October 2010 Philippine Supreme Court Decisions on Political Law

Here are selected October 2010 rulings of the Supreme Court of the Philippines on political law.

Constitutional Law

Bill of Rights; Presumption of Innocence. In this case, the so-called frame-up was virtually pure allegation bereft of credible proof. The narration of the police officer who implemented the search warrant was found, after trial and appellate review, as the true story. It is on firmer ground than the self-serving statement of the accused-appellant of frame-up.  The defense cannot solely rely upon the constitutional presumption of innocence for, while it is constitutional, the presumption is not conclusive.  Notably, the accused-appellant herself stated in her brief that “no proof was proffered by the accused-appellant of the police officers’ alleged ill motive.” Stated otherwise, the narration of the incident by law enforcers, buttressed by the presumption that they have regularly performed their duties in the absence of convincing proof to the contrary, must be given weight. People of the Philippines vs. Olive Rubio Mamaril. G.R. No. 171980, October 6, 2010.

Bill of Rights; Probable Cause. There is no general formula or fixed rule for the determination of probable cause since the same must be decided in light of the conditions obtaining in given situations and its existence depends to a large degree upon the findings or opinion of the judge conducting the examination. It is presumed that a judicial function has been regularly performed, absent a showing to the contrary. The defense’s reliance of the quoted testimony of the police officer alone, without any other evidence to show that there was indeed lack of personal knowledge, is insufficient to overturn the finding of the trial court.  The accused-appellant, having failed to present substantial rebuttal evidence to defeat the presumption of regularity of duty of the issuing judge, cannot not be sustained by the Court. People of the Philippines vs. Olive Rubio Mamaril. G.R. No. 171980, October 6, 2010.

Constitutionality; Actual Controversy; Standing 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.  Without such controversy, courts will decline to pass upon constitutional issues through advisory opinions, bereft as they are of authority to resolve hypothetical or moot questions.  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.  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 locus standi or the standing to challenge it.  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.”  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.

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.  The present petitions allege that then President Ramos had exercised vis-à-vis an assignment of franchise, a function legislative in character. As alleged, too, the Toll Regulatory Board (TRB), in the guise of entering into contracts or agreements with the Philippine National Construction Corporation (PNCC) and other juridical entities, virtually enlarged, modified and/or extended the statutory franchise of PNCC, thereby usurping a legislative prerogative. The usurpation came in the form of executing the assailed Supplemental Toll Operation Agreements and the issuance of Toll Operation Certificates. 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.  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.

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.  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.  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 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.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

