I.

THE PHILIPPINE VETERANS BANK (PVB) IS NOT A GOVERNMENT OWNED OR

CONTROLLED CORPORATION (GOCC.)
The Administrative Code defines a GOCC:
(13) Government-owned or controlled corporation refers to any agency organized as a
stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through
its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) per cent of its capital stock: x x x.
The above definition is, in turn, replicated in the more recent Republic Act No. 10149 or
the GOCC Governance Act of 2011, to wit:
(o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency
organized as a stock or non-stock corporation, vested with functions relating to public
needs whether governmental or proprietary in nature, and owned by the Government of
the Republic of the Philippines directly or through its instrumentalities either wholly or,
where applicable as in the case of stock corporations, to the extent of at least a majority
of its outstanding capital stock: x x x.
GOCCs, therefore, are "stock or non-stock" corporations "vested with functions
relating to public needs" that are "owned by the Government directly or through its
instrumentalities." By definition, three attributes thus make an entity a GOCC: first, its
organization as stock or non-stock corporation; second, the public character of its
function; and third, government ownership over the same.
Possession of all three attributes is necessary to deem an entity a GOCC. (FUNA
v. MECO, G.R. No. 193462, February 4, 2014)
PVB is organized as a stock corporation. The public character of the functions
vested in the PVB cannot be doubted either. However, PVB Is Not Owned or Controlled
by the Government Organization as a stock corporation and the mere performance of
functions with a public aspect, however, are not by themselves sufficient to consider
PVB as a GOCC. In order to qualify as a GOCC, a corporation must also, if not more
importantly, be owned by the government.
In a stock corporation, the controlling interest of the government is assured by its
ownership of at least fifty-one percent (51%) of the corporate capital stock. While 51% of
the capital stock of the Bank was initially fully subscribed by the Republic of the
Philippines for and in behalf of the veterans, their widows, orphans or compulsory heirs,
the corresponding shares of stock were to be turned over within 5 years from the
organization by the Bank to the said beneficiaries who would thereafter have the right to
vote such common shares. The balance of about 49% was to be divided into preferred
shares which would be opened for subscription by any recognized veteran, widow,
orphans or compulsory heirs of said veteran at the rate of one preferred share per
veteran, on the condition that in case of failure of any particular veteran to subscribe for
any preferred share of stock so offered to him within thirty (30) days from the date of

receipt of notice, said share of stock shall be available for subscription to other veterans
in accordance with such rules or regulations as may be promulgated by the Board of
Directors. Moreover, under Sec. 6(a), the affairs of the Bank are managed by a board of
directors composed of eleven members, three of whom are ex officio members, with the
other eight being elected annually by the stockholders in the manner prescribed by the
Corporation Law. Significantly, Sec. 28 also provides as follows:
Sec. 28. Articles of incorporation. This Act, upon its approval, shall be
deemed and accepted to all legal intents and purposes as the statutory
articles of incorporation or Charter of the Philippine Veterans' Bank; and
that, notwithstanding the provisions of any existing law to the contrary,
said Bank shall be deemed registered and duly authorized to do business
and operate as a commercial bank as of the date of approval of this Act.
This point is important because the Constitution provides in its Article IX-B,
Section 2(1) that "the Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned or
controlled corporations with original charters." As the Bank is not owned or controlled by
the Government although it does have an original charter in the form of R.A. No. 3518, it
clearly does not fall under the Civil Service and should be regarded as an ordinary
commercial corporation. Section 28 of the said law so provides. (PVB Employees
Union-NUBE v. Philippine Veterans Bank, G.R. No. 67125, August 24 1990)
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. PVBs Charter does
not come within the spirit of this constitutional provision, 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.
Furthermore, a strict and mechanical interpretation of Article XII, Section 16 of
the 1987 Constitution will hinder the State in adopting measures that will serve the public
good or national interest. It should be noted that a special law, R.A. No. 9520, the
Philippine Cooperative Code of 2008, and not the general corporation code, vests
corporate power and capacities upon cooperatives which are private corporations, in
order to implement the States avowed policy. (Liban v. Gordon, G. R. No. 175352,
January 18, 2011)
II.
THE SHARE OF EACH BENEFICIARY, WAR VETERAN OR WIDOW, ORPHAN OR
COMPULSORY HEIR OF A DECEASED VETERAN WILL BE EQUAL REGARDLESS
OF RANK AND SERVICES RENDERED.
Under RA 3518, PVBs shares are subject to the following restrictions:
1.

2.

The sale or transfer of a share or stock of a veteran, widow, orphan or

compulsory heir of a veteran to a party not a veteran, widow, orphan
or compulsory heir of a veteran shall not be allowed under any
circumstances. [Sectio 3 (b)]
The share of each beneficiary, war veteran or widow, orphan or
compulsory heir of a deceased veteran, in the distribution of the

3.

benefits accruing to the Republic of the Philippines, will be equal

regardless of rank and services rendered: Provided, That in the
case of orphan or orphans of a deceased veteran, they shall be
counted as one unit only and the share of all of them regardless of
their number will be the same or equal to that of a surviving war
veteran or surviving widow; [Section 4 (e)] and
No veterans, widow, orphan or compulsory heir shall be issued a total
of more than twenty shares. [Sectio 3 (b)]

The foregoing restrictions admit no exceptions or conditions. These limitations on

the right to own shares of stocks are in line with the declaration of state policy under RA
7169 (An Act to Rehabilitate the Philippine Veterans Bank) that PVB is a bank owned by
the Filipino veterans of World War II and deeply imbued and impressed with public
interest.