G.R. No. 175352

EN BANC

G.R. No. 175352 --- DANTE V. LIBAN, REYNALDO M. BERNARDO and SALVADOR M. VIARI, Petitioners, versus RICHARD J. GORDON, Respondent.

Promulgated:

January 18, 2011

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CONCURRING OPINION

ABAD, J.:

On July 15, 2009 the Court rendered a decision partially voiding Republic Act 95 (R.A. 95), the charter of the Philippine National Red Cross (PNRC) as amended by Presidential Decrees 1264 and 1643 (P.D. 1264 and 1643). The Court ruled that Congress enacted the PNRC Charter in violation of Section 7, Article XIV of the 1935 Constitution, which states:

SEC. 7. The 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 based its decision on a finding that the PNRC is a private corporation which Congress could not create by special law. Like any other private corporation, the PNRC can only be formed and organized under a general enabling law like the Corporation Code.

The decision stemmed from a petition that petitioners Dante Liban, et al (Liban, et al) filed with the Court to declare respondent Senator Richard J. Gordon (Sen. Gordon) as having forfeited his Senate seat under Section 13, Article VI of the 1987 Constitution.[1] Sen. Gordon had been elected Chairman of the Board of Governors of the PNRC, which the Court classified in Camporedondo v. NLRC[2] as a government-owned and controlled corporation (GOCC). Consequently, he automatically forfeited his Senate seat for holding an incompatible office in a GOCC.

Parenthetically, in resolving the case, the Court held that Liban, et al had no standing to file the petition, as it is a quo warranto case that could only be brought by the Government or an individual who claims entitlement to the public office. Since Liban, et al did not seek the Senator’s seat, they were not proper parties to bring the action.

Despite Liban, et al’s lack of standing, however, the Court chose to address the merits of their petition. The main issue was: “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.”[3]

According to the Court, the PNRC is a private organization performing public functions. Congress established it in adherence to the Geneva Conventions for the purpose contemplated under the treaties. The PNRC is a member National Society of the International Red Cross and Red Crescent Movement and is guided and bound by its seven Fundamental Principles.[4] To be recognized as a National Society, the Statutes of the International Red Cross and Red Crescent Movement required that the PNRC be autonomous or independent.

Due to this requirement, the PNRC must not appear to be an instrument or agency of the government for, “otherwise, it cannot merit the trust of all and cannot effectively carry out its mission.”[5] It must, in case of invasion or an internal war, maintain its neutrality and independence to be able to fulfill its humanitarian tasks. It cannot choose to treat only the wounded on one side.

Moreover, the PNRC cannot be government-owned because it does not receive appropriations from Congress or possess government assets. It is funded by voluntary donations from private contributors. The government does not have control over its affairs. While the President of the Philippines appoints six of the PNRC Board of Governors, the overwhelming majority of the thirty-member board is elected by private sector members. The PNRC Chairman is not appointed by or under the control of the President of the Philippines. He is elected by the organization’s governing board. These all prove that the position of PNRC Chairman is a private, not a government office.

Additionally, the Court held that the Camporedondo ruling relied on by Liban, et al was erroneous. The Court’s conclusion in that case—that the PNRC is a GOCC—is based solely on the fact that it was Congress which created PNRC under a special law. The case failed to consider, however, that the 1987 Administrative Code defines a GOCC as “any agency organized as a stock or non-stock corporation, vested with functions relating to public needs x x x, and owned by the Government directly or through its instrumentalities x x x.”[6] Since the government did not own PNRC, it cannot be a GOCC under such definition.

The Court thus concluded that Sen. Gordon did not forfeit his Senate seat.

