G.R. No.

208566

November 19, 2013

GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ

REUBEN M. ABANTE and QUINTIN PAREDES SAN DIEGO, Petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF
BUDGET AND MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA
V. DE LEON SENATE OF THE PHILIPPINES represented by FRANKLIN M. DRILON m his
capacity as SENATE PRESIDENT and HOUSE OF REPRESENTATIVES represented by
FELICIANO S. BELMONTE, JR. in his capacity as SPEAKER OF THE
HOUSE, Respondents.
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G.R. No. 208493
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner,
vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and
HONORABLE FELICIANO S. BELMONTE, JR., in his capacity as SPEAKER OF THE
HOUSE OF REPRESENTATIVES, Respondents.
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G.R. No. 209251
PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board
Member -Province of Marinduque, Petitioner,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH
ABAD, DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
PERLAS-BERNABE, J.:
"Experience is the oracle of truth."

-James Madison
Before the Court are consolidated petitions taken under Rule 65 of the Rules of Court, all of
which assail the constitutionality of the Pork Barrel System. Due to the complexity of the subject
matter, the Court shall heretofore discuss the systems conceptual underpinnings before
detailing the particulars of the constitutional challenge.
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The Facts
I. Pork Barrel: General Concept.

"Pork Barrel" is political parlance of American -English origin. Historically, its usage may
be traced to the degrading ritual of rolling out a barrel stuffed with pork to a multitude of
black slaves who would cast their famished bodies into the porcine feast to assuage
their hunger with morsels coming from the generosity of their well-fed master. This
practice was later compared to the actions of American legislators in trying to direct
federal budgets in favor of their districts. While the advent of refrigeration has made the
actual pork barrel obsolete, it persists in reference to political bills that "bring home the
bacon" to a legislators district and constituents. In a more technical sense, "Pork Barrel"
refers to an appropriation of government spending meant for localized projects and
secured solely or primarily to bring money to a representative's district. Some scholars
on the subject further use it to refer to legislative control of local appropriations.
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In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum,

discretionary funds of Members of the Legislature, although, as will be later discussed,
its usage would evolve in reference to certain funds of the Executive.
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II. History of Congressional Pork Barrel in the Philippines.

A. Pre-Martial Law Era (1922-1972).
Act 3044, or the Public Works Act of 1922, is considered as the earliest form of
"Congressional Pork Barrel" in the Philippines since the utilization of the funds
appropriated therein were subjected to post-enactment legislator approval.
Particularly, in the area of fund release, Section 3 provides that the sums
appropriated for certain public works projects "shall be distributed x x x subject to
the approval of a joint committee elected by the Senate and the House of
Representatives. "The committee from each House may also authorize one of its
members to approve the distribution made by the Secretary of Commerce and
Communications." Also, in the area of fund realignment, the same section
provides that the said secretary, "with the approval of said joint committee, or of
the authorized members thereof, may, for the purposes of said distribution,
transfer unexpended portions of any item of appropriation under this Act to any
other item hereunder."
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In 1950, it has been documented that post-enactment legislator participation

broadened from the areas of fund release and realignment to the area of project
identification. During that year, the mechanics of the public works act was
modified to the extent that the discretion of choosing projects was transferred
from the Secretary of Commerce and Communications to legislators. "For the
first time, the law carried a list of projects selected by Members of Congress, they
being the representatives of the people, either on their own account or by
consultation with local officials or civil leaders." During this period, the pork
barrel process commenced with local government councils, civil groups, and
individuals appealing to Congressmen or Senators for projects. Petitions that
were accommodated formed part of a legislators allocation, and the amount
each legislator would eventually get is determined in a caucus convened by the
majority. The amount was then integrated into the administration bill prepared by
the Department of Public Works and Communications. Thereafter, the Senate
and the House of Representatives added their own provisions to the bill until it
was signed into law by the President the Public Works Act. In the 1960s,
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however, pork barrel legislation reportedly ceased in view of the stalemate

between the House of Representatives and the Senate.
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B. Martial Law Era (1972-1986).

While the previous" Congressional Pork Barrel" was apparently discontinued in
1972 after Martial Law was declared, an era when "one man controlled the
legislature," the reprieve was only temporary. By 1982, the Batasang Pambansa
had already introduced a new item in the General Appropriations Act (GAA)
called the" Support for Local Development Projects" (SLDP) under the article on
"National Aid to Local Government Units". Based on reports, it was under the
SLDP that the practice of giving lump-sum allocations to individual legislators
began, with each assemblyman receiving P500,000.00. Thereafter,
assemblymen would communicate their project preferences to the Ministry of
Budget and Management for approval. Then, the said ministry would release the
allocation papers to the Ministry of Local Governments, which would, in turn,
issue the checks to the city or municipal treasurers in the assemblymans locality.
It has been further reported that "Congressional Pork Barrel" projects under the
SLDP also began to cover not only public works projects, or so- called "hard
projects", but also "soft projects", or non-public works projects such as those
which would fall under the categories of, among others, education, health and
livelihood.
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C. Post-Martial Law Era:

Corazon Cojuangco Aquino Administration (1986-1992).
After the EDSA People Power Revolution in 1986 and the restoration of
Philippine democracy, "Congressional Pork Barrel" was revived in the form of the
"Mindanao Development Fund" and the "Visayas Development Fund" which were
created with lump-sum appropriations of P480 Million and P240 Million,
respectively, for the funding of development projects in the Mindanao and
Visayas areas in 1989. It has been documented that the clamor raised by the
Senators and the Luzon legislators for a similar funding, prompted the creation of
the "Countrywide Development Fund" (CDF) which was integrated into the 1990
GAA with an initial funding ofP2.3 Billion to cover "small local infrastructure and
other priority community projects."
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Under the GAAs for the years 1991 and 1992, CDF funds were, with the
approval of the President, to be released directly to the implementing agencies
but "subject to the submission of the required list of projects and
activities."Although the GAAs from 1990 to 1992 were silent as to the amounts of
allocations of the individual legislators, as well as their participation in the
identification of projects, it has been reported that by 1992, Representatives
were receivingP12.5 Million each in CDF funds, while Senators were
receiving P18 Million each, without any limitation or qualification, and that they
could identify any kind of project, from hard or infrastructure projects such as
roads, bridges, and buildings to "soft projects" such as textbooks, medicines, and
scholarships.
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D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).

