G.R. No. 125509 . January 31, 2007.
PUBLIC INTEREST CENTER, INC., LAUREANO T. ANGELES, and JOCELYN P. CELESTINO, Petitioners, vs. HON. VICENTE Q. ROXAS, RTC Quezon City, Branch 227, REPUBLIC OF THE PHILIPPINES, NATIONAL POWER CORPORATION, WESTINGHOUSE ELECTRIC CORPORATION, WESTINGHOUSE ELECTRIC S.A., and WESTINGHOUSE INTERNATIONAL PROJECTS COMPANY, Respondents.

FACTS

Petitioners, as taxpayers, filed a complaint before the Regional Trial Court (RTC) seeking the declaration of nullity of the 1976 contract for the Bataan Nuclear Power Plant (BNPP) between the National Power Corporation (NPC) and Westinghouse entities. They also sought to nullify a subsequent Compromise Settlement Agreement forged on October 13, 1995, which was recommended by a Presidential Committee and involved a $100 million package from Westinghouse in exchange for dismissing all pending lawsuits. Petitioners alleged the original contract was void for being contrary to public policy and the settlement was disadvantageous to the government.
The RTC dismissed the complaint. It ruled that petitioners lacked legal standing as taxpayers, as the subject contracts involved corporate funds of the NPC, not public funds appropriated by law. The RTC also held that the issues involved political questions concerning the wisdom of executive policy and the settlement of international disputes, which are beyond judicial review. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the RTC committed grave abuse of discretion in dismissing the complaint on the grounds of petitioners’ lack of legal standing and the presence of a political question.

RULING

Yes, the Supreme Court found grave abuse of discretion. On legal standing, the Court held that petitioners, as taxpayers, had standing to sue. While the BNPP contract was initially funded by NPC, a government-owned and controlled corporation, Executive Orders had effectively transferred the plant’s ownership and obligations to the National Government. The subsequent compromise settlement was executed by the Republic itself. Consequently, the settlement involved the disbursement of public funds to satisfy government-assumed liabilities, giving taxpayers a direct interest in preventing alleged illegal expenditures.
On the political question doctrine, the Court ruled it was inapplicable. The petition did not ask for a review of the wisdom of the executive’s decision to settle but challenged the validity of the contracts themselves based on alleged violations of law, particularly the Anti-Graft and Corrupt Practices Act. The determination of a contract’s validity, including whether it is grossly disadvantageous to the government, is a judicial function. The Court emphasized that not every executive action involving foreign relations is a political question; courts can review acts for grave abuse of discretion or contravention of law. The RTC therefore erred in dismissing the case without hearing evidence on the substantive allegations. The Supreme Court granted the petition and remanded the case for further proceedings.