FIRST DIVISION

[G.R. No. 156208. September 26, 2006.]

NPC DRIVERS AND MECHANICS ASSOCIATION, (NPC DAMA),

represented by Its President ROGER S. SAN JUAN, SR., NPC
EMPLOYEES & WORKERS UNION (NEWU) — NORTHERN LUZON
REGIONAL CENTER, represented by its Regional President JIMMY
D. SALMAN, in their own individual capacities and in behalf of the
members of the associations and all affected of cers and
employees of National Power Corporation (NPC), ZOL D. MEDINA,
NARCISO M. MAGANTE, VICENTE B. CIRIO, JR., NECITAS B.
CAMAMA, in their individual capacities as employees of National
Corporation petitioners, vs . THE NATIONAL POWER
Power Corporation,
CORPORATION (NPC), NATIONAL POWER BOARD OF DIRECTORS
(NPB), JOSE ISIDRO N. CAMACHO as Chairman of the National
Power Board of Directors (NPB), ROLANDO S. QUILALA, as
President — Of cer-in-charge/CEO of National Power Corporation
and Member of National Power Board, and VINCENT S. PEREZ, JR.,
EMILIA T. BONCODIN, MARIUS P. CORPUS, RUBEN S. REINOSO, JR.,
GREGORY L. DOMINGO and NIEVES L. OSORIO , respondents.

DECISION

CHICO-NAZARIO , J : p

Before Us is a special civil action for Injunction to enjoin public respondents from
implementing the National Power Board (NPB) Resolutions No. 2002-124 and No. 2002-
125, both dated 18 November 2002, directing, among other things, the termination of all
employees of the National Power Corporation (NPC) on 31 January 2003 in line with the
restructuring of the NPC.
On 8 June 2001, Republic Act No. 9136, otherwise known as the "Electric Power Industry
Reform Act of 2001" (EPIRA Law), was approved and signed into law by President Gloria
Macapagal-Arroyo, and took effect on 26 June 2001. Section 2(i) and Section 3 of the
EPIRA Law states:
Section 2. Declaration of Policy. — It is hereby declared the policy of the State:

xxx xxx xxx

(i) To provide for an orderly and transparent privatization of the assets and
liabilities of the National Power Corporation (NPC);

xxx xxx xxx

Section 3. Scope. — This Act shall provide a framework for the restructuring of the
electric power industry, including the privatization of the assets of NPC, the
transition to the desired competitive structure, and the de nition of the
responsibilities of the various government agencies and private entities. 1

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

 Under the EPIRA Law, 2 a new National Power Board of Directors was constituted
composed of the Secretary of Finance as Chairman, with the Secretary of Energy, the
Secretary of Budget and Management, the Secretary of Agriculture, the Director-General of
the National Economic and Development Authority, the Secretary of Environment and
Natural Resources, the Secretary of Interior and Local Government, the Secretary of the
Department of Trade and Industry, and the President of the National Power Corporation as
members.
On 27 February 2002, the Secretary of the Department of Energy (DOE) promulgated the
Implementing Rules and Regulations (IRR) of the EPIRA Law, pursuant to Section 77 3
thereof. Said IRR were approved by the Joint Congressional Power Commission on even
date. Meanwhile, also in pursuant to the provisions of the EPIRA Law, the DOE created the
Energy Restructuring Steering Committee (Restructuring Committee) to manage the
privatization and restructuring of the NPC, the National Transmission Corporation
(TRANSCO), and the Power Sector Assets and Liabilities Corporation (PSALM). EICSDT

