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Tondo Medical v.

CA

Summary

This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the Decision,1
promulgated by the Court of Appeals on 26 November 2004, denying a petition for the nullification of
the Health Sector Reform Agenda (HSRA) Philippines 1999-2004 of the Department of Health (DOH); and
Executive Order No. 102, "Redirecting the Functions and Operations of the Department of Health,"
which was issued by then President Joseph Ejercito Estrada on 24 May 1999.

Prior hereto, petitioners originally filed a Petition for Certiorari, Prohibition and Mandamus under Rule
65 of the 1997 Revised Rules of Civil Procedure before the Supreme Court on 15 August 2001. However,
the Supreme Court, in a Resolution dated 29 August 2001, referred the petition to the Court of Appeals
for appropriate action.

Petitioners questioned the first reform agenda involving the fiscal autonomy of government hospitals,
particularly the collection of socialized user fees and the corporate restructuring of government
hospitals. The said provision under the HSRA reads:

Provide fiscal autonomy to government hospitals. Government hospitals must be allowed to collect
socialized user fees so they can reduce the dependence on direct subsidies from the government.

Petitioners also assailed the issuance of a draft administrative order issued by the DOH, dated 5 January
2001, entitled "Guidelines and Procedure in the Implementation of the Corporate Restructuring of
Selected DOH Hospitals to Achieve Fiscal Autonomy, and Managerial Flexibility to Start by January
2001;"3 and Administrative Order No. 172 of the DOH, entitled "Policies and Guidelines on the Private
Practice of Medical and Paramedical Professionals in Government Health Facilities,"4 dated 9 January
2001, for imposing an added burden to indigent Filipinos, who cannot afford to pay for medicine and
medical services.

Petitioners alleged that the implementation of the aforementioned reforms had resulted in making free
medicine and free medical services inaccessible to economically disadvantaged Filipinos. Thus, they
alleged that the HSRA is void for being in violation of the following constitutional provisions. Sections 5,
9, 10, 11, 13, 15, 18 of Article II; Section 1 of Article III; Sections 11 and 14 of Article XIII; and Sections 1
and 3(2) of Article XV, all of the 1987 Constitution

On 24 May 1999, then President Joseph Ejercito Estrada issued Executive Order No. 102, entitled
"Redirecting the Functions and Operations of the Department of Health," which provided for the
changes in the roles, functions, and organizational processes of the DOH. Under the assailed executive
order, the DOH refocused its mandate from being the sole provider of health services to being a
provider of specific health services and technical assistance, as a result of the devolution of basic
services to local government units.

Petitioners contended that a law, such as Executive Order No. 102, which effects the reorganization of
the DOH, should be enacted by Congress in the exercise of its legislative function. They argued that
Executive Order No. 102 is void, having been issued in excess of the President’s authority.

The Court of Appeals denied the petition due to a number of procedural defects, which proved fatal: 1)
Petitioners failed to show capacity or authority to sign the certification of non-forum shopping and the
verification; 2) Petitioners failed to show any particularized interest for bringing the suit, nor any direct
or personal injury sustained or were in the immediate danger of sustaining; 3) the Petition, brought
before the Supreme Court on 15 August 1999, was filed out of time, or beyond 60 days from the time
the reorganization methods were implemented in 2000; and 4) certiorari, Prohibition and Mandamus
will not lie where the President, in issuing the assailed Executive Order, was not acting as a tribunal,
board or officer exercising judicial or quasi-judicial functions.

In resolving the substantial issues of the case, the Court of Appeals ruled that the HSRA cannot be
declared void for violating Sections 5, 9, 10, 11, 13, 15, 18 of Article II; Section 1 of Article III; Sections 11
and 14 of Article XIII; and Sections 1 and 3(2) of Article XV, all of the 1987 Constitution, which directly or
indirectly pertain to the duty of the State to protect and promote the people’s right to health and well-
being. It reasoned that the aforementioned provisions of the Constitution are not self-executing; they
are not judicially enforceable constitutional rights and can only provide guidelines for legislation.

Moreover, the Court of Appeals held that the petitioners’ assertion that Executive Order No. 102 is
detrimental to the health of the people cannot be made a justiciable issue. The question of whether the
HSRA will bring about the development or disintegration of the health sector is within the realm of the
political department.

