/N the PNRC is a government-owned or controlled corporation (GOCC) – NO. It is a private

organization performing public functions

Petitioners: Yes, it is a GOCC as held in Camporedondo v. NLRC

SC:
LAW/CONCEPTS
A. Purpose of the PNRC
 Whereas clauses, PNRC Chapter (RA No. 95) – the PNRC was established as a voluntary
organization for the purpose contemplated in the Geneva Red Cross Convention (To assist in
caring for the wounded and sick of the armed forces and to furnish supplies)
 The PNRC is a member National Society of the Movement composed of different Red Cross groups
 In order to be recognized as a National Society, the PNRC has to be autonomous and must
operate in conformity with the 7 Fundamental Principles of the Movement: Humanity, Impartiality,
Neutrality, Independence, Voluntary service, Unity, Universality
B. Ownership
 Section 11 of the PNRC Charter – The PNRC is financed primarily by contributions from private
individuals and private entities obtained through solicitation campaigns organized by its Board of
Governors
 Sec. 12 (13), Administrative Code of 1987 - 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.
 SEC. 5, PNRC Charter – Membership in the PNRC shall be open to the entire population in the
Philippines regardless of citizenship. Any contribution to the PNRC Annual Fund Campaign shall
entitle the contributor to membership for one year and said contribution shall be deductible in full
for taxation purposes.
C. Control
 Section 6, PNRC Charter - only 6 of the 30 members of the PNRC Board of Governors are
appointed by the President of the Philippines. Thus, 24 members, or four-fifths (4/5), of the PNRC
Board of Governors are not appointed by the President.
o 18 shall be elected by chapter delegates in biennial conventions
o 6 shall be selected by the 24 members of the Board already chosen
ICAB:
A. The PNRC cannot be seen as GOCC to ensure and maintain its autonomy, neutrality and
independence.
 PNRC volunteers cannot 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.
B. 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.
 PNRC is a privately owned, privately funded, and privately run charitable organization.
 The vast majority its 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 P35, P100, P300, P500 or P1,000 for the year. Even foreigners, whether
residents or not, can be members of the PNRC.
C. The government does not control the PNRC.
 An overwhelming majority of 4/5 of the PNRC Board are elected or chosen by the private sector
members of the PNRC

D. Re: Camporedondo v. NLRC ruling  OVERTURNED by SC

 Test: 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. (PNRC passed this test).
 This ruling failed to consider the definition of a government-owned or controlled corporation
as provided under Section 2 (13) of the Administrative Code of 1987

2. W/N the PNRC Charter is valid – NO. Sections 1 to 13 are void for being unconstitutional.

LAW:
 Sec. 7, 1935 Constitution (in force when the PNRC was created by special charter) + subsequent
Constitutions – Prohibit Congress from creating private corporations except by general law
 Sec. 1, PNRC Charter – creates the PNRC as a “body corporate and politic”
 Feliciano v. Commission on Audit –
o Purpose of Constitutional proscription: To ban private corporations created by special
charters, which historically gave certain individuals, families or groups special privileges
denied to other citizens.
o Held that Local Water Districts are GOCCs since they exist by virtue of a special charter and
their capital assets and operating funds all come from the government. 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
ICAB:
 Just like the Local Water Districts, the PNRC was created through a special charter. However,
unlike the Local Water Districts, the elements of government ownership and control are clearly
lacking in the PNRC.
 In creating the PNRC as a corporate entity, Congress was in fact creating a private corporation.
Non-profit or charitable corporations are not exempted from the prohibition.
 The PNRC Charter (Sections 1 to 13 are void for being unconstitutional), insofar as it creates the
PNRC as a private corporation and grants it corporate powers, is void for being unconstitutional
 Other provisions remain valid.
CONCLUSION: 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
 RULING:

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.

SO ORDERED.
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NOTES

Other issues
[Procedural]
1. W/N the petitioners have standing to file the petition – NO
LAW:
 Sec. 1, Rule 66, Rules of Court: An action for the usurpation of a public office, position or franchise
may be commenced by a verified petition brought in the name of the Republic of the Philippines
against:
(b) A public officer who does or suffers an act which by provision of law, constitutes a ground for the
forfeiture of his office
 GR: Quo warranto is generally commenced by the Government as the proper party plaintiff
XPN: Under Sec. 5, Rule 66, 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.
ICAB:
 Petition is an action for quo warranto under Sec. 1 (b), Rule 66.
 Petitioners do not claim to be entitled to the Senate office of respondent. Hence, they have no legal
standing.

[Substantive]
2. W/N the PNRC Chairman is an official or employee of the government – NO
a. Executive - 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.
b. Judiciary/Legislature – Also NO.

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RESOLUTION
[G.R. No. 175352. January 18, 2011.] LEONARDO-DE CASTRO, J

DANTE V. LIBAN, REYNALDO M. BERNARDO and SALVADOR M. VIARI, petitioners, vs.

RICHARD J. GORDON, respondent.
PHILIPPINE NATIONAL RED CROSS, intervenor

FACTS: Respondent Gordon filed a Motion for Clarification/Reconsideration of the 2009 Decision alleging
that the SC went beyond the case when it ruled on the issue of constitutionality of the PNRC Charter (RA
95) which was not raised by the parties. The PNRC intervened and prayed that the SC sustain the
constitutionality of its Charter on the ground that it was deprived the right to due process as it was not made
a party to the case. Moreover, there was a proposed boll pending before the Congress entitled "An Act
Recognizing the PNRC as an Independent, Autonomous, Non-Governmental Organization Auxiliary to the
Authorities of the Republic of the Philippines in the Humanitarian Field, to be Known as The Philippine Red
Cross. Hence, it should not be ordered to incorporate under the Corporation Code and register with the
Securities and Exchange Commission.

HELD: Motion Granted. The sections of the PNRC Charter that were declared void must stay.

1. Constitutionality of Charter – should not have been ruled upon.

Legal Basis: Alvarez v PICOP - 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.
ICAB: Issue of constitutionality of RA 95 was not raised by the parties. Hence, it was not the very lis mota
of the case. SC should not have declared void certain sections of R.A. No. 95, as amended by Presidential
Decree (P.D.) Nos. 1264 and 1643, the PNRC Charter.

2. Nature of the PNRC – not strictly in the nature of a private corporation

The PNRC, as a National Society of the International Red Cross and Red Crescent Movement, can neither
"be classified as an instrumentality of the State, so as not to lose its character of neutrality" as well as its
independence, nor strictly as a private corporation since it is regulated by international humanitarian law
and is treated as an auxiliary of the State.