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EN BANC Lourdes Constantino and their minor children,

Renato Redentor, Anna Marika Lissa, Nina Elissa,

SPOUSES RENATO G.R. No. 106064 and Anna Karmina, Filomeno Sta. Ana III, and the
CONSTANTINO, JR. and Freedom from Debt Coalition, a non-stock, non-
LOURDES CONSTANTINO Present: profit, non-government organization that advocates a
and their minor children pro-people and just Philippine debt policy.[2] Named
RENATO REDENTOR, DAVIDE, JR., CJ., respondents were the then Governor of the Bangko
ANNA MARIKA LISSA, PUNO, Sentral ng Pilipinas, the Secretary of Finance, the
NINA ELISSA, and PANGANIBAN, National Treasurer, and the Philippine Debt
ANNA KARMINA, QUISUMBING, Negotiation Chairman Emmanuel V. Pelaez.[3] All
FREEDOM FROM DEBT YNARES-SANTIAGO, respondents were members of the Philippine panel
COALITION, and FILOMENO SANDOVAL-GUTIERREZ, tasked to negotiate with the countrys foreign
STA. ANA III, CARPIO, creditors pursuant to the Financing Program.
Petitioners ,
The operative facts are sparse and there is
vs little need to elaborate on them.

HON. JOSE B. CUISIA, The Financing Program was the culmination

in his capacity as Governor of efforts that began during the term of former
of the Central Bank, President Corazon Aquino to manage the country’s
HON. RAMON DEL ROSARIO, external debt problem through a negotiation-oriented
in his capacity as Secretary debt strategy involving cooperation and negotiation
of Finance, HON. EMMANUEL V. with foreign creditors.[4] Pursuant to this strategy, the
PELAEZ, in his capacity as Aquino government entered into three restructuring
Philippine Debt Negotiating agreements with representatives of foreign creditor
Chairman, and the NATIONAL Promulgated: governments during the period of 1986 to
TREASURER, 1991.[5] During the same period, three similarly-
Respondents. October 13, 2005 oriented restructuring agreements were executed
x-------------------------------------------------------------------x with commercial bank creditors.[6]
On 28 February 1992, the Philippine Debt
TINGA, J.: Negotiating Team, chaired by respondent Pelaez,
negotiated an agreement with the countrys Bank
The quagmire that is the foreign debt Advisory Committee, representing all foreign
problem has especially confounded developing commercial bank creditors, on the Financing Program
nations around the world for decades. It has defied which respondents characterized as a multi-option
easy solutions acceptable both to debtor countries financing package.[7] The Program was scheduled to
and their creditors. It has also emerged as cause be executed on 24 July 1992 by respondents in behalf
celebre for various political movements and of the Republic. Nonetheless, petitioners alleged that
grassroots activists and the wellspring of much even prior to the execution of the Program
scholarly thought and debate. respondents had already implemented its buyback
component when on 15 May 1992, the Philippines
The present petition illustrates some of the bought back P1.26 billion of external debts pursuant
ideological and functional differences between to the Program.[8]
experts on how to achieve debt relief. However, this
being a court of law, not an academic forum or a The petition sought to enjoin the ratification
convention on development economics, our of the Program, but the Court did not issue any
resolution has to hinge on the presented legal issues injunctive relief. Hence, it came to pass that the
which center on the appreciation of the constitutional Program was signed in London as scheduled. The
provision that empowers the President to contract petition still has to be resolved though as petitioners
and guarantee foreign loans. The ultimate choice is seek the annulment of any and all acts done by
between a restrictive reading of the constitutional respondents, their subordinates and any other public
provision and an alimentative application thereof officer pursuant to the agreement and program in
consistent with time-honored principles on executive question.[9] Even after the signing of the
power and the alter ego doctrine. Program, respondents themselves acknowledged
that the remaining principal objective of the petition
This Petition for Certiorari, Prohibition and is to set aside respondents actions.[10]
Mandamus assails said contracts which were entered
into pursuant to the Philippine Comprehensive Petitioners characterize the Financing
Financing Program for 1992 (Financing Program or Program as a package offered to the countrys foreign
Program). It seeks to enjoin respondents from creditors consisting of two debt-relief options.[11] The
executing additional debt-relief contracts pursuant first option was a cash buyback of portions of the
thereto. It also urges the Court to issue an order Philippine foreign debt at a discount.[12] The second
compelling the Secretary of Justice to institute option allowed creditors to convert existing
criminal and administrative cases against Philippine debt instruments into any of three kinds of
respondents foracts which circumvent or negate the bonds/securities: (1) new money bonds with a five-
provisions Art. XII of the Constitution.[1] year grace period and 17 years final maturity, the
purchase of which would allow the creditors to
Parties and Facts convert their eligible debt papers into bearer bonds
with the same terms; (2) interest-reduction bonds
The petition was filed on 17 July 1992 by with a maturity of 25 years; and (3) principal-
petitioners spouses Renato Constantino, Jr. and
collateralized interest-reduction bonds with a Standing of Petitioners
maturity of 25 years.[13]
The individual petitioners are suing as
On the other hand, according to respondents the citizens of the Philippines; those among them who
Financing Program would cover about U.S. $5.3 are of age are suing in their additional capacity as
billion of foreign commercial debts and it was taxpayers.[19] It is not indicated in what capacity the
expected to deal comprehensively with the Freedom from Debt Coalition is suing.
commercial bank debt problem of the country and
pave the way for the countrys access to capital Respondents point out that petitioners have
markets.[14] They add that the Program carried three no standing to file the present suit since the rule
basic options from which foreign bank lenders could allowing taxpayers to assail executive or legislative
choose, namely: to lend money, to exchange existing acts has been applied only to cases where the
restructured Philippine debts with an interest constitutionality of a statute is involved. At the same
reduction bond; or to exchange the same Philippine time, however, they urge this Court to exercise its
debts with a principal collateralized interest wide discretion and waive petitioners lack of
reduction bond.[15] standing. They invoke the transcendental importance
of resolving the validity of the questioned debt-relief
Issues for Resolution contracts and others of similar import.

