FIRST DIVISION

[G.R. No. 156208. September 26, 2006.]

NPC DRIVERS AND MECHANICS ASSOCIATION, (NPC DAMA),

represented by Its President ROGER S. SAN JUAN, SR., NPC
EMPLOYEES & WORKERS UNION (NEWU) — NORTHERN LUZON
REGIONAL CENTER, represented by its Regional President JIMMY
D. SALMAN, in their own individual capacities and in behalf of the
members of the associations and all affected o cers and
employees of National Power Corporation (NPC), ZOL D. MEDINA,
NARCISO M. MAGANTE, VICENTE B. CIRIO, JR., NECITAS B.
CAMAMA, in their individual capacities as employees of National
Power Corporation , petitioners, vs . THE NATIONAL POWER
CORPORATION (NPC), NATIONAL POWER BOARD OF DIRECTORS
(NPB), JOSE ISIDRO N. CAMACHO as Chairman of the National
Power Board of Directors (NPB), ROLANDO S. QUILALA, as
President — O cer-in-charge/CEO of National Power Corporation
and Member of National Power Board, and VINCENT S. PEREZ, JR.,
EMILIA T. BONCODIN, MARIUS P. CORPUS, RUBEN S. REINOSO, JR.,
GREGORY L. DOMINGO and NIEVES L. OSORIO , respondents.

DECISION

CHICO-NAZARIO , J : p

Before Us is a special civil action for Injunction to enjoin public respondents from
implementing the National Power Board (NPB) Resolutions No. 2002-124 and No.
2002-125, both dated 18 November 2002, directing, among other things, the
termination of all employees of the National Power Corporation (NPC) on 31 January
2003 in line with the restructuring of the NPC.
On 8 June 2001, Republic Act No. 9136, otherwise known as the "Electric Power
Industry Reform Act of 2001" (EPIRA Law), was approved and signed into law by
President Gloria Macapagal-Arroyo, and took effect on 26 June 2001. Section 2(i) and
Section 3 of the EPIRA Law states:
Section 2. Declaration of Policy . — It is hereby declared the policy of the
State:

xxx xxx xxx

(i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);

xxx xxx xxx

Section 3. Scope. — This Act shall provide a framework for the
restructuring of the electric power industry, including the privatization of the
assets of NPC, the transition to the desired competitive structure, and the
de nition of the responsibilities of the various government agencies and private
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 entities. 1

Under the EPIRA Law, 2 a new National Power Board of Directors was constituted
composed of the Secretary of Finance as Chairman, with the Secretary of Energy, the
Secretary of Budget and Management, the Secretary of Agriculture, the Director-General
of the National Economic and Development Authority, the Secretary of Environment and
Natural Resources, the Secretary of Interior and Local Government, the Secretary of the
Department of Trade and Industry, and the President of the National Power Corporation
as members.
On 27 February 2002, the Secretary of the Department of Energy (DOE)
promulgated the Implementing Rules and Regulations (IRR) of the EPIRA Law, pursuant
to Section 77 3 thereof. Said IRR were approved by the Joint Congressional Power
Commission on even date. Meanwhile, also in pursuant to the provisions of the EPIRA
Law, the DOE created the Energy Restructuring Steering Committee (Restructuring
Committee) to manage the privatization and restructuring of the NPC, the National
Transmission Corporation (TRANSCO), and the Power Sector Assets and Liabilities
Corporation (PSALM). EICSDT

