People vs. Morales

A corporation organized under the general Corporation Code, in which the Government does not own a majority of the capital stock, is a private corporation despite being organized by government agencies to implement public projects; consequently, its officers are not public officers subject to the jurisdiction of the Sandiganbayan.

In preparation for the Philippine Centennial Celebration in 1998, the National Centennial Commission (NCC) was created by Executive Order No. 128 to oversee nationwide preparations. The NCC, together with the Bases Conversion Development Authority (BCDA), organized the Philippine Centennial Expo '98 Corporation (Expocorp) to manage the Centennial International Exposition. Following allegations of anomalies in the project, including the lack of public biddings, the Senate Blue Ribbon Committee and the Ad Hoc and Independent Citizen's Committee investigated and recommended further action. This led to the Ombudsman filing criminal charges against Morales, then acting president of Expocorp, for allegedly selling a government vehicle without public bidding and failing to remit the proceeds.

• On March 10, 1996, the NCC and BCDA organized the Philippine Centennial Expo '98 Corporation (Expocorp) to operate, administer, and manage the Philippine Centennial International Exposition 1998 (Expo '98).
• Expocorp was incorporated under the Corporation Code and registered with the Securities and Exchange Commission; it was not created by a special law or charter.
• Initially, BCDA subscribed to 999,991 shares of Expocorp stock valued at P99,999,100.00, while other subscribers held stocks valued at P900.00.
• Two months after incorporation, the Board of Directors of Expocorp issued a resolution declaring unissued shares open for subscription; Global Clark Assets Corporation subscribed to 1,229,998 shares, becoming the majority stockholder with 55.16% ownership, while BCDA was left as minority stockholder with 44.84%.
• Luis J. Morales served as acting president of Expocorp, allegedly appointed by NCC Chairman Salvador Laurel (who was also Expocorp's Chief Executive Officer).
• In 2001, the Ombudsman filed an Information charging Morales with violating Section 3(e) of R.A. No. 3019 for selling a 1997 Mercedes Benz vehicle (issued for his official use) to Rodolfo M. Lejano for P2,250,000.00 without public bidding or Board approval, and for failing to deposit the proceeds to Expocorp's account.
• Morales moved to dismiss the case, arguing that the Sandiganbayan had no jurisdiction because Expocorp is a private corporation and he is not a public officer as he receives no compensation from the Government.

• Expocorp was organized to perform the executive and sovereign functions of the National Centennial Commission and should be considered a public office or an extension of the NCC.
• Morales was appointed as Expocorp president by NCC Chairman Salvador Laurel, who was held to be a public officer in Salvador H. Laurel v. Aniano A. Desierto; thus, Morales should likewise be considered a public officer performing governmental functions.
• As president of an entity performing governmental functions, Morales falls under the jurisdiction of the Sandiganbayan pursuant to Section 4 of R.A. No. 8249.

• Expocorp is a private corporation incorporated under the Corporation Code, not by a special law or original charter.
• The Government (through BCDA) does not own a majority of Expocorp's capital stock (owning only 44.84%), making it a private corporation under the Revised Administrative Code of 1987.
• The ruling in Laurel v. Desierto applied exclusively to Chairman Laurel in his capacity as NCC Chairman and did not declare that Expocorp is a GOCC or that its other officers are public officers.
• Morales receives no compensation from the Government as defined in Section 2(a) of R.A. No. 3019; his compensation comes from Expocorp's funds.

• Procedural:
  • N/A
• Substantive Issues:
  • Whether Philippine Centennial Expo '98 Corporation (Expocorp) is a government-owned or controlled corporation (GOCC) or a private corporation.
  • Whether Luis J. Morales, as president of Expocorp, qualifies as a public officer subject to the jurisdiction of the Sandiganbayan.

• Procedural:
  • N/A
• Substantive:
  • Expocorp is a private corporation. It was not created by a special law or charter but was incorporated under the Corporation Code and registered with the Securities and Exchange Commission.
  • Under Dante V. Liban v. Richard J. Gordon, a government-owned or controlled corporation must be owned by the Government, and in the case of a stock corporation, at least a majority of its capital stock must be owned by the Government. Here, BCDA (Government) owns only 44.84%, while Global Clark Assets Corporation (private) owns 55.16%.
  • The Court distinguished Salvador H. Laurel v. Aniano A. Desierto, clarifying that it only held Laurel to be a public officer as NCC Chairman and CEO, but explicitly did not rule on whether Expocorp itself is a GOCC or a private corporation.
  • Since Expocorp is a private corporation, Morales, as its president, is not a public officer under Section 4(a)(1)(g) of R.A. No. 8249 (which covers presidents of GOCCs) and is outside the Sandiganbayan's jurisdiction.
  • The petition was dismissed for lack of merit, and the Sandiganbayan's Resolution was affirmed.

• Test for Government-Owned or Controlled Corporations (GOCCs) — A corporation is considered a GOCC if (1) it is created by a special law or charter, or (2) in the case of a stock corporation, the Government owns at least a majority of its capital stock. Mere performance of functions related to governmental projects or being organized by government agencies does not convert a private corporation into a GOCC if incorporated under the general corporation law.
• Jurisdiction of the Sandiganbayan — Under Section 4 of Republic Act No. 8249, the Sandiganbayan exercises jurisdiction over presidents, directors, or trustees of GOCCs, but not over officers of private corporations, even if such corporations are organized by government agencies to implement public projects.
• Corporations Created by Special Laws or Charters vs. Corporations Under the General Law — Corporations organized under the Corporation Code are presumptively private corporations. They only acquire the status of GOCCs if the Government owns majority of the shares, regardless of the governmental nature of their purposes or the manner of their creation.

• "A government-owned or controlled corporation must be owned by the government, and in the case of a stock corporation, at least a majority of its capital stock must be owned by the government."
• "Expocorp is a private corporation as found by the Sandiganbayan. It was not created by a special law but was incorporated under the Corporation Code and was registered with the Securities and Exchange Commission."

• Salvador H. Laurel v. Aniano A. Desierto, G.R. No. 145368, April 12, 2002 — Distinguished; the Court held that Laurel was a public officer as NCC Chairman and CEO of Expocorp, but explicitly did not rule on whether Expocorp itself was a GOCC or private corporation, nor did it automatically make other Expocorp officers public officers.
• Dante V. Liban, et al. v. Richard J. Gordon, G.R. No. 175352, July 15, 2009 — Cited for the controlling definition that a GOCC must be majority-owned by the Government in terms of capital stock.

• Section 3(e) of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) — Defines the corrupt practice of causing undue injury or giving unwarranted benefits through manifest partiality, evident bad faith, or gross inexcusable negligence; the basis of the criminal charge against Morales.
• Section 4 of Republic Act No. 8249 — Defines the jurisdiction of the Sandiganbayan over presidents, directors, or trustees of government-owned or controlled corporations, state universities, or educational institutions.
• Section 2(a) of Republic Act No. 3019 — Definition of "public officer" requiring compensation from the Government, cited by Morales but not resolved by the Court as the jurisdictional issue was determined by the nature of the corporation.
• Executive Order No. 128 — The law creating the National Centennial Commission (NCC) which organized Expocorp to manage the Centennial Exposition.

• N/A (Carpio Morales, Bersamin, Villarama, Jr., and Sereno, JJ., concurred without separate opinions).