Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 156208             September 26, 2006
NPC DRIVERS AND MECHANICS ASSOCIATION, (NPC DAMA), represented by Its
President ROGER S. SAN JUAN, SR., NPC EMPLOYEES & WORKERS UNION
(NEWU) – NORTHERN LUZON REGIONAL CENTER, represented by its Regional
President JIMMY D. SALMAN, in their own individual capacities and in behalf of
the members of the associations and all affected officers and employees of
National Power Corporation (NPC), ZOL D. MEDINA, NARCISO M. MAGANTE,
VICENTE B. CIRIO, JR., NECITAS B. CAMAMA, in their individual capacities as
employees of National Power Corporation, petitioners, 
vs.
THE NATIONAL POWER CORPORATION (NPC), NATIONAL POWER BOARD OF
DIRECTORS (NPB), JOSE ISIDRO N. CAMACHO as Chairman of the National
Power Board of Directors (NPB), ROLANDO S. QUILALA, as President – Officer-in-
charge/CEO of National Power Corporation and Member of National Power Board,
and VINCENT S. PEREZ, JR., EMILIA T. BONCODIN, MARIUS P. CORPUS, RUBEN
S. REINOSO, JR., GREGORY L. DOMINGO and NIEVES L. OSORIO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a special civil action for Injunction to enjoin public respondents from
implementing the National Power Board (NPB) Resolutions No. 2002-124 and No. 2002-
125, both dated 18 November 2002, directing, among other things, the termination of all
employees of the National Power Corporation (NPC) on 31 January 2003 in line with the
restructuring of the NPC.
On 8 June 2001, Republic Act No. 9136, otherwise known as the "Electric Power
Industry Reform Act of 2001" (EPIRA Law), was approved and signed into law by
President Gloria Macapagal-Arroyo, and took effect on 26 June 2001. Section 2(i) and
Section 3 of the EPIRA Law states:
Section 2. Declaration of Policy. – It is hereby declared the policy of the State:
xxxx
(i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);
xxxx
Section 3. Scope. – This Act shall provide a framework for the restructuring of the
electric power industry, including the privatization of the assets of NPC, the
transition to the desired competitive structure, and the definition of the
responsibilities of the various government agencies and private entities.1
Under the EPIRA Law,2 a new National Power Board of Directors was constituted
composed of the Secretary of Finance as Chairman, with the Secretary of Energy, the
Secretary of Budget and Management, the Secretary of Agriculture, the Director-General
of the National Economic and Development Authority, the Secretary of Environment and
Natural Resources, the Secretary of Interior and Local Government, the Secretary of the
Department of Trade and Industry, and the President of the National Power Corporation
as members.
On 27 February 2002, the Secretary of the Department of Energy (DOE) promulgated
the Implementing Rules and Regulations (IRR) of the EPIRA Law, pursuant to Section
773 thereof. Said IRR were approved by the Joint Congressional Power Commission on
even date. Meanwhile, also in pursuant to the provisions of the EPIRA Law, the DOE
created the Energy Restructuring Steering Committee (Restructuring Committee) to
manage the privatization and restructuring of the NPC, the National Transmission
Corporation (TRANSCO), and the Power Sector Assets and Liabilities Corporation
(PSALM).
To serve as the overall organizational framework for the realigned functions of the NPC
mandated under the EPIRA Law, the Restructuring Committee proposed a new NPC
Table of Organization which was approved by the NPB through NPB Resolution No.
2002-53 dated 11 April 2002. Likewise, the Restructuring Committee reviewed the
proposed 2002 NPC Restructuring Plan and assisted in the implementation of Phase I
(Realignment) of said Plan, and thereafter recommended to the NPB for approval the
adoption of measures pertaining to the separation and hiring of NPC personnel. The
NPB, taking into consideration the recommendation of the Restructuring Committee,
thus amended the Restructuring Plan approved under NPB Resolution No. 2002-53.
