G. EFFECTS OF DECLARATION OF UNCONSTITUTIONALITY

ARTICLE 7 OF THE CIVIL CODE Art. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary.

When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. (5a)

FLORES V DRILON

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. 104732 June 22, 1993

ROBERTO A. FLORES, DANIEL Y. FIGUEROA, ROGELIO T. PALO, DOMINGO A. JADLOC, CARLITO T. CRUZ and MANUEL P. REYES, petitioner, vs.HON. FRANKLIN M. DRILON, Executive Secretary, and RICHARD J. GORDON, respondents.

Isagani M. Jungco, Valeriano S. Peralta, Miguel Famularcano, Jr. and Virgilio E. Acierto for petitioners.

 

BELLOSILLO, J.:

The constitutionality of Sec. 13, par. (d), of R.A. 7227, 1 otherwise known as the "Bases Conversion and Development Act of 1992," under which respondent Mayor Richard J. Gordon of Olongapo City was appointed Chairman and Chief Executive Officer of the Subic Bay Metropolitan Authority (SBMA), is challenged in this original petition with prayer for prohibition, preliminary injunction and temporary restraining order "to prevent useless and unnecessary expenditures of public funds by way of salaries and other operational expenses attached to the office . . . ."  2 Paragraph (d) reads —

(d) Chairman administrator — The President shall appoint a professional manager as administrator of the Subic Authority with a compensation to be determined by the Board subject to the approval of the Secretary of Budget, who shall be the ex oficio chairman of the Board and who shall serve as the chief executive officer of the Subic Authority: Provided, however, That for the first year of its operations from the effectivity of this Act, the mayor of the City of Olongapo shall be appointed as the chairman and chief executive officer of the Subic Authority (emphasis supplied).

Petitioners, who claim to be taxpayers, employees of the U.S. Facility at the Subic, Zambales, and officers and members of the Filipino Civilian Employees Association in U.S. Facilities in the Philippines, maintain that theproviso in par. (d) of Sec. 13 herein-above quoted in italics infringes on the following constitutional and statutory provisions: (a) Sec. 7, first par., Art. IX-B, of the Constitution, which states that "[n]o elective official shall be eligible for appointment or designation in any capacity to any public officer or position during his tenure," 3 because the City

Mayor of Olongapo City is an elective official and the subject posts are public offices; (b) Sec. 16, Art. VII, of the Constitution, which provides that "[t]he President shall . . . . appoint all other officers of the Government whose appointments are not otherwise provided for by law, and those whom he may be authorized by law to appoint", 4 since it was Congress through the questioned proviso and not the President who appointed the Mayor to the subject posts; 5 and, (c) Sec. 261, par. (g), of the Omnibus Election Code, which says:

Sec. 261. Prohibited Acts. — The following shall be guilty of an election offense: . . . (g) Appointment of new employees, creation of new position, promotion, or giving salary increases. — During the period of forty-five days before a regular election and thirty days before a special election, (1) any head, official or appointing officer of a government office, agency or instrumentality, whether national or local, including government-owned or controlled corporations, who appoints or hires any new employee, whether provisional, temporary or casual, or creates and fills any new position, except upon prior authority of the Commission. The Commission shall not grant the authority sought unless it is satisfied that the position to be filled is essential to the proper functioning of the office or agency concerned, and that the position shall not be filled in a manner that may influence the election. As an exception to the foregoing provisions, a new employee may be appointed in case of urgent need:Provided, however, That notice of the appointment shall be given to the Commission within three days from the date of the appointment. Any appointment or hiring in violation of this provision shall be null and void. (2) Any government official who promotes, or gives any increase of salary or remuneration or privilege to any government official or employee, including those in government-owned or controlled corporations . . . .

for the reason that the appointment of respondent Gordon to the subject posts made by respondent Executive Secretary on 3 April 1992 was within the prohibited 45-day period prior to the 11 May 1992 Elections.

The principal question is whether the proviso in Sec. 13, par. (d), of R.A. 7227 which states, "Provided, however,That for the first year of its operations from the effectivity of this Act, the mayor of the City of Olongapo shall be appointed as the chairman and chief executive officer of the Subic Authority," violates the constitutional proscription against appointment or designation of elective officials to other government posts.

In full, Sec. 7 of Art. IX-B of the Constitution provides:

No elective official shall be eligible for appointment or designation in any capacity to any public office or position during his tenure.

Unless otherwise allowed by law or by the primary functions of his position, no appointive official shall 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.

The section expresses the policy against the concentration of several public positions in one person, so that a public officer or employee may serve full-time with dedication and thus be efficient in the delivery of public services. It is an affirmation that a public office is a full-time job. Hence, a public officer or employee, like the head of an executive department described in Civil Liberties Union v. Executive Secretary, G.R. No. 83896, and Anti-Graft League of the Philippines, Inc. v. Philip Ella C. Juico, as Secretary of Agrarian Reform, G.R. No. 83815, 6 ". . . . should be allowed to attend to his duties and responsibilities without the distraction of other governmental duties or employment. He should be precluded from dissipating his efforts, attention and energy among too many positions of responsibility, which may result in haphazardness and inefficiency . . . ."

Particularly as regards the first paragraph of Sec. 7, "(t)he basic idea really is to prevent a situation where a local elective official will work for his appointment in an executive position in government, and thus neglect his constituents . . . ." 7

In the case before us, the subject proviso directs the President to appoint an elective official, i.e., the Mayor of Olongapo City, to other government posts (as Chairman of the Board and Chief Executive Officer of SBMA). Since this is precisely what the constitutional proscription seeks to prevent, it needs no stretching of the imagination to conclude that the proviso contravenes Sec. 7, first par., Art. IX-B, of the Constitution. Here, the fact that the expertise of an elective official may be most beneficial to the higher interest of the body politic is of no moment.

It is argued that Sec. 94 of the Local Government Code (LGC) permits the appointment of a local elective official to another post if so allowed by law or by the primary functions of his office. 8 But, the contention is fallacious. Section 94 of the LGC is not determinative of the constitutionality of Sec. 13, par. (d), of R.A. 7227, for no legislative act can prevail over the fundamental law of the land. Moreover, since the constitutionality of Sec. 94 of LGC is not the issue here nor is that section sought to be declared unconstitutional, we need not rule on its validity. Neither can we invoke a practice otherwise unconstitutional as authority for its validity.

In any case, the view that an elective official may be appointed to another post if allowed by law or by the primary functions of his office, ignores the clear-cut difference in the wording of the two (2) paragraphs of Sec. 7, Art. IX-B, of the Constitution. While the second paragraph authorizes holding of multiple offices by an appointiveofficial when allowed by law or by the primary functions of his position, the first paragraph appears to be more stringent by not providing any exception to the rule against appointment or designation of an elective official to the government post, except as are particularly recognized in the Constitution itself, e.g., the President as head of the economic and planning agency; 9 the Vice-President, who may be appointed Member of the Cabinet; 10 and, a member of Congress who may be designated ex officio member of the Judicial and Bar Council. 11

The distinction between the first and second paragraphs of Sec. 7, Art. IX-B, was not accidental when drawn, and not without reason. It was purposely sought by the drafters of the Constitution as shown in their deliberation, thus —

MR. MONSOD. In other words, what then Commissioner is saying, Mr. Presiding Officer, is that the prohibition is more strict with respect to elective officials, because in the case of appointive officials, there may be a law that will allow them to hold other positions.

MR. FOZ. Yes, I suggest we make that difference, because in the case of appointive officials, there will be certain situations where the law should allow them to hold some other positions. 12

The distinction being clear, the exemption allowed to appointive officials in the second paragraph cannot be extended to elective officials who are governed by the first paragraph.

It is further argued that the SBMA posts are merely ex officio to the position of Mayor of Olongapo City, hence, an excepted circumstance, citing Civil Liberties Union v. Executive Secretary, 13 where we stated that the prohibition against the holding of any other office or employment by the President, Vice-President, Members of the Cabinet, and their deputies or assistants during their tenure, as provided in Sec. 13, Art. VII, of the Constitution, does not comprehend additional duties and functions required by the primary functions of the officials concerned, who are to perform them in an ex officio capacity as provided by law, without receiving any additional compensation therefor.

This argument is apparently based on a wrong premise. Congress did not contemplate making the subject SBMA posts as ex officio or automatically attached to the Office of the Mayor of Olongapo City without need of appointment. The phrase "shall be appointed" unquestionably shows the intent to make the SBMA posts appointive and not merely adjunct to the post of Mayor of Olongapo City. Had it been the legislative intent to make the subject positions ex officio, Congress would have, at least, avoided the word "appointed" and, instead, "ex officio" would have been used. 14

Even in the Senate deliberations, the Senators were fully aware that subject proviso may contravene Sec. 7, first par., Art. IX-B, but they nevertheless passed the bill and decided to have the controversy resolved by the courts. Indeed, the Senators would not have been concerned with the effects of Sec. 7, first par., had they considered the SBMA posts as ex officio.

Cognizant of the complication that may arise from the way the subject proviso was stated, Senator Rene Saguisag remarked that "if the Conference Committee just said "the Mayor shall be the Chairman" then that should foreclose the issue. It is a legislative choice." 15 The Senator took a view that the constitutional proscription against appointment of elective officials may have been sidestepped if Congress attached the SBMA posts to the Mayor of Olongapo City instead of directing the President to appoint him to the post. Without passing upon this view of Senator Saguisag, it suffices to state that Congress intended the posts to be appointive, thus nibbling in the bud the argument that they are ex officio.

The analogy with the position of Chairman of the Metro Manila Authority made by respondents cannot be applied to uphold the constitutionality of the challenged proviso since it is not put in issue in the present case. In the same vein, the argument that if no elective official may be appointed or designated to another post then Sec. 8, Art. IX-B,

of the Constitution allowing him to receive double compensation 16 would be useless, is non sequitur since Sec. 8 does not affect the constitutionality of the subject proviso. In any case, the Vice-President for example, an elective official who may be appointed to a cabinet post under Sec. 3, Art. VII, may receive the compensation attached to the cabinet position if specifically authorized by law.

Petitioners also assail the legislative encroachment on the appointing authority of the President. Section 13, par. (d), itself vests in the President the power to appoint the Chairman of the Board and the Chief Executive Officer of SBMA, although he really has no choice under the law but to appoint the Mayor of Olongapo City.

As may be defined, an "appointment" is "[t]he designation of a person, by the person or persons having authority therefor, to discharge the duties of some office or trust," 17 or "[t]he selection or designation of a person, by the person or persons having authority therefor, to fill an office or public function and discharge the duties of the same. 18 In his treatise, Philippine Political Law, 19 Senior Associate Justice Isagani A. Cruz defines appointment as "the selection, by the authority vested with the power, of an individual who is to exercise the functions of a given office."

Considering that appointment calls for a selection, the appointing power necessarily exercises a discretion. According to Woodbury, J., 20 "the choice of a person to fill an office constitutes the essence of his appointment," 21 and Mr. Justice Malcolm adds that an "[a]ppointment to office is intrinsically an executive act involving the exercise of discretion." 22 In Pamantasan ng Lungsod ng Maynila v. Intermediate Appellate Court 23 we held:

The power to appoint is, in essence, discretionary. The appointing power has the right of choice which he may exercise freely according to his judgment, deciding for himself who is best qualified among those who have the necessary qualifications and eligibilities. It is a prerogative of the appointing power . . . .

Indeed, the power of choice is the heart of the power to appoint. Appointment involves an exercise of discretion of whom to appoint; it is not a ministerial act of issuing appointment papers to the appointee. In other words, the choice of the appointee is a fundamental component of the appointing power.

Hence, when Congress clothes the President with the power to appoint an officer, it (Congress) cannot at the same time limit the choice of the President to only one candidate. Once the power of appointment is conferred on the President, such conferment necessarily carries the discretion of whom to appoint. Even on the pretext of prescribing the qualifications of the officer, Congress may not abuse such power as to divest the appointing authority, directly or indirectly, of his discretion to pick his own choice. Consequently, when the qualifications prescribed by Congress can only be met by one individual, such enactment effectively eliminates the discretion of the appointing power to choose and constitutes an irregular restriction on the power of appointment. 24

In the case at bar, while Congress willed that the subject posts be filled with a presidential appointee for the first year of its operations from the effectivity of R.A. 7227, the proviso nevertheless limits the appointing authority to only one eligible, i.e., the incumbent Mayor of Olongapo City. Since only one can qualify for the posts in question, the President is precluded from exercising his discretion to choose whom to appoint. Such supposed power of appointment, sans the essential element of choice, is no power at all and goes against the very nature itself of appointment.

While it may be viewed that the proviso merely sets the qualifications of the officer during the first year of operations of SBMA, i.e., he must be the Mayor of Olongapo City, it is manifestly an abuse of congressional authority to prescribe qualifications where only one, and no other, can qualify. Accordingly, while the conferment of the appointing power on the President is a perfectly valid legislative act, the proviso limiting his choice to one is certainly an encroachment on his prerogative.

Since the ineligibility of an elective official for appointment remains all throughout his tenure or during his incumbency, he may however resign first from his elective post to cast off the constitutionally-attached disqualification before he may be considered fit for appointment. The deliberation in the Constitutional Commission is enlightening:

MR. DAVIDE. On Section 4, page 3, line 8, I propose the substitution of the word "term" with TENURE.

MR. FOZ. The effect of the proposed amendment is to make possible for one to resign from his position.

MR. DAVIDE. Yes, we should allow that prerogative.

MR. FOZ. Resign from his position to accept an executive position.

MR. DAVIDE. Besides, it may turn out in a given case that because of, say, incapacity, he may leave the service, but if he is prohibited from being appointed within the term for which he was elected, we may be depriving the government of the needed expertise of an individual. 25

Consequently, as long as he is an incumbent, an elective official remains ineligible for appointment to another public office.

Where, as in the case of respondent Gordon, an incumbent elective official was, notwithstanding his ineligibility, appointed to other government posts, he does not automatically forfeit his elective office nor remove his ineligibility imposed by the Constitution. On the contrary, since an incumbent elective official is not eligible to the appointive position, his appointment or designation thereto cannot be valid in view of his disqualification or lack of eligibility. This provision should not be confused with Sec. 13, Art. VI, of the Constitution where "(n)o Senator or Member of the House of Representatives may hold any other office or employment in the Government . . . during his term without forfeiting his seat . . . ." The difference between the two provisions is significant in the sense that incumbent national legislators lose their elective posts only after they have been appointed to another government office, while other incumbent elective officials must first resign their posts before they can be appointed, thus running the risk of losing the elective post as well as not being appointed to the other post. It is therefore clear that ineligibility is not directly related with forfeiture of office. ". . . . The effect is quite different where it is expressly provided by law that a person holding one office shall be ineligible to another. Such a provision is held to incapacitate the incumbent of an office from accepting or holding a second office (State ex rel. Van Antwerp v Hogan, 283 Ala. 445, 218 So 2d 258; McWilliams v Neal, 130 Ga 733, 61 SE 721) and to render his election or appointment to the latter office void (State ex rel. Childs v Sutton, 63 Minn 147, 65 NW 262. Annotation: 40 ALR 945) or voidable (Baskin v State, 107 Okla 272, 232 p 388, 40 ALR 941)." 26 "Where the constitution, or statutes declare that persons holding one office shall be ineligible for election or appointment to another office, either generally or of a certain kind, the prohibition has been held to incapacitate the incumbent of the first office to hold the second so that any attempt to hold the second is void (Ala. — State ex rel. Van Antwerp v. Hogan, 218 So 2d 258, 283 Ala 445)." 27

As incumbent elective official, respondent Gordon is ineligible for appointment to the position of Chairman of the Board and Chief Executive of SBMA; hence, his appointment thereto pursuant to a legislative act that contravenes the Constitution cannot be sustained. He however remains Mayor of Olongapo City, and his acts as SBMA official are not necessarily null and void; he may be considered a de facto officer, "one whose acts, though not those of a lawful officer, the law, upon principles of policy and justice, will hold valid so far as they involve the interest of the public and third persons, where the duties of the office were exercised . . . . under color of a known election or appointment, void because the officer was not eligible, or because there was a want of power in the electing or appointing body, or by reason of some defect or irregularity in its exercise, such ineligibility, want of power or defect being unknown to the public . . . . [or] under color of an election, or appointment, by or pursuant to a public unconstitutional law, before the same is adjudged to be such (State vs. Carroll, 38 Conn., 499; Wilcox vs. Smith, 5 Wendell [N.Y.], 231; 21 Am. Dec., 213; Sheehan's Case, 122 Mass, 445, 23 Am. Rep., 323)." 28

Conformably with our ruling in Civil Liberties Union, any and all per diems, allowances and other emoluments which may have been received by respondent Gordon pursuant to his appointment may be retained by him.

The illegality of his appointment to the SBMA posts being now evident, other matters affecting the legality of the questioned proviso as well as the appointment of said respondent made pursuant thereto need no longer be discussed.

In thus concluding as we do, we can only share the lament of Sen. Sotero Laurel which he expressed in the floor deliberations of S.B. 1648, precursor of R.A. 7227, when he articulated —

. . . . (much) as we would like to have the present Mayor of Olongapo City as the Chief Executive of this Authority that we are creating; (much) as I, myself, would like to because I know the capacity,

integrity, industry and dedication of Mayor Gordon; (much) as we would like to give him this terrific, burdensome and heavy responsibility, we cannot do it because of the constitutional prohibition which is very clear. It says: "No elective official shall be appointed or designated to another position in any capacity." 29

For, indeed, "a Constitution must be firm and immovable, like a mountain amidst the strife of storms or a rock in the ocean amidst the raging of the waves." 30 One of the characteristics of the Constitution is permanence, i.e., "its capacity to resist capricious or whimsical change dictated not by legitimate needs but only by passing fancies, temporary passions or occasional infatuations of the people with ideas or personalities . . . . Such a Constitution is not likely to be easily tampered with to suit political expediency, personal ambitions or ill-advised agitation for change." 31

Ergo, under the Constitution, Mayor Gordon has a choice. We have no choice.

WHEREFORE, the proviso in par. (d), Sec. 13, of R.A. 7227, which states: ". . . Provided, however, That for the first year of its operations from the effectivity of this Act, the Mayor of the City of Olongapo shall be appointed as the chairman and chief executive officer of the Subic Authority," is declared unconstitutional; consequently, the appointment pursuant thereto of the Mayor of Olongapo City, respondent Richard J. Gordon, is INVALID, hence NULL and VOID.

However, all per diems, allowances and other emoluments received by respondent Gordon, if any, as such Chairman and Chief Executive Officer may be retained by him, and all acts otherwise legitimate done by him in the exercise of his authority as officer de facto of SBMA are hereby UPHELD.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo and Quiason, JJ., concur.

Padilla, J., is on leave.

LOKIN V COMELEC

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. Nos. 179431-32               June 22, 2010

LUIS K. LOKIN, JR., as the second nominee of CITIZENS BATTLE AGAINST CORRUPTION (CIBAC),Petitioner, vs.COMMISSION ON ELECTIONS and the HOUSE OF REPRESENTATIVES, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 180443

LUIS K. LOKIN, JR., Petitioner, vs.COMMISSION ON ELECTIONS (COMELEC), EMMANUEL JOEL J. VILLANUEVA, CINCHONA C. GONZALES and ARMI JANE R. BORJE, Respondents.

D E C I S I O N

BERSAMIN, J.:

The principal question posed in these consolidated special civil actions for certiorari and mandamus is whether the Commission on Elections (COMELEC) can issue implementing rules and regulations (IRRs) that provide a ground for the substitution of a party-list nominee not written in Republic Act (R.A.) No. 7941,1 otherwise known as the Party-List System Act, the law that the COMELEC thereby implements.

Common Antecedents

The Citizens’ Battle Against Corruption (CIBAC) was one of the organized groups duly registered under the party-list system of representation that manifested their intent to participate in the May 14, 2007 synchronized national and local elections. Together with its manifestation of intent to participate,2 CIBAC, through its president, Emmanuel Joel J. Villanueva, submitted a list of five nominees from which its representatives would be chosen should CIBAC obtain the required number of qualifying votes. The nominees, in the order that their names appeared in the certificate of nomination dated March 29, 2007,3 were: (1) Emmanuel Joel J. Villanueva; (2) herein petitioner Luis K. Lokin, Jr.; (3) Cinchona C. Cruz-Gonzales; (4) Sherwin Tugna; and (5) Emil L. Galang. The nominees’ certificates of acceptance were attached to the certificate of nomination filed by CIBAC. The list of nominees was later published in two newspapers of general circulation, The Philippine Star News4 (sic) and The Philippine Daily Inquirer.5

Prior to the elections, however, CIBAC, still through Villanueva, filed a certificate of nomination, substitution and amendment of the list of nominees dated May 7, 2007,6 whereby it withdrew the nominations of Lokin, Tugna and Galang and substituted Armi Jane R. Borje as one of the nominees. The amended list of nominees of CIBAC thus included: (1) Villanueva, (2) Cruz-Gonzales, and (3) Borje.

Following the close of the polls, or on June 20, 2007, Villanueva sent a letter to COMELEC Chairperson Benjamin Abalos,7 transmitting therewith the signed petitions of more than 81% of the CIBAC members, in order to confirm the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution of Borje. In their petitions, the members of CIBAC averred that Lokin and Tugna were not among the nominees presented and proclaimed by CIBAC in its proclamation rally held in May 2007; and that Galang had signified his desire to focus on his family life.

On June 26, 2007, CIBAC, supposedly through its counsel, filed with the COMELEC en banc sitting as the National Board of Canvassers a motion seeking the proclamation of Lokin as its second nominee.8 The right of CIBAC to a second seat as well as the right of Lokin to be thus proclaimed were purportedly based on Party-List Canvass Report No. 26, which showed CIBAC to have garnered a grand total of 744,674 votes. Using all relevant formulas, the motion asserted that CIBAC was clearly entitled to a second seat and Lokin to a proclamation.

The motion was opposed by Villanueva and Cruz-Gonzales.

Notwithstanding Villanueva’s filing of the certificate of nomination, substitution and amendment of the list of nominees and the petitions of more than 81% of CIBAC members, the COMELEC failed to act on the matter, prompting Villanueva to file a petition to confirm the certificate of nomination, substitution and amendment of the list of nominees of CIBAC on June 28, 2007.9

On July 6, 2007, the COMELEC issued Resolution No. 8219,10 whereby it resolved to set the matter pertaining to the validity of the withdrawal of the nominations of Lokin, Tugna and Galang and the substitution of Borje for proper disposition and hearing. The case was docketed as E.M. No. 07-054.

In the meantime, the COMELEC en banc, sitting as the National Board of Canvassers, issued National Board of Canvassers (NBC) Resolution No. 07-60 dated July 9, 200711 to partially proclaim the following parties, organizations and coalitions participating under the Party-List System as having won in the May 14, 2007 elections, namely: Buhay Hayaan Yumabong, Bayan Muna, CIBAC, Gabriela Women's Party, Association of Philippine Electric Cooperatives, Advocacy for Teacher Empowerment Through Action, Cooperation and Harmony Towards Educational Reforms, Inc., Akbayan! Citizen's Action Party, Alagad, Luzon Farmers Party, Cooperative-Natco Network Party, Anak Pawis, Alliance of Rural Concerns and Abono; and to defer the proclamation of the nominees of the parties, organizations and coalitions with pending disputes until final resolution of their respective cases.

The COMELEC en banc issued another resolution, NBC Resolution No. 07-72 dated July 18, 2007,12 proclaiming Buhay Hayaan Yumabong as entitled to 2 additional seats and Bayan Muna, CIBAC, Gabriela Women's Party, and Association of Philippine Electric Cooperatives to an additional seat each; and holding in abeyance the proclamation of the nominees of said parties, organizations and coalitions with pending disputes until the final resolution of their respective cases.

With the formal declaration that CIBAC was entitled to an additional seat, Ricardo de los Santos, purportedly as secretary general of CIBAC, informed Roberto P. Nazareno, Secretary General of the House of Representatives, of the promulgation of NBC Resolution No. 07-72 and requested that Lokin be formally sworn in by Speaker Jose de Venecia, Jr. to enable him to assume office. Nazareno replied, however, that the request of Delos Santos could not be granted because COMELEC Law Director Alioden D. Dalaig had notified him of the pendency of E.M. 07-054.

On September 14, 2007, the COMELEC en banc resolved E.M. No. 07-05413 thuswise:

WHEREFORE, considering the above discussion, the Commission hereby approves the withdrawal of the nomination of Atty. Luis K. Lokin, Sherwin N. Tugna and Emil Galang as second, third and fourth nominees respectively and the substitution thereby with Atty. Cinchona C. Cruz-Gonzales as second nominee and Atty. Armi Jane R. Borje as third nominee for the party list CIBAC. The new order of CIBAC's nominees therefore shall be:

1. Emmanuel Joel J. Villanueva

2. Cinchona C. Cruz-Gonzales

3. Armi Jane R. Borje

SO ORDERED.

The COMELEC en banc explained that the actions of Villanueva in his capacity as the president of CIBAC were presumed to be within the scope of his authority as such; that the president was charged by Section 1 of Article IV of the CIBAC By-Laws to oversee and direct the corporate activities, which included the act of submitting the party's manifestation of intent to participate in the May 14, 2007 elections as well as its certificate of nominees; that from all

indications, Villanueva as the president of CIBAC had always been provided the leeway to act as the party's representative and that his actions had always been considered as valid; that the act of withdrawal, although done without any written Board approval, was accomplished with the Board’s acquiescence or at least understanding; and that the intent of the party should be given paramount consideration in the selection of the nominees.

As a result, the COMELEC en banc proclaimed Cruz-Gonzales as the official second nominee of CIBAC.14 Cruz-Gonzales took her oath of office

as a Party-List Representative of CIBAC on September 17, 2007.15

Precís of the Consolidated Cases

In G.R. No. 179431 and G.R. No. 179432, Lokin seeks through mandamus to compel respondent COMELEC to proclaim him as the official second nominee of CIBAC.

In G.R. No. 180443, Lokin assails Section 13 of Resolution No. 7804 promulgated on January 12, 2007;16 and the resolution dated September 14, 2007 issued in E.M. No. 07-054 (approving CIBAC’s withdrawal of the nominations

of Lokin, Tugna and Galang as CIBAC’s second, third and fourth nominees, respectively, and the substitution by Cruz-Gonzales and Borje in their stead, based on the right of CIBAC to change its nominees under Section 13 of

Resolution No. 7804).17 He alleges that Section 13 of Resolution No. 7804 expanded Section 8 of R.A. No. 7941.18 the law that the COMELEC seeks to thereby implement.

In its comment, the COMELEC asserts that a petition for certiorari is an inappropriate recourse in law due to the proclamation of Cruz-Gonzales as Representative and her assumption of that office; that Lokin’s proper recourse was an electoral protest filed in the House of Representatives Electoral Tribunal (HRET); and that, therefore, the Court has no jurisdiction over the matter being raised by Lokin.

For its part, CIBAC posits that Lokin is guilty of forum shopping for filing a petition for mandamus and a petition for certiorari, considering that both petitions ultimately seek to have him proclaimed as the second nominee of CIBAC.

Issues

The issues are the following:

(a) Whether or not the Court has jurisdiction over the controversy;

(b) Whether or not Lokin is guilty of forum shopping;

(c) Whether or not Section 13 of Resolution No. 7804 is unconstitutional and violates the Party-List System Act; and

(d) Whether or not the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in approving the withdrawal of the nominees of CIBAC and allowing the amendment of the list of nominees of CIBAC without any basis in fact or law and after the close of the polls, and in ruling on matters that were intra-corporate in nature.

Ruling

The petitions are granted.

AThe Court has jurisdiction over the case

The COMELEC posits that once the proclamation of the winning party-list organization has been done and its nominee has assumed office, any question relating to the election, returns and qualifications of the candidates to the House of Representatives falls under the jurisdiction of the HRET pursuant to Section 17, Article VI of the 1987

Constitution. Thus, Lokin should raise the question he poses herein either in an election protest or in a special civil action for quo warranto in the HRET, not in a special civil action for certiorari in this Court.

We do not agree.