Constitutionality; Locus Standi. A party who assails the constitutionality of a statute must have a direct and personal interest. It must show not only that the law or any governmental act is invalid, but also that it sustained or is in immediate danger of sustaining some direct injury as a result of its enforcement, and not merely that it suffers thereby in some indefinite way. Petitioners have not presented any personal stake in the outcome of the controversy.  None of them faces any charge under RA 9372. Petitioners in G.R. No. 178890, allege that they have been subjected to “close security surveillance by state security forces,” their members followed by “suspicious persons” and “vehicles with dark windshields,” and their offices monitored by “men with military build.”  They likewise claim that they have been branded as “enemies of the State.” Even conceding such allegations, petitioners have yet to show any connection between the purported “surveillance” and the implementation of RA 9372. On the other hand, petitioner-organizations in G.R. No. 178581 would like the Court to take judicial notice of respondents’ alleged action of tagging them as militant organizations fronting for the Communist Party of the Philippines (CPP) and its armed wing, the National People’s Army (NPA). The tagging, according to petitioners, is tantamount to the effects of proscription without following the procedure under the law. Petitioners’ apprehension is insufficient to substantiate their plea. That no specific charge or proscription under RA 9372 has been filed against them, three years after its effectiveness, belies any claim of imminence of their perceived threat emanating from the so-called tagging. The same is true with petitioners in G.R. No. 178554, who merely harp as well on their supposed “link” to the CPP and NPA.  They fail to particularize how the implementation of specific provisions of RA 9372 would result in direct injury to their organization and members. RA 9372 has been in effect for three years now. From July 2007 up to the present, petitioner-organizations have conducted their activities fully and freely without any threat of, much less an actual, prosecution or proscription under RA 9372.  Petitioners IBP and CODAL in G.R. No. 179157, on the other hand, base their claim of locus standi on their sworn duty to uphold the Constitution. The IBP zeroes in on Section 21 of RA 9372 directing it to render assistance to those arrested or detained under the law. The mere invocation of the duty to preserve the rule of law, however, does not suffice to clothe the IBP or any of its members with standing. The IBP failed to sufficiently demonstrate how its mandate under the assailed statute revolts against its constitutional rights and duties.  Moreover, both the IBP and CODAL have not pointed to even a single arrest or detention effected under RA 9372. Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject of “political surveillance,” also lacks locus standi.   Prescinding from the veracity, let alone legal basis, of the claim of “political surveillance,” the Court finds that she has not shown even the slightest threat of being charged under RA 9372.  Similarly lacking in locus standi are former Senator Wigberto Tañada and Senator Sergio Osmeña III, who cite their being respectively a human rights advocate and an oppositor to the passage of RA 9372.  Outside these statements, no concrete injury to them has been pinpointed. Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos Jr. in G.R. No. 178552 also conveniently state that the issues they raise are of transcendental importance, “which must be settled early” and are of “far-reaching implications,” without mention of any specific provision of RA 9372 under which they have been charged, or may be charged.  Mere invocation of human rights advocacy has nowhere been held sufficient to clothe litigants with locus standi.  Petitioners must show an actual, or immediate danger of sustaining, direct injury as a result of the law’s enforcement. To rule otherwise would be to corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared by the general public. Neither can locus standi be conferred upon individual petitioners as taxpayers and citizens.  A taxpayer suit is proper only when there is an exercise of the spending or taxing power of Congress, whereas citizen standing must rest on direct and personal interest in the proceeding.  In sum, it bears to stress that generalized interests, albeit accompanied by the assertion of a public right, do not establish locus standi. Evidence of a direct and personal interest is key. Southern Hemisphere Engagement Network, Inc., et al. vs. Anti-Terrorism Council, et al./Kilusang Mayo Uno, et al. Vs. Hon. Eduardo Ermita., et al./Bagong Alyansang Makabayan (Bayan), et al.  vs. Gloria Macapagal-Arroyo, et al./Karapatan, et al. vs. Gloria Macapagal-Arroyo, et al./The Integrated Bar of the Philippines, et al. vs. Executive Secretary Eduardo Ermita, et al./Bagong Alyansang Makabayan-Southern Tagalog, et al. vs. Gloria Macapagal-Arroyo, et al. G.R. No. 178552, 178554, 178581, 178890, 179157, 179461, October 5, 2010.

Constitutionality; Judicial Review; Actual Case or Controversy. The Court is not unaware that a reasonable certainty of the occurrence of a perceived threat to any constitutional interest suffices to provide a basis for mounting a constitutional challenge. This, however, is qualified by the requirement that there must be sufficient facts to enable the Court to intelligently adjudicate the issues. Prevailing American jurisprudence allows adjudication on the merits when an anticipatory petition clearly shows that the challenged prohibition forbids the conduct or activity that a petitioner seeks to do, as there would then be a justiciable controversy. Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that the challenged provisions of RA 9372 forbid constitutionally protected conduct or activity that they seek to do.  No demonstrable threat has been established, much less a real and existing one. Petitioners’ obscure allegations of sporadic “surveillance” and supposedly being tagged as “communist fronts” in no way approximate a credible threat of prosecution.  From these allegations, the Court is being lured to render an advisory opinion, which is not its function. Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which the Court has no original jurisdiction.  Then again, declaratory actions characterized by “double contingency,” where both the activity the petitioners intend to undertake and the anticipated reaction to it of a public official are merely theorized, lie beyond judicial review for lack of ripeness. Allegations of abuse must be anchored on real events before courts may step in to settle actual controversies involving rights which are legally demandable and enforceable. Southern Hemisphere Engagement Network, Inc, et al. vs. Anti-Terrorism Council, et al./Kilusang Mayo Uno etc., et al. Vs. Hon. Eduardo Ermita., et al./Bagong Alyansang Makabayan (Bayan), et al.  vs. Gloria Macapagal-Arroyo, et al./Karapatan, et al. vs. Gloria Macapagal-Arroyo, et al./The Integrated Bar of the Philippines, et al. vs. Executive Secretary Eduardo Ermita, et al./Bagong Alyansang Makabayan-Southern Tagalog, et al. vs. Gloria Macapagal-Arroyo, et al. G.R. Nos. 178552, 178554, 178581, 178890, 179157, 179461, October 5, 2010.

