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LIBAN vs. GORDON
G.R. No. 175352, January 18, 2011
DOCTRINE:
 The Philippine National Red Cross (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; Not being a government official
or employee, the Philippine National Red
Cross (PNRC) Chairman, as such, does not
hold a government office or employment.
 The PNRC is not government-owned but
privately owned. The vast majority of the
thousands of PNRC members are private
individuals, including students.
FACTS:
This is a petition to declare respondent Senator
Richard J. Gordon as having forfeited his seat in
the Senate.
Petitioners Dante Liban, Reynaldo Bernardo and
Salvador Viari, officers of the Board of Directors of
the QC Red Cross Chapter filed the said petition
while respondent is the Chairman of the PNRC
Board of Governors.
During respondent’s incumbency as a member of
the Senate of the PH, he was elected as Chairman
of the PNRC. 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 Sec. 13, Art.
VI of the Constitution.
“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:
- Camporendondo v. NLRC: PNRC is a govt
owned corporation
 PNRC is a gocc – test: whether the corp
was created by its own special charter for
the exercise of a public function or by
incorporation under the general
corporation law.
 PNRC – created by a special charter RA
No. 95
- Flores vs. Drilon: held that incumbent national
legislators lose their elective posts upon their
appointment to another government office
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 commited an act, which, by
provision of law, constitutes a ground for
forfeiture of his public office.
- Petitioners do not claim to be entitlted to the
Senate office of the 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
.
- under Section 11, Rule 66 of the Rules of Civil
Procedure 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 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.
ISSUE:
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.
HELD:
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. Even foreigners, whether residents or not,
can be members of the PNRC. Section 5 of the
PNRC Charter, as
amendedbyPresidentialDecreeNo.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.
 Senator Gordon and the PNRC files a motion
for reconsideration in the case decided by
the SC, declaring that Senator Gordon did not
relinquish his position in the Senate when he
accepted chairmanship of the PNRC, but at
the same declaring that RA 95, the law which
created the PNRC as an separate
incorporation only serving as an auxiliary to
 A
the government, as unconstitutional, asking it
to register itself under SEC the Corporation
Code.
DOCTRINES:
 The issue of constitutionality was not raised so
the Court resolves to rescind its earlier decision
declaring RA 95 unconstitutional.
 PNRC is a sui generis institution, shown by
Local water districts – gocc – control & ownership
several laws which amended the original
PNRC – govt controlled but not owned – private
charter despite the fact that Article XII,
Section 16 of the 1987 Constitution proscribes
the creation of corporations via special law.
National Societies of the Red Cross are sui
generis in character, regulated directly by
international humanitarian law in contract to
- Consti recognizes 2 corporations:
other private entities.
 In Feliciano v COMELEC, the court said that
the purpose of the constitutional ban is to
prevent grants of special privileges to families,
groups, etc. PNRC was created not to grant
special privileges but for the common good.
The PNRC, though created by law, is not an
instrumentality of the state, so as not to lose its
character of neutrality. It is an auxiliary.
 Section 2(13) of the Introductory Provisions of
the Administrative Code of 1987:
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“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)
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.
NACHURA. Dissenting
1. Petitioners have legal standing – not a
quo warranto but a prohibition
2. PNRC is a GOCC – created by a special
charter
o Private corporation – general law
o GOOC corp – special charter

BOY SCOUTS OF THE PH vs COA
G.R. No. 177131, June 7, 2011
DOCTRINE:
 BSP is a public corporation and its funds are
subject to the COA’s audit jurisdiction.
 BSP – constituted under R.A.No. 7278, falls
under Art. 44 of the Civil Code.
Art.44: The following are juridical persons:
1. State and its political subdivisions
2. Other corps, institutions and entities for public
interest or purpose created by law; their
personality begins as soon as they have been
constituted according to law
3. Corporations, partnerships, associations for
private interest or purpose to which the law
grants a juridical personality, separate and
distinct from that of each shareholder, partner
or member.
Art.45, NCC: “Art. 45. Juridical persons mentioned in
Nos. 1 and 2 of the preceding article are governed
by the laws creating or recognizing them.
 BSP was created by a special law to serve a
public purpose In pursuit of a constitutional
mandate, comes within the class of “PUBLIC
CORPORATIONS” defined in par. 2, Art. 44 of
the NCC.
