EN BANC

DANTE V. LIBAN,
REYNALDO M. BERNARDO,
and SALVADOR M. VIARI,
Petitioners,

G.R. No. 175352

Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA, and
BERSAMIN, JJ.

- versus -

Promulgated:
July 15, 2009

RICHARD J. GORDON,
Respondent.

x-------------------------------------------------- x
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 respondents 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 accepting and holding the position of Chairman of the PNRC Board of

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 officers 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 taxpayers 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 taxpayers suit questioning the unlawful
disbursement of 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 Courts Ruling

We find the petition without merit.

Petitioners Have No Standing to File this Petition
A careful reading of the petition reveals that it is an action for quo warranto. Section 1, Rule 66 of the Rules of
Court provides:
Section 1. Action by Government against individuals. 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:
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office,
position or franchise;
(b) A public officer who does or suffers an act which by provision of law, constitutes a ground for the
forfeiture of his office; or
(c) An association which acts as a corporation within the Philippines without being legally incorporated or
without lawful authority so to act. (Emphasis supplied)

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 x x
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 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 taxpayers 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:
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 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 Presidents 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 constitutional bodies, or must be a quasijudicial 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

Presidents power of control. There is no dispute that the CCP performs executive, and not legislative, judicial, or
quasi-judicial functions.
The Presidents 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.
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 decisionmaking within a National Society. However, the freely-elected representatives of a National Societys active members
must remain in a large majority in a National Societys 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 P35, P100, P300, P500 or P1,000 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 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 governmentowned or controlled.[24] (Emphasis supplied)

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 P400,000,000 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.
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.
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. 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
[28]
[29]
[30]
1, 2, 3, 4(a),[31] 5,[32] 6,[33] 7,[34] 8,[35] 9,[36] 10,[37] 11,[38] 12,[39] and 13[40] of the PNRC Charter, as amended, are
void.

The other provisions[41] 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 implement the Philippine Governments 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 governmentowned 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.
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.