Constitutionality; Void for Vagueness and Overbreadth Doctrine. A facial invalidation of a statute is allowed only in free speech cases, wherein certain rules of constitutional litigation are rightly excepted. To be sure, the doctrine of vagueness and the doctrine of overbreadth do not operate on the same plane. A statute or act suffers from the defect of vagueness when it lacks comprehensible standards that men of common intelligence must necessarily guess at its meaning and differ as to its application.  The overbreadth doctrine, meanwhile, decrees that a governmental purpose to control or prevent activities constitutionally subject to state regulations may not be achieved by means which sweep unnecessarily broadly and thereby invade the area of protected freedoms. As distinguished from the vagueness doctrine, the overbreadth doctrine assumes that individuals will understand what a statute prohibits and will accordingly refrain from that behavior, even though some of it is protected. A “facial” challenge is likewise different from an “as-applied” challenge. Distinguished from an as-applied challenge which considers only extant facts affecting real litigants, a facial invalidation is an examination of the entire law, pinpointing its flaws and defects, not only on the basis of its actual operation to the parties, but also on the assumption or prediction that its very existence may cause others not before the court to refrain from constitutionally protected speech or activities. The vagueness and overbreadth doctrines, as grounds for a facial challenge, are not applicable to penal laws. On the other hand, the allowance of a facial challenge in free speech cases  is justified by the aim to avert the “chilling effect” on protected speech, the exercise of which should not at all times be abridged.  This rationale is inapplicable to plain penal statutes that generally bear an “in terrorem effect” in deterring socially harmful conduct.  In fact, the legislature may even forbid and penalize acts formerly considered innocent and lawful, so long as it refrains from diminishing or dissuading the exercise of constitutionally protected rights. Under no case, therefore, may ordinary penal statutes be subjected to a facial challenge. The rationale is obvious. If a facial challenge to a penal statute is permitted, the prosecution of crimes may be hampered.  No prosecution would be possible. It is settled, furthermore, that the application of the overbreadth doctrine is limited to a facial kind of challenge and, owing to the given rationale of a facial challenge, applicable only to free speech cases. By its nature, the overbreadth doctrine has to necessarily apply a facial type of invalidation in order to plot areas of protected speech, inevitably almost always under situations not before the court, that are impermissibly swept by the substantially overbroad regulation.  Otherwise stated, a statute cannot be properly analyzed for being substantially overbroad if the court confines itself only to facts as applied to the litigants. In this case, since a penal statute may only be assailed for being vague as applied to petitioners, a limited vagueness analysis of the definition of “terrorism” in RA 9372 is legally impermissible absent an actual or imminent charge against them. In fine, petitioners have established neither an actual charge nor a credible threat of prosecution under RA 9372.  Even a limited vagueness analysis of the assailed definition of “terrorism” is thus legally impermissible. Southern Hemisphere Engagement Network, Inc., et al. vs. Anti-Terrorism Council, et al./Kilusang Mayo Uno, et al. Vs. Hon. Eduardo Ermita., et al./Bagong Alyansang Makabayan (Bayan), et al.  vs. Gloria Macapagal-Arroyo, et al./Karapatan, et al. vs. Gloria Macapagal-Arroyo, et al./The Integrated Bar of the Philippines, et al. vs. Executive Secretary Eduardo Ermita, et al./Bagong Alyansang Makabayan-Southern Tagalog, et al. vs. Gloria Macapagal-Arroyo, et al. G.R. Nos. 178552, 178554, 178581, 178890, 179157, 179461, October 5, 2010.

Eminent Domain; Just Compensation. Section 9, Article III of the 1987 Constitution requires that in the exercise of the power of eminent domain, compensation should be just. The public, through the State, must balance the injury that the taking of property causes through compensation for what is taken, value for value.  The owner’s loss is not only his property but also its income-generating potential. While the LBP immediately paid the remaining balance on the just compensation due to the petitioners after the Supreme Court had fixed the value of the expropriated properties, it overlooks one essential fact – from the time that the State took the petitioners’ properties until the time that the petitioners were fully paid, almost 12 long years passed.  This is the rationale for imposing the 12% interest – in order to compensate the petitioners for the income they would have made had they been properly compensated for their properties at the time of the taking. Furthermore, while the SC has equitably reduced the amount of interest awarded in numerous cases in the past, those cases involved interest that was essentially consensual in nature, i.e., interest stipulated in signed agreements between the contracting parties. In contrast, the interest involved in the present case “runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish, as of the date of taking.” Thus, the interest due in the present case cannot be reduced. Apo Fruits Corporation, et al. vs. Land Bank of the Philippines. G.R. No. 164195, October 12, 2010.