To serve as the overall organizational framework for the realigned functions of

the NPC mandated under the EPIRA Law, the Restructuring Committee proposed a new
NPC Table of Organization which was approved by the NPB through NPB Resolution
No. 2002-53 dated 11 April 2002. Likewise, the Restructuring Committee reviewed the
proposed 2002 NPC Restructuring Plan and assisted in the implementation of Phase I
(Realignment) of said Plan, and thereafter recommended to the NPB for approval the
adoption of measures pertaining to the separation and hiring of NPC personnel. The
NPB, taking into consideration the recommendation of the Restructuring Committee,
thus amended the Restructuring Plan approved under NPB Resolution No. 2002-53.
On 18 November 2002, pursuant to Section 63 4 of the EPIRA Law and Rule 33 5
of the IRR, the NPB passed NPB Resolution No. 2002-124 which provided for the
Guidelines on the Separation Program of the NPC and the Selection and Placement of
Personnel in the NPC Table of Organization. Under said Resolution, all NPC personnel
shall be legally terminated on 31 January 2003, and shall be entitled to separation
bene ts. On the same day, the NPB approved NPB Resolution No. 2002-125, whereby a
Transition Team was constituted to manage and implement the NPC's Separation
Program.
In a Memorandum dated 21 November 2002, the NPC OIC-President and CEO
Rolando S. Quilala circulated the assailed Resolutions and directed the concerned NPC
o cials to disseminate and comply with said Resolutions and implement the same
within the period provided for in the timetable set in NPB Resolution No. 2002-125. As
a result thereof, Mr. Paquito F. Garcia, Manager — HRSD and Resources and
Administration Coordinator of NPC, circulated a Memorandum dated 22 November
2002 to all NPC o cials and employees providing for a checklist of the documents
required for securing clearances for the processing of separation bene ts of all
employees who shall be terminated under the Restructuring Plan.
Contending that the assailed NPB Resolutions are void and without force and
effect, herein petitioners, in their individual and representative capacities, led the
present Petition for Injunction to restrain respondents from implementing NPB
Resolutions No. 2002-124 and No. 2002-125. In support thereof, petitioners invoke
Section 78 of the EPIRA Law, to wit:

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 Section 78. Injunction and Restraining Order. — The implementation of the
provisions of this Act shall not be restrained or enjoined except by an order issued
by the Supreme Court of the Philippines.

In assailing the validity of NPB Resolutions No. 2002-124 and No. 2002-125,
petitioners maintain that said Resolutions were not passed and issued by a majority of
the members of the duly constituted Board of Directors since only three of its
members, as provided under Section 48 6 of the EPIRA Law, were present, namely: DOE
Secretary Vincent S. Perez, Jr.; Department of Budget and Management Secretary
Emilia T. Boncodin; and NPC OIC-President Rolando S. Quilala. According to petitioners,
the other four members who were present at the meeting and signed the Resolutions
were not the secretaries of their respective departments but were merely
representatives or designated alternates of the o cials who were named under the
EPIRA Law to sit as members of the NPB. Petitioners claim that the acts of these
representatives are violative of the well-settled principle that "delegated power cannot
be further delegated." Thus, petitioners conclude that the questioned Resolutions have
been illegally issued as it were not issued by a duly constituted board since no quorum
existed because only three of the nine members, as provided under Section 48 of the
EPIRA Law, were present and qualified to sit and vote. IHCDAS

It is petitioners' submission that even assuming arguendo that there was no

undue delegation of power to the four representatives who signed the assailed
Resolutions, said Resolutions cannot still be given legal effect because the same did
not comply with the mandatory requirement of endorsement by the Joint
Congressional Power Commission and approval of the President of the Philippines, as
provided under Section 47 of the EPIRA Law which states that:
Section 47. NPC Privatization. — Except for the assets of SPUG, the
generation assets, real estate, and other disposable assets as well as IPP
contracts of NPC shall be privatized in accordance with this Act. Within six (6)
months from effectivity of this Act, the PSALM Corp. shall submit a plan for the
endorsement by the Joint Congressional Power Commission and the approval of
the President of the Philippines, on the total privatization of the generation assets,
real estate, other disposable assets as well as existing IPP contracts of NPC and
thereafter, implement the same, in accordance with the following guidelines,
except as provided for in paragraph (f) herein: . . . .

