Last 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. Thus, R.A. No. 95, as amended, remains valid and constitutional in its entirety.
The facts of the case
Petitioners Dante V. Liban, et al. were officers of the Board of Directors of the Quezon City Red Cross Chapter. They filed with the Supreme Court what they styled as “Petition to Declare Richard J. Gordon as Having Forfeited His Seat in the Senate” against respondent Richard J. Gordon, who was elected Chairman of the PNRC Board of Governors during his incumbency as Senator of the Philippines.
Petitioners alleged that by accepting the chairmanship of the PNRC Board of Governors, respondent Gordon ceased to be a member of the Senate pursuant to Sec. 13, Article VI of the Constitution, which provides that “[n]o Senator . . . 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 cited the case of Camporedondo vs. NLRC, which held that the PNRC is a GOCC, in supporting their argument that respondent Gordon automatically forfeited his seat in the Senate when he accepted and held the position of Chairman of the PNRC Board of Governors.
The July 15, 2009 decision
In its Decision, the Court declared that the substantial issue boils down to whether 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.
Voting 7-5, the Court held that the office of the PNRC Chairman is NOT a government office or an office in a GOCC. The PNRC Chairman is elected by the PNRC Board of Governors; he is not appointed by the President or by any subordinate government official. The PNRC in itself is NOT a GOCC because it is a privately-owned, privately-funded, and privately-run charitable organization controlled by a Board of Governors four-fifths of which are private sector individuals. Thus, respondent Gordon did not forfeit his legislative seat when he was elected as PNRC Chairman during his incumbency as Senator [as there is no incompatibility between the two positions].
The Court however held further that the PNRC Charter, R.A. 95, as amended, is void insofar as it creates the PNRC “as a private corporation” since Section 7, Article XIV of the 1935 Constitution stated that “[t]he 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 Court thus directed the PNRC to 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 read:
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.
Justice Antonio Carpio wrote the Decision for the Court. Fully concurring with him were then-Chief Justice Puno and Associate Justices Quisumbing, Carpio Morales, Chico–Nazario, Velasco, and Leonardo-de Castro.
Associate Justice Nachura wrote a Dissenting Opinion. Joining him were Associate Justices Ynares-Santiago, Brion, Peralta, and Bersamin. Then-Justice [now Chief Justice] Corona took no part in the deliberation.
According to Justice Nachura, since no private corporation can have a special charter under the Constitution, it follows that the PNRC is a GOCC. Citing jurisprudence, he argued that the test for determining whether a corporation is a GOCC is simply whether it was created with its own charter for the exercise of a public function [and not] by incorporation under the general corporation law. The definition of a GOCC under the 1987 Administrative Code, on the other hand, is broad enough to admit of other distinctions as to the kinds of GOCCs. The more crucial factor to consider, said Justice Nachura, is the definition’s reference to the corporation being vested with functions relating to public needs. In this regard, the PNRC Charter states that it is created as a “voluntary organization officially designated to assist the Republic of the Philippines in discharging the obligations set forth in the Geneva Convention.” These obligations are undoubtedly public or governmental in character. Hence, the PNRC is engaged in the performance of the government’s public functions.
Justice Nachura added that, at the very least, the PNRC should be regarded as a government instrumentality under the 1987 Administrative Code. An instrumentality “refers to any agency of the National Government not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter.” The PNRC’s organizational attributes, said Justice Nachura, are consistent with this definition.
The dissent then cites the unsettling ripple effect which the main ruling could create on numerous Court decisions, such as those dealing with the jurisdiction of the Civil Service Commission (CSC) and the authority of the Commission on Audit (COA). It also noted the absurdity of partially invalidating the PNRC Charter as this would have the consequence of imposing obligations and providing an operational framework for a legally non-existing entity. Justice Nachura finally warns against the PNRC’s ultimate demise if it were regarded as a private corporation. Because of possible violations of the equal protection clause and penal statutes, the PNRC may no longer be extended tax exemptions and official immunity or be given any form of support by the National Government, local government units, and the Philippine Charity Sweepstakes Office (PCSO). If the PNRC is consequently obliterated, Philippines will be shirking its obligations under the Geneva Conventions.
As a consequence of the premise that PNRC is a GOCC, or at least a government instrumentality, the dissent finally concluded that Sen. Gordon forfeited his Senate seat for holding two incompatible offices.