Fiscal Autonomy of the Judiciary; GSIS; Exemption from Legal Fees. In In Re: Petition for Recognition of the Exemption of the Government Service Insurance System from Payment of Legal Fees, the Court ruled that the provision in the Charter of the GSIS, i.e., Section 39 of Republic Act No. 8291, which exempts it from “all taxes, assessments, fees, charges or duties of all kinds,” cannot operate to exempt it from the payment of legal fees. This was because, unlike the 1935 and 1973 Constitutions, which empowered Congress to repeal, alter or supplement the rules of the Supreme Court concerning pleading, practice and procedure, the 1987 Constitution removed this power from Congress.  Hence, the Supreme Court now has the sole authority to promulgate rules concerning pleading, practice and procedure in all courts. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs the Court’s guaranteed fiscal autonomy and erodes its independence. In the instant case, therefore, the trial court did not acquire jurisdiction to try and decide the permissive counterclaim considering that petitioner is not exempted from the payment of legal fees. Government Service Insurance System (GSIS) vs. Heirs of Fernando P. Caballero, et al. G.R. No. 158090, October 4, 2010.

Ombudsman; Disciplinary Authority over Public School Teachers. The administrative disciplinary authority of the Ombudsman over a public school teacher is not an exclusive power but is concurrent with the proper committee of the Department of Education, Culture and Sports (DECS). However, while petitioner has such concurrent authority, Section 23 of the Ombudsman Act of 1989 provides that the Ombudsman may refer a complaint to the proper disciplinary authority. Under the circumstances obtaining in the case, it would have been more prudent for petitioner to have referred the complaint to the DECS given that it would have been in a better position to serve the interest of justice considering the nature of the controversy. Respondent is a public school teacher and is covered by RA 4670, therefore, the proceedings before the DECS would have been the more appropriate venue to resolve the dispute. In any case, the foregoing pronouncement does not automatically mean that the Supreme Court is nullifying the proceedings before the Ombudsman as estoppel has already set in. Respondent actively participated in the proceedings before the Ombudsman. He submitted his counter-affidavit, an affidavit of his witness, and attached annexes. Respondent even filed a Motion for Reconsideration asking for affirmative relief from the Ombudsman. Finally, as to the power to impose administrative liability, the Office of the Ombudsman has the authority to determine the administrative liability of an erring public official or employee, and to direct and compel the head of the concerned officer or agency to implement the penalty imposed. This power to impose administrative liability is not merely recommendatory but actually mandatory. Office of the Ombudsman vs. Pedro Delijero, Jr. G.R. No. 172635, October 20, 2010.

Office of the Ombudsman; Powers. The Ombudsman’s decision imposing the penalty of suspension for one year is immediately executory pending appeal. It cannot be stayed by the mere filing of an appeal to the Court of Appeals (CA). Clearly, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman supersedes the discretion given to the CA in Section 12, Rule 43 of the Rules of Court when a decision of the Ombudsman in an administrative case is appealed to the CA. The provision in the Rules of Procedure of the Office of the Ombudsman that a decision is immediately executory is a special rule that prevails over the provisions of the Rules of Court. Moreover, Section 13 (8), Article XI of the Constitution authorizes the Office of the Ombudsman to promulgate its own rules of procedure. In this connection, Sections 18 and 27 of the Ombudsman Act of 1989 also provide that the Office of the Ombudsman has the power to “promulgate its rules of procedure for the effective exercise or performance of its powers, functions and duties” and to amend or modify its rules as the interest of justice may require. For the CA to issue a preliminary injunction that will stay the penalty imposed by the Ombudsman in an administrative case would be to encroach on the rule-making powers of the Office of the Ombudsman under the Constitution and RA 6770 as the injunctive writ will render nugatory the provisions of Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman. Office of the Ombudsman vs. Joel S. Samaniego. G.R. No. 175573, October 5, 2010.

Preliminary Investigation; Decision; Applicability of Constitutional Requirements to DOJ. A preliminary investigation is not a quasi-judicial proceeding since “the prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused.”  Preliminary investigation is merely inquisitorial. While the prosecutor makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the prosecutor. A preliminary investigation thus partakes of an investigative or inquisitorial power for the sole purpose of obtaining information on what future action of a judicial nature may be taken. Balangauan v. Court of Appeals in fact iterates that even the action of the Secretary of Justice in reviewing a prosecutor’s order or resolution via appeal or petition for review cannot be considered a quasi-judicial proceeding since the “DOJ is not a quasi-judicial body.”  Section 14, Article VIII of the Constitution does not thus extend to resolutions issued by the DOJ Secretary. Atty. Alice Odchique-Bondoc vs. Tan Tiong Bio a.k.a. Henry Tan. G.R. No. 186652, October 6, 2010.

Validity of Supplemental Toll Operation Agreements.

