The contract-making power of the President

While all government authority emanates from the people, the breadth and depth of such authority are not brought to bear by direct popular action, but through representative government in accord with the principles of republicanism.[1] By investiture of the Constitution, the function of executive power is parceled solely to the duly elected President.[2] The Constitution contains several express manifestations of executive power, such as the provision on control over all executive departments, bureaus and offices,[3] as well as the so-called “Commander-in-Chief” clause.[4] For more discussion on this, see Separate Opinion of Justice Tinga in La Bugal B’laan Tribal Association v. Ramos (G.R. NO. 127882, JANUARY 27, 2004).

Yet, it has likewise been recognized in this jurisdiction that “executive power” is not limited to such powers as are expressly granted by the Constitution. Marcos v. Manglapus[5] concedes that the President has powers other than those expressly stated under the Constitution,[6] and thus implies that these powers may be exercised without being derivative from constitutional authority.[7] The jurisprudential value of Marcos v. Manglapus may be controvertible,[8] but the cogency of its analysis of the scope of executive power is indisputable. Neither is the concept of plenary executive power novel, as discussed by Justice Irene Cortes in her ponencia:

It has been advanced that whatever power inherent in the government that is neither legislative nor judicial has to be executive. Thus, in the landmark decision of Springer v. Government of the Philippine Islands, 277 U.S. 189 (1928), on the issue of who between the Governor-General of the Philippines and the Legislature may vote the shares of stock held by the Government to elect directors in the National Coal Company and the Philippine National Bank, the U.S. Supreme Court, in upholding the power of the Governor-General to do so, said:

. . . Here the members of the legislature who constitute a majority of the "board" and "committee" respectively, are not charged with the performance of any legislative functions or with the doing of anything which is in aid of performance of any such functions by the legislature. Putting aside for the moment the question whether the duties devolved upon these members are vested by the Organic Act in the Governor-General, it is clear that they are not legislative in character, and still more clear that they are not judicial. The fact that they do not fall within the authority of either of these two constitutes logical ground for concluding that they do fall within that of the remaining one among which the powers of government are divided . . . [At 202-203; italics supplied.]

We are not unmindful of Justice Holmes' strong dissent. But in his enduring words of dissent we find reinforcement for the view that it would indeed be a folly to construe the powers of a branch of government to embrace only what are specifically mentioned in the Constitution:

The great ordinances of the Constitution do not establish and divide fields of black and white. Even the more specific of them are found to terminate in a penumbra shading gradually from one extreme to the other. . . .

xxx xxx xxx

It does not seem to need argument to show that however we may disguise it by veiling words we do not and cannot carry out the distinction between legislative and executive action with mathematical precision and divide the branches into watertight compartments, were it ever so desirable to do so, which I am far from believing that it is, or that the Constitution requires. [At 210-211.][9]

Such general power has not been diminished notwithstanding the avowed intent of some of the framers of the 1987 Constitution to limit the powers of the President as a reaction to abuses under President Marcos, for as the Court noted, “the result was a limitation of the specific powers of the President, particularly those relating to the commander-in-chief clause, but not a diminution of the general grant of executive power.”[10] The critical perspective of this case should spring from a recognition of this elemental fact.

Section 2, Article XII of the Constitution limits the powers of the President. It provides:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of waterpower, beneficial use may be the measure and limit of the grant.

The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

It originates from the concept of executive power that is not explicitly provided for by the Constitution. As a necessary incident of the functions of the executive office, it can be concluded that the President has the authority to enter into contracts in behalf of the State in matters which are not denied him or her or not otherwise assigned to the other great branches of government, even if such general power is not categorically recognized in the Constitution. Among these traditional functions of the executive branch is the power to determine economic policy.

As once noted by Justice Feliciano, the Republic of the Philippines is itself a body corporate and juridical person vested with the full panoply of powers and attributes which are compendiously described as “legal personality.”[11] As “Chief of State” the President is also regarded as the head of this body corporate,[12] and thus is capacitated to represent the State when engaging with other entities. Such executive function, in theory, does not require a constitutional provision, or even a Constitution, in order to be operative. It is a power possessed by every duly constituted presidency starting with Aguinaldo’s. This faculty is complementary to the traditional regard of a Head of State as emblematic of the State he/she represents.

The power to contract in behalf of the State is clearly an executive function, as opposed to legislative or judicial. This is easily discernible through the process of exclusion. The other branches of government — the legislative and the judiciary — are not similarly capacitated since their core functions pertain to legislating and adjudicating respectively.

Of course, such executive power to contract is not unimpeachable and not limitless. The Constitution frowns on unchecked executive power, mandating in broad strokes, the power of judicial review[13] and legislative oversight.[14] The Constitution itself may expressly restrict the exercise of any sort of executive function. Section 2 undeniably constrains the exercise of the executive power to contract in several regards.


[1] “The Philippines is a democratic and republican State. xxx" See Section 1, Article II, Constitution. “Republicanism, in so far as it implies the adoption of a representative type of government, necessarily points to the enfranchised citizen as a particle of popular sovereignty and as the ultimate source of the established authority.” Moya v. Del Fierro, 69 Phil. 199, 204 (1939), See also Badelles v. Cabili, 136 Phil. 383, 395-396 (1969).