The following year, or in 1993, the GAA explicitly stated that the release of CDF
funds was to be made upon the submission of the list of projects and activities
identified by, among others, individual legislators. For the first time, the 1993
CDF Article included an allocation for the Vice-President. As such,
Representatives were allocated P12.5 Million each in CDF funds, Senators, P18
Million each, and the Vice-President, P20 Million.
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In 1994, 1995, and 1996, the GAAs contained the same provisions on project
identification and fund release as found in the 1993 CDF Article. In addition,
however, the Department of Budget and Management (DBM) was directed to
submit reports to the Senate Committee on Finance and the House Committee
on Appropriations on the releases made from the funds.
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Under the 1997 CDF Article, Members of Congress and the Vice-President, in
consultation with the implementing agency concerned, were directed to submit to
the DBM the list of 50% of projects to be funded from their respective CDF
allocations which shall be duly endorsed by (a) the Senate President and the
Chairman of the Committee on Finance, in the case of the Senate, and (b) the
Speaker of the House of Representatives and the Chairman of the Committee on
Appropriations, in the case of the House of Representatives; while the list for the
remaining 50% was to be submitted within six (6) months thereafter. The same
article also stated that the project list, which would be published by the
DBM, "shall be the basis for the release of funds" and that "no funds
appropriated herein shall be disbursed for projects not included in the list herein
required."
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The following year, or in 1998, the foregoing provisions regarding the required
lists and endorsements were reproduced, except that the publication of the
project list was no longer required as the list itself sufficed for the release of CDF
Funds.
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The CDF was not, however, the lone form of "Congressional Pork Barrel" at that
time. Other forms of "Congressional Pork Barrel" were reportedly fashioned and
inserted into the GAA (called "Congressional Insertions" or "CIs") in order to
perpetuate the ad ministrations political agenda. It has been articulated that
since CIs "formed part and parcel of the budgets of executive departments, they
were not easily identifiable and were thus harder to monitor." Nonetheless, the
lawmakers themselves as well as the finance and budget officials of the
implementing agencies, as well as the DBM, purportedly knew about the
insertions. Examples of these CIs are the Department of Education (DepEd)
School Building Fund, the Congressional Initiative Allocations, the Public Works
Fund, the El Nio Fund, and the Poverty Alleviation Fund. The allocations for the
School Building Fund, particularly, shall be made upon prior consultation with
the representative of the legislative district concerned. Similarly, the legislators
had the power to direct how, where and when these appropriations were to be
spent.
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E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001).

In 1999, the CDF was removed in the GAA and replaced by three (3) separate
forms of CIs, namely, the "Food Security Program Fund," the "Lingap Para Sa
Mahihirap Program Fund," and the "Rural/Urban Development Infrastructure
Program Fund," all of which contained a special provision requiring "prior
consultation" with the Member s of Congress for the release of the funds.
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It was in the year 2000 that the "Priority Development Assistance Fund" (PDAF)
appeared in the GAA. The requirement of "prior consultation with the respective
Representative of the District" before PDAF funds were directly released to the
implementing agency concerned was explicitly stated in the 2000 PDAF Article.
Moreover, realignment of funds to any expense category was expressly allowed,
with the sole condition that no amount shall be used to fund personal services
and other personnel benefits. The succeeding PDAF provisions remained the
same in view of the re-enactment of the 2000 GAA for the year 2001.
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F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).

The 2002 PDAF Article was brief and straightforward as it merely contained a
single special provision ordering the release of the funds directly to the
implementing agency or local government unit concerned, without further
qualifications. The following year, 2003, the same single provision was present,
with simply an expansion of purpose and express authority to realign.
Nevertheless, the provisions in the 2003 budgets of the Department of Public
Works and Highways (DPWH) and the DepEd required prior consultation with
Members of Congress on the aspects of implementation delegation and project
list submission, respectively. In 2004, the 2003 GAA was re-enacted.
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In 2005, the PDAF Article provided that the PDAF shall be used "to fund priority
programs and projects under the ten point agenda of the national government
and shall be released directly to the implementing agencies." It also introduced
the program menu concept, which is essentially a list of general programs and
implementing agencies from which a particular PDAF project may be
subsequently chosen by the identifying authority. The 2005 GAA was reenacted in 2006 and hence, operated on the same bases. In similar regard, the
program menu concept was consistently integrated into the
2007, 2008, 2009, and 2010 GAAs.
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Textually, the PDAF Articles from 2002 to 2010 were silent with respect to the
specific amounts allocated for the individual legislators, as well as their
participation in the proposal and identification of PDAF projects to be funded. In
contrast to the PDAF Articles, however, the provisions under the DepEd School
Building Program and the DPWH budget, similar to its predecessors, explicitly
required prior consultation with the concerned Member of Congress anent
certain aspects of project implementation.
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Significantly, it was during this era that provisions which allowed formal
participation of non-governmental organizations (NGO) in the implementation of
government projects were introduced. In the Supplemental Budget for 2006, with
respect to the appropriation for school buildings, NGOs were, by law, encouraged
to participate. For such purpose, the law stated that "the amount of at least P250

Million of the P500 Million allotted for the construction and completion of school
buildings shall be made available to NGOs including the Federation of FilipinoChinese Chambers of Commerce and Industry, Inc. for its "Operation Barrio
School" program, with capability and proven track records in the construction of
public school buildings x x x." The same allocation was made available to NGOs
in the 2007 and 2009 GAAs under the DepEd Budget. Also, it was in 2007 that
the Government Procurement Policy Board (GPPB) issued Resolution No. 122007 dated June 29, 2007 (GPPB Resolution 12-2007), amending the
implementing rules and regulations of RA 9184, the Government Procurement
Reform Act, to include, as a form of negotiated procurement, the procedure
whereby the Procuring Entity (the implementing agency) may enter into a
memorandum of agreement with an NGO, provided that "an appropriation law or
ordinance earmarks an amount to be specifically contracted out to NGOs."
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G. Present Administration (2010-Present).

Differing from previous PDAF Articles but similar to the CDF Articles, the
2011 PDAF Article included an express statement on lump-sum amounts
allocated for individual legislators and the Vice-President: Representatives were
given P70 Million each, broken down into P40 Million for "hard projects" and P30
Million for "soft projects"; while P200 Million was given to each Senator as well as
the Vice-President, with a P100 Million allocation each for "hard" and "soft
projects." Likewise, a provision on realignment of funds was included, but with
the qualification that it may be allowed only once. The same provision also
allowed the Secretaries of Education, Health, Social Welfare and Development,
Interior and Local Government, Environment and Natural Resources, Energy,
and Public Works and Highways to realign PDAF Funds, with the further
conditions that: (a) realignment is within the same implementing unit and same
project category as the original project, for infrastructure projects; (b) allotment
released has not yet been obligated for the original scope of work, and (c) the
request for realignment is with the concurrence of the legislator concerned.
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In the 2012 and 2013 PDAF Articles, it is stated that the "identification of
projects and/or designation of beneficiaries shall conform to the priority list,
standard or design prepared by each implementing agency (priority list
requirement) x x x." However, as practiced, it would still be the individual
legislator who would choose and identify the project from the said priority list.
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Provisions on legislator allocations as well as fund realignment were included in

the 2012 and 2013 PDAF Articles; but the allocation for the Vice-President, which
was pegged at P200 Million in the 2011 GAA, had been deleted. In addition, the
2013 PDAF Article now allowed LGUs to be identified as implementing agencies
if they have the technical capability to implement the projects. Legislators were
also allowed to identify programs/projects, except for assistance to indigent
patients and scholarships, outside of his legislative district provided that he
secures the written concurrence of the legislator of the intended outside-district,
endorsed by the Speaker of the House. Finally, any realignment of PDAF funds,
modification and revision of project identification, as well as requests for release
of funds, were all required to be favorably endorsed by the House Committee on
Appropriations and the Senate Committee on Finance, as the case may be.
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III. History of Presidential Pork Barrel in the Philippines.