(a)   Public Utility Franchise; Substitution of Grantee.  The Court rejected petitioners’ contention that contractual provisions on substitution of the franchise holder violated the Constitution.  Relying on Clause 17.4.1 of the Supplemental Toll Operation Agreement (STOA) for the North Luzon Expressway that the lenders have the unrestricted right to appoint a substitute entity in case of default of Manila North Tollways Corporation (MNTC) or the occurrence of an event of default in respect of MNTC’s loans, petitioners argue that since MNTC is the assignee or transferee of the franchise of Philippine National Construction Corporation (PNCC), 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 PNCC’s original franchise and hence unconstitutional, considering that the constitutional power to appoint a new franchise holder is reserved to Congress.  The Court disagreed.  Petitioners’ presupposition that only Congress has the power to directly grant franchises is misplaced.  The Court has held that administrative agencies may be empowered by the Legislature by means of a law to grant franchises or similar authorizations.  In this case, the Court ruled that the Toll Regulatory Board (TRB) is empowered to grant a franchise for toll road projects.

Petitioners also contend that substituting MNTC as the grantee in case of default with respect to its loans is tantamount to an amendment of PNCC’s original franchise and is therefore unconstitutional.  The Court also found this assertion to be without merit.  Besides holding that the Legislature may properly empower administrative agencies to grant franchises pursuant to a law, the Court explained in this case that Presidential Decree No. 1113 and the amendatory Presidential Decree No. 1894 both vested the TRB with the power to impose conditions on PNCC’s franchise in an appropriate contract and may therefore amend or alter the same when public interest so requires, save for the conditions stated in Sections 1 and 2 of PD 1894, which relate to the coverage area of the tollways and the expiration of PNCC’s original franchise.  Presidential Decree No. 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.  Accordingly, there is nothing infirm much less questionable about the provision in the MNTC STOA allowing the substitution of MNTC in case it defaults in its loans.

Furthermore, the “unrestricted right” of the lender in Clause 17.4.1 of the MNTC STOA to appoint a substituted entity is never intended to afford such lender the plenary power to do so.  It is clear that the lenders do not actually have an absolute or “unrestricted” right to appoint the substituted entity in view of TRB’s right to accept or reject the substitution within one 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.

(b)   Public Utility Franchise; Extension.  The Court agreed with petitioners’ contention that the option in the MNTC STOA to extend the concession for the stated period is unconstitutional.  Clause 17.5 of the MNTC STOA grants MNTC’s lenders the power to extend the concession in case the Grantor (Republic of the Philippines) takes over the same, for a period not exceeding 50 years, until full payment of the loans.   At the outset, Clause 17.5 does not grant the lenders the power to unilaterally extend the concession for a period not exceeding 50 years.  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 PD 1112, PD 1113 and PD 1894.  Under the applicable laws, the TRB may amend, modify, alter or revoke the authority/franchise “whenever the public interest so requires.”  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 in 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, demand that the TRB agree to extend the concession.

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, it cannot do so for an accumulated period exceeding 50 years. Otherwise, it would violate   the proscription under Article XII, Section 11 of the 1987 Constitution, which provides that no public utility franchise shall be for a longer period than 50 years.

In this case, the MNTC STOA has an original stipulated period of 30 years.  Clause 17.5 allows the extension of this period if necessary to fully repay the loans of MNTC.  If the maximum extension as provided in Clause 17.5, i.e., 50 years, is used, the accumulated concession period granted in this case would effectively be 80 years.  This is a clear violation of the 50-year franchise threshold set by the Constitution.  It is on this basis that the Court struck down the provision in Clause 17.5 allowing extension of the concession for up to 50 years.  However, the nullity is only with respect to any extension beyond the 50-year constitutional limit.

(c)   Government Guarantee.  The Court declared as unconstitutional and grossly disadvantageous to the Government Clause 11.7 of the MNTC STOA (and a similar provision in the STOA for the South Luzon Expressway rehabilitation and extension project), which guarantees the financial viability of tollway project.  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.   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.”  In this case, the TRB, by warranting to compensate MNTC for loss of revenue resulting from the non-implementation of the periodic and interim toll fee adjustments, violates the constitutionally guaranteed and exclusive power of the Legislature to appropriate money for public purpose from the General Funds of the Government.

Further, Section 3(e)(5) of PD 1112 explicitly states 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.  What the law here seeks to prevent 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 STOA’s periodic/interim adjustment formula.