On 18 November 2002, pursuant to Section 634 of the EPIRA Law and Rule 335 of the
IRR, the NPB passed NPB Resolution No. 2002-124 which provided for the Guidelines
on the Separation Program of the NPC and the Selection and Placement of Personnel in
the NPC Table of Organization. Under said Resolution, all NPC personnel shall be
legally terminated on 31 January 2003, and shall be entitled to separation benefits. On
the same day, the NPB approved NPB Resolution No. 2002-125, whereby a Transition
Team was constituted to manage and implement the NPC's Separation Program.
In a Memorandum dated 21 November 2002, the NPC OIC-President and CEO Rolando
S. Quilala circulated the assailed Resolutions and directed the concerned NPC officials
to disseminate and comply with said Resolutions and implement the same within the
period provided for in the timetable set in NPB Resolution No. 2002-125. As a result
thereof, Mr. Paquito F. Garcia, Manager – HRSD and Resources and Administration
Coordinator of NPC, circulated a Memorandum dated 22 November 2002 to all NPC
officials and employees providing for a checklist of the documents required for securing
clearances for the processing of separation benefits of all employees who shall be
terminated under the Restructuring Plan.
Contending that the assailed NPB Resolutions are void and without force and effect,
herein petitioners, in their individual and representative capacities, filed the present
Petition for Injunction to restrain respondents from implementing NPB Resolutions No.
2002-124 and No. 2002-125. In support thereof, petitioners invoke Section 78 of the
EPIRA Law, to wit:
Section 78. Injunction and Restraining Order. – The implementation of the
provisions of this Act shall not be restrained or enjoined except by an order
issued by the Supreme Court of the Philippines.
In assailing the validity of NPB Resolutions No. 2002-124 and No. 2002-125, petitioners
maintain that said Resolutions were not passed and issued by a majority of the members
of the duly constituted Board of Directors since only three of its members, as provided
under Section 486 of the EPIRA Law, were present, namely: DOE Secretary Vincent S.
Perez, Jr.; Department of Budget and Management Secretary Emilia T. Boncodin; and
NPC OIC-President Rolando S. Quilala. According to petitioners, the other four
members who were present at the meeting and signed the Resolutions were not the
secretaries of their respective departments but were merely representatives or
designated alternates of the officials who were named under the EPIRA Law to sit as
members of the NPB. Petitioners claim that the acts of these representatives are
violative of the well-settled principle that "delegated power cannot be further delegated."
Thus, petitioners conclude that the questioned Resolutions have been illegally issued as
it were not issued by a duly constituted board since no quorum existed because only
three of the nine members, as provided under Section 48 of the EPIRA Law, were
present and qualified to sit and vote.
It is petitioners' submission that even assuming arguendo that there was no undue
delegation of power to the four representatives who signed the assailed Resolutions,
said Resolutions cannot still be given legal effect because the same did not comply with
the mandatory requirement of endorsement by the Joint Congressional Power
Commission and approval of the President of the Philippines, as provided under Section
47 of the EPIRA Law which states that:
Section 47. NPC Privatization. – Except for the assets of SPUG, the generation
assets, real estate, and other disposable assets as well as IPP contracts of NPC
shall be privatized in accordance with this Act. Within six (6) months from
effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement
by the Joint Congressional Power Commission and the approval of the President
of the Philippines, on the total privatization of the generation assets, real estate,
other disposable assets as well as existing IPP contracts of NPC and thereafter,
implement the same, in accordance with the following guidelines, except as
provided for in paragraph (f) herein: x x x.
Petitioners insist that if ever there exists a valid wholesale abolition of their positions and
their concomitant separation form the service, such a process is an integral part of
"privatization" and "restructuring" as defined under the EPIRA Law and, therefore, must
comply with the above-quoted provision requiring the endorsement of the Joint
Congressional Power Commission and the approval of the President of the Philippines.
