Galicto vs. Aquino III

A petition for certiorari under Rule 65 does not lie to assail the validity of an executive order, as the issuance of an EO is an executive — not a judicial or quasi-judicial — act; the proper remedy is a petition for declaratory relief under Rule 63 filed with the Regional Trial Court. Additionally, a GOCC employee lacks locus standi to challenge an EO imposing a moratorium on salary increases where the asserted injury rests on a mere expectancy of future increases rather than a vested right, and a petition is rendered moot when subsequent legislation supersedes the challenged executive issuance.

Petitioner Jelbert B. Galicto is a Filipino citizen and Court Attorney IV assigned at the PhilHealth Regional Office CARAGA. Respondents are President Benigno Simeon C. Aquino III, who issued the challenged executive order; Executive Secretary Paquito N. Ochoa, Jr., tasked with its implementation; and DBM Secretary Florencio B. Abad, likewise charged with implementation. The dispute arose from the broader context of fiscal mismanagement in government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs), where governing boards had been granting themselves excessive allowances, bonuses, and other benefits despite incurring significant financial losses. The Senate, through its Committee on Government Corporations and Public Enterprises, conducted an inquiry in aid of legislation and issued Senate Resolution No. 17 urging the President to suspend these excessive perks. In response, President Aquino issued EO 7 on September 8, 2010, directing the rationalization of the compensation and position classification system in GOCCs and GFIs.

On July 26, 2010, in his first State of the Nation Address, President Benigno Simeon C. Aquino III publicly disclosed the alleged excessive allowances, bonuses, and other benefits enjoyed by officers and members of the Board of Directors of the Manila Waterworks and Sewerage System, a government-owned and controlled corporation that had been unable to meet its standing obligations. This disclosure prompted the Senate, through its Committee on Government Corporations and Public Enterprises, to conduct an inquiry in aid of legislation into the reported excessive salaries, allowances, and benefits across GOCCs and GFIs. The Senate Committee found that officials and governing boards of various GOCCs and GFIs had been granting themselves unwarranted allowances, bonuses, incentives, stock options, and other benefits, alongside other irregular and abusive practices. Among the findings were that representatives of the Social Security Commission to the Board of Directors of Philex Mining earned approximately ₱55 million in stock options in addition to bonuses, that three SSC representatives on the Union Bank board earned ₱46 million in bonuses in 2009, and that the MWSS, despite incurring a ₱3.5 billion loss in 2008, declared a ₱5 million bonus to its board chairman in 2009 and granted 25 bonuses in a single year.

Based on these findings, the Senate issued Senate Resolution No. 17, urging the President to order the immediate suspension of the unusually large and apparently excessive allowances, bonuses, incentives, and other perks of members of the governing boards of GOCCs and GFIs. Heeding this call, President Aquino issued Executive Order No. 7 on September 8, 2010, entitled "Directing the Rationalization of the Compensation and Position Classification System in the GOCCs and GFIs, and for Other Purposes." EO 7 provided for guiding principles and a framework to establish a fixed compensation and position classification system for GOCCs and GFIs, created a Task Force to review all remunerations of GOCC and GFI employees and officers, and ordered GOCCs and GFIs to submit compensation information to the Task Force. Critically, EO 7 imposed a moratorium on increases in salaries and other forms of compensation — except salary adjustments under EO 8011 and EO 900 — for all GOCC and GFI employees until specifically authorized by the President, and suspended all allowances, bonuses, and incentives of members of the Board of Directors/Trustees until December 31, 2010. EO 7 was published on September 10, 2010, and took effect on September 25, 2010.

Petitioner Jelbert B. Galicto, a Court Attorney IV at the PhilHealth Regional Office CARAGA, filed a Petition for Certiorari and Prohibition before the Supreme Court, asserting that EO 7 was unconstitutional for having been issued beyond the powers of the President and in breach of existing laws. He claimed standing both as a PhilHealth employee affected by the moratorium on salary increases and as a member of the bar interested in ensuring the legal validity of government issuances. The respondents raised procedural defenses — including lack of locus standi, defective jurat, and the President's immunity from suit — as well as substantive arguments supporting the validity of EO 7. During the pendency of the petition, Congress enacted RA 10149, the GOCC Governance Act of 2011, on June 6, 2011, which expressly authorized the President to fix the compensation framework of GOCCs and GFIs, thereby amending prior laws that had empowered GOCC and GFI boards to determine their own compensation systems.

