ACTUAL CONTROVERSY
is the
G.R. No. 212719, June 25, 2019
INMATES OF THE NEW BILIBID PRISON, MUNTINLUPA CITY,
NAMELY: VENANCIO A. ROXAS, SATURNINO V. PARAS,
EDGARDO G. MANUEL, HERMINILDO V. CRUZ, ALLAN F.
TEJADA, ROBERTO C. MARQUEZ, JULITO P. MONDEJAR,
ARMANDO M. CABUANG, JONATHAN O. CRISANTO, EDGAR
ECHENIQUE, JANMARK SARACHO, JOSENEL ALVARAN, AND
CRISENCIO NERI, JR., PETITIONERS, v. SECRETARY LEILA M.
DE LIMA, DEPARTMENT OF JUSTICE; AND SECRETARY
MANUEL A. ROXAS II, DEPARTMENT OF THE INTERIOR AND
LOCAL GOVERNMENT, RESPONDENTS.
ATTY. RENE A.V. SAGUISAG, SR., PETITIONER-INTERVENOR,
WILLIAM M. MONTINOLA, FORTUNATO P. VISTO, AND
ARESENIO C. CABANILLA, PETITIONERS-INTERVENORS,
[G.R. No. 214637]
REYNALDO D. EDAGO, PETER R. TORIDA, JIMMY E. ACLAO,
WILFREDO V. OMERES, PASCUA B. GALLADAN, VICTOR M.
MACOY, JR., EDWIN C. TRABUNCON, WILFREDO A. PATERNO,
FEDERICO ELLIOT, AND ROMEO R. MACOLBAS, PETITIONERS,
v. SECRETARY LEILA M. DE LIMA, DEPARTMENT OF JUSTICE;
SECRETARY MANUEL A. ROXAS II, DEPARTMENT OF THE
INTERIOR AND LOCAL GOVERNMENT; ACTING DIRECTOR
FRANKLIN JESUS B. BUCAYU, BUREAU OF CORRECTIONS;
AND JAIL CHIEF SUPERINTENDENT DIONY DACANAY
MAMARIL, BUREAU OF JAIL MANAGEMENT AND PENOLOGY,
RESPONDENTS.
DECISION
PERALTA, J.:
The sole issue for resolution in these consolidated cases 1 
legality of Section 4, Rule 1 of the Implementing Rules and
Regulations (IRR) of Republic Act (R.A.) No. 10592,2 which states:
SECTION 4. Prospective Application. - Considering that these Rules
provide for new procedures and standards of behavior for the grant
of good conduct time allowance as provided in Section 4 of Rule V
hereof and require the creation of a Management, Screening and
Evaluation Committee (MSEC) as provided in Section 3 of the same
Rule, the grant of good conduct time allowance under Republic Act
No. 10592 shall be prospective in application.
The grant of time allowance of study, teaching and mentoring and of
special time allowance for loyalty shall also be prospective in
application as these privileges are likewise subject to the
management, screening and evaluation of the MSEC. 3
The Case
On May 29, 2013, then President Benigno S. Aquino III signed into
law R.A. No. 10592, amending Articles 29, 94, 97, 98 and 99 of Act
No. 3815, or the Revised Penal Code (RPC).4 For reference, the
modifications are underscored as follows:
ART. 29. Period of preventive imprisonment deducted from term of
imprisonment. — Offenders or accused who have undergone
preventive imprisonment shall be credited in the service of their
sentence consisting of deprivation of liberty, with the full time during
which they have undergone preventive imprisonment if the detention
prisoner agrees voluntarily in writing after being informed of the
effects thereof and with the assistance of counsel to abide by
the same disciplinary rules imposed upon convicted prisoners,
except in the following cases:
1. When they are recidivists, or have been convicted previously
twice or more times of any crime; and
2. When upon being summoned for the execution of their sentence
they have failed to surrender voluntarily.
If the detention prisoner does not agree to abide by the same
disciplinary rules imposed upon convicted prisoners, he shall do so
in writing with the assistance of a counsel and shall be
credited in the service of his sentence with four-fifths of the time
during which he has undergone preventive imprisonment.
Credit for preventive imprisonment for the penalty
of reclusion perpetua shall be deducted from thirty (30)
years.
Whenever an accused has undergone preventive imprisonment for a
period equal to the possible maximum imprisonment of the offense
charged to which he may be sentenced and his case is not yet
terminated, he shall be released immediately without prejudice to
the continuation of the trial thereof or the proceeding on appeal, if
the same is under review. Computation of preventive
imprisonment for purposes of immediate release under this
paragraph shall be the actual period of detention with good
conduct time allowance: Provided, however, That if the
accused is absent without justifiable cause at any stage of
the trial, the court may motu proprio order the rearrest of the
accused: Provided, finally, That recidivists, habitual
delinquents, escapees and persons charged with heinous
crimes are excluded from the coverage of this Act. In case the
maximum penalty to which the accused may be sentenced
is destierro, he shall be released after thirty (30) days of preventive
imprisonment.
ART. 94. Partial extinction of criminal liability — Criminal liability is
extinguished partially:
1. By conditional pardon;
2. By commutation of the sentence; and
3. For good conduct allowances which the culprit may earn while he
is undergoing preventive imprisonment or serving his sentence.
ART. 97. Allowance for good conduct. - The good conduct of
any offender qualified for credit for preventive imprisonment
pursuant to Article 29 of this Code, or of any
convicted prisoner in any penal institution, rehabilitation or
detention center or any other local jail shall entitle him to the
following deductions from the period of his sentence:
1. During the first two years of (his) imprisonment, he shall be
allowed a deduction of twenty days for each month of good
behavior during detention;
2. During the third to the fifth year, inclusive, of his imprisonment,
he shall be allowed a deduction of twenty-three days for each
month of good behavior during detention;
3. During the following years until the tenth year, inclusive, of his
imprisonment, he shall be allowed a deduction of twenty-five days
for each month of good behavior during detention;
4. During the eleventh and successive years of his imprisonment, he
shall be allowed a deduction of thirty days for each month of good
behavior during detention; and
5. At any time during the period of imprisonment, he shall be
allowed another deduction of fifteen days, in addition to
numbers one to four hereof, for each month of study,
teaching or mentoring service time rendered.
An appeal by the accused shall not deprive him of entitlement
to the above allowances for good conduct.
ART. 98. Special time allowance for loyalty. - A deduction of one fifth
of the period of his sentence shall be granted to any prisoner who,
having evaded his preventive imprisonment or the service of his
sentence under the circumstances mentioned in Article 158 of this
Code, gives himself up to the authorities within 48 hours following
the issuance of a proclamation announcing the passing away of the
calamity or catastrophe referred to in said article. A deduction of
two-fifths of the period of his sentence shall be granted in
case said prisoner chose to stay in the place of his
confinement notwithstanding the existence of a calamity or
catastrophe enumerated in Article 158 of this Code.
This Article shall apply to any prisoner whether undergoing
preventive imprisonment or serving sentence.
ART. 99. Who grants time allowances. - Whenever lawfully justified,
the Director of the Bureau of Corrections, the Chief of the
Bureau of Jail Management and Penology and/or the Warden
of a provincial, district, municipal or city jail shall grant
allowances for good conduct. Such allowances once granted shall not
be revoked. (Emphases ours)
Pursuant to the amendatory law, an IRR was jointly issued by
respondents Department of Justice (DOJ) Secretary Leila M. De Lima
and Department of the Interior and Local Government (DILG)
Secretary Manuel A. Roxas II on March 26, 2014 and became
effective on April 18, 2014.5 Petitioners and intervenors assail the
validity of its Section 4, Rule 1 that directs the prospective
application of the grant of good conduct time allowance (GCTA),
time allowance for study, teaching and mentoring (TASTM), and
special time allowance for loyalty (STAL) mainly on the ground that
it violates Article 22 of the RPC.6
G.R. No. 212719
On June 18, 2014, a Petition for Certiorari and Prohibition (with
Prayer for the Issuance of a Preliminary Injunction) 7 was filed
against respondents DOJ Secretary De Lima and DILG Secretary
Roxas by Atty. Michael J. Evangelista acting as the attorney-in-
fact8 of convicted prisoners in the New Bilibid Prison (NBP), namely:
Venancio A. Roxas, Saturnino V. Paras, Edgardo G. Manuel,
Herminildo V. Cruz, Allan F. Tejada, Roberto C. Marquez, Julito P.
Mondejar, Armando M. Cabuang, Jonathan O. Crisanto, Edgar
Echenique, Janmark Saracho, Josenel Alvaran, and Crisencio Neri,
Jr. (Roxas et al.). Petitioners filed the case as real parties-in-interest
and as representatives of their member organizations and the
organizations' individual members, as a class suit for themselves and
in behalf of all who are similarly situated. They contend that the
provisions of R.A. No. 10592 are penal in nature and beneficial to
the inmates; hence, should be given retroactive effect in accordance
with Article 22 of the RPC. For them, the IRR contradicts the law it
implements. They are puzzled why it would be complex for the
Bureau of Corrections (BUCOR) and the Bureau of Jail Management
and Penology (BJMP) to retroactively apply the law when the
prisoners' records are complete and the distinctions between the
pertinent provisions of the RPC and R.A. No. 10592 are easily
identifiable. Petitioners submit that the simple standards added by
the new law, which are matters of record, and the creation of the
Management, Screening and Evaluation Committee (MSEC) should
not override the constitutional guarantee of the rights to liberty and
due process of law aside from the principle that penal laws beneficial
to the accused are given retroactive effect.
Almost a month after, or on July 11, 2014, Atty. Rene A.V.
Saguisag, Sr. filed a Petition (In Intervention). 9 He incorporates by
reference the Roxas et al. petition, impleads the same respondents,
and adds that nowhere from the legislative history of R.A. No. 10592
that it intends to be prospective in character. On July 22, 2014, the
Court resolved to grant the leave to intervene and require the
adverse parties to comment thereon.10
Another Petition-in-Intervention11 was filed on October 21, 2014.
This time, the Free Legal Assistance Group (FLAG) served as counsel
for William M. Montinola, Fortunato P. Visto, and Arsenio C. Cabanilla
(Montinola et al.), who are also inmates of the NBP. The petition
argues that Section 4, Rule I of the IRR is facially void for being
contrary to the equal protection clause of the 1987 Constitution; it
discriminates, without any reasonable basis, against those who
would have been benefited from the retroactive application of the
law; and is also ultra vires, as it was issued beyond the authority of
respondents to promulgate. In a Resolution dated November 25,
2014, We required the adverse parties to comment on the petition-
in-intervention.12
On January 30, 2015, the Office of the Solicitor General (OSG) filed
a Consolidated Comment13 to the Petition of Roxas et al. and
Petition-in-Intervention of Atty. Saguisag, Sr. More than two years
later, or on July 7, 2017, it filed a Comment14 to the Petition-in-
Intervention of Montinola et al.
G.R. No. 214637
On October 24, 2014, a Petition for Certiorari and Prohibition15 was
filed by Reynaldo D. Edago, Peter R. Torida, Jimmy E. Aclao,
Wilfredo V. Omeres, Pascua B. Galladan, Victor M. Macoy, Jr., Edwin
C. Trabuncon, Wilfredo A. Paterno, Federico Elliot, and Romeo R.
Macolbas (Edago et al.), who are all inmates at the Maximum
Security Compound of the NBP, against DOJ Secretary De Lima,
DILG Secretary Roxas, BUCOR Acting Director Franklin Jesus B.
Bucayu, and BJMP Chief Superintendent (Officer-in-Charge) Diony
Dacanay Mamaril. The grounds of the petition are as follows:
A.
SECTION 4, RULE I OF THE IRR PROVIDING FOR A PROSPECTIVE
APPLICATION OF THE PROVISIONS OF R.A. 10592 WAS ISSUED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION AND THEREBY VOID AND ILLEGAL FOR
BEING CONTRARY AND ANATHEMA TO R.A. 10592.
a. R.A. 10592 does not state that its provisions
shall have prospective application.
b. Section 4 of the IRR of R.A. 10592 is contrary to
Article 22 of the Revised Penal Code providing
that penal laws that are beneficial to the
accused shall have retroactive application.
c. Section 4, Rule I of the IRR contravenes public
policy and the intent of Congress when it
enacted R.A. 10592.
B.
SECTION 4, RULE I OF THE IRR WAS ISSUED BY RESPONDENTS
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION BECAUSE IT IS PATENTLY
UNCONSTITUTIONAL.
a. Section 4, Rule I of the IRR violates the Equal
Protection Clause of the Constitution.
b. Section 4, Rule I of the IRR violates substantive
due process.16
Per Resolution17 dated November 11, 2014, respondents were
ordered to file their comment to the petition. In compliance, BJMP
Chief Mamaril filed a Comment18 on December 10, 2014, while the
OSG did the same on February 9, 201519 in behalf of all the
respondents.
Subsequently, Edago et al. filed a Motion with Leave of Court to File
and Admit Reply,20 attaching therein said Reply. On July 28, 2015,
We granted the motion and noted the Reply.21
The Court's Ruling
The petition is granted.
Procedural Matters
Actual case or controversy
Respondents contend that the petition of Edago et al. did not comply
with all the elements of justiciability as the requirement of an actual
case or controversy vis-a-vis the requirement of ripeness has not
been complied with. For them, the claimed injury of petitioners has
not ripened to an actual case requiring this Court's
intervention: First, the MSEC has not been constituted yet so there
is effectively no authority or specialized body to screen, evaluate
and recommend any applications for time credits based on R.A. No.
10592. Second, none of petitioners has applied for the revised
credits, making their claim of injury premature, if not anticipatory.
And third, the prison records annexed to the petition are neither
signed nor certified by the BUCOR Director which belie the claim of
actual injury resulting from alleged extended incarceration. What
petitioners did was they immediately filed this case after obtaining
their prison records and computing the purported application of the
revised credits for GCTA under R.A. No. 10592.
We disagree.
It is well settled that no question involving the constitutionality or
validity of a law or governmental act may be heard and decided
unless the following requisites for judicial inquiry are present: (a)
there must be an actual case or controversy calling for the exercise
of judicial power; (b) the person challenging the act must have the
standing to question the validity of the subject act or issuance; (c)
the question of constitutionality must be raised at the earliest
opportunity; and (d) the issue of constitutionality must be the
very lis mota of the case.22 As to the requirement of actual case or
controversy, the Court stated in Province of North Cotabato, et al. v.
Gov't of the Rep. of the Phils. Peace Panel on Ancestral Domain
(GRP), et al.:23
The power of judicial review is limited to actual cases or
controversies. Courts decline to issue advisory opinions or to resolve
hypothetical or feigned problems, or mere academic questions. The
limitation of 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.
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 that can be
interpreted and enforced on the basis of existing law and
jurisprudence, x x x.
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. For a case to be considered ripe for
adjudication, it 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
There is an actual case or controversy in the case at bar because
there is a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudence.
Respondents stand for the prospective application of the grant of
GCTA, TASTM, and STAL while petitioners and intervenors view that
such provision violates the Constitution and Article 22 of the RPC.
The legal issue posed is ripe for adjudication as the challenged
regulation has a direct adverse effect on petitioners and those
detained and convicted prisoners who are similarly situated. There
exists an immediate and/or threatened injury and they have
sustained or are immediately in danger of sustaining direct injury as
a result of the act complained of. In fact, while the case is pending,
petitioners are languishing in jail. If their assertion proved to be
true, their illegal confinement or detention in the meantime is
oppressive. With the prisoners' continued incarceration, any delay in
resolving the case would cause them great prejudice. Justice
demands that they be released soonest, if not on time.
There is no need to wait and see the actual organization and
operation of the MSEC. Petitioners Edago et al. correctly invoked Our
ruling in Pimentel, Jr. v. Hon. Aguirre.25 There, We dismissed the
novel theory that people should wait for the implementing evil to
befall on them before they could question acts that are illegal or
unconstitutional, and held that "[by] the mere enactment of the
questioned law or the approval of the challenged action, the dispute
is said to have ripened into a judicial controversy even without any
other overt act." Similar to Pimentel, Jr., the real issue in this case is
whether the Constitution and the RPC are contravened by Section 4,
Rule 1 of the IRR, not whether they are violated by the acts
implementing it. Concrete acts are not necessary to render the
present controversy ripe.26 An actual case may exist even in the
absence of tangible instances when the assailed IRR has actually and
adversely affected petitioners. The mere issuance of the subject IRR
has led to the ripening of a judicial controversy even without any
other overt act. If this Court cannot await the adverse consequences
of the law in order to consider the controversy actual and ripe for
judicial intervention,27 the same can be said for an IRR. Here,
petitioners need not wait for the creation of the MSEC and be
individually rejected in their applications. They do not need to
actually apply for the revised credits, considering that such
application would be an exercise in futility in view of respondents'
insistence that the law should be prospectively applied. If the
assailed provision is indeed unconstitutional and illegal, there is no
better time than the present action to settle such question once and
for all.28
Legal standing
We do not subscribe to respondents' supposition that it is the
Congress which may claim any injury from the alleged executive
encroachment of the legislative function to amend, modify or repeal
laws and that the challenged acts of respondents have no direct
adverse effect on petitioners, considering that based on records,
there was no GCTA granted to them.
It is a general rule that every action must be prosecuted or defended
in the name of the real party-in-interest, who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the
avails of the suit.
Jurisprudence defines interest as "material interest, an interest in
issue and to be affected by the decree, as distinguished from mere
interest in the question involved, or a mere incidental interest. By
real interest is meant a present substantial interest, as distinguished
from a mere expectancy or a future, contingent, subordinate, or
consequential interest." "To qualify a person to be a real party-in-
interest in whose name an action must be prosecuted, he must
appear to be the present real owner of the right sought to be
enforced."
"Legal standing" or locus standi calls for more than just a
generalized grievance. The concept has been defined as a personal
and substantial interest in the case such that the party has sustained
or will sustain direct injury as a result of the governmental act that
is being challenged. The gist of the question of standing is whether a
party alleges such personal stake in the outcome of the controversy
as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination
of difficult constitutional questions.
A party challenging the constitutionality of a law, act, or statute
must show "not only that the law is invalid, but also that he has
sustained or is in immediate, or imminent danger of sustaining some
direct injury as a result of its enforcement, and not merely that he
suffers thereby in some indefinite way." It must [be] shown that he
has been, or is about to be, denied some right or privilege to which
he is lawfully entitled, or that he is about to be subjected to some
burdens or penalties by reason of the statute complained of. 29
In this case, petitioners are directly affected by Section 4, Rule 1 of
the IRR because they are prisoners currently serving their respective
sentences at the NBP. They have a personal stake in the outcome of
this case as their stay in prison will potentially be shortened (if the
assailed provision of the IRR is declared unlawful and void) or their
dates of release will be delayed (if R.A. No. 10592 is applied
prospectively). It is erroneous to assert that the questioned
provision has no direct adverse effect on petitioners since there were
no GCTAs granted to them. There is none precisely because of the
prospective application of R.A. No. 10592. It is a proof of the act
complained of rather than an evidence that petitioners lack legal
standing. Further, the submission of certified prison records is
immaterial in determining whether or not petitioners' rights were
breached by the IRR because, to repeat, the possible violation was
already fait accompli by the issuance of the IRR. The prison records
were merely furnished to show that respondents have prospectively
applied R.A. No. 10592 and that petitioners will be affected thereby.
Propriety of legal remedy:
Respondents argue that the petitions for certiorari and prohibition,
as well as the petitions-in-intervention, should be dismissed because
such petitions are proper only against a tribunal, board or officer
exercising judicial or quasi-judicial functions. Section 4, Rule 1 of the
IRR is an administrative issuance of respondents made in the
exercise of their rule-making or quasi-legislative functions.
True, a petition for certiorari and prohibition is not an appropriate
remedy to assail the validity of the subject IRR as it was issued in
the exercise of respondents' rule-making or quasi-legislative
function. Nevertheless, the Court has consistently held that
"petitions for certiorari and prohibition are appropriate remedies to
raise constitutional issues and to review, prohibit or nullify the acts
of legislative and executive officials."30 In Araullo v. Aquino
III,31 former Associate Justice, now Chief Justice, Lucas P. Bersamin,
explained the remedies of certiorari and prohibition, thus:
What are the remedies by which the grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government may be determined under the
Constitution?
The present Rules of Court uses two special civil actions for
determining and correcting grave abuse of discretion amounting to
lack or excess of jurisdiction. These are the special civil actions
for certiorari and prohibition, and both are governed by Rule 65. A
similar remedy of certiorari exists under Rule 64, but the remedy is
expressly applicable only to the judgments and final orders or
resolutions of the Commission on Elections and the Commission on
Audit.
The ordinary nature and function of the writ of certiorari in our
present system are aptly explained in Delos Santos v. Metropolitan
Bank and Trust Company:
In the common law, from which the remedy of certiorari evolved,
the writ of certiorari was issued out of Chancery, or the King's
Bench, commanding agents or officers of the inferior courts to return
the record of a cause pending before them, so as to give the party
more sure and speedy justice, for the writ would enable the superior
court to determine from an inspection of the record whether the
inferior court's judgment was rendered without authority. The errors
were of such a nature that, if allowed to stand, they would result in
a substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record
was then revised and corrected in matters of law. The writ
of certiorari was limited to cases in which the inferior court was said
to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or
quasi-judicial acts.
The concept of the remedy of certiorari in our judicial system
remains much the same as it has been in the common law. In this
jurisdiction, however, the exercise of the power to issue the writ
of certiorari is largely regulated by laying down the instances or
situations in the Rules of Court in which a superior court may issue
the writ of certiorari to an inferior court or officer. Section 1, Rule 65
of the Rules of Court compellingly provides the requirements for that
purpose, viz.:
xxxx
The sole office of the writ of certiorari is the correction of errors of
jurisdiction, which includes the commission of grave abuse of
discretion amounting to lack of jurisdiction. In this regard, mere
abuse of discretion is not enough to warrant the issuance of the writ.
The abuse of discretion must be grave, which means either that the
judicial or quasi-judicial power was exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, or that
the respondent judge, tribunal or board evaded a positive duty, or
virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board
exercising judicial or quasi-judicial powers acted in a capricious or
whimsical manner as to be equivalent to lack of jurisdiction.
Although similar to prohibition in that it will lie for want or excess of
jurisdiction, certiorari is to be distinguished from prohibition by the
fact that it is a corrective remedy used for the re-examination of
some action of an inferior tribunal, and is directed to the cause or
proceeding in the lower court and not to the court itself, while
prohibition is a preventative remedy issuing to restrain future action,
and is directed to the court itself. The Court expounded on the
nature and function of the writ of prohibition in Holy Spirit
Homeowners Association, Inc. v. Defensor:
A petition for prohibition is also not the proper remedy to assail an
IRR issued in the exercise of a quasi-legislative function. Prohibition
is an extraordinary writ directed against any tribunal, corporation,
board, officer or person, whether exercising judicial, quasi-judicial or
ministerial functions, ordering said entity or person to desist from
further proceedings when said proceedings are without or in excess
of said entity's or person's jurisdiction, or are accompanied with
grave abuse of discretion, and there is no appeal or any other plain,
speedy and adequate remedy in the ordinary course of law.
Prohibition lies against judicial or ministerial functions, but not
against legislative or quasi-legislative functions. Generally, the
purpose of a writ of prohibition is to keep a lower court within the
limits of its jurisdiction in order to maintain the administration of
justice in orderly channels. Prohibition is the proper remedy to afford
relief against usurpation of jurisdiction or power by an inferior court,
or when, in the exercise of jurisdiction in handling matters clearly
within its cognizance the inferior court transgresses the bounds
prescribed to it by the law, or where there is no adequate remedy
available in the ordinary course of law by which such relief can be
obtained. Where the principal relief sought is to invalidate an IRR,
petitioners' remedy is an ordinary action for its nullification, an
action which properly falls under the jurisdiction of the Regional Trial
Court. In any case, petitioners' allegation that "respondents are
performing or threatening to perform functions without or in excess
of their jurisdiction" may appropriately be enjoined by the trial court
through a writ of injunction or a temporary restraining order.
With respect to the Court, however, the remedies of certiorari and
prohibition are necessarily broader in scope and reach, and the writ
of certiorari or prohibition may be issued to correct errors of
jurisdiction committed not only by a tribunal, corporation, board or
officer exercising judicial, quasi-judicial or ministerial functions but
also to set right, undo and restrain any act of grave abuse of
discretion amounting to lack or excess of jurisdiction by any branch
or instrumentality of the Government, even if the latter does not
exercise judicial, quasi-judicial or ministerial functions. This
application is expressly authorized by the text of the second
paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate
remedies to raise constitutional issues and to review and/or prohibit
or nullify the acts of legislative and executive officials.
Necessarily, in discharging its duty under Section 1, supra, to set
right and undo any act of grave abuse of discretion amounting to
lack or excess of jurisdiction by any branch or instrumentality of the
Government, the Court is not at all precluded from making the
inquiry provided the challenge was properly brought by interested or
affected parties. The Court has been thereby entrusted expressly or
by necessary implication with both the duty and the obligation of
determining, in appropriate cases, the validity of any assailed
legislative or executive action. This entrustment is consistent with
the republican system of checks and balances.32
In view of the foregoing, We shall proceed to discuss the substantive
issues raised herein so as to finally resolve the question on the
validity of Section 4, Rule 1 of the IRR, which is purely legal in
nature. This is also because of the public importance of the issues
raised,33 and the interest of substantial justice,34 not to mention the
absence of any dispute as to any underlying fact.35
Hierarchy of courts
Respondents contend that the petition for certiorari and prohibition,
as well as the petitions-in-intervention, should still be dismissed for
failure to observe the rule on hierarchy of courts. According to them,
this Court's jurisdiction over actions assailing the validity of
administrative issuances is primarily appellate in nature by virtue of
Section 5(2)(a), Article VIII of the Constitution. 36 An action assailing
the validity of an administrative issuance is one that is incapable of
pecuniary estimation, which, under Batas Pambansa Bilang (B.P.
Blg.) 129, the Regional Trial Court (RTC) has exclusive original
jurisdiction. Further, a petition for declaratory relief filed before the
RTC, pursuant to Section 1, Rule 63 of the Rules, is the proper
remedy to question the validity of the IRR. 37
Indeed, under Section 19(1) of B.P. Blg. 129, the question presented
here is a matter incapable of pecuniary estimation, which exclusively
and originally pertained to the proper RTC.38 Fundamentally, there is
no doubt that this consolidated case captioned as petition
for certiorari and prohibition seeks to declare the unconstitutionality
and illegality of Section 4 Rule 1 of the IRR; thus, partaking the
nature of a petition for declaratory relief over which We only have
appellate jurisdiction pursuant to Section 5(2)(a), Article VIII of the
Constitution. In accordance with Section 1, Rule 63 of the Rules, the
special civil action of declaratory relief falls under the exclusive
jurisdiction of the RTC.
Nevertheless, the judicial policy has been to entertain a direct resort
to this Court in exceptional and compelling circumstances, such as
cases of national interest and of serious implications, and those of
transcendental importance and of first impression. 39 As the petitions
clearly and specifically set out special and important reasons
therefor, We may overlook the Rules. Here, petitioners Edago et