Furthermore, the Court of Appeals decreed that the President was empowered to issue Executive Order
No. 102, in accordance with Section 17 Article VII of the 1987 Constitution. It also declared that the DOH
did not implement Executive Order No. 102 in bad faith or with grave abuse of discretion, as alleged by
the petitioners, as the DOH issued Department Circular No. 275-C, Series of 2000, which created the
different committees tasked with the implementation of the RSP, only after both the DBM and
Presidential Committee on Effective Governance (PCEG) approved the RSP on 8 July 2000 and 17 July
2000, respectively.1avvphi1

Petitioners filed with the Court of Appeals a Motion for Reconsideration of the Decision rendered on 26
November 2004, but the same was denied in a Resolution dated 7 March 2005.

Petitioners allege that the HSRA should be declared void, since it runs counter to the aspiration and
ideals of the Filipino people as embodied in the Constitution.17 They claim that the HSRA’s policies of
fiscal autonomy, income generation, and revenue enhancement violate Sections 5, 9, 10, 11, 13, 15 and
18 of Article II, Section 1 of Article III; Sections 11 and 14 of Article XIII; and Sections 1 and 3 of Article XV
of the 1987 Constitution. Such policies allegedly resulted in making inaccessible free medicine and free
medical services. This contention is unfounded.

As a general rule, the provisions of the Constitution are considered self-executing, and do not require
future legislation for their enforcement. For if they are not treated as self-executing, the mandate of the
fundamental law can be easily nullified by the inaction of Congress.18 However, some provisions have
already been categorically declared by this Court as non self-executing.

In Tanada v. Angara,19 the Court specifically set apart the sections found under Article II of the 1987
Constitution as non self-executing and ruled that such broad principles need legislative enactments
before they can be implemented:
By its very title, Article II of the Constitution is a "declaration of principles and state policies." x x x. These
principles in Article II are not intended to be self-executing principles ready for enforcement through the
courts. They are used by the judiciary as aids or as guides in the exercise of its power of judicial review,
and by the legislature in its enactment of laws.

Petitioners also claim that Executive Order No. 102 is void on the ground that it was issued by the
President in excess of his authority. They maintain that the structural and functional reorganization of
the DOH is an exercise of legislative functions, which the President usurped when he issued Executive
Order No. 102.28 This line of argument is without basis.

This Court has already ruled in a number of cases that the President may, by executive or administrative
order, direct the reorganization of government entities under the Executive Department.29 This is also
sanctioned under the Constitution, as well as other statutes.

Section 17, Article VII of the 1987 Constitution, clearly states: "[T]he president shall have control of all
executive departments, bureaus and offices."

Furthermore, the DOH is among the cabinet-level departments enumerated under Book IV of the
Administrative Code, mainly tasked with the functional distribution of the work of the President.32
Indubitably, the DOH is an agency which is under the supervision and control of the President

In the same way, the Court, in Telecommunications & Broadcast Attorneys of the Philippines, Inc. v.
Comelec,45 ruled that a citizen is allowed to raise a constitutional question only when he can show that
he has personally suffered some actual or threatened injury as a result of the allegedly illegal conduct of
the government; the injury is fairly traceable to the challenged action; and the injury is likely to be
redressed by a favorable action. This case likewise stressed that the rule on constitutional questions
which are of transcendental importance cannot be invoked where a party’s substantive claim is without
merit. Thus, a party’s standing is determined by the substantive merit of his case or a preliminary
estimate thereof. After a careful scrutiny of the petitioners’ substantive claims, this Court finds that the
petitioners miserably failed to show any merit to their claims.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. This Court AFFIRMS the assailed Decision of
the Court of Appeals, promulgated on 26 November 2004, declaring both the HSRA and Executive Order
No. 102 as valid. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice
Kilosbayan v Morato

Summary:

On January 25, 1995, the parties signed an Equipment Lease Agreement (hereafter
called ELA) whereby the PGMC leased on-line lottery equipment and accessories to the
PCSO in consideration of a rental equivalent to 4.3% of the gross amount of ticket sales
derived by the PCSO from the operation of the lottery which in no case shall be less
than an annual rental computed at P35,000.00 per terminal in commercial operation.
The rental is to be computed and paid bi-weekly. In the event the bi-weekly rentals in
any year fall short of the annual minimum fixed rental thus computed, the PCSO agrees
to pay the deficiency out of the proceeds of its current ticket sales. (Pars. 1-2)

Under the law, 30% of the net receipts from the sale of tickets is allotted to charity.
(R.A. No. 1169, §6 (B))

The term of the lease is eight (8) years, commencing from the start of commercial
operation of the lottery equipment first delivered to the lessee pursuant to the agreed
schedule. (Par. 3)

In the operation of the lottery, the PCSO is to employ its own personnel. (Par. 5) It is
responsible for the loss of, or damage to, the equipment arising from any cause and for
the cost of their maintenance and repair. (Pars. 7-8)

--Upon the expiration of the lease, the PCSO has the option to purchase the equipment
for the sum of P25 million
On February 21, 1995 this suit was filed seeking to declare the ELA invalid on the ground
that it is substantially the same as the Contract of Lease nullified in the first case.
Petitioners argue:

1. THE AMENDED ELA IS NULL AND VOID SINCE IT IS BASICALLY OR SUBSTANTIALLY


THE SAME AS OR SIMILAR TO THE OLD LEASE CONTRACT AS REPRESENTED AND
ADMITTED BY RESPONDENTS PGMC AND PCSO.

2. ASSUMING ARGUENDO, THAT THE AMENDED ELA IS MATERIALLY DIFFERENT FROM


THE OLD LEASE CONTRACT, THE AMENDED ELA IS NEVERTHELESS NULL AND VOID FOR
BEING INCONSISTENT WITH AND VIOLATIVE OF PCSO'S CHARTER AND THE DECISION
OF THIS HONORABLE COURT OF MAY 5, 1995.

3. THE AMENDED EQUIPMENT LEASE AGREEMENT IS NULL AND VOID FOR BEING
VIOLATIVE OF THE LAW ON PUBLIC BIDDING OF CONTRACTS FOR FURNISHING
SUPPLIES, MATERIALS AND EQUIPMENT TO THE GOVERNMENT, PARTICULARLY E.O. NO.
301 DATED 26 JULY 1987 AND E.O. NO. 298 DATED 12 AUGUST 1940 AS AMENDED, AS
WELL AS THE "RULES AND REGULATIONS FOR THE PREVENTION OF IRREGULAR,
UNNECESSARY, EXCESSIVE OR EXTRAVAGANT (IUEE) EXPENDITURES PROMULGATED
UNDER COMMISSION ON AUDIT CIRCULAR NO. 85-55-A DATED SEPTEMBER 8, 1985,
CONSIDERING THAT IT WAS AWARDED AND EXECUTED WITHOUT THE PUBLIC BIDDING
REQUIRED UNDER SAID LAWS AND COA RULES AND REGULATIONS, IT HAS NOT BEEN
APPROVED BY THE PRESIDENT OF THE PHILIPPINES, AND IT IS NOT MOST
ADVANTAGEOUS TO THE GOVERNMENT.

4. THE ELA IS VIOLATIVE OF SECTION 2(2), ARTICLE IX-D OF THE 1987 CONSTITUTION
IN RELATION TO COA CIRCULAR NO. 85-55-A.

--The PCSO and PGMC filed separate comments in which they question the petitioners'
standing to bring this suit. They maintain (1) that the ELA is a different lease contract
with none of the vestiges of a joint venture which were found in the Contract of Lease
nullified in the prior case; (2) that the ELA did not have to be submitted to a public bidding
because it fell within the exception provided in E.O. No. 301, §1 (e); (3) that the power
to determine whether the ELA is advantageous to the government is vested in the Board
of Directors of the PCSO; (4) that for lack of funds the PCSO cannot purchase its own on-
line lottery equipment and has had to enter into a lease contract; (5) that what petitioners
are actually seeking in this suit is to further their moral crusade and political agenda,
using the Court as their forum.