An election protest proposes to oust the winning candidate from office. It is strictly a contest between the defeated and the winning candidates, based on the grounds of electoral frauds and irregularities, to determine who between them has actually obtained the majority of the legal votes cast and is entitled to hold the office. It can only be filed by a candidate who has duly filed a certificate of candidacy and has been voted for in the preceding elections.

A special civil action for quo warranto refers to questions of disloyalty to the State, or of ineligibility of the winning candidate. The objective of the action is to unseat the ineligible person from the office, but not to install the petitioner in his place. Any voter may initiate the action, which is, strictly speaking, not a contest where the parties strive for supremacy because the petitioner will not be seated even if the respondent may be unseated.

The controversy involving Lokin is neither an election protest nor an action for quo warranto, for it concerns a very peculiar situation in which Lokin is seeking to be seated as the second nominee of CIBAC. Although an election protest may properly be available to one party-list organization seeking to unseat another party-list organization to determine which between the defeated and the winning party-list organizations actually obtained the majority of the legal votes, Lokin’s case is not one in which a nominee of a particular party-list organization thereby wants to unseat another nominee of the same party-list organization. Neither does an action for quo warranto lie, considering that the case does not involve the ineligibility and disloyalty of Cruz-Gonzales to the Republic of the Philippines, or some other cause of disqualification for her.

Lokin has correctly brought this special civil action for certiorari against the COMELEC to seek the review of the September 14, 2007 resolution of the COMELEC in accordance with Section 7 of Article IX-A of the 1987 Constitution, notwithstanding the oath and assumption of office by Cruz-Gonzales. The constitutional mandate is now implemented by Rule 64 of the 1997 Rules of Civil Procedure, which provides for the review of the judgments, final orders or resolutions of the COMELEC and the Commission on Audit. As Rule 64 states, the mode of review is by a petition for certiorari in accordance with Rule 65 to be filed in the Supreme Court within a limited period of 30 days. Undoubtedly, the Court has original and exclusive jurisdiction over Lokin’s petitions for certiorari and for mandamus against the COMELEC.

B Petitioner is not guilty of forum shopping

Forum shopping consists of the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, forum shopping may arise: (a) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another; or (b) if, after having filed a petition in the Supreme Court, a party files another petition in the Court of Appeals, because he thereby deliberately splits appeals "in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar remedy) would still be open"; or (c) where a party attempts to obtain a writ of preliminary injunction from a court after failing to obtain the writ from another court.19

What is truly important to consider in determining whether forum shopping exists or not is the vexation caused to the courts and the litigants by a party who accesses different courts and administrative agencies to rule on the same or related causes or to grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issue.20

The filing of identical petitions in different courts is prohibited, because such act constitutes forum shopping, a malpractice that is proscribed and condemned as trifling with the courts and as abusing their processes. Forum shopping is an improper conduct that degrades the administration of justice.21

Nonetheless, the mere filing of several cases based on the same incident does not necessarily constitute forum shopping. The test is whether the several actions filed involve the same transactions and the same essential facts and circumstances.22 The actions must also raise identical causes of action, subject matter, and issues.23Elsewise

stated, forum shopping exists where the elements of litis pendentia are present, or where a final judgment in one case will amount to res judicata in the other.24

Lokin has filed the petition for mandamus to compel the COMELEC to proclaim him as the second nominee of CIBAC upon the issuance of NBC Resolution No. 07-72 (announcing CIBAC’s entitlement to an additional seat in the House of Representatives), and to strike down the provision in NBC Resolution No. 07-60 and NBC Resolution No. 07-72 holding in abeyance "all proclamation of the nominees of concerned parties, organizations and coalitions with pending disputes shall likewise be held in abeyance until final resolution of their respective cases." He has insisted that the COMELEC had the ministerial duty to proclaim him due to his being CIBAC’s second nominee; and that the COMELEC had no authority to exercise discretion and to suspend or defer the proclamation of winning party-list organizations with pending disputes.

On the other hand, Lokin has resorted to the petition for certiorari to assail the September 14, 2007 resolution of the COMELEC (approving the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution by Cruz-Gonzales as the second nominee and Borje as the third nominee); and to challenge the validity of Section 13 of Resolution No. 7804, the COMELEC’s basis for allowing CIBAC’s withdrawal of Lokin’s nomination.

Applying the test for forum shopping, the consecutive filing of the action for certiorari and the action for mandamus did not violate the rule against forum shopping even if the actions involved the same parties, because they were based on different causes of action and the reliefs they sought were different.

CInvalidity of Section 13 of Resolution No. 7804

The legislative power of the Government is vested exclusively in the Legislature in accordance with the doctrine of separation of powers. As a general rule, the Legislature cannot surrender or abdicate its legislative power, for doing so will be unconstitutional. Although the power to make laws cannot be delegated by the Legislature to any other authority, a power that is not legislative in character may be delegated.25

Under certain circumstances, the Legislature can delegate to executive officers and administrative boards the authority to adopt and promulgate IRRs. To render such delegation lawful, the Legislature must declare the policy of the law and fix the legal principles that are to control in given cases. The Legislature should set a definite or primary standard to guide those empowered to execute the law. For as long as the policy is laid down and a proper standard is established by statute, there can be no unconstitutional delegation of legislative power when the Legislature leaves to selected instrumentalities the duty of making subordinate rules within the prescribed limits, although there is conferred upon the executive officer or administrative board a large measure of discretion. There is a distinction between the delegation of power to make a law and the conferment of an authority or a discretion to be exercised under and in pursuance of the law, for the power to make laws necessarily involves a discretion as to what it shall be.26

The authority to make IRRs in order to carry out an express legislative purpose, or to effect the operation and enforcement of a law is not a power exclusively legislative in character, but is rather administrative in nature. The rules and regulations adopted and promulgated must not, however, subvert or be contrary to existing statutes. The function of promulgating IRRs may be legitimately exercised only for the purpose of carrying out the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it into effect. Corollary to this is that administrative regulation cannot extend the law and amend a legislative enactment. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation. Indeed, administrative or executive acts shall be valid only when they are not contrary to the laws or the Constitution.27

To be valid, therefore, the administrative IRRs must comply with the following requisites to be valid:28

1. Its promulgation must be authorized by the Legislature;

2. It must be within the scope of the authority given by the Legislature;

3. It must be promulgated in accordance with the prescribed procedure; and

4. It must be reasonable.

The COMELEC is constitutionally mandated to enforce and administer all laws and regulations relative to the conduct of an election, a plebiscite, an initiative, a referendum, and a recall.29 In addition to the powers and functions conferred upon it by the Constitution, the COMELEC is also charged to promulgate IRRs implementing the provisions of the Omnibus Election Code or other laws that the COMELEC enforces and administers.30

The COMELEC issued Resolution No. 7804 pursuant to its powers under the Constitution, Batas Pambansa Blg. 881, and the Party-List System Act.31 Hence, the COMELEC met the first requisite.

The COMELEC also met the third requisite. There is no question that Resolution No. 7804 underwent the procedural necessities of publication and dissemination in accordance with the procedure prescribed in the resolution itself.

Whether Section 13 of Resolution No. 7804 was valid or not is thus to be tested on the basis of whether the second and fourth requisites were met. It is in this respect that the challenge of Lokin against Section 13 succeeds.

As earlier said, the delegated authority must be properly exercised. This simply means that the resulting IRRs must not be ultra vires as to be issued beyond the limits of the authority conferred. It is basic that an administrative agency cannot amend an act of Congress,32 for administrative IRRs are solely intended to carry out, not to supplant or to modify, the law. The administrative agency issuing the IRRs may not enlarge, alter, or restrict the provisions of the law it administers and enforces, and cannot engraft additional non-contradictory requirements not contemplated by the Legislature.33

Section 8 of R.A. No. 7941 reads:

Section 8. Nomination of Party-List Representatives.-Each registered party, organization or coalition shall submit to the COMELEC not later that forty-five (45) days before the election a list of names, not less than five (5), from which party-list representatives shall be chosen in case it obtains the required number of votes.

A person may be nominated in one (1) list only. Only persons who have given their consent in writing may be named in the list. The list shall not include any candidate of any elective office or a person who has lost his bid for an elective office in the immediately preceding election. No change of names or alteration of the order of nominees shall be allowed after the same shall have been submitted to the COMELEC except in cases where the nominee dies, or withdraws in writing his nomination, becomes incapacitated in which case the name of the substitute nominee shall be placed last in the list. Incumbent sectoral representatives in the House of Representatives who are nominated in the party-list system shall not be considered resigned.

The provision is daylight clear. The Legislature thereby deprived the party-list organization of the right to change its nominees or to alter the order of nominees once the list is submitted to the COMELEC, except when: (a) the nominee dies; (b) the nominee withdraws in writing his nomination; or (c) the nominee becomes incapacitated. The provision must be read literally because its language is plain and free from ambiguity, and expresses a single, definite, and sensible meaning. Such meaning is conclusively presumed to be the meaning that the Legislature has intended to convey. Even where the courts should be convinced that the Legislature really intended some other meaning, and even where the literal interpretation should defeat the very purposes of the enactment, the explicit declaration of the Legislature is still the law, from which the courts must not depart.34When the law speaks in clear and categorical language, there is no reason for interpretation or construction, but only for application.35 Accordingly, an administrative agency tasked to implement a statute may not construe it by expanding its meaning where its provisions are clear and unambiguous.36

The legislative intent to deprive the party-list organization of the right to change the nominees or to alter the order of the nominees was also expressed during the deliberations of the Congress, viz:

MR. LAGMAN: And again on Section 5, on the nomination of party list representatives, I do not see any provision here which prohibits or for that matter allows the nominating party to change the nominees or to alter the order of prioritization of names of nominees. Is the implication correct that at any time after submission the names could still be changed or the listing altered?

MR. ABUEG: Mr. Speaker, that is a good issue brought out by the distinguished Gentleman from Albay and perhaps a perfecting amendment may be introduced therein. The sponsoring committee will gladly consider the same.

MR. LAGMAN: In other words, what I would like to see is that after the list is submitted to the COMELEC officially, no more changes should be made in the names or in the order of listing.

MR. ABUEG: Mr. Speaker, there may be a situation wherein the name of a particular nominee has been submitted to the Commission on Elections but before election day the nominee changed his political party affiliation. The nominee is therefore no longer qualified to be included in the party list and the political party has a perfect right to change the name of that nominee who changed his political party affiliation.

MR. LAGMAN: Yes of course. In that particular case, the change can be effected but will be the exception rather than the rule. Another exception most probably is the nominee dies, then there has to be a change but any change for that matter should always be at the last part of the list so that the prioritization made by the party will not be adversely affected.37

The usage of "No" in Section 8 – "No change of names or alteration of the order of nominees shall be allowed after the same shall have been submitted to the COMELEC except in cases where the nominee dies, or withdraws in writing his nomination, or becomes incapacitated, in which case the name of the substitute nominee shall be placed last in the list" – renders Section 8 a negative law, and is indicative of the legislative intent to make the statute mandatory. Prohibitive or negative words can rarely, if ever, be directory, for there is but one way to obey the command "thou shall not," and that is to completely refrain from doing the forbidden act,38 subject to certain exceptions stated in the law itself, like in this case.

Section 8 does not unduly deprive the party-list organization of its right to choose its nominees, but merely divests it of the right to change its nominees or to alter the order in the list of its nominees’ names after submission of the list to the COMELEC.

The prohibition is not arbitrary or capricious; neither is it without reason on the part of lawmakers. The COMELEC can rightly presume from the submission of the list that the list reflects the true will of the party-list organization. The COMELEC will not concern itself with whether or not the list contains the real intended nominees of the party-list organization, but will only determine whether the nominees pass all the requirements prescribed by the law and whether or not the nominees possess all the qualifications and none of the disqualifications. Thereafter, the names of the nominees will be published in newspapers of general circulation. Although the people vote for the party-list organization itself in a party-list system of election, not for the individual nominees, they still have the right to know who the nominees of any particular party-list organization are. The publication of the list of the party-list nominees in newspapers of general circulation serves that right of the people, enabling the voters to make intelligent and informed choices. In contrast, allowing the party-list organization to change its nominees through withdrawal of their nominations, or to alter the order of the nominations after the submission of the list of nominees circumvents the voters’ demand for transparency. The lawmakers’ exclusion of such arbitrary withdrawal has eliminated the possibility of such circumvention.

D Exceptions in Section 8 of R.A. 7941 are exclusive

Section 8 of R.A. No. 7941 enumerates only three instances in which the party-list organization can substitute another person in place of the nominee whose name has been submitted to the COMELEC, namely: (a) when the nominee dies; (b) when the nominee withdraws in writing his nomination; and (c) when the nominee becomes incapacitated.

The enumeration is exclusive, for, necessarily, the general rule applies to all cases not falling under any of the three exceptions.

When the statute itself enumerates the exceptions to the application of the general rule, the exceptions are strictly but reasonably construed. The exceptions extend only as far as their language fairly warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions. Where the general rule is established by a statute with exceptions, none but the enacting authority can curtail the former. Not even the courts may add to the

latter by implication, and it is a rule that an express exception excludes all others, although it is always proper in determining the applicability of the rule to inquire whether, in a particular case, it accords with reason and justice.39

1avvphi1

The appropriate and natural office of the exception is to exempt something from the scope of the general words of a statute, which is otherwise within the scope and meaning of such general words. Consequently, the existence of an exception in a statute clarifies the intent that the statute shall apply to all cases not excepted. Exceptions are subject to the rule of strict construction; hence, any doubt will be resolved in favor of the general provision and against the exception. Indeed, the liberal construction of a statute will seem to require in many circumstances that the exception, by which the operation of the statute is limited or abridged, should receive a restricted construction.

ESection 13 of Resolution No. 7804 expanded 

the exceptions under Section 8 of R.A. No. 7941

Section 13 of Resolution No. 7804 states:

Section 13. Substitution of nominees. – A party-list nominee may be substituted only when he dies, or his nomination is withdrawn by the party, or he becomes incapacitated to continue as such, or he withdraws his acceptance to a nomination. In any of these cases, the name of the substitute nominee shall be placed last in the list of nominees.

No substitution shall be allowed by reason of withdrawal after the polls.

Unlike Section 8 of R.A. No. 7941, the foregoing regulation provides four instances, the fourth being when the "nomination is withdrawn by the party."

Lokin insists that the COMELEC gravely abused its discretion in expanding to four the three statutory grounds for substituting a nominee.

We agree with Lokin.

The COMELEC, despite its role as the implementing arm of the Government in the enforcement and administration of all laws and regulations relative to the conduct of an election,40 has neither the authority nor the license to expand, extend, or add anything to the law it seeks to implement thereby. The IRRs the COMELEC issues for that purpose should always accord with the law to be implemented, and should not override, supplant, or modify the law. It is basic that the IRRs should remain consistent with the law they intend to carry out.41

Indeed, administrative IRRs adopted by a particular department of the Government under legislative authority must be in harmony with the provisions of the law, and should be for the sole purpose of carrying the law’s general provisions into effect. The law itself cannot be expanded by such IRRs, because an administrative agency cannot amend an act of Congress.42

The COMELEC explains that Section 13 of Resolution No. 7804 has added nothing to Section 8 of R.A. No. 7941,43 because it has merely reworded and rephrased the statutory provision’s phraseology.

The explanation does not persuade.

To reword means to alter the wording of or to restate in other words; to rephrase is to phrase anew or in a new form.44 Both terms signify that the meaning of the original word or phrase is not altered.

However, the COMELEC did not merely reword or rephrase the text of Section 8 of R.A. No. 7941, because it established an entirely new ground not found in the text of the provision. The new ground granted to the party-list organization the unilateral right to withdraw its nomination already submitted to the COMELEC, which Section 8 of R.A. No. 7941 did not allow to be done. Neither was the grant of the unilateral right contemplated by the drafters of the law, who precisely denied the right to withdraw the nomination (as the quoted record of the deliberations of the House of Representatives has indicated). The grant thus conflicted with the statutory intent to save the nominee

from falling under the whim of the party-list organization once his name has been submitted to the COMELEC, and to spare the electorate from the capriciousness of the party-list organizations.

We further note that the new ground would not secure the object of R.A. No. 7941 of developing and guaranteeing a full, free and open party-list electoral system. The success of the system could only be ensured by avoiding any arbitrariness on the part of the party-list organizations, by seeing to the transparency of the system, and by guaranteeing that the electorate would be afforded the chance of making intelligent and informed choices of their party-list representatives.

The insertion of the new ground was invalid. An axiom in administrative law postulates that administrative authorities should not act arbitrarily and capriciously in the issuance of their IRRs, but must ensure that their IRRs are reasonable and fairly adapted to secure the end in view. If the IRRs are shown to bear no reasonable relation to the purposes for which they were authorized to be issued, they must be held to be invalid and should be struck down.45

FEffect of partial nullity of Section 13 of Resolution No. 7804

An IRR adopted pursuant to the law is itself law.46 In case of conflict between the law and the IRR, the law prevails. There can be no question that an IRR or any of its parts not adopted pursuant to the law is no law at all and has neither the force nor the effect of law.47 The invalid rule, regulation, or part thereof cannot be a valid source of any right, obligation, or power.

Considering that Section 13 of Resolution No. 7804 – to the extent that it allows the party-list organization to withdraw its nomination already submitted to the COMELEC – was invalid, CIBAC’s withdrawal of its nomination of Lokin and the others and its substitution of them with new nominees were also invalid and ineffectual. It is clear enough that any substitution of Lokin and the others could only be for any of the grounds expressly stated in Section 8 of R.A. No. 7941. Resultantly, the COMELEC’s approval of CIBAC’s petition of withdrawal of the nominations and its recognition of CIBAC’s substitution, both through its assailed September 14, 2007 resolution, should be struck down for lack of legal basis. Thereby, the COMELEC acted without jurisdiction, having relied on the invalidly issued Section 13 of Resolution No. 7804 to support its action.

WHEREFORE, we grant the petitions for certiorari and mandamus.

We declare Section 13 of Resolution No. 7804 invalid and of no effect to the extent that it authorizes a party-list organization to withdraw its nomination of a nominee once it has submitted the nomination to the Commission on Elections.

Accordingly, we annul and set aside:

(a) The resolution dated September 14, 2007 issued in E. M. No. 07-054 approving Citizens’ Battle Against Corruption’s withdrawal of the nominations of Luis K. Lokin, Jr., Sherwin N. Tugna, and Emil Galang as its second, third, and fourth nominees, respectively, and ordering their substitution by Cinchona C. Cruz-Gonzales as second nominee and Armi Jane R. Borje as third nominee; and

(b) The proclamation by the Commission on Elections of Cinchona C. Cruz-Gonzales as a Party-List Representative representing Citizens’ Battle Against Corruption in the House of Representatives.

We order the Commission on Elections to forthwith proclaim petitioner Luis K. Lokin, Jr. as a Party-List Representative representing Citizens’ Battle Against Corruption in the House of Representatives.

We make no pronouncements on costs of suit.

SO ORDERED.

LUCAS P. BERSAMINAssociate Justice

LEAGUE OF CITIES V COMELEC

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 176951             November 18, 2008

LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners, vs.COMMISSION ON ELECTIONS; MUNICIPALITY OF BAYBAY, PROVINCE OF LEYTE; MUNICIPALITY OF BOGO, PROVINCE OF CEBU; MUNICIPALITY OF CATBALOGAN, PROVINCE OF WESTERN SAMAR; MUNICIPALITY OF TANDAG, PROVINCE OF SURIGAO DEL SUR; MUNICIPALITY OF BORONGAN, PROVINCE OF EASTERN SAMAR; and MUNICIPALITY OF TAYABAS, PROVINCE OF QUEZON, respondents.CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.

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G.R. No. 177499             November 18, 2008

LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners, vs.COMMISSION ON ELECTIONS; MUNICIPALITY OF LAMITAN, PROVINCE OF BASILAN; MUNICIPALITY OF TABUK, PROVINCE OF KALINGA; MUNICIPALITY OF BAYUGAN, PROVINCE OF AGUSAN DEL SUR; MUNICIPALITY OF BATAC, PROVINCE OF ILOCOS NORTE; MUNICIPALITY OF MATI, PROVINCE OF DAVAO ORIENTAL; and MUNICIPALITY OF GUIHULNGAN, PROVINCE OF NEGROS ORIENTAL, respondents.CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF

SILAY, CITY OF GENERAL SANTOS, CITY OF ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.

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G.R. No. 178056             November 18, 2008

LEAGUE OF CITIES OF THE PHILIPPINES (LCP) represented by LCP National President JERRY P. TREÑAS, CITY OF ILOILO represented by MAYOR JERRY P. TREÑAS, CITY OF CALBAYOG represented by MAYOR MEL SENEN S. SARMIENTO, and JERRY P. TREÑAS in his personal capacity as taxpayer, petitioners vs.COMMISSION ON ELECTIONS; MUNICIPALITY OF CABADBARAN, PROVINCE OF AGUSAN DEL NORTE; MUNICIPALITY OF CARCAR, PROVINCE OF CEBU; and MUNICIPALITY OF EL SALVADOR, MISAMIS ORIENTAL, respondents.CITY OF TARLAC, CITY OF SANTIAGO, CITY OF IRIGA, CITY OF LIGAO, CITY OF LEGAZPI, CITY OF TAGAYTAY, CITY OF SURIGAO, CITY OF BAYAWAN, CITY OF SILAY, CITY OF GENERAL SANTOS, CITY OF ZAMBOANGA, CITY OF GINGOOG, CITY OF CAUAYAN, CITY OF PAGADIAN, CITY OF SAN CARLOS, CITY OF SAN FERNANDO, CITY OF TACURONG, CITY OF TANGUB, CITY OF OROQUIETA, CITY OF URDANETA, CITY OF VICTORIAS, CITY OF CALAPAN, CITY OF HIMAMAYLAN, CITY OF BATANGAS, CITY OF BAIS, CITY OF CADIZ, and CITY OF TAGUM, petitioners-in-intervention.

D E C I S I O N

CARPIO, J.:

The Case

These are consolidated petitions for prohibition1 with prayer for the issuance of a writ of preliminary injunction or temporary restraining order filed by the League of Cities of the Philippines, City of Iloilo, City of Calbayog, and Jerry P. Treñas2 assailing the constitutionality of the subject Cityhood Laws and enjoining the Commission on Elections (COMELEC) and respondent municipalities from conducting plebiscites pursuant to the Cityhood Laws.

The Facts

During the 11th Congress,3 Congress enacted into law 33 bills converting 33 municipalities into cities. However, Congress did not act on bills converting 24 other municipalities into cities.

During the 12th Congress,4 Congress enacted into law Republic Act No. 9009 (RA 9009),5 which took effect on 30 June 2001. RA 9009 amended Section 450 of the Local Government Code by increasing the annual income requirement for conversion of a municipality into a city from P20 million to P100 million. The rationale for the amendment was to restrain, in the words of Senator Aquilino Pimentel, "the mad rush" of municipalities to convert into cities solely to secure a larger share in the Internal Revenue Allotment despite the fact that they are incapable of fiscal independence.6

After the effectivity of RA 9009, the House of Representatives of the 12th Congress7 adopted Joint Resolution No. 29,8 which sought to exempt from the P100 million income requirement in RA 9009 the 24 municipalities whose cityhood bills were not approved in the 11th Congress. However, the 12thCongress ended without the Senate approving Joint Resolution No. 29.

During the 13th Congress,9 the House of Representatives re-adopted Joint Resolution No. 29 as Joint Resolution No. 1 and forwarded it to the Senate for approval. However, the Senate again failed to approve the Joint Resolution. Following the advice of Senator Aquilino Pimentel, 16 municipalities filed, through their respective sponsors, individual cityhood bills. The 16 cityhood bills contained a common provision exempting all the 16 municipalities from the P100 million income requirement in RA 9009.

On 22 December 2006, the House of Representatives approved the cityhood bills. The Senate also approved the cityhood bills in February 2007, except that of Naga, Cebu which was passed on 7 June 2007. The cityhood bills lapsed into law (Cityhood Laws10) on various dates from March to July 2007 without the President's signature.11

The Cityhood Laws direct the COMELEC to hold plebiscites to determine whether the voters in each respondent municipality approve of the conversion of their municipality into a city.

Petitioners filed the present petitions to declare the Cityhood Laws unconstitutional for violation of Section 10, Article X of the Constitution, as well as for violation of the equal protection clause.12Petitioners also lament that the wholesale conversion of municipalities into cities will reduce the share of existing cities in the Internal Revenue Allotment because more cities will share the same amount of internal revenue set aside for all cities under Section 285 of the Local Government Code.13

The Issues

The petitions raise the following fundamental issues:

1. Whether the Cityhood Laws violate Section 10, Article X of the Constitution; and

2. Whether the Cityhood Laws violate the equal protection clause.

The Ruling of the Court

We grant the petitions.

The Cityhood Laws violate Sections 6 and 10, Article X of the Constitution, and are thus unconstitutional.

First, applying the P100 million income requirement in RA 9009 to the present case is a prospective, not a retroactive application, because RA 9009 took effect in 2001 while the cityhood bills became law more than five years later.

Second, the Constitution requires that Congress shall prescribe all the criteria for the creation of a city in the Local Government Code and not in any other law, including the Cityhood Laws.

Third, the Cityhood Laws violate Section 6, Article X of the Constitution because they prevent a fair and just distribution of the national taxes to local government units.

Fourth, the criteria prescribed in Section 450 of the Local Government Code, as amended by RA 9009, for converting a municipality into a city are clear, plain and unambiguous, needing no resort to any statutory construction.

Fifth, the intent of members of the 11th Congress to exempt certain municipalities from the coverage of RA 9009 remained an intent and was never written into Section 450 of the Local Government Code.

Sixth, the deliberations of the 11th or 12th Congress on unapproved bills or resolutions are not extrinsic aids in interpreting a law passed in the 13th Congress.

Seventh, even if the exemption in the Cityhood Laws were written in Section 450 of the Local Government Code, the exemption would still be unconstitutional for violation of the equal protection clause.

Preliminary Matters

Prohibition is the proper action for testing the constitutionality of laws administered by the COMELEC,14 like the Cityhood Laws, which direct the COMELEC to hold plebiscites in implementation of the Cityhood Laws. Petitioner League of Cities of the Philippines has legal standing because Section 499 of the Local Government Code tasks the League with the "primary purpose of ventilating, articulating and crystallizing issues affecting city government administration and securing, through proper and legal means, solutions thereto."15 Petitioners-in-intervention,16 which are existing cities, have legal standing because their Internal Revenue Allotment will be reduced if the Cityhood Laws are declared constitutional. Mayor Jerry P. Treñas has legal standing because as Mayor of Iloilo City and as a taxpayer he has sufficient interest to prevent the unlawful expenditure of public funds, like the release of more Internal Revenue Allotment to political units than what the law allows.

Applying RA 9009 is a Prospective Application of the Law

RA 9009 became effective on 30 June 2001 during the 11th Congress. This law specifically amended Section 450 of the Local Government Code, which now provides:

Section 450. Requisites for Creation. – (a) A municipality or a cluster of barangays may be converted into a component city if it has a locally generated average annual income, as certified by the Department of Finance, of at least One hundred million pesos (P100,000,000.00) for the last two (2) consecutive years based on 2000 constant prices, and if it has either of the following requisites:

(i) a contiguous territory of at least one hundred (100) square kilometers, as certified by the Land Management Bureau; or

(ii) a population of not less than one hundred fifty thousand (150,000) inhabitants, as certified by the National Statistics Office.

The creation thereof shall not reduce the land area, population and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed herein.

(b) The territorial jurisdiction of a newly-created city shall be properly identified by metes and bounds. The requirement on land area shall not apply where the city proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands.

(c) The average annual income shall include the income accruing to the general fund, exclusive of special funds, transfers, and non-recurring income. (Emphasis supplied)

Thus, RA 9009 increased the income requirement for conversion of a municipality into a city from P20 million to P100 million. Section 450 of the Local Government Code, as amended by RA 9009, does not provide any exemption from the increased income requirement.

Prior to the enactment of RA 9009, a total of 57 municipalities had cityhood bills pending in Congress. Thirty-three cityhood bills became law before the enactment of RA 9009. Congress did not act on 24 cityhood bills during the 11th Congress.

