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DAISY JOY ROJALLO G.R. No. 210805

CERVANTES, BASILIO
DAYSON MANJARES, JAY-R
MEDINILLA LADUB,
ARMANDO MAMARIN DE
GUZMAN, indigent patients at the
Philippine Orthopedic Center
(POC), SEAN HERBERT
VELCHEZ, RN, DANTE A.
PEREZ, RICARDO ANTONIO,
MINNELIE I. CAGARA, RN, and
VALENTIN ABALOS ARCIAGA
of the National Orthopedic
Hospital Workers' Union-Alliance
of Health Workers (NOHWU-
AHW); FRESCO BASCARA
YAPENDON, . MD, AMELIA
MANGAY MAGLACAS, RN,
JOSSEL I. EBESATE, RN, of the
Alliance of Health Workers;
CECILIA M. LAURENTE, RN, of
the Network Opposed to
Privatization of Public Hospitals
and Health Services (NOP);
ELEANOR A: JARA, MD, of the
Council for Health and
Development, DARBY E.
SANTIAGO, MD, of the Health
Alliance for Democracy;
EDELINA P. DELA PAZ, MD, of
the People's Health Movement;
JOSEPH P. CARABEO, MD, of
the Community Medicine
Practitioners and Advocates
Association (COMPASS);
REGINALD PAMUGAS, MD, of
the Health Action for Human
Rights (BAHR); ELEANOR M.

--,_
 Decision 2 G.R. No. 210805

NOLASCO, RN, of the Nars ng Present:

Bayan Community Health Nurses'
Association; SATURNINO C.
OCAMPO, of the MAKABAYAN;
JOAN MAYE. SALVADOR, of the GESMUNDO, CJ.,
Gabriela Alliance of Women; PERLAS-BERNABE,
GLORIA ARELLANO, of the LEONEN,
*
Kalipunan ng Damayan ng CAGUIOA,
Mahihirap (KADAMAY); HERNANDO,
ELMER LABOG, of the Kilusang CARANDANG,
Mayo Uno; Bayan Muna Rep. LAZARO-JAVIER,
NERI JAVIER COLMENARES INTING,
and Rep. ISAGANI CARLOS ZALAMEDA,
ZARATE, and Kabatan Partylist LOPEZ, M. V.,
Rep. TERRY RIDON, DELOS SANTOS,
Petitioners, GAERLAN,
ROSARIO, and
- versus - LOPEZ, J. Y., JJ.

H.E. BENIGNO SIMEON

AQUINO III, Chairperson of the
National Economic Development
Authority; Hon. ENRIQUE T.
ONA, Secretary of Department of
Health; Hon. TEODORO J.
HERBOSA, Undersecretary, DOH
Head, MPOC-PBAC; COSETTE
C. CANILAO, Executive Director
of the Public Private Partnership
Center; JAN IRISH P.
VILLEGAS, Project Manager,
Modernization of the Philippine
Orthopedic Center; ARSENIO M.
BALISACAN, Director General
and Vice Chairman of the National
Economic Development Authority;
CESAR V. PURISIMA, Chair of
the NEDA-Investment
Coordinating Committee (ICC);
and CONSORTIUM OF
MEGAWIDE CONSTRUCTION
CORPORATION and WORLD
CITI MEDICAL CENTER, Promulgated:
represented by MANUEL LOUIE
B. FERRER,
Respondents. May 11,
* No part.
Decision 3 G.R. No. 210805

X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X

DECISION

HERNANDO, J.:

This special civil action for Certiorari and Prohibition 1 with Application
for the Issuance of a Writ of Preliminary Injunction and/or Temporary
Restraining Order seeks to annul and set aside the proposed privatization or
commercialization of the Philippine Orthopedic Center (POC) and the
subsequent award of the Modernization of the POC Project (MPOC Project) to
private respondents. It further seeks to permanently prohibit and restrain
public respondents from implementing the said modernization project.

