FRANCISCA S. BALUYOT vs. PAUL E.

HOLGANZA and the OFFICE OF THE OMBUDSMAN (VISAYAS)

represented by its Deputy Ombudsman for the Visayas ARTURO C. MOJICA, Director VIRGINIA
PALANCA-SANTIAGO, and Graft Investigation Officer I ANNA MARIE P. MILITANTE

G.R. No. 136374.February 9, 2000

FACTS: During a spot audit in 1977, the auditors from the Philippine National Red Cross (PNRC)
headquarters discovered a case shortage in the funds of its Bohol chapter. The chapter administrator,
petitioner Baluyot, was held accountable and thereafter, respondent Holganza as member of the board
Bohol chapter, filed a complaint with the Ofc. of the Ombudsman for malversation. Upon
recommendation of respondent Militante, an administrative docket of dishonesty was also opened
against Baluyot. Baluyot raised the defense that the Ombudsman had no jurisdiction as he had authority
only over government owned or controlled corporations which the PNRC was not. She gives as evidence
of its private character 1) it does not receive budgetary support from the government and all money
given to it by the latter and its instrumentalities become private funds of the organization. 2) funds for
the payment of personnel’s salaries and other emoluments come from yearly fund campaigns, private
contributions and rentals from its properties. 3) it is not audited by COA. PNRC, petitioner claims falls
under the International Federation of Red Cross, Swiss-based organization.

ISSUE: Whether or not PNRC is a government owned or controlled corporation.

RULING: YES. PNRC is a government owned and controlled corporation, with an original charter under
RA No. 95, as amended. 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
Civil Service Commission, and are compulsory members of the GSIS.

The PNRC was not “impliedly converted to a private corporation” simply because its charter was
amended to vest in it the authority to secure loans, be exempted from payment of all duties, taxes, fees
and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its
disaster relief work and other services and in its benefits and fund raising drives.” Clearly then, public
respondent has jurisdiction over the matter.
PIONEER INSURANCE & SURETY CORPORATION vs. THE HON. COURT OF APPEALS, BORDER
MACHINERY & HEAVY EQUIPMENT, INC., (BORMAHECO), CONSTANCIO M. MAGLANA and JACOB S.
LIM

G.R. No. 84197. July 28, 1989

FACTS: In 1965, Jacob S. Lim, owner-operator of Southern Airlines (SAL), a single proprietorship entered
into a sales contract with regarding Japan Domestic Airlines (JDA) regarding 2 DC-#A type aircrafts, 1 set
of necessary spare parts where a Total of $ 190,000 in instalments are to be paid. Pioneer Insurance
and Surety Corp. as surety executed its surety bond in favor of JDA on behalf of its principal Lim. Border
Machinery and Heavy Equipment Co, Inc. of Francisco and Modesto Cervantes and Constancio Maglana
contributed funds for the transaction based on the misrepresentation of Lim that they will form a new
corporation to expand his business.

Lim as owner operator for SAL executed in favor of Pioneer a deed of chattel mortgage as security. A
restructuring of obligation to change the maturity was done twice without the knowledge of other
defendants made the surety of JDA prescribed so not entitled to reimbursement. Upon default on the
2/8 payments, Pioneer paid for him and filed a petition for the foreclosure of chattel mortgage as
security. CA affirmed Trial of Merits: Only Lim is liable to pay

ISSUE: Whether or not there is failure of respondents to incorporate leading to a de facto partnership.

RULING: NO. Partnership inter se does not necessarily exist, for ordinarily CANNOT be made to assume
the relation of partners as between themselves, when their purpose is that no partnership shall exists.
It should be implied only when necessary to do justice between the parties (i.e. only pretend to make
others liable). Lim never intended to form a corporation.