While the term "Pork Barrel" has been typically associated with lump-sum, discretionary
funds of Members of Congress, the present cases and the recent controversies on the
matter have, however, shown that the terms usage has expanded to include certain
funds of the President such as the Malampaya Funds and the Presidential Social Fund.
On the one hand, the Malampaya Funds was created as a special fund under Section
8 of Presidential Decree No. (PD) 910, issued by then President Ferdinand E. Marcos
(Marcos) on March 22, 1976. In enacting the said law, Marcos recognized the need to
set up a special fund to help intensify, strengthen, and consolidate government efforts
relating to the exploration, exploitation, and development of indigenous energy
resources vital to economic growth. Due to the energy-related activities of the
government in the Malampaya natural gas field in Palawan, or the "Malampaya Deep
Water Gas-to-Power Project", the special fund created under PD 910 has been
currently labeled as Malampaya Funds.
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On the other hand the Presidential Social Fund was created under Section 12, Title
IV of PD 1869, or the Charter of the Philippine Amusement and Gaming Corporation
(PAGCOR). PD 1869 was similarly issued by Marcos on July 11, 1983. More than two
(2) years after, he amended PD 1869 and accordingly issued PD 1993 on October 31,
1985, amending Section 12 of the former law. As it stands, the Presidential Social
Fund has been described as a special funding facility managed and administered by the
Presidential Management Staff through which the President provides direct assistance to
priority programs and projects not funded under the regular budget. It is sourced from
the share of the government in the aggregate gross earnings of PAGCOR.
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IV. Controversies in the Philippines.

Over the decades, "pork" funds in the Philippines have increased tremendously, owing
in no small part to previous Presidents who reportedly used the "Pork Barrel" in order to
gain congressional support. It was in 1996 when the first controversy surrounding the
"Pork Barrel" erupted. Former Marikina City Representative Romeo Candazo (Candazo),
then an anonymous source, "blew the lid on the huge sums of government money that
regularly went into the pockets of legislators in the form of kickbacks." He said that "the
kickbacks were SOP (standard operating procedure) among legislators and ranged
from a low 19 percent to a high 52 percent of the cost of each project, which could be
anything from dredging, rip rapping, sphalting, concreting, and construction of school
buildings." "Other sources of kickbacks that Candazo identified were public funds
intended for medicines and textbooks. A few days later, the tale of the money trail
became the banner story of the Philippine Daily Inquirer issue of August 13, 1996,
accompanied by an illustration of a roasted pig." "The publication of the stories,
including those about congressional initiative allocations of certain lawmakers,
including P3.6 Billion for a Congressman, sparked public outrage."
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Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as
enacted in the 2004 GAA for being unconstitutional. Unfortunately, for lack of "any
pertinent evidentiary support that illegal misuse of PDAF in the form of kickbacks has
become a common exercise of unscrupulous Members of Congress," the petition was
dismissed.
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Recently, or in July of the present year, the National Bureau of Investigation (NBI) began
its probe into allegations that "the government has been defrauded of some P10 Billion
over the past 10 years by a syndicate using funds from the pork barrel of lawmakers and
various government agencies for scores of ghost projects." The investigation was
spawned by sworn affidavits of six (6) whistle-blowers who declared that JLN
Corporation "JLN" standing for Janet Lim Napoles (Napoles) had swindled billions of
pesos from the public coffers for "ghost projects" using no fewer than 20 dummy NGOs
for an entire decade. While the NGOs were supposedly the ultimate recipients of PDAF
funds, the whistle-blowers declared that the money was diverted into Napoles private
accounts. Thus, after its investigation on the Napoles controversy, criminal complaints
were filed before the Office of the Ombudsman, charging five (5) lawmakers for Plunder,
and three (3) other lawmakers for Malversation, Direct Bribery, and Violation of the AntiGraft and Corrupt Practices Act. Also recommended to be charged in the complaints are
some of the lawmakers chiefs -of-staff or representatives, the heads and other officials
of three (3) implementing agencies, and the several presidents of the NGOs set up by
Napoles.
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On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year
audit investigation covering the use of legislators' PDAF from 2007 to 2009, or during
the last three (3) years of the Arroyo administration. The purpose of the audit was to
determine the propriety of releases of funds under PDAF and the Various Infrastructures
including Local Projects (VILP) by the DBM, the application of these funds and the
implementation of projects by the appropriate implementing agencies and several
government-owned-and-controlled corporations (GOCCs). The total releases covered
by the audit amounted to P8.374 Billion in PDAF and P32.664 Billion in VILP,
representing 58% and 32%, respectively, of the total PDAF and VILP releases that were
found to have been made nationwide during the audit period. Accordingly, the Co As
findings contained in its Report No. 2012-03 (CoA Report), entitled "Priority Development
Assistance Fund (PDAF) and Various Infrastructures including Local Projects (VILP),"
were made public, the highlights of which are as follows:
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Amounts released for projects identified by a considerable number of

legislators significantly exceeded their respective allocations.
Amounts were released for projects outside of legislative districts of sponsoring
members of the Lower House.
Total VILP releases for the period exceeded the total amount appropriated
under the 2007 to 2009 GAAs.
Infrastructure projects were constructed on private lots without these having
been turned over to the government.
Significant amounts were released to implementing agencies without the
latters endorsement and without considering their mandated functions,
administrative and technical capabilities to implement projects.
Implementation of most livelihood projects was not undertaken by the
implementing agencies themselves but by NGOs endorsed by the proponent
legislators to which the Funds were transferred.

 The funds were transferred to the NGOs in spite of the absence of any
appropriation law or ordinance.
Selection of the NGOs were not compliant with law and regulations.
Eighty-Two (82) NGOs entrusted with implementation of seven hundred
seventy two (772) projects amount to P6.156 Billion were either found
questionable, or submitted questionable/spurious documents, or failed to
liquidate in whole or in part their utilization of the Funds.
Procurement by the NGOs, as well as some implementing agencies, of goods
and services reportedly used in the projects were not compliant with law.
As for the "Presidential Pork Barrel", whistle-blowers alleged that" at least P900 Million
from royalties in the operation of the Malampaya gas project off Palawan province
intended for agrarian reform beneficiaries has gone into a dummy NGO." According to
incumbent CoA Chairperson Maria Gracia Pulido Tan (CoA Chairperson), the CoA is, as
of this writing, in the process of preparing "one consolidated report" on the Malampaya
Funds.
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V. The Procedural Antecedents.

