Baluyot vs. Holganza

The Philippine National Red Cross is a government-owned or controlled corporation with an original charter under Republic Act No. 95, as amended, and its officers and employees are subject to the jurisdiction of the Ombudsman under Section 13 of Republic Act No. 6770. The controlling test is whether the corporation was created by its own charter for the exercise of a public function or by incorporation under the general corporation law.

The Philippine National Red Cross operates pursuant to Republic Act No. 95, as amended, as its charter. Francisca S. Baluyot served as administrator of its Bohol chapter, while Paul E. Holganza served as a member of the board of directors of that chapter. Under Section 13 of Republic Act No. 6770, otherwise known as The Ombudsman Act of 1989, the Ombudsman is mandated to act on complaints against officers or employees of the Government, including those of government-owned or controlled corporations.

Francisca S. Baluyot was the administrator of the Bohol chapter of the Philippine National Red Cross. During a spot audit conducted on March 21, 1977 by a team of auditors from PNRC headquarters, a cash shortage of P154,350.13 was discovered in the funds of the Bohol chapter, for which Baluyot was held accountable.

Thereafter, on January 8, 1998, Paul E. Holganza, in his capacity as a member of the board of directors of the Bohol chapter, filed an affidavit-complaint before the Office of the Ombudsman charging Baluyot with malversation under Article 217 of the Revised Penal Code. The criminal complaint was docketed as OMB-VIS-CRIM-98-0022, while upon recommendation of Graft Investigation Officer I Anna Marie P. Militante, an administrative docket for dishonesty was also opened as OMB-VIS-ADM-98-0063.

On February 6, 1998, the Office of the Ombudsman issued an Order requiring Baluyot to file her counter-affidavit to the charges of malversation and dishonesty within ten days from notice, warning that failure to comply would be construed as a waiver to refute the charges and that the case would be resolved on the evidence on record. On March 14, 1998, Baluyot filed her counter-affidavit, raising principally the defense that the Ombudsman had no jurisdiction because the PNRC was not a government-owned or controlled corporation.

On August 21, 1998, the Ombudsman denied the motion to dismiss and scheduled a clarificatory hearing on the criminal aspect and a preliminary conference on the administrative aspect for September 2, 1998. Baluyot received the order on August 26, 1998 and filed a motion for reconsideration the next day, which was denied by Order dated October 28, 1998.

• Private Character of the PNRC: Petitioner argued that the Ombudsman has no jurisdiction over the subject matter because the PNRC is allegedly a private voluntary organization, not a government-owned or controlled corporation.
• Absence of Government Funding and Audit: Petitioner maintained that the private character is shown by the circumstances that the PNRC does not receive budgetary support from the government, that money given to it by the government and its instrumentalities become its private funds, that personnel salaries and emoluments come from yearly fund campaigns, private contributions and rentals from its properties, and that it is not audited by the Commission on Audit.
• International Affiliation and Internal Discipline: Petitioner argued that the PNRC falls under the International Federation of Red Cross, a Switzerland-based organization, and that the power to discipline employees accused of misconduct, malfeasance, or immorality belongs to the PNRC Secretary General by virtue of Section "G", Article IX of its by-laws.
• Neutrality and Precedent: Petitioner maintained that to classify the PNRC as a government-owned or controlled corporation would create a dangerous precedent as it would lose its neutrality, independence and impartiality.

• Status of the PNRC and Jurisdiction of the Ombudsman: Whether the Philippine National Red Cross is a private voluntary organization outside the jurisdiction of the Ombudsman, or a government-owned or controlled corporation whose officers and employees are subject to the Ombudsman's administrative, civil and criminal jurisdiction.

• Status of the PNRC and Jurisdiction of the Ombudsman: No, the PNRC is not private. It is a government-owned or controlled corporation with an original charter under Republic Act No. 95, as amended, and the Ombudsman has jurisdiction over its officers and employees pursuant to Section 13 of Republic Act No. 6770.