Furthermore, petitioner highlight the fact that said Resolutions will have an adverse
effect on about 5,648 employees of the NPC and will result in the displacement of some
2,370 employees, which, petitioners argue, is contrary to the mandate of the Constitution
to promote full employment and security of tenure.
Respondents, on the other hand, uphold the validity of the assailed Resolutions by
arguing that while it is true that four members of the National Power Board of Directors,
particularly the respective Secretaries of the Department of Interior and Local
Government, the Department of Trade and Industry, and the Department of Finance, as
well as the Director-General of the National Economic and Development Authority, were
not the actual signatories in NPB Resolutions No. 2002-124 and No. 2002-125, they
were, however, ably represented by their respective alternates. Respondents claim that
the validity of such administrative practice whereby an authority is exercised by persons
or subordinates appointed by the responsible official has long been settled.
Respondents further contend that Section 48 of the EPIRA Law does not in any way
prohibit any member of the NPB from authorizing his representative to sign resolutions
adopted by the Board.
From the arguments put forward by herein parties, it is evident that the pivotal issue to
be resolved in this Petition for Injunction is whether or not NPB Resolutions No. 2002-
124 and No. 2002-125 were properly enacted. It is petitioners' contention that the failure
of the four specifically identified department heads7 under Section 48 of the EPIRA Law
to personally approve and sign the assailed Resolutions invalidates the adoption of said
Resolutions. Petitioners maintain that there was undue delegation of delegated power
when only the representatives of certain members of the NPB attended the board
meetings and passed and signed the questioned Resolutions.
We agree with petitioners. In enumerating under Section 48 those who shall compose
the National Power Board of Directors, the legislature has vested upon these persons
the power to exercise their judgment and discretion in running the affairs of the NPC.
Discretion may be defined as "the act or the liberty to decide according to the principles
of justice and one's ideas of what is right and proper under the circumstances, without
willfulness or favor.8 Discretion, when applied to public functionaries, means a power or
right conferred upon them by law of acting officially in certain circumstances, according
to the dictates of their own judgment and conscience, uncontrolled by the judgment or
conscience of others.9 It is to be presumed that in naming the respective department
heads as members of the board of directors, the legislature chose these secretaries of
the various executive departments on the basis of their personal qualifications and
acumen which made them eligible to occupy their present positions as department
heads. Thus, the department secretaries cannot delegate their duties as members of the
NPB, much less their power to vote and approve board resolutions, because it is their
personal judgment that must be exercised in the fulfillment of such responsibility.
There is no question that the enactment of the assailed Resolutions involves the
exercise of discretion and not merely a ministerial act that could be validly performed by
a delegate, thus, the rule enunciated in the case ofBinamira v. Garrucho10 is relevant in
the present controversy, to wit:
An officer to whom a discretion is entrusted cannot delegate it to another, the
presumption being that he was chosen because he was deemed fit and
competent to exercise that judgment and discretion, and unless the power to
substitute another in his place has been given to him, he cannot delegate his
duties to another.
In those cases in which the proper execution of the office requires, on the part of
the officer, the exercise of judgment or discretion, the presumption is that he was
chosen because he was deemed fit and competent to exercise that judgment and
discretion, and, unless power to substitute another in his place has been given to
him, he cannot delegate his duties to another.
Respondents' assertion to the contrary is not tenable. The ruling in the case cited by
respondents to support their contention is not applicable in the case at bar. While it is
true that the Court has determined in the case ofAmerican Tobacco Company v.
Director of Patents11 that a delegate may exercise his authority through persons he
appoints to assist him in his functions, it must be stressed that the Court explicitly stated
in the same case that said practice is permissible only when the judgment and
discretion finally exercised are those of the officer authorized by law. According to
the Court, the rule that requires an administrative officer to exercise his own judgment
and discretion does not preclude him from utilizing, as a matter of practical
administrative procedure, the aid of subordinates, so long as it is the legally authorized
official who makes the final decision through the use of his own personal judgment.
