G.R. No. 78389 October 16, 1989
JOSE LUIS MARTIN C. GASCON, FAUSTINO “BONG” L. LAPIRA, and SPOUSES ALBERTO and KARLA LIM, petitioners, vs. The Hon. JOKER T. ARROYO, in his official capacity as Executive Secretary to the President, Hon. TEODORO C. BENIGNO, as Press Secretary, Hon. REINERIO REYES, as the Secretary of Transportation and Communication, Hon. JOSE ALCUAZ, as Chairman of the National Telecommunications Commission, Hon. CONRADO A. LIMCAOCO, JR., as the Officer-in-Charge of the People’s Television 4, ABS-CBN BROADCASTING CORPORATION, and MESSRS. VICENTE ABAD SANTOS, PASTOR DEL ROSARIO and CATALINO MACARAIG, JR., in their respective capacities as Chairman and Members of the “Arbitration Committee”, respondents.

FACTS

The case involves a petition to annul an “Agreement to Arbitrate” executed on January 6, 1987, between the Republic of the Philippines, represented by Executive Secretary Joker Arroyo, and ABS-CBN Broadcasting Corporation, represented by Eugenio Lopez, Jr. The agreement aimed to settle ABS-CBN’s claims for the return of television stations sequestered after the 1972 martial law declaration. Specifically, TV Channel 4 was taken over by the government and operated by various state entities. After the 1986 EDSA Revolution, the Presidential Commission on Good Government (PCGG) sequestered the stations. Following a successful request for the return of Channel 2, the Lopez family sought the return of Channel 4. The Executive Secretary, by authority of the President, entered into the arbitration agreement, leading to the creation of an Arbitration Committee.
Petitioners, alleging taxpayer status, filed this suit for certiorari and prohibition. They sought to annul the arbitration agreement and enjoin the Arbitration Committee from proceeding, arguing that the Executive Secretary lacked the authority to bind the government to such an agreement and that the mode of settling the claim was improper.

ISSUE

The primary issue is whether the petitioners possess the requisite legal standing (locus standi) to file the petition. A secondary issue involves the validity of the “Agreement to Arbitrate” executed by the Executive Secretary.

RULING

The Supreme Court DISMISSED the petition. The Court ruled that petitioners lack legal standing. The Court recognized that taxpayers may sue to question the constitutionality of a statute involving the expenditure of public funds, as such expenditure for an invalid law constitutes a misapplication of funds. However, the present action is not one assailing a statute but seeks to annul a contractual “Agreement to Arbitrate.” Petitioners failed to demonstrate any direct legal interest in TV Channel 4 or how they would be adversely affected by its return to the Lopez family. Without a concrete personal stake, they have no standing to sue.
On the substantive merits, which the Court addressed despite the dismissal on standing, it found the petition devoid of merit. At the time the agreement was signed, the Provisional Constitution (Freedom Constitution) was in effect, vesting the President with both legislative and executive powers. As Chief Executive, the President is assisted by a Cabinet, and the acts of department heads, like the Executive Secretary, performed in the regular course of business and within their authority, are presumptively the acts of the President unless disapproved. Therefore, respondent Executive Secretary had the authority to enter into the arbitration agreement on behalf of the Republic. Furthermore, arbitration under Republic Act No. 876 is a recognized alternative mode of dispute settlement. The government’s choice to avail itself of this faster method to resolve ABS-CBN’s claim was valid. The Court also