To serve as the overall organizational framework for the realigned functions of the NPC
mandated under the EPIRA Law, the Restructuring Committee proposed a new NPC Table
of Organization which was approved by the NPB through NPB Resolution No. 2002-53
dated 11 April 2002. Likewise, the Restructuring Committee reviewed the proposed 2002
NPC Restructuring Plan and assisted in the implementation of Phase I (Realignment) of
said Plan, and thereafter recommended to the NPB for approval the adoption of measures
pertaining to the separation and hiring of NPC personnel. The NPB, taking into
consideration the recommendation of the Restructuring Committee, thus amended the
Restructuring Plan approved under NPB Resolution No. 2002-53.
On 18 November 2002, pursuant to Section 63 4 of the EPIRA Law and Rule 33 5 of the IRR,
the NPB passed NPB Resolution No. 2002-124 which provided for the Guidelines on the
Separation Program of the NPC and the Selection and Placement of Personnel in the NPC
Table of Organization. Under said Resolution, all NPC personnel shall be legally terminated
on 31 January 2003, and shall be entitled to separation bene ts. On the same day, the NPB
approved NPB Resolution No. 2002-125, whereby a Transition Team was constituted to
manage and implement the NPC's Separation Program.
In a Memorandum dated 21 November 2002, the NPC OIC-President and CEO Rolando S.
Quilala circulated the assailed Resolutions and directed the concerned NPC of cials to
disseminate and comply with said Resolutions and implement the same within the period
provided for in the timetable set in NPB Resolution No. 2002-125. As a result thereof, Mr.
Paquito F. Garcia, Manager — HRSD and Resources and Administration Coordinator of
NPC, circulated a Memorandum dated 22 November 2002 to all NPC of cials and
employees providing for a checklist of the documents required for securing clearances for
the processing of separation bene ts of all employees who shall be terminated under the
Restructuring Plan.
Contending that the assailed NPB Resolutions are void and without force and effect, herein
petitioners, in their individual and representative capacities, led the present Petition for
Injunction to restrain respondents from implementing NPB Resolutions No. 2002-124 and
No. 2002-125. In support thereof, petitioners invoke Section 78 of the EPIRA Law, to wit:
Section 78. Injunction and Restraining Order. — The implementation of the
provisions of this Act shall not be restrained or enjoined except by an order issued
by the Supreme Court of the Philippines.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com

 In assailing the validity of NPB Resolutions No. 2002-124 and No. 2002-125, petitioners
maintain that said Resolutions were not passed and issued by a majority of the members
of the duly constituted Board of Directors since only three of its members, as provided
under Section 48 6 of the EPIRA Law, were present, namely: DOE Secretary Vincent S.
Perez, Jr.; Department of Budget and Management Secretary Emilia T. Boncodin; and NPC
OIC-President Rolando S. Quilala. According to petitioners, the other four members who
were present at the meeting and signed the Resolutions were not the secretaries of their
respective departments but were merely representatives or designated alternates of the
of cials who were named under the EPIRA Law to sit as members of the NPB. Petitioners
claim that the acts of these representatives are violative of the well-settled principle that
"delegated power cannot be further delegated." Thus, petitioners conclude that the
questioned Resolutions have been illegally issued as it were not issued by a duly
constituted board since no quorum existed because only three of the nine members, as
provided under Section 48 of the EPIRA Law, were present and qualified to sit and vote. IHCDAS

It is petitioners' submission that even assuming arguendo that there was no undue
delegation of power to the four representatives who signed the assailed Resolutions, said
Resolutions cannot still be given legal effect because the same did not comply with the
mandatory requirement of endorsement by the Joint Congressional Power Commission
and approval of the President of the Philippines, as provided under Section 47 of the
EPIRA Law which states that:
Section 47. NPC Privatization. — Except for the assets of SPUG, the generation
assets, real estate, and other disposable assets as well as IPP contracts of NPC
shall be privatized in accordance with this Act. Within six (6) months from
effectivity of this Act, the PSALM Corp. shall submit a plan for the endorsement
by the Joint Congressional Power Commission and the approval of the President
of the Philippines, on the total privatization of the generation assets, real estate,
other disposable assets as well as existing IPP contracts of NPC and thereafter,
implement the same, in accordance with the following guidelines, except as
provided for in paragraph (f) herein: . . . .