Petitioners raise several issues before this The recent trend on locus standi has veered
Court. towards a liberal treatment in taxpayers
suits. In Tatad v. Garcia Jr.,[20] this Court reiterated that
First, they object to the debt-relief contracts the prevailing doctrines in taxpayers suits are to
entered into pursuant to the Financing Program as allow taxpayers to question contracts entered into by
beyond the powers granted to the President under the national government or government owned and
Section 20, Article VII of the Constitution.[16] The controlled corporations allegedly in contravention of
provision states that the President may contract or law.[21] A taxpayer is allowed to sue where there is a
guarantee foreign loans in behalf of the Republic. It is claim that public funds are illegally disbursed, or that
claimed that the buyback and securitization/bond public money is being deflected to any improper
conversion schemes are neither loans nor guarantees, purpose, or that there is a wastage of public funds
and hence beyond the power of the President to through the enforcement of an invalid or
execute. unconstitutional law.[22]

Second, according to petitioners even Moreover, a ruling on the issues of this case
assuming that the contracts under the Financing will not only determine the validity or invalidity of
Program are constitutionally permissible, yet it is the subject pre-termination and bond-conversion of
only the President who may exercise the power to foreign debts but also create a precedent for other
enter into these contracts and such power may not be debts or debt-related contracts executed or to be
delegated to respondents. executed in behalf of the President of the Philippines
by the Secretary of Finance. Considering the reported
Third, petitioners argue that the Financing Philippine debt of P3.80 trillion as of November 2004,
Program violates several constitutional policies and the foreign public borrowing component of which
that contracts executed or to be executed pursuant reached P1.81 trillion in November, equivalent to
thereto were or will be done by respondents with 47.6% of total government borrowings,[23] the
grave abuse of discretion amounting to lack or excess importance of the issues raised and the magnitude of
of jurisdiction. the public interest involved are indubitable.

Petitioners contend that the Financing Thus, the Courts cognizance of this petition
Program was made available for debts that were is also based on the consideration that the
either fraudulently contracted or void. In this regard, determination of the issues presented will have a
petitioners rely on a 1992 Commission on Audit bearing on the state of the countrys economy, its
(COA) report which identified several behest loans as international financial ratings, and perhaps even the
either contracted or guaranteed fraudulently during Filipinos way of life. Seen in this light, the
the Marcos regime.[17] They posit that since these and transcendental importance of the issues herein
other similar debts, such as the ones pertaining to the presented cannot be doubted.
Bataan Nuclear Power Plant,[18] were eligible for
buyback or conversion under the Program, the Where constitutional issues are properly
resultant relief agreements pertaining thereto would raised in the context of alleged facts, procedural
be void for being waivers of the Republics right to questions acquire a relatively minor
repudiate the void or fraudulently contracted loans. significance.[24] We thus hold that by the very nature
of the power wielded by the President, the effect of
For their part, respondents dispute the points raised using this power on the economy, and the well-being
by petitioners. They also question the standing of in general of the Filipino nation, the Court must set
petitioners to institute the present petition and the aside the procedural barrier of standing and rule on
justiciability of the issues presented. the justiciable issues presented by the parties.

