FACTS Petitioners Liban, et al.

, who were officers of the Board of Directors of the Quezon City Red Cross Chapter, filed with the Supreme Court what they styled as Petition to Declare Richard J. Gordon as Having Forfeited His Seat in the Senate against respondent Gordon, who was elected Chairman of the Philippine National Red Cross (PNRC) Board of Governors during his incumbency as Senator. Petitioners alleged that by accepting the chairmanship of the PNRC Board of Governors, respondent Gordon ceased to be a member of the Senate pursuant to Sec. 13, Article VI of the Constitution, which provides that [n]o Senator . . . 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. Petitioners cited the case of Camporedondo vs. NLRC, G.R. No. 129049, decided August 6, 1999, which held that the PNRC is a GOCC, in supporting their argument that respondent Gordon automatically forfeited his seat in the Senate when he accepted and held the position of Chairman of the PNRC Board of Governors. Formerly, in its Decision dated July 15, 2009, the Court, voting 75,[1] held thatthe office of the PNRC Chairman is NOT a government office or an office in a GOCC for purposes of the prohibition in Sec. 13, Article VI of the 1987 Constitution. The PNRC Chairman is elected by the PNRC Board of Governors; he is not appointed by the President or by any subordinate government official. Moreover, the PNRC is NOT a GOCC because it is a privately-owned, privatelyfunded, and privately-run charitable organization and because it is controlled by a Board of Governors four-fifths of which are private sector individuals. Therefore, respondent Gordon did not forfeit his legislative seat when he was elected as PNRC Chairman during his incumbency as Senator. The Court however held further that the PNRC Charter, R.A. 95, as amended by PD 1264 and 1643, is void insofar as it creates the PNRC as a private corporation since Section 7, Article XIV of the 1935 Constitution states that [t]he 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 Court thus directed the PNRC to incorporate under the Corporation Code and register with the Securities and Exchange Commission if it wants to be a private corporation. The fallo of the Decision read: 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. Respondent Gordon filed a Motion for Clarification and/or for Reconsideration of the Decision. The PNRC likewise moved to intervene and filed its own Motion for Partial Reconsideration. They basically questioned the second part of the Decision with regard to the pronouncement on the nature of the PNRC and the constitutionality of some provisions of the PNRC Charter. ISSUE Was it correct for the Court to have passed upon and decided on the issue of the constitutionality of the PNRC charter? Corollarily: What is the nature of the PNRC?