Petitioners insist that if ever there exists a valid wholesale abolition of their positions and
their concomitant separation form the service, such a process is an integral part of
"privatization" and "restructuring" as de ned under the EPIRA Law and, therefore, must
comply with the above-quoted provision requiring the endorsement of the Joint
Congressional Power Commission and the approval of the President of the Philippines.
Furthermore, petitioner highlight the fact that said Resolutions will have an adverse effect
on about 5,648 employees of the NPC and will result in the displacement of some 2,370
employees, which, petitioners argue, is contrary to the mandate of the Constitution to
promote full employment and security of tenure.
Respondents, on the other hand, uphold the validity of the assailed Resolutions by arguing
that while it is true that four members of the National Power Board of Directors,
particularly the respective Secretaries of the Department of Interior and Local Government,
the Department of Trade and Industry, and the Department of Finance, as well as the
Director-General of the National Economic and Development Authority, were not the actual
signatories in NPB Resolutions No. 2002-124 and No. 2002-125, they were, however, ably
represented by their respective alternates. Respondents claim that the validity of such
administrative practice whereby an authority is exercised by persons or subordinates
appointed by the responsible of cial has long been settled. Respondents further contend
that Section 48 of the EPIRA Law does not in any way prohibit any member of the NPB
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 from authorizing his representative to sign resolutions adopted by the Board.

From the arguments put forward by herein parties, it is evident that the pivotal issue to be
resolved in this Petition for Injunction is whether or not NPB Resolutions No. 2002-124 and
No. 2002-125 were properly enacted. It is petitioners' contention that the failure of the four
specifically identified department heads 7 under Section 48 of the EPIRA Law to personally
approve and sign the assailed Resolutions invalidates the adoption of said Resolutions.
Petitioners maintain that there was undue delegation of delegated power when only the
representatives of certain members of the NPB attended the board meetings and passed
and signed the questioned Resolutions.
We agree with petitioners. In enumerating under Section 48 those who shall compose the
National Power Board of Directors, the legislature has vested upon these persons the
power to exercise their judgment and discretion in running the affairs of the NPC.
Discretion may be de ned as "the act or the liberty to decide according to the principles of
justice and one's ideas of what is right and proper under the circumstances, without
willfulness or favor. 8 Discretion, when applied to public functionaries, means a power or
right conferred upon them by law of acting of cially in certain circumstances, according to
the dictates of their own judgment and conscience, uncontrolled by the judgment or
conscience of others. 9 It is to be presumed that in naming the respective department
heads as members of the board of directors, the legislature chose these secretaries of the
various executive departments on the basis of their personal quali cations and acumen
which made them eligible to occupy their present positions as department heads. Thus,
the department secretaries cannot delegate their duties as members of the NPB, much
less their power to vote and approve board resolutions, because it is their personal
judgment that must be exercised in the fulfillment of such responsibility. DTEHIA

There is no question that the enactment of the assailed Resolutions involves the exercise
of discretion and not merely a ministerial act that could be validly performed by a delegate,
thus, the rule enunciated in the case of Binamira v. Garrucho 1 0 is relevant in the present
controversy, to wit:
An of cer to whom a discretion is entrusted cannot delegate it to another, the
presumption being that he was chosen because he was deemed t and
competent to exercise that judgment and discretion, and unless the power to
substitute another in his place has been given to him, he cannot delegate his
duties to another.

In those cases in which the proper execution of the of ce requires, on the part of
the of cer, the exercise of judgment or discretion, the presumption is that he was
chosen because he was deemed t and competent to exercise that judgment and
discretion, and, unless power to substitute another in his place has been given to
him, he cannot delegate his duties to another.