The Court shall tackle the procedural questions ahead Ripeness/Actual Case Dimension
of the substantive issues.
Even as respondents concede the
transcendental importance of the issues at bar, in
The Courts Rulings their Rejoinder they ask this Court to dismiss
the Petition. Allegedly, petitioners arguments are
mere attempts at abstraction.[25] Respondents are
correct to some degree. Several issues, as shall be The point that must be
discussed in due course, are not ripe for adjudication. stressed is that repudiation is not an
attractive alternative if net payments
The allegation that respondents waived the to creditors in the short and medium-
Philippines right to repudiate void and fraudulently run can be reduced through an
contracted loans by executing the debt-relief agreement (as opposed to a
agreements is, on many levels, not justiciable. unilaterally set ceiling on debt
service payments) which provides
In the first place, records do not show for both rescheduling of principal
whether the so-called behest loansor other allegedly and capitalization of interest, or its
void or fraudulently contracted loans for that equivalent in new loans, which
matterwere subject of the debt-relief contracts would make it easier for the country
entered into under the Financing Program. to pay interest.[28]

Moreover, asserting a right to repudiate void Sovereign default is not new to the Philippine
or fraudulently contracted loans begs the question of setting. In October 1983, the Philippines declared a
whether indeed particular loans are void or moratorium on principal payments on its external
fraudulently contracted. Fraudulently contracted debts that eventually lasted four years,[29] that
loans are voidable and, as such, valid and enforceable virtually closed the countrys access to new foreign
until annulled by the courts. On the other hand, void money[30]and drove investors to leave the Philippine
contracts that have already been fulfilled must be market, resulting in some devastating
declared void in view of the maxim that no one is consequences.[31] It would appear then that
allowed to take the law in his own this beguilingly attractive and dangerously simplistic
hands.[26] Petitioners theory depends on a prior solution deserves the utmost circumspect cogitation
annulment or declaration of nullity of the pre-existing before it is resorted to.
loans, which thus far have not been submitted to this
Court. Additionally, void contracts are unratifiable In any event, the discretion on the matter lies
by their very nature; they are null and void ab initio. not with the courts but with the executive. Thus,
Consequently, from the viewpoint of civil law, what the Program was conceptualized as an offshoot of the
petitioners present as the Republics right to repudiate decision made by then President Aquino that the
is yet a contingent right, one which cannot be allowed Philippines should recognize its sovereign
as an anticipatory basis for annulling the debt-relief debts[32] despite the controversy that engulfed many
contracts. Petitioners contention that the debt-relief debts incurred during the Marcos era. It is a scheme
agreements are tantamount to waivers of the whereby the Philippines restructured its debts
Republics right to repudiate so-called behest loans is following a negotiated approach instead of a default
without legal foundation. approach to manage the bleak Philippine debt
It may not be amiss to recognize that there
are many advocates of the position that the Republic As a final point, petitioners have no real basis
should renege on obligations that are considered as to fret over a possible waiver of the right to repudiate
illegitimate. However, should the executive branch void contracts. Even assuming that spurious loans
unilaterally, and possibly even without prior court had become the subject of debt-relief contracts,
determination of the validity or invalidity of these respondents unequivocally assert that the Republic
contracts, repudiate or otherwise declare to the did not waive any right to repudiate void or
international community its resolve not to recognize fraudulently contracted loans, it having incorporated
a certain set of illegitimate loans, adverse a no-waiver clause in the agreements.[33]
repercussions[27] would come into play. Dr. Felipe
Medalla, former Director General of the National Substantive Issues
Economic Development Authority, has warned, thus:
It is helpful to put the matter in perspective before
One way to reduce debt moving on to the merits. The Financing Program
service is to repudiate debts, totally extinguished portions of the countrys pre-existing
or selectively. Taken to its limit, loans through either debt buyback or bond-
however, such a strategy would put conversion. The buyback approach essentially pre-
the Philippines at such odds with too terminated portions of public debts while the bond-
many enemies. Foreign commercial conversion scheme extinguished public debts
banks by themselves and without the through the obtention of a new loan by virtue of a
cooperation of creditor sovereign bond issuance, the proceeds of which in
governments, especially the United turn were used for terminating the original loan.
States, may not be in a position to
inflict much damage, but concerted First Issue: The Scope of Section 20, Article VII
sanctions from commercial banks,
multilateral financial institutions For their first constitutional argument,
and creditor governments would petitioners submit that the buyback and bond-
affect not only our sources of credit conversion schemes do not constitute the loan
but also our access to markets for our contract or guarantee contemplated in the
exports and the level of development Constitution and are consequently prohibited. Sec.
assistance. . . . [T]he country might 20, Art. VII of the Constitution provides, viz:
face concerted sanctions even if
debts were repudiated only
The President may contract Government, the Secretary of
or guarantee foreign loans in behalf Finance, with the approval of the
of the Republic of President of the Philippines, after
the Philippines with the prior consultation with the Monetary
concurrence of the Monetary Board Board, is authorized to borrow from
and subject to such limitations as time to time on the credit of the
may be provided under law. The Republic of the Philippines such
Monetary Board shall, within thirty sum or sums as in his judgment
days from the end of every quarter of may be necessary, and to issue
the calendar year, submit to the therefor evidences of indebtedness
Congress a complete report of its of the Philippine Government."
decisions on applications for loans to Such evidences of indebtedness