The petitioners in this case are patients and employees of the POC,
health-allied professionals and legislators. They contend that they are suing on
their own behalf and on behalf of the general public, who will be directly
affected by the privatization of the POC which is the country's only
specialized orthopedic hospital that treats patients who are mostly indigents or
otherwise unable to pay the high cost of medical care. They assert that being
taxpayers, they have a clear interest in the disbursement of public funds to be
allocated for the whole process of privatizing the POC, hence, they will suffer
direct and substantial injury therefrom, thus clothing them with legal standing
to institute the instant petition. 2

Further, petitioners invoke the concurrent jurisdiction of this Court to

resolve the present controversy claiming that they do not have other available
practical administrative remedies. Moreover, given the paramount importance
or transcendental significance of the issues involved and the magnitude of the
actual and imminent injury as well as the adverse effects of the questioned acts
of respondents, petitioners submit that they have no speedy, plain and
adequate remedy except to seek urgent judicial intervention from this Court. 3

Public respondents, on the other hand, are being sued in their capacity as
officials of the government while private respondents are private corporations
duly registered under Philippine laws. 4

The facts as culled from the records are as follows:

1 Rollo, Vol. I, pp. 3-64.

2
Id. at 7-12.
3
Id. at 13-15.
4 Id. at 10-11.
Decision 4 G.R. No. 210805

The MPOC Project consists of the construction of a new hospital facility

within the National Kidney and Transplant Institute Compound along East
Avenue, Quezon City, wherein the project proponent will undertake the
construction of a 700-bed capacity specialty care hospital providing
orthopedic clinical services and allied services; procurement, installation,
operations and management of modem diagnostics and clinical equipment;
procurement, installation, operations and management of IT facilities;
operation and maintenance of the new hospital facility; provision of
administrative and ancillary services; provision of appropriately qualified
staff; and provision of teaching and training facilities to be used in the conduct
of training programs to be offered in the new hospital facility.

To summarize, the concessionaire will design, build, finance, operate and

maintain the facility for a period of 25 years and thereafter, transfer the said
facility to the Department of Health (DOH). The MPOC Project shall be
implemented through a Build-Operate-Transfer (BOT) arrangement under the
provisions of Republic Act No. (RA) 6957 5 as amended by RA 7718,
otherwise known as the "Build-Operate-and-Transfer (BOT) Law" and
pursuant to the Public Private Partnership (PPP) Program of public respondent
former President Benigno S. Aquino III (respondent Aquino ). 6

On November 18, 2012, the Modernization of the Philippine Orthopedic

Center - Pre-Qualification, Bids and Awards Committee (MPOC-PBAC)
issued an invitation to pre-qualify and bid for the MPOC Project. 7

On January 28, 2013, the MPOC-PBAC conducted a Pre-Qualification

Conference wherein it recommended the pre-qualification of the following
prospective bidders:

1. Siemens, Inc. Health Sector;

2. G.E. Healthcare General Electric Philippines, Inc.;
3. Sta. Clara International Corp.;
4. Mount Grace Hospital Venture;
5. Philips Electronics and Lighting, Inc.;
6. Metro Pacific Investments;
7. Megawide Engineering Excellence;
8. Strategic Alliance Holding, Inc.; and
9. Data Trail Corporation. 8

5 An Act Authorizing the Financing, Construction, Operat_ion and Maintenance of Infrastructure Projects by

the Private Sector, and for Other Purposes.

6
Rollo. Vol.I, pp. 18-19.
7
ld. at 17-18.
8
Id. at 19.
Decision 5 G.R. No. 210805

On June 4, 2013, the Consortium of Megawide Construction Company

(Megawide) and World Citi Medical Center (WCMC; collectively, the
Consortium), submitted its proposal as the sole bidder. After declaring the
technical and financial bid of Megawide to be complete, the MPOC-PBAC
submitted the pertinent documents to the Investment Coordination Committee
of the National Economic and Development Authority (ICC-NEDA) for
evaluation. The same was approved by the NEDA Board chaired by
respondent Aquino on November 21, 2013. Thus, the MPOC-PBAC issued
Resolution No. 13 on November 28, 2013 recommending to Enrique T. Ona
(respondent Ona) the award of the MPOC Project to Megawide. On December
9, 2013, respondent Ona issued a Notice of Award 9 in favor ofMegawide.