al. are correct in asserting that R.A. No. 10592 and its IRR affect the
entire correctional system of the Philippines. Not only the social,
economic, and moral well-being of the convicts and detainees are
involved but also their victims and their own families, the jails, and
the society at large. The nationwide implications of the petitions, the
extensive scope of the subject matter, the upholding of public policy,
and the repercussions on the society are factors warranting direct
recourse to Us.
Yet more than anything, there is an urgent necessity to dispense
substantive justice on the numerous affected inmates. It is a must to
treat this consolidated case with a circumspect leniency, granting
petitioners the fullest opportunity to establish the merits of their
case rather than lose their liberty on the basis of technicalities. 40 It distinguished author has put it, the exception was inspired by
need not be said that while this case has been pending, their right to sentiments of humanity, and accepted by science.49
liberty is on the line. An extended period of detention or one that is According to Mr. Chief Justice Manuel Araullo, the principle is "not as
beyond the period allowed by law violates the accused person's right a right" of the offender, "but founded on the very principles on which
to liberty.41 Hence, We shunt the rigidity of the rules of procedure so the right of the State to punish and the commination of the penalty
as not to deprive such birthright.42 The Court zealously guards are based, and regards it not as an exception based on political
against the curtailment of a person's basic constitutional and natural considerations, but as a rule founded on principles of strict justice." 50
right to liberty.43 The right to liberty, which stands second only to life
in the hierarchy of constitutional rights, cannot be lightly taken Further, case law has shown that the rule on retroactivity under
away.44 At its core, substantive due process guarantees a right to Article 22 of the RPC applies to said Code 51 and its amendments,52 as
liberty that cannot be taken away or unduly constricted, except well as to special laws,53 such as Act No. 2126,54 Presidential Decree
through valid causes provided by law.45 No. 603,55 R.A. No. 7636,56 R.A. No. 8293,57 R.A. No. 8294,58 R.A.
No. 9344,59 and R.A. No. 10586,60 to cite a few.
Substantive Issues
But what exactly is a penal law?
Every new law has a prospective effect. Under Article 22 of the RPC,
however, a penal law that is favorable or advantageous to the
A penal provision or statute has been consistently defined by
accused shall be given retroactive effect if he is not a habitual
jurisprudence as follows:
criminal. These are the rules, the exception, and the exception to
A penal provision defines a crime or provides a punishment for
the exception on the effectivity of laws.46
one.61
In criminal law, the principle favorabilia sunt amplianda adiosa
Penal laws and laws which, while not penal in nature, have
restrigenda (penal laws which are favorable to the accused are given
provisions defining offenses and prescribing penalties for their
retroactive effect) is well entrenched. 47 It has been sanctioned since
violation.62
the old Penal Code.48
x x x as far back as the year 1884, when the Penal Code took effect
Properly speaking, a statute is penal when it imposes punishment for
in these Islands until the 31st of December, 1931, the principle
an offense committed against the state which, under the
underlying our laws granting to the accused in certain cases an
Constitution, the Executive has the power to pardon. In common
exception to the general rule that laws shall not be retroactive when
use, however, this sense has been enlarged to include within the
the law in question favors the accused, has evidently been carried
term "penal statutes" all statutes which command or prohibit certain
over into the Revised Penal Code at present in force in the
acts, and establish penalties for their violation, and even those
Philippines through article 22 x x x. This is an exception to the
which, without expressly prohibiting certain acts, impose a penalty
general rule that all laws are prospective, not retrospective,
upon their commission.63
variously contained in the following maxims: Lex prospicit, non
respicit (the law looks forward, not backward); lex defuturo, judex
Penal laws are those acts of the Legislature which prohibit certain
de proeterito (the law provides for the future, the judge for the
acts and establish penalties for their violations; or those that define
past); and adopted in a modified form with a prudent limitation in
crimes, treat of their nature, and provide for their punishment. 64
our Civil Code (article 3). Conscience and good law justify this
exception, which is contained in the well-known The "penal laws" mentioned in Article 22 of the RPC refer
aphorism: Favorabilia sunt amplianda, odiosa restringenda. As one to substantive laws, not procedural rules.65 Moreover, the mere fact
that a law contains penal provisions does not make it penal in
nature.66
In the case at bar, petitioners assert that Article 22 of the RPC
applies because R.A. No. 10592 is a penal law. They claim that said
law has become an integral part of the RPC as Articles 29, 94, 97,
98 and 99 thereof. Edago et al. further argue that if an amendment
to the RPC that makes the penalties more onerous or prejudicial to
the accused cannot be applied retroactively for being an ex post
facto law, a law that makes the penalties lighter should be
considered penal laws in accordance with Article 22 of the RPC.
We concur.
While R.A. No. 10592 does not define a crime/offense or
provide/prescribe/establish a penalty 67 as it addresses the
rehabilitation component68 of our correctional system, its provisions
have the purpose and effect of diminishing the punishment attached
to the crime. The further reduction on the length of the penalty of
imprisonment is, in the ultimate analysis, beneficial to the detention
and convicted prisoners alike; hence, calls for the application of
Article 22 of the RPC.
The prospective application of the beneficial provisions of R.A. No.
10592 actually works to the disadvantage of petitioners and those
who are similarly situated. It precludes the decrease in the penalty
attached to their respective crimes and lengthens their prison stay;
thus, making more onerous the punishment for the crimes they
committed. Depriving them of time off to which they are justly
entitled as a practical matter results in extending their sentence and
increasing their punishment. 69 Evidently, this transgresses the clear
mandate of Article 22 of the RPC.
In support of the prospective application of the grant of GCTA,
TASTM, and STAL, respondents aver that a careful scrutiny of R.A.
No. 10592 would indicate the need for "new procedures and
standards of behavior" to fully implement the law by the BUCOR (as
to persons serving their sentences after conviction) and the BJMP
(as to accused who are under preventive detention). It is alleged
that the amendments introduced are substantial and of utmost
importance that they may not be implemented without a thorough
revision of the BUCOR and the BJMP operating manuals on jail
management. In particular, the establishment of the MSEC is said to
be an administrative mechanism to address the policy and necessity
that the BUCOR superintendents and the BJMP jail wardens must
follow uniform guidelines in managing, screening and evaluating the
behavior or conduct of prisoners prior to their recommendation to
the heads of the two bureaus on who may be granted time
allowances.
Respondents fail to persuade Us.
Except for the benefits of TASTM and the STAL granted to a prisoner
who chose to stay in the place of his confinement despite the
existence of a calamity or catastrophe enumerated in Article 158 of
the RPC, the provisions of R.A. No. 10592 are mere modifications of
the RPC that have been implemented by the BUCOR prior to the
issuance of the challenged IRR. In view of this, the claim of "new
procedures and standards of behavior" for the grant of time
allowances is untenable.
It appears that even prior to February 1, 1916 when Act No. 2557
was enacted,70 prisoners have already been entitled to deduct the
period of preventive imprisonment from the service of their
sentences. In addition, good conduct time allowance has been in
existence since August 30, 1906 upon the passage of Act No.
1533.71 Said law provided for the diminution of sentences imposed
upon convicted prisoners in consideration of good conduct and
diligence.72 Under Act No. 1533 and subsequently under Article 97 of
the RPC, the time allowance may also apply to detention prisoners if
they voluntarily offer in writing to perform such labor as may be
assigned to them.73 Such prerequisite was removed by R.A. No.
10592.
Subject to the review, and in accordance with the rules and
regulations, as may be prescribed by the Secretary of Public
Instruction, the wardens or officers in charge of Insular or provincial
jails or prisons were mandated to make and keep such records and
take such further actions as may be necessary to carry out the
provisions of Act No. 1533.74 When the RPC took effect on January 1,
1932,75 the Director of Prisons was empowered to grant allowances
for good conduct whenever lawfully justified. 76 With the effectivity of
R.A. No. 10592 on June 6, 2013, such authority is now vested on the
Director of the BUCOR, the Chief of the BJMP and/or the Warden of a
provincial, district, municipal or city jail.77
Under the IRR of R.A. No. 10592, the MSECs are established to act
as the recommending body for the grant of GCTA and TASTM. 78 They
are tasked to manage, screen and evaluate the behavior and
conduct of a detention or convicted prisoner and to monitor and
certify whether said prisoner has actually studied, taught or
performed mentoring activities.79 The creation of the MSEC,
however, does not justify the prospective application of R.A. No.
10592. Nowhere in the amendatory law was its formation set as a
precondition before its beneficial provisions are applied. What R.A.
No. 10592 only provides is that the Secretaries of the DOJ and the
DILG are authorized to promulgate rules and regulations on
the classification system for good conduct and time allowances, as
may be necessary to implement its provisions. 80 Clearly, respondents
went outside the bounds of their legal mandate when they provided
for rules beyond what was contemplated by the law to be enforced.
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 IRRSs, because an administrative
agency cannot amend an act of Congress.81
The contention of Edago et al. stands undisputed that, prior to the
issuance of the assailed IRR and even before the enactment of R.A.
No. 10592, a Classification Board had been handling the functions of
the MSEC and implementing the provisions of the RPC on time
allowances. While there is a noble intent to systematize and/or
institutionalize existing set-up, the administrative and procedural
restructuring should not in any way prejudice the substantive rights
of current detention and convicted prisoners.
Furthermore, despite various amendments to the law, the standard
of behavior in granting GCTA remains to be "good conduct." In
essence, the definition of what constitutes "good conduct" has been
invariable through the years, thus:
Act No. 1533: "not been guilty of a violation of discipline or any of
the rules of the prison, and has labored with diligence and fidelity
upon all such tasks as have been assigned to him."82
BUCOR Operating Manual dated March 30, 2000: "displays good
behavior and who has no record of breach of discipline or violation of
prison rules and regulations."83
IRR of R.A. No. 10592: "the conspicuous and satisfactory behavior of
a detention or convicted prisoner consisting of active involvement in
rehabilitation programs, productive participation in authorized work
activities or accomplishment of exemplary deeds coupled with
faithful obedience to all prison/jail rules and regulations" 84
Among other data, an inmate's prison record contains information on
his behavior or conduct while in prison.85 Likewise, the
certificate/diploma issued upon successful completion of an
educational program or course (i.e., elementary, secondary and
college education as well as vocational training) forms part of the
record.86 These considered, the Court cannot but share the same
sentiment of Roxas et al. It is indeed perplexing why it is complex
for respondents to retroactively apply R.A. No. 10592 when all that
the MSEC has to do is to utilize the same standard of behavior for
the grant of time allowances and refer to existing prison records.
WHEREFORE, the consolidated petitions are GRANTED. Section 4,
Rule 1 of the Implementing Rules and Regulations of Republic Act
No. 10592 is DECLARED invalid insofar as it provides for the
prospective application of the grant of good conduct time allowance,
time allowance for study, teaching and mentoring, and special time
allowance for loyalty. The Director General of the Bureau of
Corrections and the Chief of the Bureau of Jail Management and
Penology are REQUIRED to RE-COMPUTE with reasonable dispatch
the time allowances due to petitioners and all those who are
similarly situated and, thereafter, to CAUSE their immediate release
from imprisonment in case of full service of sentence, unless they
are being confined thereat for any other lawful cause.
This Decision is IMMEDIATELY EXECUTORY.
SO ORDERED.
ELECTION LAW
G.R. No. 216572, April 19, 2016
 FELICIANO LEGASPI, Petitioner, v. COMMISSION ON ELECTIONS,
ALFREDO D. GERMAR, AND ROGELIO P. SANTOS, JR., Respondent.
RESOLUTION
VELASCO JR., J.:
The opportunities for the Court to revisit its ruling in Mendoza vs.
COMELEC1 (Mendoza) are sparse. It is a rarity for us to be presented a case
assailing the COMELEC en banc's reversal of its division's ruling notwithstanding
the former's failure to muster the four (4) votes required under our Constitution
to do so. In fact, the September 1, 2015 Decision in the case at bench is only
second to the seminal case of Mendoza to have resolved such an issue. The
Court must, therefore, take advantage of this rare opportunity, on
reconsideration, to modify the Mendoza doctrine before it further takes root,
deeply entrenched in our jurisprudence.
The facts of this case are simple and undisputed.
To recapitulate, petitioner Feliciano Legaspi (Legaspi) and private respondent
Alfredo D. Germar (Germar) both ran as mayoralty candidates in Norzagaray,
Bulacan while private respondent Rogelio Santos (Santos) was a candidate for
councilor in the May 13, 2013 elections. 2 On May 14, 2013 Legaspi filed a
Petition for Disqualification against private respondents, docketed as SPA No.
13-353 (DC). There, petitioner averred that from May 11, 2013 until election
day, private respondents engaged in massive vote-buying, using their political
leaders as conduits. As per witness accounts, said political leaders, while
camped inside the North Hills Village Homeowners Association Office in Brgy.
Bitungol, Norzagaray, Bulacan, were distributing to voters envelopes containing
Php 500.00 each and a sample ballot bearing the names of private respondents.
Through military efforts, the vote-buying was foiled and the office, which served
as the venue for distribution, padlocked. The newly-minted Chief of Police,
P/Supt. Dale Soliba, and his subordinates then attempted to force open the
office and retrieve from inside four (4) boxes containing the remaining
undistributed envelopes with an estimated aggregate amount of Php800,000.00,
but a group of concerned citizens were able to thwart their plan in flagrante
delicto and intercept the said evidence of vote-buying. 3
In answer, private respondents denied the allegations and raised the alibi that
from 3:00 o'clock to 11:00 o'clock in the evening of May 11, 2013, they
attended the Liberal Party's meeting de avance at the San Andres Parish church
grounds, and that they did not go to nor visit the office of the Homeowner's
Association of North Hills Village at the time the election offenses were allegedly
committed.4
Giving due credence and consideration to the evidence adduced by
petitioner,5 the COMELEC Special First Division, by a 2-1 vote on October 3,
2013, disqualified private respondents from the 2013 electoral race. The
dispositive portion of the COMELEC resolution 6 reads:
WHEREFORE, premises considered, the Commission RESOLVED as it hereby
RESOLVES to:
(1) DISQUALIFY Respondents Alfredo M. Gesmar (sic) and Rogelio C. Santos,
Jr. for the positions of Mayor and Councilor of Norzagaray, Bulacan;
(2) REFER the criminal aspect of this case against Germar (sic), Roberto
Esquivel, Rogelio Santos, Jr., Dale Soliba, Dominador Rayo, Marivic Nunez,
Adelaida Auza, Amelia Cruz, and Leonardo Ignacio to the Law Department for
preliminary investigation; and
(3) ORDER the Regional Election Director of COMELEC Region III to implement
this Resolution, following the rules on succession as provided in R.A. 7160.
SO ORDERED.
Thereafter, private respondents moved for reconsideration before the
COMELEC en banc but the latter, through its July 10, 2014 Resolution, 7 resolved
to deny private respondents' motion thusly:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the Commission RESOLVED, as it
hereby RESOLVES to DENY this Motion for Reconsideration for LACK OF MERIT.
Consequently, the October 3, 2013 Resolution of the Special First Division (1)
disqualifying respondents Alfredo M. Germar and Rogelio C. Santos, Jr. for the
positions of Mayor and Councilor of Norzagaray, Bulacan; (2) referring the
criminal aspect of this case against Alfredo M. Germar, Roberto Esquivel,
Rogelio Santos, Jr., Dale Soliba, Dominador Rayo, Marivic Nunez, Adelaida Auza,
Amelia Cruz and Leonardo Ignacio to the Law Department for preliminary
investigation and (3) ordering the Regional Election Director of COMELEC Region
III to implement this Resolution, following the Rules on Succession as provided
under R.A. 7160 is hereby AFFIRMED.
SO ORDERED.
The adverted Resolution had a vote of 3-2-1-1, as follows: three (3)
commissioners, namely Chairman Sixto S. Brillantes, Jr. and commissioners
Lucenito N. Tagle and Elias R. Yusoph, voted for the denial of the motion, while
two (2) commissioners, Christian Robert S. Lim and Luie Tito F. Guia, dissented.
Commissioner Al A. Parreno took no part in the deliberations and Commissioner
Maria Grace Cielo M. Padaca did not vote as her ad interim appointment had
already expired, vacating a seat in the electoral tribunal. 8
Since the Resolution was not concurred in by four (4) votes or a majority of all
the members of the COMELEC, a re-deliberation of the administrative aspect of
the case was conducted pursuant to Sec. 6, Rule 18 of the COMELEC Rules of
Procedure. The re-deliberation resulted in the issuance of the assailed
Order9 dated January 28, 2015 with a 3-2-2 vote: the previously voting
commissioners maintained their respective positions while then newly-appointed
commissioner Arthur D. Lim took no part in the deliberations and abstained
from voting.10 Citing the same procedural rule, the COMELEC en banc dismissed
the original Petition for Disqualification filed by Legaspi in the following wise:
WHEREFORE, premises considered, the Commission RESOLVED, as it
hereby RESOLVES to DISMISS the administrative aspect of this Petition for
Disqualification for FAILURE TO OBTAIN THE NECESSARY MAJORITY
VOTES AFTER RE-DELIBERATION/REHEARING by the members of the
Commission en banc.
SO ORDERED.
Perplexed as to how he who prevailed before the COMELEC Special First Division
can face defeat before the COMELEC en banc when three (3) commissioners
voted to deny private respondents' motion for reconsideration and only two (2)
commissioners voted to reverse the judgment in his favor, Legaspi launched a
Rule 64 petition assailing the January 28, 2015 COMELEC en banc Order before
this Court. Regrettably, the Court, on September 1, 2015, voted to dismiss the
petition.
From the September 1, 2015 Decision, petitioner Legaspi interposed the instant
motion for reconsideration. Hence, the Court is faced once again with the issue
on how to treat the rulings of the COMELEC en banc when less than four (4)
votes were cast to either grant or deny the motion for reconsideration pending
before it.
The Court's Ruling
The Court GRANTS petitioner's motion for reconsideration. The September 1,
2015 Decision in the case at bar is hereby REVERSED and SET ASIDE, and the
instant petition is GRANTED.
Primarily, the Court is called to interpret Sec. 6, Rule 18 of the COMELEC Rules
on Procedure. The provision reads:
Section 6. Procedure if Opinion is Equally Divided. - When the
Commission en banc is equally divided in opinion, or the necessary majority
cannot be had, the case shall be reheard, and if on rehearing no decision is
reached, the action or proceeding shall be dismissed if originally commenced in
the Commission; in appealed cases, the judgment or order appealed from shall
stand affirmed; and all incidental matters, the petition or motion shall be
denied." (emphasis added)
As framed in the September 1, 2015 Decision, the afore-cited provision outlines
the effects of the COMELEC en banc's failure to decide:
1. If the action or proceeding is originally commenced in the
COMELEC, such action or proceeding shall be dismissed;
2. In appealed cases, the judgment or order appealed from shall
stand affirmed; or
3. In incidental matters, the petition or motion shall be denied.
In dismissing Legaspi's petition on September 1, 2015, the Court first
categorized SPA No. 13-353 (DC) as an action "originally commenced with the
Commission" warranting the entire case's dismissal should the en banc fail to
reach the required majority vote, regardless of the COMELEC division's ruling.
This, according to the ponencia, is the first effect of Sec. 6, Rule 18 of the
COMELEC Rules of Procedure, as previously applied in Mendoza.
To summarize Mendoza, therein petitioner Joselito R. Mendoza (Mendoza) was
proclaimed winner of the 2007 gubernatorial election for the province of
Bulacan, besting respondent Roberto M. Pagdanganan (Pagdanganan). On June
1, 2007, Pagdanganan filed an election protest that the COMELEC Second
Division eventually granted, thereby annulling Mendoza's proclamation.
Aggrieved, Mendoza moved for reconsideration with the en banc, but the
COMELEC failed to reach a majority vote to either grant or deny the motion.
Pursuant to its rules, the COMELEC en banc reheard the case but was,
nevertheless, unsuccessful in obtaining the required majority vote to render a
valid ruling. Thus, in a 3-1 vote, with three votes denying the motion, the
COMELEC en banc sustained the ruling of its Second Division. 11
On petition with the Court, Mendoza pointed out that because the necessary
majority vote of four (4) was not obtained by the COMELEC en banc,
Pagdanganan's election protest ought to be dismissed. Agreeing, the Court, on
March 25, 2010, ruled for Mendoza and explained that as an original action
before the Commission, failure to muster the required majority vote on
reconsideration would lead to the election protest's dismissal, not just of the
motion for reconsideration.12
Aside from relying on the Mendoza  ruling, the September 1, 2015 Decision
discussed that a motion for reconsideration lodged with the COMELEC en banc is
not an "action or proceeding" within the contemplation of the rules; that the
phrase ought to be construed as pertaining to Part V of the COMELEC Rules of
Procedure, denominated as "Particular Actions or Proceedings" and covering
Rules 20-34. Thus, the Court applied the first effect and ordered that Legaspi's
Petition for Disqualification, the alleged "action or proceeding" in this case, be
 dismissed in its entirety.
The interpretation of Sec. 6, Rule 18
of the COMELEC Rules of Procedure in Mendoza
and in the September 1, 2015 Decision
renders the rule unconstitutional
The Mendoza doctrine, as reiterated in the September 1, 2015 Decision,
deviated from the 1987 Constitution. Not only does it circumvent the four-vote
requirement under Sec. 7, Art. IX-A of the Constitution, it likewise diminishes
the adjudicatory powers of the COMELEC Divisions under Sec. 3, Article IX-C. 14
Under Sec. 3, Article IX-C of the 1987 Constitution, 15 the COMELEC Divisions are
granted adjudicatory powers to decide election cases, provided that the
COMELEC en banc shall resolve motions for reconsideration of the division
rulings. Further, under Sec. 7, Article IX-A of the Constitution, 16 four (4) votes
are necessary for the COMELEC en banc to decide a case. Naturally, the party
moving for reconsideration, as the party seeking affirmative relief, carries the
burden of proving that the division committed reversible error. The movant then
shoulders the obligation of convincing four (4) Commissioners to grant his or
her plea.17
This voting threshold, however, is easily rendered illusory by the
application of the Mendoza ruling, which virtually allows the grant of a
motion for reconsideration even though the movant fails to secure four
votes in his or her favor, in blatant violation of Sec. 7, Art. IX-A of the
Constitution. In this case, in spite of securing only two (2) votes to grant their
motion for reconsideration, private respondents were nevertheless declared the
victors in the January 28, 2015 COMELEC en banc Resolution.18
To exacerbate the situation, the circumvention of the four-vote requirement, in
turn, trivializes the proceedings before the COMELEC divisions and presents
rather paradoxical scenarios, to wit:19
i. The failure of the COMELEC en banc to muster the required majority
vote only means that it could not have validly decided the case. Yet
curiously, it managed to reverse the ruling of a body that has properly
exercised its adjudicatory powers; and
ii. A motion for reconsideration may be filed on the ground that the
evidence is insufficient to justify the decision, order or ruling; or that the
said decision, order or ruling is contrary to law. If the COMELEC en
banc does not find that either ground exists, there would be no cogent
reason to disturb the ruling of the COMELEC division. Otherwise stated,
failure to muster four votes to sustain the motion for reconsideration should
be understood as tantamount to the COMELEC en banc finding no reversible
error attributable to its division's ruling. Said decision, therefore, ought to
be affirmed, not reversed nor vacated.
These resultant paradoxes have to be avoided. Under the prevailing
interpretation of Sec. 6, Rule 18 of the COMELEC Rules of Procedure, a movant,
in situations such as this, need not even rely on the strength of his or her
arguments and evidence to win a case, and may, instead, choose to rest on
inhibitions and abstentions of COMELEC members to produce the same result.
To demonstrate herein, it is as though the two (2) abstention votes were
counted in favor of the private respondents to reach the majority vote of four
(4). This impedes and undermines the adjudicatory powers of the COMELEC
divisions by allowing their rulings to be overruled by the en banc without the
latter securing the necessary number to decide the case. 20
From the foregoing disquisitions, it is then difficult to see how
the Mendoza doctrine "complements our Constitution."21 Far from it, the
prevailing interpretation of Sec. 6, Rule 18 of the COMELEC Rules of Procedure
severely suffers from constitutional infirmities and calls for the nullification of
the rule itself.
The motion for reconsideration
before the COMELEC en banc
is an "incidental matter"
Proceeding to the core of the controversy, we now apply Sec. 6, Rule 18 in the
case at bar. As discussed in the September 1, 2015 ponencia:
xxx [T]he effects of the COMELEC en banc's failure to decide vary depending
on the type of case or  matter that is before the commission. Thus, under
the provision, the first effect (i.e., the dismissal of the action or proceeding)
only applies when the type of case before the COMELEC is an action or
proceeding "originally commenced in the commission"; the second effect (i.e.,
the affirmance of a judgment or order) only applies when the type of case
before the COMELEC is an "appealed case"; and the third effect (i.e., the
denial of the petition or motion) only applies when the case or matter
before the COMELEC is an "incidental matter." (emphasis added)
Verily, classifying the pending case or matter before the COMELEC is a
prerequisite to identifying the applicable effect. Here, while the case
originated from Legaspi's filing of a Petition for Disqualification, said petition has
already been passed upon and decided by the COMELEC Special First Division on
October 3, 2013. Instead, what was under consideration when Sec. 6, Rule 18
was invoked was no longer Legaspi's petition for disqualification itself but
his motion for reconsideration before the COMELEC en banc. The pending • Rule 27 - Pre-proclamation Controversies
issue at the time was not directly private respondents' qualification or
disqualification to run for or hold office, but, more precisely, whether or not the D. SPECIAL RELIEFS
COMELEC division committed reversible error in its October 3, 2013 ruling.
• Rule 28 - Certiorari, Prohibition and Mandamus
For the first effect to apply, the pending case or matter must be an • Rule 29 - Contempt
original action or proceeding originally commenced before the
COMELEC. This could take either of two forms: those originally commenced E. PROVISIONAL REMEDIES
with the COMELEC Division or those originally commenced with the COMELEC en
banc.
• Rule 30 - Injunction
Under Article IX-C, Sec. 2(2) of the Constitution, actions originally commenced
before the COMELEC Division consist of all contests relating to the elections, F. SPECIAL PROCEEDINGS
returns, and qualifications of all elective regional, provincial, and city
officials.22 On the other hand, the cases directly filed with the COMELEC en
banc are those specifically provided in the COMELEC Rules of Procedure, such as •  Rule 31 - Annulment of Permanent List of Voters
petitions for postponement of elections under Sec. 1, Rule 26, petitions for •  Rule 32 — Registration of Political Parties or Organization
failure of election under Sec. 2, Rule 26, complaints or charges for indirect •  Rule 33 - Accreditation of Citizens' Arms of the Commission
contempt under Sec. 2, Rule 29, preliminary investigation of election offenses
under Sec. 1, Rule 34, and all other cases where the COMELEC division is not G. ELECTION OFFENSES
authorized to act.23
• Rule 34 - Prosecution of Election Offenses
In this case, while the motion for reconsideration was filed with the COMELEC en
banc in the first instance, it cannot strictly be considered as an "action or
proceeding" originally commenced with the commission as contemplated by the It bears stressing that the first effect would only apply if the tie vote was in the
rules. As held in the September 1, 2015 Decision, the coverage of the phrase is resolution of the "action or proceeding" originally commenced before the
limited to those itemized in Part V of the COMELEC Rules of Procedure, viz: COMELEC. But given that the pending matter when the vote was cast was the
resolution of the motion for reconsideration, which is neither an action nor a
COMELEC RULES OF PROCEDURE - PART V proceeding within the ambit of Part V of the COMELEC Rules of Procedure, the
PARTICULAR ACTIONS OR PROCEEDINGS first effect cannot therefore be applied in this case.