(d)   Toll Rate Adjustments.  The Court rejected petitioners’ contention that the toll rate adjustment mechanisms in the STOAs violated the Constitution.  Petitioners argue that the STOAs for the North Luzon Expressway, South Luzon Expressway and South Metro Manila Skyway (SMMS) projects 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 provisions on initial toll rates and periodic/interim toll rate adjustments, by using a built-in automatic toll rate adjustment formula, guaranteed fixed returns for the investors and negated the public hearing requirement.  The Court held that the requisite public hearings under Section 3(d) of PD 1112 and Section 8(b) of PD 1894 are not negated by the fixing of the initial toll rates and the periodic adjustments under the STOAs.

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.

In determining the reasonableness of subsequent toll rate increases, the TRB must seek out the Commission on Audit for assistance in examining and auditing the financial books of the public utilities concerned.  Furthermore, while the periodic, interim and other toll rate adjustment formulas are indicated in the STOAs, it does not mean that the TRB should accept a rate adjustment predicated on the economic data, references or assumptions adopted by the toll operator.  The final figures should be determined by the TRB based on its appreciation of the relevant rate-influencing data.  The TRB should exercise its rate-fixing powers 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 a change in the current toll fees.  Section 3(d) of PD 1112 grants the TRB the power to “issue, 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.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

Administrative Law

Administrative Agencies; Doctrine of Primary Administrative Jurisdiction. Under the doctrine of primary administrative jurisdiction, courts will not determine a controversy where the issues for resolution demand the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact. The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court. Undeniably, supervening events have substantially changed the factual backdrop of the case while it was pending before the Court.  The Supreme Court thus deferred to the competence and expertise of the Securities and Exchange Commission to determine whether, given the supervening events, the Second Amendment to the Rehabilitation Plan is no longer capable of implementation and whether the rehabilitation case should be terminated as a consequence. Nestle Philippines, Inc. et al. vs. Uniwide Sales, Inc., et al. G.R. No. 174674, October 20, 2010.

Government Contracts; Public Bidding.  The Court held that public bidding is not required with respect to the procurement of the South Metro Manila Skyway, North Luzon Expressway and South Luzon Expressway projects.  Private petitioners maintain that public bidding is required for these projects on the basis that they are in the nature of a build-operate-transfer infrastructure undertaking under the BOT Law.  The Court said that the BOT Law does not squarely apply to Philippine National Construction Corporation (PNCC), which exercised its prerogatives and obligations under its franchise to pursue the construction, rehabilitation and expansion of the above toll roads with chosen partners. These tollway projects may very well qualify as a build-operate-transfer undertaking.  However, given that the projects have been undertaken by PNCC in the exercise of its franchise under Presidential Decree No. 1113 and Presidential Decree No. 1894, in joint venture with its chosen partners at the time when it was held valid to do so by the Office of the Government Corporate Counsel and the Department of Justice, the public bidding provisions under the BOT Law do not strictly apply.

The above projects are not ordinary contracts for the construction of government infrastructure projects, which require, under the Government Procurement Reform Act or the now-repealed Presidential Decree No. 1594, public bidding as the preferred mode of contract award.  Neither are these contracts where financing or financial guarantees for the project are obtained from the government. Rather, the Supplemental Toll Operating Agreements (pursuant to which PNCC is undertaking the projects together with its chosen partners) actually constitute a statutorily-authorized transfer or assignment of usufruct of PNCC’s existing franchise to construct, maintain and operate expressways.

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, as here, a franchisee (PNCC) undertakes the 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.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

Election Laws

Candidate; Residency Requirement. While it is undisputed that Mitra’s domicile of origin is Puerto Princesa City, Mitra adequately proved by substantial evidence that he transferred by incremental process to Aborlan beginning 2008, and concluded his transfer in early 2009.  Given this proof, the burden of evidence lies with the private respondents to establish the contrary, which the latter failed to do. On the other hand, the COMELEC based its ruling that Mitra did not take up residence in Aborlan largely on the photographs of Mitra’s Aborlan premises; it concluded that the photographed premises could not have been a residence because of its assessment of the interior design and furnishings of the room.  Thus, the COMELEC Second Division’s Resolution (which the COMELEC en banc fully supported) did not merely conclude that Mitra does not live in the photographed premises; more than this, it ruled that these premises cannot be considered a home or a residence, for lack of the qualities of a home that the Second Division wanted to see. The COMELEC not only grossly misread the evidence but even used personal and subjective standards in its assessment of Mitra’s dwelling when, in fact, the law is replete with standards, i.e., the dwelling must be where a person permanently intends to return and to remain. Abraham Kahlil B. Mitra vs. Commission on Elections, Antonio V. Gonzales and Orlando R. Balbon, Jr. G.R. No. 191938, October 19, 2010.