be contracted or guaranteed by the may be of the following types:
government or government-owned
and controlled corporations which ....
would have the effect of increasing
the foreign debt, and containing c. Treasury bonds, notes,
other matters as may be provided by securities or other evidences of
indebtedness having maturities of
one year or more but not exceeding
twenty-five years from the date of
On Bond-conversion
issue. (Emphasis supplied.)
Loans are transactions wherein the owner of
a property allows another party to use the property
Under the foregoing provisions, sovereign
and where customarily, the latter promises to return
bonds may be issued not only to supplement
the property after a specified period with payment for
government expenditures but also to provide for the
its use, called interest.[34] On the other hand, bonds
purchase,[37] redemption,[38] or refunding[39] of any
are interest-bearing or discounted government or
obligation, either direct or guaranteed, of the
corporate securities that obligate the issuer to pay the
Philippine Government.
bondholder a specified sum of money, usually at
specific intervals, and to repay the principal amount
of the loan at maturity.[35] The word bond means
Petitioners, however, point out that a
contract, agreement, or guarantee. All of these terms
supposed difference between contracting a loan and
are applicable to the securities known as bonds. An
issuing bonds is that the former creates a definite
investor who purchases a bond is lending money to
creditor-debtor relationship between the parties
the issuer, and the bond represents the issuers
while the latter does not.[40] They explain that a
contractual promise to pay interest and repay
contract of loan enables the debtor to restructure or
principal according to specific terms. A short-term
novate the loan, which benefit is lost upon the
bond is often called a note.[36]
conversion of the debts to bearer bonds such that the
Philippines surrenders the novatable character of a
The language of the Constitution is simple
loan contract for the irrevocable and unpostponable
and clear as it is broad. It allows the President to
demandability of a bearer bond.[41]Allegedly, the
contract and guarantee foreign loans. It makes no
Constitution prohibits the President from issuing
prohibition on the issuance of certain kinds of loans
bonds which are far more onerous than loans.[42]
or distinctions as to which kinds of debt instruments
are more onerous than others. This Court may not
This line of thinking is flawed to say the least.
ascribe to the Constitution meanings and restrictions
The negotiable character of the subject bonds is not
that would unduly burden the powers of the
mutually exclusive with the Republics freedom to
President. The plain, clear and unambiguous
negotiate with bondholders for the revision of the
language of the Constitution should be construed in
terms of the debt. Moreover, the securities market
a sense that will allow the full exercise of the power
provides some flexibilityif the Philippines wants to
provided therein. It would be the worst kind of
pay in advance, it can buy out its bonds in the market;
judicial legislation if the courts were to misconstrue
if interest rates go down but the Philippines does not
and change the meaning of the organic act.
have money to retire the bonds, it can replace the old
bonds with new ones; if it defaults on the bonds, the
The only restriction that the Constitution
bondholders shall organize and bring about a re-
provides, aside from the prior concurrence of the
negotiation or settlement.[43] In fact, several countries
Monetary Board, is that the loans must be subject to
have restructured their sovereign bonds in view
limitations provided by law. In this regard, we note
either of inability and/or unwillingness to pay the
that Republic Act (R.A.) No. 245 as amended by Pres.
indebtedness.[44] Petitioners have not presented a
Decree (P.D.) No. 142, s. 1973, entitled An Act
Authorizing the Secretary of Finance to Borrow to Meet plausible reason that would preclude the Philippines
Public Expenditures Authorized by Law, and for Other from acting in a similar fashion, should it so opt.
Purposes, allows foreign loans to be contracted in the
form of, inter alia, bonds. Thus:
This theory may even be dismissed in a
Sec. 1. In order to meet public perfunctory manner since petitioners are merely
expenditures authorized by law or to expecting that the Philippines would opt to
provide for the purchase, restructure the bonds but with the negotiable
redemption, or refunding of any character of the bonds, would be prevented from so
obligations, either direct or doing. This is a contingency which petitioners do not
guaranteed of the Philippine assert as having come to pass or even imminent.
Consummated acts of the executive cannot be struck any such sinking funds the
down by this Court merely on the basis of petitioners principal amount of any
anticipatory cavils. obligations which have
matured, or which have
been called for redemption
On the Buyback Scheme or for which redemption has
been demanded in
In their Comment, petitioners assert that the accordance with terms
power to pay public debts lies with Congress and was prescribed by him prior to
deliberately withheld by the Constitution from the date of issue: Provided,
President.[45] It is true that in the balance of power however, That he may, if he
between the three branches of government, it is so chooses and if the holder
Congress that manages the countrys coffers by virtue is willing, exchange any
of its taxing and spending powers. However, the law- such obligation with any
making authority has promulgated a law ordaining other direct or guaranteed
an automatic appropriations provision for debt obligation or obligations of
servicing[46]by virtue of which the President is the Philippine Government
empowered to execute debt payments without the of equivalent value. In the
need for further appropriations. Regarding these case of interest-bearing
legislative enactments, this Court has held, viz: obligations, he shall pay not
less than their face value; in
Congress deliberates or acts on the the case of obligations issued
budget proposals of the President, at a discount he shall pay the
and Congress in the exercise of its face value at maturity; or, if
own judgment and wisdom redeemed prior to maturity,
formulates an appropriation act such portion of the face
precisely following the process value as is prescribed by the
established by the Constitution, terms and conditions under
which specifies that no money may which such obligations
be paid from the Treasury except in were originally
accordance with an appropriation issued. (Emphasis
made by law. supplied.)