Respondents' assertion to the contrary is not tenable. The ruling in the case cited by
respondents to support their contention is not applicable in the case at bar. While it is true
that the Court has determined in the case of American Tobacco Company v. Director of
Patents 1 1 that a delegate may exercise his authority through persons he appoints to
assist him in his functions, it must be stressed that the Court explicitly stated in the same
case that said practice is permissible only when the judgment and discretion finally
exercised are those of the of cer authorized by law . According to the Court, the rule
that requires an administrative of cer to exercise his own judgment and discretion does
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 not preclude him from utilizing, as a matter of practical administrative procedure, the aid
of subordinates, so long as it is the legally authorized of cial who makes the nal decision
through the use of his own personal judgment.
In the case at bar, it is not dif cult to comprehend that in approving NPB Resolutions No.
2002-124 and No. 2002-125, it is the representatives of the secretaries of the different
executive departments and not the secretaries themselves who exercised judgment in
passing the assailed Resolution, as shown by the fact that it is the signatures of the
respective representatives that are af xed to the questioned Resolutions. This, to our
mind, violates the duty imposed upon the speci cally enumerated department heads to
employ their own sound discretion in exercising the corporate powers of the NPC.
Evidently, the votes cast by these mere representatives in favor of the adoption of the said
Resolutions must not be considered in determining whether or not the necessary number
of votes was garnered in order that the assailed Resolutions may be validly enacted.
Hence, there being only three valid votes cast out of the nine board members, namely
those of DOE Secretary Vincent S. Perez, Jr.; Department of Budget and Management
Secretary Emilia T. Boncodin; and NPC OIC-President Rolando S. Quilala, NPB Resolutions
No. 2002-124 and No. 2002-125 are void and are of no legal effect.
Having determined that the assailed Resolutions are void as they lack the necessary
number of votes for their adoption, We no longer deem it necessary to pass upon the other
issues raised in the instant petition
WHEREFORE, premises considered, National Power Board Resolutions No. 2002-124 and
No. 2002-125 are hereby declared VOID and WITHOUT LEGAL EFFECT. The Petition for
Injunction is hereby GRANTED and respondents are hereby ENJOINED from implementing
said NPB Resolutions No. 2002-124 and No. 2002-125. aAHDIc

SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Callejo, Sr., JJ., concur.

Footnotes

1. Annex "A" of Petition; rollo, pp. 24-25.

2. Section 48. National Power Board of Directors. — Upon the passage of this Act, Section 6 of
Republic Act No. 6395, as amended, and Section 13 of Republic Act No. 7638, as
amended, referring to the composition of the National Power Board of Directors, are
hereby repealed and a new Board shall be immediately organized. The new Board shall
be composed of the Secretary of Finance as Chairman, with the following as members:
the Secretary of Energy, the Secretary of Budget and Management, the Secretary of
Agriculture, the Director-General of the National Economic and Development Authority,
the Secretary of Environment and Natural Resources, the Secretary of the Interior and
Local Government, the Secretary of the Department of Trade and Industry, and the
President of the National Power Corporation.

3. Section 77. Implementing Rules and Regulations. — The DOE shall, in consultation with
relevant government agencies, the electric power industry participants, non-government
organizations and end-users, promulgate the Implementing Rules and Regulations (IRR)
of this Act within six (6) months from the effectivity of this Act, subject to the approval
by the Power Commission.
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 4. Section 63. Separation Bene ts of Of cials and Employees of Affected Agencies . — National
Government employees displaced or separated from the service as a result of the
restructuring of the electricity industry and privatization of NPC assets pursuant to this
Act, shall be entitled to either a separation pay and other bene ts in accordance with
existing laws, rules or regulations or be entitled to avail of the privileges provided under a
separation plan which shall be one and one-half month salary for every year of service in
the government: Provided, however, That those who avail of such privileges shall start
their government service anew if absorbed by any government-owned successor
company. In no case shall there be any diminution of bene ts under the separation plan
until the full implementation of the restructuring and privatization.
Displaced or separated personnel as a result of the privatization, if quali ed, shall be given
preference in the hiring of the manpower requirements of the privatized companies.

The salaries of employees of NPC shall continue to be exempt from the coverage of Republic
Act No. 6758, otherwise known as "The Salary Standardization Act."

With respect to employees who are not retained by NPC, the Government, through the
Department of Labor and Employment, shall endeavor to implement re-training, job
counseling, and job placement programs.

5. RULE 33. SEPARATION BENEFITS

Section 1. General Statement on Coverage.

This Rule shall apply to all employees in the National Government service as of 26 June 2001
regardless of position, designation or status, who are displaced or separated from the
service as a result of the Restructuring of the electricity industry and Privatization of NPC
assets: Provided, however, That the coverage for casual or contractual employees shall
be limited to those whose appointments were approved or attested by the Civil Service
Commission (CSC).

Section 2. Scope of Application. This Rule shall apply to affected personnel of DOE, ERB, NEA
and NPC.

Section 3. Separation and Other Benefits.