• Lack of Legal Basis: Petitioner argued that EO 7 was null and void for lack of legal basis, asserting that P.D. 985 is inapplicable because GOCCs were subsequently granted the power to fix compensation, and that P.D. 1597 and R.A. 6758 had revoked such presidential authority. He maintained that GOCCs need only report their compensation plans to the President, not seek approval, and that Joint Resolution No. 4, series of 2009, had not ripened into law for lack of publication.
• Divestment of Board Power: Petitioner argued that EO 7 was invalid for divesting the Board of Directors of GOCCs of their power to fix compensation, a power granted by legislation that could not be revoked or modified by executive fiat.
• Usurpation of Legislative Power: Petitioner contended that EO 7 was by substance a law, constituting a derogation of congressional prerogative and therefore unconstitutional, as it involved the determination and discretion of what the law shall be.
• Ultra Vires Acts: Petitioner maintained that the acts of suspending and imposing a moratorium were ultra vires because Joint Resolution No. 4 does not expressly authorize the President to exercise such powers.
• Lack of Sufficient Standards: Petitioner argued that EO 7 was an invalid issuance for having no sufficient standards, rendering it arbitrary, unreasonable, and a violation of substantive due process.
• Directory Nature: Petitioner asserted that, consistent with Pimentel vs. Aguirre, EO 7 was only directory and not mandatory.

• Procedural Defects: Respondents argued that the petitioner lacked locus standi, failed to attach a board resolution or secretary's certificate authorizing him to represent PhilHealth, omitted his PTR Number, MCLE Compliance Number, and IBP Number from his signature, submitted a defective jurat failing to indicate a valid identification card, improperly included the President as a party respondent despite presidential immunity, and invoked an improper remedy since certiorari does not lie.
• Presidential Control: Respondents countered that the President exercises control over the governing boards of GOCCs and GFIs and can therefore fix their compensation packages, and that EO 7 was issued in accordance with law to control the grant of excessive salaries, allowances, incentives, and other benefits.
• Validity of Joint Resolution No. 4: Respondents argued that Joint Resolution No. 4 was valid and served as the authority for issuing EO 7.

• Propriety of Certiorari: Whether a petition for certiorari under Rule 65 is the proper remedy to challenge the validity of an executive order.
• Locus Standi: Whether petitioner, as a PhilHealth employee and member of the bar, has legal standing to challenge EO 7.
• Defective Jurat: Whether the defective jurat in the Verification/Certification of Non-Forum Shopping warrants dismissal of the petition.
• Mootness: Whether the petition was rendered moot by supervening events, namely the lapse of Section 10 of EO 7 and the enactment of RA 10149.

• Propriety of Certiorari: No. Certiorari does not lie because the issuance of an executive order is an executive act, not a judicial or quasi-judicial function; the proper remedy is a petition for declaratory relief under Rule 63 filed with the RTC.
• Locus Standi: No. Petitioner failed to demonstrate a personal and material interest in the outcome, as future salary increases are contingent events or mere expectancies, not vested rights; his claim as a member of the bar is a general interest shared by the whole citizenry.
• Defective Jurat: No, the defect is not fatal. The verification is only a formal, not a jurisdictional, requirement that the Court may waive, and the requirements regarding counsel's identification numbers do not apply to a party litigant who signs his own pleadings.
• Mootness: Yes. The petition was rendered moot by the lapse of Section 10 of EO 7 on December 31, 2010, and the enactment of RA 10149, which expressly authorized the President to fix the compensation framework of GOCCs and GFIs.

• Propriety of Certiorari: Petitions for certiorari and prohibition under Rule 65 are available only to question judicial, quasi-judicial, or mandatory acts. The issuance of an executive order is an exercise of executive — not judicial or quasi-judicial — function. A judicial function involves the power to determine what the law is and what the legal rights of the parties are, and to adjudicate upon those rights; a quasi-judicial function involves investigation of facts, holding hearings, and drawing conclusions as a basis for official action. Neither description applies to the President's issuance of EO 7. The proper remedy is a petition for declaratory relief under Rule 63, filed with the RTC, which allows any person whose rights are affected by an executive order to bring an action to determine questions of construction or validity. The Court cited Liga ng mga Barangay National vs. City Mayor of Manila and Southern Hemisphere Engagement Network, Inc. vs. Anti Terrorism Council as controlling precedents where certiorari was dismissed for being directed against legislative or executive acts. While the Court acknowledged its past liberal approach in cases like Pimentel vs. Aguirre, it emphasized that such liberality remains an exception with limits, as held in Concepcion vs. COMELEC and Lozano vs. Nograles, and cannot trump blatant disregard of procedural rules when other remedies are available.