Debt service is not included in the The afore-quoted provisions of law specifically allow
General Appropriation Act, since the President to pre-terminate debts without further
authorization therefor already exists action from Congress.
under RA Nos. 4860 and 245, as
amended, and PD 1967. Precisely in Petitioners claim that the buyback scheme is
the light of this subsisting neither a guarantee nor a loan since its underlying
authorization as embodied in said intent is to extinguish debts that are not yet due and
Republic Acts and PD for debt demandable.[48] Thus, they suggest that contracts
service, Congress does not concern entered pursuant to the buyback scheme are
itself with details for implementation unconstitutional for not being among those
by the Executive, but largely with contemplated in Sec. 20, Art. VII of the Constitution.
annual levels and approval thereof
upon due deliberations as part of the Buyback is a necessary power which springs
whole obligation program for the from the grant of the foreign borrowing power. Every
year. Upon such approval, Congress statute is understood, by implication, to contain all
has spoken and cannot be said to such provisions as may be necessary to effectuate its
have delegated its wisdom to the object and purpose, or to make effective rights,
Executive, on whose part lies the powers, privileges or jurisdiction which it grants,
implementation or execution of the including all such collateral and subsidiary
legislative wisdom.[47] consequences as may be fairly and logically inferred
from its terms.[49] The President is not empowered to
borrow money from foreign banks and governments
Specific legal authority for the buyback of loans is on the credit of the Republic only to be left bereft of
established under Section 2 of Republic Act (R.A.) No. authority to implement the payment despite
240, viz: appropriations therefor.