As stated earlier, the Court partially voided the PNRC Charter on the ground that Congress has been constitutionally prohibited from creating private corporations by special law. The Court declared as void those provisions of the PNRC Charter that related to its creation and those that granted it corporate powers.[7] What remained of the Charter, said the Court,[8] served “as recognition by the State that the unincorporated PNRC is the local National Society of the International Red Cross and Red Crescent Movement.” The surviving provisions supposedly implemented the Philippine Government’s treaty obligations under Article 4(5) of the Statutes of the Movement which required a National Society to be “duly recognized by the legal government of its country on the basis of the Geneva Conventions and of the national legislation.”[9]

Justice Antonio Eduardo B. Nachura dissented and was joined by four other members of the Court.[10] First, he argued that Liban, et al had standing to file the petition, which he characterized as one for prohibition and not quo warranto. The petition actually sought an injunction against a continuing violation of the Constitution and involved a constitutional issue with great impact on public interest. Thus, the petition deserved the attention of the Court in view of its seriousness, novelty, and weight as precedent.

According to Justice Nachura, since no private corporation can have a special charter under the Constitution, it follows that the PNRC is a GOCC. As held in Camporedondo and Baluyot v. Holganza,[11] the test for determining whether a corporation is a GOCC is simply whether it was created under its own charter for the exercise of a public function or 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 x x x.”[12] 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.”[13] 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, the Philippines will be shirking its obligations under the Geneva Conventions.

The dissent finally concluded that Sen. Gordon forfeited his Senate seat for holding two incompatible offices.

Although the main ruling favored Sen. Gordon, he filed a motion for clarification and reconsideration of the Court’s decision.[14] He said that the Court decided the case beyond what was necessary, considering that the parties never raised the constitutionality of the PNRC Charter as an issue. He invoked the rule that the Court will not pass upon a constitutional issue unless it is the very lis mota of the case or if it can be disposed of on some other ground. Since the Court held that Liban, et al had no personality to file the petition, the Court should have simply refrained from delving into the constitutionality of the PNRC Charter. Sen. Gordon thus submits that the Court should regard the declaration of unconstitutionality of the PNRC Charter obiter dictum.

Liban, et al also filed a motion for reconsideration of the Court’s decision, essentially adopting the thesis of Justice Nachura.[15]

Subsequently, the PNRC, which was not a party to the case, sought to intervene and filed a motion for reconsideration of the Court’s decision.[16] It claimed that, although the Court annulled its very existence, it did not give the PNRC the chance to defend itself and prove the validity of its creation. The PNRC pointed out that P.D. 1264 and 1643 completely repealed R.A. 95. Consequently, the PNRC no longer owed its creation to Congress but to President Marcos pursuant to his power of executive legislation. The constitutional bar is on Congress.

As for its organizational nature, the PNRC asserts that it is neither a private nor a government corporation but a sui generis entity, a unique being with no equivalent in corporate organizations. While the PNRC performs certain public services, its neutrality and independence would be compromised if it were to be deemed as a government-owned corporation or instrumentality. Besides, it is in fact neither owned nor controlled by the government.

The PNRC also stressed that, although it has private characteristics, it was not created for profit or gain but in compliance with treaty obligations under the Geneva Conventions. As such, it is an auxiliary of government in the performance of humanitarian functions under international law.

To support its stand that it is a sui generis entity, the PNRC submitted a position paper[17] prepared by the International Federation of Red Cross and Red Crescent Societies (the Federation) explaining the specific nature of National Societies like the PNRC.

There is a need to examine the Court’s decision in this case considering its far reaching effects. Allowing such decision to stand will create innumerable mischief that would hamper the PNRC’s operations. With a void juridical personality, it cannot open a bank account, issue tax-exempt receipts for donations, or enter into contracts for delivery of rescue reliefs like blood, medicine, and food. Its officers would be exposed to suits in their personal capacities. The validity of its past transactions would be open to scrutiny and challenge. Neither the country nor the PNRC needs this.