During the 12th Congress, the House of Representatives adopted Joint Resolution No. 29, exempting from the income requirement of P100 million in RA 9009 the 24 municipalities whose cityhood bills were not acted upon during the 11th Congress. This Resolution reached the Senate. However, the 12th Congress adjourned without the Senate approving Joint Resolution No. 29.

During the 13th Congress, 16 of the 24 municipalities mentioned in the unapproved Joint Resolution No. 29 filed between November and December of 2006, through their respective sponsors in Congress, individual cityhood bills containing a common provision, as follows:

Exemption from Republic Act No. 9009. - The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009.

This common provision exempted each of the 16 municipalities from the income requirement of P100 million prescribed in Section 450 of the Local Government Code, as amended by RA 9009. These cityhood bills lapsed into law on various dates from March to July 2007 after President Gloria Macapagal-Arroyo failed to sign them.

Indisputably, Congress passed the Cityhood Laws long after the effectivity of RA 9009. RA 9009 became effective on 30 June 2001 or during the 11th Congress. The 13th Congress passed in December 2006 the cityhood bills which became law only in 2007. Thus, respondent municipalities cannot invoke the principle of non-retroactivity of laws.17 This basic rule has no application because RA 9009, an earlier law to the Cityhood Laws, is not being applied retroactively but prospectively.

Congress Must Prescribe in the Local Government Code All Criteria

Section 10, Article X of the 1987 Constitution provides:

No province, city, municipality, or barangay shall be created, divided, merged, abolished or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. (Emphasis supplied)

The Constitution is clear. The creation of local government units must follow the criteria established in the Local Government Code and not in any other law. There is only one Local Government Code.18 The Constitution requires Congress to stipulate in the Local Government Code all the criteria necessary for the creation of a city, including the conversion of a municipality into a city. Congress cannot write such criteria in any other law, like the Cityhood Laws.

The criteria prescribed in the Local Government Code govern exclusively the creation of a city. No other law, not even the charter of the city, can govern such creation. The clear intent of the Constitution is to insure that the creation of cities and other political units must follow the same uniform, non-discriminatory criteria found solely in the Local Government Code. Any derogation or deviation from the criteria prescribed in the Local Government Code violates Section 10, Article X of the Constitution.

RA 9009 amended Section 450 of the Local Government Code to increase the income requirement from P20 million to P100 million for the creation of a city. This took effect on 30 June 2001. Hence, from that moment the Local Government Code required that any municipality desiring to become a city must satisfy the P100 million income requirement. Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption from this income requirement.

In enacting RA 9009, Congress did not grant any exemption to respondent municipalities, even though their cityhood bills were pending in Congress when Congress passed RA 9009. The Cityhood Laws, all enacted after the effectivity of RA 9009, explicitly exempt respondent municipalities from the increased income requirement in Section 450 of the Local Government Code, as amended by RA 9009. Such exemption clearly violates Section 10, Article X of the Constitution and is thus patently unconstitutional. To be valid, such exemption must be written in the Local Government Code and not in any other law, including the Cityhood Laws.

Cityhood Laws Violate Section 6, Article X of the Constitution

Uniform and non-discriminatory criteria as prescribed in the Local Government Code are essential to implement a fair and equitable distribution of national taxes to all local government units. Section 6, Article X of the Constitution provides:

Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. (Emphasis supplied)

If the criteria in creating local government units are not uniform and discriminatory, there can be no fair and just distribution of the national taxes to local government units.

A city with an annual income of only P20 million, all other criteria being equal, should not receive the same share in national taxes as a city with an annual income of P100 million or more. The criteria of land area, population and income, as prescribed in Section 450 of the Local Government Code, must be strictly followed because such criteria, prescribed by law, are material in determining the "just share" of local government units in national taxes. Since the Cityhood Laws do not follow the income criterion in Section 450 of the Local Government Code, they prevent the fair and just distribution of the Internal Revenue Allotment in violation of Section 6, Article X of the Constitution.

Section 450 of the Local Government Code is Clear, Plain and Unambiguous

There can be no resort to extrinsic aids – like deliberations of Congress – if the language of the law is plain, clear and unambiguous. Courts determine the intent of the law from the literal language of the law, within the law's four corners.19 If the language of the law is plain, clear and unambiguous, courts simply apply the law according to its express terms. If a literal application of the law results in absurdity, impossibility or injustice, then courts may resort to extrinsic aids of statutory construction like the legislative history of the law.20

Congress, in enacting RA 9009 to amend Section 450 of the Local Government Code, did not provide any exemption from the increased income requirement, not even to respondent municipalities whose cityhood bills were then pending when Congress passed RA 9009. Section 450 of the Local Government Code, as amended by RA 9009, contains no exemption whatsoever. Since the law is clear, plain and unambiguous that any municipality desiring to convert into a city must meet the increased income requirement,

there is no reason to go beyond the letter of the law in applying Section 450 of the Local Government Code, as amended by RA 9009.

The 11th Congress' Intent was not Written into the Local Government Code

True, members of Congress discussed exempting respondent municipalities from RA 9009, as shown by the various deliberations on the matter during the 11th Congress. However, Congress did not write this intended exemption into law. Congress could have easily included such exemption in RA 9009 but Congress did not. This is fatal to the cause of respondent municipalities because such exemption must appear in RA 9009 as an amendment to Section 450 of the Local Government Code. The Constitution requires that the criteria for the conversion of a municipality into a city, including any exemption from such criteria, must all be written in the Local Government Code. Congress cannot prescribe such criteria or exemption from such criteria in any other law. In short, Congress cannot create a city through a law that does not comply with the criteria or exemption found in the Local Government Code.

Section 10 of Article X is similar to Section 16, Article XII of the Constitution prohibiting Congress from creating private corporations except by a general law. Section 16 of Article XII provides:

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. (Emphasis supplied)

Thus, Congress must prescribe all the criteria for the "formation, organization, or regulation" of private corporations in a general law applicable to all without discrimination.21 Congress cannot create a private corporation through a special law or charter.

Deliberations of the 11th Congress on Unapproved Bills Inapplicable

Congress is not a continuing body.22 The unapproved cityhood bills filed during the 11th Congress became mere scraps of paper upon the adjournment of the 11th Congress. All the hearings and deliberations conducted during the 11th Congress on unapproved bills also became worthless upon the adjournment of the 11th Congress. These hearings and deliberations cannot be used to interpret bills enacted into law in the 13th or subsequent Congresses.

The members and officers of each Congress are different. All unapproved bills filed in one Congress become functus officio upon adjournment of that Congress and must be re-filed anew in order to be taken up in the next Congress. When their respective authors re-filed the cityhood bills in 2006 during the 13th Congress, the bills had to start from square one again, going through the legislative mill just like bills taken up for the first time, from the

filing to the approval. Section 123, Rule XLIV of the Rules of the Senate, on Unfinished Business, provides:

Sec. 123. x x x

All pending matters and proceedings shall terminate upon the expiration of one (1) Congress, but may be taken by the succeeding Congress as if presented for the first time. (Emphasis supplied)

Similarly, Section 78 of the Rules of the House of Representatives, on Unfinished Business, states:

Section 78. Calendar of Business. The Calendar of Business shall consist of the following:

a. Unfinished Business. This is business being considered by the House at the time of its last adjournment. Its consideration shall be resumed until it is disposed of. The Unfinished Business at the end of a session shall be resumed at the commencement of the next session as if no adjournment has taken place. At the end of the term of a Congress, all Unfinished Business are deemed terminated. (Emphasis supplied)

Thus, the deliberations during the 11th Congress on the unapproved cityhood bills, as well as the deliberations during the 12th and 13th Congresses on the unapproved resolution exempting from RA 9009 certain municipalities, have no legal significance. They do not qualify as extrinsic aids in construing laws passed by subsequent Congresses.

Applicability of Equal Protection Clause

If Section 450 of the Local Government Code, as amended by RA 9009, contained an exemption to the P100 million annual income requirement, the criteria for such exemption could be scrutinized for possible violation of the equal protection clause. Thus, the criteria for the exemption, if found in the Local Government Code, could be assailed on the ground of absence of a valid classification. However, Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption. The exemption is contained in the Cityhood Laws, which are unconstitutional because such exemption must be prescribed in the Local Government Code as mandated in Section 10, Article X of the Constitution.

Even if the exemption provision in the Cityhood Laws were written in Section 450 of the Local Government Code, as amended by RA 9009, such exemption would still be unconstitutional for violation of the equal protection clause. The exemption provision merely states, "Exemption from Republic Act No. 9009 ─ The City of x x x shall be exempted from the income requirement prescribed under Republic Act No. 9009." This one sentence exemption provision contains no classification standards or guidelines differentiating the exempted municipalities from those that are not exempted.

Even if we take into account the deliberations in the 11th Congress that municipalities with pending cityhood bills should be exempt from the P100 million income requirement, there is still no valid classification to satisfy the equal protection clause. The exemption will be based solely on the fact that the 16 municipalities had cityhood bills pending in the 11th Congress when RA 9009 was enacted. This is not a valid classification between those entitled and those not entitled to exemption from the P100 million income requirement.

To be valid, the classification in the present case must be based on substantial distinctions, rationally related to a legitimate government objective which is the purpose of the law,23 not limited to existing conditions only, and applicable to all similarly situated. Thus, this Court has ruled:

The equal protection clause of the 1987 Constitution permits a valid classification under the following conditions:

1. The classification must rest on substantial distinctions;

2. The classification must be germane to the purpose of the law;

3. The classification must not be limited to existing conditions only; and

4. The classification must apply equally to all members of the same class.24

There is no substantial distinction between municipalities with pending cityhood bills in the 11thCongress and municipalities that did not have pending bills. The mere pendency of a cityhood bill in the 11th Congress is not a material difference to distinguish one municipality from another for the purpose of the income requirement. The pendency of a cityhood bill in the 11th Congress does not affect or determine the level of income of a municipality. Municipalities with pending cityhood bills in the 11th Congress might even have lower annual income than municipalities that did not have pending cityhood bills. In short, the classification criterion − mere pendency of a cityhood bill in the 11th Congress − is not rationally related to the purpose of the law which is to prevent fiscally non-viable municipalities from converting into cities.

Municipalities that did not have pending cityhood bills were not informed that a pending cityhood bill in the 11th Congress would be a condition for exemption from the increased P100 million income requirement. Had they been informed, many municipalities would have caused the filing of their own cityhood bills. These municipalities, even if they have bigger annual income than the 16 respondent municipalities, cannot now convert into cities if their income is less than P100 million.

The fact of pendency of a cityhood bill in the 11th Congress limits the exemption to a specific condition existing at the time of passage of RA 9009. That specific condition will never happen again. This violates the requirement that a valid classification must not be limited to existing conditions only. This requirement is illustrated in Mayflower Farms, Inc. v. Ten Eyck,25 where the challenged law allowed milk dealers engaged in business prior to

a fixed date to sell at a price lower than that allowed to newcomers in the same business. In Mayflower, the U.S. Supreme Court held:

We are referred to a host of decisions to the effect that a regulatory law may be prospective in operation and may except from its sweep those presently engaged in the calling or activity to which it is directed. Examples are statutes licensing physicians and dentists, which apply only to those entering the profession subsequent to the passage of the act and exempt those then in practice, or zoning laws which exempt existing buildings, or laws forbidding slaughterhouses within certain areas, but excepting existing establishments. The challenged provision is unlike such laws, since, on its face, it is not a regulation of a business or an activity in the interest of, or for the protection of, the public, but an attempt to give an economic advantage to those engaged in a given business at an arbitrary date as against all those who enter the industry after that date. The appellees do not intimate that the classification bears any relation to the public health or welfare generally; that the provision will discourage monopoly; or that it was aimed at any abuse, cognizable by law, in the milk business. In the absence of any such showing, we have no right to conjure up possible situations which might justify the discrimination. The classification is arbitrary and unreasonable and denies the appellant the equal protection of the law. (Emphasis supplied)

In the same vein, the exemption provision in the Cityhood Laws gives the 16 municipalities a unique advantage based on an arbitrary date − the filing of their cityhood bills before the end of the 11thCongress - as against all other municipalities that want to convert into cities after the effectivity of RA 9009.

Furthermore, limiting the exemption only to the 16 municipalities violates the requirement that the classification must apply to all similarly situated. Municipalities with the same income as the 16 respondent municipalities cannot convert into cities, while the 16 respondent municipalities can. Clearly, as worded the exemption provision found in the Cityhood Laws, even if it were written in Section 450 of the Local Government Code, would still be unconstitutional for violation of the equal protection clause.

WHEREFORE, we GRANT the petitions and declare UNCONSTITUTIONAL the Cityhood Laws, namely: Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491.

SO ORDERED.

ANTONIO T. CARPIOAssociate Justice

FRANCISCO V TOLL

Republic of the PhilippinesSUPREME COURT

Manila 

EN BANC 

ERNESTO B. FRANCISCO, JR.and JOSE MA. O. HIZON,Petitioners,

- versus - TOLL REGULATORY BOARD, PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, MANILA NORTH TOLLWAYS CORPORATION, BENPRES HOLDINGS CORPORATION, FIRST PHILIPPINE INFRASTRUCTURE DEVELOPMENT CORPORATION, TOLLWAY MANAGEMENT CORPORATION, PNCC SKYWAY CORPORATION, CITRA METRO MANILA TOLLWAYS CORPORATION and HOPEWELL CROWN INFRASTRUCTURE, INC.,Respondents.x-------------------------------------------xHON. IMEE R. MARCOS, RONALDO B. ZAMORA, CONSUMERS UNION OF THE PHILIPPINES, INC., QUIRINO A. MARQUINEZ, HON. LUIS A. ASISTIO, HON. ERICO BASILIO A. FABIAN, HON. RENATO KA RENE B. MAGTUBO, HON. RODOLFO G. PLAZA, HON. ANTONIO M. SERAPIO, HON. EMMANUEL JOEL J. VILLANUEVA, HON. ANIBAN NG MGA MANGGAGAWA SA AGRIKULTURA (AMA), INC., ANIBAN NG MGA MAGSASAKA, MANGINGISDA AT MANGGAGAWA SA AGRIKULTURA-KATIPUNAN, INC., KAISAHAN NG MGA MAGSASAKA SA AGRIKULTURA, INC., KILUSAN NG MANGAGAWANG MAKABAYAN,

  G.R. No. 166910 Present: CORONA, CJ,CARPIO,CARPIO-MORALES,*VELASCO, JR.,NACHURA,LEONARDO-DE CASTRO,BRION,PERALTA,BERSAMIN,DEL CASTILLO,ABAD,*

VILLARAMA, JR.,PEREZ,MENDOZA, andSERENO, JJ.       G.R. No. 169917         

Petitioners,

- versus - The REPUBLIC OF THE PHILIPPINES, acting by and through the TOLL REGULATORY BOARD, MANILA NORTH TOLLWAYS CORPORATION, PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, and FIRST PHILIPPINE INFRASTRUCTURE DEVELOPMENT CORP.,Respondents.x-------------------------------------------xGISING KABATAAN MOVEMENT, INC., BARANGAY COUNCIL OF SAN ANTONIO,MUNICIPALITY OF SANPEDRO, LAGUNA [as Represented by COUNCILOR CARLON G. AMBAYEC], and YOUNG PROFESSIONALS AND ENTREPRENEURS OF SAN PEDRO, LAGUNAPetitioners,

- versus - THE REPUBLIC OF THE PHILIPPINES, acting through the TOLL REGULATORY BOARD (TRB), PHILIPPINE NATIONAL CONSTRUCTION CORPORATION (PNCC),Respondents.x-------------------------------------------xTHE REPUBLIC OF THE PHILIPPINES, represented by the TOLL REGULATORY BOARD,Petitioner,

- versus - YOUNG PROFESSIONALS AND ENTREPRENEURS OF SAN PEDRO, LAGUNA,Respondent.

                             G.R. No. 173630              

       G.R. No. 183599     Promulgated: October 19, 2010

x-----------------------------------------------------------------------------------------x 

D E C I S I O N 

VELASCO, JR., J.: Before us are four petitions; the first three are special civil actions under Rule 65,

assailing and seeking to nullify certain statutory provisions, presidential actions and implementing orders, toll operation-related contracts and issuances on the construction, maintenance and operation of the major tollway systems in Luzon. The petitions likewise seek to restrain and permanently prohibit the implementation of the allegedly illegal toll fee rate hikes for the use of the North Luzon Expressway (NLEX), South Luzon Expressway (SLEX) and the South Metro Manila Skyway (SMMS). The fourth, a petition for review under Rule 45, seeks to annul and set aside the decision dated June 23, 2008 of the Regional Trial Court (RTC) of Pasig, in SCA No. 3138-PSG, enjoining the original toll operating franchisee from collecting toll fees in the SLEX.

 By Resolution of March 20, 2007, the Court ordered the consolidation of the first three

petitions, docketed as G.R. Nos. 166910, 169917 and 173630, respectively. The fourth petition, G.R. No. 183599, would later be ordered consolidated with the earlier three petitions.

THE FACTS 

The antecedent facts are as followsOn March 31, 1977, then President Ferdinand E. Marcos issued Presidential Decree No.

(P.D.) 1112, authorizing the establishment of toll facilities on public improvements. [1] This issuance, in its preamble, explicitly acknowledged the huge financial requirements and the necessity of tapping the resources of the private sector to implement the governments infrastructure programs. In order to attract private sector involvement, P.D. 1112 allowed the

collection of toll fees for the use of certain public improvements that would allow a reasonable rate of return on investments. The same decree created the Toll Regulatory Board (TRB) and invested it under Section 3 (a) (d) and (e) with the power to enter, for the Republic, into contracts for the construction, maintenance and operation of tollways, grant authority to operate a toll facility, issue therefor the necessary Toll Operation Certificate (TOC) and fix initial toll rates, and, from time to time, adjust the same after due notice and hearing.

 On the same date, P.D. 1113 was issued, granting to the Philippine National Construction

Corporation (PNCC), then known as the Construction and Development Corporation of the Philippines (CDCP), for a period of thirty years from May 1977 or up to May 2007 a franchise to construct, maintain and operate toll facilities in the North Luzon and South Luzon Expressways, with the right to collect toll fees at such rates as the TRB may fix and/or authorize. Particularly, Section 1 of P.D. 1113 delineates the coverage of the expressways from Balintawak, Caloocan City to Carmen, Rosales, Pangasinan and from Nichols, Pasay City to Lucena, Quezon. And because the franchise is not self-executing, as it was in fact made subject, under Section 3 of P.D. 1113, to such conditions as may be imposed by the Board in an appropriate contract to be executed for such purpose, TRB and PNCC signed in October 1977, a Toll Operation Agreement (TOA) on the North Luzon and South Luzon Tollways, providing for the detailed terms and conditions for the construction, maintenance and operation of the expressway.[2]

 On December 22, 1983, P.D. 1894 was issued therein further granting PNCC a franchise

over the Metro Manila Expressway (MMEX), and the expanded and delineated NLEX and SLEX. Particularly, PNCC was granted the right, privilege and authority to construct, maintain and operate any and all such extensions, linkages or stretches, together with the toll facilities appurtenant thereto, from any part of the North Luzon Expressway, South Luzon Expressway and/or Metro Manila Expressway and/or to divert the original route and change the original end-points of the North Luzon Expressway and/or South Luzon Expressway as may be approved by the [TRB].[3] Under Section 2 of P.D. 1894, the franchise granted the [MMEX] and all extensions, linkages, stretches and diversions after the approval of the decree that may be constructed after the approval of this decree [on December 22, 1983] shall likewise have a term of thirty (30) years, commencing from the date of completion of the project.

 As expressly set out in P.D. 1113 and reiterated in P.D. 1894, PNCC may sell or assign

its franchise thereunder granted or cede the usufruct[4] thereof upon the Presidents approval.[5] This same provision on franchise transfer and cession of usufruct is likewise found in P.D. 1112.[6]

 Then came the 1987 Constitution with its franchise provision.[7]

In 1993, the Government Corporate Counsel (GCC), acting on PNCCs request, issued Opinion No. 224, s. 1993,[8] later affirmed by the Secretary of Justice,[9] holding that PNCC

may, subject to certain clearance and approval requirements, enter into a joint venture (JV) agreement (JVA) with private entities without going into public bidding in the selection of its JV partners. PNCCs query was evidently prompted by the need to seek out alternative sources of financing for expanding and improving existing expressways, and to link them to economic zones in the north and to the CALABARZON area in the south. MOU FOR THE CONSTRUCTION, REHABILITATIONAND EXPANSION OF EXPRESSWAYS

 On February 8, 1994, the Department of Public Works and Highways (DPWH), TRB,

PNCC, Benpres Holdings Corporation (Benpres) and First Philippine Holdings Corporation (FPHC), among other private and government entities/agencies, executed a Memorandum of Understanding (MOU) envisaged to open the door for the entry of private capital in the rehabilitation, expansion (to Subic and Clark) and extension, as flagship projects, of the expressways north of Manila, over which PNCC has a franchise. To carry out their undertakings under the MOU, Benpres and FPHC formed, as their infrastructure holding arm, the First Philippine Infrastructure and Development Corporation (FPIDC).

 Consequent to the MOU execution, PNCC entered into financial and/or technical JVAs

with private entities/investors for the toll operation of its franchised areas following what may be considered as a standard pattern, viz.: (a) after a JVA is concluded and the usual government approval of the assignment by PNCC of the usufruct in the franchise under P.D. 1113, as amended, secured, a new JV company is specifically formed to undertake a defined toll road project; (b) the Republic of the Philippines, through the TRB, as grantor, PNCC, as operator, and the new corporation, as investor/concessionaire, with its lender, as the case may be, then execute a Supplemental Toll Operation Agreement (STOA) to implement the TOA previously issued; and (c) once the requisite STOA approval is given, project prosecution starts and upon the completion of the toll road project or of a divisible phase thereof, the TRB fixes or approves the initial toll rate after which, it passes a board resolution prescribing the periodic toll rate adjustment.

 The STOA defines the scope of the road project coverage, the terminal date of the

concession, and includes provisions on initial toll rate and a built-in formula for adjustment of toll rates, investment recovery clauses and contract termination in the event of the concessionaires, PNCCs or TRBs default, as the case may be.

 The following events or transactions, involving the personalities as indicated, transpired

with respect to the following projects: 

THE SOUTH METRO MANILA SKYWAY (SMMS)

(BUENDIA BICUTAN ELEVATED STRETCH) PROJECT PNCC entered into a JV partnership arrangement with P.T. Citra, an Indonesian

company, and created, for the SMMS project, the Citra Metro Manila Tollways Corporation (CMMTC).

 On November 27, 1995, TRB, PNCC and CMMTC executed a STOA for the SMMS

project (CITRA STOA). And on April 7, 1996, then President Fidel V. Ramos approved the CITRA STOA.

 Phase I of the SMMS project the Bicutan to Buendia elevated expressway stretch was

completed in December 1998, and the consequent initial toll rates for its use implemented a month after. On November 26, 2004, the TRB passed Resolution No. 2004-53, approving the periodic toll rate adjustment for the SMMS. THE NLEX EXPANSION PROJECT (REHABILITATED AND WIDENED NLEX, SUBIC EXPRESSWAY, CIRCUMFERENTIAL ROAD C-5)

In reply to the query of the then TRB Chairman, the Department of Justice (DOJ) issued DOJ Opinion No. 79, s. of 1994, echoing an earlier opinion of the GCC, that the TRB can implement the NLEX expansion project through a JV scheme with private investors possessing the requisite technical and financial capabilities.

On May 16, 1995, then President Ramos approved the assignment of PNCCs usufructuary rights as franchise holder to a JV company to be formed by PNCC and FPIDC.PNCC and FPIDC would later ink a JVA for the rehabilitation and modernization of the NLEX referred in certain pleadings as the North Luzon Tollway project.[10] The Manila North Tollways Corporation (MNTC) was formed for the purpose. 

On April 30, 1998, the Republic, through the TRB, PNCC and MNTC, executed a STOA for the North Luzon Tollway project (MNTC STOA) in which MNTC was authorized, inter alia, to subcontract the operation and maintenance of the project, provided that the majority of the outstanding shares of the contractor shall be owned by MNTC. The MNTC STOA covers three phases comprising of ten segments, including the rehabilitated and widened NLEX, the Subic Expressway and the circumferential Road C-5.[11] The STOA is to be effective for thirty years, reckoned from the issuance of the toll operation permit for the last completed phase or until December 31, 2030, whichever is earlier. The Office of the President (OP) approved the STOA on June 15, 1998.

On August 2, 2000, pursuant to the MNTC STOA, the Tollways Management Corporation (TMC)formerly known as the Manila North Tollways Operation and Maintenance Corporationwas created to undertake the operation and maintenance of the NLEX tollway facilities, interchanges and related works.

 On January 27, 2005, the TRB issued Resolution No. 2005-04 approving the initial

authorized toll rates for the closed and flat toll systems applicable to the new NLEX. 

THE SOUTH LUZON EXPRESSWAY PROJECT (NICHOLS TO LUCENA CITY) For the SLEX expansion project, PNCC and Hopewell Holdings Limited (HHL), as JV

partners, executed a Memorandum of Agreement (MOA),[12] which eventually led to the formation of a JV company Hopewell Crown Infrastructure, Inc. (HCII), now MTD Manila Expressways, Inc., (MTDME). And pursuant to the PNCC-MTDME JVA, the South Luzon Tollway Corporation (SLTC) and the Manila Toll Expressway Systems, Inc. (MATES) were incorporated to undertake the financing, construction, operation and maintenance of the resulting Project Toll Roads forming part of the SLEX. The toll road projects are divisible toll sections or segments, each segment defined as to its starting and end points and each with the corresponding distance coverage. The proposed JVA, as later amended, between PNCC and MTDME was approved by the OP on June 30, 2000.

Eventually, or on February 1, 2006, a STOA[13] for the financing, design, construction, lane expansion and maintenance of the Project Toll Roads (PTR) of the rehabilitated and improved SLEX was executed by and among the Republic, PNCC, SLTC, as investor, and MATES, as operator. To be precise, the PTRs, under the STOA, comprise and contemplated the full rehabilitation and/or roadway widening of the following existing toll roads or facilities: PTR 1 that portion of the tollway commencing at the end of South MM Skyway to the Filinvest exit at Alabang (1-242 km); PTR 2 the tollway from Alabang to Calamba, Laguna (27.28 km); PTR 3 the tollway from Calamba to Sto. Tomas, Batangas (7.6 km) and PTR 4 the tollway from Sto. Tomas to Lucena City (54.27 km).[14]

 Under Clause 6.03 of the STOA, the Operator, after substantially completing a TPR, shall

file an application for a Toll Operation Permit over the relevant completed TPR or segment, which shall include a request for a review and approval by the TRB of the calculation of the new current authorized toll rate.

 G.R. NO. 166910

 Petitioners Francisco and Hizon, as taxpayers and expressway users, seek to nullify the

various STOAs adverted to above and the corresponding TRB resolutions, i.e. Res. Nos. 2004-53 and 2005-04, fixing initial rates and/or approving periodic toll rate adjustments therefor. To the petitioners, the STOAs and the toll rate-fixing resolutions violate the Constitution in that they veritably impose on the public the burden of financing tollways by way of exorbitant fees and thus depriving the public of property without due process.These STOAs are also alleged to

be infirm as they effectively awarded purported build-operate-transfer (BOT) projects without public bidding in violation of the BOT Law (R.A. 6957, as amended by R.A. 7718).

 Petitioners likewise assail the constitutionality of Sections 3 (a) and (d) of P.D. 1112 in

relation to Section 8 (b) of P.D. 1894 insofar as they vested the TRB, on one hand, toll operation awarding power while, on the other hand, granting it also the power to issue, modify and promulgate toll rate charges. The TRB, so petitioners bemoan, cannot be an awarding party of a TOA and, at the same time, be the regulator of the tollway industry and an adjudicator of rate exactions disputes.

 Additionally, petitioners also seek to nullify certain provisions of P.D. 1113 and P.D.