 Ownership and control test irrelevant in BSP,
an attached agency to the govt through
DECS
FACTS:
BSP filed a petition for prohinition against COA. In
this petition, BSP seeks that the COA be prohibited
from implementing its Decision and its Resolution,
as well as their other issuances arising therefrom,
and all of the foregoing be rendered null and
void.
COA:
On Aug. 19, 1999, COA issued Resolution No. 99-
011, with the subject “Defining the Commission’s
policy with respect to the audit body of the Boy
Scouts of the Philippines.” In its Reso, COA stated
that BSP was created as a public corporation
under C.A. No. 111, as amended by PD. No. 460
and R.A. No. 7278.
 To conduct an annual financial audit of
the BSP in accordance with generally
accepted auditing standards
 BSP shall be classified among the govt
corp belonging to the Educational, Social,
Scientific, Civic and Research Sector
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
- that in Boy Scouts of the Philippines v. NLRC,
the SC ruled that the BSP, as constituted under
its charter, was a “government controlled
corporation within the meaning of Article
IX(B)(2)(1) of the Constitution”; and that “the
BSP is appropriately regarded as a
government instrumentality under the 1987
Administrative Code.”
BSP:
- Sought for the reconsideration of the COA
Resolution signed by BSP National President
Jejomar C". Binay:
1. That the ruling in BSP vs NLRC, classifying BSP
as a govt controlled corp is anchored on the
substantial gov’t participation in the National
Executive Board of the BSP – that the case was
decided when the BSP charter is defined by
CA NO. 111, as amended by PD 460.
However, RA 7278 amended BSP’s charter
after the case was decided.
 RA No. 7278 virtually eliminated the
“substantial gov’t participation by
removing:
(i) the President of the Philippines
and executive secretaries, with
the exception of the Secretary of
Education, as members thereof;
and
(ii) the appointment and
confirmation power of the
President of the Philippines, as
Chief Scout, over the members of
the said Board.
2. The BSP further claimed that the 1987
Administrative Code itself, of which the BSP s.
NLRC relied on for some terms, defines
government-owned and controlled
corporations as agencies organized as stock
or non-stock corporations which the BSP,
under its present charter, is not.
 BSP believes that the gov’t has no
funds invested in BSP
3. BSP is not a gov’t instrumentality under 1987
Administrative Code.
 BSP not administering funds; not
include in the DECS National Budget.
o Sec. 20 of the Administrative Code
provides: -instrumentality refers to “any
agency of the National Government, not
integrated within the department
framework, vested with special functions
or jurisdiction by law, endowed with some
if not all corporate powers, administering

special funds, and enjoying operational
autonomy, usually through a charter.”
4. BSP merely an “attached agency” of DECS,
not an agency, department, nor bureau
o Section 2(4) of the Administrative Code, is
defined AGENCY as any of the various units of
the Government including a department,
bureau, office, instrumentality, government-
owned or controlled corporation or local
government or distinct unit therein.
o department which refers to an executive
department as created by law (Section 2[7] of
the Administrative Code); nor a bureau which
refers to any principal subdivision or unit of any
department (Section 2[8], Administrative Code)
ISSUE: WON BSP falls under the audit jurisdiction of the
COA
HELD:
After considering the legislative history of
the amended charter and the applicable laws
and the arguments of both parties, the Court
found that the BSP is a public corporation and its
funds are subject to the COA’s audit jurisdiction.
The BSP Charter (CA No. 111/ An Act to
Create a Public Corporation to be known as thE
BSP and to define its powers and purposes)
created the BSP as a “public corporation” to serve
the following public interest or purpose: xxx to
promote through organization and cooperation
with other agencies, the ability of boys to do useful
things for themselves and others, to train them in
scout craft, and to inculcate in them patriotism,
civic consciousness and responsibility, courage,
self-reliance, discipline and kindred virtues, and
moral values, using the method which are in
common use by boy scouts.
The purpose of the BSP as stated in its
amended charter shows that it was created in
order to implement a State policy declared in
Article II, Section 13 of the Constitution. Evidently,
the BSP, which was created by a special law to
serve a public purpose in pursuit of a constitutional
mandate, comes within the class of “public
corporations” defined by paragraph 2, Article 44
of the Civil Code and governed by the law which
creates it, pursuant to Article 45 of the same
Code.