• Locus Standi: Legal standing requires a personal and substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the challenged governmental act. The three requisites are: (1) personal or threatened injury from the allegedly illegal conduct; (2) injury fairly traceable to the challenged action; and (3) injury likely to be redressed by a favorable action. Petitioner's claim that he stands to be prejudiced by the moratorium on salary increases is speculative and based on a mere expectancy, because he has no vested right to salary increases. The curtailment of future increases cannot but be characterized as contingent events. His alternative claim of standing as a member of the bar was rejected as "too general an interest shared by other groups and the whole citizenry," citing IBP vs. Zamora and Prof. David vs. Pres. Macapagal-Arroyo. The transcendental importance doctrine cannot cure the lack of locus standi where, as here, the petition is saddled with other formal and procedural infirmities that render giving due course an exercise in futility, citing Velarde vs. Social Justice Society. Finally, petitioner cannot be considered a representative of PhilHealth absent a Board Resolution or Secretary's Certificate authorizing him to act as such.

• Defective Jurat: The Court found no violation of Section 3, Rule 7 regarding signature and address, as the petition bore petitioner's signature and office address. The requirements under the Supreme Court En Banc Resolution dated November 12, 2001 and Bar Matter No. 1922 (requiring IBP Number, PTR Number, and MCLE Compliance Number) do not apply because the suit was brought by petitioner himself as a party litigant, not through counsel; a party who is not a lawyer may sign his own pleadings. However, the jurat was indeed defective under A.M. No. 02-8-13-SC for failing to indicate a current identification document. Nevertheless, the defective jurat is not a fatal defect, as the verification is only a formal, not jurisdictional, requirement that the Court may waive, citing In-N-Out Burger, Inc. vs. Sehwani, Incorporated.

• Mootness: A moot case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. Two supervening events rendered the petition moot. First, Section 10 of EO 7, which suspended allowances and bonuses of board directors/trustees, lapsed on December 31, 2010. Second, and more significantly, Congress enacted RA 10149 (GOCC Governance Act of 2011) on June 6, 2011, which expressly authorized the President to fix the compensation framework of GOCCs and GFIs. Sections 5, 8, and 9 of RA 10149 created the Governance Commission for GOCCs (GCG), tasked with developing a Compensation and Position Classification System subject to presidential approval, and provided that no GOCC shall be exempt from coverage. This new law amended RA 7875 and other laws that had enabled certain GOCCs and GFIs to fix their own compensation frameworks. For the Court to rule on the constitutionality of EO 7 would be merely an academic exercise, as the President can now reissue an EO containing the same provisions without legal constraints. The Court declined to resolve the remaining issues raised in the petition in light of the mootness and procedural infirmities.

• Locus Standi — Legal standing requires a personal and substantial interest in the case such that the party has sustained or will sustain direct injury as a result of the challenged governmental act. The three requisites are: (1) actual or threatened personal injury from the allegedly illegal conduct; (2) injury fairly traceable to the challenged action; and (3) injury likely to be redressed by a favorable action. A mere expectancy of future salary increases does not constitute a vested right sufficient to confer standing. The transcendental importance doctrine cannot cure the lack of locus standi where the petition is otherwise saddled with procedural infirmities rendering adjudication futile.

• Mootness Doctrine — A case is moot when it ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. An action is moot when the issues have become academic or dead, or when the matter in dispute has already been resolved. The enactment of superseding legislation can render a challenge to an earlier executive issuance moot, as the Court's determination would have been overtaken by subsequent events.

• Certiorari vs. Declaratory Relief — A petition for certiorari under Rule 65 lies only against a tribunal, board, or officer exercising judicial or quasi-judicial functions. The issuance of an executive order is an executive act, not a judicial or quasi-judicial one; accordingly, certiorari does not lie. The proper remedy to assail the validity of an executive order is a petition for declaratory relief under Rule 63, filed with the RTC, over which the Supreme Court has only appellate, not original, jurisdiction.