1894, which uniformly grant the President the power to approve the transfer or assignment of usufruct or the rights and privileges thereunder by the tollway operator to third parties, particularly the transfer effected by PNCC to MNTC. As argued, the authority to approve partakes of an exercise of legislative power under Article VI, Section 1 of the Constitution.[15]

 In the meantime, or on April 8, 2010, the TRB issued a Certificate of Substantial

Completion[16] with respect to PTR 1 (Alabang-Filinvest stretch) and PTR 2 (Alabang-Calamba segments) of SLEX, signifying the completion of the full rehabilitation/expansion of both segments and the linkages/interchanges in between pursuant to the requirements of the corresponding STOA. TRB on even date issued a Toll Operation Permit in favor of MATES over said PTRs 1 and 2.[17] Accordingly, upon due application, the TRB approved the publication of the toll rate matrix for PTRs 1 and 2, the rate to take effect on June 30, 2010.[18] The implementation of the published rate would, however, be postponed to August 2010.

 On July 5, 2010, petitioner Francisco filed a Supplemental Petition with prayer for the

issuance of a temporary restraining order (TRO) and/or status quo order focused on the impending collection of what was perceived to be toll rate increases in the SLEX. The assailed adjustments were made public in a TRB notice of toll rate increases for the SLEX from Alabang to Calamba on June 6, 2010, and were supposed to have been implemented on June 30, 2010. On August 13, 2010, the Court granted the desired TRO, enjoining the respondents in the consolidated cases from implementing the toll rate increases in the SLEX.

 In their Consolidated Comment/Opposition to the Supplemental Petition, respondents

SLTC et al., aver that the disputed rates are actually initial and opening rates, not an increase or adjustment of the prevailing rate, for the new expanded and rehabilitated SLEX. In fine, the new toll rates are, per SLTC, for a new and upgraded facility, i.e. the aforementioned Project Toll Roads 1 and 2 put up pursuant to the 2006 Republic-PNCC-SLTC-MATES STOA adverted to.

 

G.R. NO. 169917  

While they raise, for the most part, the same issues articulated in G.R. No. 166910, such as the public bidding requirement, the power of the President to approve the assignment of PNCCs usufructuary rights to cover (as petitioners Imee R. Marcos, et al., would stress) even the assignment of the expressway from Balintawak to Tabang, the virtual amendment and extension of a statutory franchise by way of administrative action (e.g., the execution of a STOA or issuance of a TOC), petitioners in G.R. No. 169917some of them then and still are members of the House of Representatives have, as their main focus, the North Luzon Tollway project and the agreements and devices entered in relation therewith.

 Petitioners also assail the MNTC STOA on the ground that it granted the lenders (Asian

Development Bank/World Bank) of MNTC, as project concessionaire, the unrestricted rights to appoint a substitute entity to replace MNTC in case of an MNTC Default before prepayment of the loans, while also granting said lenders, in appropriate cases, the option to extend the concession or franchise for a period not exceeding fifty years coinciding with the full payment of the loans.

 G.R. NO. 173630

 Apart from those taken up in the other petitions for certiorari and prohibition, petitioners,

in G.R. No. 173630, whose members and constituents allegedly traverse SLEX daily, aver that TRB ought to have applied the provisions of R.A. 6957 [BOT Law] and R.A. 9184 [Government Procurement Reform Act], which require public bidding for the prosecution of the SLEX project. G.R. NO. 183599

 CIVIL CASE SCA NO. 3138-PSG BEFORE THE RTC

 On September 14, 2007, the Young Professionals and Entrepreneurs of San Pedro,

Laguna (YPES), one of the petitioners in G.R. No. 173630, filed before the RTC, Branch 155, in Pasig City, a special civil action for certiorari, etc., against the TRB, docketed as SCA No. 3138-PSG, containing practically identical issues raised in G.R. No. 173630.Like its petition in G.R. No. 173630, YPES, before the RTC, assailed and sought to nullify the April 27, 2007 TOC, which TRB issued to PNCC inasmuch as the TOC worked to extend PNCCs tollway operation franchise for the SLEX. As YPES argued, only the Congress can extend the term of PNCCs franchise which expired on May 1, 2007.

 RULING OF THE RTC IN SCA NO. 3138-PSG

 

By Decision[19] dated June 23, 2008, the RTC, for the main stated reason that the authority to grant or renew franchises belongs only to Congress, granted YPES petition, disposing as follows:

ACCORDINGLY, the instant Petition for Certiorari, Prohibition and Mandamus is hereby GRANTED and the questioned Toll Operation Certificate (TOC) covering the [SLEX] issued by respondent TRB in April, 2007, is hereby ordered ANNULLED and SET ASIDE.

 FURTHER, respondent PNCC is hereby immediately PROHIBITED from

collecting toll fess along the SLEX facilities as it no longer has the power and authority to do so.

 FINALLY, as mandated under Section 9 of PD No. 1113, respondent PNCC is

hereby COMMANDED to turn over without further delay the physical assets and facilities of the SLEX including improvements thereon, together with the equipment and appurtenances directly related to their operations, without any cost, to the Government through the Toll Regulatory Board x x x.[20]

 Thus, the instant petition for review on certiorari under Rule 45, filed by the TRB on pure

questions of law, docketed as G.R. No. 183599. In their separate comments, public and private respondents uniformly seek the dismissal

of the three special civil actions on the threshold issue of the absence of a justiciable case and lack of locus standi on the part of the petitioners therein. Other grounds raised range from the impropriety of certiorari to nullify toll operation agreements; the inapplicability of the public bidding rules in the selection by PNCC of its JV partners and the authority of the President to approve TOAs and the transfer of usufructuary rights. PNCC argues, in esse, that its continuous toll operations did not constitute an extension of its franchise, its authority to operate after the expiry date thereof in May 2007 being based on the valid authority of TRB to issue TOC. 

THE ISSUES The principal consolidated but interrelated issues tendered before the Court, most of

which with constitutional undertones, may be reduced into six (6) and formulated in the following wise: first, whether or not an actual case or controversy exists and, relevantly, whether petitioners in the first three petitions have locus standi; second, whether the TRB is vested with the power and authority to grant what amounts to a franchise over tollway facilities; third, corollary to the second, whether the TRB can enter into TOAs and, at the same time, promulgate toll rates and rule on petitions for toll rate adjustments; fourth, whether the President is duly authorized to approve contracts, inclusive of assignment of contracts, entered into by the TRB relative to tollway operations; fifth, whether the subject STOAs covering the

NLEX, SLEX and SMMS and their respective extensions, linkages, etc. are valid; sixth, whether a public bidding is required or mandatory for these tollway projects.

 Expressly prayed, if not subsumed, in the first three petitions, is to prohibit TRB and its

concessionaires from collecting toll fees along the Skyway and Luzon Tollways. 

PRELIMINARY ISSUESEXISTENCE OF AN ACTUAL CONTROVERSY, ITS RIPENESS AND

THE LOCUS STANDI TO SUE The power of judicial review can only be exercised in connection with a bona

fide controversy involving a statute, its implementation or a government action.[21] Withal, courts will decline to pass upon constitutional issues through advisory opinions, bereft as they are of authority to resolve hypothetical or moot questions.[22] The limitation on the power of judicial review to actual cases and controversies defines the role assigned to the judiciary in a tripartite allocation of power, to assure that the courts will not intrude into areas committed to the other branches of government.[23]

 In The Province of North Cotabato v. The Government of the Republic of

the Philippines Peace Panel on Ancestral Domain (GRP), the Court has expounded anew on the concept of actual case or controversy and the requirement of ripeness for judicial review, thus:

 An actual case or controversy involves a conflict of legal rights, an assertion of opposite

legal claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or dispute. There must be a contrariety of legal rights x x x. The Court can decide the constitutionality of an act x x x only when a proper case between opposing parties is submitted for judicial determination.

 Related to the requirement of an actual case or controversy is the requirement

of ripeness. A question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual challenging it. x x x [I]t is a prerequisite that something had then been accomplished or performed by either branch before a court may come into the picture, and the petitioner must allege the existence of an immediate or threatened injury to itself as a result of the challenged action.  He must show that he has sustained or is immediately in danger of sustaining some direct injury as a result of the act complained of.[24]

 But even with the presence of an actual case or controversy, the Court may refuse judicial

review unless the constitutional question or the assailed illegal government act is brought before it by a party who possesses what in Latin is technically called locus standi or the standing to challenge it.[25] To have standing, one must establish that he has a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement.[26] Particularly, he must show that (1) he has suffered some actual or threatened

injury as a result of the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the challenged action; and (3) the injury is likely to be redressed by a favorable action.[27]

 Petitions for certiorari and prohibition are, as here, appropriate remedies to raise

constitutional issues and to review and/or prohibit or nullify, when proper, acts of legislative and executive officials.[28] The present petitions allege that then President Ramos had exercised vis--vis an assignment of franchise, a function legislative in character. As alleged, too, the TRB, in the guise of entering into contracts or agreements with PNCC and other juridical entities, virtually enlarged, modified to the core and/or extended the statutory franchise of PNCC, thereby usurping a legislative prerogative. The usurpation came in the form of executing the assailed STOAs and the issuance of TOCs. Grave abuse of discretion is also laid on the doorstep of the TRB for its act of entering into these same contracts or agreements without the required public bidding mandated by law, specifically the BOT Law (R.A. 6957, as amended) and the Government Procurement Reform Act (R.A. 9184).

 In fine, the certiorari petitions impute on then President Ramos and the TRB, the

commission of acts that translate inter alia into usurpation of the congressional authority to grant franchises and violation of extant statutes. The petitions make a prima facie case for certiorari and prohibition; an actual case or controversy ripe for judicial review exists. Verily, when an act of a branch of government is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute.  In doing so, the judiciary merely defends the sanctity of its duties and powers under the Constitution.[29]

In any case, the rule on standing is a matter of procedural technicality, which may be relaxed when the subject in issue or the legal question to be resolved is of transcendental importance to the public.[30] Hence, even absent any direct injury to the suitor, the Court can relax the application of legal standing or altogether set it aside for non-traditional plaintiffs, like ordinary citizens, when the public interest so requires.[31] There is no doubt that individual petitioners, Marcos, et al., in G.R. No. 169917, as then members of the House of Representatives, possess the requisite legal standing since they assail acts of the executive they perceive to injure the institution of Congress. On the other hand, petitioners Francisco, Hizon, and the other petitioning associations, as taxpayers and/or mere users of the tollways or representatives of such users, would ordinarily not be clothed with the requisite standing. While this is so, the Court is wont to presently relax the rule on locus standi owing primarily to the transcendental importance and the paramount public interest involved in the implementation of the laws on the Luzon tollways, a roadway complex used daily by hundreds of thousands of motorists. What we said a century ago in Severino v. Governor General is just as apropos today:

When the relief is sought merely for the protection of private rights, x x x [the relators] right must clearly appear. On the other hand, when the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the people are regarded as the real party in interest, and the relator at whose instigation the proceedings are instituted need not show that he has any legal or special interest in the result, it being

sufficient to show that he is a citizen and as such interested in the execution of the laws.[32] (Words in bracket and emphasis added.)

Accordingly, We take cognizance of the present case on account of its transcendental importance to the public.

 SECOND ISSUE: TRB EMPOWERED TO GRANT AUTHORITY TO OPERATE

TOLL FACILITY /SYSTEM 

It is abundantly clear that Sections 3 (a) and (e) of P.D. 1112 in relation to Section 4 of P.D. 1894 have invested the TRB with sufficient power to grant a qualified person or entity with authority to construct, maintain, and operate a toll facility and to issue the corresponding toll operating permit or TOC.

 Sections 3 (a) and (e) of P.D. 1112 and Section 4 of P.D. 1894 amply provide the power

to grant authority to operate toll facilities: Section 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following powers and duties: (a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines with persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as but not limited to national highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to corporations or associations qualified under the Constitution and authorized by law to engage in toll operations; x x x x (e) To grant authority to operate a toll facility and to issue therefore the necessary Toll Operation Certificate subject to such conditions as shall be imposed by the Board including inter alia the following: 

(1)   That the Operator shall desist from collecting toll upon the expiration of the Toll Operation Certificate. 

(2)   That the entire facility operated as a toll system including all operation and maintenance equipment directly related thereto shall be turned over to the government immediately upon the expiration of the Toll Operation Certificate. 

(3)   That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the rights or privileges acquired under the Toll Operation Certificate to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other company or corporation organized for the same purpose, without the prior approval of the President of the Philippines. In the event of any valid transfer of the Toll Operation Certificate, the Transferee shall be subject to all the conditions, terms, restrictions and limitations of this Decree as fully and completely and to the same extent as if the Toll

Operation Certificate has been granted to the same person, firm, company, corporation or other commercial or legal entity. 

(4)   That in time of war, rebellion, public peril, emergency, calamity, disaster or disturbance of peace and order, the President of the Philippines may cause the total or partial closing of the toll facility or order to take over thereof by the Government without prejudice to the payment of just compensation. 

(5)   That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds shall be issued by any government agency or government-owned or controlled corporation on any financing program of the toll operator in connection with his undertaking under the Toll Operation Certificate. 

(6)   The Toll Operation Certificate may be amended, modified or revoked whenever the public interest so requires.

 (a)    The Board shall promulgate rules and regulations governing the procedures for the

grant of Toll Certificates. The rights and privileges of a grantee under a Toll Operation Certificate shall be defined by the Board. 

(b)   To issue rules and regulations to carry out the purposes of this Decree. SECTION 4. The Toll Regulatory Board is hereby given jurisdiction and supervision over the GRANTEE with respect to the Expressways, the toll facilities necessarily appurtenant thereto and, subject to the provisions of Section 8 and 9 hereof, the toll that the GRANTEE will charge the users thereof. By explicit provision of law, the TRB was given the power to grant administrative

franchise for toll facility projects. The concerned petitioners would argue, however, that PNCCs [then CDCPs] franchise, as

toll operator, was granted via P.D. 1113, on the same day P.D. 1112, creating the TRB, was issued. It is thus pointed out that P.D. 1112 could not have plausibly granted the TRB with the power and jurisdiction to issue a similar franchise. Pushing the point, they maintain that only Congress has, under the 1987 Constitution, the exclusive prerogative to grant franchise to operate public utilities.

 We are unable to agree with petitioners stance and their undue reliance on Article XII,

Section 11 of the Constitution, which states that: 

SEC. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition

that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires x x x.  The limiting thrust of the foregoing constitutional provision on the grant of franchise or

other forms of authorization to operate public utilities may, in context, be stated as follows: (a) the grant shall be made only in favor of qualified Filipino citizens or corporations; (b) Congress can impair the obligation of franchises, as contracts; and (c) no such authorization shall be exclusive or exceed fifty years.

 A franchise is basically a legislative grant of a special privilege to a person.

[33] Particularly, the term, franchise, includes not only authorizations issuing directly from Congress in the form of statute, but also those granted by administrative agencies to which the power to grant franchise has been delegated by Congress.[34] The power to authorize and control a public utility is admittedly a prerogative that stems from the Legislature. Any suggestion, however, that only Congress has the authority to grant a public utility franchise is less than accurate. As stressed in Albano v. Reyesa case decided under the aegis of the 1987 Constitutionthere is nothing in the Constitution remotely indicating the necessity of a congressional franchise before each and every public utility may operate, thus:

 That the Constitution provides x x x that the issuance of a franchise, certificate or other

form of authorization for the operation of a public utility shall be subject to amendment, alteration or repeal by Congress does not necessarily imply x x x that only Congress has the power to grant such authorization. Our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities.[35] (Emphasis ours.) In such a case, therefore, a special franchise directly emanating from Congress is not

necessary if the law already specifically authorizes an administrative body to grant a franchise or to award a contract.[36] This is the same view espoused by the Secretary of Justice in his opinion dated January 9, 2006, when he stated:

 That the administrative agencies may be vested with the authority to grant

administrative franchises or concessions over the operation of public utilities under their respective jurisdiction and regulation, without need of the grant of a separate legislative franchise, has been upheld by the Supreme Court x x x.[37]

 Under the 1987 Constitution, Congress has an explicit authority to grant a public utility

franchise. However, it may validly delegate its legislative authority, under the power of subordinate legislation,[38] to issue franchises of certain public utilities to some administrative agencies. In Kilusang Mayo Uno Labor Center v. Garcia, Jr., We explained the reason for the validity of subordinate legislation, thus:

 

Such delegation of legislative power to an administrative agency is permitted in order to adapt to the increasing complexity of modern life. As subjects for governmental regulation multiply, so does the difficulty of administering the laws. Hence, specialization even in legislation has become necessary.[39] (Emphasis ours.)  As aptly pointed out by the TRB and other private respondents, the Land Transportation

Franchising and Regulatory Board (LTFRB), the Civil Aeronautics Board (CAB), the National Telecommunications Commission (NTC), and the Philippine Ports Authority (PPA), to name a few, have been such delegates. The TRB may very well be added to the growing list, having been statutorily endowed, as earlier indicated, the power to grant to qualified persons, authority to construct road projects and operate thereon toll facilities. Such grant, as evidenced by the corresponding TOC or set out in a TOA, may be amended, modified, or revoked [by the TRB] whenever the public interest so requires.[40]

 In Philippine Airlines, Inc. v. Civil Aeronautics Board,[41] the Court reiterated its holding

in Albano that the CAB, like the PPA, has sufficient statutory powers under R.A. 776 to issue a Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a domestic air transport operator who, although not possessing a legislative franchise, meets all the other requirements prescribed by law. We held therein that there is nothing in the law nor in the Constitution which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator.[42] We further explicated:

Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts. It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, even the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature.[43] (Emphasis ours.) The validity of the delegation by Congress of its franchising prerogative is beyond cavil.

So it was that in Tatad v. Secretary of the Department of Energy,[44] We again ruled that the delegation of legislative power to administrative agencies is valid. In the instant case, the certiorari petitioners assume and harp on the lack of authority of PNCC to continue with its NLEX, SLEX, MMEX operations, in joint venture with private investors, after the lapse of its P.D. 1113 franchise. None of these petitioners seemed to have taken due stock of and appreciated the valid delegation of the appropriate power to TRB under P.D. 1112, as enlarged

in P.D. 1894. To be sure, a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. [45] Consequently, it has been held that privileges conferred by grant by administrative agencies as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature.[46]

   While it may be, as held in Strategic Alliance Development Corporation v. Radstock

Securities Limited,[47] that PNCCs P.D. 1113 franchise had already expired effective May 1, 2007, this fact of expiration did not, however, carry with it the cancellation of PNCCs authority and that of its JV partners granted under P.D. 1112 in relation to Section 1 of P.D. 1894 to construct, operate and maintain any and all such extensions, linkages or stretches, together with the toll facilities appurtenant thereto, from any part of the North Luzon Expressway, South Luzon Expressway and/or Metro Manila Expressway and/or to divert the original route and change the original end-points of the [NLEX]and/or [SLEX] as may be approved by the [TRB]. And to highlight the point, the succeeding Section 2 of P.D. 1894 specifically provides that the franchise for the extension and toll road projects constructed after the approval of P.D. 1894 shall be thirty years, counted from project completion. Indeed, prior to the expiration of PNCCs original franchise in May 2007, the TRB, in the exercise of its special powers under P.D. 1112, signed supplemental TOAs with PNCC and its JV partners. These STOAs covered the expansion and rehabilitation of NLEX and SLEX, as the case may be, and/or the construction, operation and maintenance of toll road projects contemplated in P.D.1894. And there can be no denying that the corresponding toll operation permits have been issued.

 In fine, the STOAs[48] TRB entered with PNCC and its JV partners had the effect of

granting authorities to construct, operate and maintain toll facilities, but with the injection of additional private sector investments consistent with the intent of P.D. Nos. 1112, 1113 and 1894.[49] The execution of these STOAs came in 1995, 1998 and 2006, or before the expiration of PNCCs original franchise on May 1, 2007. In accordance with applicable laws, these transactions have actually been authorized and approved by the President of the Philippines.[50] And as a measure to ensure the legality of the said transactions and in line with due diligence requirements, a review thereof was secured from the GCC and the DOJ, prior to their execution.

 Inasmuch as its charter empowered the TRB to authorize the PNCC and like entities to

maintain and operate toll facilities, it may be stated as a corollary that the TRB, subject to certain qualifications, infra, can alter the conditions of such authorization. Well settled is the rule that a legislative franchise cannot be modified or amended by an administrative body with general delegated powers to grant authorities or franchises. However, in the instant case, the law granting a direct franchise to PNCC[51] evidently and specifically conferred upon the TRB the power to impose conditions in an appropriate contract.[52] And to reiterate, Section 3 of P.D.

1113 provides that [t]his [PNCC] franchise is granted subject to such conditions as may be imposed by the [TRB] in an appropriate contract to be executed for this purpose, and with the understanding and upon the condition that it shall be subject to amendment, alteration or repeal when public interest so requires.[53] A similarly worded proviso is found in Section 6 of P.D. 1894. It is in this light that the TRB entered into the subject STOAs in order to allow the infusion of additional investments in the subject infrastructure projects. Prior to the expiration of PNCCs franchise on May 1, 2007, the STOAs merely imposed additional conditionalities, or as aptly pointed out by SLTC et al., obviously having in mind par. 16.06 of its STOA with TRB,[54] served as supplement, to the existing TOA of PNCC with TRB. We have carefully gone over the different STOAs and discovered that the tollway projects covered thereby were all undertaken under the P.D. 1113 franchise of PNCC. And it cannot be over-emphasized that the respective STOAs of MNTC and SLTC each contain provisions addressing the eventual expiration of PNCCs P.D. 1113 franchise and authorizing, thru the issuance by the TRB of a TOC, the implementation of a given toll project even after May 1, 2007. Thus:

 MNTC STOA 

2.6 CONCESSION PERIOD. In order to sustain the financial viability and integrity of the Project, GRANTOR [TRB] hereby grants MNTC the CONCESSION for the PROJECT ROADS for a period commencing upon the date that this [STOA] comes into effect under Clause 4.1 until 31 December 2030 or thirty years after the issuance of the corresponding TOLL OPERATION PERMIT for the last completed phase. Accordingly, unless the PNCC FRANCHISE is further extended beyond its expiry on 01 May 2007, GRANTOR undertakes to issue the necessary [TOC] for the rehabilitated and refurbished [NLEX] six months prior to the expiry of the PNCC FRANCHISE on 01 May 2007.

 SLTC STOA

 2.03 Authority of Investor and Operator to Undertake the Project

 (1)             The GRANTOR [TRB] has determined that the Project Toll Roads are within

the existing SLEX and are thus covered by the PNCC Franchise that is due to expire on May 1, 2007. PNCC has committed to exert its best efforts to obtain an extension x x x It is understood and agreed that in the event the PNCC Franchise is not renewed beyond the said expiry date, this [STOA] and the Concession granted x x x will stand in place of the PNCC Franchise and serve as a new concession, or authority, pursuant to Section 3 (a) of the TRB Charter, for the Investor to undertake the Project and for the Operator to Operate and Maintain the Project Toll Roads immediately upon the expiration of the PNCC Franchise, without need of the execution x x x of any other document to effect the same.

 

(2) x x x in the event it is subsequently decreed by competent authority that the issuance by the Grantor of a [TOC] is necessary x x x the Grantor shall x x x cause the TRB x x x to issue such [TOC] in favor of the Operator, embodying the terms and conditions of this Agreement. 

 The foregoing notwithstanding, there are to be sure certain aspects in PNCCs

legislative franchise beyond the altering reach of TRB. We refer to the coverage area of the tollways and the expiry date of PNCCs original franchise, which is May 1, 2007, as expressly stated under Sections 1 and 2 of P.D. 1894, respectively. The fact that these two items were specifically and expressly defined by law, i.e. P.D. 1113, indicates an intention that any alteration, modification or repeal thereof should only be done through the same medium. We said as much in Radstock, thus: [T]he term of the x x x franchise, which is 30 years from 1 May 1977, shall remain the same, as expressly provided in the first sentence of x x x Section 2 of P.D. 1894.[55] It is likewise worth noting what We further held in that case:

 The TRB does not have the power to give back to PNCC the toll assets and

facilities which were automatically turned over to the Government, by operation of law, upon the expiration of the franchise of the PNCC on 1 May 2007. Whatever power the TRB may have to grant authority to operate a toll facility or to issue a [TOC], such power does not obviously include the authority to transfer back to PNCC ownership of National Government assets, like the toll assets and facilities, which have become National Government property upon the expiry of PNCCs franchise x x x.[56] (Emphasis in the original.) Verily, upon the expiration of PNCCs legislative franchise on May 1, 2007, the new

authorities to construct, maintain and operate the subject tollways and toll facilities granted by the TRB pursuant to the validly executed STOAs and TOCs, shall begin to operate and be treated as administrative franchises or authorities. Pursuant to Section 3 (e) P.D. 1112, TRB possesses the power and duty, inter alia to:

 x x x grant authority to operate a toll facility and to issue therefore the necessary Toll Operation Certificate subject to such conditions as shall be imposed by the [TRB] including inter alia x x x. This is likewise consistent with the position of the Secretary of Justice in Opinion No.

122 on November 24, 1995,[57] thus: TRB has no authority to extend the legislative franchise of PNCC over the existing NSLE (North and South Luzon Expressways). However, TRB is not precluded under Section 3 (e) of P.D. No. 1112 (TRB Charter) to grant PNCC and its joint venture partner the authority to operate the existing toll facility of the NSLE and to issue therefore the necessary Toll Operation Certificate x x x.

It should be noted that the existing franchise of PNCC over the NSLE, which will expire on May 1, 2007, gives it the right, privilege and authority to construct, maintain and operate the NSLE.The Toll Operation Certificate which TRB may issue to the PNCC and its joint venture partner after the expiration of its franchise on May 1, 2007 is an entirely new authorization, this time for the operation and maintenance of the NSLE x x x. In other words, the right of PNCC and its joint venture partner, after May 7, 2007 [sic] to operate and maintain the existing NSLE will no longer be founded on its legislative franchise which is not thereby extended, but on the new authorization to be granted by the TRB pursuant to Section 3 (e), above quoted, of P.D. No. 1112. (Emphasis ours.)  The same opinion was thereafter made by the Secretary of Justice on January 9, 2006, in

Opinion No. 1,[58] stating that: 

The existing franchise of PNCC over the NSLE, which will expire on May 1, 2007, gives it the right, privilege and authority to construct, maintain and operate the NSLE. The Toll Operation Certificate which the TRB may issue to the PNCC and its joint venture partner after the expiration of its franchise on May 1, 2007 is an entirely new authorization, this time for the operation and maintenance of the NSLE. [T]he right of PNCC and its joint venture partner, after May 1, 2007, to operate and maintain the existing NSLE will no longer be founded on its legislative franchise which is not thereby extended, but on the new authorization to be granted by the TRB pursuant to Section 3 (e) of PD No. 1112.

 It appears therefore, that the effect of the STOA is not to extend the Franchise

of PNCC, but rather, to grant a new Concession over the SLEX Project and the OMCo., entities which are separate and distinct from PNCC. While initially, the authority of SLTC and OMCo. to enter into the STOA with the TRB and thereby become grantees of the Concession, will stem from and be based on the JVA and the assignment by PNCC to the OMCo. of the Usufruct in the Franchise, we submit that upon the execution by SLTC and the TRB of the STOA, the right to the Concession will emanate from the STOA itself and from the authority of the TRB under Section 3 (a) of the TRB Charter. Such being the case, the expiration of the Franchise on 1 May 2007, since such Concession is an entirely new and distinct concession from the Franchise and is, as stated, granted to entities other than PNCC.

 Finally, with regards (sic) the authority of the TRB this Office in Secretary of

Justice Opinion No. 92, s. 2000, stated that: 

Suffice it to say that official acts of the President enjoy full faith and confidence of the Government of the Republic of the Philippines which he represents. Furthermore, considering that the queries raised herein relates to the exercise by the TRB of its regulatory powers over toll road project, the same falls squarely within the exclusive jurisdiction of TRB pursuant to P.D. No. 1112. Consequently, it is, therefore, solely within TRBs prerogative and determination as to what rule shall govern and is made applicable to a specific toll road project proposal. 