Pursuant thereto, public respondent DOH, through respondent Ona,

executed a Build-Operate-Transfer Agreement 10 (BOT Agreement) with
private respondents, through their authorized representative, private
respondent Manuel Louie B. Ferrer, on March 6, 2014.

These prompted petitioners to file before this Court on February 3, 2014

the present petition seeking to annul and set aside the privatization of the POC
including the award to Megawide of the MPOC Project and accordingly
prohibit the building, operation and transfer of the POC to Megawide.

Petitioners impute grave abuse of discretion amounting to lack or excess

of jurisdiction against public respondents when they:

1. relinquished the duty and responsibility to provide and ensure

basic social service such as health to a private entity through
privatization or commercialization of a government hospital (the
POC) to the prejudice of the poor and underprivileged; and

2. expanded the application of the Build, Operate and Transfer

(BOT) Law to cover the privatization of health services. I I

Petitioners contend that the privatization of the POC will result in the
denial of medical services to thousands of indigent Filipinos, a clear violation
of their constitutional right to health. 12 According to petitioners, under the
present set-up, POC has a 700-bed capacity, 85% of which or a total of 562
are allocated to service non-paying patients while only 15% or 95 beds are
allotted to pay patients.

9
Id. at 65-66.
10
Rollo, Vol. II, pp. 325-408.
11
Rollo, Vol. I, pp. 24-25.
12
Id. at 25.
Decision 6 G.R. No. 210805

However, with the privatization of the POC, Megawide is required to

apportion only 10% of the 700 beds to service patients or a measly 70 beds.
Thus, the reduction of the beds to be devoted to service patients is practically
a denial of expert medical care for thousands of Filipinos who do not have the
means to pay for their medical needs. 13

Moreover, petitioners argue that the privatization of the POC violates

Section 6 of RA 1939 which prescribes that all government hospitals shall
operate with not less than 90% of its bed capacity as free or charity beds. 14

Additionally, petitioners assert that the privatization of the POC violates

POCs employees' right to security of tenure because they are only given two
options: to either work in the Modernized POC in which case, they will have
to resign or, if eligible, to retire from government service, or they may be
transferred to another DOH hospital. 15

Also, petitioners argue that public respondents' act of privatizing the

POC amounts to grave abuse of discretion amounting to lack or excess of
jurisdiction because they illegally expanded the application of the Build
Operate and Transfer (BOT) Law to cover the privatization of health services.

Petitioners submit that under the BOT Law, only health facilities, which
are limited to equipment and installations or physical structures like buildings,
roads, bridges and similar installations, are allowed to be contracted out to
private entities. It does not include the activities or services being undertaken
in such installations such as health/medical services being offered in a
hospital. 16

Lastly, petitioners aver that the DOH committed grave abuse of

discretion in awarding to the Consortium a contract which is greatly
disadvantageous to the government and the consumers as the public will
eventually pay for higher medical expenses contrary to the mandate of the
BOT Law which provides that tolls, fees and rentals to be charged or collected
should be reasonable. 17

Accordingly, petitioners pray for the annulment of the MPOC Project and
issuance of a temporary restraining order and/or writ of preliminary injunction
commanding respondents to cease and desist from implementing the
challenged project and, after hearing the merits of the petition, that We render
judgment permanently enjoining respondents from implementing the

13
Id. at 45-46.
14
Id. at 47.
15 Id. at 50-52.
16 Id. at 53-56.
17
Id. at 57.
Decision 7 G.R. No. 210805

complained acts. 18

The Consortium and public respondents filed their respective

Comments. 19

Respondents counter that petitioners have no legal standing to initiate the

instant action as they do not stand to suffer any direct substantial injury from
the implementation of the MPOC Project. As taxpayers, they lack the
requisite capacity in the absence of any illegal expenditure or an allegation of
disbursement of public funds. Anent petitioners-employees of the POC and
health-related professionals, they will not sustain direct or substantial injury
from the implementation of the MPOC Project as they will not be terminated
from their employment.