The Constitution emphatically prohibits
the creation of private corporations except by a
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.
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The BSP is a public corporation or a
government agency or instrumentality with
juridical personality, which does not fall within the
constitutional prohibition in Article XII, Section 16,
notwithstanding the amendments to its charter.
Not all corporations, which are not government
owned or controlled, are ipso facto to be
considered private corporations as there exist
another distinct class of corporations or chartered
institutions which are otherwise known as “public
corporations.” These corporations are treated by
law as agencies or instrumentalities of the
government which are not subject to the test of
ownership or control and economic viability but to
different criteria relating to their public
purposes/interests or constitutional policies and
objectives and their administrative relationship to
the government or any of its Departments or
Offices.
Since BSP, under its amended charter,
continues to be a public corporation or a
government instrumentality, the Court concludes
that it is subject to the exercise by the COA of its
audit jurisdiction in the manner consistent with the
provisions of the BSP Charter.
Notes:
Veterans Federation of the Ph – A public
corporation because RA No. 2640 designates it as
one
*CA 111
* ART. 44 & 45 NCC
* Administrative Code: BSP is an attached agency
(3) Attachment.—(a) This refers to the lateral
relationship between the department or its
equivalent and the attached agency or
corporation for purposes of policy and program
coordination. The coordination may be
accomplished by having the department
represented in the governing board of the
attached agency or corporation, either as
chairman or as a member, with or without voting
rights, if this is permitted by the charter;
*Art. XII of the Consti: National Economy and
Patrimony
*not government owned or controlled,
are ipso facto to be considered private
corporations
*public corporation not subject to test of
ownership and control and economic viability but
diff criteria
*private corp/gocc – subject to test of economic
viability

PHILIPPINE SOCIETY FOR THE PREVENTION OF
CRUELTY TO ANIMALS VS. COMMISSION ON AUDIT,
G.R. No. 169752. September 25, 2007
DOCTRINES:
 Amendments introduced by C.A. No. 148
made it clear that the petitioner was a private
corporation and not an agency of the
government.
 A reading of petitioner’s charter shows that it
is not subject to the control or supervision by
any agency of the State, unlike government-
owned and controlled corporations.
 Another indication that petitioner’s nature as
a private entity is the fact that its employees
are registered and covered by the SSS at
petitioner’s initiative and not through the GSIS.
 Fact that a certain juridical entity is impressed
with public interest does not, by that
circumstance alone, make the entity a public
corporation, inasmuch as a corporation may
be private though its charter contains
provisions of a public character incorporated
solely for the public good.
 The true criterion to determine whether a
corporation is public or private is found in the
totality of the relation of the corporation to
the State.
FACTS:
The petitioner was incorporated as a juridical
entity over one hundred years ago by virtue of Act
No. 1285, enacted on January 19, 1905, by the
Philippine Commission. The petitioner, at the time
it was created, was composed of animal
aficionados and animal propagandists. The
objects of the petitioner, as stated in Section 2 of
its charter, shall be to enforce laws relating to
cruelty inflicted upon animals or the protection of
animals in the Philippine Islands, and generally, to
do and perform all things which may tend in any
way to alleviate the suffering of animals and
promote their welfare.
At the time of the enactment of Act No. 1285, the
original Corporation Law, Act No. 1459, was not
yet in existence. Act No. 1285 antedated both the
Corporation Law and the constitution of the SEC.
For the purpose of enhancing its powers in
promoting animal welfare and enforcing laws for
the protection of animals, the petitioner was
initially imbued under its charter with the power to
apprehend violators of animal welfare laws. In
addition, the petitioner was to share 1/2 of the
fines imposed and collected through its efforts for
violations of the laws related thereto.
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Subsequently, however, the power to make
arrests as well as the privilege to retain a portion of
the fines collected for violation of animal-related
laws were recalled by virtue
of .. Whereas,
the cruel treatment of animals is now an offense
against the State, penalized under our statutes,
which the Government is duty bound to enforce;
When the COA was to perform an audit on them
they refuse to do so, by the reason that they are a
private entity and not under the said commission.
It argued that COA covers only government
entities. On the other hand the COA decided that
it is a government entity.
