I. SHORT TITLE: BALUYOT VS.

HOLGANZA

II. FULL TITLE: Francisca S. Baluyot, petitioner, vs.

Paul E. Holganza And The Office Of The Ombudsman (Visayas) Represented by its Deputy
Ombudsman for Visayas Arturo C. Mojica, Director Virginia Palanca-Santiago, And Graft
Investigation Officer I Anna Marie P. Militante, Respondents.

III. TOPIC: Corporation Law- Non-chartered GOCCs

IV. STATEMENT OF FACTS:

During a spot audit conducted on March 21, 1977 by a team of auditors from the Philippine
National Red Cross (PNRC) headquarters, a cash shortage of P154,350.13 was discovered in the funds of
its Bohol chapter. The chapter administrator, petitioner Francisca S. Baluyot, was held accountable for the
shortage. Thereafter, private respondent Paul E. Holganza, in his capacity as a member of the board of
directors of the Bohol chapter, filed an affidavit-complaint before the Office of the Ombudsman charging
petitioner of malversation under Article 217 of the Revised Penal Code. However, upon recommendation
by respondent Anna Marie P. Militante, Graft Investigation Officer I, an administrative docket for
dishonesty was also opened against petitioner.

On March 14, 1998, petitioner filed her counter-affidavit, raising principally the defense that public
respondent had no jurisdiction over the controversy. She argued that the Ombudsman had authority only
over government-owned or controlled corporations, which the PNRC was not, or so she claimed.

Petitioner contends that the Ombudsman has no jurisdiction over the subject matter of the
controversy since the PNRC is allegedly a private voluntary organization. The following circumstances,
she insists, are indicative of the private character of the organization: (1) the PNRC does not receive any
budgetary support from the government, and that 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; and
(3) it is not audited by the Commission on Audit. Petitioner states that the PNRC falls under the
International Federation of Red Cross, a Switzerland-based organization, and that the power to discipline
employees accused of misconduct, malfeasance, or immorality belongs to the PNRC Secretary General by
virtue of its by-laws. She threatens that "to classify the PNRC as a government-owned or controlled
corporation would create a dangerous precedent as it would lose its neutrality, independence and
impartiality .

V. STATEMENT OF THE CASE:

This is a special civil action for certiorari, seeking the reversal of the Orders dated August 21, 1998
and October 28, 1998 issued by the Office of the Ombudsman, which denied petitioner's motion to dismiss
and motion for reconsideration, respectively

VI. ISSUE:
1. WON the Philippine National Red Cross is a Government-owned and controlled Corporation
2. WON the Ombudsman has jurisdiction over the subject matter of the case

VII. RULING:

1. YES. Following the ruling in Camporedondo v. National Labor Relations Commission, et. al.,
Philippine National Red Cross (PNRC) is a government owned and controlled corporation, with an
original charter under Republic Act 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 Government Service Insurance
System. 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, and be allotted one
lottery draw a year by the Philippine Charity Sweepstakes Office for the support of its disaster relief
operation in addition to its existing lottery draws for blood program.

2. YES. pursuant to Section 13, of Republic Act No. 6770, otherwise known as "The Ombudsman
Act of 1989", to wit:

Sec. 13. Mandate. — The Ombudsman and his Deputies, as protectors of the people, shall act promptly
on complaints filed in any form or manner against officers or employees of the Government, or of any
subdivision, agency or instrumentality thereof, including government-owned or controlled
corporations, and enforce their administrative, civil and criminal liability in every case where the
evidence warrants in order to promote efficient service by the Government to the people.

VIII. DISPOSITIVE PORTION

WHEREFORE, the petition for certiorari is hereby DISMISSED. Costs against petitioner
 I. SHORT TITLE: FELICIANO VS. COA et al.,
II. FULL TITLE: ENGR. RANULFO C. FELICIANO, in his capacity as General
Manager of the Leyte Metropolitan Water District (LMWD), Tacloban City, petitioner, vs.
COMMISSION ON AUDIT, Chairman CELSO D. GANGAN, Commissioners RAUL C.
FLORES and EMMANUEL M. DALMAN, and Regional Director of COA Region
VIII, respondents.