A. ORDINARY ACTIONS The second effect cannot likewise be applied herein for it requires that
the pending case or matter be an appeal. Worth maintaining is this doctrine
• Rule 20 - Election Protests in  Mendoza: a motion for reconsideration is a constitutionally guaranteed
• Rule 21 - Quo Warranto remedial mechanism for parties aggrieved by a division decision or resolution,
•  Rule 22 - Appeals from Decisions of Courts in Election Protest Cases but not an appeal.24 In the same vein, it was held in Apo Fruits Corporation v.
Court of Appeals25 that "[t]he Supreme Court sitting en banc is not an appellate
B. SPECIAL ACTIONS court vis-a-vis its Divisions, and it exercises no appellate jurisdiction over the
latter. Each division of the Court is considered not a body inferior to the Court
• Rule 23 - Petition to Deny Due Course To or Cancel Certificates of Candidacy en banc, and sits veritably as the Court en banc itself"26
•Rule 24 - Proceedings Against Nuisance Candidates
•Rule 25 - Disqualification of Candidates This leaves the court with the third effect: that the petition or motion will
• Rule 26 - Postponement of Suspension of Elections be dismissed in incidental matters.

C. IN SPECIAL CASES The Court now determines whether the motion for reconsideration of private
respondents is an "incidental matter" to which the third effect will apply.
Without doubt, the answer is in the affirmative.
In the August 24, 2010 ruling in League of Cities vs. COMELEC,27 the Court
applied Sec.7, Rule 56 of the Rules of Court, which reads:
Rule 56
Procedure in the Supreme Court
xxxx
SEC. 7. Procedure if opinion is equally divided. - Where the court en banc
is equally divided in opinion, or the necessary majority cannot be had, the case
shall again be deliberated on, and if after such deliberation no decision is
reached, the original action commenced in the court shall be dismissed; in
appealed cases, the judgment or order appealed from shall stand affirmed;
and on all incidental matters, the petition or motion shall be
denied. (Emphasis supplied)
As can be gleaned, the afore-quoted rule bears striking similarity with Sec. 6,
Rule 18 of the COMELEC Rules of Procedure. In the adverted ruling, Senior
Associate Justice Antonio T. Carpio (Justice Carpio) explained that a motion for
reconsideration is an incidental matter, and that application of Sec. 7, Rule
56 thereto has been clarified in A.M. No. 99-1-09-SC 28 wherein the Court
resolved as follows:
A MOTION FOR THE CONSIDERATION OF A DECISION OR RESOLUTION OF THE
COURT EN BANG OR OF A DIVISION MAY BE GRANTED UPON A VOTE OF A
MAJORITY OF THE MEMBERS OF THE EN BANC OR OF A DIVISION, AS THE
CASE MAY BE, WHO ACTUALLY TOOK PART IN THE DELIBERATION OF THE
MOTION.
IF THE VOTING RESULTS IN A TIE, THE MOTION FOR
RECONSIDERATION IS DEEMED DENIED.  (emphasis added)
Free from ambiguity, the plain meaning of the clarificatory resolution is that the
motion for reconsideration, being an incidental matter, is deemed denied if no
majority vote is reached. Consequently, the Court's prior majority action in such
cases stands affirmed.29
Defensor-Santiago vs. COMELEC30 served as jurisprudential basis for the
pronouncement in the August 24, 2010 League of Cities ruling. In the cited
case, eight (8) Justices of the Supreme Court, as against five (5), voted to
declare Republic Act No. 673531 insufficient to cover the system of initiative on
amendments to the Constitution, and to nullify the COMELEC rules and
regulations prescribing the conduct thereof. On reconsideration, the Court was
equally-divided, 6-6, yet the prior Decision was never deemed overturned. The
deadlock was interpreted to mean that the opposite view failed to muster
enough votes to modify or reverse the majority ruling. Therefore, the motion for
reconsideration was denied and the original Decision, upheld. 32
Noticeably, Mendoza, which was decided by the Court on March 25, 2010,
preceded the August 24, 2010 League of Cities ruling. In the latter en
banc case, the Court set the precedent that the failure to reach the majority
vote on reconsideration would only result in the denial of the motion alone. 33
There is no reason why the same procedural principle in League of Cities, as
embodied in A.M. No. 99-1-09-SC, cannot find application in election
cases. With Sec. 6, Rule 18 of the COMELEC Rules of Procedure couched
in terms that are almost identical with Sec. 7, Rule 56 of the Rules of
Court, the interpretation of one ought not deviate from the
other. Interpretare et cocordare leges legibus est optimus interpretandi modus.
The rule is that a statute must be construed not only to be consistent with itself
but also to harmonize with other laws so as to form a complete, coherent and
intelligible system.34 A.M. No. 99-1-09-SC on Sec. 7, Rule 56 of the Rules of
Court should then be given suppletory application" 35 to election cases for a
singular interpretation of the similarly phrased rules, more particularly to the
treatment of less than majority votes on motions for reconsideration before the
COMELEC en banc.
In conclusion, Sec. 3, Article IX-C of the Constitution bestows on the COMELEC
divisions the authority to decide election cases. Their decisions are capable of
attaining finality, without need of any affirmative or confirmatory action on the
part of the COMELEC en banc. And while the Constitution requires that the
motions for reconsideration be resolved by the COMELEC en banc, it likewise
requires that four votes must be reached for it to render a valid ruling and,
consequently, to GRANT the motion for reconsideration of private respondents.
Hence, when the private respondents failed to get the four-vote requirement on
their motion for reconsideration, their motion is defeated and lost as there was
NO valid ruling to sustain the plea for reconsideration. The prior valid action -
the COMELEC Special First Division's October 3, 2013 Resolution in this case -
therefore subsists and is affirmed by the denial of the motion for
reconsideration.
WHEREFORE, premises considered, the motion for reconsideration is
hereby GRANTED and the September 1, 2015 Decision of the Court
is REVERSED and SET ASIDE. The instant petition is GRANTED and the
January 28, 2015 Order of the Comelec en banc in SPA No. 13-353 (DC) is
hereby SET ASIDE. The October 3, 2013 Resolution of the COMELEC Special
First Division in SPA No. 13-353 (DC) is REINSTATED and AFFIRMED. THIS
DECISION IS IMMEDIATELY EXECUTORY.
SO ORDERED.
cralawlawlibrary
QUASI-LEGISLATIVE POWER OF ADMINISTRATIVE AGENCY

May 3. 2019
G.R. No. 227670
ALYANSA PARA SA BAGONG PILIPINAS, INC. (ABP), represented by
Evelyn V. Jallorina and Noel Villones, Petitioner
vs.
ENERGY REGULATORY COMMISSION, represented by its Chairman,
JOSE VICENTE B. SALAZAR, DEPARTMENT OF ENERGY, represented
by Secretary ALFONSO G. CUSI, MERALCO, CENTRAL LUZON
PREMIERE POWER CORPORATION, ST. RAPHAEL POWER
GENERATION CORPORATION, PANAY ENERGY DEVELOPMENT
CORPORATION, MARIVELES POWER GENERATION CORPORATION,
GLOBAL LUZON ENERGY DEVELOPMENT CORPORATION, ATIMONAN
ONE ENERGY, INC., REDONDO PENINSULA ENERGY, INC., and
PHILIPPINE COMPETITION COMMISSION, Respondents
DECISION
CARPIO, J.:
The outcome of this case will greatly affect, for the next two decades, all
consumers of electricity in the Philippines, which include the over 95 million
Filipinos living in the Philippines as well as the millions of business enterprises
operating in the Philippines.
Section 19, Article XII of the 1987 Constitution provides: "The State shall
regulate or prohibit monopolies when the public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed."
The State grants electricity distribution utilities, through legislative franchises, a
regulated monopoly within their respective franchise areas. Competitors are
legally barred within the franchise areas of distribution utilities. Facing no
competition, distribution utilities can easily dictate the price of electricity that
they charge consumers. To protect the consuming public from exorbitant or
unconscionable charges by distribution utilities, the State regulates the
acquisition cost of electricity that distribution utilities can pass on to
consumers.
As part of its regulation of this monopoly, the State requires distribution utilities
to subject to competitive public bidding their purchases of electricity from
power generating companies. Competitive public bidding is essential since the
power cost purchased by distribution utilities is entirely passed on to
consumers, along with other operating expenses of distribution
utilities. Competitive public bidding is the most efficient, transparent, and
effective guarantee that there will be no price gouging by distribution
utilities.
Indeed, the requirement of competitive public bidding for power purchases of
distribution utilities has been adopted in the United States, Europe, Latin
America, India, and many developing countries.   This requirement is primarily
1
aimed at ensuring a fair, reasonable, and least-cost generation charge to
consumers, under a transparent power sale mechanism between the
generation companies and the distribution utilities.
Section 6, Article XII of the 1987 Constitution provides: "The use of property
bears a social function, and all economic agents shall contribute to the
common good. Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own,
establish, and operate economic enterprises, subject to the duty of the State
to promote distributive justice and to intervene when the common good
so demands."
Indisputably, the use of electricity bears a vital social function. The State, in
requiring competitive public bidding in the purchase of power by distribution
utilities, has exercised its constitutional "duty x x x to intervene when the
common good so demands." 2
The breakdown of charges in a Manila Electric Company (Meralco) bill
contains the following: Generation Charge, Transmission Charge, System
Loss Charge, Distribution Charge (Meralco), Subsidies, Government Taxes,
Universal Charges, FiT-All Charge (Renewable), and Other Charges. The
Power Supply Agreements (PSAs) involved in the present case were
executed in April 2016 and have terms that range from 20 to 21 years.
Section 43 of Republic Act No. 9136, or the Electric Power Industry Reform
Act of 2001 (EPIRA), includes a description, in broad strokes, of the functions
of the Energy Regulatory Commission (ERC): "The ERC shall promote
competition, encourage market development, ensure customer choice
and discourage/penalize abuse of market power in the restructured
electricity industry." Moreover, Section 2 of the EPIRA declares it a state policy
to "ensure the x x x affordability of the supply of electric power." Further,
Section 45 of the EPIRA mandates the ERC to enforce safeguards to
"promote true market competition and prevent harmful monopoly and
market power abuse." If the ERC violates its statutory functions, this Court,
as mandated by Section 1, Article VIII of the 1987 Constitution,  has the duty to
3
strike down the acts of ERC whenever these are performed with grave abuse
of discretion amounting to lack or excess of jurisdiction.
The Case
Alyansa para sa Bagong Pilipinas, Inc. (ABP), represented by Evelyn V.
Jallorina and Noel Villones, filed G.R. No. 227670, a petition for certiorari and
prohibition  with an application for a temporary restraining order and/or writ of
4
preliminary injunction. Named as respondents are the ERC, the Department of
Energy (DOE), Meralco, Central Luzon Premiere Power Corporation (CLPPC),
St. Raphael Power Generation Corporation (SRPGC), Panay Energy
Development Corporation (PEDC), Mariveles Power Generation Corporation
(MPGC), Global Luzon Energy Development Corporation (GLEDC), Atimonan
One Energy, Inc. (AlE), Redondo Peninsula Energy, Inc. (RPE), and the
Philippine Competition Commission (PCC).
The petition seeks to declare as void ERC Resolution No. 1, Series of 2016
(ERC Clarificatory Resolution). The petition also seeks that this Court direct
the ERC to disapprove the Power Supply Agreements (PSAs) of the
Distribution Utilities (DUs) submitted after 7 November 2015 for failure to
conduct Competitive Selection Process (CSP). The petition further asks the
Court to order ERC to implement CSP in accordance with the Department of
Energy (DOE) Circular No. DC2015-06-0008 (2015 DOE Circular) and ERC
Resolution No. 13, Series of 2015 (CSP Guidelines). 5
The Facts
On 11 June 2015, the DOE issued the 2015 DOE Circular entitled "Mandating
All Distribution Utilities to Undergo Competitive Selection Process (CSP)
in Securing Power Supply Agreements (PSA)." Sections 3 and 10 of the
2015 DOE Circular provide:
Section 3. Standard Features in the Conduct of the CSP. After the
effectivity of this Circular, all DUs shall procure PSAs only through CSP
conducted through a Third Party duly recognized by the ERC and the
DOE. In the case of [Electric Cooperatives (ECs)], the Third Party shall also be
duly recognized by the National Electrification Administration (NEA).
Under this Circular, CSPs for the procurement of PSAs of all DUs shall
observe the following:
(a) Aggregation for un-contracted demand requirements of DUs;
(b) Annually conducted; and
(c) Uniform template for the terms and conditions in the PSA to be issued by
the ERC in coordination with the DOE.
Within one hundred twenty (120) days from the effectivity of this Circular, the
ERC and [the] DOE shall jointly issue the guidelines and procedures for the
aggregation of the un-contracted demand requirements of the DUs and the
process for the recognition or accreditation of the Third Party that conducts the
CSP as hereto provided. For clarity, the term aggregation as used in this
Circular refers to the wholesale demand and energy requirements of DUs, and
not of the Contestable Markets under Retail Competition and Open Access
(RCOA) regime.
As used in this section, the un-contracted demand or energy requirements of
the DUs shall refer to the energy and demand not yet procured individually or
collectively by the DUs, excluding those energy and capacity covered by PSAs
that have been filed for approval before the ERC.
xxxx
Section 10. Effectivity. This Circular shall take effect immediately upon its
publication in two (2) newspapers of general circulation and shall remain in
effect until otherwise revoked. (Boldfacing added)
Section 3 of the 2015 DOE Circular expressly and categorically mandates
CSP, or competitive public bidding, whenever DUs secure PSAs. The
2015 DOE Circular took effect on 30 June 2015 upon its publication in
two newspapers of general circulation. Section 3 expressly states
that "[a]fter the effectivity of this Circular, all DUs shall procure PSAs
only through CSP
x x x."
On 20 October 2015, Joint Resolution No. 1 (Joint Resolution), executed by
the DOE and the ERC, reiterated the need to adopt a "regime of transparent
process in securing Power Supply Agreements." The fifth Whereas clause
of the Joint Resolution provides:
WHEREAS, the DOE and ERC recognize the adoption of competitive selection Based on its provisions, the CSP Guidelines took effect on 7 November 2015,
as a policy that will encourage investments in the power generation business following its publication in the Philippine Daily Inquirer and the Philippine
thereby ensuring electric power supply availability in a regime of transparent Star. Section 4 of the CSP Guidelines expressly provides that CSP "shall not
process in securing Power Supply Agreements (PSAs), which is an integral apply to PSAs already filed with the ERC as of the effectivity of this
part of the power sector reform agenda. (Boldfacing added) Resolution." Thus, the ERC no longer required CSP for all PSAs already filed
with the ERC on or before 7 November 2015. Section 4 of the CSP Guidelines
Under the Joint Resolution, the DOE and the ERC agreed that ERC shall issue further states that "[f]or PSAs already executed but are not yet filed or for those
the appropriate regulation to implement CSP. Section 1 of the Joint that are still in the process of negotiation, the concerned DUs are directed to
Resolution states: comply with the CSP requirement before their PSA applications will be
accepted by the ERC."
Section 1. Competitive Selection Process. Consistent with their respective
mandates, the DOE and ERC recognize that Competitive Selection Process On 15 March 2016, however, the ERC, for the second time, unilaterally
(CSP) in the procurement of Power Supply Agreements (PSAs) by the DUs postponed the date of effectivity of CSP. The ERC issued the ERC
engenders transparency, enhances security of supply, and ensures stability of Clarificatory Resolution, which restated the date of effectivity of the CSP
electricity prices to captive electricity end-users in the long- Guidelines from 7 November 2015 to 30 April 2016. Paragraph 1 of the
term. Consequently, by agreement of the DOE and ERC, the ERC shall ERC Clarificatory Resolution reads:
issue the appropriate regulation to implement the same. (Boldfacing and
italicization added) 1. The effectivity of the CSP [Guidelines] is hereby restated to be 30 April
2016. All PSAs executed on or after the said date shall be required, without
On the same date, 20 October 2015, the ERC issued the CSP Guidelines, exception, to comply with the provisions of the CSP [Guidelines]. (Boldfacing
which directed all DUs to conduct CSP in the procurement of their power added)
supply for their captive markets.
The second postponement of the effectivity of CSP from 7 November
The CSP Guidelines fixed a new date of effectivity for compliance with CSP. 2015 to 30 April 2016, or by 175 days, allowed DUs to enter into contracts
This is the first instance that the ERC unilaterally fixed a different date from 30 during the period of postponement to avoid the mandatory CSP.
June 2015, effectively postponing the date of effectivity of CSP from 30
June 2015 to 7 November 2015 or by 130 days: The table below shows that the following PSAs between Meralco and its power
suppliers were executed and submitted to the ERC within 10 days prior the
Section 4. Applicability. The CSP requirement herein mandated shall not restated 30 April 2016 deadline. According to the ERC Clarificatory
apply to PSAs already filed with the ERC as of the effectivity of this Resolution, these PSAs are not required to comply with CSP.
Resolution. For PSAs already executed but are not yet filed or for those
that are still in the process of negotiation, the concerned DUs are Power Power Amount of Term of Start of Date of Date of
directed to comply with the CSP requirement before their PSA Supplier Purchaser Power Agreement Negotiations PSA Submission
applications will be accepted by the ERC. Purchased Execution of
Application
This Resolution shall take effect immediately following its publication in a to ERC
newspaper of general circulation in the Philippines.
Redondo Manila 225 20 years 7
19 July 20 April 28 April
x x x x (Boldfacing and italicization added) Peninsula Electric Megawatts 2012 8
2016 9
2016  10

