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

CALIDA
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 Gordons 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.

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 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 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.

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