What happens to PNRC after Liban v. Gordon

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Liban v. Gordon
By Atty. Rey Cartojano

The recent ruling of the Supreme Court in Liban vs. Gordon raises many problematic issues concerning the fate of the Red Cross movement in the Philippines.

The Supreme Court in a 7-5 ruling justified the holding by Senator Richard Gordon of the Chairmanship of the Board of Governors of the Philippine National Red Cross (PNRC) by nullifying almost all provisions of Republic Act No. 95, as amended, otherwise known as the PNRC Charter.

Reversing its earlier position in earlier cases that PNRC is a government- owned or controlled corporation, the Supreme Court through Associate Justice Antonio Carpio found that PNRC is a “privately owned, privately funded, and privately run charitable organization”, and as such, the PNRC Charter passed by Congress suffers constitutional infirmity in the light of Article XII, Section 16 prohibiting Congress from passing a special law creating private corporations.

Had the Supreme Court found that PNRC is a public corporation, or a government-owned or controlled corporation as enunciated its earlier decisions, Senator Gordon could have forfeited his Senate seat in the light of Artice VI, Section 13 of the Constitution prohibiting members of Congress from holding office in government, or any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries, during their term without forfeiting their seats.

But the majority ruling raises more questions than answers.

In a strong dissenting opinion, Associate Justice Antonio Eduardo Nachura, concurred in by four (4) other Justices, maintained that Senator Gordon violates the Constitution by holding the chairmanship of the Board of Governors of the Philippine National Red Cross (PNRC) as the latter is a government-owned or controlled corporation, if not a government instrumentality.

The dissenting opinion faulted the majority in its sole reliance of categorizing a corporation as government-owned or controlled through the literal control test, especially in the 51% control of capital stock in case of stock corporations, as defined in Section 2(13) of Executive Order No. 292, otherwise known as the Administrative Code of 1987, as the said provision provides further a qualification that a GOCC may be categorized “for purposes of the exercise and discharge of their respective powers, functions and responsibilities”.

In fine, the dissenting opinion said that “a GOCC may either be a stock or non-stock corporation, or that it ‘may be further categorized’, suggesting that the definition provided in the Administrative Code is broad enough to admit of other distinctions as to the kinds of GOCCs”.

The dissenting opinion said that PNRC is at the very least a government instrumentality, citing Section 2(10) of Executive Order No. 292, to wit:

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. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations.
There is information that a motion for reconsideration is being considered to be filed with the Supreme Court. A change of heart of one Justice will reverse the tide against Senator Gordon, as there will be a deadlock in the High Court, thus paving for the possibility that the PNRC Charter will be upheld as constitutional, as there is always the presumption of the constitutionality of congressional enactments in cases of deadlocks in Supreme Court rulings.

Not only that, the appointment of two (2) additional Justices in the High Tribunal will change the voting alignments, as there is that possibility of another deadlock even assuming that the present majority of seven (7) Justices will stick to their positions.

Assuming that the present Supreme Court ruling will be sustained, we have problematic scenarios for the Philippine Red Cross movement.

First, the PNRC organization as defined in Republic Act No. 95 will be dissolved, as a necessary consequence of the ruling that its Charter is null and void.

Second, the Board of Governors as constituted under the PNRC Charter will also be dissolved, putting in a possible state of hiatus and confusion the management and operations of the PNRC.

An interesting question is whether or not the existing Board of Governors, as constituted, can continue governing the operations of the ‘un-chartered or unincorporated’ PNRC, especially in the light of the fact that some of its members are appointees of the President. Can the Chapters call an organizational meeting to reconstitute a new Board of Governors?

A new and recent twist is the pending Senate Bill No. 3285 and House Bill No. 6509 which both propose to amend Republic Act No. 95, or the PNRC Charter.

At the outset, the passage of the new Red Cross bill will suffer the same fate as Republic Act No. 95 if we assume the reasoning of the majority in the Liban v. Gordon case, as many will consider the new Red Cross bill as an exercise in futility. But on second thought, is it really an exercise in futility? There is the view that even with the affirmation of the majority ruling by the Supreme Court, it will take possibly years for the Supreme Court to declare again this new Red Cross law as unconstitutional, and there is always that possibility that the High Court may again change its position depending on the changes in the composition of the Justices.

Another complication in all these legal discussions is the effect of the scenarios on the fate of Senator Gordon as Chairman of the Board of Governors of the PNRC. Senator Gordon, a declared candidate for President in the 2010 elections, appears to be consolidating his hold on the PNRC through his open support of the proposed new Red Cross bill, but this has serious back lash on many Red Cross stakeholders who are not in conformity with how Senator Gordon has politicized an organization that is supposed to be independent, neutral and apolitical.

The final resolution of Liban vs. Gordon may still provide the chance to put an end to the perceived growing politicization of Red Cross if and when the Supreme Court will have a change of heart and consider PNRC as a government-owned or controlled corporation, or a government instrumentality.