Energy, Inc. Company (MW) 6

(RPE) (Meralco)
Atimonan Meralco 2 x 600 20 years 3rd or 4th 26 April 28 April capital of RPE was owned by PowerGen, and three percent (3%) of its total
One Energy, MW (net)  11
and six quarter of 2016 14
2016 subscribed capital was owned by the Meralco Pension Fund." 42

Inc. (AlE) months  12

2014 13

CLPPC and MPGC are subsidiaries of SMC Global Power Holdings Corp.
(SMC Global), the subsidiary of San Miguel Corporation (SMC) engaged in the
28 April construction and operation of various power projects.
43
St. Raphael Meralco Up to 400 20 years Latter part 26 April
Power MW 16
and four of 2014  18
2016 19
2016
Generation months 17 In its Comment, Meralco admitted that "no actual bidding is
Corporation conducted,"  and that "the PSAs entered into by Meralco undergo competitive
44

(SRPGC) selection and thorough negotiations, taking into consideration its specific

and unique requirements."  In short, no CSP was conducted through a third
45

Panay Meralco Up to 70 20 years 21 May 26 April 27 April party recognized by the ERC as mandated in the 2015 DOE Circular.
22
Energy MW 21
2014 23
2016 24
2016 25

Developmen Meralco also stated that, apart from the seven (7) PSAs between Meralco and
t its power suppliers, there are eighty-three (83) other PSAs filed with the
Corporation ERC during the period from 16 April 2016 to 29 April 2016, bringing the
(PEDC) total PSAs excluded from CSP to ninety (90) PSAs.
Global Meralco 600 MW 26
20 years 9 December 27 April 29 April
27
Luzon 2014 28
2016 29
2016 30
DATE NO. OF PSAS GENERATION
Energy COMPANIES
Developmen
t Corporation 16 to 24 April 4 PSAs Mineral Power, Palm
(GLEDC) 2016 Concepcion, Astroenergy,
GNPower Kauswagan
Central Meralco Up to 528 21 years  32
18 March 26 April 29 April
Luzon MW 31
2015 33
2016 34
2016 35 25 April 2016 5 PSAs GNPower Dinginin
Premiere 26 April 2016 5 PSAs GNPower Dinginin, Astroenergy
Power
Corporation 27 April 2016 4 PSAs GNPower Dinginin
(CLPPC)
28 April 2016 10 PSAs A. Brown, GNPower Dinginin,
Mariveles Meralco Up to 528 21 years 11 February 26 April 29 April Southern Philippines Power,
37
Power MW 36
2015 38
2016 39
2016 40
SMCPC, Surepep, Total Power,
Generation Upper Manupali Hydro
Corporation
(MPGC) 29 April 2016 55 PSAs SMEC, MPGC, SCPC, SMCPC,
LPPC, PEDC, GLEDC, CLPPC,
A. Brown, A1E, Anda,
AlE and RPE are subsidiaries or affiliates of Meralco.  In paragraph 3. 71
41
Astronenergy, Delta P, GNPower
of its Comment, Meralco stated that "[a]t the time of the signing of the AlE Dinginin, GPower, Isabela Power,
PSA, AlE was wholly-owned by Meralco PowerGen Corporation ('PowerGen'), Levan Marketing, Mapalad
a wholly-owned subsidiary of Meralco. On the other hand, at the time of the Power, Minergy, RPE, SRPGC,
signing of the RPE PSA, forty-seven percent (47%) of the total subscribed Sunasia Energy, TeaM Energy,
 Trans-Asia, Unified Leyte
Geothennal Energy, Western
Power Mindanao 46
Meralco further stated in its Comment:
1.41. Furthermore, apart from MERALCO, the following DUs and electric
cooperatives also filed more than one PSA with the ERC during the second
(2nd) half of April 2016: (a) Agusan del Sur Electric Cooperative, Inc.; (b)
Bukidnon Second Electric Cooperative, Inc.; (c) Cagayan Electric Power &
Light Company, Inc.; (d) Cotabato Light and Power Company; (e) Davao del
Sur Electric Cooperative; (t) Iloilo 1 Electric Cooperative; (g) Ilocos Sur Electric
Cooperative Incorporation; (h) Isabela I Electric Cooperative, Inc.; (i) Isabela II
Electric Cooperative; (j) Leyte III Electric Cooperative, Inc.; (k) La Union
Electric Cooperative, Inc.; (1) Pangasinan Electric Cooperative III; (m)
Peninsula Electric Cooperative, Inc.; (n) Tarlac II Electric Cooperative, Inc.; (o)
Zamboanga City Electric Cooperative, Inc.; and (p) Zamboanga del Sur
Electric Cooperative, Inc.47
The Issues
ABP raised the following issues:
1. Whether or not the ERC committed grave abuse of discretion in issuing the
[ERC Clarificatory Resolution].
2. Whether or not the separate PSAs of Meralco with respondent generation
companies should be disapproved for their failure to comply with the
requirements of the [2015 DOE Circular] and the [CSP Guidelines]. 48
ABP's petition thus presents a purely legal issue: Does ERC have the statutory
authority to postpone the date of effectivity of CSP, thereby amending the
2015 DOE Circular which required CSP to take effect on 30 June 2015?
The determination of the extent of the ERC's statutory authority in the present
case is a purely legal question and can be resolved without making any finding
of fact. The affirmative or negative resolution of this purely legal question will
necessarily result in legal consequences, thus:
(a) If the Court rules affirmatively (that is, the ERC has the statutory authority
to postpone the date of effectivity of CSP, and thereby ERC can amend the
2015 DOE Circular), then the legal consequence is that the 90 PSAs submitted
to the ERC before the amended effectivity of CSP (30 April 2016) will serve as
basis to pass on the power cost to consumers for the duration of the PSAs,
whatever the duration of these PSAs.
(b) If the Court rules negatively (that is, the ERC does not have the statutory
authority to postpone the date of effectivity of CSP, and thereby cannot amend
the 2015 DOE Circular), then the legal consequence is that the 90 PSAs
submitted to the ERC after the effectivity of CSP on or after 30 June 2015
cannot serve as basis to pass on the power cost to consumers. In such a case,
the ERC will have to conduct CSP on all PSA applications submitted on or
after 30 June 2015.
Clearly, there is no factual issue in dispute in the present case, and no factual
issue has been raised by any of the parties. Thus, the present case can be
resolved purely on the legal issue raised by ABP even as the resolution of this
purely legal issue will necessarily result in legal consequences either way.
The Court's Ruling
We GRANT ABP's petition. The ERC does not have the statutory authority to
postpone the date of effectivity of CSP, and thereby cannot amend the 2015
DOE Circular. As a result, the 90 PSAs submitted to the ERC after the
effectivity of CSP on or after 30 June 2015 cannot serve as basis to pass on
the power cost to consumers. The ERC must require CSP on all PSA
applications submitted on or after 30 June 2015.
Certiorari and Prohibition
As Remedy
Petitioner ABP correctly filed a petition for certiorari and prohibition before this
Court.
[T]he remedies of certiorari and prohibition are necessarily broader in scope
and reach, and the writ of certiorari or prohibition may be issued to correct
errors of jurisdiction committed not only by a tribunal, corporation, board or
officer exercising judicial, quasi-judicial or ministerial functions but also to set
right, undo and restrain any act of grave abuse of discretion amounting to lack
or excess of jurisdiction by any branch or instrumentality of the
Government, even if the latter does not exercise judicial, quasi-judicial or
ministerial functions. This application is expressly authorized by the text of the
second paragraph of Section 1, [Article 8 of the 1987
Constitution].  (Boldfacing and italicization added)
49
Not every abuse of discretion can be occasion for this Court to exercise its
jurisdiction. Grave abuse of discretion means "such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction, or, in other words
where the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and it must be so patent and gross as to amount
to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law. It is not sufficient that a
tribunal, in the exercise of its power, abused its discretion, such abuse must be
grave."50
The Dissenting Opinion of Justice Andres B. Reyes, Jr. would rather have this
Court dismiss the petition. Justice Reyes asserts that the ERC, in issuing the
ERC Clarificatory Resolution, acted within its jurisdiction  and did not act with
51
grave abuse of discretion amounting to lack or excess of jurisdiction.  Justice
52
Reyes claims that the ERC was exercising its quasi-legislative power, as
granted by Sections 43 and 45 of the EPIRA and as defined in Sections 3 and
4 of the 2015 DOE Circular, when the ERC issued the ERC Clarificatory
Resolution. Justice Reyes advances three reasons to justify his assertion that
the ERC did not act with grave abuse of discretion amounting to lack or excess
of jurisdiction.
First, the implementation of ERC Resolution No. 13 caused an avalanche of
concerns and confusion from the stakeholders of the industry regarding the
actual implementation of the provisions of the resolution, so much so that a
multitude of [Distribution Utilities] DUs, mostly electric cooperatives, sought for
an exemption from the guidelines in the resolution. xxx.
xxxx
Second, ERC did not "evade" its positive duty as provided for in the
Constitution, the EPIRA, [the 2015 DOE Circular], or [the CSP Guidelines] as
the petitioners would like the Court to believe.xx x.
xxxx
xx x ERC's action on merely "restating" the date of effectivity of [the ERC
Clarificatory Resolution] - its own resolution that has been in effect since April,
2016 - has not been shown to have been promulgated with grave abuse of
discretion amounting to lack or excess of jurisdiction.
Third, it must also be emphasized that [the ERC Clarificatory Resolution]
enjoys a strong presumption of its validity. x x x. 
53
Justice Reyes's Dissenting Opinion also finds no problem with the issuance
and the contents of the ERC Clarificatory Resolution.  According to Justice
1âшphi1
Reyes, under the Joint Resolution executed by the DOE and the ERC on 20
October 2015, the DOE and the ERC agreed that the ERC shall issue the
appropriate regulation to implement CSP. "54
Justice Reyes is correct - consistent with their respective mandates under
EPIRA, the DOE and the ERC agreed that the ERC shall issue the appropriate
regulation to implement CSP in accordance with the 2015 DOE
Circular.   However, the ERC's delegated authority is limited to implementing
55
or executing CSP in accordance with the 2015 DOE Circular, not
postponing CSP so as to freeze CSP for at least 20 years, effectively
suspending CSP for one entire generation of Filipinos. The delegated authority
to implement CSP does not include the authority to postpone or
suspend CSP for 20 years, beyond the seven-year terms of office  of the ERC
56
Commissioners postponing or suspending the CSP, and beyond the seven-
year terms of office of their next successors, as well as beyond the six-year
terms of office of three Presidents of the Republic.
The ERC's exercise of its quasi-legislative power, which took the form of the
issuance of the ERC Clarificatory Resolution, was done in excess of its
jurisdiction. The postponement of the effectivity of CSP was without
the approval, and even without coordination with the DOE, in clear and
blatant violation of Section 4 of the 2015 DOE Circular mandating
CSP. The ERC has no power to postpone the effectivity of the 2015 DOE
Circular. Under the 2015 DOE Circular, the ERC can only issue supplemental
guidelines, which means guidelines to implement the 2015 DOE Circular, and
not to amend it. Postponing the effectivity of CSP amends the 2015 DOE
Circular, and does not constitute issuance of mere supplemental guidelines.
The issuance of the ERC Clarificatory Resolution was attended with
grave abuse of discretion amounting to lack or excess of jurisdiction for
the following reasons:
(1) Postponing the effectivity of CSP from 30 June 2015 to 7 November
2015, and again postponing the effectivity of CSP from 7 November 2015
to 30 April 2016, or a total of 305 days, allowed DUs nationwide to avoid
the mandatory CSP;
(2) Postponing the effectivity of CSP effectively freezes for at least 20
years the DOE-mandated CSP to the great prejudice of the public. The
purpose of CSP is to compel DUs to purchase their electric power at a
transparent, reasonable, and least-cost basis, since this cost is entirely
passed on to consumers. The ERC's postponement unconscionably
placed this public purpose in deep freeze for at least 20 years.
Indisputably, the ERC committed grave abuse of discretion amounting to
lack or excess of jurisdiction when the ERC postponed the effectivity of
CSP. The postponement effectively prevented for at least 20 years the
enforcement of a mechanism intended to ensure "transparent and
reasonable prices in a regime of free and fair competition," as mandated
by law under EPIRA, a mechanism implemented in the 2015 DOE Circular
which took effect on 30 June 2015.
In short, in the absence of CSP, there is no transparency in the purchase
by DUs of electric power, and thus there is no assurance of the
reasonableness of the power rates charged to consumers. As a
consequence, all PSA applications submitted to the ERC on or after 30
June 2015 should be deemed not submitted and should be made to
comply with CSP.
Why the ERC Acted in Excess of its Jurisdiction:
Purpose of CSP and Significance of the
Postponement of the CSP Deadline
The EPIRA was enacted on 8 June 2001. Among the EPIRA's declared State
policies are, as stated in its Section 2:
57
xxxx
(b) To ensure the quality, reliability, security and affordability of the
supply of electric power;
(c) To ensure transparent and reasonable prices of electricity in a regime
of free and fair competition and full public accountability to achieve
greater operational and economic efficiency and enhance the
competitiveness of Philippine products in the global market; [and]
xxxx
(f) To protect the public interest as it is affected by the rates and services
of electric utilities and other providers of electric power;
x x x x (Boldfacing and italicization added)
The EPIRA mandates the DOE to "supervise the restructuring of the electricity
industry."  The EPIRA amended Section 5 of Republic Act No. 7638, or "The
58
Department of Energy Act of 1992," to allow the DOE to fulfill this new
mandate under the EPIRA.
More importantly, Section 37 of the EPIRA includes the following in its
enumeration of the DOE's powers and functions:
(a) Formulate policies for the planning and implementation of a
comprehensive program for the efficient supply and economical use of
energy consistent with the approved national economic plan x x x and
provide a mechanism for the integration, rationalization, and coordination of
the various energy programs of the Government;
xxxx
(d) Ensure the reliability, quality and security of supply of electric power;
xxxx
(e) x x x [T]he DOE shall, among others,
xxxx
(ii) Facilitate and encourage reforms in the structure and operations of
distribution utilities for greater efficiency and lower costs;
xxxx
(h) Exercise supervision and control over all government activities
relative to energy projects in order to attain the goals embodied in
Section 2 of RA 7638;
xxxx
(p) Formulate such rules and regulations as may be necessary to
implement tile objectives of this Act; x x x
x x x x (Boldfacing and italicization added)
Under the EPIRA, it is the DOE that issues the rules and regulations to
implement the EPIRA, including the implementation of the policy
objectives stated in Section 2  of the EPIRA. Rules and regulations
59
include circulars that have the force and effect of rules or regulations.
Thus, pursuant to its powers and functions under the EPIRA, the DOE
issued the 2015 DOE Circular mandating the conduct of CSP.
The 2015 DOE Circular, as stated in its very provisions, was issued
pursuant to the DOE's power to "formulate such rules and regulations as
may be necessary to implement the objectives of the EPIRA,"  where the
60
State policy is to "[p]rotect the public interest as it is affected by the
rates and services of electric utilities and other providers of electric
power."  Under the EPIRA, it is also the State policy to "ensure the x x
61
x affordability of the supply of electric power."  The purpose of the 2015
62
DOE Circular is to implement the State policies prescribed in the EPIRA.
Clearly, the 2015 DOE Circular constitutes a rule or regulation issued by
the DOE pursuant to its rule-making power under Section 37(p) of the
EPIRA.
The EPIRA also provides for the powers and functions of the ERC. Section 43
of the EPIRA mandates that the ERC "shall be responsible for the following
key functions in the restructured industry:"
(a) Enforce the implementing rules and regulations of this Act.
xxxx
(o) Monitor the activities in the generation and supply of the electric power
industry with the end in view of promoting free market competition
and ensuring that the allocation or pass through of bulk purchase cost
by distributors is transparent, non-discriminatory and that any existing
subsidies shall be divided pro-rata among all retail suppliers;
x x x x (Boldfacing and italicization added)
Thus, the very first mandate of the ERC under its charter, the EPIRA,
is to "[e]nforce the implementing rules and regulations" of the EPIRA as
formulated and adopted by DOE. Clearly, under the EPIRA, it is the DOE
that formulates the policies, and issues the rules and regulations, to
implement the EPIRA. The function of the ERC is to enforce and
implement the policies formulated, as well as the rules and regulations
issued, by the DOE. The ERC has no power whatsoever to amend the
implementing rules and regulations of the EPIRA as issued by the DOE.
The ERC is further mandated under EPIRA to ensure that the "pass
through of bulk purchase cost by distributors is transparent [and] non-
discriminatory." 63
Despite the ERC's characterization as an "independent, quasi-judicial
regulatory body,"  it is incorrect to conclude, as Justice Alfredo Benjamin S.
64
Caguioa holds, that the ERC exercises "inherent and sufficient power,"  and
65
"sufficient power, as the independent regulator of the industry,"  to supplant or
66
change, as it did in the present case, policies, rules, and regulations
prescribed by the DOE. The power involved in the
ERC's implementation of the 2015 DOE Circular is not quasi-judicial but
executive. There are no adverse parties involved in the implementation by the
ERC of the 2015 DOE Circular. The ERC does not adjudicate rights and
obligations of adverse parties in the present case. The issue presented here
involves the propriety of the exercise of the ERC's executive
implementation of the policies, as well as the rules and regulations of the
EPIRA as issued by the DOE.
Moreover, the nature of the power involved in the ERC's postponement of the
effectivity of CSP as mandated in the 2015 DOE Circular is not quasi-judicial
but delegated legislative power. Justice Caguioa states that "the ERC could
solely issue"  any resolution changing the dates of effectivity of CSP as set
67
by the CSP Guidelines and the ERC Clarificatory Resolution "because it was
empowered by the law, i.e., the EPIRA." 68
We quote below the entirety of Section 43 of the EPIRA, prescribing the
functions of the ERC, and there is absolutely nothing whatsoever in this
complete enumeration of the ERC's functions that grants the ERC rule-
making power to supplant or change the policies, rules, regulations, or
circulars prescribed by the DOE. The ERC's functions, as granted by the
EPIRA, are limited, inter alia, to the enforcement of the implementing rules and
regulations of the EPIRA, and not to amend or revoke them. At most, as stated
in paragraph (m) of Section 43, the ERC may only take any other
action delegated to it pursuant to EPIRA. The ERC may not exceed its
delegated authority. Section 43 of the EPIRA provides as follows:
Section 43. Functions of the ERC. - The ERC shall promote competition,
encourage market development, ensure customer choice and
discourage/penalize abuse of market power in the restructured electricity
industry. In appropriate cases, the ERC is authorized to issue cease and desist
order after due notice and hearing. Towards this end, it shall be responsible for
the following key functions in the restructured industry:
(a) Enforce the implementing rules and regulations of this Act;
(b) Within six (6) months from the effectivity of this Act, promulgate and
enforce, in accordance with law, a National Grid Code and a Distribution Code
which shall include, but not limited to, the following:
(i) Performance standards for TRANSCO O & M Concessionaire, distribution
utilities and suppliers: Provided, That in the establishment of the performance
standards, the nature and function of the entities shall be considered; and
(ii) Financial capability standards for the generating companies, the
TRANSCO, distribution utilities and suppliers: Provided, That in the formulation
of the financial capability standards, the nature and function of the entity shall
be considered: Provided, further, That such standards are set to ensure that
the electric power industry participants meet the minimum financial standards
to protect the public interest. Determine, fix, and approve, after due notice and
public hearings the universal charge, to be imposed on all electricity end-users
pursuant to Section 34 hereof;
(c) Enforce the rules and regulations governing the operations of the electricity
spot market and the activities of the spot market operator and other
participants in the spot market, for the purpose of ensuring a greater supply
and rational pricing of electricity;
(d) Determine the level of cross subsidies in the existing retail rate until the
same is removed pursuant to Section 7 4 hereof;
(e) Amend or revoke, after due notice and hearing, the authority to operate of
any person or entity which fails to comply with the provisions hereof, the IRR
or any order or resolution of the ERC. In the event a divestment is required,
the ERC shall allow the affected party sufficient time to remedy the infraction
or for an orderly disposal, but shall in no case exceed twelve (12) months from
the issuance of the order;
(t) In the public interest, establish and enforce a methodology for setting
transmission and distribution wheeling rates and retail rates for the captive
market of a distribution utility, taking into account all relevant considerations,
including the efficiency or inefficiency of the regulated entities. The rates must
be such as to allow the recovery of just and reasonable costs and a
reasonable return on rate base (RORB) to enable the entity to operate viably.
The ERC may adopt alternative forms of internationally accepted rate-resetting
methodology as it may deem appropriate. The rate-setting methodology so
adopted and applied must ensure a reasonable price of electricity. The rates
prescribed shall be nondiscriminatory. To achieve this objective and to ensure
the complete removal of cross subsidies, the cap on the recoverable rate of
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby
amended and shall be replaced by caps which shall be determined by the ERC
based on load density, sales mix, cost of service, delivery voltage and other
technical considerations it may promulgate. The ERC shall determine such
form of rate-setting methodology, which shall promote efficiency. In case the
rate setting methodology used is RORB, it shall be subject to the following
guidelines:
(i) For purposes of determining the rate base, the TRANSCO or any
distribution utility may be allowed to revalue its eligible assets not more than
once every three (3) years by an independent appraisal company: Provided,
however, That ERC may give an exemption in case of unusual
devaluation: Provided, further, That the ERC shall exert efforts to minimize
price shocks in order to protect the consumers;
(ii) Interest expenses are not allowable deductions from permissible return on
rate base;
(iii) In determining eligible cost of services that will be passed on to the end-
users, the ERC shall establish minimum efficiency performance standards for
the TRANSCO and distribution utilities including systems losses, interruption
frequency rates, and collection efficiency;
(iv) Further, in determining rate base, the TRANSCO or any distribution utility
shall not be allowed to include management inefficiencies like cost of project
delays not excused by force majeure, penalties and related interest during
construction applicable to these unexcused delays; and
(v) Any significant operating costs or project investments of TRANSCO and
distribution utilities which shall become part of the rate base shall be subject to
verification by the ERC to ensure that the contracting and procurement of the
equipment, assets and services have been subjected to transparent and
accepted industry procurement and purchasing practices to protect the public
interest.
(g) Three (3) years after the imposition of the universal charge, ensure that the
charges of the TRANSCO or any distribution utility shall bear no cross
subsidies between grids, within grids, or between classes of customers, except
as provided herein;
(h) Review and approve any changes on the terms and conditions of service of
the TRANSCO or any distribution utility;
(i) Allow TRANSCO to charge user fees for ancillary services to all electric
power industry participants or self-generating entities connected to the grid.
Such fees shall be fixed by the ERC after due notice and public hearing;
(j) Set a lifeline rate for the marginalized end-users;
(k) Monitor and take measures in accordance with this Act to penalize abuse of
market power, cartelization, and anti-competitive or discriminatory behavior by
any electric power industry participant;
(l) Impose fines or penalties for any non-compliance with or breach of this Act,
the IRR of this Act and the rules and regulations which it promulgates or
administers;
(m) Take any other action delegated to it pursuant to this Act;
(n) Before the end of April of each year, submit to the Office of the President of
the Philippines and Congress, copy furnished the DOE, an annual report
containing such matters or cases which have been filed before or referred to it
during the preceding year, the actions and proceedings undertaken and its
decision or resolution in each case. The ERC shall make copies of such
reports available to any interested party upon payment of a charge which
reflects the printing costs. The ERC shall publish all its decisions involving
rates and anti-competitive cases in at least one (1) newspaper of general
circulation, and/or post electronically and circulate to all interested electric
power industry participants copies of its resolutions to ensure fair and impartial
treatment;
(o) Monitor the activities of the generation and supply of the electric power
industry with the end in view of promoting free market competition and
ensuring that the allocation or pass through of bulk purchase cost by
distributors is transparent, non-discriminatory and that any existing subsidies
shall be divided pro-rata among all retail suppliers;
(p) Act on applications for or modifications of certificates of public convenience
and/or necessity, licenses or permits of franchised electric utilities in
accordance with law and revoke, review and modify such certificates, licenses
or permits in appropriate cases, such as in cases of violations of the Grid
Code, Distribution Code and other rules and regulations issued by the ERC in
accordance with law;
(q) Act on applications for cost recovery and return on demand side
management projects;
(r) In the exercise of its investigative and quasi-judicial powers, act against any
participant or player in the energy sector for violations of any law, rule and
regulation governing the same, including the rules on cross-ownership, anti-
competitive practices, abuse of market positions and similar or related acts by
any participant in the energy sector or by any person, as may be provided by
law, and require any person or entity to submit any report or data relative to
any investigation or hearing conducted pursuant to this Act;
(s) Inspect, on its own or through duly authorized representatives, the
premises, books of accounts and records of any person or entity at any time, in
the exercise of its quasi-judicial power for purposes of determining the
existence of any anti-competitive behavior and/or market power abuse and any
violation of rules and regulations issued by the ERC;
(t) Perform such other regulatory functions as are appropriate in order to
ensure the successful restructuring and modernization of the electric power
industry, such as, but not limited to, the rules and guidelines under which
generation companies, distribution utilities which are not publicly listed shall
offer and sell to the public a portion not less than fifteen percent ( 15%) of their
common shares of stocks: Provided, however, That generation companies,
distribution utilities or their respective holding companies that are already listed
in the PSE are deemed in compliance. For existing companies, such public
offering shall be implemented not later than five (5) years from the effectivity of
this Act. New companies shall implement their respective public offerings not
later than five (5) years from the issuance of their certificate of compliance;
and
(u) The ERC shall have the original and exclusive jurisdiction over all cases
contesting rates, fees, fines and penalties imposed by the ERC in the exercise
of the abovementioned powers, functions and responsibilities and over all
cases involving disputes between and among participants or players in the
energy sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing
rates or fees shall be published at least twice for two successive weeks in two
(2) newspapers of nationwide circulation.
In the present case, where there is no exercise of the ERC's quasijudicial
powers, the ERC is legally bound to enforce the rules and regulations of the
DOE as authorized under the EPIRA. The ERC has no independence or
discretion to ignore, waive, amend, postpone, or revoke the rules and
regulations of the DOE pursuant to the EPIRA, as it is horn book doctrine
that rules and regulations issued pursuant to law by administrative
agencies, like the DOE, have the force and effect of law.  In fact, the first
69
duty and function of the ERC under its charter is to "enforce the
implementing rules and regulations" of the EPIRA as issued by the
DOE. Certainly, the ERC has no power to ignore, waive, amend,
postpone, or revoke the policies, rules, regulations, and circulars issued
by the DOE pursuant to the EPIRA.
In any event, even in quasi-judicial cases, the ERC is bound to apply the
policies, rules, regulations, and circulars issued by the DOE as the ERC
has no power to ignore, waive, amend, postpone, or revoke the policies,
rules, regulations, and circulars issued by the DOE pursuant to the
EPIRA. To repeat, the DOE's rules, regulations, and circulars issued
pursuant to the DOE's rule-making power under the EPIRA have the
force and effect of law which the ERC is legally bound to follow, whether
the ERC is exercising executive, quasi-legislative, or quasi-judicial
powers.
Pursuant to the DOE's mandate under the EPIRA,  the 2015 DOE Circular
70
required all DUs to undergo CSP in procuring PSAs. The DOE issued on