Sec. 2. The Secretary of Even petitioners concede that [t]he

Finance shall cause to be Constitution, as a rule, does not enumeratelet alone
paid out of any moneys in enumerate allthe acts which the President (or any
the National Treasury not other public officer) may not do,[50] and [t]he fact that
otherwise appropriated, or the Constitution does not explicitly bar the President
from any sinking funds from exercising a power does not mean that he or she
provided for the purpose by does not have that power.[51] It is inescapable from the
law, any interest falling standpoint of reason and necessity that the authority
due, or accruing, on any to contract foreign loans and guarantees without
portion of the public debt restrictions on payment or manner thereof coupled
authorized by law. He shall with the availability of the corresponding
also cause to be paid out of appropriations, must include the power to effect
any such money, or from payments or to make payments unavailing by either
restructuring the loans or even refusing to make any the enunciation of the principle that
payment altogether. "The executive power shall be vested
in a President of the Philippines."
More fundamentally, when taken in the This means that the President of
context of sovereign debts, a buyback is simply the the Philippines is the Executive of
purchase by the sovereign issuer of its own debts at a the Government of the Philippines,
discount. Clearly then, the objection to the validity of and no other. The heads of the
the buyback scheme is without basis. executive departments occupy
political positions and hold office in
Second Issue: Delegation of Power an advisory capacity, and, in the
language of Thomas Jefferson,
Petitioners stress that unlike other powers "should be of the President's bosom
which may be validly delegated by the President, the confidence" (7 Writings, Ford ed.,
power to incur foreign debts is expressly reserved by 498), and, in the language of
the Constitution in the person of the President. They Attorney-General Cushing (7 Op.,
argue that the gravity by which the exercise of the Attorney-General, 453), "are subject
power will affect the Filipino nation requires that the to the direction of the President."
President alone must exercise this power. They Without minimizing the importance
submit that the requirement of prior concurrence of of the heads of the various
an entity specifically named by the Constitutionthe departments, their personality is in
Monetary Boardreinforces the submission that not reality but the projection of that of
respondents but the President alone and the President. Stated otherwise, and
personally can validly bind the country. as forcibly characterized by Chief
Justice Taft of the Supreme Court of
Petitioners position is negated both by the United States, "each head of a
explicit constitutional[52] and legal[53]imprimaturs, as department is, and must be, the
well as the doctrine of qualified political agency. President's alter ego in the matters of
that department where the President
The evident exigency of having the Secretary is required by law to exercise
of Finance implement the decision of the President to authority" (Myers vs. United States,
execute the debt-relief contracts is made manifest by 47 Sup. Ct. Rep., 21 at 30; 272 U. S., 52
the fact that the process of establishing and executing at 133; 71 Law. ed., 160).[56]
a strategy for managing the governments debt is deep
within the realm of the expertise of the Department As it was, the backdrop consisted of a major
of Finance, primed as it is to raise the required policy determination made by then President Aquino
amount of funding, achieve its risk and cost that sovereign debts have to be respected and the
objectives, and meet any other sovereign debt concomitant reality that the Philippines did not have
management goals.[54] enough funds to pay the debts. Inevitably, it fell upon
the Secretary of Finance, as the alter ego of the
If, as petitioners would have it, the President President regarding the sound and efficient
were to personally exercise every aspect of the foreign management of the financial resources of the
borrowing power, he/she would have to pause from Government,[57] to formulate a scheme for the
running the country long enough to focus on a welter implementation of the policy publicly expressed by
of time-consuming detailed activities the propriety of the President herself.
incurring/guaranteeing loans, studying and
choosing among the many methods that may be Nevertheless, there are powers vested in the
taken toward this end, meeting countless times with President by the Constitution which may not be
creditor representatives to negotiate, obtaining the delegated to or exercised by an agent or alter ego of
concurrence of the Monetary Board, explaining and the President. Justice Laurel, in his ponencia in Villena,
defending the negotiated deal to the public, and more makes this clear:
often than not, flying to the agreed place of execution
to sign the documents. This sort of constitutional Withal, at first blush, the argument
interpretation would negate the very existence of of ratification may seem plausible
cabinet positions and the respective expertise which under the circumstances, it should be
the holders thereof are accorded and would unduly observed that there are certain acts
hamper the Presidents effectivity in running the which, by their very nature, cannot
government. be validated by subsequent approval
or ratification by the President. There
Necessity thus gave birth to the doctrine of qualified are certain constitutional powers and
political agency, later adopted in Villena v. Secretary of prerogatives of the Chief Executive
the Interior[55] from American jurisprudence, viz: of the Nation which must be
exercised by him in person and no
With reference to the Executive amount of approval or ratification
Department of the government, will validate the exercise of any of
there is one purpose which is crystal- those powers by any other person.
clear and is readily visible without Such, for instance, in his power to
the projection of judicial searchlight, suspend the writ of habeas corpus
and that is the establishment of a and proclaim martial law (PAR. 3,
single, not plural, Executive. The first SEC. 11, Art. VII) and the exercise by
section of Article VII of the him of the benign prerogative of
Constitution, dealing with the mercy (par. 6, sec. 11, idem).[58]
Executive Department, begins with
Corp.,[60] this Court had occasion to examine the
These distinctions hold true to this day. There are authority granted by Congress to the Department of
certain presidential powers which arise out of Trade and Industry (DTI) Secretary to impose
exceptional circumstances, and if exercised, would safeguard measures pursuant to the Safeguard
involve the suspension of fundamental freedoms, or Measures Act. In doing so, the Court was impelled to
at least call for the supersedence of executive construe Section 28(2), Article VI of the Constitution,
prerogatives over those exercised by co-equal which allowed Congress, by law, to authorize the
branches of government. The declaration of martial President to fix within specified limits, and subject to
law, the suspension of the writ of habeas corpus, and such limitations and restrictions as it may impose,
the exercise of the pardoning power notwithstanding tariff rates, import and export quotas, tonnage and
the judicial determination of guilt of the accused, all wharfage dues, and other duties or imposts within
fall within this special class that demands the the framework of the national development program
exclusive exercise by the President of the of the Government.[61]
constitutionally vested power. The list is by no means
exclusive, but there must be a showing that the While the Court refused to uphold the broad
executive power in question is of similar gravitas and construction of the grant of power as preferred by the
exceptional import. DTI Secretary, it nonetheless tacitly acknowledged
that Congress could designate the DTI Secretary, in
We cannot conclude that the power of the his capacity as alter ego of the President, to exercise
President to contract or guarantee foreign debts falls the authority vested on the chief executive under