• Vested Right to Salary vs. Expectancy — A public officer has a vested right only to salaries already earned or accrued for services rendered. Future salary increases are a mere expectancy, contingent on numerous variables, and do not give rise to a vested right. The absence of a vested right to future increases deprives a petitioner of legal standing to challenge a moratorium on such increases.

• "Since the issuance of an EO is not judicial, quasi-judicial or a mandatory act, a petition for certiorari and prohibition is an incorrect remedy; instead a petition for declaratory relief under Rule 63 of the Rules of Court, filed with the Regional Trial Court (RTC), is the proper recourse to assail the validity of EO 7." — This passage states the ratio decidendi on the impropriety of certiorari to challenge executive orders, a procedural ruling that determines the proper avenue for assailing presidential issuances.

• "In the present case, we are not convinced that the petitioner has demonstrated that he has a personal stake or material interest in the outcome of the case because his interest, if any, is speculative and based on a mere expectancy." — This passage articulates the Court's application of the locus standi requirement to a GOCC employee challenging a moratorium on salary increases, establishing that future increases are expectancies, not vested rights.

• "A moot case is 'one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value.'" — This is the canonical formulation of the mootness doctrine as applied in this case, where the enactment of RA 10149 superseded EO 7 and rendered judicial resolution academic.

• "while the Court has taken an increasingly liberal approach to the rule of locus standi, evolving from the stringent requirements of 'personal injury' to the broader 'transcendental importance' doctrine, such liberality is not to be abused." — This passage defines the limits of the transcendental importance exception to the locus standi requirement, cautioning against using it to bypass procedural rules when other remedies are available.

• Liga ng mga Barangay National vs. City Mayor of Manila, 465 Phil. 529 (2004) — Controlling precedent followed. The Court dismissed a petition for certiorari to set aside an EO issued by a city mayor, holding that declaratory relief before the RTC was the proper remedy, since the mayor acted in an executive — not judicial or quasi-judicial — capacity.
• Southern Hemisphere Engagement Network, Inc. vs. Anti Terrorism Council, G.R. Nos. 178552, 178554, 178581, 178890, 179157 and 179461, October 5, 2010, 632 SCRA 146 — Followed. The Court dismissed petitions for certiorari and prohibition challenging the constitutionality of RA 9372 because the respondents (members of the Anti-Terrorism Council) did not exercise judicial or quasi-judicial functions.
• Concepcion vs. Commission on Elections, G.R. No. 178624, June 30, 2009, 591 SCRA 420 — Followed. The Court emphasized the importance of availing of proper remedies and cautioned against the wrongful use of certiorari to assail quasi-legislative acts, ruling that liberality and the transcendental importance doctrine cannot trump blatant disregard of procedural rules.
• IBP vs. Hon. Zamora, 392 Phil. 618 (2000) — Followed. The Court ruled that the IBP's mere invocation of its duty to preserve the rule of law was "too general an interest shared by other groups and the whole citizenry" and insufficient to confer standing.
• Prof. David vs. Pres. Macapagal-Arroyo, 522 Phil. 705 (2006) — Followed. The Court held that national officers of the IBP lacked legal standing, having failed to allege any direct or potential injury from the issuance of Presidential Proclamation No. 1017 and General Order No. 5.
• Velarde vs. Social Justice Society, G.R. No. 159357, April 28, 2004, 428 SCRA 283 — Followed. The Court held that even if it could have exempted a case from the stringent locus standi requirement, doing so would be futile where the petition was saddled with procedural infirmities.
• Lozano vs. Nograles, G.R. Nos. 187883 & 187910, June 16, 2009, 589 SCRA 356 — Followed. The Court emphasized that its liberal approach to locus standi has limits and should not be abused.
• Pimentel, Jr. vs. Hon. Aguirre, 391 Phil. 84 (2000) — Distinguished. The Court acknowledged that it had given due course to a certiorari petition assailing an administrative order in Pimentel, but distinguished it because the propriety of the petition and the hierarchy-of-courts rule were not at issue there.
• In-N-Out Burger, Inc. vs. Sehwani, Incorporated, G.R. No. 179127, December 24, 2008, 575 SCRA 535 — Followed. The Court held that a defective jurat in the Verification/Certification of Non-Forum Shopping is not a fatal defect, as verification is only a formal, not jurisdictional, requirement.