Special Laws

Agrarian Reform; Just Compensation. Although the Department of Agrarian Reform (DAR) is vested with primary jurisdiction under the Comprehensive Agrarian Reform Law (CARL) of 1988 to determine in a preliminary manner the reasonable compensation for lands taken under the CARP, such determination is subject to challenge in the courts.  The CARL vests in the RTCs, sitting as Special Agrarian Courts, original and exclusive jurisdiction over all petitions for the determination of just compensation.  The jurisdiction of the RTCs is not any less “original and exclusive” because the question is first passed upon by the DAR.  The proceedings before the RTC are not a continuation of the administrative determination. Additionally, the administrative orders providing for the guidelines in determining just compensation are mandatory and not mere guides that the RTC may disregard. Finally, although in some expropriation cases, the Court allowed the imposition of said interest, the same was in the nature of damages for delay in payment which in effect makes the obligation on the part of the government one of forbearance. In this case, respondents are not entitled to interest on the final compensation considering that petitioner promptly deposited the compensation for their lands after they rejected petitioner’s initial valuation. Land Bank of the Philippines vs. Glenn Y. Escandor, et al. G.R. No. 171685, October 11, 2010.

Energy Regulatory Commission; Implementation of RA 7832. SURNECO cannot insist on using the multiplier scheme even after the imposition of the system loss caps under Section 10 of R.A. No. 7832.  Indeed, under National Electrification Administration Memorandum No. 1-A, the use of the multiplier scheme allows the recovery of system losses even beyond the caps mandated in R.A. No. 7832, which is intended to gradually phase out pilferage losses as a component of the recoverable system losses by the distributing utilities such as SURNECO.  However, it is totally repugnant to and incompatible with the system loss caps established in R.A. No. 7832, and is repealed by Section 16 of the law.  As between NEA Memorandum No. 1-A, a mere administrative issuance, and R.A. No. 7832, a legislative enactment, the latter must prevail. Additionally, the PPA formula provided in the IRR of R.A. No. 7832 was only a model to be used as a guide by the electric cooperatives in proposing their own PPA formula for approval by the then Energy Regulatory Board (ERB).  Sections 4 and 5, Rule IX of the IRR directed the electric cooperatives to apply for approval of such formula with the ERB so that the system loss caps under the law would be incorporated in their computation of power cost adjustments.  The IRR did not provide for a specific formula; therefore, there was nothing in the IRR that was amended or could have been amended relative to the PPA formula.  The IRR left to the ERB, now the Energy Regulatory Commission, the authority to approve and oversee the implementation of the electric cooperatives’ PPA formula in the exercise of its rate-making power over them. Surigao del Norte Electric Cooperative, Inc. (SURNECO) vs. Energy Regulatory Commission. G.R. No. 183626, October 4, 2010.

PNCC; Authority After Expiration of Franchise.  In this case, petitioners assume and harp on the lack of authority of the Philippine National Construction Corporation (PNCC) to continue, in joint venture with private investors, with its North Luzon Expressway (NLEX), South Luzon Expressway (SLEX) and Metro Manila Expressway (MMEX) operations after the lapse of its franchise (granted under Presidential Decree No. 1113) on May 1, 2007.  However, this expiration did not carry with it the cancellation of PNCC’s authority and that of its joint venture partners granted under Presidential Decree No. 1112 in relation to Section 1 of Presidential Decree No. 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 [NLEX], [SLEX] and/or [MMEX] 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].”   To highlight the point, Section 2 of PD 1894 specifically provides that the franchise for the extension and toll road projects constructed after the approval of PD 1894 shall be 30 years, counted from project completion. Indeed, prior to the expiration of PNCC’s original franchise in May 2007, the Toll Regulatory Board (TRB), in the exercise of its special powers under PD 1112, signed Supplemental Toll Operation Agreements (STOAs) with PNCC and its private joint venture 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 PD 1894.  Further, corresponding Toll Operation Certificates (TOCs) have been issued for the toll road projects.  The STOAs TRB entered into with PNCC and its joint venture 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 PD 1112, PD 1113 and PD 1894.  The execution of these STOAs came in 1995, 1998 and 2006, or before the expiration of PNCC’s original franchise on May 1, 2007.  Upon the expiration of PNCC’s 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.  After May 1, 2007, the operation and maintenance of the NLEX and the other subject tollways are no longer be founded on PNCC’s original franchise but on entirely new authorizations, i.e. the TOCs, granted by the TRB pursuant to its statutory franchising authority under Sections 3(a) and (e) of PD 1112.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