Spurred in large part by the findings contained in the CoA Report and the Napoles
controversy, several petitions were lodged before the Court similarly seeking that the
"Pork Barrel System" be declared unconstitutional. To recount, the relevant procedural
antecedents in these cases are as follows:
On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice
Society, filed a Petition for Prohibition of even date under Rule 65 of the Rules of Court
(Alcantara Petition), seeking that the "Pork Barrel System" be declared unconstitutional, and a
writ of prohibition be issued permanently restraining respondents Franklin M. Drilon and
Feliciano S. Belmonte, Jr., in their respective capacities as the incumbent Senate President and
Speaker of the House of Representatives, from further taking any steps to enact legislation
appropriating funds for the "Pork Barrel System," in whatever form and by whatever name it
may be called, and from approving further releases pursuant thereto. The Alcantara Petition
was docketed as G.R. No. 208493.
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On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez,

Reuben M. Abante, Quintin Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr.
(Villegas) filed an Urgent Petition For Certiorari and Prohibition With Prayer For The Immediate
Issuance of Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction dated
August 27, 2013 under Rule 65 of the Rules of Court (Belgica Petition), seeking that the annual
"Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which provided
for the 2013 PDAF, and the Executives lump-sum, discretionary funds, such as the Malampaya
Funds and the Presidential Social Fund, be declared unconstitutional and null and void for
being acts constituting grave abuse of discretion. Also, they pray that the Court issue a TRO
against respondents Paquito N. Ochoa, Jr., Florencio B. Abad (Secretary Abad) and Rosalia V.
De Leon, in their respective capacities as the incumbent Executive Secretary, Secretary of the
Department of Budget and Management (DBM), and National Treasurer, or their agents, for
them to immediately cease any expenditure under the aforesaid funds. Further, they pray that
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the Court order the foregoing respondents to release to the CoA and to the public: (a) "the
complete schedule/list of legislators who have availed of their PDAF and VILP from the years
2003 to 2013, specifying the use of the funds, the project or activity and the recipient entities or
individuals, and all pertinent data thereto"; and (b) "the use of the Executives lump-sum,
discretionary funds, including the proceeds from the x x x Malampaya Funds and remittances
from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the
recipient entities or individuals, and all pertinent data thereto." Also, they pray for the "inclusion
in budgetary deliberations with the Congress of all presently off-budget, lump-sum, discretionary
funds including, but not limited to, proceeds from the Malampaya Funds and remittances from
the PAGCOR." The Belgica Petition was docketed as G.R. No. 208566.
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Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition

dated August 23, 2012 (Nepomuceno Petition), seeking that the PDAF be declared
unconstitutional, and a cease and desist order be issued restraining President Benigno Simeon
S. Aquino III (President Aquino) and Secretary Abad from releasing such funds to Members of
Congress and, instead, allow their release to fund priority projects identified and approved by
the Local Development Councils in consultation with the executive departments, such as the
DPWH, the Department of Tourism, the Department of Health, the Department of
Transportation, and Communication and the National Economic Development Authority. The
Nepomuceno Petition was docketed as UDK-14951.
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On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases;
(b) requiring public respondents to comment on the consolidated petitions; (c) issuing a TRO
(September 10, 2013 TRO) enjoining the DBM, National Treasurer, the Executive Secretary, or
any of the persons acting under their authority from releasing (1) the remaining PDAF allocated
to Members of Congress under the GAA of 2013, and (2) Malampaya Funds under the phrase
"for such other purposes as may be hereafter directed by the President" pursuant to Section 8
of PD 910 but not for the purpose of "financing energy resource development and exploitation
programs and projects of the government under the same provision; and (d) setting the
consolidated cases for Oral Arguments on October 8, 2013.
On September 23, 2013, the Office of the Solicitor General (OSG) filed a Consolidated
Comment (Comment) of even date before the Court, seeking the lifting, or in the alternative, the
partial lifting with respect to educational and medical assistance purposes, of the Courts
September 10, 2013 TRO, and that the consolidated petitions be dismissed for lack of merit.
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On September 24, 2013, the Court issued a Resolution of even date directing petitioners to
reply to the Comment.
Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a)
on September 30, 2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas
Reply); (b) on October 1, 2013, Belgica, et al. filed a Reply dated September 30, 2013 (Belgica
Reply); and (c) on October 2, 2013, Alcantara filed a Reply dated October 1, 2013.
On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by
the parties for the Oral Arguments scheduled on October 8, 2013. In view of the technicality of
the issues material to the present cases, incumbent Solicitor General Francis H. Jardeleza
(Solicitor General) was directed to bring with him during the Oral Arguments representative/s
from the DBM and Congress who would be able to competently and completely answer
questions related to, among others, the budgeting process and its implementation. Further, the

CoA Chairperson was appointed as amicus curiae and thereby requested to appear before the
Court during the Oral Arguments.
On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed
the parties to submit their respective memoranda within a period of seven (7) days, or until
October 17, 2013, which the parties subsequently did.
The Issues Before the Court
Based on the pleadings, and as refined during the Oral Arguments, the following are the main
issues for the Courts resolution:
I. Procedural Issues.
Whether or not (a) the issues raised in the consolidated petitions involve an actual and
justiciable controversy; (b) the issues raised in the consolidated petitions are matters of policy
not subject to judicial review; (c) petitioners have legal standing to sue; and (d) the Courts
Decision dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766, and 113888, entitled
"Philippine Constitution Association v. Enriquez" (Philconsa) and Decision dated April 24, 2012
in G.R. No. 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and
Management" (LAMP) bar the re-litigatio n of the issue of constitutionality of the "Pork Barrel
System" under the principles of res judicata and stare decisis.
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II. Substantive Issues on the "Congressional Pork Barrel."

Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar
thereto are unconstitutional considering that they violate the principles of/constitutional
provisions on (a) separation of powers; (b) non-delegability of legislative power; (c) checks and
balances; (d) accountability; (e) political dynasties; and (f) local autonomy.
III. Substantive Issues on the "Presidential Pork Barrel."
Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by
the President" under Section 8 of PD 910, relating to the Malampaya Funds, and (b) "to
finance the priority infrastructure development projects and to finance the restoration of
damaged or destroyed facilities due to calamities, as may be directed and authorized by the
Office of the President of the Philippines" under Section 12 of PD 1869, as amended by PD
1993, relating to the Presidential Social Fund, are unconstitutional insofar as they constitute
undue delegations of legislative power.
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These main issues shall be resolved in the order that they have been stated. In addition, the
Court shall also tackle certain ancillary issues as prompted by the present cases.
The Courts Ruling
The petitions are partly granted.
I. Procedural Issues.

The prevailing rule in constitutional litigation is that no question involving the constitutionality or
validity of a law or governmental act may be heard and decided by the Court unless there is
compliance with the legal requisites for judicial inquiry, namely: (a) there must be an actual
case or controversy calling for the exercise of judicial power; (b) the person challenging the act
must have the standing to question the validity of the subject act or issuance; (c) the question of
constitutionality must be raised at the earliest opportunity ; and (d) the issue of constitutionality
must be the very lis mota of the case. Of these requisites, case law states that the first two are
the most important and, therefore, shall be discussed forthwith.
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A. Existence of an Actual Case or Controversy.