• Status of the PNRC and Jurisdiction of the Ombudsman: The test to determine whether a corporation is government-owned or controlled, or private in nature, is whether it was created by its own charter for the exercise of a public function or by incorporation under the general corporation law. Those with special charters are government corporations subject to its provisions. Applied here, the PNRC has an original charter under Republic Act No. 95, as amended, and was not impliedly converted to a private corporation simply because its charter was amended to vest in it authority to secure loans, to be exempted from duties, taxes, fees and other charges on importations and purchases for its exclusive use, on donations for disaster relief work and other services and in benefits and fund raising drives, and to be allotted one lottery draw a year by the Philippine Charity Sweepstakes Office for disaster relief operation in addition to existing lottery draws for blood program. Practically the same issue on almost identical facts had been resolved in Camporedondo vs. National Labor Relations Commission, et al., involving a PNRC chapter administrator and a shortage in chapter funds. Accordingly, jurisdiction lies with the Ombudsman, whose mandate under Section 13 of Republic Act No. 6770 extends to officers or employees of government-owned or controlled corporations for enforcement of administrative, civil and criminal liability where evidence warrants.

• Government-Owned or Controlled Corporation — Charter Test — A corporation is government-owned or controlled, rather than private, if created by its own charter for the exercise of a public function, as distinguished from creation by incorporation under the general corporation law. Those with special charters are government corporations subject to its provisions, and its employees are under the jurisdiction of the Civil Service Commission and are compulsory members of the Government Service Insurance System. The doctrine was applied to hold that the PNRC, chartered under Republic Act No. 95, as amended, remained a government-owned or controlled corporation despite amendments granting loan authority, tax exemptions, and lottery allotments.
• Ombudsman Mandate Over Government-Owned or Controlled Corporations — Under Section 13 of Republic Act No. 6770, the Ombudsman and his Deputies, as protectors of the people, shall act promptly on complaints against officers or employees of the Government, or of any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations, and enforce their administrative, civil and criminal liability in every case where evidence warrants. The doctrine was applied to sustain Ombudsman jurisdiction over a PNRC chapter administrator charged with malversation and dishonesty.

• "The test to determine whether a corporation is government owned or controlled, or private in nature is simple. Is it created by its own charter for the exercise of a public function, or by incorporation under the general corporation law?" — States the controlling test for distinguishing government corporations from private corporations, applied to classify the PNRC.
• "The PNRC was not 'impliedly converted to a private corporation' simply because its charter was amended to vest in it the authority to secure loans, be exempted from payment of all duties, taxes, fees and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its disaster relief work and other services and in its benefits and fund raising drives, and be allotted one lottery draw a year by the Philippine Charity Sweepstakes Office for the support of its disaster relief operation in addition to its existing lottery draws for blood program." — Rejects the argument that privileges and amendments transformed the PNRC into a private entity.
• "Sec. 13. Mandate. — The Ombudsman and his Deputies, as protectors of the people, shall act promptly on complaints filed in any form or manner against officers or employees of the Government, or of any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations, and enforce their administrative, civil and criminal liability in ever case where the evidence warrants in order to promote efficient service by the Government to the people." — Quotes the statutory basis for Ombudsman jurisdiction over officers and employees of government-owned or controlled corporations.

• Camporedondo vs. National Labor Relations Commission, et al., G.R. No. 129049, August 6, 1999 — Followed as controlling precedent on almost identical facts involving a PNRC chapter administrator and a shortage in chapter funds, holding that the PNRC is a government-owned or controlled corporation with an original charter under Republic Act No. 95, as amended.

• Section 13, Republic Act No. 6770 (The Ombudsman Act of 1989) — Provides the Ombudsman's mandate over officers or employees of the Government, including government-owned or controlled corporations; applied to sustain jurisdiction over petitioner as PNRC chapter administrator for malversation and dishonesty.
• Article 217, Revised Penal Code — Defines and penalizes malversation; the criminal charge filed against petitioner by affidavit-complaint before the Ombudsman.
• Republic Act No. 95, as amended — The original charter of the Philippine National Red Cross; relied upon to classify the PNRC as a government-owned or controlled corporation created by special charter for a public function.

Quisumbing, J. and Buena, J., concur. Bellosillo, J., took no part due to relation to a party. Mendoza, J., took no part due to personal relation to one of the parties.