• Section 1, Rule 65, Rules of Court — Defines the petition for certiorari as available only against a tribunal, board, or officer exercising judicial or quasi-judicial functions, acting without or in excess of jurisdiction or with grave abuse of discretion. Applied to hold that certiorari does not lie against the President's issuance of an executive order, which is an executive act.
• Section 1, Rule 63, Rules of Court — Provides that any person interested under a deed, will, contract, or other written instrument whose rights are affected by a statute, executive order, or regulation may bring an action in the RTC to determine questions of construction or validity. Applied as the proper remedy for challenging EO 7.
• Section 5, Article VIII, 1987 Constitution — Defines the Supreme Court's powers, including original jurisdiction over certiorari, prohibition, mandamus, quo warranto, and habeas corpus, and appellate review of lower court judgments involving constitutionality or validity of laws, ordinances, or regulations. Applied to show that the Court has only appellate, not original, jurisdiction over declaratory relief.
• Section 9, EO 7 — Imposes a moratorium on increases in salaries, allowances, incentives, and other benefits of GOCC and GFI employees until specifically authorized by the President. Applied to determine that petitioner's interest in future salary increases is a mere expectancy.
• Section 10, EO 7 — Suspends allowances, bonuses, and incentives of board directors/trustees of GOCCs and GFIs until December 31, 2010. Applied to find that this provision had lapsed, contributing to mootness.
• Sections 5, 8, and 9, RA 10149 (GOCC Governance Act of 2011) — Create the Governance Commission for GOCCs (GCG), authorize it to develop a Compensation and Position Classification System subject to presidential approval, and provide that no GOCC shall be exempt from coverage. Applied to find that the enactment superseded prior laws empowering GOCC boards to fix their own compensation, thereby mooting the petition.
• Section 9, Joint Resolution No. 4 — Recognizes the authority of RA 6758-exempt entities to determine their own compensation systems but requires them to observe policies, parameters, and guidelines prescribed by the President, and subjects any increase in salary rates to presidential approval upon DBM recommendation. Discussed in the context of petitioner's arguments regarding the legal basis of EO 7.
• Section 16(n), RA 7875 (National Health Insurance Act of 1995) — Grants the PhilHealth board of directors the authority to appoint personnel and fix their compensation, except the PhilHealth president whose appointment and compensation require presidential approval. Discussed as the charter provision petitioner claimed EO 7 violated.
• A.M. No. 02-8-13-SC — Requires a current identification document bearing the photograph and signature of the individual as competent evidence of identity in jurats. Applied to find the jurat defective but not fatal.

• Corona, C.J. — Wrote a separate opinion concurring with the dismissal. He agreed with the ponencia's disposition on standing and mootness but provided additional substantive reasoning on the merits, arguing that EO 7 was a valid exercise of presidential power. He maintained that: (a) petitioner lacked standing because salary increases are mere expectancies, not vested rights, and petitioner's membership in the bar is insufficient to confer standing; (b) the petition was mooted by the lapse of Section 10 of EO 7 and the enactment of RA 10149; (c) EO 7 was consistent with existing laws, including RA 7875 and Joint Resolution No. 4, because Section 9 of Joint Resolution No. 4 requires exempt entities to observe presidential policies, parameters, and guidelines on compensation, and subjects salary increases to presidential approval; (d) a joint resolution, upon approval by the President after three readings, is law and may amend or repeal prior statutes; (e) Sections 59 of RA 9970 and Section 56 of RA 10147 expressly recognize the President's power to approve or disapprove salary increases in RA 6758-exempt GOCCs and GFIs; and (f) no violation of substantive due process occurred because there is no vested right to future salary increases or to bonuses, which are gratuitous acts of liberality not demandable as a matter of right.
• Carpio, A.J.
• Velasco, Jr., A.J.
• Leonardo-De Castro, A.J. (On Official Leave)
• Peralta, A.J.
• Bersamin, A.J. (On Leave)
• Del Castillo, A.J. (On Leave)
• Abad, A.J.
• Villarama, Jr., A.J.
• Perez, A.J.
• Mendoza, A.J. (On Leave)
• Sereno, A.J. (On Leave)
• Reyes, A.J.
• Perlas-Bernabe, A.J.