11 June 2015 the 2015 DOE Circular which took effect upon its publication on
30 June 2015.
The 2015 DOE Circular recognized that under the EPIRA, the DOE has the
mandate to "formulate such rules and regulations as may be necessary to
implement the objectives of the EPIRA,"  where the State policy is to
71
"[p]rotect the public interest as it is affected by the rates and services of
electric utilities and other providers of electric power."  The 2015 DOE
72
Circular reiterated the EPIRA's mandate that "all Distribution Utilities (DUs)
shall have the obligation to supply electricity in the least-cost manner to their
Captive Market, subject to the collection of retail rate du[l]y approved by the
[ERC]."73
The 2015 DOE Circular mandated that DUs, including electric cooperatives,
obtain their PSAs through CSP. Section 1 of the 2015 DOE Circular states the
principles behind CSP:
Section 1. General Principles. Consistent with its mandate, the DOE
recognizes that Competitive Selection Process (CSP) in the procurement of
PSAs by the DUs ensures security and certainty of electricity prices of electric
power to end-users in the long-term. Towards this end, all CSPs undertaken
by the DUs shall be guided by the following principles:
(a) Increase the transparency needed in the procurement process to
reduce risks;
(b) Promote and instill competition in the procurement and supply of
electric power to all end-users;
(c) Ascertain least-cost outcomes that are unlikely to be challenged in
the future as the political and institutional scenarios should change; and
(d) Protect the interest of the general public. (Boldfacing added)
In sum, the raison d'etre of CSP is to ensure transparency and competition in
the procurement of power supply by DUs so as to provide the least-cost
electricity to the consuming public.
The clear text of Section 3 of the 2015 DOE Circular mandates the conduct of
CSP after the Circular's effectivity on 30 June 2015.
Section 3. Standard Features in the Conduct of CSP. After the effectivity
of this Circular, all DUs shall procure PSAs only through CSP conducted
through a Third Party duly recognized by the ERC and the DOE. In case of
the [Electric Cooperatives (ECs)], the Third Party shall also be duly recognized
by the National Electrification Administration (NEA).
x x x x (Boldfacing and italicization added)
Section 5 of the 2015 DOE Circular states the non-retroactivity of the Circular's
effect.
Section 5. Non-Retroactivity. This Circular shall have prospective application
and will not apply to PSAs with tariff rates already approved and/or have been
filed for approval by the ERC before the effectivity of this Circular. (Boldfacing
added)
Clearly, PSAs filed with the ERC after the effectivity of the 2015 DOE Circular
must comply with CSP as only PSAs filed "before the effectivity" of the
Circular are excluded from CSP.
Section 10 of the 2015 DOE Circular provides for its effectivity:
Section 10. Effectivity. This Circular shall take effect immediately upon
its publication in two (2) newspapers of general circulation and shall remain
in effect until otherwise revoked. (Boldfacing added)
The 2015 DOE Circular took effect upon its publication on 30 June 2015 in
the Philippine Daily Inquirer and the Philippine Star.  Section 10 expressly
74
declares that the "Circular x x x shall remain in effect until otherwise
revoked." Indisputably, CSP became mandatory as of 30 June 2015. Taking
all these provisions together, all PSAs submitted to the ERC after the
effectivity of the 2015 DOE Circular, on or after 30 June 2015, are
required to undergo CSP.
Since the 2015 DOE Circular was issued solely by the DOE, it is solely the
DOE that can amend, postpone, or revoke the 2015 DOE Circular unless a
higher authority, like the Congress or the President, amends or revokes
it. Certainly, the ERC has no authority to amend, postpone, or revoke the
2015 DOE Circular, including its date of effectivity.
The Joint Resolution executed by DOE and the ERC on 20 October 2015
reiterated that the ERC shall issue the appropriate regulation to implement
CSP. The Joint Resolution did not authorize the ERC to change the date
of effectivity of the mandatory CSP. The Joint Resolution expressly
mandated that the "ERC shall issue the appropriate regulation to
implement" CSP. The power "to implement" CSP does not include the power
to postpone the date of effectivity of CSP, which is expressly mandated in the
2015 DOE Circular to take effect upon the publication of the Circular. In fact, to
postpone is the opposite of "to implement."
On the same date, 20 October 2015, the ERC issued the CSP Guidelines,
which directed all DUs to conduct CSP in the procurement of their power
supply for their captive markets. While the 2015 DOE Circular mandated CSP
to take effect on 30 June 2015, the ERC under the CSP Guidelines
unilaterally postponed the date of effectivity of CSP from 30 June 2015 to
7 November 2015 or by 130 days. This marks the first postponement by ERC
of the effectivity of the mandatory CSP.
On 15 March 2016, however, the ERC, for the second time, unilaterally
postponed the date of effectivity of the mandatory CSP. On this date the
ERC issued the ERC Clarificatory Resolution, which restated the date of
effectivity of CSP from 7 November 2015 to 30 April 2016. The second
postponement of the effectivity of CSP from 7 November 2015 to 30 April
2016, or by 175 days, allowed DUs to enter into contracts during the
period of postponement to avoid the mandatory CSP.
Why the ERC Acted in Excess of its Jurisdiction:
Required Coordination Between
the DOE and the ERC
The 2015 DOE Circular explicitly stated the instances that required joint action
of the DOE and the ERC:
1. Recognition of the Third Party that will conduct the CSP for the procurement
of PSAs by the DUs;
2. Issuance of guidelines and procedures for the aggregation of the un-
contracted demand requirements of the DUs;
3. Issuance of guidelines and procedures for the recognition or accreditation of
the Third Party that conducts the CSP; and
4. Issuance of supplemental guidelines and procedures to properly guide the
DUs and the Third Party in the design and execution of the CSP.
These instances are in Sections 3 and 4 of the 2015 DOE Circular:
Section 3. Standard Features in the Conduct of CSP. After the effectivity of this
Circular, all DUs shall procure PSAs only through CSP conducted
through a Third Party duly recognized by the ERC and the DOE. In case of
the [Electric Cooperatives (ECs)], the Third Party shall also be duly recognized
by the National Electrification Administration (NEA).
xxxx
Within one hundred twenty (120) days from the effectivity of this Circular, the
ERC and [the] DOE shall jointly issue guidelines and procedures for the
aggregation of the un-contracted demand requirements of the DUs and
the process for the recognition or accreditation of the Third Party that
conducts the CSP as hereto provided. x x x.
xxxx
Section 4. Supplemental Guidelines. To ensure efficiency and transparency of
the CSP Process [sic], the ERC, upon its determination and in
coordination with the DOE shall issue supplemental guidelines and
procedures to properly guide the DUs and the Third Party in the design
and execution of the CSP. The supplemental guidelines should ensure that
any CSP and its outcome shall redound to greater transparency in the
procurement of electric supply, and promote greater private sector participation
in the generation and supply sectors, consistent with the declared policies
under EPIRA. (Boldfacing and italicization added)
In all the foregoing instances, the ERC is mandated to act jointly with the DOE.
All these instances merely implement CSP, and do not postpone CSP or
amend the 2015 DOE Circular, which are beyond mere implementation of
CSP. If the ERC cannot act by itself on certain instances in the mere
implementation of CSP, then the ERC certainly cannot act by itself in the
postponement of CSP or in the amendment of the 2015 DOE Circular.
We reiterate that the ERC unilaterally postponed the effectivity of the
mandatory CSP twice. The ERC made the first unilateral postponement on 20
October 2015, when it stated that PSAs already filed with the ERC on or
before 7 November 2015 were not required to undergo CSP. This first
unilateral postponement was from 30 June 2015 to 7 November 2015, or a
period of postponement of 130 days. The ERC made a second unilateral
postponement on 15 March 2016, when it restated the effectivity of the CSP
Guidelines from 7 November 2015 to 30 April 2016, or a postponement of 175
days. All in all, the ERC, by itself and without authorization from or
coordination with the DOE, postponed the effectivity of the mandatory
CSP for 305 days.
The ERC thus amended, and not merely supplemented, the "guidelines and
procedures to properly guide the DUs and the Third Party in the design and
execution of the CSP."  This is contrary to what the 2015 DOE Circular clearly
75
intended - that CSP shall take effect upon the Circular's publication on 30 June
2015.
In its Comment to the present petition,   the DOE denied any responsibility
76
in the ERC's restatement of the effective date in the ERC Clarificatory
Resolution. The DOE stated:
15. DOE is not aware of the cut-off date shift. There is nothing on record
that shows that ERC, contrary to Section 4 of the [2015] DOE Circular,
coordinated with DOE in "restating" the date of effectivity to a later date, or
from 7 November 2015 to 30 April 2016 for a period of one-hundred and
seventy-five (175) days.   (Boldfacing added)
77
In contrast, there is nothing in the ERC's 60-page Comment  which disavowed
78
DOE's allegation of non-coordination. If anything, the ERC's Comment
underscored its assertion that the ERC Clarificatory Resolution was solely
issued by the ERC supposedly as "a legitimate exercise of its quasi-
legislative powers granted by law."79
We do not doubt that the ERC has the power to issue the appropriate
regulation to implement CSP. This is clear from the EPIRA and the 2015 DOE
Circular. Indeed, Justice Reyes in his Dissenting Opinion belabored this
delegated power by underscoring the existence of the Joint Resolution. Justice
Reyes misunderstood the delegation of power to mean that the Joint
Resolution, by itself, is the required "coordination" in the implementation of
CSP. Under this theory of Justice Reyes, the required "coordination" could
take place only once upon the issuance of the Joint Resolution, and there can
be no other coordination required in the future even if the ERC issues
additional guidelines or regulations to implement CSP. This interpretation is
obviously erroneous.
Moreover, the ERC's power is neither absolute nor unbridled. The ERC
can only promulgate rules, but only insofar as it is authorized. Section 4(b) of
Rule 3 of the Implementing Rules and Regulations of the EPIRA states:
Pursuant to Sections 43 and 45 of the Act, the ERC shall promulgate such
rules and regulations as autltorized tltereby, including but not limited to
Competition Rules and limitations on recovery of system losses, and shall
impose fines or penalties for any non-compliance with or breach of the Act,
these Rules and the rules and regulations which it promulgates or administers.
(Boldfacing and italicization added)
The 2015 DOE Circular specifically stated that the ERC's power to issue CSP
guidelines and procedures should be exercised "in coordination with the
DOE." The purpose of such coordination was "to ensure efficiency and
transparency in the CSP." In short, the ERC could not issue CSP guidelines
and procedures without coordination with DOE. The DOE has expressly
declared that the ERC did not coordinate with DOE in issuing the ERC
Clarificatory Resolution. The ERC's unilateral postponement of CSP for 305
days, allowing DUs to avoid the mandatory CSP to the great prejudice of the
public, was clearly without authority and manifestly constituted grave abuse of
discretion. Moreover, the ERC's unilateral postponement of CSP egregiously
prevented "transparency" and resulted in inefficiency by delaying the
implementation of CSP.
In their Dissenting Opinions, Justice Reyes  and Justice Caguioa  both use
80 81
the DOE's letter dated 18 January 2016,  which requested the ERC to allow an
82
electric cooperative (Abra Electric Cooperative, Inc. [ABRECO]) to directly
negotiate with a power supplier despite the mandatory CSP, to justify the
ERC's alleged power to amend the 2015 DOE Circular.
First, Justice Reyes overlooks the direction of the exercise of power in this
instance: instead of the ERC acting alone, the DOE directed the ERC to take
action on the matter. This letter proves that the power to amend the 2015 DOE
Circular belongs to the DOE, not to the ERC. There is clearly a necessity for
the ERC to coordinate with the DOE with regard to CSP matters.
Second, the DOE's endorsement to the ERC, as expressly stated in the DOE's
letter dated 18 January 2016, "does not preclude the ERC from exercising its
authority to evaluate ABRECO's PSAs and require further action, such as
subjecting ABRECO's PSA to a Swiss challenge." A Swiss challenge is "a
hybrid mechanism between the direct negotiation approach and the
competitive bidding route."  It is a system where "[a] third party can bid on a
83
project during a designated period but the original proponent can counter
match any superior offer."  In short, a Swiss challenge is a form of public
84
bidding, and is recognized in the implementing rules of laws such as Republic
Act No. 6957, "An Act Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private Sector and for Other
Purposes," as amended by Republic Act No. 7718,  and Executive Order No.
85
146,  "Delegating to the National Economic and Development Authority
86
(NEDA) Board the Power of the President to Approve Reclamation Projects."
Third, even assuming that the DOE letter exempted one specific DU from
CSP, it did not authorize ERC to postpone the effectivity of the mandatory CSP
for 305 days for all other DUs nationwide.
Fourth, the term of exemption for ABRECO was only for three years, or from
2016 to 2018. The PSAs executed during ERC's unilateral 305-day
postponement had terms that range from 20 to 21 years.
In view of the DOE's explicit assertion that the ERC did not coordinate with the
DOE regarding the issuance of the ERC Clarificatory Resolution, and the
ERC's corresponding silence on the same matter, we hold that the ERC's
issuance of the ERC Clarificatory Resolution is void, because it was issued
with grave abuse of discretion and in excess of its rule-making authority.
Why the ERC Gravely Abused its Discretion:
Effective Twenty- Year Freeze
of the Mandatory CSP
The PSAs between Meralco and its power suppliers were executed and
submitted to the ERC within 10 days prior to the restated 30 April 2016
deadline. The data collated in the above-mentioned tables are, as indicated in
the footnotes, found in the pleadings submitted by the pertinent parties. These
are judicial admissions, and are not findings of fact. According to the ERC
Clarificatory Resolution, these PSAs are not required to comply with CSP.
Obviously, the rationale behind CSP - to ensure transparency in the purchase
by DUs of bulk power supply so as to provide the consuming public affordable
electricity rates - acquires greater force and urgency when the DU or its
parent company holds a significant equity interest in the bulk power
supplier. Such a parent-subsidiary relationship, or even a significant equity
interest in the bulk power supplier, does not lend itself to fair and arms-length
transactions between the DU and the bulk power supplier.
From Meralco's Comment, we see that the effect of the non-implementation of
CSP is more widespread and far-reaching than what petitioners initially
presented. Non-implementation of CSP affects various areas of the
country and not just Meralco's extensive service areas. Postponement of
the effectivity of the mandatory CSP resulted in the exemption from CSP
of a total of ninety (90) PSAs covering various areas of the country.
87
Under the ERC Clarificatory Resolution, the dates of submission put these
PSAs outside the ambit of the mandatory CSP for at least 20 years based on
the contract terms of these PSAs.
In effect, the ERC Clarificatory Resolution signaled to DUs to rush the
negotiations and finalize their PSAs with power generation
companies. Meeting the extended deadline would then render the 2015
DOE Circular mandating CSP inutile for at least 20 years. We cannot, in
conscience, allow this to happen. To validate the ERC's postponement of
CSP under the CSP Guidelines and the ERC Clarificatory Resolution
means to validate ERC's arbitrary and unauthorized act of putting into
deep freeze, for at least 20 years, the principles behind CSP to the great
prejudice of the public. 88
Why the ERC Gravely Abused its Discretion:
The Whereas Clauses of the
CSP Guidelines and of the ERC Clarificatory Resolution
The ERC's Comment states: "It must be emphasized that the considerable
amount of time, money, and effort it took to enter into a PSA would have been
wasted if the CSP [Guidelines] took effect immediately."  Granting that
89
negotiations for the PSAs took considerable time, the issuance of the 2015
DOE Circular and of the CSP Guidelines was not conjured on a whim. We find
that ERC's Comment fails to consider the efforts of both the DOE and the ERC
prior to the issuance of the 2015 DOE Circular as well as the CSP Guidelines.
As early as 5 December 2003, the DOE issued Department Circular No. 2003-
12-011, entitled "Enjoining All Distribution Utilities to Supply Adequate,
Affordable, Quality and Reliable Electricity," which reiterated the state policy
that "all DUs must x x x take cognizance and assume full responsibility to
forecast, assure and contract for the supply of electric power within their
respective franchise areas to meet their obligations as a DU particularly to their
Captive Market."  Moreover, the DOE had conducted a series of
90
nationwide public consultations on the proposed policy on competitive
procurement of electric power for all electricity end-users.  The dates and
91
manner of consultations, as well as the acts of the DOE and the ERC, were
specifically mentioned in the Whereas Clauses of the CSP Guidelines, thus:
xxxx
WHEREAS, on February 19, 2013, the ERC issued a Notice in ERC Case No.
2013-005 RM, entitled "In the Matter of the Promulgation of the Rules
Governing the Execution, Review and Evaluation of Power Supply Agreements
Entered Into by Distribution Utilities for the Supply of Electricity to their Captive
Market" (PSA Rules), which was posted on the ERC's website, directing all
interested parties to submit their respective comments on the first draft of the
PSA Rules, not later than March 22, 2013;
WHEREAS, on various dates, the ERC received comments on the first draft of
the PSA Rules from interested parties, namely: a) Cagayan Electric Power and
Light Co., Inc. (CEPALCO); b) Visayan Electric Company, Inc. (VECO); c)
Quezon Power (Philippines) Ltd. Co. (QPL); d) Power Source Philippines, Inc.
(PSPI); e) National Grid Corporation of the Philippines (NGCP); t) Philippine
Independent Power Producers Association, Inc. (PIPPA); g) Next Power
Consortium, Inc.; h) SN Aboitiz Power Group (SNAP); i) Aboitiz Power
Corporation (APC); j) Philippine Electricity Market Corporation (PEMC); k)
Manila Electric Company (MERALCO); 1) Department of Energy (DOE); m)
Philippine Rural Electric Cooperatives Associations, Inc. (PHILRECA); and n)
National Rural Electric Cooperative Association (NRECA);
WHEREAS, on October 16, 2013, the ERC issued a Notice of Posting and
Publication in the aforementioned case, which was posted on the ERC's
website, directing all interested parties to submit their respective comments on
the second draft of the PSA Rules and setting the same for public
consultations on December 2, 2013 in Pasig City for the Luzon stakeholders
and on December 5, 2013 in Cebu City for the Visayas and Mindanao
stakeholders;
WHEREAS, on various dates, the ERC received comments on the second
draft of the PSA Rules from interested parties, namely: a) PHILRECA; b)
CEPALCO; c) VECO; d) QPL; e) PSPI; t) NGCP; g) PIPPA; h) Next Power
Consortium, Inc.; i) SNAP; j) APC; k) PEMC; 1) MERALCO; m) DOE; and n)
NRECA;
WHEREAS, on January 27, 2014, the ERC issued a Notice of Posting and
Public Consultation setting the second draft of the PSA Rules for public
consultations on February 18, 20 and 24, 2014 in Davao City, Cebu City and
Pasig City for the Mindanao, Visayas and Luzon stakeholders, respectively;
WHEREAS, on February 18, 20 and 24, 2014, the ERC conducted public
consultations wherein the comments of the interested partied were discussed;
WHEREAS, the ERC, likewise, conducted Focus Group Discussions (FGDs)
with the stakeholders on April 22 to 24, 2014 in Pasig City, May 6 to 8, 2014 in
Cebu City, May 13 to 14, 2014 in Cagayan De Oro City and May 20 to 22,
2014 in Pasig City, to thoroughly discuss major issues in relation to the draft
PSA Rules, such as: a) the requirement of Competitive Selection Process
(CSP); b) the proposed PSA template; c) the joint filing of PSA applications by
the DUs and generation companies (GenCos); and d) the "walk-away"
provision in the PSA, and the ERC likewise set the deadline for the submission
of additional comments or position papers for May 30, 2014;
WHEREAS, on various dates, the ERC received position papers/additional
comments from interested parties, namely: a) PIPPA; b) APC; c) Mindanao
Coalition of Power Consumers; and d) Association of Mindanao Rural Electric
Cooperatives, Inc. (AMRECO);
WHEREAS, Article III of the draft PSA Rules requires the DU to undertake
a transparent and competitive selection process before contracting for
the supply of electricity to its captive market;
WHEREAS, in October 2014, the DOE issued for comments its draft
Circular on the proposed Demand Aggregation and Supply Auctioning
Policy (DASAP);
WHEREAS, in the proposed DASAP, all DUS will be mandated to comply
with the auction requirement prescribed therein and other rules and
guidelines as may be prescribed in the implementation of the DASAP;
WHEREAS, by reason of the issuance of the DASAP and pending the
finalization thereof, the ERC held in abeyance its action on ERC Case No.
2013-005 RM and final approval of the draft PSA Rules;
WHEREAS, on June 11, 2015, the Department of Energy (DOE) issued
Department Circular No. DC2015-06-008, Mandating All Distribution
Utilities to Undergo Competitive Selection Process (CSP) in Securing
Power Supply Agreements (PSA);
WHEREAS, the ERC and the DOE are convinced that there is an advantage to
be gained by having a CSP in place, in terms of ensuring transparency in the
DUs' supply procurement and providing opportunities to elicit the best price
offers and other PSA terms and conditions from suppliers[.]  (Boldfacing and
92
italicization added)
In stark contrast to the extensive consensus-building which attended the
drafting of the 2015 DOE Circular and the CSP Guidelines, the ERC
Clarificatory Resolution explicitly admitted that its issuance
was not accompanied by any public consultation or focus group
discussion. Rather, the ERC Clarificatory Resolution was unilaterally
issued by the ERC, without coordinating with DOE, on the basis of
"several letters from stakeholders." The stakeholders had no way of
knowing the concerns of their peers as there was no interaction or discussion
among the stakeholders.
WHEREAS, since the publication of the CSP [Guidelines] on 06 November
2015, the [ERC] has received several letters from stakeholders which raised
issues on the constitutionality of the effectivity of the CSP [Guidelines], sought
clarification on the implementation of the CSP and its applicability to the
renewal and extension of PSAs, requested a determination of the accepted
forms of CSP, and submitted grounds for exemption from its applicability,
among others.
WHEREAS, after judicious study and due consideration of the different
perspectives raised in the aforementioned letters, with the end in view of
ensuring the successful implementation of the CSP for the benefit of
consumers, DUs, and GenCos, the [ERC] has resolved to allow a period of
transition for the full implementation of the CSP [Guidelines] and, as such,
restates the effectivity date of the CSP [Guidelines] to a later date[.] 93
The CSP Guidelines did not, in the words of the OSG, "take effect
immediately." Rather, it was the product of years of negotiation. The
stakeholders were aware of the contents and the eventual implementation of
CSP. Moreover, the CSP Guidelines, although signed on 20 October 2015,
took effect on 7 November 2015, or 18 days after signing.
Why the ERC Gravely Abused its Discretion:
Obligations of a Distribution Utility in the
Electric Power Industry
The EPIRA divided the electric power industry into four sectors, namely:
generation, transmission, distribution, and supply.  The distribution of
94
electricity to end-users is a regulated common carrier business requiring a
franchise.  We reiterate that the EPIRA mandates that a distribution utility has
95
the obligation to supply electricity in the least-cost manner to its captive
market, subject to the collection of distribution retail supply rate duly approved
by the ERC. 96
Republic Act No. 9209 granted Meralco a congressional franchise to construct,
operate, and maintain a distribution system for the conveyance of electric
power to the end-users in the cities and municipalities of Metro Manila,
Bulacan, Cavite, and Rizal, and certain cities, municipalities, and barangays in
Batangas, Laguna, Quezon, and Pampanga. Meralco's franchise is in the
nature of a monopoly because it does not have any competitor in its
designated areas. The actual monopolistic nature of Meralco's franchise was
recognized and addressed by the framers of our Constitution, thus:
MR. DAVIDE: xx x
Under Section 15 on franchise, certificate, or any other form of authorization
for the operation of a public utility, we notice that the restriction, provided in the
1973 Constitution that it should not be exclusive in character, is no longer
provided. Therefore, a franchise, certificate or any form of authorization
for the operation of a public utility may be exclusive in character.
MR. VILLEGAS: I think, yes.
MR. DAVIDE: It may be "yes." But would it not violate precisely the thrust
against monopolies?
MR. VILLEGAS: The question is, we do not include the provision about the
franchise being exclusive in character.
MR. SUAREZ: This matter was taken up during the Committee meetings. The
example of the public utility given was the MERALCO. If there is a
proliferation of public utilities engaged in the servicing of the needs of
the public for electric current, this may lead to more problems for the
nation. That is why the Commissioner is correct in saying that that will
constitute an exemption to the general rule that there must be no
monopoly of any kind, but it could be operative in the case of public
utilities.
MR. DAVIDE: Does not the Commissioner believe that the other side of the
coin may also be conducive to more keen competition and better public
service?
MR. SUAREZ: The Commissioner may be right.
MR. DAVIDE: Does not the Commissioner believe that we should restore the
qualification that it should not be exclusive in character?
MR. SUAREZ: In other words, under the Commissioner's proposal, Metro
Manila, for example, could be serviced by two or more public utilities similar to
or identical with what MERALCO is giving to the public?
MR. DAVIDE: That is correct.
MR. SUAREZ: The Commissioner feels that that may create or generate
improvement in the services?
MR. DAVIDE: Yes, because if we now allow an exclusive grant of a
franchise, that might not be conducive to public service.
MR. SUAREZ: We will consider that in the committee level
MR. MONSOD: With the Commissioner's permission, may I just amplify this.
MR. VILLEGAS: Commissioner Monsod would like to make a clarification.
MR. MONSOD: I believe the Commissioner is addressing himself to a situation
where it lends itself to more than one franchise. For example, electric power,
it is possible that within a single grid, we may have different distribution
companies. So the Commissioner is right in that sense that perhaps in
some situations, non-exclusivity may be good for the public. But in the
case of power generation, this may be a natural activity that can only be
generated by one company, in which case, prohibiting exclusive franchise may
not be in the public interest.  (Boldfacing added)
97
Section 5 of Republic Act No. 9209 provides that "[t]he retail rates to
[Meralco's] captive market and charges for the distribution of electric
power by [Meralco] to its end-users shall be regulated by and subject to
the approval of the ERC." As the holder of a distribution franchise, Meralco is
obligated to provide electricity at the least cost to its consumers. The ERC, as
Meralco's rate regulator, approves the retail rates - comprising of power and
distribution costs - to be charged to end-users. As we have demonstrated
above, both Meralco and the ERC have been remiss in their obligations. Going
through competitive public bidding as prescribed in the 2015 DOE Circular is
the only way to ensure a transparent and reasonable cost of electricity to
consumers.
Lest we forget, the ERC is expressly mandated in Section 43(o) of the EPIRA
of "ensuring that the x x x pass through of bulk purchase cost by
distributors is transparent." The ERC's postponement of CSP twice, totaling
305 days and enabling 90 PSAs in various areas of the country to avoid CSP
for at least 20 years, directly and glaringly violates this express mandate of
the ERC, resulting in the non-transparent, secretive fixing of prices for bulk
purchases of electricity, to the great prejudice of the 95 million Filipinos living
in this country as well as the millions of business enterprises operating in this
country. This ERC action is a most extreme instance of grave abuse of
discretion, amounting to lack or excess of jurisdiction, warranting the strong
condemnation by this Court and the annulment of the ERC's action.
Absent compliance with CSP in accordance with the 2015 DOE Circular, the
PSAs shall be valid only as between the DUs and the power generation
suppliers, and shall not bind the DOE, the ERC, and the public for purposes of
determining the transparent and reasonable power purchase cost to be passed
on to consumers.
On 1 February 2018, the DOE issued Circular No. DC2018-02-0003 entitled
"Adopting and Prescribing the Policy for the Competitive Selection Process in
the Procurement by the Distribution Utilities of Power Supply Agreements for
the Captive Market" (2018 DOE Circular). The DOE prescribed, in Annex "A"
of this 2018 DOE Circular, the DOE's own CSP Policy in the procurement of
power supply by DUs for their captive market (2018 DOE CSP Policy).
Section 16.1 of the 2018 DOE CSP Policy expressly repealed Section 4 of
the 2015 DOE Circular authorizing ERC to issue supplemental guidelines
to implement CSP.