ISSUE: WON the said petitioner is a private entity.
RULING:
YES. First, the Court agrees with the petitioner that
the “charter test” cannot be applied. Essentially,
the “charter test” provides that the test to
determine whether a corporation is government
owned or controlled, or private in nature is simple.
Is it created by its own charter for the exercise of
a public function, or by incorporation under the
general corporation law? Those with special
charters are government corporations subject to
its provisions, and its employees are under the
jurisdiction of the CSC, and are compulsory
members of the GSIS.
And since the “charter test” had been introduced
by the 1935 Constitution and not earlier, it follows
that the test cannot apply to the petitioner, which
was incorporated by virtue of Act No. 1285,
enacted on January 19, 1905. Settled is the rule
that laws in general have no retroactive effect,
unless the contrary is provided. All statutes are to
be construed as having only a prospective
operation, unless the purpose and intention of the
legislature to give them a retrospective effect is
expressly declared or is necessarily implied from
the language used. In case of doubt, the doubt
must be resolved against the retrospective
effect.
Second, a reading of petitioner’s charter
shows that it is not subject to control or supervision
by any agency of the State, unlike GOCCs. No
government representative sits on the board of
trustees of the petitioner. Like all private
corporations, the successors of its members are
determined voluntarily and solely by the petitioner
in accordance with its by-laws, and may exercise
those powers generally accorded to private
corporations, such as the powers to hold property,
to sue and be sued, to use a common seal, and
so forth. It may adopt by-laws for its internal
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operations: the petitioner shall be managed or exemplify public corporations. They are created
operated by its officers “in accordance with its by- by the State as its own device and agency for the
laws in force.” accomplishment of parts of its own public works.
Third. The employees of the petitioner are Fifth. The respondents argue that since the
registered and covered by the SSS at the latter’s charter of the petitioner requires the latter to
initiative, and not through the GSIS, which should render periodic reports to the Civil Governor,
be the case if the employees are considered whose functions have been inherited by the
government employees. This is another indication President, the petitioner is, therefore, a
of petitioner’s nature as a private entity. government instrumentality.
Fourth. The respondents contend that the This contention is inconclusive. By virtue of
petitioner is a “body politic” because its primary the fiction that all corporations owe their very
purpose is to secure the protection and welfare of existence and powers to the State, the reportorial
animals which, in turn, redounds to the public requirement is applicable to all corporations of
good. This argument, is not tenable. The fact that whatever nature, whether they are public, quasi-
a certain juridical entity is impressed with public public, or private corporations—as creatures of
interest does not, by that circumstance alone, the State, there is a reserved right in the legislature
make the entity a public corporation, inasmuch as to investigate the activities of a corporation to
a corporation may be private although its charter determine whether it acted within its powers. In
contains provisions of a public character, other words, the reportorial requirement is the
incorporated solely for the public good. This class principal means by which the State may see to it
of corporations may be considered quasi-public that its creature acted according to the powers
corporations, which are private corporations that and functions conferred upon it.
render public service, supply public wants, or
pursue other eleemosynary objectives. While
purposely organized for the gain or benefit of its
members, they are required by law to discharge
functions for the public benefit. Examples of these
corporations are utility, railroad, warehouse,
telegraph, telephone, water supply corporations
and transportation companies. It must be stressed
that a quasi-public corporation is a species of
private corporations, but the qualifying factor is
the type of service the former renders to the
public: if it performs a public service, then it
becomes a quasi-public corporation.
Authorities are of the view that the purpose alone
of the corporation cannot be taken as a safe
guide, for the fact is that almost all corporations
are nowadays created to promote the interest,
good, or convenience of the public. A bank, for
example, is a private corporation; yet, it is created
for a public benefit. Private schools and
universities are likewise private corporations; and
yet, they are rendering public service. Private
hospitals and wards are charged with heavy
social responsibilities. More so with all common
carriers. On the other hand, there may exist a
public corporation even if it is endowed with gifts
or donations from private individuals.
The true criterion, therefore, to determine whether
a corporation is public or private is found in the
totality of the relation of the corporation to the
State. If the corporation is created by the State as
the latter’s own agency or instrumentality to help
it in carrying out its governmental functions, then
that corporation is considered public; otherwise, it
is private. Applying the above test, provinces,
chartered cities, and barangays can best