RULING: [The Court GRANTED reconsideration and MODIFIED the dispositive portion of the Decision by deleting the second sentence thereof.] NO, it was not correct for the Court to have decided on the constitutional issue because it was not the very lismota of the case. The PNRC is sui generis in nature; it is neither strictly a GOCC nor a private corporation. 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 lismota of the case. We have reiterated the rule as to when the Court will consider the issue of constitutionality in Alvarez v. PICOP Resources, Inc., thus: This Court will not touch the issue of unconstitutionality unless it is the very lismota. 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, if the record also presents some other ground upon which the court may [rest] its judgment, that course will be adopted and the constitutional question will be left for consideration until such question will be unavoidable. [T]his Court should not have declared void certain sections of . . . the PNRC Charter. Instead, the Court should have exercised judicial restraint on this matter, especially since there was some other ground upon which the Court could have based its judgment. Furthermore, the PNRC, the entity most adversely affected by this declaration of unconstitutionality, which was not even originally a party to this case, was being compelled, as a consequence of the Decision, to suddenly reorganize and incorporate under the Corporation Code, after more than sixty (60) years of existence in this country. Since its enactment, the PNRC Charter was amended several times, particularly on June 11, 1953, August 16, 1971, December 15, 1977, and October 1, 1979, by virtue of R.A. No. 855, R.A. No. 6373, P.D. No. 1264, and P.D. No. 1643, respectively. The passage of several laws relating to the PNRCs corporate existence notwithstanding the effectivity of the constitutional proscription on the creation of private corporations by law is a recognition that the PNRC is not strictly in the nature of a private corporation contemplated by the aforesaid constitutional ban. A closer look at the nature of the PNRC would show that there is none like it[,] not just in terms of structure, but also in terms of history, public service and official status accorded to it by the State and the international community. There is merit in PNRCs contention that its structure is sui generis. It is in recognition of this sui generis character of the PNRC that R.A. No. 95 has remained valid and effective from the time of its enactment in March 22, 1947 under the 1935 Constitution and during the effectivity of the 1973 Constitution and the 1987 Constitution. 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. [T]his Court [must] recognize the countrys 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. Under the Constitution, the Philippines adopts the generally accepted principles of international law as part of the law of the land. 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 PNRCs 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. 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. Although [the PNRC] is neither a subdivision, agency, or instrumentality of the government, nor a GOCC or a subsidiary thereof . . . so much so that respondent, under the Decision, was correctly allowed to hold his position as Chairman thereof concurrently while he served as a Senator, such a conclusion does not ipso facto imply that the PNRC is a private corporation within the contemplation of the provision of the Constitution, that must be organized under the Corporation Code. [T]he sui generis character of PNRC requires us to approach controversies involving the PNRC on a case-to-case basis. In sum, the PNRC enjoys a special status as an important ally and auxiliary of the government in the humanitarian field in accordance with its commitments under international law. This Court cannot all of a sudden refuse to recognize its existence, especially since the issue of the constitutionality of the PNRC Charter was never raised by the parties. It bears emphasizing that the PNRC has responded to almost all national disasters since 1947, and is widely known to provide a substantial portion of the countrys blood requirements. Its humanitarian work is unparalleled. The Court should not shake its existence to the core in an untimely and drastic manner that would not only have negative consequences to those who depend on it in times of disaster and armed hostilities but also have adverse effects on the image of the Philippines in the international community. The sections of the PNRC Charter that were declared void must therefore stay. [Thus, R.A. No. 95 remains valid and constitutional in its entirety. The Court MODIFIED the dispositive portion of the Decision by deleting the second sentence, to now 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. 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. Libanet al. are officers of the Board of Directors of the Quezon City Red Cross Chapter. In 2006, during Gordons incumbency as a member of the Senate, he was elected Chairman of the PNRC Board of Governors. Libanet 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. Gordons 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 FUNCTIONS.
IS A PRIVATE ORGANIZATION PERFORMING PUBLIC

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 boards 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.

Court. The structure of the PNRC, being neither strictly private nor public in nature, R.A. 95 remains valid and constitutional in its entirety.

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 corporal 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 nonprofit 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. FACTS Richard J. Gordon (respondent) filed for a Motion for Clarification and/or for Reconsideration on the promulgated Decision by the Court on July 15, 2009. The case brought about by the petitioners was regarding to Gordons forfeiture of his seat in the Senate when he accepted the Chairmanship in the Philippine National Red Cross (PNRC). The court ruled that it was not the case, as PNRC is not a government-owned and controlled corporation for the purpose of prohibition in Sect. 13, Art. VI of the 1987 Constitution. The Court, however, further declared void the PNRC Charter (as in R.A. 95) insofar as it creates the PNRC as a private corporation and consequently ruled that the PNRC should incorporate under the Corporation Code and register with the Securities and Exchange Commission if it wants to be a private corporation. Respondent argues that the validity of R.A. 95 was not an issue in the aforementioned case; the petitioners did not raise its constitutionality. As the court decided, the petitioners did not have standing to file the instant petition. Hence, the pronouncement of the Court on the validity of R.A. No. 95 should be considered obiter. ISSUE Are the provisions of R.A. No. 95 valid and constitutional? HELD Yes. Richard J. Gordons Motion for Clarification and/or Reconsideration and movant-intervenor PNRCs Motion for Partial Reconsideration of the Decision in G.R. No. 175352 dated July 15, 2009 were granted. The constitutionality of R.A. No. 95, as amended, the charter of the Philippine National Red Cross, was not raised by the parties as an issue and should not have been passed upon by the