In fact, the modernization of the POC would give them more

employment opportunities because they will have the option to continue
working for the government or transfer to the new facility. Finally,
petitioners-legislators are devoid of standing in filing the instant petition
because the MPOC Project does not infringe on their duties and prerogatives
as legislators. 20

Further, respondents argue that the petition does not raise any issue of
transcendental importance because there is no prohibition against the
establishment of a BOT arrangement between the government and private
entities for the modernization of public hospitals such as the POC. 21

Besides, respondents contend that the petition is premature because the

petitioners failed to exhaust all available administrative remedies. 22

Respondents add that the petition involves a political question which is

beyond the province of this Court to decide. They argue that the objection of
petitioners to the partnership of the DOH with Megawide in the development
of the POC is an attack, not only on the legality, but on the soundness of the
policy behind the PPP scheme employed in the MPOC Project. 23

Respondents also dispute petitioners' allegation that the MPOC Project

violates Section 15, Article II and Section 11, Article XIII of the Constitution
as well as International Laws and Treaty. They emphasize that the above-
mentioned constitutional provisions are not self-executory, thus, are not
judicially demandable rights, the disregard of which can give rise to a cause of

18
Id. at 59-6 I.
19
Id. at 115-160; 165-258.
20
Id. at 127-128.
21 Id. at 128-129.
22
Id. at 129-130.
23
Id. at 131.
Decision 8 G.R. No. 210805

action in the courts.

In any case, the implementation of the MPOC Project is not an abdication

but is, in fact, in recognition of the State's duty to provide and ensure the
people's access to quality hospitals and health care facilities. With the
deteriorating state of the POC coupled by its outdated or broken machines, it
can no longer accommodate the increasing number of patients and provide
quality health care services to them. 24

Respondents likewise reject petitioners' contention that the MPOC

Project is in fact a privatization of the POC in the guise of modernization.
According to respondents, there will be no transfer of ownership of
government assets to the private sector. What will be transferred is only the
management and operations of the government infrastructure, which transfer
will only be for a limited time period. 25

As regards petitioners' allegation that the MPOC Project violates the

provisions of the BOT Law because it prohibits the contracting out of health
and medical services to project proponents, respondents emphasize that under
the BOT arrangement, the operation of the facility can be undertaken by the
project proponent. Thus, in the case of a health facility such as the POC, the
operation thereof by the project proponent will obviously include the
performance of health and medical services as a natural consequence of
operating such a facility. 26

Respondents also protest petitioners' interpretation of the MPOC-PBAC

Bid Bulletin No. 5 which allegedly reduced the allocated beds to service
patients to only 70 as opposed to the previously allotted 562 beds to service
category patients. Respondents explained that out of the 700 beds to be
installed, 490 beds are set aside for sponsored and service category patients to
ensure that the poor and the indigents will be the main beneficiaries of the
modernization project. Moreover, the minimum requirement set to be devoted
to sponsored and service category patients is at 490 beds. There is nothing in
the arrangement that says that the remaining 210 beds would strictly be for the
use of pay patients. 27

Finally, respondents argue that the MPOC Project will not impinge on the
POC employees' right to security of tenure as they are given the option to
either transfer to the new facility or remain in government service where they
will be retained in the present POC or transferred to other government
hospitals and facilities. In either case, they are accorded security oftenure. 28

24
Id. at 138-141.
25
Id. at 143-144.
26
Id. at 144-146.
27
Id. at 149.
28
Id. at 150-152.

~-
Decision 9 G.R. No. 210805

Issue

The primordial issue for the Court's resolution is whether or not public
respondents gravely abused their discretion in entering into the MPOC Project
with private respondents.

Our Ruling

The petition is partly meritorious.

In light of the supervening "Notice of Termination" 29 of the BOT

Agreement served by private respondents upon public respondent DOH on
November 10, 2015 and received by the latter on even date, the dismissal of
the case on the ground of mootness is warranted.