within the same exceptional class. Indubitably, the Section 28(2), Article VI.[62] At the same time, the
decision to contract or guarantee foreign debts is of Court emphasized that since Section 28(2), Article VI
vital public interest, but only authorized Congress to impose limitations and
restrictions on the authority of the President to
impose tariffs and imposts, the DTI Secretary was
necessarily subjected to the same restrictions that
Congress could impose on the President in the
akin to any contractual obligation undertaken by the exercise of this taxing power.
sovereign, which arises not from any extraordinary
incident, but from the established functions of Similarly, in the instant case, the Constitution
governance. allocates to the President the exercise of the foreign
borrowing power subject to such limitations as may
Another important qualification must be be provided under law. Following Southern Cross, but
made. The Secretary of Finance or any in line with the limitations as defined in Villena, the
designated alter ego of the President is bound to presidential prerogative may be exercised by the
secure the latters prior consent to or subsequent Presidents alter ego, who in this case is the Secretary
ratification of his acts. In the matter of contracting or of Finance.
guaranteeing foreign loans, the repudiation by the
President of the very acts performed in this regard by It bears emphasis that apart from the
the alter egowill definitely have binding effect. Had Constitution, there is also a relevant statute, R.A. No.
petitioners herein succeeded in demonstrating that 245, that establishes the parameters by which the alter
the President actually withheld approval and/or ego may act in behalf of the President with respect to
repudiated the Financing Program, there could be a the borrowing power. This law expressly provides
cause of action to nullify the acts of respondents. that the Secretary of Finance may enter into foreign
Notably though, petitioners do not assert that borrowing contracts. This law neither amends nor
respondents pursued the Program without prior goes contrary to the Constitution but merely
authorization of the President or that the terms of the implements the subject provision in a manner
contract were agreed upon without the Presidents consistent with the structure of the Executive
authorization. Congruent with the avowed Department and the alter ego doctine. In this regard,
preference of then President Aquino to honor and respondents have declared that they have followed
restructure existing foreign debts, the lack of showing the restrictions provided under R.A. No.
that she countermanded the acts of respondents leads 245,[63] which include the requisite presidential
us to conclude that said acts carried presidential authorization and which, in the absence of proof and
approval. even allegation to the contrary, should be regarded in
a fashion congruent with the presumption of
With constitutional parameters already regularity bestowed on acts done by public officials.
established, we may also note, as a source of
suppletory guidance, the provisions of R.A. No. 245. Moreover, in praying that the acts of the
The afore-quoted Section 1 thereof empowers the respondents, especially that of the Secretary of
Secretary of Finance with the approval of the Finance, be nullified as being in violation of a
President and after consultation[59] of the Monetary restrictive constitutional interpretation, petitioners in
Board, to borrow from time to time on the credit of effect would have this Court declare R.A. No. 245
the Republic of the Philippines such sum or sums as unconstitutional. We will not strike down a law or
in his judgment may be necessary, and to issue provisions thereof without so much as a direct attack
therefor evidences of indebtedness of the Philippine thereon when simple and logical statutory
Government. Ineluctably then, while the President construction would suffice.
wields the borrowing power it is the Secretary of
Finance who normally carries out its thrusts. Petitioners also submit that the unrestricted character
of the Financing Program violates the framers intent
behind Section 20, Article VII to restrict the power of
In our recent rulings in Southern Cross Cement the President. This intent, petitioners note, is
Corporation v. The Philippine Cement Manufacturers embodied in the proviso in Sec. 20, Art. VII, which
states that said power is subject to such limitations as computations, we can make no conclusion other than
may be provided under law. However, as previously that respondents efforts were geared towards debt-
discussed, the debt-relief contracts are governed by relief with marked positive results and towards
the terms of R.A. No. 245, as amended by P.D. No. 142 achieving the constitutional policies which
s. 1973, and therefore were not developed in an petitioners so hastily declare as having been violated
unrestricted setting. by respondents. We recognize that as with
other schemes dependent on volatile market and
economic structures, the contracts entered into by
Third Issue: Grave Abuse of Discretion and respondents may possibly have a net outflow and
Violation of Constitutional Policies therefore negative result. However, even petitioners
call this latter event the worst-case scenario. Plans are
seldom foolproof. To ask the Court to strike down
We treat the remaining issues jointly, for in view of debt-relief contracts, which, according to
the foregoing determination, the general allegation of independent third party evaluations using
grave abuse of discretion on the part of respondents historically-suggested rates would result in
would arise from the purported violation of various substantial debt-relief,[76] based merely on the
state policies as expressed in the Constitution. possibility of petitioners worst-case scenario
projection, hardly seems reasonable.
Petitioners allege that the Financing Program violates
the constitutional state policies to promote a social
order that will ensure the prosperity and Moreover, the policies set by the Constitution as
independence of the nation and free the people from litanized by petitioners are not a panacea that can
poverty,[64] foster social justice in all phases of annul every governmental act sought to be struck
national development,[65] and develop a self-reliant down. The gist of petitioners arguments on violation
and independent national economy effectively of constitutional policies and grave abuse of
controlled by Filipinos;[66] thus, the contracts discretion boils down to their allegation that the debt-
executed or to be executed pursuant thereto were or relief agreements entered into by respondents do not
would be tainted by a grave abuse of discretion deliver the kind of debt-relief that petitioners would
amounting to lack or excess of jurisdiction. want. Petitioners cite the aforementioned article in
stating that that the agreement achieves little that
Respondents cite the following in support of the cannot be gained through less complicated means
propriety of their acts:[67] (1) a Department of Finance like postponing (rescheduling) principal
study showing that as a result of the implementation payments,[77] thus:
of voluntary debt reductions schemes, the countrys
debt stock was reduced by U.S. $4.4 billion as of [T]he price of success in putting
December 1991;[68] (2) revelations made by together this debt-relief package
independent individuals made in a hearing before the (indicates) the possibility that a
Senate Committee on Economic Affairs indicating simple rescheduling agreement may
that the assailed agreements would bring about well turn out to be less expensive
substantial benefits to the country;[69] and (3) the Joint than this comprehensive debt-relief
Legislative-Executive Foreign Debt Councils package. This means that in the next
endorsement of the approval of the financing package six years the humble and simple
containing the debt-relief agreements and issuance of rescheduling process may well be
a Motion to Urge the Philippine Debt Negotiating the lesser evil because there is that
Panel to continue with the negotiation on the distinct possibility that less money
aforesaid package.[70] will flow out of the country as a