In the case at bar, it is not difficult to comprehend that in approving NPB Resolutions No.
2002-124 and No. 2002-125, it is the representatives of the secretaries of the different
executive departments and not the secretaries themselves who exercised judgment in
passing the assailed Resolution, as shown by the fact that it is the signatures of the
respective representatives that are affixed to the questioned Resolutions. This, to our
mind, violates the duty imposed upon the specifically enumerated department heads to
employ their own sound discretion in exercising the corporate powers of the NPC.
Evidently, the votes cast by these mere representatives in favor of the adoption of the
said Resolutions must not be considered in determining whether or not the necessary
number of votes was garnered in order that the assailed Resolutions may be validly
enacted. Hence, there being only three valid votes cast out of the nine board members,
namely those of DOE Secretary Vincent S. Perez, Jr.; Department of Budget and
Management Secretary Emilia T. Boncodin; and NPC OIC-President Rolando S. Quilala,
NPB Resolutions No. 2002-124 and No. 2002-125 are void and are of no legal effect.
Having determined that the assailed Resolutions are void as they lack the necessary
number of votes for their adoption, We no longer deem it necessary to pass upon the
other issues raised in the instant petition
WHEREFORE, premises considered, National Power Board Resolutions No. 2002-124
and No. 2002-125 are hereby declared VOID and WITHOUT LEGAL EFFECT. The
Petition for Injunction is hereby GRANTED and respondents are
hereby ENJOINED from implementing said NPB Resolutions No. 2002-124 and No.
2002-125.
SO ORDERED.
Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Callejo, Sr.,
J.J., concur.

Footnotes
1
 Annex "A" of Petition; rollo, pp. 24-25.
2
 Section 48. National Power Board of Directors. – Upon the passage of this Act,
Section 6 of Republic Act No. 6395, as amended, and Section 13 of Republic Act
No. 7638, as amended, referring to the composition of the National Power Board
of Directors, are hereby repealed and a new Board shall be immediately
organized. The new Board shall be composed of the Secretary of Finance as
Chairman, with the following as members: the Secretary of Energy, the Secretary
of Budget and Management, the Secretary of Agriculture, the Director-General of
the National Economic and Development Authority, the Secretary of Environment
and Natural Resources, the Secretary of the Interior and Local Government, the
Secretary of the Department of Trade and Industry, and the President of the
National Power Corporation.
3
 Section 77. Implementing Rules and Regulations. – The DOE shall, in
consultation with relevant government agencies, the electric power industry
participants, non-government organizations and end-users, promulgate the
Implementing Rules and Regulations (IRR) of this Act within six (6) months from
the effectivity of this Act, subject to the approval by the Power Commission.
4
 Section 63. Separation Benefits of Officials and Employees of Affected
Agencies. - National Government employees displaced or separated from the
service as a result of the restructuring of the electricity industry and privatization
of NPC assets pursuant to this Act, shall be entitled to either a separation pay
and other benefits in accordance with existing laws, rules or regulations or be
entitled to avail of the privileges provided under a separation plan which shall be
one and one-half month salary for every year of service in the
government: Provided, however, That those who avail of such privileges shall
start their government service anew if absorbed by any government-owned
successor company. In no case shall there be any diminution of benefits under
the separation plan until the full implementation of the restructuring and
privatization.
Displaced or separated personnel as a result of the privatization, if qualified, shall
be given preference in the hiring of the manpower requirements of the privatized
companies.
The salaries of employees of NPC shall continue to be exempt from the coverage
of Republic Act No. 6758, otherwise known as "The Salary Standardization Act."
With respect to employees who are not retained by NPC, the Government,
through the Department of Labor and Employment, shall endeavor to implement
re-training, job counseling, and job placement programs.
5
 RULE 33. SEPARATION BENEFITS
Section 1. General Statement on Coverage.