III. TOPIC: Corporation Law- Non-Chartered GOCCs

IV. STATEMENT OF FACTS:

A Special Audit Team from COA Regional Office No. VIII audited the accounts of Leyte Metropolitan
Water District (LMWD). Subsequently, LMWD received a letter from COA requesting payment of auditing
fees. As General Manager of LMWD, Feliciano sent a reply informing COA’s Regional Director that the
water district could not pay the auditing fees. Petitioner cited as basis for his action Sections 6 and 20 of PD
198 as well as Section 18 of RA 6785. Petitioner wrote COA through the Regional Director asking for refund
of all auditing fees LMWD previously paid to COA.

On 16 March 2000, petitioner received COA Chairman Celso D. Gangan’s Resolution dated 3 January
2000 denying his requests. Petitioner filed a motion for reconsideration on 31 March 2000, which COA denied
on 30 January 2001.

The COA ruled that the Court has already settled COA’s audit jurisdiction over local water districts
in Davao City Water District v. Civil Service Commission and Commission on Audit, where it was held that
Section 3(b) of PD 198 gives the local executives of the local subdivision unit where such water districts are
located the power to appoint the members who will comprise the Board of Directors. In contrast, the members
of the Board of Directors or the trustees of a private corporation are elected from among members or
stockholders thereof. It would not be amiss at this point to emphasize that a private corporation is created for
the private purpose, benefit, aim and end of its members or stockholders. Necessarily, said members or
stockholders should be given a free hand to choose who will compose the governing body of their corporation.
But this is not the case here and this clearly indicates that local water districts are not private corporations.
Hence, Feliciano filed the petition and to the petition were resolutions of the Visayas Association of Water
Districts (VAWD) and the Philippine Association of Water Districts (PAWD) supporting the petition.

V. STATEMENT OF THE CASE:

This is a petition for certiorari to annul the Commission on Audit’s Resolution dated 3 January 2000 and
the Decision dated 30 January 2001 denying the Motion for Reconsideration. The COA denied petitioner
Ranulfo C. Feliciano’s request for COA to cease all audit services, and to stop charging auditing fees, to Leyte
Metropolitan Water District ("LMWD"). The COA also denied petitioner’s request for COA to refund all
auditing fees previously paid by LMWD

VI. ISSUES:
Petitioner contends that COA committed grave abuse of discretion amounting to lack or excess of
jurisdiction by auditing LMWD and requiring it to pay auditing fees. Petitioner raises the following issues
for resolution:

1. WON a Local Water District ("LWD") created under PD 198, as amended, is a government-owned or
controlled corporation subject to the audit jurisdiction of COA;

2. WON Section 20 of PD 198, as amended, prohibits COA’s certified public accountants from auditing local
water districts; and
3. WON Section 18 of RA 6758 prohibits the COA from charging government-owned and controlled
corporations auditing fees.

VII. RULING:
1. Whether LWDs are Private or Government-Owned
and Controlled Corporations with Original Charters

LWDs are GOCCs. The Constitution and existing laws mandate COA to audit all government agencies,
including government-owned and controlled corporations ("GOCCs") with original charters. An LWD is a
GOCC with an original charter.

Petitioner maintains that LWDs are not government-owned and controlled corporations with original
charters. Petitioner claims that LWDs are created "pursuant to" and not created directly by PD 198. Thus, he
concludes that PD 198 is not an "original charter" that would place LWDs within the audit jurisdiction of
COA. Petitioner elaborates that PD 198 does not create LWDs since it does not expressly direct the creation
of such entities, but only provides for their formation on an optional or voluntary basis. He adds that the
operative act that creates an LWD is the approval of the Sanggunian Resolution as specified in PD 198.
Petitioner’s contention deserves scant consideration. 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.

The 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. Under existing laws, that
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.

Obviously, LWDs are not private corporations because they are not created under the Corporation
Code. LWDs are not registered with the Securities and Exchange Commission. Section 14 of the Corporation
Code states that "[A]ll corporations organized under this code shall file with the Securities and Exchange
Commission articles of incorporation x x x." LWDs have no articles of incorporation, no incorporators and no
stockholders or members. There are no stockholders or members to elect the board directors of LWDs as in
the case of all corporations registered with the Securities and Exchange Commission. The local mayor or the
provincial governor appoints the directors of LWDs for a fixed term of office. Significantly, petitioners are
not created under the said code, but on the contrary, they were created pursuant to a special law and
are governed primarily by its provision.

LWDs exist by virtue of PD 198, which constitutes their special charter. Since under the Constitution
only government-owned or controlled corporations may have special charters, LWDs can validly exist only if
they are government-owned or controlled. To claim that LWDs are private corporations with a special charter
is to admit that their existence is constitutionally infirm.