FIRST. Congress created the PNRC to comply with the country’s commitments under the Geneva Conventions. The treaties envisioned the establishment in each country of a voluntary organization that would assist in caring for the wounded and sick of the armed forces during times of armed conflict. Upon proclaiming its adherence to the Geneva Conventions, the Republic of the Philippines forthwith created the PNRC for the purpose contemplated by the treaties. Its creation was not privately motivated, but borne of the Republic’s observance of treaty obligations. The “whereas clause” of P.D. 1643 or the revised PNRC Charter lays down this basic premise:

x x x x

WHEREAS, more than one hundred forty nations of the world have ratified or adhered to the Geneva Conventions of August 12, 1949 for the Amelioration of the Condition of the Wounded and Sick of Armed Forces and at Sea, The Prisoners of War, and The Civilian Population in Time of War referred to in this Charter as the Geneva Conventions;

WHEREAS, the Republic of the Philippines became an independent nation on July 4, 1946, and proclaimed on February 14, 1947 its adherence to the Geneva Conventions of 1929, and by the action, indicated its desire to participate with the nations of the world in mitigating the suffering caused by war and to establish in the Philippines a voluntary organization for that purpose as contemplated by the Geneva Conventions;

x x x x

It is thus evident that the PNRC’s creation derived primarily from the Geneva Conventions. When Congress created the PNRC, it did not intend to form either a private or government-owned corporation with the usual powers and attributes that such entities might possess. Rather, it set out to form an organization that would be responsive to the requirements of the Geneva Conventions. Section 1 of the PNRC Charter thus provides:

SECTION 1. There is hereby created in the Republic of the Philippines a body corporate and politic to be the voluntary organization officially designated to assist the Republic of the Philippines in discharging the obligations set forth in the Geneva Conventions and to perform such other duties as are inherent upon a national Red Cross Society. The national headquarters of this Corporation shall be located in Metropolitan Manila.

As a voluntary organization tasked to assist the Republic in fulfilling its commitments under the Geneva Conventions, 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.[18] Since the impetus for the PNRC’s creation draws from the country’s adherence to the treaties, it is in this context that its organizational nature should be viewed and understood.

SECOND. The PNRC is a National Society of the Red Cross Movement and is recognized by both the International Committee of the Red Cross (ICRC) and the International Federation of Red Cross and Red Crescent Societies. The PNRC is regarded as a component of the Movement with concomitant rights and obligations under international humanitarian law. Its status as a recognized National Society has imbued it with attributes that ordinary private corporations or government entities do not possess. It is a sui generis entity that has no precise legal equivalent under our statutes.

The PNRC is not an ordinary private corporation within the meaning of the Corporation Code. As stated earlier, its creation was not privately motivated but originated from the State’s obligation to comply with international law. The State organized the PNRC to assist it in discharging its commitments under the Geneva Conventions as an “auxiliary of the public authorities in the humanitarian field.”[19] It was not established by private individuals for profit or gain, but by the State itself pursuant to the objectives of international humanitarian law.

The PNRC is not an ordinary charitable organization, foundation, or non-governmental organization (NGO). As a component of the international Movement, it enjoys protection not afforded to any charitable organization or NGO under the Geneva Conventions. For instance, Articles 24 and 26 of the First Geneva Convention vests National Society personnel with the same status as the armed forces medical services in times of armed conflict, subject to certain conditions. Also, only recognized National Societies enjoy exclusive use of the protective red cross emblem in conformity with the treaties.[20] National Societies like the PNRC are thus directly regulated by international humanitarian law, unlike ordinary charitable organizations or NGOs.

The PNRC also has rights and obligations under international humanitarian law that ordinary charitable organizations and NGOs do not have. Foremost of these rights is the privilege to participate as a full member in the International Conference of the Red Cross and Red Crescent, in which States also participate as members pursuant to the Geneva Conventions.[21] States Parties and all components of the Movement attend the conference to discuss humanitarian matters on equal footing.[22] No other organization has this exceptional privilege in relation to a State.