Even with these justifications, respondents aver that

their acts are within the arena of political questions Note must be taken that from these citations,
which, based on the doctrine of separation of petitioners submit that there is possibly a better way to
powers,[71] the judiciary must leave without go about debt rescheduling and, on that basis, insist
interference lest the courts substitute their judgment that the acts of respondents must be struck down.
for that of the official concerned and decide a matter These are rather tenuous grounds to condemn the
which by its nature or law is for the latter alone to subject agreements as violative of constitutional
decide.[72] principles.

On the other hand, in furtherance of their argument Conclusion

on respondents violation of constitutional policies,
petitioners cite an article of Jude Esguerra, The 1992 The raison d etre of the Financing Program is to
Buyback and Securitization Agreement with Philippine manage debts incurred by the Philippines in a
Commercial Bank Creditors,[73] in illustrating a best-case manner that will lessen the burden on the Filipino
scenario in entering the subject debt-relief taxpayers thus the term debt-relief agreements. The
agreements. The computation results in a yield of measures objected to by petitioners were not aimed at
$218.99 million, rather than the $2,041.00 million incurring more debts but at terminating pre-existing
claimed by the debt negotiators.[74] On the other debts and were backed by the know-how of the
hand, the worst-case scenario allegedly is that a net countrys economic managers as affirmed by third
amount of $1.638 million will flow out of the country party empirical analysis.
as a result of the debt package.[75]
That the means employed to achieve the goal
Assuming the accuracy of the foregoing for the nonce, of debt-relief do not sit well with petitioners is
despite the watered-down parameters of petitioners beyond the power of this Court to remedy. The
exercise of the power of judicial review is merely to
checknot supplantthe Executive, or to simply
ascertain whether he has gone beyond the
constitutional limits of his jurisdiction but not to
exercise the power vested in him or to determine the
wisdom of his act.[78] In cases where the main purpose
is to nullify governmental acts whether as
unconstitutional or done with grave abuse of
discretion, there is a strong presumption in favor of
the validity of the assailed acts. The heavy onus is in
on petitioners to overcome the presumption of

We find that petitioners have not sufficiently

established any basis for the Court to declare the acts
of respondents as unconstitutional.

WHEREFORE the petition is hereby

DISMISSED. No costs.