By constitutional fiat, judicial power operates only when there is an actual case or
controversy. This is embodied in Section 1, Article VIII of the 1987 Constitution which
pertinently states that "judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable x x x."
Jurisprudence provides that an actual case or controversy is one which "involves a conflict of
legal rights, an assertion of opposite legal claims, susceptible of judicial resolution as
distinguished from a hypothetical or abstract difference or dispute. In other words, "there must
be a contrariety of legal rights that can be interpreted and enforced on the basis of existing law
and jurisprudence." Related to the requirement of an actual case or controversy is the
requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. "A question is ripe for adjudication when the act being challenged
has had a direct adverse effect on the individual challenging it. It is a prerequisite that
something had then been accomplished or performed by either branch before a court may come
into the picture, and the petitioner must allege the existence of an immediate or threatened
injury to itself as a result of the challenged action." "Withal, courts will decline to pass upon
constitutional issues through advisory opinions, bereft as they are of authority to resolve
hypothetical or moot questions."
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Based on these principles, the Court finds that there exists an actual and justiciable controversy
in these cases.
The requirement of contrariety of legal rights is clearly satisfied by the antagonistic positions of
the parties on the constitutionality of the "Pork Barrel System." Also, the questions in these
consolidated cases are ripe for adjudication since the challenged funds and the provisions
allowing for their utilization such as the 2013 GAA for the PDAF, PD 910 for the Malampaya
Funds and PD 1869, as amended by PD 1993, for the Presidential Social Fund are currently
existing and operational; hence, there exists an immediate or threatened injury to petitioners as
a result of the unconstitutional use of these public funds.
As for the PDAF, the Court must dispel the notion that the issues related thereto had been
rendered moot and academic by the reforms undertaken by respondents. A case becomes moot
when there is no more actual controversy between the parties or no useful purpose can be
served in passing upon the merits. Differing from this description, the Court observes that
respondents proposed line-item budgeting scheme would not terminate the controversy nor
diminish the useful purpose for its resolution since said reform is geared towards the 2014
budget, and not the 2013 PDAF Article which, being a distinct subject matter, remains legally
effective and existing. Neither will the Presidents declaration that he had already "abolished the
PDAF" render the issues on PDAF moot precisely because the Executive branch of government
has no constitutional authority to nullify or annul its legal existence. By constitutional design, the
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annulment or nullification of a law may be done either by Congress, through the passage of a
repealing law, or by the Court, through a declaration of unconstitutionality. Instructive on this
point is the following exchange between Associate Justice Antonio T. Carpio (Justice Carpio)
and the Solicitor General during the Oral Arguments:
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Justice Carpio: The President has taken an oath to faithfully execute the law, correct? Solicitor
General Jardeleza: Yes, Your Honor.
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Justice Carpio: And so the President cannot refuse to implement the General Appropriations
Act, correct?
Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the
PDAF, the President has a duty to execute the laws but in the face of the outrage over PDAF,
the President was saying, "I am not sure that I will continue the release of the soft projects," and
that started, Your Honor. Now, whether or not that (interrupted)
Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the
power to stop the releases in the meantime, to investigate, and that is Section 38 of Chapter 5
of Book 6 of the Revised Administrative Code x x x. So at most the President can suspend,
now if the President believes that the PDAF is unconstitutional, can he just refuse to implement
it?
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Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the specific case of the
PDAF because of the CoA Report, because of the reported irregularities and this Court can take
judicial notice, even outside, outside of the COA Report, you have the report of the whistleblowers, the President was just exercising precisely the duty .
xxxx
Justice Carpio: Yes, and that is correct. Youve seen the CoA Report, there are anomalies, you
stop and investigate, and prosecute, he has done that. But, does that mean that PDAF has
been repealed?
Solicitor General Jardeleza: No, Your Honor x x x.
xxxx
Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a
law to repeal it, or this Court declares it unconstitutional, correct?
Solictor General Jardeleza: Yes, Your Honor.
Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied)
Even on the assumption of mootness, jurisprudence, nevertheless, dictates that "the moot and
academic principle is not a magical formula that can automatically dissuade the Court in
resolving a case." The Court will decide cases, otherwise moot, if: first, there is a grave violation
of the Constitution; second, the exceptional character of the situation and the paramount public
interest is involved; third, when the constitutional issue raised requires formulation of controlling

principles to guide the bench, the bar, and the public; and fourth, the case is capable of
repetition yet evading review.
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The applicability of the first exception is clear from the fundamental posture of petitioners they
essentially allege grave violations of the Constitution with respect to, inter alia, the principles of
separation of powers, non-delegability of legislative power, checks and balances, accountability
and local autonomy.
The applicability of the second exception is also apparent from the nature of the interests
involved
the constitutionality of the very system within which significant amounts of public funds have
been and continue to be utilized and expended undoubtedly presents a situation of exceptional
character as well as a matter of paramount public interest. The present petitions, in fact, have
been lodged at a time when the systems flaws have never before been magnified. To the
Courts mind, the coalescence of the CoA Report, the accounts of numerous whistle-blowers,
and the governments own recognition that reforms are needed "to address the reported abuses
of the PDAF" demonstrates a prima facie pattern of abuse which only underscores the
importance of the matter. It is also by this finding that the Court finds petitioners claims as not
merely theorized, speculative or hypothetical. Of note is the weight accorded by the Court to the
findings made by the CoA which is the constitutionally-mandated audit arm of the government.
In Delos Santos v. CoA, a recent case wherein the Court upheld the CoAs disallowance of
irregularly disbursed PDAF funds, it was emphasized that:
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The COA is endowed with enough latitude to determine, prevent, and disallow irregular,
unnecessary, excessive, extravagant or unconscionable expenditures of government funds. It is
tasked to be vigilant and conscientious in safeguarding the proper use of the government's, and
ultimately the people's, property. The exercise of its general audit power is among the
constitutional mechanisms that gives life to the check and balance system inherent in our form
of government.
It is the general policy of the Court to sustain the decisions of administrative authorities,
especially one which is constitutionally-created, such as the CoA, not only on the basis of the
doctrine of separation of powers but also for their presumed expertise in the laws they are
entrusted to enforce. Findings of administrative agencies are accorded not only respect but also
finality when the decision and order are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this
Court entertains a petition questioning its rulings. x x x. (Emphases supplied)
Thus, if only for the purpose of validating the existence of an actual and justiciable controversy
in these cases, the Court deems the findings under the CoA Report to be sufficient.
The Court also finds the third exception to be applicable largely due to the practical need for a
definitive ruling on the systems constitutionality. As disclosed during the Oral Arguments, the
CoA Chairperson estimates that thousands of notices of disallowances will be issued by her
office in connection with the findings made in the CoA Report. In this relation, Associate Justice
Marvic Mario Victor F. Leonen (Justice Leonen) pointed out that all of these would eventually
find their way to the courts. Accordingly, there is a compelling need to formulate controlling
principles relative to the issues raised herein in order to guide the bench, the bar, and the public,
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not just for the expeditious resolution of the anticipated disallowance cases, but more
importantly, so that the government may be guided on how public funds should be utilized in
accordance with constitutional principles.
Finally, the application of the fourth exception is called for by the recognition that the preparation
and passage of the national budget is, by constitutional imprimatur, an affair of annual
occurrence. The relevance of the issues before the Court does not cease with the passage of
a "PDAF -free budget for 2014." The evolution of the "Pork Barrel System," by its multifarious
iterations throughout the course of history, lends a semblance of truth to petitioners claim that
"the same dog will just resurface wearing a different collar." In Sanlakas v. Executive
Secretary, the government had already backtracked on a previous course of action yet the
Court used the "capable of repetition but evading review" exception in order "to prevent similar
questions from re- emerging." The situation similarly holds true to these cases. Indeed, the
myriad of issues underlying the manner in which certain public funds are spent, if not resolved
at this most opportune time, are capable of repetition and hence, must not evade judicial review.
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B. Matters of Policy: the Political Question Doctrine.