The pertinent portion of the November 10, 2015 Notice of Termination

reads:

In view of the foregoing, it is with deepest regret that we serve on

your office this Notice of Termination of the BOT Agreement. Section[s]
8.2 and 9.2a of the BOT Agreement provide that if the delay in the
performance of the DOH exceeds one hundred eighty (I 80) days from
Signing Date, the Project Proponent may opt to terminate the BOT
Agreement. This 180-day period came and went over a year ago on
September 2, 2014. Accordingly, the BOT Agreement will terminate on
November 15, 2015 ("Termination Date"). 30

The grounds relied upon by private respondents in terminating the BOT

Agreement were Sections 8 and 9.2a thereof which pertinently provide:

Section 8. PROJECT SITE

xxxx

Within 30 days from the Signing Date, the DOH shall make available and
deliver to the Project Proponent the Project Site by issuing a Certificate of
Possession in the name of the Project Proponent. If the delay in the issuance of
the Certificate of Possession exceeds one hundred eighty ( 180) days from
Signing Date, the Project Proponent shall be entitled to terminate this BOT
Agreement without any liability to the DOH or to treat such failure as Non-
Fault Delay.

xxxx

29
Rollo, Vol. III, pp. 911-912.
30
Id. at 911.
Decision 10 G.R. No. 210805

Section 9.2a

The DOH shall procure the services of the Independent Consultant during
Construction, subject to the terms of reference in Annex H within ninety (90)
days from Signing Date. If the delay in the appointment of the Independent
Consultant exceeds one hundred eighty (180) days from Signing Date, the
Project Proponent shall be entitled to terminate this BOT Agreement without
any liability to the DOH or to treat such failure as Non-Fault Delay. 31

Thus, on November 27, 2015, private respondents filed a Manifestation32

before this Court manifesting that in view of this development, the instant
petition has been rendered moot and academic.

Accordingly, the Court finds that the petition at bar has indeed become
moot and academic by virtue of the supervening termination of the BOT
Agreement that transpired after the filing of the instant petition.

To expound, "[a] case or issue is considered moot and academic when it

ceases to present a justiciable controversy by virtue of supervening events, so
that an adjudication of the case or a declaration on the issue would be
of no practical value or use. In such instance, there is no actual substantial
relief which a petitioner would be entitled to, and which would be negated by
the dismissal of the petition. Courts generally decline jurisdiction over such
case or dismiss it on the ground of mootness. This is because the judgment
will not serve any useful purpose or have any practical legal effect because, in
the nature of things, it cannot be enforced." 33

In the case at bar, there is no dispute that the action for certiorari and
prohibition filed by petitioners has been mooted by the termination of the
BOT Agreement of private respondents. The staleness of the claims becomes
more manifest considering the reliefs sought by petitioners, i.e., to annul and
set aside the BOT Agreement for the modernization of the POC; and to
permanently enjoin respondents from implementing the MPOC Project, are
hinged on the existence of the BOT Agreement.

Corollarily, the eventual termination of the BOT Agreement rendered the

resolution of the issues relating to the prayers for certiorari and prohibition of
no practical or legal effect. Simply stated, petitioners in this case would no
longer be entitled to any actual substantial relief regardless of this Court's
disposition on the merits of the present petition.

WHEREFORE, the Court resolves to DISMISS the petition for being

moot and academic.

31
Rollo, Vol. II, pp. 348-349.
32
Rollo, Vol. III, pp. 908-910.
33
Penafrancia Sugar Mill, Inc. v. Sugar Regulatory Administration, 728 Phil. 535,540 (2014).
 Decision 11 G.R. No. 210805

SO ORDERED.

Associate Justice

WE CONCUR:

A~

Associate Justice Associate Justice

No part
ALFREDO BENJAMIN S. CAGUIOA
Associate Justice

HEN
Associate Justice
 Decision 12• G.R. No. 210805

y
EDGARDO L. DELOS SANTOS ~N
sAMuE:LH.GA
Associate Justice Associate Justice

OSARIO JHOSE~OPEZ
Associate Justice

CERTIFICATION

I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court.