The STOA is an explicit grant of the Concession by the Republic of the Philippines, through the TRB pursuant to P.D. (No.) 1112 and as approved by the President xxx. The foregoing grant is in full accord with the provisions of P.D. (No.) 1112 which authorizes TRB to enter into contracts on behalf of the Republic of the   Philippines   for the construction, operation and maintenance of toll facilities.   Such being the case, we opine that no other legal requirement is necessary to make the STOA effective of to confirm MNTCs (In this case, SLTC and the OMCO) rights and privileges granted therein. (Emphasis in the original.)

 Considering, however, that all toll assets and facilities pertaining to PNCC pursuant to its

P.D. 1113 franchise are deemed to have already been turned over to the National Government on May 1, 2007,[59] whatever participation that PNCC may have in the new authorities to construct, maintain and operate the subject tollways, shall be limited to doing the same in trust for the National Government. In Radstock, the Court held that [w]ith the expiration of PNCCs franchise, [its] assets and facilities were automatically turned over, by operation of law, to the government at no cost.[60] The Court went on further to state that the Governments ownership of PNCCs toll assets inevitably resulted in its owning too of the toll fees and the net income derived, after May 1, 2007, from the toll assets and facilities.[61] But as We have earlier discussed, the tollways and toll facilities should remain functioning in accordance with the validly executed STOAs and TOCs. However, PNCCs assets and facilities, or, in short, its very share/participation in the JVAs and the STOAs, inclusive of its percentage share in the toll fees collected by the JV companies currently operating the tollways shall likewise automatically accrue to the Government.

 In fine, petitioners claim about PNCCs franchise being amenable to an amendment only

by an act of Congress, or, what practically amounts to the same thing, that the TRB is without authority at all to modify the terms and conditions of PNCCs franchise, i.e. by amending its TOA/TOC, has to be rejected. Their lament then that the TRB, through the instrumentality of mere contracts and an administrative operating certificate, or STOAs and TOC, to be precise, effectively, but invalidly amended PNCC legislative franchise, are untenable. For, the bottom line is, the TRB has, through the interplay of the pertinent provisions of P.D. Nos. 1112, 1113 and 1894, the power to grant the authority to construct and operate toll road projects and toll facilities by way of a TOA and the corresponding TOC. What is otherwise a legislative power to grant or renew a franchise is not usurped by the issuance by the TRB of a TOC. But to emphasize, the case of the TRB is quite peculiarly unique as the special law conferring the legislative franchise likewise vested the TRB with the power to impose conditions on the franchise, albeit in a limited sense, by excluding from the investiture the power to amend or modify the stated lifetime of the franchise, its coverage and the ownership arrangement of the toll assets following the expiration of the legislative franchise.[62]

 At this juncture, the Court wishes to express the observation that P.D. Nos. 1112, 1113

and 1894, as couched and considered as a package, very well endowed the TRB with extraordinary powers. For, subject to well-defined limitations and approval requirements, the

TRB can, by way of STOAs, allow and authorize, as it has allowed and authorized, a legislative franchisee, PNCC, to share its concession with another entity or JV partners, the authorization effectively covering periods beyond May 2007. However, this unpalatable reality, a leftover of the martial law regime, presents issues on the merits and the wisdom of the economic programs, which properly belong to the legislature or the executive to address. The TRB is not precluded from granting PNCC and its joint venture partners authority, through a TOC for a period following the term of the proposed SMMS, with the said TOC serving as an entirely new authorization upon the expiration of PNCCs franchise on May 1, 2007. In short, after May 1, 2007, the operation and maintenance of the NLEX and the other subject tollways will no longer be founded on P.D. 1113 or portions of P.D. 1894 (PNCCs original franchise) but on an entirely new authorization, i.e. a TOC, granted by the TRB pursuant to its statutory authority under Sections 3 (a) and (e) of P.D. 1112.

Likewise needing no extended belaboring, in the light of the foregoing dispositions, is the untenable holding of the RTC in SCA No. 3138-PSG that the TRB is without power to issue a TOC to PNCC, amend or renew its authority over the SLEX tollways without separate legislative enactment. And lest it be overlooked, the TRB may validly issue an entirely new authorization to a JV company after the lapse of PNCCs franchise under P.D. 1113. Its thirty-year concession under P.D. 1894, however, does not have the quality of definiteness as to its start, as by the terms of the issuance, it commences and is to be counted from the date of approval of the project, the term project obviously referring to Metro Manila Expressways and all extensions, linkages, stretches and diversions refurbishing and rehabilitation of the existing NLEX and SLEX constructed after the approval of the decree in December 1983. The suggestion, therefore, of the petitioners in G.R. No. 169917, citing a 1989 Court of Appeals (CA) decision in CA-G.R. 13235 (Republic v. Guerrero, et al.), that the Balintawak to Tabang portion of the expressway no longer forms part of PNCCs franchise and, therefore, PNCC is without any right to assign the same to MNTC via a JVA, is specious. Firstly, in its Decision[63] in G.R. No. 89557, a certiorari proceeding commenced by PNCC to nullify the CA decision adverted to, the Court approved a compromise agreement, which referred to (1) the PNCCs authority to collect toll and maintenance fees; and (2) the supervision, approval and control by the DPWH[64] of the construction of additional facilities, on the questioned portion of the NLEX.[65] And still in another Decision,[66] the Court ruled that the Balintawak to Tabang stretch was recognized as part of the franchise of, or otherwise restored as toll facilities to be operated by x x x PNCC.[67] Once stamped with judicial imprimatur, and unless amended, modified or revoked by the parties, a compromise agreement becomes more than a mere binding contract; as thus sanctioned, the agreement constitutes the courts determination of the controversy, enjoining the parties to faithfully comply thereto.[68] Verily, like any other judgment, it has the effect and authority of res judicata.[69]

 At any rate, the PNCC was likewise granted temporary or interim authority by the TRB

to operate the SLEX,[70] to ensure the continued development, operations and progress of the

projects. We have ruled in Oroport Cargohandling Services, Inc. v. Phividec Industrial Authority that an administrative agency vested by law with the power to grant franchises or authority to operate can validly grant the same in the interim when it is necessary, temporary and beneficial to the public.[71] The grant by the TRB to PNCC as interim operator of the SLEX was certainly intended to guarantee the continued operation of the said tollway facility, and to ensure the want of any delay and inconvenience to the motoring public.

 All given, the cited CA holding is not a binding precedent. The time limitation on PNCCs

franchise under either P.D. 1113 or P.D. 1894 does not detract from or diminish the TRBs delegated authority under P.D. 1112 to enter into separate toll concessions apart and distinct from PNCCs original legislative franchise.

 THIRD ISSUE: TRBS POWER TO ENTER INTO CONTRACTS; ISSUE,

MODIFY AND PROMULGATE TOLL RATES; AND TO RULE ON PETITIONSRELATIVE TO TOLL RATES LEVEL AND INCREASES VALID

 The petitioners in the special civil actions cases would have the Court declare as invalid

(a) Section 3 (a) and (d) of P.D. 1112 (which accord the TRB, on one hand, the power to enter into contracts for the construction, and operation of toll facilities, while, on the other hand, granting it the power to issue and promulgate toll rates) and (b) Section 8 (b) of P.D. 1894 (granting TRB adjudicatory jurisdiction over matters involving toll rate movements). As submitted, granting the TRB the power to award toll contracts is inconsistent with its quasi-judicial function of adjudicating petitions for initial toll and periodic toll rate adjustments. There cannot, so petitioners would postulate, be impartiality in such a situation.

 The assailed provisions of P.D. 1112 and P.D. 1894 read: 

P.D. 1112 

Section 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following powers and duties: (a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines with persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as but not limited to national highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to corporations or associations qualified under the Constitution and authorized by law to engage in toll operations; (d) Issue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities and   upon notice and hearing , to approve or disapprove petitions for the increase thereof. Decisions of the Board on petitions for the increase of toll rate shall be appealable to the Office of the President within ten (10) days from the promulgation thereof. Such appeal shall not suspend the imposition of the new rates, provided however, that pending

the resolution of the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary to reimburse toll payers affected in case a reversal of the decision. (Emphasis ours.)

 P.D. 1894

 SECTION 8. x x x

 (b) For the Metro Manila Expressway and such extensions, linkages, stretches and

diversions of the Expressways which may henceforth be constructed, maintained and operated by the GRANTEE, the GRANTEE shall collect toll at such rates as shall initially be approved by the Toll Regulatory Board. The Toll Regulatory Board shall have the authority to approve such initial toll rates without the necessity of any notice and hearing, except as provided in the immediately succeeding paragraph of this Section. For such purpose, the GRANTEE shall submit for the approval of the Toll Regulatory Board the toll proposed to be charged the users. After approval of the toll rate(s) by the Toll Regulatory Board and publication thereof by the GRANTEE once in a newspaper of general circulation, the toll shall immediately be enforceable and collectible upon opening of the expressway to traffic use. 

Any interested Expressways users shall have the right to file, within a period of ninety (90) days after the date of publication of the initial toll rate, a petition with the Toll Regulatory Board for a review of the initial toll rate; provided, however, that the filing of such petition and the pendency of the resolution thereof shall not suspend the enforceability and collection of the toll in question. The Toll Regulatory Board, at a public hearing called for the purpose after due notice, shall then conduct a review of the initial toll shall be appealable (sic) to the Office of the President within ten (10) days from the promulgation thereof. The GRANTEE may be required to post a bond in such amount and from such surety or sureties and under such terms and conditions as the Toll Regulatory Board shall fix in case of any petition for review of, or appeal from, decisions of the Toll Regulatory Board. 

In case it is finally determined, after a review by the Toll Regulatory Board or appeal therefrom, that the GRANTEE is not entitled, in whole or in part, to the initial toll, the GRANTEE shall deposit in the escrow account the amount collected under the approved initial toll fee and such amount shall be refunded to Expressways users who had paid said toll in accordance with the procedure as may be prescribed or promulgated by the Toll Regulatory Board. (Emphasis ours.)

 The petitioners are indulging in gratuitous, if not unfair, conclusion as to the capacity of

the TRB to act as a fair and objective tribunal on matters of toll fee fixing. Administrative bodies have expertise in specific matters within the purview of their

respective jurisdictions. Accordingly, the law concedes to them the power to promulgate implementing rules and regulations (IRR) to carry out declared statutory policies provided that the IRR conforms to the terms and standards prescribed by that statute.[72]

 The Court does not perceive an irreconcilable clash in the enumerated TRBs statutory

powers, such that the exercise of one negates another. The ascription of impartiality on the part of the TRB cannot, under the premises, be accorded cogency. Petitioners have not shown that

the TRB lacks the expertise, competence and capacity to implement its mandate of balancing the interests of the toll-paying motoring public and the imperative of allowing the concessionaires to recoup their investment with reasonable profits. As it were, Section 9 of P.D. 1894 provides a parametric formula for adjustment of toll rates that takes into account the Peso-US Dollar exchange rate, interest rate and construction materials price index, among other verifiable and quantifiable variables.

 While not determinative of the issue immediately at hand, the grant to and the exercise by

an administrative agency of regulating and allowing the operation of public utilities and, at the same time, fixing the fees that they may charge their customers is now commonplace. It must be presumed that the Congress, in creating said agencies and clothing them with both adjudicative powers and contract-making prerogatives, must have carefully studied such dual authority and found the same not breaching any constitutional principle or concept.[73] So must it be for P.D. Nos. 1112 and 1894.

 The Court can take judicial cognizance of the exercise by the LTFRB and NTC both

spin-off agencies of the now defunct Public Service Commission of similar concurrent powers. The LTFRB, under Executive Order No. (E.O.) 202,[74] series of 1987, is empowered,[75] among others, to regulate the operation of public utilities or for hire vehicles and to grant franchises or certificates of public convenience (CPC); and to fix rates or fares, to approve petitions for fare rate increases and to resolve oppositions to such petitions.

The NTC, on the other hand, has been granted similar powers of granting franchises, allocating areas of operations, rate-fixing and to rule on petitions for rate increases under E.O. 546,[76] s. of 1979.

 The Energy Regulatory Commission (ERC) likewise enjoys on the one hand, the power (a) to grant, modify or revoke an authority to operate facilities used in the generation of electricity, and on the other, (b) to determine, fix and approve rates and tariffs of transmission, and distribution retail wheeling charges and tariffs of franchise electric utilities and all electric power rates including that which is charged to end-users.[77] In Chamber of Real Estate and Builders Association, Inc. v. ERC, We even categorically stated that the ERC is a quasi-judicial and quasi-legislative regulatory body created under Section 38 of the EPIRA, [and] x x x an administrative agency vested with broad regulatory and monitoring functions over the Philippine electric industry to ensure its successful restructuring and modernization x x x.[78]

 To summarize, the fact that an administrative agency is exercising its administrative or

executive functions (such as the granting of franchises or awarding of contracts) and at the same time exercising its quasi-legislative (e.g. rule-making) and/or quasi-judicial functions (e.g. rate-fixing), does not support a finding of a violation of due process or the Constitution. In C.T. Torres Enterprises, Inc. v. Hibionada,[79] We explained the rationale, thus:

 

It is by now commonplace learning that many administrative agencies exercise and perform adjudicatory powers and functions, though to a limited extent only. Limited delegation of judicial or quasi-judicial authority to administrative agencies (e.g. the Securities and Exchange Commission and the National Labor Relations Commission) is well recognized in our jurisdiction, basically because the need for special competence and experience has been recognized as essential in the resolution of questions of complex or specialized character and because of a companion recognition that the dockets of our regular courts have remained crowded and clogged.

 x x x x

 As a result of the growing complexity of the modern society, it has become necessary to create more and more administrative bodies to help in the regulation of its ramified activities.Specialized in the particular fields assigned to them, they can deal with the problems thereof with more expertise and dispatch than can be expected from the legislature or the courts of justice. This is the reason for the increasing vesture of quasi-legislative and quasi-judicial powers in what is now not unquestionably called the fourth department of the government.

 x x x x

 There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency's special expertise. The very definition of an administrative agency includes its being vested with quasi-judicial powers.  The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. (Emphasis ours.) 

FOURTH ISSUE: PRESIDENT AMPLY VESTED WITH STATUTORYPOWER TO APPROVE TRB CONTRACTS

 Just like their parallel stance on the grant to TRB of the power to enter into toll

agreements, e.g., TOAs or STOAs, the petitioners in the first three petitions would assert that the grant to the President of the power to peremptorily authorize the assignment by PNCC, as franchise holder, of its franchise or the usufruct in its franchise is unconstitutional. It is unconstitutional, so petitioners would claim, for being an encroachment of legislative power.

 As earlier indicated, Section 3 (a) of P.D. 1112 requires approval by the President of any

contract TRB may have entered into or effected for the construction and operation of toll facilities. Complementing Section 3 (a) is 3 (e) (3) of P.D. 1112 enjoining the transfer of the usufruct of PNCCs franchise without the Presidents prior approval. For perspective, Section 3 (e) (3) of P.D. 1112 provides:

 That the toll operator shall not lease, transfer, grant the usufruct of, sell or

assign the rights or privileges acquired under the [TOC] to any person x x x or legal entity nor merge with any other company or corporation organized for the same

purpose without the prior approval of the President of the Philippines. In the event of any valid transfer of the TOC, the Transferee shall be subject to all the conditions, terms, restrictions and limitations of this Decree x x x.[80]

 The Presidents approving authority is of statutory origin. To us, there is nothing illegal,

let alone unconstitutional, with the delegation to the President of the authority to approve the assignment by PNCC of its rights and interest in its franchise, the assignment and delegation being circumscribed by restrictions in the delegating law itself. As the Court stressed in Kilosbayan v. Guingona, Jr.,[81] the rights and privileges conferred under a franchise may be assigned if authorized by a statute, subject to such restrictions as may be provided by law, such as the prior approval of the grantor or a government agency.[82]

 There can, therefore, be no serious challenge to this presidential- approving

prerogative. Should grave abuse of discretion in some way infect the exercise of the prerogative, then the approval action may be nullified for that reason, but not on the ground that the underlying authority is constitutionally doubtful. If the TRB may validly be empowered to grant private entities the authority to operate toll facilities, would a delegation of a lesser authority to approve the grant to the head of the administrative machinery of the government be objectionable?

 The fact that P.D. 1112 partakes of a martial law issuance does not per se provide an

objectionable feature to the decree, albeit it may be argued with some plausibility that then President Marcos intended to have the final say as to who shall act as the toll operators of the Luzon expressways. Be that as it may, all proclamations, orders, decrees, instructions, and acts promulgated, issued, or done by the former President (Ferdinand E. Marcos) are part of the law of the land, and shall remain valid, legal, binding, and effective, unless modified, revoked or superseded by subsequent proclamations, orders, decrees, instructions, or other acts of the President.[83] To emphasize, Padua v. Ranadacited Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, quoting that:

 The Court wryly observes that during the past dictatorship, every presidential

issuance, by whatever name it was called, had the force and effect of law because it came from President Marcos. Such are the ways of despots. Hence, it is futile to argue that LOI 474 could not have repealed P.D. No. 27 because the former was only a letter of instruction. The important thing is that it was issued by President Marcos, whose word was law during that time.[84]

 FIFTH ISSUE: ASSAILED STOAS VALIDLY ENTERED

 This brings us to the issue of the validity of certain provisions of the STOAs and related

agreements entered into by the TRB, as duly approved by the President.

 Relying on Clause 17.4.1[85] of the MNTC STOA that the lenders have the unrestricted

right to appoint a substitute entity in case of default of MNTC or of the occurrence of an event of default in respect of the loans, petitioners argue that since MNTC is the assignee or transferee of PNCCs franchise, then it steps into the shoes of PNCC. They contend that the act of replacing MNTC as grantee is tantamount to an amendment or alteration of the PNCCs original franchise and hence unconstitutional, considering that the constitutional power to appoint a new franchise holder is reserved to Congress.[86]

 This contention is bereft of merit. Petitioners presupposition that only Congress has the power to directly grant franchises is

misplaced. Time and again, We have held that administrative agencies may be empowered by the Legislature by means of a law to grant franchises or similar authorizations. [87] And this, We have sufficiently addressed in the present case.[88] To reiterate, We discussed in Albano that our statute books are replete with laws granting administrative agencies the power to issue authorizations.[89] This delegation of legislative power to administrative agencies is allowed in order to adapt to the increasing complexity of modern life.[90] Consequently, We have held that the privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature.[91]

 In this case, the TRBs charter itself, or Section 3 (e) of P.D. 1112, specifically empowers

it to grant authority to operate a toll facility and to issue therefore the necessary Toll Operation Certificate subject to such conditions as shall be imposed by the [TRB]x x x. [92] Section 3 (a) of the same law permits the TRB to enter into contracts for the construction, operation and maintenance of toll facilities. Clearly, there is no question that the TRB is vested by the Legislature, through P.D. 1112, with the power not only to grant an authority to operate a toll facility, but also to enter into contracts for the construction, operation and maintenance thereof.

 Petitioners also contend that substituting MNTC as the grantee in case of its default with

respect to its loans is tantamount to an amendment of PNCCs original franchise and is hence, unconstitutional. We also find this assertion to be without merit. Besides holding that the Legislature may properly empower administrative agencies to grant franchises pursuant to a law, We have also earlier explained in this case that P.D. 1113 and the amendatory P.D. 1894 both vested the TRB with the power to impose conditions on PNCCs franchise in an appropriate contract and may therefore amend or alter the same when public interest so requires; [93] save for the conditions stated in Sections 1 and 2 of P.D. 1894, which relates to the coverage area of the tollways and the expiration of PNCCs original franchise.[94] P.D. 1112 provided further that the TRB has the power to amend or modify a Toll Operation Certificate that it issued when public interest so requires.[95] Accordingly, to Our mind, there is nothing infirm much less questionable

about the provision in the STOA, allowing the substitution of MNTC in case it defaults in its loans.

 Furthermore, in the subject provision (Clause 17.4.1[96]), the unrestricted right of the

lender to appoint a substituted entity is never intended to afford such lender a plenary power to do so. The subject clause states:

 17.4.1 The PARTIES acknowledge that following a Notice of Substitution under clauses 17.2 or 17.3 the LENDERS have, subject to the provisions of Clause 17.4.3, the unrestricted right to appoint a SUBSTITUTED ENTITY in place of MNTC following the declaration of the occurrence of a MNTC DEFAULT prior to full repayment of the LOANS or of an event of default in respect of the LOANS. GRANTOR shall extend all reasonable assistance to the AGENT to put in place a SUBSTITUTED ENTITY. MNTC shall make available all necessary information to potential SUBSTITUTED ENTITY to enable such entity to evaluate the Project. (Emphasis ours.) It is clear from the above-quoted provision that Clause 17.4.1 should always be construed

and read in conjunction with Clauses 17.2, 17.3, 17.4.2, 17.4.3 and 20.12.Clauses 17.2 and 17.3 discuss the procedures that must be followed and undertaken in case of MNTCs default prior to the full repayment of the loans, and before the substitution under Clause 17.4.1 could take place. These clauses provide the following process:

 Prior to Full Repayment of the LOANS:

 17.2 Upon occurrence of an MNTC DEFAULT under Clause 17.1(a) and (e) prior to full repayment of the LOANS, GRANTOR shall serve a written Notice of Default to MNTC with copy to the AGENT giving a reasonable period of time to cure the MNTC DEFAULT, such period being three (3) months from receipt of the notice or such longer period as may be approved by GRANTOR, taking due consideration of the nature of the default and of the repair works required. If MNTC fails to remedy such default during such three (3) month or [sic] curing period, GRANTOR may issue a Notice of Substitution on MNTC, copy furnished to the AGENT, which shall take effect upon the assumption and take over by the SUBSTITUTED ENTITY pursuant to the provisions of Clause 17.4 hereof; Provided, However, that prior to such assumption and take over by the SUBSTITUTED ENTITY, MNTC shall continue toOPERATE AND MAINTAIN the PROJECT ROADS and shall place in an escrow account the TOLL revenues, save such amounts as may be needed to primarily cover the OPERATING COSTS and as may be owing and due to the lenders under the LOANS and, secondarily, to cover the PNCC Gross Toll Revenue Share, Provided, Further, that upon the assumption and take over by the SUBSTITUTED ENTITY, such assumption and take over shall have the effect of revoking the rights, privileges and obligations of MNTC under this AGREEMENT in

favor of the SUBSTITUTED ENTITY and MNTC shall cease to be a PARTY to this AGREEMENT. 17.3 If prior to full repayment of the LOANS MNTC fails to remedy MNTC DEFAULT under Clause 17.1 (b) or an MNTC DEFAULT occurs under Clause 17.1 (c), (d) or (f) prior to full repayment of the LOANS, GRANTOR shall serve a Notice of Substitution on MNTC, copy furnished to the AGENT, as provided under Clause 17.4.[97] (Emphasis ours) It is apparent from the above-quoted provision that it is the TRB representing the

Republic of the Philippines as Grantor which has control over the situation before Clause 17.4.1 could come into place. To stress, following the condition under Clause 17.4.1, it is only when Clauses 17.2 and 17.3 have been complied with that the entire Clause 17.4 could begin to materialize.

 Clauses 17.4.2 and 17.4.3 also provide for certain parameters as to when a substituted

entity could be considered acceptable, and enumerate the conditions that should be undertaken and complied with.[98] Particularly, the subject provisions state:

 17.4.2 The SUBSTITUTED ENTITY shall be required to provide evidence to GRANTOR that

at the time of substitution: 

(i)     it is legally and validly nominated by the AGENT as MNTCs substitute to continue the implementation of the PROJECT. 

(ii)   it is legally and validly constituted and has the capability to enter into such agreement as may be required to give effect to the substitution;

 17.4.3 The AGENT shall have one (1) year to effect a substitution under Clause

17.4; Provided, However, that during this time the AGENT shall not take any action which may jeopardize the continuity of the service and shall take the necessary action to ensure its continuation. To effect such substitution, the AGENT shall notify its intention to GRANTOR and shall, at the same time, give all necessary information to GRANTOR. GRANTOR shall, within one (1) month following such notification, inform the AGENT of its acceptance of the substitution, if the conditions set forth in Clause 17.4.2 have been satisfied. The SUBSTITUTED ENTITY shall be permitted a reasonable period to cure any MNTC DEFAULT under Clause 17.1 (a), (b) or (e).

  From the foregoing, it is clear that the lenders do not actually have an absolute or

unrestricted right to appoint the SUBSTITUTED ENTITY in view of TRBs right to accept or reject the substitution within one (1) month from notice and such right to appoint comes into

force only if and when the TRB decides to effectuate the substitution of MNTC as allowed in Clause 17.2 of the MNTC STOA.

 At the same time, Clause 17.4.4 particularizes the conditions upon which the substitution

shall become effective, to wit: 17.4.4 The Substitution shall be effective upon:

 (a)    the appointment of a SUBSTITUTED ENTITY in accordance with the

provisions of this Clause 17.4; and, 

(b)   assumption by the SUBSTITUTED ENTITY of all of the rights and obligations of MNTC under this AGREEMENT, including the payment of PNCCs Gross Toll Revenue Share under the JOINT VENTURE AGREEMENT dated 29 August 1995 and all other agreements in connection with this agreement signed and executed by and between PNCC and MNTC.

  

The afore-quoted Section (a) of Clause 17.4.4 reiterates the necessity of compliance by the substituted entity with all the conditions provided under Clause 17.4.Furthermore, following the above-quoted conditions veritably protects the interests of the Government. As previously discussed supra, PNCCs assets with respect to its legislative franchise under P.D. 1113, as amended, has already been automatically turned over to the Government. And whatever share PNCC has in relation to the currently implemented administrative authority granted by the TRB is merely being held in trust by it in favor of the Government. Accordingly, the fact that Section b of Clause 17.4.4 ensures that the obligation to pay PNCCs Gross Toll Revenue Share is assumed by the substituted entity, necessarily means that the Governments Gross Toll Revenue Share is safeguarded and kept intact.

 The MNTC STOA also states that only in case no substituted entity is established in

accordance with Clause 17.4 that Clause 17.5 shall be applied. Clause 17.5 grants the lenders the power to extend the concession in case the Grantor (Republic of the Philippines) takes over the same, for a period not exceeding fifty years, until full payment of the loans. [99] Petitioners contend that the option to extend the concession for that stated period is, however, unconstitutional.

 This assertion is impressed with merit. At the outset, Clause 17.5 does not actually grant

the lenders of the defaulting concessionaire, the power to unilaterally extend the concession for a period not exceeding fifty years. For reference, the pertinent provision states:

 

17.5 Only if no SUBSTITUTE ENTITY is established shall the GRANTOR [TRB] be entitled to take-over the CONCESSION with no commitment on the LOANS in which case the OPERATION AND MAINTENANCE CONTRACT shall be assigned to any entity that the AGENT[100] may designate provided such entity has a sufficient legal and technical capacity to perform and assume the obligations of the OPERATION AND MAINTENANCE CONTRACT under this AGREEMENT. The LENDERS shall receive all TOLL, excepting PNCCs revenue share provided for under the JOINT INVESTMENT PROPOSAL (vide: Annex C hereof), for as long as required until full repayment of the LOANS including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed fifty (50) years; Provided that the LENDERS support all amounts payable under the OPERATION AND MAINTENANCE CONTRACT. For avoidance of doubt, the GRANTOR will have no obligation in relation to liabilities incurred by MNTC prior to such take-over.[101] (Emphasis supplied) The afore-quoted provision should be read in conjunction with Clause 20.12, which

expressly provides that the MNTC STOA is made under and shall be governed by and construed in accordance with the laws of the Philippines, and particularly, by the provisions of P.D. Nos. 1112, 1113 and 1894. Under the applicable laws, the TRB may very wellamend, modify, alter or revoke the authority/franchise whenever the public interest so requires. [102] In a word, the power to determine whether or not to continue or extend the authority granted to a concessionaire to operate and maintain a tollway is vested to the TRB by the applicable laws. The necessity of whether or not to extend the concession or the authority to construct, operate and maintain a tollway rests, by operation of law, with the TRB. As such, the lenders cannot unilaterally extend the concession period, or, with like effect, impose upon or demand that the TRB agree to extend such concession.

