Cervantes vs. Aquino

A certiorari and prohibition action seeking annulment of a Build-Operate-Transfer agreement and restraint of its implementation becomes moot and academic upon supervening termination of that agreement, leaving no actual substantial relief to grant. Because the reliefs sought were hinged on the continued existence of the BOT Agreement, adjudication after its termination would serve no useful purpose or have any practical legal effect.

Petitioners are indigent patients of the Philippine Orthopedic Center (POC), POC employees and members of the National Orthopedic Hospital Workers' Union-Alliance of Health Workers, health professionals and organizations opposed to privatization of public hospitals, and party-list legislators suing in their own behalf, as taxpayers, and on behalf of the general public. Public respondents are national government officials sued in their official capacities in connection with the Public Private Partnership program, while private respondents are the awarded project proponent consortium. The POC is described as the country's only specialized orthopedic hospital treating mostly indigents, and the governing framework invoked is the Build-Operate-and-Transfer Law, Republic Act No. 6957 as amended by Republic Act No. 7718.

The Modernization of the Philippine Orthopedic Center Project contemplated construction of a new 700-bed specialty hospital for orthopedic clinical and allied services within the National Kidney and Transplant Institute Compound along East Avenue, Quezon City. The concessionaire was to undertake design, construction, procurement and installation of modern diagnostics, clinical and IT equipment, operation and management thereof, operation and maintenance of the facility, provision of administrative and ancillary services and qualified staff, and provision of teaching and training facilities. In sum, the arrangement was to design, build, finance, operate and maintain the facility for 25 years and thereafter transfer it to the Department of Health (DOH), implemented as a Build-Operate-Transfer arrangement under Republic Act No. 6957 as amended by Republic Act No. 7718 and pursuant to the Public Private Partnership Program.

On November 18, 2012, the Modernization of the Philippine Orthopedic Center-Pre-Qualification, Bids and Awards Committee (MPOC-PBAC) issued an invitation to pre-qualify and bid. On January 28, 2013, it conducted a Pre-Qualification Conference and recommended pre-qualification of nine prospective bidders: Siemens, Inc. Health Sector; G.E. Healthcare General Electric Philippines, Inc.; Sta. Clara International Corp.; Mount Grace Hospital Venture; Philips Electronics and Lighting, Inc.; Metro Pacific Investments; Megawide Engineering Excellence; Strategic Alliance Holding, Inc.; and Data Trail Corporation. On June 4, 2013, the Consortium of Megawide Construction Company and World Citi Medical Center submitted its proposal as sole bidder. After its technical and financial bid was declared complete, the documents were submitted to the Investment Coordination Committee of the National Economic and Development Authority for evaluation and approved by the NEDA Board chaired by respondent Aquino on November 21, 2013. The MPOC-PBAC then issued Resolution No. 13 on November 28, 2013 recommending award to Megawide, and respondent Ona issued a Notice of Award on December 9, 2013.

Thereafter, the DOH through respondent Ona executed a Build-Operate-Transfer Agreement with private respondents through authorized representative Manuel Louie B. Ferrer on March 6, 2014. According to petitioners, the existing POC had a 700-bed capacity with 85% or 562 beds allocated to non-paying patients and only 15% or 95 beds to pay patients, whereas under Bid Bulletin No. 5 only 10% or 70 beds would be apportioned to service patients. Respondents, for their part, maintained that 490 beds were set aside as minimum for sponsored and service category patients to ensure the poor and indigents would be the main beneficiaries, with nothing requiring the remaining 210 beds to be strictly for pay patients. Petitioners further alleged impairment of employees' tenure, who were given the options to resign or retire if joining the modernized facility or to transfer to another DOH hospital, while respondents maintained employees could transfer to the new facility or remain in government service with tenure preserved.

On February 3, 2014, petitioners filed the present action to annul the privatization and award and to prohibit building, operation and transfer of the POC to Megawide. While the case was pending, private respondents served on the DOH on November 10, 2015 a Notice of Termination of the BOT Agreement effective November 15, 2015, invoking delay exceeding 180 days from Signing Date in delivery of the project site by Certificate of Possession and in procurement of the Independent Consultant, the 180-day period having expired on September 2, 2014.

• Relinquishment of Health Duty: Petitioner argued that relinquishing the duty to provide basic health services through privatization or commercialization of the POC to a private entity prejudiced the poor and underprivileged and denied medical services to thousands of indigent Filipinos in violation of the constitutional right to health.
• Charity Beds: Petitioner maintained that reducing service beds from 562 to only 70 violated Section 6 of RA 1939 requiring all government hospitals to operate with not less than 90% of bed capacity as free or charity beds.
• Security of Tenure: Petitioner argued that POC employees' right to security of tenure was violated because they were only given the options to resign or retire to work in the modernized POC or to transfer to another DOH hospital.
• Scope of BOT Law: Petitioner maintained that public respondents illegally expanded the BOT Law, which covers only health facilities limited to equipment, installations or physical structures, not the health or medical services undertaken therein.
• Disadvantageous Terms: Petitioner argued that the award was greatly disadvantageous to the government and consumers because the public would eventually pay higher medical expenses contrary to the BOT Law mandate that tolls, fees and rentals be reasonable.