Significantly, both States Parties and the Movement’s components adopt the Statutes of the Movement during the conference held every four (4) years.[23] The Statutes underscore the special relationship that National Societies have in relation to the State. Article 2 of the Statutes lays down reciprocal rights and obligations between States Parties to the Geneva Conventions and the National Societies, thus:

1. The States Parties to the Geneva Conventions cooperate with the components of the Movement in accordance with these Conventions, the present Statutes and the resolutions of the International Conference.

2. Each State shall promote the establishment on its territory of a National Society and encourage its development.

3. The States, in particular those which have recognized the National Society constituted on their territory, support, whenever possible, the work of the components of the Movement. The same components, in their turn and in accordance with their respective statutes, support as far as possible humanitarian activities of the States.

4. The States shall at all times respect the adherence by all components of the Movement to the Fundamental Principles.

5. The implementation of the present Statutes by the components of the Movement shall not affect the sovereignty of States, with due respect for the provisions of international humanitarian law.

As can be seen, therefore, the PNRC is unlike ordinary charitable organizations or NGOs in many respects due to the distinct features it directly derives from international law. Although it is a local creation, it was so organized as a national Red Cross Society with direct reference to the Geneva Conventions. The PNRC was explicitly “designated as the organization which is authorized to act in matters of relief under said Convention.”[24] Consequently, its organizational status cannot be assessed independently of the treaties that prompted its establishment.

The PNRC cannot also be regarded as a government corporation or instrumentality. To begin with, it is not owned or controlled by the government or part of the government machinery. The conditions for its recognition as a National Society also militate against its classification as a government entity. Article 4 (4) of the Statutes requires a National Society to “(h)ave an autonomous status which allows it to operate in conformity with the Fundamental Principles of the Movement.”

Thus, a National Society must maintain its impartiality, neutrality, and independence. In its mission “to prevent and alleviate human suffering wherever it may be found,” it must make “no discrimination as to nationality, race, religious beliefs, class or political opinions.” It must enjoy the confidence of all and not take sides in hostilities or controversies of a political, racial, religious or ideological nature.[25] It cannot be seen, therefore, as an instrument of the State or under governmental control.

The Statutes require, however, that a National Society like the PNRC “(b)e duly recognized by the legal government of its country on the basis of the Geneva Conventions and of the national legislation as a voluntary aid society, auxiliary to the public authorities in the humanitarian field.”[26] This signifies a partnership with government in implementing State obligations based on international humanitarian law.[27]

The status of being an “auxiliary” of government in the humanitarian field is a precondition to a National Society’s existence and recognition as a component of the Movement. In its position paper, the Federation explained that the status of auxiliary “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 other words, the status confers upon the PNRC the duty to be the government’s humanitarian partner while, at the same time, remaining independent and free from government intervention. As a recognized National Society, the PNRC must be autonomous, even as it assists government in the discharge of its humanitarian obligations.

Notably, the PNRC Charter is also reflective of the organization’s dual nature. It does not only vest the PNRC with corporate powers, but imposes upon it duties related to the performance of government functions. Under Section 1 of the charter, the PNRC is “officially designated to assist the Republic of the Philippines in discharging the obligations set forth in the Geneva Conventions.” As such, it is obligated “to provide volunteer aid to the sick and wounded of the armed forces in time of war” and “to perform all duties devolving upon the Corporation as a result of the adherence of the Republic of the Philippines to the said Convention.”

Moreover, the charter clearly established the PNRC as a National Red Cross Society pursuant to the treaties and Statutes of the Movement. It was authorized “to act in such matters between similar national societies of other governments and the governments and people and the Armed Forces of the Republic of the Philippines.” The PNRC was to establish and maintain a system of national and international relief and to apply the same in meeting natural disasters, all in the spirit of the Geneva Conventions.

In the pursuit of its humanitarian tasks, the PNRC was thus granted the power of perpetual succession, the capacity to sue and be sued, and the power to hold real and personal property. It was authorized to adopt a seal, but was given exclusive use of the Red Cross emblem and badge in accordance with the treaties. It may likewise adopt by-laws and regulations and do all acts necessary to carry its purposes into effect.