Gordon’s and PNRC’s motions for reconsideration
Though he prevailed, respondent Gordon nevertheless filed a Motion for Clarification and/or for Reconsideration of the Decision. The PNRC, which was not a party in the case until the Decision came out, moved to intervene and filed its own Motion for Partial Reconsideration. Both movants basically questioned the second part of the Decision with regard to the pronouncement on the nature of the PNRC and the resultant unconstitutionality of some provisions of the PNRC Charter. They raised the following issue: What is the nature of the PNRC? Corollarily, as it correct for the Court to have passed upon and decided on the issue of the constitutionality of the PNRC charter?
Changes in the voting in the Court Resolution
As written at the outset, the Court, voting 9-5, GRANTED reconsideration and MODIFIED the dispositive portion of the Decision by deleting the second sentence thereof. Thus, the fallo should now read 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.
Associate Justice Teresita Leonardo-De Castro, with whom Justices Velasco, Nachura, Peralta, Bersamin, Del Castillo, Villarama, and Perez fully concurred, penned the Resolution for the Court en banc. Of those constituting the new majority, Justices Leonardo-De Castro and Velasco previously concurred without qualification to the ponencia of Justice Carpio, while Justices Nachura, Peralta and Bersamin dissented therefrom. Justice Del Castillo, who joined the Court on July 29, 2009, voted with the new majority. Another newcomer, Justice Abad, who joined the Court on on August 7, 2009, wrote a Separate Concurring Opinion.
Justice Carpio, the ponente of the July 15, 2009 Decision, was reduced to writing a Dissenting Opinion. Concurring with him were Justices Carpio-Morales, Brion, Mendoza and Sereno. Justice Brion previously concurred with the dissent of Justice Nachura. Two newcomers, Justices Mendoza (joined the Court on January 4, 2010) and Sereno (joined on August 13, 2010), also concurred with Justice Carpio.
The majority opinion
The majority held that 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 lis mota of the case. The Court quoted the 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 [even] 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.
Thus, the majority opined that the Court should not have declared void certain sections of the PNRC Charter in its July 15, 2009 Decision. Instead, the Court should have exercised judicial restraint on this matter, especially since there was some other ground upon which the Court could have based its judgment. Furthermore, the PNRC, the entity most adversely affected by this declaration of unconstitutionality, which was not even originally a party to this case, was being compelled, as a consequence of the Decision, to suddenly reorganize and incorporate under the Corporation Code, after more than sixty (60) years of existence in this country.
The majority also noted that since its enactment, the PNRC Charter was amended several times, particularly on June 11, 1953, August 16, 1971, December 15, 1977, and October 1, 1979, by virtue of R.A. No. 855, R.A. No. 6373, P.D. No. 1264, and P.D. No. 1643, respectively. The passage of several laws relating to the PNRC’s corporate existence notwithstanding the effectivity of the constitutional proscription on the creation of private corporations by law is a recognition that the PNRC is not strictly in the nature of a private corporation contemplated by the aforesaid constitutional ban. It found merit in PNRC’s contention that its structure is sui generis [since a] closer look at the nature of the PNRC would show that there is none like it, not just in terms of structure, but also in terms of history, public service and official status accorded by the State and the international community. 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.
Justice Leonardo-De Castro argued that Court [must] recognize the country’s adherence to the Geneva Convention and respect the unique status of the PNRC in consonance with its treaty obligations. The Geneva Convention has the force and effect of law. Under the Constitution, the Philippines adopts the generally accepted principles of international law as part of the law of the land. This constitutional provision must be reconciled and harmonized with Article XII, Section 16 of the Constitution [which provides that “[t]he Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations.”], instead of using the latter to negate the former. 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.
Echoing the thesis of Justice Carpio in the Decision, Justice Leonardo-De Castro reiterated that 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.
[But] although [the PNRC] is neither a subdivision, agency, or instrumentality of the government, nor a GOCC or a subsidiary thereof . . . so much so that respondent, under the Decision, was correctly allowed to hold his position as Chairman thereof concurrently while he served as a Senator, such a conclusion does not ipso facto imply that the PNRC is a “private corporation” within the contemplation of the provision of the Constitution, that must be organized under the Corporation Code. [T]he sui generis character of PNRC requires us to approach controversies involving the PNRC on a case-to-case basis.
In sum, 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. This 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, the Court MODIFIED the dispositive portion of the Decision by deleting the second sentence, to now read 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.