• Legal Standing: Respondent countered that petitioners lacked direct substantial injury, taxpayers showed no illegal expenditure or disbursement of public funds, employees would not be terminated and would gain employment options, and legislators showed no infringement of legislative duties.
• Transcendental Importance and Remedies: Respondent argued that no issue of transcendental importance was raised because no prohibition bars a BOT for modernizing public hospitals, and that the petition was premature for failure to exhaust available administrative remedies.
• Political Question: Respondent maintained that the objection attacked the soundness of the PPP policy behind the MPOC Project, presenting a political question beyond judicial determination.
• Right to Health Not Self-Executing: Respondent argued that Section 15, Article II and Section 11, Article XIII of the Constitution and invoked international laws were not self-executory, and that modernization implemented rather than abdicated the State duty given the deteriorating POC and outdated or broken machines.
• No Privatization: Respondent countered that no ownership of government assets would transfer, only management and operations for a limited period.
• Operation Includes Services: Respondent argued that under a BOT, operation of a health facility by the proponent naturally includes performance of health and medical services.
• Bed Allocation and Tenure: Respondent maintained that 490 beds minimum were devoted to sponsored and service patients without restricting the remaining 210 beds to pay patients, and that employees retained tenure whether transferring to the new facility or remaining in government service.

• Grave Abuse in MPOC Project: Whether public respondents gravely abused their discretion in entering into the MPOC Project with private respondents through alleged privatization and expanded application of the BOT Law.
• Mootness: Whether the supervening termination of the BOT Agreement rendered the petition for certiorari and prohibition moot and academic.

• Grave Abuse in MPOC Project: Not resolved on the merits. Disposition turned on mootness, the challenged BOT Agreement having been terminated and no practical relief remaining.
• Mootness: Yes. The petition was dismissed, termination of the BOT Agreement having extinguished the justiciable controversy over annulment and permanent prohibition.

• Grave Abuse in MPOC Project: The merits concerning privatization, charity beds, tenure, scope of the BOT Law, and reasonableness of fees were no longer adjudicated because the reliefs of annulment and permanent injunction were hinged on the existence of the BOT Agreement. With that agreement terminated effective November 15, 2015 pursuant to Sections 8 and 9.2a after delay exceeding 180 days from Signing Date, any declaration would be of no practical value or use.
• Mootness: A case becomes moot when supervening events cause it to cease presenting a justiciable controversy, leaving no actual substantial relief to which petitioner would be entitled and which dismissal would negate. Applied here, the November 10, 2015 Notice of Termination, received on even date and invoking failure to deliver the project site by Certificate of Possession within 30 days from Signing Date and failure to procure the Independent Consultant within 90 days, with termination allowed if delay exceeded 180 days, extinguished the controversy. Because jurisdiction over moot cases is generally declined as unenforceable and purposeless, dismissal was warranted.

• Mootness doctrine — A case or issue is moot and academic when supervening events cause it to cease presenting a justiciable controversy, so that adjudication would be of no practical value or use because no actual substantial relief remains. Courts generally decline jurisdiction or dismiss on that ground because judgment would serve no useful purpose and cannot be enforced. The doctrine was applied to dismiss the challenge where the BOT Agreement sought to be annulled and enjoined had already been terminated.

• "The petition is partly meritorious." — Introduces the disposition that petitioners' challenge was overtaken by events, framing dismissal as grounded on supervening mootness rather than rejection of all substantive claims.
• "In view of the foregoing, it is with deepest regret that we serve on your office this Notice of Termination of the BOT Agreement. Section[s] 8.2 and 9.2a of the BOT Agreement provide that if the delay in the performance of the DOH exceeds one hundred eighty (180) days from Signing Date, the Project Proponent may opt to terminate the BOT Agreement. This 180-day period came and went over a year ago on September 2, 2014. Accordingly, the BOT Agreement will terminate on November 15, 2015 ("Termination Date")." — States the operative supervening fact and contractual basis that extinguished the controversy.
• "[a] case or issue is considered moot and academic when it ceases to present a justiciable controversy by virtue of supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or use." — Articulates the canonical test for mootness applied to justify dismissal.
• "WHEREFORE, the Court resolves to DISMISS the petition for being moot and academic." — Records the dispositive order denying any further relief on certiorari and prohibition.

• Peñafrancia Sugar Mill, Inc. vs. Sugar Regulatory Administration, 728 Phil. 535, 540 (2014) — Cited as authority for the definition and effect of mootness, supporting dismissal where judgment would have no practical legal effect.

• Republic Act No. 6957 as amended by Republic Act No. 7718, BOT Law — Cited as the legal vehicle for the 25-year design-build-finance-operate-maintain and transfer arrangement; petitioners contended it covers only physical health facilities, while respondents contended operation includes health services.
• Section 15, Article II and Section 11, Article XIII, Constitution — Invoked by petitioners as the right to health allegedly violated by reduced charity beds; respondents contended these provisions are not self-executory and impose no judicially demandable cause of action, with modernization claimed to advance access to quality facilities.
• Section 6, RA 1939 — Invoked by petitioners as requiring government hospitals to operate with not less than 90% bed capacity as free or charity beds, allegedly violated by allocation of only 70 service beds.
• Sections 8 and 9.2a, BOT Agreement — Provided for DOH delivery of the project site by Certificate of Possession within 30 days and procurement of the Independent Consultant within 90 days from Signing Date, with proponent's right to terminate without liability if delay exceeded 180 days; relied upon for the November 15, 2015 termination.

Gesmundo, C.J., Perlas-Bernabe, Leonen, Carandang, Lazaro-Javier, Inting, Zalameda, M. Lopez, Delos Santos, Gaerlan, Rosario, and J. Lopez, JJ., concur. Caguioa, J., no part.