 Be that as it may, it must be noted, however, that while the TRB is vested by law with the

power to extend the administrative franchise or authority that it granted, nevertheless, it cannot do so for an accumulated period exceeding fifty years. Otherwise, it would violate the proscription under Article XII, Section 11 of the 1987 Constitution, which states that:[103]

 Sec. 11. No franchise, certificate, or any other form of authorization for the

operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their

proportionate share in its capital, and all the executive and managing officers of such corporation or associations must be citizens of the Philippines. (Emphasis Ours) In this case, the MNTC STOA already has an original stipulated period of thirty years.

[104] Clause 17.5 allows the extension of this period if necessary to fully repay the loans made by MNTC to the lenders, thus:

 x x x The LENDERS shall receive all TOLL, excepting PNCCs revenue share

provided for under the JOINT INVESTMENT PROPOSAL (vide: Annex C hereof), for as long as required until full repayment of the LOANS including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50) years; x x x (Emphasis ours.) If the maximum extension as provided for in Clause 17.5, i.e. fifty years, shall be utilized,

the accumulated concession period that would be granted in this case would effectively be eighty years. To Us, this is a clear violation of the fifty-year franchise threshold set by the Constitution. It is in this regard that we strike down the above-quoted clause, including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50) years in Clause 17.5 as void for being violative of the Constitution.[105] It must be made abundantly clear, however, that the nullity shall be limited to such extension beyond the 50-year constitutional limit.

All told, petitioners allegations that the TRB acted with grave abuse of discretion and with gross disadvantage to the Government with respect to Clauses 17.4.1 and 17.5 of the MNTC STOA are unfounded and speculative.

Petitioners also allege that the MNTC STOA is grossly disadvantageous to the Government since under Clause 11.7 thereof, the Government, through the TRB, guarantees the viability of the financing program of a toll operator. Under Clause 11.7 of the MNTC STOA, the TRB agreed to pay monthly, the difference in the toll fees actually collected by MNTC and that which it could have realized under the STOA. The pertinent provisions states:

 11.7 To insure the viability and integrity of the Project, the Parties recognize

the necessity for adjustments of the AUTHORIZED TOLL RATE . In the event that said adjustment are not effected as provided under this Agreement for reasons not attributable to MNTC, the GRANTOR [TRB] warrants and so undertakes to compensate, on a monthly basis, the resulting loss of revenue due to the difference between the AUTHORIZED TOLL RATE actually collected and the AUTHORIZED TOLL RATE which MNTC would have been able to collect had the adjustments been implemented. (Emphasis ours) As set out in the preamble of P.D. 1112, the need to encourage the infusion of private

capital in tollway projects is the underlying rationale behind the enactment of said decree. Owing to the scarce capital available to bankroll a huge capital-intensive project, such

as the North Luzon Tollway project, it is well-nigh inevitable that the financing of these types of projects is sourced from private investors. Quite naturally, the investors expect the regularity of the cash flow. It is perhaps in this broad context that the obligation of the Grantor under Clause 11.7 of the MNTC STOA was included in the STOA. To Us, Clause 11.7 is not only grossly disadvantageous to the Government but a manifest violation of the Constitution. 

Section 3 (e) (5) of P.D. 1112 explicitly states: 

[t]hat no guarantee, Certificate of Indebtedness, collateral securities, or bonds shall be issued by any government agency or government-owned or controlled corporation on any financing program of the toll operator in connection with his undertaking under the Toll Operation Certificate.

  

What the law seeks to prevent in this situation is the eventuality that the Government, through any of its agencies, could be obligated to pay or secure, whether directly or indirectly, the financing by the private investor of the project. In this case, under Clause 11.7 of the MNTC STOA, the Republic of the Philippines (through the TRB) guaranteed the security of the project against revenue losses that could result, in case the TRB, based on its determination of a just and reasonable toll fee, decides not to effect a toll fee adjustment under the STOAs periodic/interim adjustment formula. The OSG, in its Comment, admitted that the amounts the government undertook to pay in case of Clause 11.7 violation is an undertaking to pay compensatory damage for something akin to a breach of contract.[106] As P.D. 1112 itself expressly prohibits the guarantee of a security in the financing of the toll operator pursuant to its tollway project, Clause 11.7 cannot be a valid stipulation in the STOA.

 This is more so for being in violation of the Constitution. Article VI, Section 29 (1) of the

Constitution mandates that [n]o money shall be paid out of the Treasury except in pursuance of an appropriation made by law.[107] We have held in Radstock that government funds or property shall be spent or used solely for public purposes, as expressly mandated by Section 4 (2) of PD 1445 or the Government Auditing Code.[108] Particularly, We held in Radstock case that:

 [t]he power to appropriate money from the General Funds of the Government belongs exclusively to the Legislature. Any act in violation of this iron-clad rule is unconstitutional.

 Reinforcing this Constitutional mandate, Sections 84 and 85 of PD 1445

require that before a government agency can enter into a contract involving the expenditure of government funds, there must be an appropriation law for such expenditure, thus:

 Section 84. Disbursement of government funds.

 1. Revenue funds shall not be paid out of any public treasury or depository except in pursuance of an

appropriation law or other specific statutory authority. x x x x Section 85. Appropriation before entering into contract. No contract involving the expenditure of public funds shall be entered into unless there is an appropriation

therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure. x x x x Section 86 of PD 1445, on the other hand, requires that the proper accounting

official must certify that funds have been appropriated for the purpose.  Section 87 of PD 1445 provides that any contract entered into contrary to the requirements of Sections 85 and 86 shall be void.[109] (Emphasis ours.) In the instant case, the TRB, by warranting to compensate MNTC with the loss of

revenue resulting from the non-implementation of the periodic and interim toll fee adjustments, violates the very constitutionally guaranteed power of the Legislature, to exclusively appropriate money for public purpose from the General Funds of the Government. The TRB veritably accorded unto itself the exclusive authority granted to Congress to appropriate money that comes from the General Funds, by making a warranty to compensate a revenue loss under Clause 11.7 of the MNTC STOA. There is not even a badge of indication that the aforementioned requisites under the Constitution and P.D. 1445 in respect of appropriation of money from the General Funds of the Government have been properly complied with. Worse, P.D. 1112 expressly prohibits the guarantee of security of the financing of a toll operator in connection with his undertaking under the Toll Operation Certificate. Accordingly, Clause 11.7 of the MNTC STOA, under which the TRB warrants and undertakes to compensate MNTCs loss of revenue resulting from the non-implementation of the periodic and interim toll fee adjustments, is illegal, unconstitutional and hence void.

 Parenthetically, We also find a similar provision in the SLTC STOA under Clause 8.08

thereof, which states that:[110]

 (2)   In the event the Authorized Toll Rate and adjustments thereto are not implemented or made

effective in accordance with the provisions of this Agreement, for reasons not attributable to the fault of the Investor and/or the Operator, including the reversal by the TRB or by any competent court or authority of any such adjustment in the Authorized Toll Rate previously approved by the TRB, except where such reversal is by reason of a determination of the misapplication of the Authorized Toll Rates, the Grantor shall compensate the Operator, on a monthly basis and within thirty (30) days of submission by the Operator of a notice thereof, without interest, for the resulting loss of revenue computed as the difference between: (a)    the actual traffic volume for the month in question multiplied by the Current Authorized

Toll Rate as escalated and/or adjusted, that should be in effect; and 

(b)   the Gross Toll Revenue for the month in question. 

(3)   The obligation of the Grantor to compensate the Operator shall continue until the applicable Current Authorized Toll Rate is implemented.

 Akin to what is contemplated in Clause 11.7 of the MNTC STOA, Clauses 8.08 (2) and

(3) of the SLTC STOA, under which the TRB warrants or is obligated to compensate the Operator for its loss of revenue resulting from the non-implementation of the calculation/formula of authorized toll price and toll rate adjustments found in Clause 8 thereof, are illegal, unconstitutional and, hence, void. This ruling is consistent with the TRBs power to determine, without any influence or compulsion direct or indirect as to whether a change in the toll fee rates is warranted. We will discuss the same below.

 Petitioners argue that the CITRA, SLTC and MNTC STOAs tie the hands of the TRB as

it is bound by the stipulated periodic and interim toll rate adjustments provided therein. Petitioners contend that the SMMS (CITRA STOA), the SLTC and the MNTC STOAs provisions on initial toll rates and periodic/interim toll rate adjustments, by using a built-in automatic toll rate adjustment formula,[111] allegedly guaranteed fixed returns for the investors and negated the public hearing requirement.

This contention is erroneous. The requisite public hearings under Section 3 (d) of P.D. 1112 and Section 8 (b) of P.D. 1894 are not negated by the fixing of the initial toll rates and the periodic adjustments under the STOA.

 Prefatorily, a clear distinction must be made between the statutory prescription on the

fixing of initial toll rates, on the one hand, and of periodic/interim or subsequent toll rates, on the other. First, the hearing required under the said provisos refers to notice and hearing for the approval or denial of petitions for toll rate adjustments or the subsequent toll rates, not to the fixing of initial toll rates. By express legal provision, the TRB is authorized to approve the initial toll rates without the necessity of a hearing. It is only when a challenge on the initial toll rates fixed ensues that public hearings are required. Section 8 of P.D. 1894 says so:

 x x x the GRANTEE shall collect toll at such rates as shall initially be approved by the [TRB].   The [TRB]   shall have the authority   to approve   such   initial toll rates without the necessity of any notice and hearing, except as provided in the immediately succeeding paragraph of this Section. For such purpose, the GRANTEE shall submit for the approval of the [TRB] the toll proposed to be charged the users. After approval of the toll rate(s) by the [TRB] and publication thereof by the GRANTEE once in a newspaper of general circulation, the toll shall immediately be enforceable and collectible upon opening of the expressway to traffic use.

 Any interested   Expressways users   shall have the right to   file, within   x x x (90)

days after the date of publication of the initial toll rate, a petition with the [TRB] for a review of the initial toll rate; provided, however, that the filing of such petition and the pendency of the resolution thereof shall not suspend the enforceability and collection of the toll in question. The [TRB], at a public hearing called for the purpose

shall then conduct a review of the initial toll (sic) shall be appealable to the [OP] within ten (10) days from the promulgation thereof.(Emphasis ours.)

 Of the same tenor is Section 3 (d) of P.D. 1112 stating that the TRB has the power and

duty to: 

[i]ssue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities and upon notice and hearing, to approve or disapprove petitions for the increase thereof. Decisions of the [TRB] on petitions for the increase of toll rate shall be appealable to the [OP] within ten (10) days from the promulgation thereof. Such appeal shall not suspend the imposition of the new rates, provided however, that pending the resolution of the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary to reimburse toll payers affected in case a (sic) reversal of the decision.[112] (Emphasis Ours.) Similarly in Padua v. Ranada, the fixing of provisional toll rates by the TRB without a

public hearing was held to be valid, such procedure being expressly provided by law. [113] To be very clear, it is only the fixing of the initial and the provisional toll rates where a public hearing is not a vitiating requirement. Accordingly, subsequent toll rate adjustments are mandated by law to undergo both the requirements of public hearing and publication.

 In Manila International Airport Authority (MIAA) v. Blancaflor, the Court expounded on

the necessity of a public hearing in rate fixing/increases scenario. There, the Court ruled that the MIAA, being an agency attached to the Department of Transportation and Communications (DOTC), is governed by Administrative Code of 1987,[114] Book VII, Section 9 of which specifically mandates the conduct of a public hearing.[115] Accordingly, the MIAAs resolutions, which increased the rates and charges for the use of its facilities without the required hearing, were struck down as void.[116] Similarly, as We do concede, the TRB, being likewise an agency attached to the DOTC,[117] is governed by the same Code and consequently requires public hearing in appropriate cases. It is, therefore, imperative that in implementing and imposing new, i.e. subsequent toll rates arrived at using the toll rate adjustment formula, the subject tollway operators and the TRB must necessarily comply not only with the requirement of publication but also with the equally important public hearing. Accordingly, any fixing of the toll rate, which did not or does not comply with the twin requirements of public hearing and publication, must therefore be struck down as void. In such case, the previously valid toll rate shall consequently apply, pending compliance with the twin requirements for the new toll rate.

 In the instant consolidated cases, the fixing of the initial toll rates may have indeed come

to pass without any public hearing.[118] Unfortunately for petitioners, and notwithstanding its presumptive validity, they did not assail the initial toll rates within the timeframe provided in

P.D. 1112 and P.D. 1894.[119] Besides, as earlier explicated, the STOA provisions on periodic rate adjustments are not a bar to a public hearing as the formula set forth therein remains constant, serving only as a guide in the determination of the level of toll rates that may be allowed.

 It is apropos to state at this juncture that, in determining the reasonableness of the

subsequent toll rate increases, it behooves the TRB to seek out the Commission on Audit (COA) for assistance in examining and auditing the financial books of the public utilities concerned. Section 22, Chapter 4, Subtitle B, Title 1, Book V of the Administrative Code of 1987 expressly authorizes the COA to examine the aforementioned documents in connection with the fixing of rates of every nature, including as in this case, the fixing of toll fees. [120] We have on certain occasions applied this provision. Manila Electric Company, Inc. v. Lualhati easily comes to mind where this Court tasked the Energy Regulatory Commission to seek the assistance of the COA in determining the reasonableness of the rate increases that MERALCO intended to implement.[121] We have consistently held that the law is deemed written into every contract.[122] Being a provision of law, this authority of the COA under the Administrative Code should therefore be deemed written in the subject contracts i.e. the STOAs.

 In this regard, during the examination and audit, the public utilities concerned are

mandated to produce all the reports, records, books of accounts and such other papers as may be required, and the COA is empowered to examine under oath any official or employee of the said public utilit[ies].[123] Any public utility unreasonably denying COA access to the aforementioned documents, unnecessarily obstructs the examination and audit and may be adjudged liable of concealing any material information concerning its financial status, shall be subject to the penalties provided by law.[124] Finally, the TRB is further obliged to take the appropriate action on the COA Report with respect to its finding of reasonableness of the proposed rate increases.[125]

 Furthermore, while the periodic, interim and other toll rate adjustment formulas are

indicated in the STOAs,[126] it does not necessarily mean that the TRB should accept a rate adjustment predicated on the economic data, references or assumptions adopted by the toll operator. At the end of the day, the final figures should be those of the TRB based on its appreciation of the relevant rate-influencing data. In fine, the TRB should exercise its rate-fixing powers vested to it by law within the context of the agreed formula, but always having in mind that the rates should be just and reasonable. Conversely, it is very well within the power of the TRB under the law to approve the change in the current toll fees .[127] Section 3 (d) of P.D. 1112 grants the TRB the power to [i]ssue, modify and promulgate from time to time the rates of toll that will be charged the direct users of toll facilities. But the reasonableness of a possible increase in the fees must first be clearly and convincingly established by the petitioning

entities, i.e. the toll operators.Otherwise, the same should not be granted by the approving authority concerned. In Philippine Communications Satellite Corporation v. Alcuaz,[128] the Court had the opportunity to explain what is meant by a just and reasonable fixing of rates, thus:

 Hence, the inherent power and authority of the State, or its authorized agent, to regulate the rates charged by public utilities should be subject always to the requirement that the rates so fixed shall be reasonable and just. A commission has no power to fix rates which are unreasonable or to regulate them arbitrarily. This basic requirement of reasonableness comprehends such rates which must not be so low as to be confiscatory, or too high as to be oppressive.What is a just and reasonable rate is not a question of formula but of sound business judgment based upon the evidence it is a question of fact calling for the exercise of discretion, good sense, and a fair, enlightened and independent judgment. In determining whether a rate is confiscatory, it is essential also to consider the given situation, requirements and opportunities of the utility. A method often employed in determining reasonableness is the fair return upon the value of the property to the public utility x x x. (Emphasis ours.) If in case the TRB finds the change in the rates to be reasonable and therefore merited,

the increase shall then be implemented after the formalities of public hearing and publication are complied with. In this case, it is clear that the change in the toll fees is immediately effective and implementable. This is notwithstanding that, in case of anincrease in the toll fees, an appeal thereon is filed. The law is clear. Thus:

 x x x Decisions of the [TRB] on petitions for the increase of toll rate shall be appealable to the Office of the President within ten (10) days from the promulgation thereof. Such appeal shall not suspend the imposition of the new rates, provided however, that pending the resolution of the appeal, the petitioner for increased rates in such case shall deposit in a trust fund such amounts as may be necessary to reimburse toll payers affected in case a reversal of the decision.[129] (Emphasis ours.)

 Besides the settled rule under Section 3 (d) of P.D. 1112 that the power to issue, modify

and promulgate toll fees rests with the TRB, it must also be underscored that the periodic and the interim adjustments found in Clauses 11.4 to 11.6 of the MNTC STOA do not necessarily guarantee an increase in the toll fees. To stress, the formula is based on many variable factors that could mean either an increase or a decrease in the toll fees, depending, inter alia, on how well certain economies are doing; and on the projections and figures published by the Bangko Sentral ng Pilipinas (BSP).[130] It is therefore arduous to contemplate a grossness in a disadvantage that could only possibly arise in case of a non-implementation of a change particularly, an increase in the toll rates. 

Petitioners have not incidentally shown that it is the traveling public, the users of the expressways, who shouldered or will shoulder the completion of the projects by way of exorbitant fees payment, with the investors ending up with a killing therefrom. This conclusion, for all its factual dimension, is too simplistic for acceptance. And it does not consider the reality

that the Court is not a trier of facts. Neither does it take stock of the nature and function of toll roads and toll fees paid by motorists, as aptly elucidated inNorth Negros Sugar Co., Inc. v. Hidalgo,[131] thus:

 Toll is the price of the privilege to travel over that particular highway, and it is

a quid pro quo. It rests on the principle that he who, receives the toll does or has done something as an equivalent to him who pays it. Every traveler has the right to use the turnpike as any other highway, but he must pay the toll.[132]

 A toll road is a public highway, differing from the ordinary public highways chiefly

in this: that the cost of its construction in the first instance is borne by individuals, or by a corporation, having authority from the state to build it, and, further, in the right of the public to use the road after completion, subject only to the payment of toll.[133]

 Toll roads are in a limited sense public roads, and are highways for travel, but

we do not regard them as public roads in a just sense, since there is in them a private proprietary right x x x.[134] (Emphasis ours.)  Parenthetically, our review of Section 7 of the SMMS STOA readily yields the

information that the level of the initial toll rates hinges on a mix of factors. Tax holidays that may be granted and the tax treatment of dividends may be mentioned. On the other hand, the subsequent periodic adjustments are provided to address factors that usually weigh on the financial condition of any business endeavor, such as currency devaluation, inflation and the usual increases in maintenance and operational costs incorporated into the formula provided therefor. Even with the existence of an automatic toll rate adjustment formula, compliance by the TRB and the other respondents with the twin requirements of public hearing and publication is still mandatory. To reiterate, laws always occupy a plane higher than mere contract provisions. In case the minimum statutory requirements are stiffer than that of a contract, or when the contract does not expressly stipulate the minimum requirements of the law, then We rule that compliance with such minimum legal requirements should be done. To summarize, any toll fee increase should comply with the legal twin requirements of publication and public hearing, the absence of which will nullify the imposition and collection of the new toll fees.

 In all, the initial toll rates and periodic adjustments appear to Us as simply predicated on

the basic rationale for investing in a toll project, which to repeat is: a reasonable rate of return for the investment. Section 2 (o) of the BOT Law, as amended, provides for a definition for a reasonable rate of return on investments and operating and maintenance cost.[135] Running through the gamut of our statutes providing for and encouraging partnership of the public and private sector is the paramount common good for infrastructure projects and the equally important factor of giving a reasonable rate of return to private sectors investments. The

viability of any infrastructure project depends on the returns which should be reasonable of the investment coming from the private sector.

 While the interests of the public are ideally to be accorded primacy in considering

government contracts, the reality on the ground is that the tollway projects may not at all be possible or would be difficult to realize without the involvement of the investing private sector, which expects its usual share of profit. Thus, the Court is at a loss to understand how the level of the initial toll rates, which depended on several factors indicated above, and the subsequent adjustments resulted in the charging of exorbitant toll fees that, to petitioners, enabled the investors to shift the burden of financing the completion of the projects on the motoring public.

 Neither does the alleged drasticif we may characterize it as suchsteep increase in the level

of toll rates for NLEX constitute a killing for PNCC and its partner MNTC.Petitioners make much of the amount of the toll fees vis--vis the then prevailing minimum wage. These plays of figures detract from the essential concern on the propriety of the level of the toll rates vis--vis the investments sunk in the NLEX project with a view, on the part of private investors, to a reasonable return on their investment. Where no substantial figures were provided on the investments, the projected operating and maintenance costs vis--vis the projected revenue from the toll fees, no substantial conclusions may reasonably be deduced therefrom. Besides, to be taken into account in relation to the costs of the construction and rehabilitation of the NLEX is the length of the tollway and for which motorists have to pay the corresponding toll. Certainly, the allegations and conclusions of petitioners as to the unreasonable increase of the toll rates are without adequate factual mooring.

 The use of a tollway is a privilege that comes at a cost. The toll is a price paid for the use

of a privilege. There are to be sure alternative roads and routes, which motorists may fall back on if they are unwilling to pay the toll. The toll, as might be expected, is pegged at a level that makes the developmental projects and their maintenance viable; otherwise, no investment can be expected for the furtherance of the projects.

 Petitioners Francisco and Hizon alleged that, per the minutes of the TRB meetings, the

Board deliberately refrained, particularly with respect to the Skyway project, from conducting public hearings for the grant of the initial toll rates and on the rate adjustment formula to be used in order to accelerate the implementation of the projects. The allegation is far from correct. A perusal of the pertinent minutes of the TRB meetings, particularly that held on August 17, 1995,[136] in fact would disclose a picture different from that depicted by said petitioners. Nothing in the minutes of said meeting tends to indicate that the TRB resolved to dispense with public hearings. We, therefore, find petitioners Francisco and Hizons attempt to mislead the Court by falsely citing supposed portions[137] of the August 17, 1995 TRB meeting very unfortunate. They quoted a correction on the minutes of the Special Board Meeting No. 95-05

held on July 26, 1995, which was taken up in the August 17, 1995 meeting for the approval of the minutes of the previous meeting. In said special meeting of July 26, 1995,[138] the Board deliberated on the recommendation of ADG Santos for the conduct of a public hearing or soliciting the endorsement of the Metro Manila Development Authority (MMDA). [139] But the TRB did not resolve to omit a public hearing with respect to the toll rates. In fact, the deliberations used the words in the event the Board decides and if the Board conducts, clearly conveying the notion that the TRB had not decided or resolved the issue of public hearings. Be that as it may, We rule that the TRB is mandated to comply with the twin requirements of public hearing and publication.

 Petitioners Francisco and Hizons lament about the TRB merely relying on, if not yielding

to, the recommendation and findings of the Technical Working Group (TWG) of the DPWH on matters relative to STOA stipulations and toll-rate fixing cannot be accorded cogency. In the area involving big finance and complex project planning, banking on the data supplied by technicians and experts is at once practical as it is inevitable. The Court cannot see its way clear to understand why petitioners would begrudge the TRB for tapping the technical know-how of others. And it cannot be overemphasized that a recommendation is no more than an exhortation or an urging as to what is advisable or expedient, not binding on the person to which it is being made.[140] To recommend involves the idea that another has the final decision.[141] The ultimate decision still rests with the TRB whether or not to accept the findings of the TWG. The minutes of the TRB meetings show that its members went through the tedious process of deliberating on the formula to be used in computing the toll rates. The fact that the TRB might have adopted the TWGs recommendation would not, on that ground alone, vitiate the bona fides of the formers decision nor stain the proceedings leading to such decision. In any case, as earlier held, the toll rate adjustment formula does not and cannot contravene the legal twin requirements of public hearing and publication.

 In another bid to nullify the STOAs in question, petitioners would foist on the Court the

arguments that, firstly, President Ramos twisted the arms of the TRB towards entering into the agreements in question and, secondly, that the CITRA STOA contained restrictive confidentiality provisions barring the public from knowing their contents and the details of the negotiations related thereto.

 We are not persuaded by the first ground, not necessarily because the pressure brought to

bear on TRB rendered the STOAs infirm, but because the allegations on pressure-tactics allegedly employed by President Ramos are too speculative for acceptance.

 On the second ground, We fail to see how the insertion of the alleged confidentiality

clause in the CITRA STOA translates into grave abuse of discretion or a violation of the Constitution, particularly Article III, Section 7[142] thereof. First off, the Court can take judicial

notice that most commercial contracts, including finance-related project agreements carry the standard confidentiality clause to protect proprietary data and/or intellectual property rights. This protection angle appears to be the intent of Clause 14.04(l)[143] of the CITRA STOA. And as may be noted, the succeeding Clause 14.04 (2)[144] removes from the ambit of the confidentiality restriction the following: disclosure of any information: (a) not otherwise done by the parties; (b) which is required by law to be disclosed to any person who is authorized by law to receive the same; (c) to a tribunal hearing pertinent proceedings relative to the contract or agreement; and (d) to confidential entities and persons relative to the disclosing party like its banks, consultants, financiers and advisors. The second (item b) exception provides a reasonable dimension to the assailed confidentiality clause.

 Needless to stress, the obligation of the government to make information available cannot

be exaggerated.[145] The constitutional right to information does not mean that every day and every hour is open house in government offices having custody of the desired documents.[146] Petitioners have not sufficiently shown, thus cannot really be heard to complain, that they had been unreasonably denied access to information with regard to the MNTC or SMMS STOA. Besides, the remedy for unreasonable denial of information that is a matter of public concern is by way of mandamus.[147]

 Finally, as to petitioners catch-all claim that the STOAs are disadvantageous to the

government, as therein represented by the TRB, suffice it to state for the nonce that behind these agreements are the Boards expertise and policy determination on technical, financial and operational matters involving expressways and tollways. It is not for courts to look into the wisdom and practicalities behind the exercise by the TRB of its contract-making prerogatives under P.D. Nos. 1112, 1113 and 1894, absent proof of grave abuse of discretion which would justify judicial review. In this regard, the Court recalls what it wrote in G & S Transport Corporation v. Court of Appeals,[148] to wit:

 x x x courts, as a rule, refuse to interfere with proceedings undertaken by

administrative bodies or officials in the exercise of administrative functions. This is because such bodies are generally better equipped technically to decide administrative questions and that non-legal factors, such as government policy on the matter are usually involved in the decision. 

SIXTH ISSUE: PUBLIC BIDDING NOT REQUIRED Private petitioners would finally maintain that public bidding is required for the SMMS

and the North Luzon/South Luzon Tollways, partaking as these projects allegedly do of the nature of a BOT infrastructure undertaking under the BOT Law. Prescinding from this premise, they would conclude that the STOAs in question and related preliminary and post-STOA

agreements are null and void for want of the necessary public bidding required for government infrastructure projects.

 The contention is patently flawed. The BOT Law does not squarely apply to the peculiar case of PNCC, which exercised its

prerogatives and obligations under its franchise to pursue the construction, rehabilitation and expansion of the tollways with chosen partners. The tollway projects may very well qualify as a build-operate-transfer undertaking. However, given that the projects in the instant case have been undertaken by PNCC in the exercise of its franchise under P.D. Nos. 1113 and 1894, in joint partnership with its chosen partners at the time when it was held valid to do so by the OGCC and the DOJ, the public bidding provisions under the BOT Law do not strictly apply. For, as aptly noted by the OSG, the subject STOAs are not ordinary contracts for the construction of government infrastructure projects, which requires under the Government Procurement Reform Act or the now-repealed P.D. 1594,[149] public bidding as the preferred mode of contract award. Neither are they contracts where financing or financial guarantees for the project are obtained from the government. Rather, the STOAs actually constitute a statutorily-authorized transfer or assignment of usufruct of PNCCs existing franchise to construct, maintain and operate expressways.[150]

 The conclusion would perhaps be different if the tollway projects were to be prosecuted

by an outfit completely different from, and not related to, PNCC. In such a scenario, the entity awarded the winning bid in a BOT-scheme infrastructure project will have to construct, operate and maintain the tollways through an automatic grant of a franchise or TOC, in which case, public bidding is required under the law.