In short, the DOE revoked the authority it delegated to the ERC to issue

supplemental guidelines to implement CSP, and the DOE itself issued its own
guidelines, the 2018 DOE CSP Policy, to implement CSP under the 2015 DOE
Circular. This means that the CSP Guidelines issued by the ERC have
become functus officio and have been superseded by the 2018 DOE CSP
Policy. Under its Section 15, the 2018 DOE CSP Policy is expressly made to
apply to "all prospective PSAs." The 2018 DOE Circular, including its Annex
"A," took effect upon its publication on 9 February 2018. Thus, the 90 PSAs
mentioned in this present case must undergo CSP in accordance with the
2018 DOE Circular, in particular the 2018 DOE CSP Policy prescribed in
Annex "A" of the 2018 DOE Circular.

WHEREFORE, the petition for certiorari and prohibition is GRANTED. The first

paragraph of Section 4 of Energy Regulatory Commission Resolution No. 13,
Series of 2015 (CSP Guidelines), and Energy Regulatory Commission
Resolution No. 1, Series of 2016 (ERC Clarificatory Resolution), are hereby
declared VOID ab initio. Consequently, all Power Supply Agreement
applications submitted by Distribution Utilities to the Energy Regulatory
Commission on or after 30 June 2015 shall comply with the Competitive
Selection Process in accordance with Department of Energy Circular No.
DC2018-02-0003 (2018 DOE Circular) and its Annex "A." Upon compliance
with the Competitive Selection Process, the power purchase cost resulting
from such compliance shall retroact to the date of effectivity of the complying
Power Supply Agreement, but in no case earlier than 30 June 2015, for
purposes of passing on the power purchase cost to consumers.

SO ORDERED.
rule on additional position and double compensation and on commission on
audit jurisdiction
G.R. No. 211293, June 04, 2019
ADELAIDO ORIONDO, TEODORO M. HERNANDEZ, RENATO L.
BASCO, CARMEN MERINO, AND REYNALDO SALVADOR,
PETITIONERS, v. COMMISSION ON AUDIT, RESPONDENT.
DECISION
LEONEN, J.:
A corporation, whether with or without an original charter, is under
the audit jurisdiction of the Commission on Audit so long as the
government owns or has controlling interest in it.
This resolves the Petition1 under Rule 64 of the Rules of Court filed
by Adelaido Oriondo, Teodoro M. Hernandez, Renato L. Basco,
Carmen, Merino, and Reynaldo Salvador, former officers of the
Philippine Tourism Authority who had received honoraria and cash
gifts for concurrently rendering services to Corregidor Foundation,
Inc. They assail the Commission on Audit's Decision2 No. 2010-095
dated October 21, 2010 and Resolution3 dated December 6, 2013,
disallowing the payment of the honoraria and cash gifts to them for
being contrary to Department of Budget and Management Budget
Circular No. 2003-5 on the payment of honoraria and Article IX-B,
Section 84 of the Constitution prohibiting the payment of additional
or double compensation.
The submissions of the parties present the following facts.
Executive Order No. 58, series of 1954,5 made certain battlefield
areas in Corregidor open to the public and accessible as tourist
attractions. Executive Order No. 123, series of 1968, further
amended Executive Order No. 58, thereby authorizing the Ministry of
National Defense to enter into contracts for the conversion of areas
within the Corregidor as tourist spots.6
Pursuant to Executive Order No. 123, the Ministry of National
Defense and the Philippine Tourism Authority executed a
Memorandum of Agreement7 dated July 10, 1986 for the
development of Corregidor and its neighboring islands into major
tourist attractions. Specifically, the Ministry of National Defense,
with prior approval of the President, leased the entire island of
Corregidor to the Philippine Tourism Authority for one peso (P1.00).
As for the Philippine Tourism Authority, it undertook to maintain and
preserve the war relics on the island and to fully develop
Corregidor's potential as an international and local tourist
destination. The Philippine Tourism Authority was thus authorized to
"[p]ackage and source the necessary funds to develop and restore
the Corregidor Island group."8
On February 6, 1987, the Philippine Tourism Authority Board of
Directors adopted Resolution No. B-7-87,9 approving the creation of
a foundation for the development of Corregidor. On October 28,
1987, the Corregidor Foundation, Inc. was incorporated under
Securities and Exchange Commission Registration No. 145674. 10
On August 3, 1993, the Philippine Tourism Authority executed a
Memorandum of Agreement11 with Corregidor Foundation, Inc. to
centralize the island's planning and development. The Philippine
Tourism Authority agreed to release to the Corregidor Foundation,
Inc. its operating funds based on a budget for its approval. For its
part, the Corregidor Foundation, Inc. agreed to submit a quarterly
report on the receipts and disbursements of Philippine Tourism
Authority funds. It additionally agreed to deposit all collections of
revenues in a distinct and separate account in the name of the island
of Corregidor, with the disposition of the funds at the sole discretion
of the Philippine Tourism Authority.
Another Memorandum of Agreement12 was subsequently entered into
by the Philippine Tourism Authority and the Corregidor Foundation,
Inc. on September 3, 1996. The subsequent Agreement reiterated
the provisions of the August 3, 1993 Agreement but added some
stipulations. In particular, the second paragraph of item 4 was
included, providing that the disbursements of the Philippine Tourism
Authority's funds by Corregidor Foundation, Inc. shall be subject to
the audit of the Internal Auditor of the Philippine Tourism Authority
and the Commission on Audit.
 4.1. teaching personnel of the Department of Education, Commission on
On February 14, 2005, the Commission on Audit, through Audit
Higher Education, Technical Education and Skills Development
Team Leader Divina M. Telan, issued Audit Observation
Authority, State Universities and Colleges and other educational
Memorandum No. 2004-00213 for comments of then Corregidor
Foundation, Inc. Executive Director Artemio G. Matibag. There, the institutions engaged in actual classroom teaching whose teaching
Audit Team noted that the following personnel of the Philippine load is outside of the regular office hours and/or in excess of the
Tourism Authority who were concurrently rendering services in regular load;
Corregidor Foundation, Inc. received honoraria and cash gifts in
4.2 those who act as lecturers, resource persons, coordinators and
2003, to wit:
facilitators in seminars, training programs and other similar
activities in training institutions, including those conducted by
Cash entities for their officials and employees; and
Name Position Bonus Total
Gift
4.3. chairs and members of Commissions/Board Councils and other
Treasurer / Deputy General similar entities which are hereinafter referred to as a collegial body
Adelaido
Manager of the Philippine 42,000 1,500 43,500 including the personnel thereof, who are neither paid salaries nor
Oriondo
Tourism Authority per diems but compensated in the form of honoraria as provided by
Teodoro law, rules and regulations.15
Corporate Secretary 42,000 1,500 43,500 Further, according to the Audit Team, the cash gifts given to
Hernandez
Oriondo, Hernandez, Basco, Merino, and Salvador, as officers of the
Renato L. Corregidor Foundation, Inc., constituted double compensation
Technical Assistant 16,000 1,500 17,500
Basco prohibited in Article IX-B, Section 816 of the Constitution because
they had already received honoraria and cash gifts as employees of
Carmen the Philippine Tourism Authority.17
Executive Secretary A 9,600 1,500 11,100
Merino
Reynaldo The Audit Team thus recommended that Corregidor Foundation, Inc.
Utility Worker A 14,400 1,500 15,900 comply with Budget Circular No. 2003-5; otherwise, it would be
Salvador
constrained to recommend the disallowance of the amounts paid as
Total 124,000 7,500 131,500 honoraria and cash gift.18
The Audit Team was of the opinion that the grant of honoraria to
Oriondo, Hernandez, Basco, Merino, and Salvador were contrary to On June 15, 2006, the Legal and Adjudication Office-Corporate of
Department of Budget and Management Circular No. 2003-5.14 This the Commission on Audit issued Notice of Disallowance No. CFI-
budget circular, applicable to all national government agencies, 2006-001,19 disallowing in audit the honoraria and cash gift paid to
government-owned and/or controlled corporations, and government Oriondo, Hernandez, Basco, Merino, and Salvador. Aside from the
financial institutions, enumerated in item 4 those exclusively entitled payees, the persons made liable for the amount were Corregidor
to honoraria: Foundation, Inc.'s Chief Accountant Noria Jane Perez, Finance Office
4. General Guidelines Lauro Legazpi, and Executive Director Artemio G. Matibag. 20