The PNRC is financed primarily by contributions obtained through solicitation campaigns and private donations. And yet, it is required to submit to the President of the Philippines an annual report of its activities including its financial condition, receipts and disbursements. It is allotted one annual national lottery draw and is exempt from taxes, duties, and fees on importations and purchases, as well as on donations for its disaster relief work and other services.

Consequently, 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.

THIRD. 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.

In Feliciano v. Commission on Audit,[28] the Court explained that the purpose of the ban against the creation of private corporations by special charter is to prevent the grant to certain individuals, families, or groups of special privileges that are denied to other citizens. The creation of the PNRC does not traverse the purpose of the prohibition, as Congress established the PNRC to comply with State obligations under international law. The PNRC Charter is simply a manifestation of the State’s adherence to the Geneva Conventions. By enacting the PNRC Charter, Congress merely implemented the will of the State to join other nations of the world in the humanitarian cause.

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.

FOURTH. The main issue in this case is whether or not 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 lies in the determination of whether or not the PNRC is in fact a GOCC. As explained earlier, the PNRC is not a GOCC, but a sui generis entity that has no legal equivalent under any of our statutes. Consequently, 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.

Finally, the sui generis character of the PNRC does not necessarily overturn the rulings of the Court in Camporedondo and Baluyot. The PNRC’s exceptional nature admits of the conclusions reached in those cases that the PNRC is a GOCC for the purpose of enforcement of labor laws and penal statutes. The PNRC’s sui generis character compels us to approach controversies involving the PNRC on a case-to-case basis, bearing in mind its distinct nature, purposes and special functions. Rules that govern traditional private or public entities may thus be adjusted in relation to the PNRC and in accordance with the circumstances of each case.

ACCORDINGLY, I concur in the decision written for the majority by Justice Teresita J. Leonardo-De Castro.

ROBERTO A. ABAD

Associate Justice

[1] The provision 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. Neither shall he be appointed to any office which may have been created or the emoluments thereof increased during the term for which he was elected.

[2] Camporedondo v. National Labor Relations Commission, 370 Phil. 901 (1999).

[4] These principles are: Humanity, Impartiality, Neutrality, Independence, Voluntary Service, Unity and Universality.

[6] Section 2(13), Introductory Provisions, 1987 Administrative Code.

[7] These void provisions are Sections 1 to 13 of the PNRC Charter.

[8] These include Sections 4(b) and (c), 14, 15, 16 and 17 of the PNRC Charter.

[10] All in all, seven (7) members of the Court voted in favor of the main decision penned by Justice Antonio T. Carpio, while five (5) members dissented. One (1) associate justice took no part.

[13] Section 2 (10), Introductory Provisions, 1987 Administrative Code.

[18] See The Relevance of the 50^th Anniversary of the Geneva Conventions to National Red Cross and Red Crescent Societies: Reviewing the Past to Address the Future; International Review of the Red Cross 835, pp. 649-668 by Michael A. Meyer (http./www.icrc.org/web/eng/siteen0.nsf/htmlall/57jq3j?opendocument; last visited July 12, 2010).

[19] Article 4 (3), Statutes of the Movement.

[20] Article 44 (2) of the First Geneva Convention.

[22] See The Legal Status of National Red Cross and Red Crescent Societies by Christophe Lanord; (http://www.icrc.org/web/eng/siteen0.nsf/html/57JQT9; last visited June 25, 2010).

[27] See National Red Cross and Red Crescent Societies as Auxiliaries to the Public Authorities in the Humanitarian Field: Conclusions from the Study Undertaken by the International Federation of Red Cross and Red Crescent Societies; Prepared by the International Federation of Red cross and Red Crescent Societies in consultation with the International Committee of the Red Cross (http./www.icrc.org/web/eng/siteen0.nsf/htmlall/5xrfbm?opendocument; last visited July 12, 2010).