--The Kilosbayan, Inc. is an organization described in its petition as "composed of civic-


spirited citizens, pastors, priests, nuns and lay leaders who are committed to the cause
of truth, justice, and national renewal." Its trustees are also suing in their individual and
collective capacities as "taxpayers and concerned citizens." The other petitioners (Sen.
Freddie Webb, Sen. Wigberto Tañada and Rep. Joker P. Arroyo) are members of Congress
suing as such and as "taxpayers and concerned citizens."

Respondents question the right of petitioners to bring this suit on the ground that, not
being parties to the contract of lease which they seek to nullify, they have no personal
and substantial interest likely to be injured by the enforcement of the contract. Petitioners
on the other hand contend that the ruling in the previous case sustaining their standing
to challenge the validity of the first contract for the operation of lottery is now the "law
of the case" and therefore the question of their standing can no longer be reopened.
There is an additional reason for a reexamination of the ruling on standing. The voting
on petitioners' standing in the previous case was a narrow one, with seven (7) members
sustaining petitioners' standing and six (6) denying petitioners' right to bring the suit.
The majority was thus a tenuous one that is not likely to be maintained in any subsequent
litigation. In addition, there have been changes in the membership of the Court, with the
retirement of Justices Cruz and Bidin and the appointment of the writer of this opinion
and Justice Francisco. Given this fact it is hardly tenable to insist on the maintenance of
the ruling as to petitioners' standing.

--Petitioners argue that inquiry into their right to bring this suit is barred by the doctrine
of "law of the case." We do not think this doctrine is applicable considering the fact that
while this case is a sequel to G.R. No. 113375, it is not its continuation. The doctrine
applies only when a case is before a court a second time after a ruling by an appellate
court. Thus in People v. Pinuila, 103 Phil. 992, 999 (1958), it was stated:

"Law of the case" has been defined as the opinion delivered on a former appeal. More
specifically, it means that whatever is once irrevocably established as the controlling legal
rule of decision between the same parties in the same case continues to be the law of
the case, whether correct on general principles or not, so long as the facts on which such
decision was predicated continue to be the facts of the case before the court. (21 C. J. S.
330)
Standing is a special concern in constitutional law because in some cases suits
are brought not by parties who have been personally injured by the operation
of a law or by official action taken, but by concerned citizens, taxpayers or
voters who actually sue in the public interest.

There is, however, no allegation that public funds are being misspent so as to
make this action a public one and justify relaxation of the requirement that an
action must be prosecuted in the name of the real party in interest.

Petitioners invoke the following Principles and State Policies set forth in Art. II of the
Constitution:

The maintenance of peace and order, the protection of life, liberty, and property, and the
promotion of the general welfare are essential for the enjoyment by all the people of the
blessings of democracy. (§5).

The natural and primary right and duty of parents in the rearing of the youth for civic
efficiency and the development of moral character shall receive the support of the
Government. (§12)

The State recognizes the vital role of the youth in nation-building and shall promote their
physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth
patriotism and nationalism, and encourage their involvement in public and civic affairs.
(§13)

The State shall give priority to education, science and technology, arts, culture, and
sports to foster patriotism and nationalism, accelerate social progress, and promote total
human liberation and development. (§17)

(Memorandum for Petitioners, p. 7)

These are not, however, self executing provisions, the disregard of which can give rise
to a cause of action in the courts. They do not embody judicially enforceable
constitutional rights but guidelines for legislation.
The Court considered the Contract of Lease to be actually a joint venture
agreement. From another angle, it said that the arrangement, especially the
provision that all risks were for the account of the PGMC, was in effect a lease
by the PCSO of its franchise to the PGMC.

These features of the old Contract of Lease have been removed in the present
ELA. While the rent is still expressed in terms of percentage (it is now 4.3% of
the gross receipts from the sale of tickets) in the ELA, the PGMC is now
guaranteed a minimum rent of P35,000.00 a year per terminal in commercial
operation.

WHEREFORE, the Petition for Prohibition, Review and/or Injunction seeking to declare
the Equipment Lease Agreement between the Philippine Charity Sweepstakes Office and
the Philippine Gaming Management Corp. invalid is DISMISSED.

Tanada v Angara

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