The concurrence of Justice Abad
Justice Abad noted that the PNRC is imbued with characteristics that ordinary private or government organizations do not possess. Its charter’s direct reference to the Geneva Conventions gives the PNRC a special status in relation to governments of any form, as well as a unique place in international humanitarian law. Thus, the PNRC cannot be classified as either a purely private or government entity. It is a hybrid organization that derives certain peculiarities from international humanitarian law. For this reason, its organizational character does not fit the parameters provided by either the Corporation Code or Administrative Code. It is a sui generis entity that draws its nature from the Geneva Conventions, the Statutes of the Movement and the law creating it.
He further averred that the Constitution does not preclude the creation of corporations that may neither be classified as private nor governmental. Sec. 7, Article XIV of the 1935 Constitution, which was carried over in subsequent versions of the fundamental law, does not prohibit Congress from creating other types of organizations that may not fall strictly within the terms of what is deemed a private or government corporation. The Constitution simply provides that Congress cannot create private corporations, except by general law, unless such corporations are owned or controlled by the government. It does not forbid Congress from creating organizations that do not belong to these two general types. The special status of the PNRC under international humanitarian law justifies the special manner of its creation. The State itself committed the PNRC’s formation to the community of nations, and no less than an act of Congress should be deemed sufficient compliance with such an obligation. To require the PNRC to incorporate under the general law is to disregard its unique standing under international conventions. It also ignores the very basic premise for the PNRC’s creation.
Finally, Justice Abad held that the main issue in this case is whether the office of 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. The resolution of this question, he said, lies in the determination of whether or not the PNRC is in fact a GOCC. [Since] the PNRC is not a GOCC, but a sui generis entity that has no legal equivalent under any of our statutes, [respondent] Senator Gordon did not forfeit his Senate seat under the constitutional prohibition. In view of the PNRC’s sui generis character, the Court need not even dwell on the issue of whether or not the PNRC Charter was validly enacted. Congress is proscribed only from creating private corporations which, as demonstrated, the PNRC is not. The issue of constitutionality was not raised by any of the original parties and could have been avoided in the first place. Neither was the PNRC a party to the case, despite being the entity whose creation was declared void under the main decision.
The minority opinion
In resolving the motions for reconsideration, Justice Carpio agreed that generally, the Court will not pass upon a constitutional question unless such question is raised by the parties. Citing jurisprudence, however, he noted that his rule is not inflexible. In this case, the constitutional issue was inevitably thrust upon the Court upon its finding that the PNRC is a private corporation, whose creation by a special charter is proscribed by the Constitution. In view of the Court’s finding that the PNRC is a private corporation, it was imperative for the Court to address the issue of the [validity of the] creation of the PNRC through a special charter. To declare the PNRC, a creation of RA 95, a private corporation without declaring RA 95 unconstitutional would mean that Congress can create a private corporation through a special law. Moreover, the fact that the constitutionality of RA 95 has not been questioned for more than 60 years does not mean that it could no longer be declared unconstitutional. One is not estopped from assailing the validity of a law just because such law has been relied upon in the past and all that time has not been attacked as unconstitutional.
Hence, the PNRC cannot claim that it is sui generis just because it is a private organization performing certain public or governmental functions since all private charitable organizations are doing public service or activities that also constitute governmental functions. That the PNRC is rendering public service does not exempt it from the constitutional prohibition against the creation of a private corporation through a special law since the PNRC is, admittedly, still a private organization. The express prohibition against the creation of private corporations by special charter cannot be disregarded just because a private corporation claims to be sui generis. The constitutional prohibition admits of no exception.
The conditions for recognition of National Societies do not require that the State itself create the National Society [the PNRC in this case] through a special charter. The absence of such requirement is proper and necessary considering the Movement’s emphasis on the importance of maintaining the independence of the National Society, free from any form of intervention from the government. What is important is that the National Society is officially recognized by the government as auxiliary to the public authorities in the humanitarian services of the government. This the Philippine government can accomplish even without creating the PNRC through a special charter.
Justice Carpio agreed with the PNRC that it is a private organization performing public functions. Precisely because it is a private organization, the PNRC charter is violative of the constitutional proscription against the creation of private corporations by special law. Nevertheless, keeping in mind the treaty obligations of the Philippines under the Geneva Conventions, the assailed Decision only held void those provisions of the PNRC charter which create PNRC as a private corporation or grant it corporate powers. The other provisions respecting the government’s treaty obligations [were not struck down and] remain valid. Since the constitutional prohibition admits of no exception, this Court has no recourse but to apply the prohibition to the present case. The Court, he said, has no power to make PNRC an exception to Section 16, Article XII of the 1987 Constitution.
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