Dissension in the Court: January 2011

The following is a decision promulgated by the High Court in January 2011 where at least one Justice felt compelled to express his or her dissent from the decision penned by the ponente.

1.         Sui Generis (Leonardo-de Castro vs. Carpio)

The case of Dante V. Liban, et al vs. Richard J. Gordon originated from a petition filed by petitioners to declare Gordon as having forfeited his seat in the Senate when he accepted the chairmanship of the Board of Governors of the Philippine National Red Cross (PNRC). According to the petitioners, Gordon had violated Section 13, Article VI of the 1987 Constitution, which 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.

In its original decision, the Supreme Court ruled that Senator Gordon did not commit such a violation because the PNRC, having been established in March 22, 1947 through Republic Act No. 95, was not a government-owned or controlled corporation, but a private corporation or organization albeit performing public functions.

That ruling, however, engendered a resultant query as to whether or not then, the PNRC was unconstitutionally established by the legislature given that under Section 7, Article XIV of the then effective 1935 Constitution, it was provided that:

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 and controlled by the Government or any subdivision or instrumentality thereof.

Similar prohibitions are found in Article XIV, Section 4 of the 1973 Constitution and Article XII, Section 16 of the 1987 Constitution.  The latter reads:

SECTION 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

As a result, while exonerating the Senator, the Supreme Court was compelled to declare most of the first thirteen provisions of the PNRC charter as void to the extent that they created the PNRC as a private corporation.

It was this latter portion of the decision which Gordon and the PNRC as intervenor, asked the High Court to reconsider.

In speaking for the majority, Justice Teresita Leonardo-de Castro, as ponente of the decision on the motions for reconsideration filed by Gordon and PNRC, first conceded that the constitutionality of the PNRC was never brought up as an issue by the petitioners.  Accordingly, on the basis of existing jurisprudence which asserts that the issue of unconstitutionality should not be touched upon unless it is the very lis mota or unless such question is raised by the parties, the Supreme Court “should not have declared void certain sections of R.A. No. 95, as amended by Presidential Decree (P.D.) Nos. 1264 and 1643, the PNRC Charter.  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.

Justice Leonardo-de Castro specifically pointed out that the constitutionality of the PNRC charter had never been challenged and had in fact been amended several times by Congress.  These actions by the legislature, relating as they do to the PNRC’s very corporate existence notwithstanding the constitutional proscription on the creation of private corporations by law, constitutes a recognition that the PNRC is not strictly in the nature of a private corporation contemplated by the aforesaid constitutional ban.

As the ponente states:

“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 to it by the State and the international community.  There is merit in PNRC’s contention that its structure is sui generis.”

Citing a 2004 ruling in Feliciano v. Commission on Audit, the majority decision noted 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.  This, according to the High Court, is not the case with the PNRC Charter 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.  A strict and mechanical interpretation of Article XII, Section 16 of the 1987 Constitution will, wrote Justice Leonardo-de Castro, hinder the State in adopting measures that will serve the public good or national interest.

Accordingly, as a sui generis entity, the PNRC is neither a subdivision, agency, or instrumentality of the government, nor a government-owned or -controlled corporation or a subsidiary thereof (and therefore Senator Gordon is not in breach of the Constitution for having accepted the chairmanship of the PNRC).  That it is not such a government entity 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.

The sole dissenter, Antonio T. Carpio first took exception to the adherence by the majority to the view that the Supreme Court should refrain from ruling on matters of constitutionality where the parties did not raise the same as an issue.  On this point, Justice Caprio posited that the constitutional issue was inevitable because of the Court’s decision that the PNRC was a private corporation established through a special law. “The Court could not declare the PNRC a private corporation created by the special law without running afoul of Section 16, Article XII of the 1987 Constitution. To declare the PNRC a private corporation necessarily meant declaring RA 95 unconstitutional. 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. This the Court could not do.

Besides, according to the dissent, the Supreme Court allowed the PNRC to intervene to argue on the validity of its charter.  Accordingly, the PNRC had actually become a party to the case, raising the specific issue of the constitutionality of the PNRC charter.  Although the original parties did not raise as an issue the constitutionality of Republic Act 95, they were still afforded the opportunity to be heard on this constitutional issue when they filed their respective motions for reconsideration.

Justice Carpio then took the contrary view that the PNRC charter suffered constitutional infirmities, despite the arguments raised by the PNRC as to its nature as an entity.  On this issue, the dissent said:

All private charitable organizations are doing public service or activities that also constitute governmental functions.  Hence, the PNRC cannot claim that it is sui generis just because it is a private organization performing certain public or 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 under Section 16, Article XII of the 1987 Constitution cannot be disregarded just because a private corporation claims to be sui generis. The constitutional prohibition admits of no exception.

Nevertheless, according to the dissenter, because of the treaty obligations of the Philippines under the Geneva Conventions, only those provisions of the PNRC charter which create PNRC as a private corporation or grant it corporate powers should be declared void. The other provisions respecting the government’s treaty obligations remain valid.

(Dante V. Liban, et al. vs. Richard J. Gordon, respondent, Philippine National Red Cross, intervenor; G.R. No. 175352, January 18, 2011. See dissenting opinion here.)

(author’s note:  This author suspects that an entity such as the Philippine National Red Cross was not the sort of “private corporation” that the framers of the Constitution had in mind when it decreed that the Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations.  Be that as it may, this author wonders why Congress did not consider establishing the Philippine National Red Cross as some form of “association” or “institution” as opposed to a “corporation” given that the Constitution only restricts Congress from establishing “private corporations.”  Under Article 44 of the Civil Code, an association or an institution, like a corporation, could have a juridical personality.  Surely, Congress had that power.)

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