Petitioners insist that if ever there exists a valid wholesale abolition of their
positions and their concomitant separation form the service, such a process is an
integral part of "privatization" and "restructuring" as de ned under the EPIRA Law and,
therefore, must comply with the above-quoted provision requiring the endorsement of
the Joint Congressional Power Commission and the approval of the President of the
Philippines. Furthermore, petitioner highlight the fact that said Resolutions will have an
adverse effect on about 5,648 employees of the NPC and will result in the displacement
of some 2,370 employees, which, petitioners argue, is contrary to the mandate of the
Constitution to promote full employment and security of tenure.
Respondents, on the other hand, uphold the validity of the assailed Resolutions
by arguing that while it is true that four members of the National Power Board of
Directors, particularly the respective Secretaries of the Department of the Interior and
Local Government, the Department of Trade and Industry, and the Department of
Finance, as well as the Director-General of the National Economic and Development
Authority, were not the actual signatories in NPB Resolutions No. 2002-124 and No.
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 2002-125, they were, however, ably represented by their respective alternates.
Respondents claim that the validity of such administrative practice whereby an
authority is exercised by persons or subordinates appointed by the responsible o cial
has long been settled. Respondents further contend that Section 48 of the EPIRA Law
does not in any way prohibit any member of the NPB from authorizing his
representative to sign resolutions adopted by the Board.

From the arguments put forward by herein parties, it is evident that the pivotal
issue to be resolved in this Petition for Injunction is whether or not NPB Resolutions No.
2002-124 and No. 2002-125 were properly enacted. It is petitioners' contention that
the failure of the four speci cally identi ed department heads 7 under Section 48 of the
EPIRA Law to personally approve and sign the assailed Resolutions invalidates the
adoption of said Resolutions. Petitioners maintain that there was undue delegation of
delegated power when only the representatives of certain members of the NPB
attended the board meetings and passed and signed the questioned Resolutions.
We agree with petitioners. In enumerating under Section 48 those who shall
compose the National Power Board of Directors, the legislature has vested upon these
persons the power to exercise their judgment and discretion in running the affairs of
the NPC. Discretion may be de ned as "the act or the liberty to decide according to the
principles of justice and one's ideas of what is right and proper under the
circumstances, without willfulness or favor. 8 Discretion, when applied to public
functionaries, means a power or right conferred upon them by law of acting o cially in
certain circumstances, according to the dictates of their own judgment and conscience,
uncontrolled by the judgment or conscience of others. 9 It is to be presumed that in
naming the respective department heads as members of the board of directors, the
legislature chose these secretaries of the various executive departments on the basis
of their personal quali cations and acumen which made them eligible to occupy their
present positions as department heads. Thus, the department secretaries cannot
delegate their duties as members of the NPB, much less their power to vote and
approve board resolutions, because it is their personal judgment that must be
exercised in the fulfillment of such responsibility. DTEHIA

There is no question that the enactment of the assailed Resolutions involves the
exercise of discretion and not merely a ministerial act that could be validly performed
by a delegate, thus, the rule enunciated in the case of Binamira v. Garrucho 1 0 is relevant
in the present controversy, to wit:
An o cer to whom a discretion is entrusted cannot delegate it to another,
the presumption being that he was chosen because he was deemed t and
competent to exercise that judgment and discretion, and unless the power to
substitute another in his place has been given to him, he cannot delegate his
duties to another.

In those cases in which the proper execution of the o ce requires, on the

part of the o cer, the exercise of judgment or discretion, the presumption is that
he was chosen because he was deemed t and competent to exercise that
judgment and discretion, and, unless power to substitute another in his place has
been given to him, he cannot delegate his duties to another.