[2] Section 1, Article VII of the Constitution states: “The executive power shall be vested in the President of the Philippines.”

[3] See Section 17, Article VII, Constitution, which reads: “The President shall have control of all the executive departments, bureaus and offices. He shall ensure that the laws be faithfully executed.”

[4] See Section 18, Article VII, Constitution, which begins: “The President shall be the Commander-in-Chief of all armed forces of the Philippines and whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless violence, invasion or rebellion. xxx”

[5] G.R. No. 88211, 27 October 1989, 178 SCRA 760.

[6] Id. at 764. Citing the eminent American legal scholar Laurence Tribe, who notes that US jurisprudence makes clear “that the constitutional concept of inherent power is not a synonym for power without limit; rather, the concept suggests only that not all powers granted in the Constitution are themselves exhausted by internal enumeration, so that, within a sphere properly regarded as one of “executive” power, authority is implied unless there or elsewhere expressly limited.” Ibid.

[7] Justice Irene Cortes, who penned the Court’s decision in Marcos v. Manglapus, has opined elsewhere on the grant of plenary executive powers on the President, “[who] personifies the executive branch. There is a unity in the executive branch absent from the two other branches of government. The president is not the chief of many executives. He is the executive. His direction of the executive branch can be more immediate and direct than the United States president because he is given by express provision of the constitution control over all executive departments, bureaus and offices.” I. Cortes, The Philippine Presidency: A Study of Executive Power, pp. 68-69; cited in Sanlakas v. Executive Secretary et al., G.R. Nos. 159086, 159103, 159185, 159196, 3 February 2004.

[8] “This case is unique. It should not create a precedent, for the case of a dictator forced out of office and into exile after causing twenty years of political, economic and social havoc in the country and who within the short space of three years seeks to return, is in a class by itself.” Marcos v. Manglapus, supra note 7, at 682.

[9] Id. at 692. See also supra note 8. In light of the U.S. Supreme Court decision in the famed Steel Seizure case, Youngstown Sheet v. Sawyer, supra note 2, and the competing analyses of Justice Black (whose “formalist” approach led to rigid categorization of separate legislative, executive and judicial functions), and Justices Frankfurter and Jackson (who opted for a more flexible, functional approach), Gunther and Sullivan note that “[m]uch scholarly commentary on separation of powers has endorsed the functional approach, and cite this following argument for the “functional” view: “When the Constitution confers power, it confers power on the three generalist political heads of authority, not on branches as such. [Its] silence about the shape of the inevitable, actual government was a product both of drafting compromises and of the explicit purpose to leave Congress free to make whatever arrangements it deemed ‘necessary and proper’ for the detailed pursuit of government purposes.” G. Gunther and K. Sullivan, Constitutional Law (14th ed., 2001), at 342; citing Strauss, “Formal and Functional Approaches to Separation of Powers Questions – A Foolish Inconsistency,” 72 Corn.L.Rev. 488 (1987).

Another analysis is proferred by Chemerinsky, who acknowledges that the debate on inherent presidential power has existed “from the earliest days of the country.” E. Chemerinsky, Constitutional Law: Principles and Policies (2nd ed., 2002), at 329. In analyzing the U.S. Supreme Court’s divided opinions in the seminal case of Youngstown Sheet, supra note 2, he notes that while the majority opinion of Justice Black seems to deny the existence of any inherent presidential power, the concurring opinions of Justices Douglas, Frankfurter and Jackson do seem to acknowledge the existence of such power, albeit subject to proscription by the legislative branch. Chemerinsky also notes that the view of inherent presidential authority had been affirmed in the earlier case of U.S. v. Curtiss-Wright Export Corporation, 299 U.S. 304 (1936), which pertained to the presidential power to conduct foreign policy. Id. at 334.

[10] Ibid. See also Sanlakas v. Executive Secretary; supra note 9.

[11] Iron and Steel Authority v. Court of Appeals, 319 Phil. 648, 658 (1995).

[12] Apropos to the nature of the Filipino presidency is the following comment on the U.S. presidency by an American historian, “As our Chief of State, and as such the embodiment of the people’s elective will, the President is clad with the prerogative of the office, and possesses more actual sovereign power than any British king since George III. In his role as Chief of Foreign Relations, from the beginning he has been the sole organ of the nation in its external relations, and its sole representative with foreign nations. While the Senate must advise and consent to any treaty, the President has exclusive initiative in their negotiation.” G.F. Milton, The Use of Presidential Power: 1789-1943 (1980 ed.), at 3.

[13] Section 1, Article VIII, Constitution enables the courts to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the executive, a duty which is made easier if there is a specifically prescribed constitutional standard which warrants obeisance by the executive branch.

[14] See Secs. 21 and 22, Art. VI, Const., which read:

Sec. 21. The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected.

Sec. 22. The heads of departments may upon their own initiative, with the consent of the President, or upon the request of either House, as the rules of each House shall provide, appear before and be heard by such House or any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations shall not be limited to written questions, but may cover matters related thereto. When the security of the State or the public interest so requires and the President so states in writing, the appearance shall be conducted in executive session.

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