 Where, in the instant case, a franchisee undertakes the tollway projects of construction,

rehabilitation and expansion of the tollways under its franchise, there is no need for a public bidding. In pursuing the projects with the vast resource requirements, the franchisee can partner with other investors, which it may choose in the exercise of its management prerogatives. In this case, no public bidding is required upon the franchisee in choosing its partners as such process was done in the exercise of management prerogatives and in pursuit of its right of delectus personae.[151] Thus, the subject tollway projects were undertaken by companies, which are the product of the joint ventures between PNCC and its chosen partners.

 Petitioners Francisco and Hizons assertions about the TRB awarding the tollway projects

to favored companies, unsubstantiated as they are, need no belaboring. Suffice it to state that the discretion to choose who shall stand as critical JV partners remained all along with PNCC, at least theoretically. Needless to say, the records do not show that the TRB committed an

oversight as an administrative body over any aspect of tollway operations with regard to PNCCs selection of partners.

 The foregoing disquisitions considered, there is no more point in passing upon the

propriety of prohibiting or enjoining, on the ground of unconstitutionality or grave abuse of discretion, the implementation of the initial toll rates and/or the adjusted toll rates for the SMSS, expanded NLEX and SLEX, as authorized by the separate TRB resolutions, subject of and originally challenged in these proceedings.

 These TRB resolutions and the STOAs upon which they are predicated have long been in

effect. The parties have acted on these issuances and contracts whose existence, as an operative fact, cannot be ignored, let alone erased, even if the charge of unconstitutionality is given currency.

 While not exactly of governing applicability in this case, what the Court wrote

in De Agbayani v. Philippine National Bank,[152] on the operative fact doctrine is apropos: 

x x x When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution. .

 Such a view has support in logic and possesses the merit of simplicity. It may not

however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether  or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.

 In the language of an American Supreme Court decision: The actual existence of a

statute, prior to such a determination [of constitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration x x x. (Emphasis in the original.) The petitioners in the first three (3) petitions and the respondent in the fourth have not so

said explicitly, but their brief is against the issuance of P.D. Nos. 1112, 1113 and 1894, which conferred a package of express and implied powers and discretion to the TRB and the President resulting in the execution of what is perceived to be offending STOAs and the runaway

collection of illegal toll fees. And they have come to the Court to strike down all these issuances, agreements and exactions. While the Court is not insensitive to their concerns, the rule is that all reasonable doubts should be resolved in favor of the constitutionality of a statute,[153] and the validity of the acts taken in pursuant thereof. It follows, therefore, that the Court will not set aside a law as violative of the Constitution except in a clear case of breach[154] and only as a last resort.[155]And as the theory of separation of powers prescribes, the Court does not pass upon questions of wisdom, expediency and justice of legislation. To Us, petitioners and respondent YPES in the fourth petition have not discharged the heavy burden of demonstrating in a clear and convincing manner the unconstitutionality of the decrees challenged or the invalidity of assailed acts of the President and the TRB. Because they failed to do so, the Court must uphold the presumptive constitutionality and validity of the provisions of the three decrees in question, and the subject contracts and TOCs.

 Regarding petitioner Franciscos Supplemental Petition, the toll rates, the collection of which in the amount based on the formula and assumptions set forth in the law, and the adverted STOA dated February 1, 2006 and subject of the TRO issued on August 13, 2010, has been duly published[156] and approved by the TRB, as required by Section 5 of P.D. 1112.[157] And the party-concessionaires have adequately demonstrated, and the TRB has virtually acknowledged[158] that the said rates subject of the TRO partake of the nature of opening or initial toll rates, which have not yet been implemented since the time the SLTC STOA took effect.[159] To note, the toll rates subject of the TRO were approved and are to be implemented in connection with the new facility, such as Project Toll Roads 1 and 2 pursuant to the new SLTC STOA and the expanded and rehabilitated SLEX.[160] As earlier discussed, public hearing is not required in the fixing and implementation of initial toll rates. But an interested party aggrieved by the initial rates imposed is not without any resource as he may, within the time frame provided by Section 8 (b) of P.D. 1894, repair to the TRB for review and thereafter to the OP.[161] As expressly provided in the same section, however, the pendency of the petition for review, if there be any, shall not suspend the enforceability and collection of the toll in question. In net effect, the challenge before the Court of the SLEX toll rate imposition is premature. However, the Court treats this Supplemental Petition assailing the toll rates covered by the TRB Notice of Toll Rates published on June 6, 2010 as a petition for review filed under P.D. 1894, and hereby remands the same to the TRB for a review of the questioned rates to determine the propriety thereof.

 WHEREFORE, the petitions in G.R. Nos. 166910 and 173630 are hereby DENIED for

lack of merit. Accordingly, We declare as VALID AND CONSTITUTIONALthe following: 1.                the Supplemental Toll Operation Agreement dated April 30, 1998 covering the

North Luzon Tollway Project and the TRB Board Resolution No. 2005-4 issued pursuant thereto;

 

2.                the Supplemental Toll Operation Agreement dated November 27, 1995 covering the South Metro Manila Skyway and the TRB Board Resolution No. 2004-53 and previous TRB resolutions issued pursuant thereto;

 3.                the Supplemental Toll Operation Agreement covering the South Luzon Tollway

Project or South Luzon Expressway and the TRB Board resolutions issued pursuant to the said agreement, particularly the TRB Board resolutions allowing the toll rate increases that are supposed to have been implemented on June 30, 2010;

 4.                Section 3, paragraph (a) of Presidential Decree No. 1112, otherwise known as the

Toll Operation Decree, in relation to Section 3, paragraph (d) thereof and Section 8, paragraph (b) of Presidential Decree No. 1894; and

 5.                Section 3, paragraph (e) 3 of P.D. No. 1112 and Section 13 of P.D. No. 1894.

 We however declare Clause 11.7 of the Supplemental Toll Operation Agreement between

the Republic of the Philippines, represented by respondent TRB, as grantor, the Philippine National Construction Corporation, as franchisee, and the Manila North Tollways Corporation (MNTC) dated April 30, 1998; and the clause including if necessary an extension of the CONCESSION PERIOD which in no case shall exceed a maximum period of fifty (50) years in Clause 17.5 of the same STOA, as VOID andUNCONSTITUTIONAL for being contrary to Section 2, Article XII of the 1987 Constitution. We likewise declare Clauses 8.08 (2) & (3) of the Supplemental Toll Operation Agreement between the Republic of the Philippines, represented by respondent TRB, as grantor, the Philippine National Construction Corporation as franchisee, the South Luzon Tollway Corporation as investor, and the Manila Toll Expressway Systems, Inc. as operator, dated February 1, 2006, as VOID and UNCONSTITUTIONAL.

 The petition in G.R. No. 169917 is likewise hereby DENIED for lack of merit. We

declare as VALID and CONSTITUTIONAL the following: 1.                Notice of Approval dated May 16, 1995 by former President Fidel V. Ramos on

the assignment of PNCCs usufructuary rights; 2.                the Joint Venture Agreement dated August 29, 1995; 3.                the Joint Investment Proposal, etc. dated June 16, 1996; 4.                the Supplemental Toll Operation Agreement (STOA) dated April 30, 1998 and the

Notice of Approval of said STOA dated June 15, 1998 by former President Fidel V. Ramos; and

 5.                the provisional toll rate increases published February 9, 2005, granted by the TRB. 

The petition in G.R. No. 183599 is GRANTED. Accordingly, the Decision dated June 23, 2008 of the Regional Trial Court, Branch 155 in Pasig City, docketed as SCA No. 3138-PSG, annulling the TOC covering the SLEX, enjoining the original toll operating franchisee from collecting toll fees in the SLEX, and ordering the turnover of related assets to the Government, is hereby REVERSED and SET ASIDE, and the petition filed therein by the Young Professionals and Entrepreneurs of San Pedro, Laguna with the RTC of Pasig is DISMISSED for lack of merit.

 In view of the foregoing dispositions in the petitions at bar, the TRO issued by the Court

on August 13, 2010 is hereby ordered LIFTED, with respect to the petitions in G.R. Nos. 166910, 169917, 173630 and 183599.

 The challenge contained in the Supplemental Petition in G.R. No. 166910 against the toll

rates subject of the TRB Notice of Toll Rates published on June 6, 2010, for the SLEX projects, Toll Road Projects 1 and 2 of the new SLTC STOA, and the expanded and rehabilitated SLEX, is REMANDED to the TRB for a review of the assailed toll rates to determine whether SLTC and MATES are entitled to the toll fees.

 No Cost. SO ORDERED.

   PRESBITERO J. VELASCO, JR.Associate Justice   WE CONCUR:   

RENATO C. CORONAChief Justice

 

CHAVEZ V JBC

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 202242               April 16, 2013

FRANCISCO I. CHAVEZ, Petitioner, vs.JUDICIALAND BAR COUNCIL, SEN. FRANCIS JOSEPH G. ESCUDERO and REP. NIEL C. TUPAS, JR.,Respondents.

R E S O L U T I O N

MENDOZA, J.:

This resolves the Motion for Reconsideration1 filed by the Office of the Solicitor General (OSG) on behalf of the respondents, Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr. (respondents), duly opposed2 by the petitioner, former Solicitor General Francisco I. Chavez (petitioner).

By way of recapitulation, the present action stemmed from the unexpected departure of former Chief Justice Renato C. Corona on May 29, 2012, and the nomination of petitioner, as his potential successor. In his initiatory pleading, petitioner asked the Court to determine 1] whether the first paragraph of Section 8, Article VIII of the 1987 Constitution allows more than one (1) member of Congress to sit in the JBC; and 2] if the practice of having two (2) representatives from each House of Congress with one (1) vote each is sanctioned by the Constitution.

On July 17, 2012, the Court handed down the assailed subject decision, disposing the same in the following manner:

WHEREFORE, the petition is GRANTED. The current numerical composition of the Judicial and Bar Council is declared UNCONSTITUTIONAL. The Judicial and Bar Council is hereby enjoined to reconstitute itself so that only one (1) member of Congress will sit as a representative in its proceedings, in accordance with Section 8(1), Article VIII of the 1987 Constitution.

This disposition is immediately executory.

SO ORDERED.

On July 31, 2012, following respondents’ motion for reconsideration and with due regard to Senate Resolution Nos. 111,3 112,4 113,5 and 114,6 the Court set the subject motion for oral arguments on August 2, 2012.7 On August 3, 2012, the Court discussed the merits of the arguments and agreed, in the meantime, to suspend the effects of the second paragraph of the dispositive portion of the July 17, 2012 Decision which decreed that it was immediately executory. The decretal portion of the August 3, 2012 Resolution8 reads:

WHEREFORE, the parties are hereby directed to submit their respective MEMORANDA within ten (10) days from notice. Until further orders, the Court hereby SUSPENDS the effect of the second paragraph of the dispositive portion of the Court’s July 17, 2012 Decision, which reads: "This disposition is immediately executory."9

Pursuant to the same resolution, petitioner and respondents filed their respective memoranda.10

Brief Statement of the Antecedents

In this disposition, it bears reiterating that from the birth of the Philippine Republic, the exercise of appointing members of the Judiciary has always been the exclusive prerogative of the executive and legislative branches of the government. Like their progenitor of American origins, both the Malolos Constitution11 and the 1935 Constitution12 vested the power to appoint the members of the Judiciary in the President, subject to confirmation by the Commission on Appointments. It was during these times that the country became witness to the deplorable practice of aspirants seeking confirmation of their appointment in the Judiciary to ingratiate themselves with the members of the legislative body.13

Then, under the 1973 Constitution,14 with the fusion of the executive and legislative powers in one body, the appointment of judges and justices ceased to be subject of scrutiny by another body. The power became exclusive

and absolute to the Executive, subject only to the condition that the appointees must have all the qualifications and none of the disqualifications.

Prompted by the clamor to rid the process of appointments to the Judiciary of the evils of political pressure and partisan activities,15 the members of the Constitutional Commission saw it wise to create a separate, competent and independent body to recommend nominees to the President.

Thus, it conceived of a body, representative of all the stakeholders in the judicial appointment process, and called it the Judicial and Bar Council (JBC). The Framers carefully worded Section 8, Article VIII of the 1987 Constitution in this wise:

Section 8. (1) A Judicial and Bar Council is hereby created under the supervision of the Supreme Court composed of the Chief Justice as ex officio Chairman, the Secretary of Justice, and a representative of the Congress as ex officio Members, a representative of the Integrated Bar, a professor of law, a retired Member of the Supreme Court, and a representative of the private sector.

From the moment of the creation of the JBC, Congress designated one (1) representative to sit in the JBC to act as one of the ex-officio members.16 Pursuant to the constitutional provision that Congress is entitled to one (1) representative, each House sent a representative to the JBC, not together, but alternately or by rotation.

In 1994, the seven-member composition of the JBC was substantially altered. 1âwphi1 An eighth member was added to the JBC as the two (2) representatives from Congress began sitting simultaneously in the JBC, with each having one-half (1/2) of a vote.17

In 2001, the JBC En Banc decided to allow the representatives from the Senate and the House of Representatives one full vote each.18 It has been the situation since then.

Grounds relied upon by Respondents

Through the subject motion, respondents pray that the Court reconsider its decision and dismiss the petition on the following grounds: 1] that allowing only one representative from Congress in the JBC would lead to absurdity considering its bicameral nature; 2] that the failure of the Framers to make the proper adjustment when there was a shift from unilateralism to bicameralism was a plain oversight; 3] that two representatives from Congress would not subvert the intention of the Framers to insulate the JBC from political partisanship; and 4] that the rationale of the Court in declaring a seven-member composition would provide a solution should there be a stalemate is not exactly correct.

While the Court may find some sense in the reasoning in amplification of the third and fourth grounds listed by respondents, still, it finds itself unable to reverse the assailed decision on the principal issues covered by the first and second grounds for lack of merit. Significantly, the conclusion arrived at, with respect to the first and second grounds, carries greater bearing in the final resolution of this case.

As these two issues are interrelated, the Court shall discuss them jointly.

Ruling of the Court

The Constitution evinces the direct action of the Filipino people by which the fundamental powers of government are established, limited and defined and by which those powers are distributed among the several departments for their safe and useful exercise for the benefit of the body politic.19 The Framers reposed their wisdom and vision on one suprema lex to be the ultimate expression of the principles and the framework upon which government and society were to operate. Thus, in the interpretation of the constitutional provisions, the Court firmly relies on the basic postulate that the Framers mean what they say. The language used in the Constitution must be taken to have been deliberately chosen for a definite purpose. Every word employed in the Constitution must be interpreted to exude its deliberate intent which must be maintained inviolate against disobedience and defiance. What the Constitution clearly says, according to its text, compels acceptance and bars modification even by the branch tasked to interpret it.

For this reason, the Court cannot accede to the argument of plain oversight in order to justify constitutional construction. As stated in the July 17, 2012 Decision, in opting to use the singular letter "a" to describe "representative of Congress," the Filipino people through the Framers intended that Congress be entitled to only one (1) seat in the JBC. Had the intention been otherwise, the Constitution could have, in no uncertain terms, so provided, as can be read in its other provisions.

A reading of the 1987 Constitution would reveal that several provisions were indeed adjusted as to be in tune with the shift to bicameralism. One example is Section 4, Article VII, which provides that a tie in the presidential election shall be broken "by a majority of all the Members of both Houses of the Congress, voting separately."20Another is Section 8 thereof which requires the nominee to replace the Vice-President to be confirmed "by a majority of all the Members of both Houses of the Congress, voting separately."21 Similarly, under Section 18, the proclamation of martial law or the suspension of the privilege of the writ of habeas corpus may be revoked or continued by the Congress, voting separately, by a vote of at least a majority of all its Members."22 In all these provisions, the bicameral nature of Congress was recognized and, clearly, the corresponding adjustments were made as to how a matter would be handled and voted upon by its two Houses.

Thus, to say that the Framers simply failed to adjust Section 8, Article VIII, by sheer inadvertence, to their decision to shift to a bicameral form of the legislature, is not persuasive enough. Respondents cannot just lean on plain oversight to justify a conclusion favorable to them. It is very clear that the Framers were not keen on adjusting the provision on congressional representation in the JBC because it was not in the exercise of its primary function – to legislate. JBC was created to support the executive power to appoint, and Congress, as one whole body, was merely assigned a contributory non-legislative function.

The underlying reason for such a limited participation can easily be discerned. Congress has two (2) Houses. The need to recognize the existence and the role of each House is essential considering that the Constitution employs precise language in laying down the functions which particular House plays, regardless of whether the two Houses consummate an official act by voting jointly or separately. Whether in the exercise of its legislative23 or its non-legislative functions such as inter alia, the power of appropriation,24 the declaration of an existence of a state of war,25 canvassing of electoral returns for the President and Vice-President,26 and impeachment,27 the dichotomy of each House must be acknowledged and recognized considering the interplay between these two Houses. In all these instances, each House is constitutionally granted with powers and functions peculiar to its nature and with keen consideration to 1) its relationship with the other chamber; and 2) in consonance with the principle of checks and balances, as to the other branches of government.

In checkered contrast, there is essentially no interaction between the two Houses in their participation in the JBC. No mechanism is required between the Senate and the House of Representatives in the screening and nomination of judicial officers. Rather, in the creation of the JBC, the Framers arrived at a unique system by adding to the four (4) regular members, three (3) representatives from the major branches of government - the Chief Justice as ex-officio Chairman (representing the Judicial Department), the Secretary of Justice (representing the Executive Department), and a representative of the Congress (representing the Legislative Department). The total is seven (7), not eight. In so providing, the Framers simply gave recognition to the Legislature, not because it was in the interest of a certain constituency, but in reverence to it as a major branch of government.

On this score, a Member of Congress, Hon. Simeon A. Datumanong, from the Second District of Maguindanao, submitted his well-considered position28 to then Chief Justice Reynato S. Puno:

I humbly reiterate my position that there should be only one representative of Congress in the JBC in accordance with Article VIII, Section 8 (1) of the 1987 Constitution x x x.

The aforesaid provision is clear and unambiguous and does not need any further interpretation. Perhaps, it is apt to mention that the oft-repeated doctrine that "construction and interpretation come only after it has been demonstrated that application is impossible or inadequate without them."

Further, to allow Congress to have two representatives in the Council, with one vote each, is to negate the principle of equality among the three branches of government which is enshrined in the Constitution.

In view of the foregoing, I vote for the proposition that the Council should adopt the rule of single representation of Congress in the JBC in order to respect and give the right meaning to the above-quoted provision of the Constitution. (Emphases and underscoring supplied)

On March 14, 2007, then Associate Justice Leonardo A. Quisumbing, also a JBC Consultant, submitted to the Chief Justice and ex-officio JBC Chairman his opinion,29 which reads:

8. Two things can be gleaned from the excerpts and citations above: the creation of the JBC is intended to curtail the influence of politics in Congress in the appointment of judges, and the understanding is that seven (7) persons will compose the JBC. As such, the interpretation of two votes for Congress runs counter to the intendment of the framers. Such interpretation actually gives Congress more influence in the appointment of judges. Also, two votes for Congress would increase the number of JBC members to eight, which could lead to voting deadlock by reason of even-numbered membership, and a clear violation of 7 enumerated members in the Constitution. (Emphases and underscoring supplied)

In an undated position paper,30 then Secretary of Justice Agnes VST Devanadera opined:

As can be gleaned from the above constitutional provision, the JBC is composed of seven (7) representatives coming from different sectors. From the enumeration it is patent that each category of members pertained to a single individual only. Thus, while we do not lose sight of the bicameral nature of our legislative department, it is beyond dispute that Art. VIII, Section 8 (1) of the 1987 Constitution is explicit and specific that "Congress" shall have only "xxx a representative." Thus, two (2) representatives from Congress would increase the number of JBC members to eight (8), a number beyond what the Constitution has contemplated. (Emphases and underscoring supplied)

In this regard, the scholarly dissection on the matter by retired Justice Consuelo Ynares-Santiago, a former JBC consultant, is worth reiterating.31 Thus:

A perusal of the records of the Constitutional Commission reveals that the composition of the JBC reflects the Commission’s desire "to have in the Council a representation for the major elements of the community." xxx The ex-officio members of the Council consist of representatives from the three main branches of government while the regular members are composed of various stakeholders in the judiciary. The unmistakeable tenor of Article VIII, Section 8(1) was to treat each ex-officio member as representing one co-equal branch of government. xxx Thus, the JBC was designed to have seven voting members with the three ex-officio members having equal say in the choice of judicial nominees.

x x x

No parallelism can be drawn between the representative of Congress in the JBC and the exercise by Congress of its legislative powers under Article VI and constituent powers under Article XVII of the Constitution. Congress, in relation to the executive and judicial branches of government, is constitutionally treated as another co-equal branch in the matter of its representative in the JBC. On the other hand, the exercise of legislative and constituent powers requires the Senate and the House of Representatives to coordinate and act as distinct bodies in furtherance of Congress’ role under our constitutional scheme. While the latter justifies and, in fact, necessitates the separateness of the two Houses of Congress as they relate inter se, no such dichotomy need be made when Congress interacts with the other two co-equal branches of government.

It is more in keeping with the co-equal nature of the three governmental branches to assign the same weight to considerations that any of its representatives may have regarding aspiring nominees to the judiciary. The representatives of the Senate and the House of Representatives act as such for one branch and should not have any more quantitative influence as the other branches in the exercise of prerogatives evenly bestowed upon the three. Sound reason and principle of equality among the three branches support this conclusion. [Emphases and underscoring supplied]

The argument that a senator cannot represent a member of the House of Representatives in the JBC and vice-versa is, thus, misplaced. In the JBC, any member of Congress, whether from the Senate or the House of

Representatives, is constitutionally empowered to represent the entire Congress. It may be a constricted constitutional authority, but it is not an absurdity.

From this score stems the conclusion that the lone representative of Congress is entitled to one full vote. This pronouncement effectively disallows the scheme of splitting the said vote into half (1/2), between two representatives of Congress. Not only can this unsanctioned practice cause disorder in the voting process, it is clearly against the essence of what the Constitution authorized. After all, basic and reasonable is the rule that what cannot be legally done directly cannot be done indirectly. To permit or tolerate the splitting of one vote into two or more is clearly a constitutional circumvention that cannot be countenanced by the Court. Succinctly put, when the Constitution envisioned one member of Congress sitting in the JBC, it is sensible to presume that this representation carries with him one full vote.

It is also an error for respondents to argue that the President, in effect, has more influence over the JBC simply because all of the regular members of the JBC are his appointees. The principle of checks and balances is still safeguarded because the appointment of all the regular members of the JBC is subject to a stringent process of confirmation by the Commission on Appointments, which is composed of members of Congress.

Respondents’ contention that the current irregular composition of the JBC should be accepted, simply because it was only questioned for the first time through the present action, deserves scant consideration. Well-settled is the rule that acts done in violation of the Constitution no matter how frequent, usual or notorious cannot develop or gain acceptance under the doctrine of estoppel or laches, because once an act is considered as an infringement of the Constitution it is void from the very beginning and cannot be the source of any power or authority.

It would not be amiss to point out, however, that as a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. This rule, however, is not absolute. Under the doctrine of operative facts, actions previous to the declaration of unconstitutionality are legally recognized. They are not nullified. This is essential in the interest of fair play. To reiterate the doctrine enunciated in Planters Products, Inc. v. Fertiphil Corporation:32

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.33

Under the circumstances, the Court finds the exception applicable in this case and holds that notwithstanding its finding of unconstitutionality in the current composition of the JBC, all its prior official actions are nonetheless valid.

Considering that the Court is duty bound to protect the Constitution which was ratified by the direct action of the Filipino people, it cannot correct what respondents perceive as a mistake in its mandate. Neither can the Court, in the exercise of its power to interpret the spirit of the Constitution, read into the law something that is contrary to its express provisions and justify the same as correcting a perceived inadvertence. To do so would otherwise sanction the Court action of making amendment to the Constitution through a judicial pronouncement.

In other words, the Court cannot supply the legislative omission. According to the rule of casus omissus "a case omitted is to be held as intentionally omitted."34 "The principle proceeds from a reasonable certainty that a particular person, object or thing has been omitted from a legislative enumeration."35 Pursuant to this, "the Court cannot under its power of interpretation supply the omission even though the omission may have resulted from inadvertence or because the case in question was not foreseen or contemplated."36 "The Court cannot supply what it thinks the legislature would have supplied had its attention been called to the omission, as that would be judicial legislation."37

Stated differently, the Court has no power to add another member by judicial construction.

The call for judicial activism fails to stir the sensibilities of the Court tasked to guard the Constitution against usurpation. The Court remains steadfast in confining its powers in the sphere granted by the Constitution itself.

Judicial activism should never be allowed to become judicial exuberance.38 In cases like this, no amount of practical logic or convenience can convince the Court to perform either an excision or an insertion that will change the manifest intent of the Framers. To broaden the scope of congressional representation in the JBC is tantamount to the inclusion of a subject matter which was not included in the provision as enacted. True to its constitutional mandate, the Court cannot craft and tailor constitutional provisions in order to accommodate all of situations no matter how ideal or reasonable the proposed solution may sound. To the exercise of this intrusion, the Court declines.

WHEREFORE, the Motion for Reconsideration filed by respondents is hereby DENIED.

The suspension of the effects of the second paragraph of the dispositive portion of the July 17, 2012 Decision of the Court, which reads, "This disposition is immediately executory," is hereby LIFTED.

SO ORDERED.

JOSE CATRAL MENDOZAAssociate Justice

ARAULLO V AQUINO

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 209287               February 3, 2015

MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN; JUDY M. TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON, PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA WOMEN'S PARTY REPRESENTATIVE; REP. TERRY L. RIDON, KABATAAN PARTYLIST REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAYAN MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN; VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners, vs.BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209135

AUGUSTO L. SYJUCO JR., Ph.D., Petitioner, vs.FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET AND MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAPACITY AS THE SENATE PRESIDENT OF THE PHILIPPINES, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209136

MANUELITO R. LUNA, Petitioner, vs.SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS OFFICIAL CAPACITY AS ALTER EGO OF THE PRESIDENT, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209155

ATTY. JOSE MALVAR VILLEGAS, JR. Petitioner vs.THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209164

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN M. BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners, vs.DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B. ABAD, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209260

INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner, vs.SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM),Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209442

GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN M. ABANTE AND REV. JOSE L. GONZALEZ,Petitioners, vs.PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES, REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO BELMONTE, JR.; THE EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY SECRETARY FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY CESAR V. PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE LEON, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209517

CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES (COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING AUTHORITY (CUE-NHA); MANUEL BACLAGON, FOR HIMSELF AND AS PRESIDENT OF THE SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES, DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO); ANTONIA PASCUAL, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF AGRARIAN REFORM EMPLOYEES ASSOCIATION (DAREA); ALBERT MAGALANG, FOR HIMSELF AND AS PRESIDENT OF THE ENVIRONMENT AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL ARABA, FOR HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG MGA KAW ANI NG MMDA (KKK-MMDA), Petitioners, vs.BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. 209569

VOLUNTEERS AGAINST CRIME AND CORRUPTION (V ACC), REPRESENTED BY DANTE L. JIMENEZ,Petitioner, vs.PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

R E S O L U T I O N

BERSAMIN, J.:

The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be allowed to sap its strength nor greed for power debase its rectitude.1

Before the Court are the Motion for Reconsideration2 filed by the respondents, and the Motion for Partial Reconsideration3 filed by the petitioners in G.R. No. 209442.

