Public Corporations
Liban v. Gordon, G. R. No. 175352, January 18, 2011
FACTS:
This resolves the Motion for Clarification and/or for Reconsideration1 filed on August 10, 2009 by
respondent Richard J. Gordon (respondent) of the Decision promulgated by this Court on July 15, 2009
(the Decision), the Motion for Partial Reconsideration filed on August 27, 2009 by movant-intervenor
Philippine National Red Cross (PNRC), and the latter’s Manifestation and Motion to Admit Attached
Position Paper filed on December 23, 2009.
In the Decision, the Court held that respondent did not forfeit his seat in the Senate when he
accepted the chairmanship of the PNRC Board of Governors, as "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." The Decision, however, further declared
void the PNRC Charter "insofar as it creates the PNRC as a private corporation" and consequently ruled
that "the PNRC should incorporate under the Corporation Code and register with the Securities and
Exchange Commission if it wants to be a private corporation." The dispositive portion of the Decision
reads as follows:
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.
ISSUE:
Whether the Red Cross is a private corporation
RULING:
NO. It is in recognition of this sui generis character of the PNRC that R.A. No. 95 has remained
valid and effective from the time of its enactment in March 22, 1947 under the 1935 Constitution and
during the effectivity of the 1973 Constitution and the 1987 Constitution.
The PNRC Charter and its amendatory laws have not been questioned or challenged on
constitutional grounds, not even in this case before the Court now.
In the Decision, the Court, citing Feliciano v. Commission on Audit, 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.
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Public Corporations
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. It should be noted that a special law, R.A. No. 9520, the Philippine Cooperative Code of 2008,
and not the general corporation code, vests corporate power and capacities upon cooperatives which
are private corporations, in order to implement the State’s avowed policy.
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