This Rule shall apply to all employees in the National Government service
as of 26 June 2001 regardless of position, designation or status, who are
displaced or separated from the service as a result of the Restructuring of
the electricity industry and Privatization of NPC assets: Provided,
however, That the coverage for casual or contractual employees shall be
limited to those whose appointments were approved or attested by the
Civil Service Commission (CSC).
Section 2. Scope of Application. This Rule shall apply to affected
personnel of DOE, ERB, NEA and NPC.
Section 3. Separation and Other Benefits.
(a) The separation benefit shall consist of either a separation pay and
other benefits granted in accordance with existing laws, rules and
regulations or a separation plan equivalent to one and one half (1-½)
months' salary for every year of service in the government, whichever is
higher: Provided,That the separated or displaced employee has rendered
at least one (1) year of service at the time of effectivity of the Act.
(b) The following shall govern the application of Section 3(a) of this Rule:
(i) With respect to NPC officials and employees, they shall be
considered legally terminated and shall be entitled to the benefits
or separation pay provided in Section 3(a) herein when the
restructuring plan as approved by the NPC Board shall have been
implemented.
(ii) With respect to NEA officials and employees, they shall be
considered legally terminated and shall be entitled to the benefits
or separation pay provided in Section 3(a) herein when a
restructuring of NEA is implemented pursuant to a law enacted by
Congress or pursuant to Section 5(a)(5) of Presidential Decree
No. 269.
(iii) With respect to the affected Bureaus of the DOE, their officials
and employees shall be considered legally terminated and shall
be entitled to the benefits or separation pay provided in Section
3(a) herein when the re-organizational plan shall have been
implemented as a result of the Restructuring of the electric power
industry.
(c) The governing board or authority of the entities enumerated in Section
3(b) hereof shall have the sole prerogative to hire the separated
employees as new employees who start their service anew for such
positions and for such compensation as may be determined by such
board or authority pursuant to its restructuring program. Those who avail
of the foregoing privileges shall start their government service anew if
absorbed by any government agency or any government-owned
successor company.
(d) In no case shall there be any diminution of benefits under the
separation plan until the full implementation of the Restructuring of the
electric power industry and the Privatization of NPC assets in accordance
with the approved Restructuring and Privatization schedule.
(e) For this purpose, "Salary," as a rule, refers to the basic pay including
the thirteenth (13th) month pay received by an employee pursuant to his
appointment, excluding per diems, bonuses, overtime pay, honoraria,
allowances and any other emoluments received in addition to the basic
pay under existing laws.
(f) Likewise, "Separation" or "Displacement" refers to the severance of
employment of any official or employee, who is neither qualified under
existing laws, rules and regulations nor has opted to retire under existing
laws, as a result of the Restructuring of the electric power industry or
Privatization of NPC assets pursuant to the Act.
Section 4. Funding.
Funds necessary to cover the separation pay under this Rule shall
be provided either by the Government Service Insurance System (GSIS)
or from the corporate funds of the NEA or the NPC, as the case may be;
and in the case of the DOE and the ERB, by the GSIS or from the general
fund, as the case may be. The Buyer or Concessionaire or the successor
company shall not be liable for the payment of the separation pay.
Section 5. Preferential Rights of Employees.
Displaced or separated personnel as a result of the Restructuring of
the electric power industry and Privatization of NPC assets shall be given
preference in the hiring of manpower requirements of the newly-created
offices or the privatized companies: Provided, That the displaced or
separated personnel meet the prescribed qualifications. With respect to
employees who are not retained by NPC, the government, through the
Department of Labor and Employment (DOLE), shall endeavor to
implement re-training, job counseling, and job placement programs.
Section 6. Implementation.
The DOE, NEA, and NPC, shall issue guidelines applicable to
their respective employees to implement this Rule within ninety (90) days
from effectivity of these Rules: Provided, That in the case of ERC, the
independent quasi-judicial body created under the Act, the manner of,
and timetable for, implementation of its organization shall be governed by
Section 38 and Section 39 of the Act.