The phrase "government-owned and controlled corporations with original charters" in the Constitution
means GOCCs created under special laws and not under the general incorporation law. There is no difference
between the term "original charters" and "special charters."

By "government-owned or controlled corporation with original charter," We mean government

owned or controlled corporation created by a special law and not under the Corporation Code of the
Philippines.

Petitioner’s contention that the Sangguniang Bayan resolution creates the LWDs assumes that the
Sangguniang Bayan has the power to create corporations. This is a patently baseless assumption. The Local
Government Code does not vest in the Sangguniang Bayan the power to create corporations. What the Local
Government Code empowers the Sangguniang Bayan to do is to provide for the establishment of a waterworks
system "subject to existing laws." The Sangguniang Bayan may establish a waterworks system only in
accordance with the provisions of PD 198.

Petitioner further contends that a law must create directly and explicitly a GOCC in order that it may
have an original charter. In short, petitioner argues that one special law cannot serve as enabling law for several
GOCCs but only for one GOCC. There is, however, no prohibition on Congress to create several GOCCs of
the same class under one special enabling charter.

The rationale behind the prohibition on private corporations having special charters does not apply to
GOCCs. There is no danger of creating special privileges to certain individuals, families or groups if there is
one special law creating each GOCC. Certainly, such danger will not exist whether one special law creates
one GOCC, or one special enabling law creates several GOCCs. Thus, Congress may create GOCCs either by
special charters specific to each GOCC, or by one special enabling charter applicable to a class of GOCCs,
like PD 198 which applies only to LWDs.

Petitioner also contends that LWDs are private corporations because Section 6 of PD 198 declares that
LWDs "shall be considered quasi-public" in nature. He rationalizes that a public corporation cannot be deemed
"quasi-public" because such corporation is already public. Petitioner concludes that the term "quasi-public"
can only apply to private corporations. The argument is inconsequential. Petitioner forgets that the
constitutional criterion on the exercise of COA’s audit jurisdiction depends on the government’s ownership
or control of a corporation. The nature of the corporation, whether it is private, quasi-public, or public is
immaterial.

The Constitution vests in the COA audit jurisdiction over "government-owned and controlled
corporations with original charters," as well as "government-owned or controlled corporations" without
original charters. GOCCs with original charters are subject to COA pre-audit, while GOCCs without original
charters are subject to COA post-audit. GOCCs without original charters refer to corporations created under
the Corporation Code but are owned or controlled by the government. The nature or purpose of the
corporation is not material in determining COA’s audit jurisdiction. Neither is the manner of creation of a
corporation, whether under a general or special law. The determining factor of COA’s audit jurisdiction
is government ownership or control of the corporation.

2. WON COA’s accountants are prohibited from performing audit on LWDs

Petitioner argues that PD 198 expressly prohibits COA auditors, or any government auditor for that matter,
from auditing LWDs. Petitioner asserts that this is the import of the second sentence of Section 20 of PD 198
when it states that "[A]uditing shall be performed by a certified public accountant not in the government
service."36

PD 198 cannot prevail over the Constitution. No amount of clever legislation can exclude GOCCs like
LWDs from COA’s audit jurisdiction. Section 3, Article IX-C of the Constitution outlaws any scheme or
devise to escape COA’s audit jurisdiction, thus:

Sec. 3. No law shall be passed exempting any entity of the Government or its subsidiary in any guise
whatever, or any investment of public funds, from the jurisdiction of the Commission on Audit.

The framers of the Constitution added Section 3, Article IX-D of the Constitution precisely to annul
provisions of Presidential Decrees, like that of Section 20 of PD 198, that exempt GOCCs from COA audit.

3. On the Legality of COA’s

Practice of Charging Auditing Fees
 Petitioner claims that the auditing fees COA charges LWDs for audit services violate the prohibition in
Section 18 of RA 6758. Petitioner’s claim has no basis.