Respondents' assertion to the contrary is not tenable. The ruling in the case cited
by respondents to support their contention is not applicable in the case at bar. While it
is true that the Court has determined in the case of American Tobacco Company v.
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 Director of Patents 1 1 that a delegate may exercise his authority through persons he
appoints to assist him in his functions, it must be stressed that the Court explicitly
stated in the same case that said practice is permissible only when the judgment and
d is c r e t io n finally exercised are those of the o cer authorized by law .
According to the Court, the rule that requires an administrative o cer to exercise his
own judgment and discretion does not preclude him from utilizing, as a matter of
practical administrative procedure, the aid of subordinates, so long as it is the legally
authorized o cial who makes the nal decision through the use of his own personal
judgment.
In the case at bar, it is not di cult to comprehend that in approving NPB
Resolutions No. 2002-124 and No. 2002-125, it is the representatives of the secretaries
of the different executive departments and not the secretaries themselves who
exercised judgment in passing the assailed Resolution, as shown by the fact that it is
the signatures of the respective representatives that are a xed to the questioned
Resolutions. This, to our mind, violates the duty imposed upon the speci cally
enumerated department heads to employ their own sound discretion in exercising the
corporate powers of the NPC. Evidently, the votes cast by these mere representatives
in favor of the adoption of the said Resolutions must not be considered in determining
whether or not the necessary number of votes was garnered in order that the assailed
Resolutions may be validly enacted. Hence, there being only three valid votes cast out
of the nine board members, namely those of DOE Secretary Vincent S. Perez, Jr.;
Department of Budget and Management Secretary Emilia T. Boncodin; and NPC OIC-
President Rolando S. Quilala, NPB Resolutions No. 2002-124 and No. 2002-125 are void
and are of no legal effect.
Having determined that the assailed Resolutions are void as they lack the
necessary number of votes for their adoption, We no longer deem it necessary to pass
upon the other issues raised in the instant petition
WHEREFORE, premises considered, National Power Board Resolutions No. 2002-
124 and No. 2002-125 are hereby declared VOID and WITHOUT LEGAL EFFECT. The
Petition for Injunction is hereby GRANTED and respondents are hereby ENJOINED from
implementing said NPB Resolutions No. 2002-124 and No. 2002-125. aAHDIc

SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.
Footnotes
1. Annex "A" of Petition; rollo, pp. 24-25.
2. Section 48. National Power Board of Directors. — Upon the passage of this Act, Section 6 of
Republic Act No. 6395, as amended, and Section 13 of Republic Act No. 7638, as
amended, referring to the composition of the National Power Board of Directors, are
hereby repealed and a new Board shall be immediately organized. The new Board shall
be composed of the Secretary of Finance as Chairman, with the following as members:
the Secretary of Energy, the Secretary of Budget and Management, the Secretary of
Agriculture, the Director-General of the National Economic and Development Authority,
the Secretary of Environment and Natural Resources, the Secretary of the Interior and
Local Government, the Secretary of the Department of Trade and Industry, and the
President of the National Power Corporation.

3. Section 77. Implementing Rules and Regulations. — The DOE shall, in consultation with
relevant government agencies, the electric power industry participants, non-government
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 organizations and end-users, promulgate the Implementing Rules and Regulations (IRR)
of this Act within six (6) months from the effectivity of this Act, subject to the approval
by the Power Commission.
4. Section 63. Separation Bene ts of O cials and Employees of Affected Agencies . — National
Government employees displaced or separated from the service as a result of the
restructuring of the electricity industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and other bene ts in accordance with
existing laws, rules or regulations or be entitled to avail of the privileges provided under a
separation plan which shall be one and one-half month salary for every year of service in
the government: Provided, however, That those who avail of such privileges shall start
their government service anew if absorbed by any government-owned successor
company. In no case shall there be any diminution of bene ts under the separation plan
until the full implementation of the restructuring and privatization.
Displaced or separated personnel as a result of the privatization, if quali ed, shall be given
preference in the hiring of the manpower requirements of the privatized companies.
The salaries of employees of NPC shall continue to be exempt from the coverage of Republic
Act No. 6758, otherwise known as "The Salary Standardization Act."
With respect to employees who are not retained by NPC, the Government, through the
Department of Labor and Employment, shall endeavor to implement re-training, job
counseling, and job placement programs.
5. RULE 33. SEPARATION BENEFITS

Section 1. General Statement on Coverage.

This Rule shall apply to all employees in the National Government service as of 26 June 2001
regardless of position, designation or status, who are displaced or separated from the
service as a result of the Restructuring of the electricity industry and Privatization of NPC
assets: Provided, however, That the coverage for casual or contractual employees shall
be limited to those whose appointments were approved or attested by the Civil Service
Commission (CSC).

Section 2. Scope of Application. This Rule shall apply to affected personnel of DOE, ERB, NEA
and NPC.