Heads of entities are authorized to use their respective appropriation Oriondo, Hernandez, Basco, Merino, and Salvador filed a Motion for
for the payment of honoraria only to the following: Reconsideration of the Notice of Disallowance, arguing that
Corregidor Foundation, Inc. is a private corporation created under
the Corporation Code and, therefore, cannot be audited by the
Commission on Audit.21 This was denied by the Legal Adjudication
Office-Corporate in its Decision No. 2007-037, 22 where it held that
Corregidor Foundation, Inc. is a government-owned or controlled
corporation.
The appeal filed was likewise denied by the Adjudication and
Settlement Board of the Commission on Audit in Decision No. 2009-
002.23 Citing the definition of a government owned or controlled
corporation in the Administrative Code of 1987, the Adjudication and
Settlement Board held that Corregidor Foundation, Inc. is a
government-owned or controlled corporation under the audit powers
of the Commission on Audit. Corregidor Foundation, Inc., according
to the Adjudication and Settlement Board, is a non-stock corporation
which receives funds from the government, through the Philippine
Tourism Authority. The Adjudication and Settlement Board
highlighted that Memorandum of Agreement dated September 3,
1996 provided that the funds received and disbursed by the
Corregidor Foundation, Inc. is subject to the audit of the Internal
Auditor of the Philippine Tourism Authority and the Commission on
Audit. Finally, Corregidor Foundation, Inc. was deemed created for a
public purpose, which is the maintenance and preservation of
Corregidor.
Considering that Corregidor Foundation, Inc. is a government-owned
or controlled corporation, the Adjudication and Settlement Board
held the foundation is subject to Budget Circular No. 2003-5 and
2003-02, limiting the grant of honoraria to specific government
personnel, and Article IX-B, Section 8 of the Constitution prohibiting
double compensation.24
The dispositive portion of the Adjudication and Settlement Board's
Decision No. 2009-002 read:
WHEREFORE, the foregoing premises considered, this Board
hereby DENIES the instant appeal for want of merit. Accordingly,
LAO-Corporate Decision No. 2007-037 dated June 07, 2007
sustaining ND No. CFI-2006-001 dated June 15, 2006
is AFFIRMED.25 (Emphasis in the original)
Oriondo, Hernandez, Basco, Merino, and Salvador
appealed26 Decision No. 2009-002, but the appeal was denied by the
Commission on Audit in its October 21, 2010 Decision No. 2010-
095.27
The Commission on Audit Commission Proper maintained that the
Corregidor Foundation, Inc. is a government-owned or controlled
corporation given the following circumstances: (1) the incorporators
of the Corregidor Foundation, Inc. are all government officials; (2)
the Corregidor Foundation, Inc. is substantially subsidized by the
government, with 99.66% of its budget coming from the
Department of Tourism, Duty Free Philippines, and the Philippine
Tourism Authority; (3) the budget of Corregidor Foundation, Inc.
needs prior approval of the Philippine Tourism Authority; (4)
Corregidor Foundation, Inc. is required to submit a quarterly report
of its receipts and disbursement of Philippine Tourism Authority
funds; (5) all collections of revenues are to be deposited and taken
up in the books of Corregidor Foundation, Inc. as accountability to
the Philippine Tourism Authority, and the disposition of the funds are
at the sole discretion of the Philippine Tourism Authority; and (6)
Corregidor Foundation, Inc. has no authority to dispose of the
properties subject of the Memorandum of Agreement. 28
While it is true that Corregidor Foundation, Inc. was organized under
the Corporation Code, the Commission Proper, citing Philippine
Society for the Prevention of Cruelty to Animals v. Commission on
Audit,29 held that it is the "totality test"—the totality of the relation
of a corporation to the State-that determines a corporation's status
as a government-owned or controlled corporation. Given that
Corregidor Foundation, Inc. was created by the State as its own
instrumentality to carry out a governmental function, the
Commission Proper concluded that Corregidor Foundation, Inc.
should be considered a public corporation.
The Commission proper added that coverage under the Social
Security System "is but a consequence of [Corregidor Foundation,
Inc.'s] insistence that it is a private corporation, not a priori reason
that it is."30
Given the foregoing premises, the Commission Proper held that
Corregidor Foundation, Inc. is a government-owned or controlled
corporation subject to Budget Circular No. 2003-5 and Article IX-B,
Section 8 of the Constitution. Corregidor Foundation, Inc. had no
authority to grant honoraria to its personnel and give cash gifts to its
employees who were concurrently holding a position in the Philippine
Tourism Authority.
The dispositive portion of the Commission on Audit's Decision No.
2010-095 read:
WHEREFORE, premises considered, the instant appeal is
hereby DENIED for lack of merit. Accordingly, ASB Decision No.
2009-002 dated January 26, 2009 is AFFIRMED.31 (Emphasis in the
original)
Oriondo, Hernandez, Basco, Merino, and Salvador filed a Motion for
Reconsideration, which the Commission on Audit En Banc denied in a
its December 5, 2013 Resolution32 thus:
The [Commission on Audit Proper] denied the Motion for
Reconsideration for lack of merit and affirmed with finality COA
Decision No. 2010-095 dated October 21, 2010 affirming the
disallowance on the grant of honoraria and cash gift to the Philippine
Tourism Authority employees who are rendering services to
Corregidor Foundation[,] Inc. in the amount of P131,500.00. The
movant failed to present new and material evidence that would
warrant a reversal or modification of the assailed decision. 33
On March 14, 2014, Oriondo, Hernandez, Basco, Merino, and
Salvador filed before this Court a Petition 34 designated as a "Petition
for Review on Certiorari"35 under Rule 64 of the Rules of Court. The
Commission on Audit, through the Office of the Solicitor General,
filed its Comment36 on June 25, 2014, to which Oriondo, Hernandez,
Basco, Merino, and Salvador replied37 on October 7, 2014. Upon the
directive of this Court,38 the parties filed their respective
Memoranda.39
According to petitioners, a cursory reading of Article IX-D, Section
240 of the Constitution reveals that the Commission on Audit has no
power to determine whether an entity is a government-owned or
controlled corporation. Petitioners maintain that the Commission on
Audit had no jurisdiction to conduct a post-audit of Corregidor
Foundation, Inc.'s disbursements on the basis of its own
determination of Corregidor Foundation's status as a government-
owned or controlled corporation. Consequently, the Commission's
rulings on the grant of honoraria and cash gifts are allegedly null
and void.41
On the threshold issue, petitioners insist that Corregidor Foundation,
Inc. is not a government-owned or controlled corporation due to the
following reasons: (1) Corregidor Foundation, Inc. is neither
organized as a stock corporation nor is it created by a special law or
is governed by a charter created by a special law; 42 (2) Corregidor
Foundation, Inc. was organized as a private corporation under the
general corporation law, and its assets are allegedly its exclusive
property, not government-owned;43 (3) the personnel of Corregidor
Foundation, Inc. are under the coverage of the Social Security
System, further showing that Corregidor Foundation, Inc. is a
private corporation;44 (4) its funds come primarily from grants and
donations of international organizations and foreign entities, not
from the National Government considering that its funding was
never provided in the General Appropriations Act; 45 and (5) the
quarterly reports submitted by Corregidor Foundation, Inc. is only
based on its Memorandum of Agreement with the Philippine Tourism
Authority, not because it is a government-owned or controlled
corporation.46
Countering petitioners, respondent Commission on Audit first
highlighted that the Petition was erroneously denominated as a
"Petition for Review on Certiorari" under Rule 64 of the Rules of
Court. "[T]here is no such thing as a Petition for Review under Rule
64,"47 argued respondent Commission. The error notwithstanding,
respondent Commission contends that the Petition should be treated
as one for certiorari, specifically, to determine whether or not there
was grave abuse of discretion on the part of the Commission on
Audit in disallowing the grant of honoraria and cash gifts to
petitioners.48
On whether or not it has the jurisdiction to determine whether an
entity is a government-owned or controlled corporation, respondent
Commission argues that it has the competence to make such
determination. Pursuant to its constitutional duty to examine, audit,
and settle all accounts pertaining to the revenue and expenditures of
the government, including government-owned or controlled
corporations, respondent Commission maintains that the
determination of the status of an entity as a government-owned or
controlled corporation is but a "necessary incident to [the]
performance of its duties and the discharge of its
functions."49 Respondent Commission asserts its competency to
determine the status of Corregidor Foundation, Inc. as a
government-owned or controlled corporation, arguing that it only
applied the law on the matter.50
On the principal issue of whether or not Corregidor Foundation, Inc.
is a government-owned or controlled corporation, respondent
Commission answers in the affirmative. It cites Philippine National
Oil Company (PNOC) - Energy Development Corporation v. National
Labor Relations Commission51and Philippine Society for the
Prevention of Cruelty to Animals v. Commission on Audit 52 where this
Court enunciated the criteria for determining the status of a
corporation as government-owned or controlled. Respondent
Commission thereafter noted the circumstances demonstrating that
all these criteria are present in this case. First, Corregidor
Foundation, Inc. is under the Department of Tourism, created to
develop the tourism in the island of Corregidor. Second, the
incorporators of Corregidor Foundation, Inc. are all government
officials and all of its trustees are public officials sitting in an ex
officio capacity.53
Respondent Commission maintains that Corregidor Foundation, Inc.
was created by the State to carry out a governmental function as
shown by the following: (1) Corregidor Foundation, Inc. is
substantially subsidized by the government, with 99.66% of its
budget, as audited, coming from the Department of Tourism, Duty
Free Philippines, and the Philippine Tourism Authority; (2)
Corregidor Foundation, Inc.'s budget is subject to the prior approval
of the Philippine Tourism Authority; (3) Corregidor Foundation, Inc.
is required to submit a quarterly report on its receipts and
disbursement of Philippine Tourism Authority funds; (4) all
collections of revenues are deposited and taken up in the books of
Corregidor Foundation, Inc. as accountability to the Philippine
Tourism Authority; and (5) Corregidor Foundation, Inc. cannot
encumber, mortgage, or alienate the premises subject of its
Memorandum of Agreement with the Philippine Tourism
Authority.54 These allegedly show that the disallowed amounts were
public funds, which are definitely within the audit jurisdiction of
respondent Commission; thus, there was no grave abuse of
discretion on the part of the Commission on Audit in issuing the
Notice of Disallowance.
The issues for this Court's resolution are:
First, whether or not the Commission on Audit has jurisdiction to
determine whether a corporation such as Corregidor Foundation,
Inc. is a government-owned or controlled corporation; and
Second, whether or not Corregidor Foundation, Inc. is a
government-owned or controlled corporation under the audit
jurisdiction of the Commission on Audit.
The Petition is dismissed.
Respondent Commission on Audit did not gravely abuse its discretion
in issuing Notice of Disallowance No. CFI-2006-001. It has the
competency to determine the status of corporations such as
Corregidor Foundation, Inc. as government-owned or controlled, and
correctly found that Corregidor Foundation, Inc. is, indeed, a
government-owned or controlled corporation under its audit
jurisdiction.
I
We first address respondent Commission's contention that
petitioners erroneously referred to their Petition as a "Petition for
Review on Certiorari" under Rule 64 of the Rules of Court.
A petition for review on certiorari is the remedy provided in Rule 45,
Section 1 of the Rules of Court against an adverse judgment, final
order, or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law:
RULE 45
Appeal by Certiorari to the Supreme Court
SECTION 1. Filing of Petition with Supreme Court. - A party desiring
to appeal by certiorari from a judgment or final order or resolution of
the Court of Appeals, the Sandiganbayan, the Regional Trial Court or
other courts whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The petition shall
raise only questions of law which must be distinctly set forth.
On the other hand, Rule 64 of the Rules of Court pertains to "Review
of Judgments and Final Orders or Resolutions of the Commission on
Elections and the Commission on Audit." Section 1 of Rule 64 defines
the scope of the Rule, while section 2 refers to "Mode of Review" and
provides that the judgments, final orders, and resolutions of the
Commission on Audit are to be brought on certiorari to this Court
under Rule 65. The pertinent provisions of Rules 64 and 65 are as
follows:
RULE 64
Review of Judgments and Final Orders or Resolutions of the
Commission on Elections and the Commission on Audit
SECTION 1. Scope. — This Rule shall govern the review of
judgments and final orders or resolutions of the Commission on
Elections and the Commission on Audit.
SECTION 2. Mode of Review. — A judgment or final order or
resolution of the Commission on Elections and the Commission on
Audit may be brought by the aggrieved party to the Supreme Court
on certiorari under Rule 65, except as hereinafter provided.
SECTION 3. Time to File Petition. — The petition shall be filed within
thirty (30) days from notice of the judgment or final order or
resolution sought to be reviewed. The filing of a motion for new trial
or reconsideration of said judgment or final order or resolution, if
allowed under the procedural rules of the Commission concerned,
shall interrupt the period herein fixed. If the motion is denied, the
aggrieved party may file the petition within the remaining period,
but which shall not be less than five (5) days in any event, reckoned
from notice of denial.
....
RULE 65
Certiorari, Prohibition and Mandamus
SECTION 1. Petition for Certiorari. — When any tribunal, board or
officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as
law and justice may require.
The petition shall be accompanied by a certified true copy of the
judgment, order or resolution subject thereof, copies of all pleadings
and documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the paragraph of
Section 3, Rule 46.
....
SECTION 4. Where Petition Filed. — The petition may be filed not
later than sixty (60) days from notice of the judgment, order or
resolution sought to be assailed in the Supreme Court or, if it relates
to the acts or omissions of a lower court or of a corporation, board,
officer or person, in the Regional Trial Court exercising jurisdiction
over the territorial area as defined by the Supreme Court. It may
also be filed in the Court of Appeals whether or not the same is in
aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid
of its jurisdiction. If it involves the acts or omissions of a quasi-
judicial agency, and unless otherwise provided by law or these
Rules, the petition shall be filed in and cognizable only by the Court
of Appeals.
The foregoing provisions readily reveal that a Petition for Review on
Certiorari under Rule 45 is an appeal and a true review that involves
"digging into the merits and unearthing errors of
judgment."55 However, despite the repeated use of the word
"review" in Rule 64, the remedy is principally one for certiorari that
"deals exclusively with grave abuse of discretion, which may not
exist even when the decision is otherwise erroneous."56
That the remedy against an adverse decision, order, or ruling of the
Commission on Audit is a petition for certiorari, not review or appeal,
is based on Article IX-A, Section 7 of the Constitution, thus:
ARTICLE IX
Constitutional Commissions

A. Common Provisions
....
SECTION 7. Each Commission shall decide by a majority vote of all
its Members any case or matter brought before it within sixty days
from the date of its submission for decision or resolution. A case or
matter is deemed submitted for decision or resolution upon the filing
of the last pleading, brief, or memorandum required by the rules of
the Commission or by the Commission itself. Unless otherwise
provided by this Constitution or by law, any decision, order, or ruling
of each Commission may be brought to the Supreme Court on
certiorari by the aggrieved party within thirty days from receipt of a
copy thereof. (Emphasis Supplied)
This is affirmed in Reyna v. Commission on Audit,57 where the Court
maintained its certiorari jurisdiction over judgments, final orders or
resolutions of the Commission on Audit:
In the absence of grave abuse of discretion, questions of fact cannot
be raised in a petition for certiorari, under Rule 64 of the Rules of
Court. The office of the petition for certiorari is not to correct simple
errors of judgment; any resort to the said petition under Rule 64, in
relation to Rule 65, of the 1997 Rules of Civil Procedure is limited to
the resolution of jurisdictional issues.58
We agree with respondent Commission that petitioners erroneously
denominated their Petition as a "Petition for Review on Certiorari."
Except for the designation, however, we find that the Petition was
filed under Rule 64 of the Rules of Court given that the Petition
refers to Rule 64 and was filed within 30 days from notice of the
Resolution dated December 6, 2013 denying petitioners' Motion for
Reconsideration before the Commission on Audit. Therefore, we shall
resolve the Petition in the exercise of our certiorari jurisdiction under
Article IX-A, Section 7 of the Constitution.
II
The Constitution, the Administrative Code of 1987, and the
Government Auditing Code of the Philippines define the powers of
the Commission on Audit. Article IX-D, Section 2 of the Constitution
provides:
SECTION 2. (1) The Commission on Audit shall have the power,
authority, and duty to examine, audit, and settle all accounts
pertaining to the revenue and receipts of, and expenditures or uses
of funds and property, owned or held in trust by, or pertaining to,
the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned or controlled
corporations with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and offices that have been
granted fiscal autonomy under this Constitution; (b) autonomous
state colleges and universities; (c) other government-owned or
controlled corporations and their subsidiaries; and (d) such non-
governmental entities receiving subsidy or equity, directly or
indirectly, from or through the Government, which are required by
law or the granting institution to submit to such audit as a condition
of subsidy or equity. However, where the internal control system of
the audited agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are
necessary and appropriate to correct the deficiencies. It shall keep
the general accounts of the Government and, for such period as may
be provided by law, preserve the vouchers and other supporting
papers pertaining thereto.
(2) The Commission shall have exclusive authority, subject to the
limitations in this Article, to define the scope of its audit and
examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and
regulations, including those for the prevention and disallowance of
irregular, unnecessary, excessive, extravagant, or unconscionable
expenditures, or uses of government funds and properties.
(Emphasis supplied)
A provision similar to Article IX-D, Section 2(1) is found in Book V,
Title I, Subtitle B, Chapter 4, Section 11 of the Administrative Code:
SECTION 11. General Jurisdiction. — (1) The Commission on Audit
shall have the power, authority, and duty to examine, audit, and
settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust
by, or pertaining to, the Government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned or
controlled corporations with original charters, and on a post-audit
basis: (a) constitutional bodies, commissions and offices that have
been granted fiscal autonomy under this Constitution; (b)
autonomous state colleges and universities; (c) other government-
owned or controlled corporations and their subsidiaries; and (d)
such non-governmental entities receiving subsidy or equity, directly
or indirectly, from or through the Government, which are required
by law or the granting institution to submit to such audit as a
condition of subsidy or equity. However, where the internal control
system of the audited agencies is inadequate, the Commission may
adopt such measures, including temporary or special pre-audit, as
are necessary and appropriate to correct the deficiencies. It shall
keep the general accounts of the Government and, for such period
as may be provided by law, preserve the vouchers and other
supporting papers pertaining thereto. (Emphasis supplied)
The Government Auditing Code of the Philippines, in Section 26,
likewise provides:
SECTION 26. General Jurisdiction. — The authority and powers of
the Commission shall extend to and comprehend all matters relating
to auditing procedures, systems and controls, the keeping of the
general accounts of the Government, the preservation of vouchers
pertaining thereto for a period of ten years, the examination and
inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all
persons respecting funds or property received or held by them in an
accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to
the Government or any of its subdivisions, agencies and
instrumentalities. The said jurisdiction extends to all government-
owned or controlled corporations, including their subsidiaries, and
other self-governing boards, commissions, or agencies of the
Government, and as herein prescribed, including non-governmental
entities subsidized by the government, those funded by donations
through the government, those required to pay levies or
government share, and those for which the government has put up
a counterpart fund or those partly funded by the government.
(Emphasis supplied)
Based on the foregoing provisions, the Commission on Audit
generally has audit jurisdiction over public entities. 59 In the
Administrative Code's Introductory Provisions, the Commission on
Audit is even allowed to categorize government-owned or controlled
corporations for purposes of the exercise and discharge of its
powers, functions, and responsibilities with respect to such
corporations.60
The extent of the Commission on Audit's audit authority even
extends to non-governmental entities that receive subsidy or equity
from or through the government.61
Therefore, it is absurd for petitioners to challenge the competency of
the Commission on Audit to determine whether or not an entity is a
government-owned or controlled corporation. Jurisdiction is "the
power to hear and determine cases of the general class to which the
proceedings in question belong," 62 and the determination of whether
or not an entity is the proper subject of its audit jurisdiction is a
necessary part of the Commission's constitutional mandate to
examine and audit the government as well as non-government
entities that receive subsidies from it. To insist on petitioners'
argument would be to impede the Commission on Audit's exercise of
its powers and functions.
This Court upheld the competence of the Commission on Audit to
determine the status of an entity as a government-owned or
controlled corporation in Feliciano v. Commission on Audit63 and Boy
Scouts of the Philippines,64 among others. In these cases, the Court
took cognizance of petitions assailing the Commission on Audit's
determination that Leyte Metropolitan Water District and Boy Scouts
of the Philippines are government-owned or controlled corporations,
and are thus subject to the Commission's audit jurisdiction.
III
The Commission on Audit's power to determine whether an entity is
a government-owned or controlled corporation is already settled. We
thus proceed to resolve the issue of whether the Corregidor
Foundation, Inc. is a government-owned or controlled corporation
under the audit jurisdiction of the Commission on Audit.
The term "government-owned or controlled corporation" is defined in
several laws. Presidential Decree No. 2029, issued by then President
Ferdinand E. Marcos, defines a government-owned or controlled
corporation in Section 2, thus:
SECTION 2. Definition. — A government-owned or controlled
corporation is a stock or a non-stock corporation, whether
performing governmental or proprietary functions, which is directly
chartered by a special law or if organized under the general
corporation law is owned or controlled by the government directly,
or indirectly through a parent corporation or subsidiary corporation,
to the extent of at least a majority of its outstanding capital stock or
of its outstanding voting capital stock;
Provided, that a corporation organized under the general corporation
law under private ownership at least a majority of the shares of
stock of which were conveyed to a government financial institution,
whether by a foreclosure or otherwise, or a subsidiary corporation of
a government corporation organized exclusively to own and manage,
or lease, or operate specific physical assets acquired by a
government financial institution in satisfaction of debts incurred
therewith, and which in any case by enunciated policy of the
government is required to be disposed of to private ownership within
a specified period of time, shall not be considered a government-
owned or controlled corporation before such disposition and even if
the ownership or control thereof is subsequently transferred to
another government-owned or controlled corporation;
Provided, further, that a corporation created by special law which is
explicitly intended under that law for ultimate transfer to private
ownership under certain specified conditions shall be considered a
government-owned or controlled corporation, until it is transferred
to private ownership; and
Provided, finally, that a corporation that is authorized to be
established by special law, but which is still required under that law
to register with the Securities and Exchange Commission in order to
acquire a juridical personality, shall not on the basis of the special
law alone be considered a government-owned or controlled
corporation.
The Administrative Code, in section 2(13) of its Introductory
Provisions, defines a government-owned or controlled corporation in
this wise:
SECTION 2. General Terms Defined. — Unless the specific words of
the text, or the context as a whole, or a particular statute, shall
require a different meaning:
....
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as
in the case of stock corporations, to the extent of at least fifty-one
(51) per cent of its capital stock: Provided, That government-
owned or controlled corporations may be further categorized by the
Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of
their respective powers, functions and responsibilities with respect
to such corporations.
In Republic Act No. 10149, otherwise known as the GOCC
Governance Act of 2011, the term is defined in Section 3(o):
SECTION 3. Definition of Terms. —
....
   