(a) The separation bene t shall consist of either a separation pay and other bene ts granted
in accordance with existing laws, rules and regulations or a separation plan equivalent to
one and one half (1-1/2) months' salary for every year of service in the government,
whichever is higher: Provided, That the separated or displaced employee has rendered at
least one (1) year of service at the time of effectivity of the Act.

(b) The following shall govern the application of Section 3(a) of this Rule:

(i) With respect to NPC of cials and employees, they shall be considered legally terminated
and shall be entitled to the bene ts or separation pay provided in Section 3(a) herein
when the restructuring plan as approved by the NPC Board shall have been
implemented.

(ii) With respect to NEA of cials and employees, they shall be considered legally terminated
and shall be entitled to the bene ts or separation pay provided in Section 3(a) herein
when a restructuring of NEA is implemented pursuant to a law enacted by Congress or
pursuant to Section 5(a)(5) of Presidential Decree No. 269.

(iii) With respect to the affected Bureaus of the DOE, their of cials and employees shall be
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 considered legally terminated and shall be entitled to the bene ts or separation pay
provided in Section 3(a) herein when the re-organizational plan shall have been
implemented as a result of the Restructuring of the electric power industry.

(c) The governing board or authority of the entities enumerated in Section 3(b) hereof shall
have the sole prerogative to hire the separated employees as new employees who start
their service anew for such positions and for such compensation as may be determined
by such board or authority pursuant to its restructuring program. Those who avail of the
foregoing privileges shall start their government service anew if absorbed by any
government agency or any government-owned successor company.

(d) In no case shall there be any diminution of bene ts under the separation plan until the full
implementation of the Restructuring of the electric power industry and the Privatization
of NPC assets in accordance with the approved Restructuring and Privatization
schedule.

(e) For this purpose, "Salary," as a rule, refers to the basic pay including the thirteenth (13th)
month pay received by an employee pursuant to his appointment, excluding per diems,
bonuses, overtime pay, honoraria, allowances and any other emoluments received in
addition to the basic pay under existing laws.

(f) Likewise, "Separation" or "Displacement" refers to the severance of employment of any

of cial or employee, who is neither quali ed under existing laws, rules and regulations
nor has opted to retire under existing laws, as a result of the Restructuring of the electric
power industry or Privatization of NPC assets pursuant to the Act.

Section 4. Funding.

Funds necessary to cover the separation pay under this Rule shall be provided either by the
Government Service Insurance System (GSIS) or from the corporate funds of the NEA or
the NPC, as the case may be; and in the case of the DOE and the ERB, by the GSIS or
from the general fund, as the case may be. The Buyer or Concessionaire or the successor
company shall not be liable for the payment of the separation pay.

Section 5. Preferential Rights of Employees.

Displaced or separated personnel as a result of the Restructuring of the electric power industry
and Privatization of NPC assets shall be given preference in the hiring of manpower
requirements of the newly-created of ces or the privatized companies: Provided, That
the displaced or separated personnel meet the prescribed quali cations. With respect to
employees who are not retained by NPC, the government, through the Department of
Labor and Employment (DOLE), shall endeavor to implement re-training, job counseling,
and job placement programs.

Section 6. Implementation.

The DOE, NEA, and NPC, shall issue guidelines applicable to their respective employees to
implement this Rule within ninety (90) days from effectivity of these Rules: Provided,
That in the case of ERC, the independent quasi-judicial body created under the Act, the
manner of, and timetable for, implementation of its organization shall be governed by
Section 38 and Section 39 of the Act.

6. Supra note 2.

7. Secretaries of the Department of Interior and Local Government, the Department of Trade
and Industry, and the Department of Finance, and the Director-General of the National
Economic and Development Authority.
CD Technologies Asia, Inc. © 2016 cdasiaonline.com
 8. Lamb v. Phipps, 22 Phil. 456, 488-489 (1912).

9. Id. at 489.

10. G.R. No. 92008, 30 July 1990, 188 SCRA 154, 159-160.

11. G.R. No. L-26803, 14 October 1975, 67 SCRA 287, 295.

CD Technologies Asia, Inc. © 2016 cdasiaonline.com