Section 3. Separation and Other Benefits.

(a) The separation bene t shall consist of either a separation pay and other bene ts granted
in accordance with existing laws, rules and regulations or a separation plan equivalent to
one and one half (1-1/2) months' salary for every year of service in the government,
whichever is higher: Provided, That the separated or displaced employee has rendered at
least one (1) year of service at the time of effectivity of the Act.
(b) The following shall govern the application of Section 3(a) of this Rule:
(i) With respect to NPC o cials and employees, they shall be considered legally terminated
and shall be entitled to the bene ts or separation pay provided in Section 3(a) herein
when the restructuring plan as approved by the NPC Board shall have been
implemented.

(ii) With respect to NEA o cials and employees, they shall be considered legally terminated
and shall be entitled to the bene ts or separation pay provided in Section 3(a) herein
when a restructuring of NEA is implemented pursuant to a law enacted by Congress or
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 pursuant to Section 5(a)(5) of Presidential Decree No. 269.

(iii) With respect to the affected Bureaus of the DOE, their o cials and employees shall be
considered legally terminated and shall be entitled to the bene ts or separation pay
provided in Section 3(a) herein when the re-organizational plan shall have been
implemented as a result of the Restructuring of the electric power industry.
(c) The governing board or authority of the entities enumerated in Section 3(b) hereof shall
have the sole prerogative to hire the separated employees as new employees who start
their service anew for such positions and for such compensation as may be determined
by such board or authority pursuant to its restructuring program. Those who avail of the
foregoing privileges shall start their government service anew if absorbed by any
government agency or any government-owned successor company.
(d) In no case shall there be any diminution of bene ts under the separation plan until the full
implementation of the Restructuring of the electric power industry and the Privatization
of NPC assets in accordance with the approved Restructuring and Privatization
schedule.
(e) For this purpose, "Salary," as a rule, refers to the basic pay including the thirteenth (13th)
month pay received by an employee pursuant to his appointment, excluding per diems,
bonuses, overtime pay, honoraria, allowances and any other emoluments received in
addition to the basic pay under existing laws.
(f) Likewise, "Separation" or "Displacement" refers to the severance of employment of any
o cial or employee, who is neither quali ed under existing laws, rules and regulations
nor has opted to retire under existing laws, as a result of the Restructuring of the electric
power industry or Privatization of NPC assets pursuant to the Act.
Section 4. Funding.
Funds necessary to cover the separation pay under this Rule shall be provided either by the
Government Service Insurance System (GSIS) or from the corporate funds of the NEA or
the NPC, as the case may be; and in the case of the DOE and the ERB, by the GSIS or
from the general fund, as the case may be. The Buyer or Concessionaire or the successor
company shall not be liable for the payment of the separation pay.
Section 5. Preferential Rights of Employees.

Displaced or separated personnel as a result of the Restructuring of the electric power industry
and Privatization of NPC assets shall be given preference in the hiring of manpower
requirements of the newly-created o ces or the privatized companies: Provided, That
the displaced or separated personnel meet the prescribed quali cations. With respect to
employees who are not retained by NPC, the government, through the Department of
Labor and Employment (DOLE), shall endeavor to implement re-training, job counseling,
and job placement programs.
Section 6. Implementation.
The DOE, NEA, and NPC, shall issue guidelines applicable to their respective employees to
implement this Rule within ninety (90) days from effectivity of these Rules: Provided,
That in the case of ERC, the independent quasi-judicial body created under the Act, the
manner of, and timetable for, implementation of its organization shall be governed by
Section 38 and Section 39 of the Act.

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 6. Supra note 2.
7. Secretaries of the Department of the Interior and Local Government, the Department of Trade
and Industry, and the Department of Finance, and the Director-General of the National
Economic and Development Authority.
8. Lamb v. Phipps, 22 Phil. 456, 488-489 (1912).
9. Id. at 489.
10. G.R. No. 92008, 30 July 1990, 188 SCRA 154, 159-160.

11. G.R. No. L-26803, 14 October 1975, 67 SCRA 287, 295.

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