DANTE V. LIBAN, vs. RICHARD J. GORDON, G.R. No.

175352, July 15,

2009

Doctrine:
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.

Facts:
Liban and other petitions filed a Petition to Declare Gordon as having forfeited his seat in the
Senate. They allege that respondent ceased to be a member of the Senate by accepting the
chairmanship of the PNRC Board of Governors as provided under Section 13, Article VI of the
Constitution.

Petitioners cite Camporedondo v. NLRC,[2] which held that the PNRC is a

government-owned or controlled corporation.

Issue:
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.

Ruling:
No.
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 Governor

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. Clearly, an overwhelming
majority of four-fifths of the PNRC Board are elected or chosen by the private
sector members of the PNRC.
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.

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.

DANTE V. LIBAN, vs. RICHARD J. GORDON, G.R. No. 175352, January 18,
2011

PHILIPPINE NATIONAL RED CROSS, Intervenor.

Doctrine:
In the Decision, the Court, citing Feliciano v. Commission on Audit,[19]explained that
the purpose of the constitutional provision prohibiting Congress from creating
private corporations was to prevent the granting of special privileges to certain
individuals, families, or groups, which were denied to other groups. Based on the
above discussion, it can be seen that the PNRC Charter does not come within the
spirit of this constitutional provision, as it does not grant special privileges to a
particular individual, family, or group, but creates an entity that strives to serve the
common good.

Facts:
Respondent Gordon filed a Motion for Clarification and/or Reconsideration on the decision
promulgated by the Court last July 15, 2009.

The Decision, among others, declared void the PNRC Charter in so far as it creates the PNRC as
a private corporation and ruled that it should be incorporated under the Corporation Code.
In his Motion for Clarification and/or for Reconsideration, respondent raises
the following grounds: (1) as the issue of constitutionality of Republic Act (R.A.)
No. 95 was not raised by the parties, the Court went beyond the case in deciding
such issue; and (2) as the Court decided that Petitioners did not have standing to
file the instant Petition, the pronouncement of the Court on the validity of R.A. No.
95 should be considered obiter.

Issue:
Whether or not the PNRC Charter should be upheld

Ruling:
YES.
As correctly pointed out in respondents Motion, the issue of constitutionality
of R.A. No. 95 was not raised by the parties, and was not among the issues defined
in the body of the Decision; thus, it was not the very lis mota of the case. We have
reiterated the rule as to when the Court will consider the issue of constitutionality
in Alvarez v. PICOP Resources, Inc.,[12] thus:

This Court will not touch the issue of unconstitutionality unless it is

the very lis mota. It is a well-established rule that a court should not
pass upon a constitutional question and decide a law to be
unconstitutional or invalid, unless such question is raised by the
parties and that when it is raised, if the record also presents some other
ground upon which the court may [rest] its judgment, that course will be
adopted and the constitutional question will be left for consideration until
such question will be unavoidable.[13]
By requiring the PNRC to organize under the Corporation Code just like any other private
corporation, the Decision of July 15, 2009 lost sight of the PNRC’s special status under international
humanitarian law and as an auxiliary of the State, designated to assist it in discharging its obligations
under the Geneva Conventions.

The PNRC, as a National Society of the International Red Cross and Red Crescent Movement,
can neither “be classified as an instrumentality of the State, so as not to lose its character of neutrality”
as well as its independence, nor strictly as a private corporation since it is regulated by international
humanitarian law and is treated as an auxiliary of the State.

The auxiliary status of [a] Red Cross Society means that it is at one and the same time a
private institution and a public service organization because the very nature of its work
implies cooperation with the authorities, a link with the State. In carrying out their major
functions, Red Cross Societies give their humanitarian support to official bodies, in general
having larger resources than the Societies, working towards comparable ends in a given sector.
In the Decision, the Court, citing Feliciano v. Commission on Audit,[19]explained that
the purpose of the constitutional provision prohibiting Congress from creating
private corporations was to prevent the granting of special privileges to certain
individuals, families, or groups, which were denied to other groups. Based on the
above discussion, it can be seen that the PNRC Charter does not come within the
spirit of this constitutional provision, as it does not grant special privileges to a
particular individual, family, or group, but creates an entity that strives to serve the
common good.

Furthermore, a strict and mechanical interpretation of Article XII, Section 16 of the

1987 Constitution will hinder the State in adopting measures that will serve the
public good or national interest.