PUBLIC CORPORATION
thereof increased during the term for which he was elected.
G.R. No. 175352
DANTE V. LIBAN, REYNALDO M. BERNARDO, and SALVADOR M.
VIARI, Petitioners,
vs.
RICHARD J. GORDON, Respondent.
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 respondent’s 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
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 officer’s 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 taxpayer’s
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 taxpayer’s 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 Court’s 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
taxpayer’s 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 President’s 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 quasi-judicial 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
President’s power of control. There is no dispute that the CCP performs
executive, and not legislative, judicial, or quasi-judicial functions.
The President’s 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.1avvphi1
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 decision-
making within a National Society. However, the freely-elected representatives of
a National Society’s active members must remain in a large majority in a National
Society’s 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 ₱35, ₱100, ₱300, ₱500 or ₱1,000 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 government-owned 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 ₱400,000,000 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
1,28 2,29 3,30 4(a),31 5,32 6,33 7,34 8,35 9,3610,37 11,38 12,39 and 1340 of the PNRC
Charter, as amended, are void.
The other provisions41 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
Government’s 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 government-owned 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.

ANTONIO T. CARPIO