Liban vs.

Gordon (2009)

Ponente: Carpio, J.

Facts:
Petitioners are officers of the Board of Directors of the QC Red Cross Chapter while Respondent is the
Chairman of the Philippine National Red Cross (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 - Sec. 13, Art. VI, 1987 Consti: No Senator or Member of the HoR may
hold any other office/employment in the Gov’t, or any subdivision, agency, or instrumentality thereof,
including gov’t-owned or controlled corporations or their subsidiaries, during his term w/o 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 which held that PNRC is a gov’t-owned or controlled corporation.
Flores v. Drilon held that incumbent national legislators lose their elective posts upon their appointment to
another government office.

Respondent:
 Petitioners have no standing to file petition w/c appears to be an action for quo warranto – they do not
claim to be entitled to the Senate office of respondent.
 Sec. 11, Rule 66, Rules of Civil Procedure: action should be commenced w/in 1 year after the cause of
public officer’s forfeiture of office – respondent has been working as a Red Cross volunteer for 40 yrs
 Petitioners cannot raise a constitutional question as taxpayers – no claim that they suffered some actual
damage/threatened injury or illegal disbursement of public funds
 If petition is for declaratory relief, SC has no jurisdiction  original jurisdiction in RTC
 PNRC is not a gov’t owned/controlled corporation
 Sec. 13, Art. VI of Consti does not apply because volunteer service to PNRC is not an office/employment

Petitioners: present petition is a taxpayer’s suit questioning 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. Court has jurisdiction because it involves a legal/constitutional issue of transcendental
importance.

Issues, Holding & Ratio:

WON petitioners have standing.

SC: NO. The petition is an action for quo warranto (Sec. 1, Rule 66, Rules of Court – an action for the
usurpation of a public office against a public officer who does or suffers an act which constitutes a ground for
forfeiture of his office). See facts for petitioner’s allegations. Petitioners do not claim to be entitled to the
Senate office of respondent.

WON PNRC is a Private or Government-Owned or Controlled Corporation.

SC: PNRC is a Private Corporation.
May 22, 1947 – Pres. Manuel Roxas signed RA 95 (PNRC Charter) adhering to the Geneva Convention of
July 27, 1929. 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 w/o consideration of
nationality, race, religion, gender, social status, or political affiliation.
- A member of National Society of the International Red Cross and Red Crescent Movement. 7 Fundamental
Principles: Humanity, Impartiality, Neutrality, Independence, Voluntary Service, Unity, Universality.
- Must be autonomous, neutral and independent; not appear to be instrument/agency that implements gov’t
policy to merit the trust of all and effectively carry out its mission – therefore, it cannot be
owned/controlled by the gov’t
 The Philippine gov’t does not own the PNRC – does not have gov’t assets and does not receive any
appropriation from the Congress. It is financed primarily by contributions from private individuals/entities
obtained through solicitation campaigns organized by its Board of Governors (Sec. 11, PNRC Charter).
The gov’t does not control the PNRC. Only 6 of the 30 members of the PNRC Board of Governors are
appointed by the President of the Philippines (Sec. 6, PNRC Charter). A majority of 4/5 of the PNRC Board are
elected/chosen by the private sector members of the PNRC.
The PNRC Chairman is not appointed by the President or any subordinate gov’t official, therefore, he is not an
official/employee of the Philippine Government. Sec. 16, Art. VII of Consti – President appoints all officials &
employees in the Executive branch whose appointments are vested in the President by the Consti or by law.
President also appoints those whose appointments are not otherwise provided by law. The law may also
authorize the “heads of deparments, agencies, commissions, or boards” to appoint officers lower in rank.
The vast majority of the thousands of PNRC members are private individuals, including students and
foreigners; those contribute to the annual fund campaign of the PNRC (Sec. 5, PNRC Charter amended by PD
1264).
Sec. 2(13) of he Introductory Provisions of the Administrative Code of 1987: A gov’t-owned or controlled
corporation must be owned by the gov’t, and in case of a stock corporation, at least a majority of its capital
stock must be owned by the gov’t. In case of a non-stock corporation, at least a majority of the members must
be gov’t officials holding such membership by appointment/designation by the gov’t.

WON the office of the PNRC Chairman is a gov’t office or an office in a government-owned or controlled
corporation for purposes of the prohibition in Sec. 13, Art. VI of Consti.
SC: The office of the PNRC Chairman is a private office. The President cannot review, reverse or modify the
decisions/actions of the PNRC Board and the PNRC Chairman. Only the PNRC Board can review, reverse or
modify the decisions/actions of the PNRC Chairman.

