G.R. No.

198688, November 24, 2020

KILUSANG MAGBUBUKID NG PILIPINAS (KMP), ET. AL., Petitioners, v.

AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY,
REPRESENTED BY ITS BOARD COMPOSED OF: ROBERTO K. MATHAY,
PRESIDENT & CEO, ET. AL., Respondents.

G.R. No. 208282

PINAG-ISANG LAKAS NG MGA SAMAHAN SA CASIGURAN, AURORA

(PIGLACASA), REPRESENTED BY ITS VICE PRESIDENT EDWIN C. GARCIA, ET.
AL., Petitioners, v. AURORA PACIFIC ECONOMIC ZONE AND FREEPORT
AUTHORITY (APECO), SENATE OF THE PHILIPPINES, REPRESENTED BY
SENATE PRESIDENT FRANKLIN DRILON, AND HOUSE OF REPRESENTATIVES,
REPRESENTED BY SPEAKER FELICIANO BELMONTE, Respondents.

DECISION

LEONEN, J.:

FACTS
Before this Court are two consolidated Petitions assailing as unconstitutional Republic
Act No. 9490,3 as amended by Republic Act No. 10083,4 which established the Aurora
Special Economic Zone and Freeport, a special economic zone and freeport in Aurora.

petitioners assert that the assailed laws violate Article XII, Section 21 of the
Constitution for granting respondent Aurora Pacific Economic Zone and Freeport
Authority (APEZA) the authority to contract foreign loans without approval of the
President, the Department of Finance, or the Central Bank.

Article XII, Section 21 of the Constitution Section 21. Foreign loans may only be
incurred in accordance with law and the regulation of the monetary authority.
Information on foreign loans obtained or guaranteed by the Government shall be made
available to the public.

On the issue on foreign investment, respondents argue that the authority to contract a
foreign loan may be validly delegated to respondent APEZA, as a government-owned or
controlled corporation.

ISSUE

Whether the assailed laws violate Article XII, Section 21 of the Constitution for granting
respondent APEZA the authority to contract foreign loans without approval of the
President, the Department of Finance, or the Central Bank.

RULING
The allegations on the violation on rules concerning foreign loans is untenable

The president is allowed to contract and guarantee foreign loans, and the Constitution
does not distinguish as to the kind of loans or debt instruments that it covers. 309 The
president shares this authority with the Central Bank

the president may validly delegate the power to contract foreign loans under the
doctrine of qualified political agency. The Constitution sanctions such delegation to the
Secretary of Finance, as the president's alter ego, provided that the contracting of loan
is subject to the president's approval.

Section 12(g) of the assailed Republic Act No. 9490 complies with the constitutional and
legal requirements on contracting foreign loans. It states:chanroblesvirtualawlibrary
(g) Subject to the approval of the President of the Philippines and the
Monetary Board of the Bangko Sentral ng Pilipinas and upon the
recommendation of the Department of Finance, to raise or borrow
adequate and necessary funds from local or foreign sources to finance
its projects and programs under this Act, and for that purpose to issue
bonds, promissory notes, and other forms of securities, and to secure the same
by a guarantee, pledge, mortgage, deed of trust, or an assignment of all or part
of its property or assets[.]
It is clear that the borrowing of foreign loan for APECO is subject to the approval of the
president and the Monetary Board, and upon the Department of Finance's
recommendation. This provision cannot be interpreted to mean that respondent APEZA
can, on its own, contract foreign loans and other indebtedness. The safeguards found in
the Constitution and the Special Economic Zone Act316 are present in the provision.