President’s Power to Approve TRB Contracts. Petitioners here assert that the grant to the President of the power to peremptorily authorize the assignment by Philippine National Construction Corporation (PNCC), as franchise holder, of its franchise or the usufruct in its franchise is unconstitutional for being an encroachment of legislative power.  The Court rejected this claim.  Section 3(a) of Presidential Decree No. 1112 requires approval by the President of any contract the Toll Regulatory Board may have entered into or effected for the construction and operation of toll facilities.  Complementing Section 3(a) is 3(e)(3) of PD 1112 enjoining the transfer of the usufruct of PNCC’s franchise without the President’s prior approval.  The President’s approving authority is therefore of statutory origin.  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.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

Public Land; Alienability. Unless a public land is shown to have been reclassified as alienable or actually alienated by the State to a private person, that piece of land remains part of the public domain, and its occupation in the concept of owner, no matter how long, cannot confer ownership or possessory rights. It is only after the property has been declared alienable and disposable that private persons can legally claim possessory rights over it. This does not mean, however, that neither of the parties has the right to possess the property. While the Modestos claim to have been in possession of Lot 356 for almost 33 years, this occupation could not give rise to possessory rights while the property being occupied remain government land that had not yet been declared alienable and disposable. It was the Modestos, however, who were the actual possessors of the property when it was declared alienable and disposable on October 16, 1987, and continued to possess the property until the present time. Pio Modesto and Cirila Rivera-Modesto vs. Carlos Urbina, substituted by the heirs of Olympia Miguel Vda. de Urbina, et al. G.R. No. 189859, October 18, 2010.

Public land; Foreshore. To qualify as foreshore land, it must be shown that the land lies between the high and low water marks and is alternately wet and dry according to the flow of the tide. The land’s proximity to the waters alone does not automatically make it a foreshore land. Thus, in Republic of the Philippines v. Lensico, the Court held that although the two corners of the subject lot adjoins the sea, the lot cannot be considered as foreshore land since it has not been proven that the lot was covered by water during high tide. Similarly in this case, it was clearly proven that the disputed land remained dry even during high tide. Indeed, all the evidence supports the conclusion that the disputed portion of Lot No. 6278-M is not foreshore land but remains private land owned by respondents. Manuel Almagro, joined by his spouse, Elizabeth Almagro vs. Salvacion C. Kwan, et al. / Margarita Pachoro, et al. vs. William C. Kwan, et al. G.R. Nos. 175806, 175810 and G.R. No. 175849. October 20, 2010.

Toll Regulatory Board; Franchising Powers.  The Court dismissed petitioners’ argument that only Congress has, under the 1987 Constitution, the exclusive prerogative to grant franchise to operate public utilities.  With respect to the Toll Regulatory Board (TRB), Sections 3(a) and (e) of Presidential Decree No. 1112 in relation to Section 4 of Presidential Decree No. 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 Toll Operation Certificate.  By explicit provision of law, therefore, the TRB was given the power to grant administrative franchise for toll facility projects.

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. Reyes — a case decided under the 1987 Constitution — there is nothing in the Constitution remotely indicating the necessity of a congressional franchise before each and every public utility may operate.  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.  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, to issue franchises of certain public utilities to some administrative agencies.  Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

Toll Regulatory Board; Quasi-Legislative and Quasi-Judicial Functions.  Petitioners in the special civil actions cases would have the Court declare as invalid (i) Sections 3(a) and (d) of Presidential Decree No. 1112 (which accord the Toll Regulatory Board (TRB) the power to enter into contracts for the construction and operation of toll facilities, and, at the same time, grant it the power to issue and promulgate toll rates) and (ii) Section 8(b) of Presidential Decree No. 1894 (which grant the TRB adjudicatory jurisdiction over matters involving toll rate movements). As submitted by petitioners, 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 Court rejected these arguments.  It does not perceive an irreconcilable clash in the enumerated statutory powers of the TRB, such that the exercise of one negates the other. 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.  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. Ernesto B. Francisco, Jr., et al. vs. Toll Regulatory Board, et al./Hon. Imee R. Marcos, et al. vs. The Republic of the Philippines, et al./Gising Kabataan Movement, Inc., et al. vs. The Republic of the Philippines, et al./The Republic of the Philippines vs. Young Professionals and Entrepreneurs of San Pedro, Laguna. G.R. No. 166910, 169917, 173630, 183599, October 19, 2010.

(Vicente thanks Charmaine Rose H. Kaw for her help in preparing this post.)