*The PNRC Charter is Violative of the Constitutional Proscription against the Creation of Private
Corporations by Special Law
1935 (Sec. 7 was in force when PNRC was created by special character on March 22, 1947), 1973 & 1987
(Sec. 16) Constitutions provide that: The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Gov’t-owned or controlled corporations may be
created/established by special charters in the interest of the common good and subject to the test of economic
viability.
Feliciano v. CoA – Sec. 16 of 1987 Consti bans private corporations to be created by special charters, which
historically gave individuals, families or groups special privileges denied to other citizens.
PNRC was created through a special charter, however, the elements of gov’t ownership and control (e.g.
capital assets and operating funds from gov’t) are clearly lacking in the PNRC. It therefore cannot be
considered a gov’t-owned or controlled corporation.
In creating PNRC as a corporate entity, Congress was in fact creating a private corporation, which is not
exempt from constitutional prohibition (Sec. 16 above) even as a non-profit/charitable corporation.
PNRC Charter insofar as it creates the PNRC as a private corporation and grants it corporate powers is void
for being unconstitutional  Sec. 1-13 are void. Other provisions remain valid as they can be considered as a
recognition by the State that 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.
They also implement the Phil. Gov’t’s treaty obligations based on the Geneva Conventions.

Judgment: Office of the PNRC Chairman declared not a government office.

Dissent: Nachura, J.

The petition is one for prohibition and petitioners have legal standing as citizens and taxpayers.
The remedy sought is preventive and restrictive, an injunction against an alleged continuing violation of the
fundamental law. They raise a constitutional issue, w/o claiming any entitlement to either the Senate seat or
chairmanship of PNRC. The Court has full authority and bounden duty to assume jurisdiction to determine
WON other branches of gov’t have kept themselves w/in the limits of the Consti & laws and have not abused
discretion given them.

PNRC is a gov’t-owned or controlled corporation (GOCC). Its charter does not violate the
constitutional proscription against creation of private corporations by special law. PNRC was
incorporated under RA 95, a special law. It cannot be anything but a GOCC. PNRC was not impliedly converted
into a private corporation simply because its charter was amended to vest in it authority to secure loans, be
exempted from payment of all duties, tax fees, etc.
The use of Sec. 2(13) of Introductory Provisions of Administrative Code of 1987 by the ponencia to define a
GOCC does not pronounce a definition of a GOCC that strays from Sec. 16, Art. XII of Consti. It merely declares
that a GOCC may either be a stock or non-stock corporation.
Sec. 1 of PNRC Charter – PNRC is officially designated to assist the RP in discharging the obligations set
forth in the Geneva Conventions – therefore, it is engaged in the performance of the gov’ts public functions.
PNRC is endowed w/ corporate powers. It administers special funds – contributions of members, aid given
by gov’t, supported by PCSO and LGUs. It submits annual reports receipts and disbursement to the President.
ANRC (precursor of PNRC) is considered a federal instrumentality – immunity from state taxation,
subjected to governmental supervision & regular financial audit, principal officer appointed by the President –
but remains an independent, volunteer-led org. No basis to assume that it cannot merit the trust of all and
cannot effectively carry out mission as a National Red Cross Society. Separatists & insurgents do not consider
them as the enemy but as the entity to turn to in the event of injury.
Considering that PNRC is a GOCC, its charter does not violate the constitutional provision (Sec. 16, Art. XII).
To declare Sec. 1 of PNRC Charter (creation and incorporation of the org) invalid and the rest valid is to
reach an absurd situation in w/c obligations are imposed on and a framework for its operation is laid down
for a legally non-existing entity. Sec. 2-17 of RA 95 are not separable from Sec. 1 – cannot stand independently
– no separability clause.
Presumption of constitutionality of law is presumed. There is no clear showing that the PNRC Charter runs
counter to the consti. All reasonable doubts should be resolved in favor of the constitutionality of the statute.
Deleterious effects will result if PNRC is declared a private corporation – employees will no longer be
covered by the GSIS; it can no longer be extended tax exemptions and official immunity; and cannot anymore
be given support, financial or otherwise, by the National Gov’t, LGUs, and PCSO. The Court must not arbitrarily
declare a law unconstitutional just to save a single individual from unavoidable consequences of his
transgression of the Consti even if done in good faith.

Sen. Gordon’s continuous occupancy of 2 incompatible positions is a clear violation of the Consti
(Sec. 13, Art. VI). The language in the provision is unambiguous; requires no in-depth construction. A
position held in an ex officio capacity (a second post held by virtue of the functions of the first office) does not
violate such constitutional proscription. The chairmanship of the PNRC Board is not held in an ex officio
capacity by a member of Congress.

Vote to grant Petition.