Section 18 of RA 6758 prohibits COA personnel from receiving any kind of compensation from any
government entity except "compensation paid directly by COA out of its appropriations and
contributions." Thus, RA 6758 itself recognizes an exception to the statutory ban on COA personnel
receiving compensation from GOCCs. In Tejada v. Domingo, the Court declared:

the Court explained the meaning of the word "contributions" in Section 18 of RA 6758, which allows COA
to charge GOCCs the cost of its audit services:

x x x the contributions from the GOCCs are limited to the cost of audit services which are based on the actual
cost of the audit function in the corporation concerned plus a reasonable rate to cover overhead expenses. The
actual audit cost shall include personnel services, maintenance and other operating expenses, depreciation on
capital and equipment and out-of-pocket expenses. In respect to the allowances and fringe benefits granted by
the GOCCs to the COA personnel assigned to the former’s auditing units, the same shall be directly defrayed
by COA from its own appropriations x x x. 41

COA may charge GOCCs "actual audit cost" but GOCCs must pay the same directly to COA and not to
COA auditors. Petitioner has not alleged that COA charges LWDs auditing fees in excess of COA’s "actual
audit cost." Neither has petitioner alleged that the auditing fees are paid by LWDs directly to individual COA
auditors. Thus, petitioner’s contention must fail.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the Resolution of the Commission on Audit dated 3 January 2000 and the Decision dated 30
January 2001 denying petitioner’s Motion for Reconsideration are AFFIRMED. The second sentence of
Section 20 of Presidential Decree No. 198 is declared VOID for being inconsistent with Sections 2 (1) and 3,
Article IX-D of the Constitution. No costs.
 I. SHORT TITLE: LIBAN et al. VS. GORDON
II. FULL TITLE: Dante V. Liban, Reynaldo M. Bernardo, and Salvador M.
Viari, Petitioners, vs. Richard J. Gordon, Respondent.
III. TOPIC: Corporation Law- Non-chartered GOCCs
IV. STATEMENT OF FACTS:

Petitioners Dante V. Liban, Reynaldo M. Bernardo, and Salvador M. Viari (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, 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”

Petitioners cite Camporedondo v. NLRC,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,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. If the petition is one for quo warranto, it is already barred by prescription
since the 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.
 V. STATEMENT OF THE CASE:
This is a petition to declare Senator Richard J. Gordon (respondent) as having forfeited his seat in the
Senate.

VI. ISSUES:
WON the office of the PNRC Chairman is a government office or an office in a GOCC for purposes of the
prohibition in Section 13, Article VI of the Constitution.

VII. RULING:

NO. PNRC is a Private Organization Performing Public Functions

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. The PNRC is a member
National Society of the International Red Cross and Red Crescent Movement (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.

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.

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. 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.

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.

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.

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 and the proscription does not apply.
 Under Section 17, Article VII of the Constitution, 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.

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.

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, 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, 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:

“ 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:”

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.

addition: The PNRC Charter is Violative of the Constitutional Proscription against the Creation of
Private Corporations by Special Law

In Feliciano v. Commission on Audit, 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. 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, is void for being unconstitutional.
 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.

VIII. DISPOSITIVE PORTION:

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.

Note:

On January 18, 2011, the Supreme Court en banc promulgated its Resolution in the case of Liban, et
al. vs. Gordon, G.R. No. 175352. The Court granted partial reconsideration and modified the dispositive
portion of its July 15, 2009 Decision. Thus, the High Tribunal maintained its holding that respondent Gordon
did not forfeit his legislative seat when he was elected as PNRC Chairman during his incumbency as Senator
but deleted the pronouncement in the Decision that the PNRC Charter, R.A. 95, as amended, is void insofar
as it creates the PNRC as a private corporation. It ruled that the constitutional issue regarding the PNRC
charter was not the lis mota of the case; hence, the Court should not have passed upon it. It also declared that
the PNRC is sui generis in nature; it is neither strictly a GOCC nor a private corporation. The PNRC enjoys a
special status as an important ally and auxiliary of the government in the humanitarian field in accordance
with its commitments under international law; the Court cannot all of a sudden refuse to recognize its existence,
especially since the issue of the constitutionality of the PNRC Charter was never raised by the parties. It bears
emphasizing that the PNRC has responded to almost all national disasters since 1947, and is widely known to
provide a substantial portion of the country’s blood requirements. Its humanitarian work is unparalleled. The
Court should not shake its existence to the core in an untimely and drastic manner that would not only have
negative consequences to those who depend on it in times of disaster and armed hostilities but also have
adverse effects on the image of the Philippines in the international community. The sections of the PNRC
Charter that were declared void must therefore stay. Thus, R.A. No. 95, as amended, remains valid and
constitutional in its entirety (vote 9-5).

2011 DISPOSITIVE PORTION:

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.