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 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 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 9,36 10,37 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.