The PLDT case: A constitutional malady?

In June 2011, the Supreme Court, in Gamboa vs Finance Secretary (G.R. No. 176579), handed down a decision of far-reaching importance.

It defined the term “capital” under Section 11, Article XII of the 1987 Constitution, for purposes of determining compliance with the foreign ownership limit for public utilities.

After defining the term, the Court ordered the Securities and Exchange Commission (SEC) to investigate whether the Philippine Long Distance Telephone Company (PLDT) violated the constitutional provision and, “if there is a violation […] to impose the appropriate sanctions.”

In so ordering, the Court directed the SEC to use what it prescribed as the definition of “capital” under Section 11, Article XII, of the 1987 Constitution in that, it “refers only to shares of stock entitled to vote in the election of directors.”

On Oct. 9, 2012, the Court declared its decision as final.

The petition filed with the Supreme Court did not assail any action of the SEC. In fact, the SEC was not made a party to the petition.

Rather, the petition was for the annulment of an indirect sale of PLDT shares. The seller and buyer were not parties to the case and PLDT itself was not a party.

But despite the absence of these basic facts, the Court proceeded to exercise the power of judicial review and ordered the SEC to exercise the discretionary executive power to investigate a violation of law in a certain manner.

With all due respect, the Supreme Court rendered an advisory opinion AND ORDERED the Executive Department TO FOLLOW IT because this “purely legal issue” is of “transcendental importance to the economy” and it “has remained unresolved for over 75 years.”

What is judicial power?

As early as 1932, the Supreme Court declared: “It is judicial power and judicial power only which is exercised by the Supreme Court.” (Meralco vs Pasay Transportation Company, Inc., et al., G.R. No. L-37878, 25 November 1932).

It is not judicial power for the Court to order administrative agencies, like the SEC, to investigate in the first instance a violation of law according to a prescribed manner.  This is exclusively executive power.  As the Court itself has said: “[i]n the same manner that the legislature has no authority to direct the judiciary in the exercise of powers that are strictly judicial, neither has the judiciary any power to command the executive, or those holding executive powers, in the use of functions that are purely executive” (Fernandez-Subido v. Lacson, G.R. No. L-16494, 29 August 1961).

Neither is judicial power for the Court to issue advisory opinions to government agencies. In Guingona v. Court of Appeals, G.R. No. 125532, 10 July 1998, the Supreme Court itself held that “[c]ourts have no authority to pass upon issues through advisory opinions or to resolve hypothetical or feigned problems or friendly suits collusively arranged between parties without real adverse interests. Courts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging. As a condition precedent to the exercise of judicial power, an actual controversy between litigants must first exist.”

In fact, the Supreme Court once emphatically said that “the power of judicial review does not repose upon the courts a ‘self-starting capacity’” (David vs Macapagal-Arroyo, G.R. No. 171396, 3 May 2006).

In the words of the Rules of Court, the exercise of judicial power requires an action between parties “who stand to be benefited or injured by the judgment in the suit” (Rule 3, Sec. 2) based on an “act or omission by which a party violates a right of another” (Rule 2, Sec. 2).

Separation of powers

Indeed, the Supreme Court is not like Congress which can create a law that imposes duties on the general public, or the President who can issue rules and regulations without regard to particular persons or facts.

The constitutional separation of powers entrusts, in the first instance, the resolution of issues of “far-reaching implications to the national economy” to the executive and legislative departments according to their discretion for the public good.

The courts may only annul the exercise of that discretion if “there has been a grave abuse of discretion amounting to lack or excess of jurisdiction” (1987 Constitution, Article Vlll, Section 1).

The courts cannot overrule the executive and legislative departments on the mere allegation that their action is not correct.

The constitutional requirement for judicial interference in the acts of the executive and legislative departments “is not correctness but arbitrariness” (David vs Macapagal-Arroyo).

So, for a student of the law like me, did the Gamboa ruling create a constitutional malady?

I leave that for the constitutional law experts to answer.

(The author is a law professor at the Ateneo Law School. He may be contacted at [email protected].)