In their Motion for Reconsideration, the respondents assail the decision4 promulgated on July 1 2014 upon the following procedural and substantive errors, viz:

PROCEDURAL

I

WITHOUT AN ACTUAL CASE OR CONTROVERSY, ALLEGATIONS OF GRAVE ABUSE OF DISCRETION ON THE PART OF ANY INSTRUMENTALITY OF THE GOVERNMENT CANNOT CONFER ON THIS HONORABLE COURT THE POWER TO DETERMINE THE CONSTITUTIONALITY OF THE DAP AND NBC NO. 541

II

PETITIONERS’ ACTIONS DO NOT PRESENT AN ACTUAL CASE OR CONTROVERSY AND THEREFORE THIS HONORABLE COURT DID NOT ACQUIRE JURISDICTION

III

PETITIONERS HAVE NEITHER BEEN INJURED NOR THREATENED WITH INJURY AS A RESULT OF THE OPERATION OF THE DAP AND THEREFORE SHOULD HAVE BEEN HELD TO HAVE NO STANDING TO BRING THESE SUITS FOR CERTIORARI AND PROHIBITION

IV

NOR CAN PETITIONERS’ STANDING BE SUSTAINED ON THE GROUND THAT THEY ARE BRINGING THESE SUITS AS CITIZENS AND AS TAXPAYERS

V

THE DECISION OF THIS HONORABLE COURT IS NOT BASED ON A CONSIDERATION OF THE ACTUAL APPLICATIONS OF THE DAP IN 116 CASES BUT SOLELY ON AN ABSTRACT CONSIDERATION OF NBC NO. 5415

SUBSTANTIVE

I

THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED "SAVINGS" UNDER THE RELEVANT PROVISIONS OF THE GAA

II

ALL DAP APPLICATIONS HAVE APPROPRIATION COVER

III

THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS TO OTHER DEPARTMENTS PURSUANT TO HIS CONSTITUTIONAL POWERS

IV

THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT REVENUE COLLECTIONS FROM EACH SOURCE OF REVENUE ENUMERATED IN THE BUDGET PROPOSAL MUST EXCEED THE CORRESPONDING REVENUE TARGET

V

THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED6

The respondents maintain that the issues in these consolidated cases were mischaracterized and unnecessarily constitutionalized; that the Court’s interpretation of savings can be overturned by legislation considering that savings is defined in the General Appropriations Act (GAA), hence making savings a statutory issue;7 that the withdrawn unobligated allotments and unreleased appropriations constitute savings and may be used for augmentation;8 and that the Court should apply legally recognized norms and principles, most especially the presumption of good faith, in resolving their motion.9

On their part, the petitioners in G.R. No. 209442 pray for the partial reconsideration of the decision on the ground that the Court thereby:

FAILED TO DECLARE AS UNCONSTITUTIONAL AND ILLEGAL ALL MONEYS UNDER THE DISBURSEMENT ACCELERATION PROGRAM (DAP) USED FOR ALLEGED AUGMENTATION OF APPROPRIATION ITEMS THAT DID NOT HAVE ACTUAL DEFICIENCIES10

They submit that augmentation of items beyond the maximum amounts recommended by the President for the programs, activities and projects (PAPs) contained in the budget submitted to Congress should be declared unconstitutional.

Ruling of the Court

We deny the motion for reconsideration of the petitioners in G.R. No. 209442, and partially grant the motion for reconsideration of the respondents.

The procedural challenges raised by the respondents, being a mere rehash of their earlier arguments herein, are dismissed for being already passed upon in the assailed decision.

As to the substantive challenges, the Court discerns that the grounds are also reiterations of the arguments that were already thoroughly discussed and passed upon in the assailed decision. However, certain declarations in our July 1, 2014 Decision are modified in order to clarify certain matters and dispel further uncertainty.

1.

The Court’s power of judicial review

The respondents argue that the Executive has not violated the GAA because savings as a conceptis an ordinary species of interpretation that calls for legislative, instead of judicial, determination.11

This argument cannot stand.

The consolidated petitions distinctly raised the question of the constitutionality of the acts and practices under the DAP, particularly their non-conformity with Section 25(5), Article VI of the Constitution and the principles of separation of power and equal protection. Hence, the matter is still entirely within the Court’s competence, and its determination does not pertain to Congress to the exclusion of the Court. Indeed, the interpretation of the GAA and its definition of savings is a foremost judicial function. This is because the power of judicial review vested in the Court is exclusive. As clarified in Endencia and Jugo v. David:12

Under our system of constitutional government, the Legislative department is assigned the power to make and enact laws. The Executive department is charged with the execution of carrying out of the provisions of said laws.

But the interpretation and application of said laws belong exclusively to the Judicial department. And this authority to interpret and apply the laws extends to the Constitution. Before the courts can determine whether a law is constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but also of the pertinent portion of the Constitution in order to decide whether there is a conflict between the two, because if there is, then the law will have to give way and has to be declared invalid and unconstitutional.

x x x x

We have already said that the Legislature under our form of government is assigned the task and the power to make and enact laws, but not to interpret them. This is more true with regard to the interpretation of the basic law, the Constitution, which is not within the sphere of the Legislative department. If the Legislature may declare what a law means, or what a specific portion of the Constitution means, especially after the courts have in actual case ascertain its meaning by interpretation and applied it in a decision, this would surely cause confusion and instability in judicial processes and court decisions. Under such a system, a final court determination of a case based on a judicial interpretation of the law of the Constitution may be undermined or even annulled by a subsequent and different interpretation of the law or of the Constitution by the Legislative department. That would be neither wise nor desirable, besides being clearly violative of the fundamental, principles of our constitutional system of government, particularly those governing the separation of powers.13

The respondents cannot also ignore the glaring fact that the petitions primarily and significantly alleged grave abuse of discretion on the part of the Executive in the implementation of the DAP. The resolution of the petitions thus demanded the exercise by the Court of its aforedescribed power of judicial review as mandated by the Constitution.

2.

Strict construction on the accumulation and utilization of savings

The decision of the Court has underscored that the exercise of the power to augment shall be strictly construed by virtue of its being an exception to the general rule that the funding of PAPs shall be limited to the amount fixed by Congress for the purpose.14 Necessarily, savings, their utilization and their management will also be strictly construed against expanding the scope of the power to augment.15 Such a strict interpretation is essential in order to keep the Executive and other budget implementors within the limits of their prerogatives during budget execution, and to prevent them from unduly transgressing Congress’ power of the purse.16 Hence, regardless of the perceived beneficial purposes of the DAP, and regardless of whether the DAP is viewed as an effective tool of stimulating the national economy, the acts and practices under the DAP and the relevant provisions of NBC No. 541 cited in the Decision should remain illegal and unconstitutional as long as the funds used to finance the projects mentioned therein are sourced from savings that deviated from the relevant provisions of the GAA, as well as the limitation on the power to augment under Section 25(5), Article VI of the Constitution. In a society governed by laws, even the best intentions must come within the parameters defined and set by the Constitution and the law. Laudable purposes must be carried out through legal methods.17

Respondents contend, however, that withdrawn unobligated allotments and unreleased appropriations under the DAP are savings that may be used for augmentation, and that the withdrawal of unobligated allotments were made pursuant to Section 38 Chapter 5, Book VI of the Administrative Code;18 that Section 38 and Section 39, Chapter 5, Book VI of the Administrative Code are consistent with Section 25(5), Article VI of the Constitution, which, taken together, constitute "a framework for which economic managers of the nation may pull various levers in the form of authorization from Congress to efficiently steer the economy towards the specific and general purposes of the GAA;"19 and that the President’s augmentation of deficient items is in accordance with the standing authority issued by Congress through Section 39.

Section 25(5), Article VI of the Constitution states:

Section 25. x x x x x x x

5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of

Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

x x x x

Section 38 and Section 39, Chapter 5, Book VI of the Administrative Code provide:

Section 38. Suspension of Expenditure of Appropriations. - Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees.

Section 39. Authority to Use Savings in Appropriations to Cover Deficits.—Except as otherwise provided in the General Appropriations Act, any savings in the regular appropriations authorized in the General Appropriations Act for programs and projects of any department, office or agency, may, with the approval of the President, be used to cover a deficit in any other item of the regular appropriations: Provided, that the creation of new positions or increase of salaries shall not be allowed to be funded from budgetary savings except when specifically authorized by law: Provided, further, that whenever authorized positions are transferred from one program or project to another within the same department, office or agency, the corresponding amounts appropriated for personal services are also deemed transferred, without, however increasing the total outlay for personal services of the department, office or agency concerned. (Bold underscoring supplied for emphasis)

In the Decision, we said that:

Unobligated allotments, on the other hand, were encompassed by the first part of the definition of "savings" in the GAA, that is, as "portions or balances of any programmed appropriation in this Act free from any obligation or encumbrance." But the first part of the definition was further qualified by the three enumerated instances of when savings would be realized. As such, unobligated allotments could not be indiscriminately declared as savings without first determining whether any of the three instances existed. This signified that the DBM’s withdrawal of unobligated allotments had disregarded the definition of savings under the GAAs.

x x x x

The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of further expenditures, not the withdrawal of unobligated allotments, to wit:

x x x x

Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but instead transferred the funds to other PAPs.20

We now clarify.

Section 38 refers to the authority of the President "to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act." When the President suspends or stops expenditure of funds, savings are not automatically generated until it has been established that such funds or appropriations are free from any obligation or encumbrance, and that the work, activity or purpose for which the appropriation is authorized has been completed, discontinued or abandoned.

It is necessary to reiterate that under Section 5.7 of NBC No. 541, the withdrawn unobligated allotments may be:

5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned, from which the allotments were withdrawn;

5.7.2 Realigned to cover additional funding for other existing programs and projects of the agency/OU; or

5.7.3 Used to augment existing programs and projects of any agency and to fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented during the current year.

Although the withdrawal of unobligated allotments may have effectively resulted in the suspension or stoppage of expenditures through the issuance of negative Special Allotment Release Orders (SARO), the reissuance of withdrawn allotments to the original programs and projects is a clear indication that the program or project from which the allotments were withdrawn has not been discontinued or abandoned. Consequently, as we have pointed out in the Decision, "the purpose for which the withdrawn funds had been appropriated was not yet fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings impossible."21 In this regard, the withdrawal and transfer of unobligated allotments remain unconstitutional. But then, whether the withdrawn allotments have actually been reissued to their original programs or projects is a factual matter determinable by the proper tribunal.

Also, withdrawals of unobligated allotments pursuant to NBC No. 541 which shortened the availability of appropriations for MOOE and capital outlays, and those which were transferred to PAPs that were not determined to be deficient, are still constitutionally infirm and invalid.

At this point, it is likewise important to underscore that the reversion to the General Fund of unexpended balances of appropriations – savings included – pursuant to Section 28 Chapter IV, Book VI of the Administrative Code22does not apply to the Constitutional Fiscal Autonomy Group (CFAG), which include the Judiciary, Civil Service Commission, Commission on Audit, Commission on Elections, Commission on Human Rights, and the Office of the Ombudsman. The reason for this is that the fiscal autonomy enjoyed by the CFAG –

x x x contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix rates of compensation not exceeding the highest rates authorized by law for compensation and pay plans of the government and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the discharge of their functions.

Fiscal autonomy means freedom from outside control. If the Supreme Court says it needs 100 typewriters but DBM rules we need only 10 typewriters and sends its recommendations to Congress without even informing us, the autonomy given by the Constitution becomes an empty and illusory platitude.

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional system is based. x x x23

On the other hand, Section 39 is evidently in conflict with the plain text of Section 25(5), Article VI of the Constitution because it allows the President to approve the use of any savings in the regular appropriations authorized in the GAA for programs and projects of any department, office or agency to cover a deficit in any other item of the regular appropriations. As such, Section 39 violates the mandate of Section 25(5) because the latter expressly limits the authority of the President to augment an item in the GAA to only those in his own Department out of the savings in other items of his own Department’s appropriations. Accordingly, Section 39 cannot serve as a valid authority to justify cross-border transfers under the DAP. Augmentations under the DAP which are made by the Executive within its department shall, however, remain valid so long as the requisites under Section 25(5) are complied with.

In this connection, the respondents must always be reminded that the Constitution is the basic law to which all laws must conform. No act that conflicts with the Constitution can be valid.24 In Mutuc v. Commission on Elections,25 therefore, we have emphasized the importance of recognizing and bowing to the supremacy of the Constitution:

x x x The concept of the Constitution as the fundamental law, setting forth the criterion for the validity of any public act whether proceeding from the highest official or the lowest functionary, is a postulate of our system of government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies the topmost rung in the legal hierarchy. The three departments of government in the discharge of the functions with which it is [sic] entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must be

observed. Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority, whether substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or disregard what it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is called upon to maintain inviolate what is decreed by the fundamental law. Even its power of judicial review to pass upon the validity of the acts of the coordinate branches in the course of adjudication is a logical corollary of this basic principle that the Constitution is paramount. It overrides any governmental measure that fails to live up to its mandates. Thereby there is a recognition of its being the supreme law.

Also, in Biraogo v. Philippine Truth Commission of 2010,26 we have reminded that: – The role of the Constitution cannot be overlooked. It is through the Constitution that the fundamental powers of government are established, limited and defined, and by which these powers are distributed among the several departments. The Constitution is the basic and paramount law to which all other laws must conform and to which all persons, including the highest officials of the land, must defer. Constitutional doctrines must remain steadfast no matter what may be the tides of time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the whims and caprices of government and the people who run it.27

3.

The power to augment cannot be used to fund non-existent provisions in the GAA

The respondents posit that the Court has erroneously invalidated all the DAP-funded projects by overlooking the difference between an item and an allotment class, and by concluding that they do not have appropriation cover; and that such error may induce Congress and the Executive (through the DBM) to ensure that all items should have at least P1 funding in order to allow augmentation by the President.28

At the outset, we allay the respondents’ apprehension regarding the validity of the DAP funded projects. It is to be emphatically indicated that the Decision did not declare the en masse invalidation of the 116 DAP-funded projects. To be sure, the Court recognized the encouraging effects of the DAP on the country’s economy,29 and acknowledged its laudable purposes, most especially those directed towards infrastructure development and efficient delivery of basic social services.30 It bears repeating that the DAP is a policy instrument that the Executive, by its own prerogative, may utilize to spur economic growth and development.

Nonetheless, the Decision did find doubtful those projects that appeared to have no appropriation cover under the relevant GAAs on the basis that: (1) the DAP funded projects that originally did not contain any appropriation for some of the expense categories (personnel, MOOE and capital outlay); and (2) the appropriation code and the particulars appearing in the SARO did not correspond with the program specified in the GAA. The respondents assert, however, that there is no constitutional requirement for Congress to create allotment classes within an item. What is required is for Congress to create items to comply with the line-item veto of the President.31

After a careful reexamination of existing laws and jurisprudence, we find merit in the respondents’ argument.

Indeed, Section 25(5) of the 1987 Constitution mentions of the term item that may be the object of augmentation by the President, the Senate President, the Speaker of the House, the Chief Justice, and the heads of the Constitutional Commissions. In Belgica v. Ochoa,32 we said that an item that is the distinct and several part of the appropriation bill, in line with the item-veto power of the President, must contain "specific appropriations of money" and not be only general provisions, thus:

For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which may be the object of the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the details, the distinct and severable parts of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of the Philippine Islands, the US Supreme Court characterized an item of appropriation as follows:

An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of money, not some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)

On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to exercise his power of item veto, must contain "specific appropriations of money" and notonly "general provisions" which provide for parameters of appropriation.

Further, it is significant to point out that an item of appropriation must be an item characterized by singular correspondence – meaning an allocation of a specified singular amount for a specified singular purpose, otherwise known as a "line-item." This treatment not only allows the item to be consistent with its definition as a "specific appropriation of money" but also ensures that the President may discernibly veto the same. Based on the foregoing formulation, the existing Calamity Fund, Contingent Fund and the Intelligence Fund, being appropriations which state a specified amount for a specific purpose, would then be considered as "line-item" appropriations which are rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly apportioned into component percentages or values; however, it is crucial that each percentage or value must be allocated for its own corresponding purpose for such component to be considered as a proper line-item. Moreover, as Justice Carpio correctly pointed out, a valid appropriation may even have several related purposes that are by accounting and budgeting practice considered as one purpose, e.g., MOOE (maintenance and other operating expenses), in which case the related purposes shall be deemed sufficiently specific for the exercise of the President‘s item veto power. Finally, special purpose funds and discretionary funds would equally square with the constitutional mechanism of item-veto for as long as they follow the rule on singular correspondence as herein discussed. x x x (Emphasis supplied)33

Accordingly, the item referred to by Section 25(5) of the Constitution is the last and indivisible purpose of a program in the appropriation law, which is distinct from the expense category or allotment class. There is no specificity, indeed, either in the Constitution or in the relevant GAAs that the object of augmentation should be the expense category or allotment class. In the same vein, the President cannot exercise his veto power over an expense category; he may only veto the item to which that expense category belongs to.

Further, in Nazareth v. Villar,34 we clarified that there must be an existing item, project or activity, purpose or object of expenditure with an appropriation to which savings may be transferred for the purpose of augmentation. Accordingly, so long as there is an item in the GAA for which Congress had set aside a specified amount of public fund, savings may be transferred thereto for augmentation purposes. This interpretation is consistent not only with the Constitution and the GAAs, but also with the degree of flexibility allowed to the Executive during budget execution in responding to unforeseeable contingencies.

Nonetheless, this modified interpretation does not take away the cave at that only DAP projects found in the appropriate GAAs may be the subject of augmentation by legally accumulated savings. Whether or not the 116 DAP-funded projects had appropriation cover and were validly augmented require factual determination that is not within the scope of the present consolidated petitions under Rule 65.

4.

Cross-border transfers are constitutionally impermissible

The respondents assail the pronouncement of unconstitutionality of cross-border transfers made by the President. They submit that Section 25(5), Article VI of the Constitution prohibits only the transfer of appropriation, not savings. They relate that cross-border transfers have been the practice in the past, being consistent with the President’s role as the Chief Executive.35

In view of the clarity of the text of Section 25(5), however, the Court stands by its pronouncement, and will not brook any strained interpretations.

5.

Unprogrammed funds may only be released upon proof that the total revenues exceeded the target

Based on the 2011, 2012 and 2013 GAAs, the respondents contend that each source of revenue in the budget proposal must exceed the respective target to authorize release of unprogrammed funds. Accordingly, the Court’s

ruling thereon nullified the intention of the authors of the unprogrammed fund, and renders useless the special provisions in the relevant GAAs.36

The respondents’ contentions are without merit.

To recall, the respondents justified the use of unprogrammed funds by submitting certifications from the Bureau of Treasury and the Department of Finance (DOF) regarding the dividends derived from the shares of stock held by the Government in government-owned and controlled corporations.37 In the decision, the Court has held that the requirement under the relevant GAAs should be construed in light of the purpose for which the unprogrammed funds were denominated as "standby appropriations." Hence, revenue targets should be considered as a whole, not individually; otherwise, we would be dealing with artificial revenue surpluses. We have even cautioned that the release of unprogrammed funds based on the respondents’ position could be unsound fiscal management for disregarding the budget plan and fostering budget deficits, contrary to the Government’s surplus budget policy.38

While we maintain the position that aggregate revenue collection must first exceed aggregate revenue target as a pre-requisite to the use of unprogrammed funds, we clarify the respondents’ notion that the release of unprogrammed funds may only occur at the end of the fiscal year.

There must be consistent monitoring as a component of the budget accountability phase of every agency’s performance in terms of the agency’s budget utilization as provided in Book VI, Chapter 6, Section 51 and Section 52 of the Administrative Code of 1987,which state:

SECTION 51. Evaluation of Agency Performance.—The President, through the Secretary shall evaluate on a continuing basis the quantitative and qualitative measures of agency performance as reflected in the units of work measurement and other indicators of agency performance, including the standard and actual costs per unit of work.

SECTION 52. Budget Monitoring and Information System.—The Secretary of Budget shall determine accounting and other items of information, financial or otherwise, needed to monitor budget performance and to assess effectiveness of agencies’ operations and shall prescribe the forms, schedule of submission, and other components of reporting systems, including the maintenance of subsidiary and other records which will enable agencies to accomplish and submit said information requirements: Provided, that the Commission on Audit shall, in coordination with the Secretary of Budget, issue rules and regulations that may be applicable when the reporting requirements affect accounting functions of agencies: Provided, further, that the applicable rules and regulations shall be issued by the Commission on Audit within a period of thirty (30) days after the Department of Budget and Management prescribes the reporting requirements.

Pursuant to the foregoing, the Department of Budget and Management (DBM) and the Commission on Audit (COA) require agencies under various joint circulars to submit budget and financial accountability reports (BFAR) on a regular basis,39 one of which is the Quarterly Report of Income or Quarterly Report of Revenue and Other Receipts.40 On the other hand, as Justice Carpio points out in his Separate Opinion, the Development Budget Coordination Committee (DBCC) sets quarterly revenue targets for aspecific fiscal year.41 Since information on both actual revenue collections and targets are made available every quarter, or at such time as the DBM may prescribe, actual revenue surplus may be determined accordingly and eleases from the unprogrammed fund may take place even prior to the end of the fiscal year.42

In fact, the eleventh special provision for unprogrammed funds in the 2011 GAA requires the DBM to submit quarterly reports stating the details of the use and releases from the unprogrammed funds, viz:

11. Reportorial Requirement. The DBM shall submit to the House Committee on Appropriations and the Senate Committee on Finance separate quarterly reports stating the releases from the Unprogrammed Fund, the amounts released and purposes thereof, and the recipient departments, bureaus, agencies or offices, GOCCs and GFIs, including the authority under which the funds are released under Special Provision No. 1 of the Unprogrammed Fund.

Similar provisions are contained in the 2012 and 2013 GAAs.43

However, the Court’s construction of the provision on unprogrammed funds is a statutory, not a constitutional, interpretation of an ambiguous phrase. Thus, the construction should be given prospective effect.44

6.

The presumption of good faith stands despite the obiter pronouncement

The remaining concern involves the application of the operative fact doctrine.

The respondents decry the misapplication of the operative fact doctrine, stating:

110. The doctrine of operative fact has nothing to do with the potential liability of persons who acted pursuant to a then-constitutional statute, order, or practice. They are presumed to have acted in good faith and the court cannot load the dice, so to speak, by disabling possible defenses in potential suits against so-called "authors, proponents and implementors." The mere nullification are still deemed valid on the theory that judicial nullification is a contingent or unforeseen event.

111. The cases before us are about the statutory and constitutional interpretations of so-called acts and practices under a government program, DAP. These are not civil, administrative, or criminal actions against the public officials responsible for DAP, and any statement about bad faith may be unfairly and maliciously exploited for political ends. At the same time, any negation of the presumption of good faith, which is the unfortunate implication of paragraphs 3 and 4 of page 90 of the Decision, violates the constitutional presumption of innocence, and is inconsistent with the Honorable Court’s recognition that "the implementation of the DAP yielded undeniably positive results that enhanced the economic welfare of the country."

112. The policy behind the operative fact doctrine is consistent with the idea that regardless of the nullification of certain acts and practices under the DAP and/or NBC No. 541, it does not operate to impute bad faith to authors, proponents and implementors who continue to enjoy the presumption of innocence and regularity in the performance of official functions and duties. Good faith is presumed, whereas bad faith requires the existence of facts. To hold otherwise would send a chilling effect to all public officers whether of minimal or significant discretion, the result of which would be a dangerous paralysis of bureaucratic activity.45 (Emphasis supplied)

In the speech he delivered on July 14, 2014, President Aquino III also expressed the view that in applying the doctrine of operative fact, the Court has already presumed the absence of good faith on the part of the authors, proponents and implementors of the DAP, so that they would have to prove good faith during trial.46

Hence, in their Motion for Reconsideration, the respondents now urge that the Court should extend the presumption of good faith in favor of the President and his officials who co-authored, proposed or implemented the DAP.47

The paragraphs 3 and 4 of page 90 of the Decision alluded to by the respondents read:

Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be invoked only in situations where the nullification of the effects of what used to be a valid law would result in inequity and injustice; but where no such result would ensue, the general rule that an unconstitutional law is totally ineffective should apply.

In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can no longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.48 (Bold underscoring is supplied)

The quoted text of paragraphs 3 and 4 shows that the Court has neither thrown out the presumption of good faith nor imputed bad faith to the authors, proponents and implementors of the DAP. The contrary is true, because the Court has still presumed their good faith by pointing out that "the doctrine of operative fact xxx cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by

the proper tribunals determining their criminal, civil, administrative and other liabilities." Note that the proper tribunals can make "concrete findings of good faith in their favor" only after a full hearing of all the parties in any given case, and such a hearing can begin to proceed only after according all the presumptions, particularly that of good faith, by initially requiring the complainants, plaintiffs or accusers to first establish their complaints or charges before the respondent authors, proponents and implementors of the DAP.

It is equally important to stress that the ascertainment of good faith, or the lack of it, and the determination of whether or not due diligence and prudence were exercised, are questions of fact.49 The want of good faith is thus better determined by tribunals other than this Court, which is not a trier of facts.50

For sure, the Court cannot jettison the presumption of good faith in this or in any other case. 1âwphi1 The presumption is a matter of law. It has had a long history. Indeed, good faith has long been established as a legal principle even in the heydays of the Roman Empire.51In Soriano v. Marcelo,52 citing Collantes v. Marcelo,53 the Court emphasizes the necessity of the presumption of good faith, thus:

Well-settled is the rule that good faith is always presumed and the Chapter on Human Relations of the Civil Code directs every person, inter alia, to observe good faith which springs from the fountain of good conscience. Specifically, a public officer is presumed to have acted in good faith in the performance of his duties. Mistakes committed by a public officer are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. "Bad faith" does not simply connote bad moral judgment or negligence. There must be some dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a sworn duty through some motive or intent or ill will. It partakes of the nature of fraud. It contemplates a state of mind affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes.

The law also requires that the public officer’s action caused undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage or preference in the discharge of his functions. x x x

The Court has further explained in Philippine Agila Satellite, Inc. v. Trinidad-Lichauco: 54

We do not doubt the existence of the presumptions of "good faith" or "regular performance of official duty", yet these presumptions are disputable and may be contradicted and overcome by other evidence. Many civil actions are oriented towards overcoming any number of these presumptions, and a cause of action can certainly be geared towards such effect. The very purpose of trial is to allow a party to present evidence to overcome the disputable presumptions involved. Otherwise, if trial is deemed irrelevant or unnecessary, owing to the perceived indisputability of the presumptions, the judicial exercise would be relegated to a mere ascertainment of what presumptions apply in a given case, nothing more. Consequently, the entire Rules of Court is rendered as excess verbiage, save perhaps for the provisions laying down the legal presumptions.

Relevantly, the authors, proponents and implementors of the DAP, being public officers, further enjoy the presumption of regularity in the performance of their functions. This presumption is necessary because they are clothed with some part of the sovereignty of the State, and because they act in the interest of the public as required by law.55 However, the presumption may be disputed.56

At any rate, the Court has agreed during its deliberations to extend to the proponents and implementors of the DAP the benefit of the doctrine of operative fact. This is because they had nothing to do at all with the adoption of the invalid acts and practices.

7.

The PAPs under the DAP remain effective under the operative fact doctrine

As a general rule, the nullification of an unconstitutional law or act carries with it the illegality of its effects. However, in cases where nullification of the effects will result in inequity and injustice, the operative fact doctrine may apply.57 In so ruling, the Court has essentially recognized the impact on the beneficiaries and the country as a whole if its ruling would pave the way for the nullification of the P144.378 Billions58 worth of infrastructure projects, social and economic services funded through the DAP. Bearing in mind the disastrous impact of nullifying these projects by virtue alone of the invalidation of certain acts and practices under the DAP, the Court has upheld the efficacy of

such DAP-funded projects by applying the operative fact doctrine. For this reason, we cannot sustain the Motion for Partial Reconsideration of the petitioners in G.R. No. 209442.

IN VIEW OF THE FOREGOING, and SUBJECT TO THE FOREGOING CLARIFICATIONS, the Court PARTIALLY GRANTS the Motion for Reconsideration filed by the respondents, and DENIES the Motion for Partial Reconsideration filed by the petitioners in G.R. No. 209442 for lack of merit.

ACCORDINGLY, the dispositive portion of the Decision promulgated on July 1, 2014 is hereby MODIFIED as follows:

WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES the following acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541 and related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers, namely:

(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year without complying with the statutory definition of savings contained in the General Appropriations Acts; and

(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other offices outside the Executive.

The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the conditions provided in the relevant General Appropriations Acts.

SO ORDERED.

LUACAS P. BERSAMINAssociate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENOChief Justice