(o) Government-Owned or -Controlled Corporation (GOCC) refers to
any agency organized as a stock or nonstock corporation, vested
with functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government of the
Republic of the Philippines directly or through its instrumentalities
either wholly or, where applicable as in the case of stock
corporations, to the extent of at least a majority of its outstanding
capital stock: Provided, however, That for purposes of this Act, the
term "GOCC" shall include GICP/GCE and GFI as defined herein.
Based on the above provisions, an entity is considered a
government-owned or controlled corporation if all three (3)
attributes are present: (1) the entity is organized as a stock or non-
stock corporation;65 (2) its functions are public in character;66 and
(3) it is owned67 or, at the very least, controlled68 by the
government.
Examples of government-owned or controlled corporations are the
Leyte Metropolitan Water District and the Boy Scouts of the
Philippines. As found in Feliciano, the Leyte Metropolitan Water
District is a stock corporation organized under an original charter or
special law, i.e., Presidential Decree No. 198 or the Provincial Water
Utilities Act of 1973. It performs a public service by providing water
to its water district and, as a local water utility, it is controlled by the
government considering that its directors are appointed by the head
of the local government unit. It was in Feliciano where this Court
said that "the determining factor of the [Commission on Audit's]
audit jurisdiction is government ownership or control of the
corporation."69
As for the Boy Scouts of the Philippines, this Court held in Boy
Scouts of the Philippines v. Commission on Audit70 that it is a non-
stock corporation created under an original charter, specifically,
Commonwealth Act No. 111. Its functions primarily involve
implementing the state policy provided in Article II, Section 13 of
the Constitution on promoting and protecting the well-being of the
youth; and that it is an attached agency of the then Department of
Education, Culture, and Sports, now Department of Education.
In contrast, the Philippine Society for the Prevention of Cruelty to
Animals, the Manila Economic and Cultural Office, and the Executive
Committee of the Metro Manila Film Festival were all declared not
subject to the audit jurisdiction of the Commission on Audit. The
Court in Philippine Society for the Prevention of Cruelty to Animals
v. Commission on Audit71 held that the petitioner corporation,
though created through an original charter, eventually became a
private corporation when its "sovereign powers" to arrest offenders
of animal welfare laws and the power to serve processes in
connection therewith were withdrawn via an amendatory law. The
second attribute—the public character of the corporation's functions
—was therefore absent. It was in Philippine Society for the
Prevention of Cruelty to Animals where the Court held that "[t]he
true criterion. . . to determine whether a corporation is public or
private is found in the totality of the relation of the corporation to
the State,"72 adding that "[if] the corporation is created by the State
as the latter's own agency or instrumentality to help it in carrying
out its governmental functions, then that corporation is public;
otherwise, it is private."73
The Manila Economic and Cultural Office is a non-stock corporation
performing certain "'consular and other functions' relating to the
promotion, protection and facilitation of Philippine interests in
Taiwan."74 However, none of its members, officers or trustees were
found to be government appointees or public officers designated by
reason of their office. Because of the absence of the third attribute,
i.e., government ownership or control, this Court held in Funa v.
Manila Economic and Cultural Office75 that respondent corporation
was not a government-owned or controlled corporation. Instead, it
was declared a "sui generis entity" whose accounts were
nevertheless subject to the audit jurisdiction of the Commission on
Audit because it receives funds on behalf of the government.
As for the Executive Committee of the Metro Manila Film Festival,
the Court declared that is not a government-owned or controlled
corporation in Fernando v. Commission on Audit76 because it was not
organized either as a stock or a non-stock corporation. Despite the
absence of the first element, the Court held that it is subject to the
audit jurisdiction of the Commission on Audit because it receives its
funds from the government.
Taking the foregoing into consideration, we rule that the Corregidor
Foundation, Inc. is a government-owned or controlled corporation
under the audit jurisdiction of the Commission on Audit.
Corregidor Foundation, Inc. was organized as a non-stock
corporation under the Corporation Code. It was issued a certificate
of registration77 by the Securities and Exchange Commission on
October 28, 1987 and, according to its Articles of
Incorporation,78 Corregidor Foundation, Inc. was organized and to be
operated in the public interest:
NINTH: That the Foundation is organized and shall be operated in
the public interest and shall have no capital stock, no premium
profit, and shall devote all of its income from whatever source
including gifts, donations, grants, subsidies or other form of
philantrophy (sic) and income derived from business - gate receipts,
tourists, [and] entrance fees to the accomplishment of the purpose
enumerated herein.79
Corregidor Foundation, Inc. was organized primarily to maintain and
preserve the war relics in Corregidor and develop the area's
potential as an international and local tourist destination. Its Articles
of Incorporation provides the following purposes:
SECOND: That the purposes for which the Foundation is formed are
as follows:
1. To maintain and preserve war relics on Corregidor Island and the
development of its potentials as an international and local tourist
destination, and to that end and purpose, to promote and encourage
the recovery, collection, preservation, restoration and protection of
materials and objects, including land and buildings, forming part or
otherwise depicting the historic character and role of the island
fortress in the defense of the country's territorial integrity and
sovereignty, such as but not limited to maps, sketches, drawings,
flags, documents, books and military armaments, equipment and
facilities.
2. To enter into, make, perform and carry out of (sic) cancel and
rescind contracts of every kind and for any lawful purpose with any
person, firm, association, corporation, entity, domestic or foreign, or
others, in which it has a lawful interest.
3. To acquire, purchase, own, hold, operate, develop, lease,
mortgage, pledge, exchange, sell, transfer, or otherwise in any
manner permitted by law, real and personal property of every kind
and description or any interest therein as may be necessary to carry
out its purposes.
4. To raise or borrow money for any of the purposes of the
Foundation and from time to time without limits as to amount to
draw, make, accept, endorse, guarantee, execute and issue
promisory (sic) notes, drafts, bills of exchange, warrants,
debentures, and other negotiable or non-negotiable instruments and
evidence of indebtedness, and to secure the payment thereof, and of
the interest thereon by mortgage on, or pledge, conveyance or
assignment in trust of the whole or any part of the assets of the
Foundation, real, personal, or mixed, including contract rights,
whether at the time owned or thereafter acquired; and to sell[,]
pledge, or otherwise dispose of such securities or other obligations
for the Foundation in furtherance of its purposes.
5. To invest funds as it may be able to obtain from donations,
grants, or loans and from all other sources, in securities or
properties from the return of which the foundation hopes to subsist
and carry on the activities and purposes for which it was organized.
6. In general, to carry on any activity and to have and exercise any
and all of the powers conferred by law, and to do any and all acts
and things herein set forth to the same extent as juridical persons
could do, and in any part of the world, as principal, factor, agent or
otherwise either alone, or in syndicate, partnership, association or
corporation, domestic or foreign, and to establish and maintain
offices and agencies and to exercise all or any of its corporate
powers and rights within the Philippines or abroad, as may be
directly or indirectly incidental or conducive to the attainment of the
above-mentioned purposes.80
The enumeration shows that Corregidor Foundation, Inc.'s purposes
are related to the promotion and development of tourism in the
country, a declared state policy81 and, therefore, a function public in
character.
When Corregidor Foundation, Inc. was organized, all of its
incorporators were government officials, to wit: (1) Jose Antonio U.
Gonzalez, Secretary of Tourism; (2) Rafael Ileto, Secretary of
National Defense; (3) General Fidel Ramos, Chief of Staff; (4)
Dominador O. Reyes, Undersecretary of Tourism for Internal
Services; and (5) Atty. Ramon Binamira, General Manager,
Philippine Tourism Authority.82
Corregidor Foundation, Inc.'s Articles of Incorporation also require
that the members of its Board of Trustees be all government officials
and shall so hold their position as members of the Board by reason
of their office:
SIXTH: That the affairs of the Foundation shall be administered and
governed by the Board of Trustees composed of seven (7) members Provided, further, that a representative of the Department of
who are to serve until their successors are chosen or elected and Science and Technology or any other governmental agency which
qualified as provided by the By-Laws and their names, nationalities, may succeed to the functions of said agency shall be allowed to sit
residences and official address are as follows: with the Board of Trustees of the Foundation as Department of
Science and Technology representative therein. 83
Name Citizenship Address There is no showing that these requirements were ever amended.
      As the foregoing established, the government has substantial
HON. JOSE ANTONIO U. ... participation in the selection of Corregidor Foundation, Inc.'s
GONZALEZ governing board.84 The government controls Corregidor Foundation,
Filipino Inc. making it a government-owned or controlled corporation.
 DOT Bldg., Kalaw Street,
 Secretary of Tourism Ermita, Manila
Petitioners nevertheless contend that Corregidor Foundation, Inc. is
... not a government-owned or controlled corporation because it was
HON. RAFAEL ILETO not organized as a stock corporation and was incorporated under a
Filipino general law, not a special law or an original charter.
Camp Emilio Aguinaldo
 Secretary of National Defense
Quezon City
These arguments are wrong. Even a cursory reading of the statutory
... definitions of "government owned-or controlled corporation" readily
GENERAL FIDEL RAMOS reveals that a non-stock corporation may be government-owned or
Filipino controlled. These definitions begin with "a government-owned or
 Camp Crame, Quezon
 Chief of Staff controlled corporation"85 and refers to a "stock or non-stock
City
corporation. . ."86 Furthermore, there is nothing in the law which
MS. BETH DAY ROMULO Filipino ... provides that government-owned or controlled corporations are
always created under an original charter or special law. As held
MS. NINI QUEZON in Feliciano, there are government-owned or controlled corporations
Filipino ...
AVANCEÑA without an original charter, that is, those created under the
U.S. Embassy Roxas Corporation Code.87
MR. NICHOLAS PLATT American
Blvd., Metro Manila
It is immaterial whether a corporation is private or public for
ATTY. RAMON BINAMIRA ... purposes of exercising the audit jurisdiction of the Commission on
Audit. So long as the government owns or controls the corporation,
Filipino as in this case, the Commission on Audit may audit the corporation's
 General Manager, Philippine  DOT Bldg., Kalaw Street
Tourism Authority Ermita, Manila accounts. In Feliciano:
[T]he constitutional criterion on the exercise of [the Commission on
Audit's] audit jurisdiction depends on the government's ownership or
Provided, however, that the abovenamed government officials shall control of a corporation. The nature of the corporation, whether it is
hold their position as members of the Board by reason of their private, quasi-public, or public is immaterial.
respective offices.
The Constitution vests in the [Commission on Audit] audit
jurisdiction over "government-owned and controlled corporations
with original charters," as well "government-owned or controlled
corporations" without original charters. [Government-owned or
controlled corporations] with original charters are subject to [the
Commission's] pre-audit, while [government-owned or controlled
corporations] without original charters are subject to [the
Commission's] post-audit. [Government-owned or controlled
corporations] without original charters refer to corporations created
under the Corporation Code but are owned or controlled by the
government. The nature or purpose of the corporation is not
material in determining [the Commission's] audit jurisdiction.
Neither is the manner of creation of a corporation, whether under a
general or special law.88 (Emphasis supplied)
Just because the employees of Corregidor Foundation, Inc. are not
under the jurisdiction of the Civil Service Commission does not mean
that Corregidor Foundation, Inc. is not government-owned or
controlled. Article IX-B, Section 2(1)89 of the Constitution is clear
that the jurisdiction of the Civil Service Commission is over
government-owned or controlled corporations with original charters,
not over those without original charters like Corregidor Foundation,
Inc. Addressing a similar argument, this Court in Davao City Water
District v. Civil Service Commission,90 cited in Feliciano, said that:
By "government-owned or controlled corporation with original
charter," We mean government owned or controlled corporation
created by a special law and not under the Corporation Code of the
Philippines. Thus, in the case of Lumanta v. NLRC (G.R. No. 82819,
February 8, 1989, 170 SCRA 79, 82), We held:
"The Court, in National Service Corporation (NASECO) v. National
Labor Relations Commission, G.R. No. 69870, promulgated on 29
November 1988, quoting extensively from the deliberations of the
1986 Constitutional Commission in respect of the intent and
meaning of the new phrase 'with original charter,' in effect held
that government-owned and controlled corporations with original
charter refer to corporations chartered by special law as
distinguished from corporations organized under our general
incorporation statute - the Corporation Code. In NASECO, the
company involved had been organized under the general
incorporation statute and was a subsidiary of the National
Investment Development Corporation (NIDC) which in turn was a
subsidiary of the Philippine National Bank, a bank chartered by a
special statute. Thus, government-owned or controlled corporations
like NASECO are effectively, excluded from the scope of the Civil
Service." (Emphasis supplied)
From the foregoing pronouncement, it is clear that what has been
excluded from the coverage of the [Civil Service Commission] are
those corporations created pursuant to the Corporation Code.91
Also, there is no proof that Corregidor Foundation, Inc.'s funding
primarily comes from grants and donations of international
organizations or foreign entities as petitioners contend. On the
contrary, for the period audited by the Commission on Audit or in
2003, 99.66% of Corregidor Foundation, Inc.'s budget or Four
Hundred Twenty-Three Million, One Hundred Sixty-Four Thousand,
One Hundred Fifteen Pesos (P423,164,115.00) came from the
government, specifically, from the Department of Tourism, Duty
Free Philippines, and the Philippine Tourism Authority. 92 This was
never controverted by petitioners.
Indeed, the following provisions of the September 3, 1996
Memorandum of Agreement indubitably show that Corregidor
Foundation, Inc. is funded by the government through the Philippine
Tourism Authority. Corregidor Foundation, Inc. is required to submit
its budget for approval of the Philippine Tourism Authority. It even
voluntarily submitted itself to the audit jurisdiction of the
Commission on Audit:
MEMORANDUM OF AGREEMENT
CORREGIDOR ISLAND MANAGEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and entered into this 3rd day of September,
1996 by and between:
The PHILIPPINE TOURISM AUTHORITY, a government owned
corporation with office address at DOT Building, Kalaw, Ermita,
Manila, represented herein by its General Manager, EDUARDO T.
JOAQUIN, hereinafter referred to as AUTHORITY;
-and-
CORREGIDOR FOUNDATION, INC., a private nonstock, non-profit
corporation existing and doing business under the laws of the
Philippines with office address at Tourism Building, T. M. Kalaw
Street, Ermita, Manila, represented herein by its Executive Director,
ALFRED A. X. BURGOS, SR., hereinafter referred to as
FOUNDATION;
-WITNESSETH-
WHEREAS, pursuant to a Memorandum of Agreement, referred to as
ANNEX I, the then Ministry of National Defense ceded and conveyed
Corregidor Island to the Department of Tourism/Philippine Tourism
Authority for tourist development purposes;
WHEREAS, consistent with the avowed objective of the
abovementioned Memorandum of Agreement, the FOUNDATION was
eventually organized for private concern to work hand in hand with
the government in enhancing the touristic potentials of the Island
referred to as ANNEX II;
WHEREAS, the parties in order to further accelerate the desired
development find it necessary to transfer the management of the
Island to the FOUNDATION for the purpose of centralizing its
planning and development;
WHEREAS, the AUTHORITY, cognizant of the inability of the
FOUNDATION to source fund for the purpose, hereby assumes
responsibility of providing the budgetary requirements that will
enable the latter to perform the mandate it has received from the
former under this agreement;
NOW, THEREFORE, for and in consideration of the foregoing
premises and covenants and undertakings hereinafter setforth (sic),
parties hereto agreed to the following:
1. PTA hereby authorizes FOUNDATION to manage
and operate CORREGIDOR ISLAND including all
existing facilities therein;
2. FOUNDATION shall use, manage and operate
the aforesaid Island together with its facilities in
order to update and standardize its service
systems;
....
4. Upon execution of the Agreement, AUTHORITY
shall release an operating fund as financial
assistance to the FOUNDATION equivalent to
three (3) months operating expenses based on
the present budget provided for the Island by
FOUNDATION. It is understood that with the
execution of this Agreement, FOUNDATION shall
submit a budget for Corregidor Island for
AUTHORITY'S approval. Within five (5) days of
the first month and every month thereafter, the
equivalent of two (2) months operating fund
based on the approved budget shall be released
by AUTHORITY. Releases of the operating fund
shall be scheduled in such manner that
FOUNDATION shall always have at its disposal
three (3) months operating fund.
FOUNDATION shall submit an annual report on
receipts and disbursements of AUTHORITY funds
on or before the 15th  day of the first month of
each year, duly approved and certified by the
Executive Director. Said report shall be subject
n to audit by AUTHORITY Internal Auditor and
Commission on Audit.
....
6. All collections of revenue shall be taken up in
the books of the FOUNDATION as accountability
to AUTHORITY and to be deposited by
FOUNDATION in a distinct and separate account
in the name of Corregidor Island, the disposition
of which shall be as per approved annual budget
of the FOUNDATION whether for Capital
Expenditures and for Operating
Expenses.93 (Emphasis supplied)
At any rate, even if it were true that Corregidor Foundation, Inc. is
funded by international organizations and foreign entities, these
foreign grants already became public funds the moment they were
donated to Corregidor Foundation, Inc. Thus, these funds may be
audited by the Commission on Audit. The Court elucidated
in Fernando v. Commission on Audit:94
[D]espite the private source of funds, ownership over the same was
already transmitted to the government by way of donation. As
donee, the government had become the owner of the funds, with full
ownership rights and control over the use and disposition of the
same, subject only to applicable laws and COA rules and regulations.
Thus, upon donation to the government, the funds became public in
character.
This is in contrast to cases where there is no transfer of ownership
over the funds from private parties to the government, such as in
the case of cash deposits required in election protests filed before
the trial courts, Commission on Elections, and electoral tribunals. In
these cases, the government becomes a mere depositary of such
fund, the use and disposition of which is subject to the conformity of
the private party-depositor who remains to be the owner thereof. 95
Lastly, while it is true that just like any other corporation organized
under the Corporation Code, Corregidor Foundation, Inc. may
determine voluntarily and solely the successors of its members in
accordance with its own by-laws, this does not change the public
character of its functions and the control the government has over it.
As discussed, the promotion and development of tourism is a public
function and, as provided in its Articles of Incorporation, the
members of Corregidor Foundation, Inc. must be government
officials who shall hold their membership by reason of their office.
In sum, Corregidor Foundation, Inc. is a government-owned or
controlled corporation. Thus, it is under the audit jurisdiction of the
Commission on Audit.
IV
There are cases where this Court, despite the disallowance by the
Commission on Audit, nevertheless enjoined the refund of the
disallowed amounts.96 In these instances, this Court found that the
parties received the disallowed amounts in good faith, defined as
"that state of mind denoting honesty of intention, and freedom from
knowledge of circumstances which ought to put the holder upon
inquiry."97 It also means "an honest intention to abstain from taking
any unconscientious disadvantage of another, even though
technicalities of law, together with the absence of all information,
notice, or benefit or belief of facts which render transactions
unconscientious."98
Here, we cannot ascribe good faith to petitioners in receiving the
disallowed amounts. Department of Budget and Management
Circular No. 2003-5 is clear that only the following are entitled to
honoraria:
4. General Guidelines
4.1. teaching personnel of the Department of Education, Commission on
Higher Education, Technical Education and Skills Development
Authority, State Universities and Colleges and other educational
institutions engaged in actual classroom teaching whose teaching
load is outside of the regular office hours and/or in excess of the
regular load;
4.2 those who act as lecturers, resource persons, coordinators and
facilitators in seminars, training programs and other similar
activities in training institutions, including those conducted by
entities for their officials and employees; and
4.3. chairs and members of Commissions/Board Councils and other
similar entities which are hereinafter referred to as a collegial body
including the personnel thereof, who are neither paid salaries nor
per diems but compensated in the form of honoraria as provided by
law, rules and regulations.99
It is obvious that Corregidor Foundation, Inc. is not an educational
institution and petitioners are not its teaching personnel. Neither are
petitioners lecturers by virtue of their positions in Corregidor
Foundation, Inc. nor are there laws or rules allowing the payment of
honoraria to personnel of the Corregidor Foundation, Inc.
Finally, petitioners knew fully well that they serve in Corregidor
Foundation, Inc. by reason of their office in the Philippine Tourism
Authority. It is also undisputed that petitioners, as officers and
personnel of the Philippine Tourism Authority, already received
honoraria and cash gifts. Considering that this Court pronounced as
early as 1991 in Civil Liberties Union v. The Executive
Secretary100 that an ex-officio position is "actually and in legal
contemplation part of the principal office,"101 receiving another set of
honoraria and cash gift for rendering services to the Corregidor
Foundation, Inc. would be tantamount to payment of additional
compensation proscribed in Article IX-B, Section 8 of the
Constitution. These circumstances negate any claim of good faith.
The present case is different from Blaquera v. Alcala102 and De Jesus
v. Commission on Audit103 where this Court enjoined the refund of
the disallowed amounts. Both cases had ostensible legal bases on
which the recipients honestly believed that the disallowed amounts
paid were due to them.
In Blaquera, productivity incentive benefits of not less than
P2,000.00 were given to employees of the Philippine Tourism
Authority in 1991. The grant was made on the basis of
Administrative Order No. 268, series of 1992. The next year,
productivity incentive benefits were again granted, but a
subsequently issued Administrative Order No. 29, series of 1993
ordered a forced refund of productivity incentive benefits that were
more than P1,000.00. This Court upheld the validity of
Administrative Order No. 29, the latter's issuance being part of the
power of control of the President. However, this Court enjoined the
refund of the disallowed amounts because the employees received
the benefits "in the honest belief that the amounts given were due. .
. and the latter accepted the same with gratitude, confident that
they richly deserve such benefits."104 In Blaquera, Administrative
Order No. 268 ostensibly authorized the payment of the productivity
incentive benefits.
the recipients "need not refund the [disallowed] allowances and
bonus they received[.]"105 In De Jesus, Local Water Utilities
Administration's Resolution No. 313, series of 1995 ostensibly
authorized the payment of the allowances and bonuses.
Unlike in Blaquera and De Jesus, no such ostensible legal basis was
presented in this case. There was no reason for petitioners to
honestly believe that another set of honoraria and cash gifts, by
reason of their ex-officio positions in Corregidor Foundation, Inc.,
were due them. It cannot be said that they received the disallowed
amounts in good faith.
All told, Corregidor Foundation, Inc. is a government-owned or
controlled corporation. It is subject to Department of Budget and
Management Circular No. 2003-5 limiting the payment of honoraria
to certain personnel of the government. Furthermore, petitioners,
being employees of the Philippine Tourism Authority, are public
officers prohibited from receiving additional, double or indirect
compensation as per Article IX-B, Section 8 of the Constitution. The
Commission on Audit did not gravely abuse its discretion in
disallowing the payment of honoraria and cash gift to petitioners.
WHEREFORE, the Petition for Certiorari is DISMISSED.
SO ORDERED.

In De Jesus, allowances and bonuses were given to the members of

the Interim Board of Directors of the Catbalogan Water District on
the basis of the Local Water Utilities Administration's Resolution No.
313, series of 1995. The Commission on Audit disallowed the
payment because, according to Section 13 of the Provincial Water
Utilities Act of 1973, directors of local water utilities shall only
receive per diems. This Court affirmed the disallowance but held that