The "limitation on the power of judicial review to actual cases and controversies carries the
assurance that "the courts will not intrude into areas committed to the other branches of
government." Essentially, the foregoing limitation is a restatement of the political question
doctrine which, under the classic formulation of Baker v. Carr, applies when there is found,
among others, "a textually demonstrable constitutional commitment of the issue to a coordinate
political department," "a lack of judicially discoverable and manageable standards for resolving
it" or "the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion." Cast against this light, respondents submit that the "the political branches
are in the best position not only to perform budget-related reforms but also to do them in
response to the specific demands of their constituents" and, as such, "urge the Court not to
impose a solution at this stage."
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The Court must deny respondents submission.

Suffice it to state that the issues raised before the Court do not present political but legal
questions which are within its province to resolve. A political question refers to "those questions
which, under the Constitution, are to be decided by the people in their sovereign capacity, or in
regard to which full discretionary authority has been delegated to the Legislature or executive
branch of the Government. It is concerned with issues dependent upon the wisdom, not legality,
of a particular measure." The intrinsic constitutionality of the "Pork Barrel System" is not an
issue dependent upon the wisdom of the political branches of government but rather a legal one
which the Constitution itself has commanded the Court to act upon. Scrutinizing the contours of
the system along constitutional lines is a task that the political branches of government are
incapable of rendering precisely because it is an exercise of judicial power. More importantly,
the present Constitution has not only vested the Judiciary the right to exercise judicial power but
essentially makes it a duty to proceed therewith. Section 1, Article VIII of the 1987 Constitution
cannot be any clearer: "The judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law. It includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government." In
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Estrada v. Desierto, the expanded concept of judicial power under the 1987 Constitution and
its effect on the political question doctrine was explained as follows:
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To a great degree, the 1987 Constitution has narrowed the reach of the political question
doctrine when it expanded the power of judicial review of this court not only to settle actual
controversies involving rights which are legally demandable and enforceable but also to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of government. Heretofore, the
judiciary has focused on the "thou shalt not's" of the Constitution directed against the exercise of
its jurisdiction. With the new provision, however, courts are given a greater prerogative to
determine what it can do to prevent grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of government. Clearly, the new
provision did not just grant the Court power of doing nothing. x x x (Emphases supplied)
It must also be borne in mind that when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; does not in reality
nullify or invalidate an act of the legislature or the executive, but only asserts the solemn and
sacred obligation assigned to it by the Constitution." To a great extent, the Court is laudably
cognizant of the reforms undertaken by its co-equal branches of government. But it is by
constitutional force that the Court must faithfully perform its duty. Ultimately, it is the Courts
avowed intention that a resolution of these cases would not arrest or in any manner impede the
endeavors of the two other branches but, in fact, help ensure that the pillars of change are
erected on firm constitutional grounds. After all, it is in the best interest of the people that each
great branch of government, within its own sphere, contributes its share towards achieving a
holistic and genuine solution to the problems of society. For all these reasons, the Court cannot
heed respondents plea for judicial restraint.
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C. Locus Standi.
"The gist of the question of standing is whether a party alleges such personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court depends for illumination of difficult constitutional
questions. Unless a person is injuriously affected in any of his constitutional rights by the
operation of statute or ordinance, he has no standing."
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Petitioners have come before the Court in their respective capacities as citizen-taxpayers and
accordingly, assert that they "dutifully contribute to the coffers of the National
Treasury." Clearly, as taxpayers, they possess the requisite standing to question the validity of
the existing "Pork Barrel System" under which the taxes they pay have been and continue to be
utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer from the
unconstitutional usage of public funds, if the Court so rules. Invariably, taxpayers have been
allowed to sue where there is a claim that public funds are illegally disbursed or that public
money is being deflected to any improper purpose, or that public funds are wasted through the
enforcement of an invalid or unconstitutional law, as in these cases.
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Moreover, as citizens, petitioners have equally fulfilled the standing requirement given that the
issues they have raised may be classified as matters "of transcendental importance, of
overreaching significance to society, or of paramount public interest." The CoA Chairpersons
statement during the Oral Arguments that the present controversy involves "not merely a
systems failure" but a "complete breakdown of controls" amplifies, in addition to the matters
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above-discussed, the seriousness of the issues involved herein. Indeed, of greater import than
the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon
the fundamental law by the enforcement of an invalid statute. All told, petitioners have
sufficient locus standi to file the instant cases.
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D. Res Judicata and Stare Decisis.

Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or
simply, stare decisis which means "follow past precedents and do not disturb what has been
settled") are general procedural law principles which both deal with the effects of previous but
factually similar dispositions to subsequent cases. For the cases at bar, the Court examines the
applicability of these principles in relation to its prior rulings in Philconsa and LAMP.
The focal point of res judicata is the judgment. The principle states that a judgment on the
merits in a previous case rendered by a court of competent jurisdiction would bind a subsequent
case if, between the first and second actions, there exists an identity of parties, of subject
matter, and of causes of action. This required identity is not, however, attendant hereto since
Philconsa and LAMP, respectively involved constitutional challenges against the 1994 CDF
Article and 2004 PDAF Article, whereas the cases at bar call for a broader constitutional scrutiny
of the entire "Pork Barrel System." Also, the ruling in LAMP is essentially a dismissal based on a
procedural technicality and, thus, hardly a judgment on the merits in that petitioners therein
failed to present any "convincing proof x x x showing that, indeed, there were direct releases of
funds to the Members of Congress, who actually spend them according to their sole discretion"
or "pertinent evidentiary support to demonstrate the illegal misuse of PDAF in the form of
kickbacks and has become a common exercise of unscrupulous Members of Congress." As
such, the Court up held, in view of the presumption of constitutionality accorded to every law,
the 2004 PDAF Article, and saw "no need to review or reverse the standing pronouncements in
the said case." Hence, for the foregoing reasons, the res judicata principle, insofar as the
Philconsa and LAMP cases are concerned, cannot apply.
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On the other hand, the focal point of stare decisis is the doctrine created. The principle,
entrenched under Article 8 of the Civil Code, evokes the general rule that, for the sake of
certainty, a conclusion reached in one case should be doctrinally applied to those that follow if
the facts are substantially the same, even though the parties may be different. It proceeds from
the first principle of justice that, absent any powerful countervailing considerations, like cases
ought to be decided alike. Thus, where the same questions relating to the same event have
been put forward by the parties similarly situated as in a previous case litigated and decided by
a competent court, the rule of stare decisis is a bar to any attempt to re-litigate the same issue.
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Philconsa was the first case where a constitutional challenge against a Pork Barrel provision,
i.e., the 1994 CDF Article, was resolved by the Court. To properly understand its context,
petitioners posturing was that "the power given to the Members of Congress to propose and
identify projects and activities to be funded by the CDF is an encroachment by the legislature on
executive power, since said power in an appropriation act is in implementation of the law" and
that "the proposal and identification of the projects do not involve the making of laws or the
repeal and amendment thereof, the only function given to the Congress by the Constitution." In
deference to the foregoing submissions, the Court reached the following main conclusions: one,
under the Constitution, the power of appropriation, or the "power of the purse," belongs to
Congress; two, the power of appropriation carries with it the power to specify the project or
activity to be funded under the appropriation law and it can be detailed and as broad as
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Congress wants it to be; and, three, the proposals and identifications made by Members of
Congress are merely recommendatory. At once, it is apparent that the Philconsa resolution was
a limited response to a separation of powers problem, specifically on the propriety of conferring
post-enactment identification authority to Members of Congress. On the contrary, the present
cases call for a more holistic examination of (a) the inter-relation between the CDF and PDAF
Articles with each other, formative as they are of the entire "Pork Barrel System" as well as (b)
the intra-relation of post-enactment measures contained within a particular CDF or PDAF
Article, including not only those related to the area of project identification but also to the areas
of fund release and realignment. The complexity of the issues and the broader legal analyses
herein warranted may be, therefore, considered as a powerful countervailing reason against a
wholesale application of the stare decisis principle.
In addition, the Court observes that the Philconsa ruling was actually riddled with inherent
constitutional inconsistencies which similarly countervail against a full resort to stare decisis. As
may be deduced from the main conclusions of the case, Philconsas fundamental premise in
allowing Members of Congress to propose and identify of projects would be that the said
identification authority is but an aspect of the power of appropriation which has been
constitutionally lodged in Congress. From this premise, the contradictions may be easily seen. If
the authority to identify projects is an aspect of appropriation and the power of appropriation is a
form of legislative power thereby lodged in Congress, then it follows that: (a) it is Congress
which should exercise such authority, and not its individual Members; (b) such authority must be
exercised within the prescribed procedure of law passage and, hence, should not be exercised
after the GAA has already been passed; and (c) such authority, as embodied in the GAA, has
the force of law and, hence, cannot be merely recommendatory. Justice Vitugs Concurring
Opinion in the same case sums up the Philconsa quandary in this wise: "Neither would it be
objectionable for Congress, by law, to appropriate funds for such specific projects as it may be
minded; to give that authority, however, to the individual members of Congress in whatever
guise, I am afraid, would be constitutionally impermissible." As the Court now largely benefits
from hindsight and current findings on the matter, among others, the CoA Report, the Court
must partially abandon its previous ruling in Philconsa insofar as it validated the post-enactment
identification authority of Members of Congress on the guise that the same was merely
recommendatory. This postulate raises serious constitutional inconsistencies which cannot be
simply excused on the ground that such mechanism is "imaginative as it is innovative."
Moreover, it must be pointed out that the recent case of Abakada Guro Party List v.
Purisima (Abakada) has effectively overturned Philconsas allowance of post-enactment
legislator participation in view of the separation of powers principle. These constitutional
inconsistencies and the Abakada rule will be discussed in greater detail in the ensuing section of
this Decision.
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As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality
and, hence, has not set any controlling doctrine susceptible of current application to the
substantive issues in these cases. In fine, stare decisis would not apply.
II. Substantive Issues.
A. Definition of Terms.
Before the Court proceeds to resolve the substantive issues of these cases, it must first define
the terms "Pork Barrel System," "Congressional Pork Barrel," and "Presidential Pork Barrel" as
they are essential to the ensuing discourse.

Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and
Executive branches of government to accumulate lump-sum public funds in their offices with
unchecked discretionary powers to determine its distribution as political largesse." They assert
that the following elements make up the Pork Barrel System: (a) lump-sum funds are allocated
through the appropriations process to an individual officer; (b) the officer is given sole and broad
discretion in determining how the funds will be used or expended; (c) the guidelines on how to
spend or use the funds in the appropriation are either vague, overbroad or inexistent; and (d)
projects funded are intended to benefit a definite constituency in a particular part of the country
and to help the political careers of the disbursing official by yielding rich patronage
benefits. They further state that the Pork Barrel System is comprised of two (2) kinds of
discretionary public funds: first, the Congressional (or Legislative) Pork Barrel, currently known
as the PDAF; and, second, the Presidential (or Executive) Pork Barrel, specifically, the
Malampaya Funds under PD 910 and the Presidential Social Fund under PD 1869, as amended
by PD 1993.
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Considering petitioners submission and in reference to its local concept and legal history, the
Court defines the Pork Barrel System as the collective body of rules and practices that govern
the manner by which lump-sum, discretionary funds, primarily intended for local projects, are
utilized through the respective participations of the Legislative and Executive branches of
government, including its members. The Pork Barrel System involves two (2) kinds of lump-sum
discretionary funds:
First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund wherein legislators, either individually or collectively organized into
committees, are able to effectively control certain aspects of the funds utilization through
various post-enactment measures and/or practices. In particular, petitioners consider the PDAF,
as it appears under the 2013 GAA, as Congressional Pork Barrel since it is, inter alia, a postenactment measure that allows individual legislators to wield a collective power; and
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Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum,
discretionary fund which allows the President to determine the manner of its utilization. For
reasons earlier stated, the Court shall delimit the use of such term to refer only to the
Malampaya Funds and the Presidential Social Fund.
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With these definitions in mind, the Court shall now proceed to discuss the substantive issues of
these cases.
B. Substantive Issues on the Congressional Pork Barrel.
1. Separation of Powers.
a. Statement of Principle.
The principle of separation of powers refers to the constitutional demarcation of the three
fundamental powers of government. In the celebrated words of Justice Laurel in Angara v.
Electoral Commission, it means that the "Constitution has blocked out with deft strokes and in
bold lines, allotment of power to the executive, the legislative and the judicial departments of the
government." To the legislative branch of government, through Congress, belongs the power
to make laws; to the executive branch of government, through the President, belongs the
power to enforce laws; and to the judicial branch of government, through the Court, belongs
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the power to interpret laws. Because the three great powers have been, by constitutional
design, ordained in this respect, "each department of the government has exclusive cognizance
of matters within its jurisdiction, and is supreme within its own sphere." Thus, "the legislature
has no authority to execute or construe the law, the executive has no authority to make or
construe the law, and the judiciary has no power to make or execute the law." The principle of
separation of powers and its concepts of autonomy and independence stem from the notion that
the powers of government must be divided to avoid concentration of these powers in any one
branch; the division, it is hoped, would avoid any single branch from lording its power over the
other branches or the citizenry. To achieve this purpose, the divided power must be wielded by
co-equal branches of government that are equally capable of independent action in exercising
their respective mandates. Lack of independence would result in the inability of one branch of
government to check the arbitrary or self-interest assertions of another or others.
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Broadly speaking, there is a violation of the separation of powers principle when one branch of
government unduly encroaches on the domain of another. US Supreme Court decisions instruct
that the principle of separation of powers may be violated in two (2) ways: firstly, "one branch
may interfere impermissibly with the others performance of its constitutionally assigned
function"; and "alternatively, the doctrine may be violated when one branch assumes a function
that more properly is entrusted to another." In other words, there is a violation of the principle
when there is impermissible (a) interference with and/or (b) assumption of another departments
functions.
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The enforcement of the national budget, as primarily contained in the GAA, is indisputably a
function both constitutionally assigned and properly entrusted to the Executive branch of
government. In Guingona, Jr. v. Hon. Carague (Guingona, Jr.), the Court explained that the
phase of budget execution "covers the various operational aspects of budgeting" and
accordingly includes "the evaluation of work and financial plans for individual activities," the
"regulation and release of funds" as well as all "other related activities" that comprise the budget
execution cycle. This is rooted in the principle that the allocation of power in the three principal
branches of government is a grant of all powers inherent in them. Thus, unless the
Constitution provides otherwise, the Executive department should exclusively exercise all roles
and prerogatives which go into the implementation of the national budget as provided under the
GAA as well as any other appropriation law.
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In view of the foregoing, the Legislative branch of government, much more any of its members,
should not cross over the field of implementing the national budget since, as earlier stated, the
same is properly the domain of the Executive. Again, in Guingona, Jr., the Court stated that
"Congress enters the picture when it deliberates or acts on the budget proposals of the
President. Thereafter, Congress, "in the exercise of its own judgment and wisdom, formulates
an appropriation act precisely following the process established by the Constitution, which
specifies that no money may be paid from the Treasury except in accordance with an
appropriation made by law." Upon approval and passage of the GAA, Congress law -making
role necessarily comes to an end and from there the Executives role of implementing the
national budget begins. So as not to blur the constitutional boundaries between them, Congress
must "not concern it self with details for implementation by the Executive."
176

The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held
that "from the moment the law becomes effective, any provision of law that empowers Congress
or any of its members to play any role in the implementation or enforcement of the law violates
the principle of separation of powers and is thus unconstitutional." It must be clarified,
177

however, that since the restriction only pertains to "any role in the implementation or
enforcement of the law," Congress may still exercise its oversight function which is a
mechanism of checks and balances that the Constitution itself allows. But it must be made clear
that Congress role must be confined to mere oversight. Any post-enactment-measure allowing
legislator participation beyond oversight is bereft of any constitutional basis and hence,
tantamount to impermissible interference and/or assumption of executive functions. As the Court
ruled in Abakada:
178

Any post-enactment congressional measure x x x should be limited to scrutiny and

investigation. In particular, congressional oversight must be confined to the following:
1wphi1

(1) scrutiny based primarily on Congress power of appropriation and the budget
hearings conducted in connection with it, its power to ask heads of departments to
appear before and be heard by either of its Houses on any matter pertaining to their
departments and its power of confirmation; and
(2) investigation and monitoring of the implementation of laws pursuant to the power of
Congress to conduct inquiries in aid of legislation.
Any action or step beyond that will undermine the separation of powers guaranteed by the
Constitution. (Emphases supplied)
b. Application.
In these cases, petitioners submit that the Congressional Pork Barrel among others, the 2013
PDAF Article "wrecks the assignment of responsibilities between the political branches" as it is
designed to allow individual legislators to interfere "way past the time it should have ceased" or,
particularly, "after the GAA is passed." They state that the findings and recommendations in the
CoA Report provide "an illustration of how absolute and definitive the power of legislators wield
over project implementation in complete violation of the constitutional principle of separation of
powers." Further, they point out that the Court in the Philconsa case only allowed the CDF to
exist on the condition that individual legislators limited their role to recommending projects and
not if they actually dictate their implementation.
179

180

181

For their part, respondents counter that the separations of powers principle has not been
violated since the President maintains "ultimate authority to control the execution of the GAA
and that he "retains the final discretion to reject" the legislators proposals. They maintain that
the Court, in Philconsa, "upheld the constitutionality of the power of members of Congress to
propose and identify projects so long as such proposal and identification are
recommendatory." As such, they claim that "everything in the Special Provisions [of the 2013
PDAF Article follows the Philconsa framework, and hence, remains constitutional."
182

183

184

The Court rules in favor of petitioners.

As may be observed from its legal history, the defining feature of all forms of Congressional
Pork Barrel would be the authority of legislators to participate in the post-enactment phases of
project implementation.
At its core, legislators may it be through project lists, prior consultations or program
menus have been consistently accorded post-enactment authority to identify the projects
185

187

186

they desire to be funded through various Congressional Pork Barrel allocations. Under the 2013
PDAF Article, the statutory authority of legislators to identify projects post-GAA may be
construed from the import of Special Provisions 1 to 3 as well as the second paragraph of
Special Provision 4. To elucidate, Special Provision 1 embodies the program menu feature
which, as evinced from past PDAF Articles, allows individual legislators to identify PDAF
projects for as long as the identified project falls under a general program listed in the said
menu. Relatedly, Special Provision 2 provides that the implementing agencies shall, within 90
days from the GAA is passed, submit to Congress a more detailed priority list, standard or
design prepared and submitted by implementing agencies from which the legislator may make
his choice. The same provision further authorizes legislators to identify PDAF projects outside
his district for as long as the representative of the district concerned concurs in writing.
Meanwhile, Special Provision 3 clarifies that PDAF projects refer to "projects to be identified by
legislators" and thereunder provides the allocation limit for the total amount of projects
identified by each legislator. Finally, paragraph 2 of Special Provision 4 requires that any
modification and revision of the project identification "shall be submitted to the House
Committee on Appropriations and the Senate Committee on Finance for favorable endorsement
to the DBM or the implementing agency, as the case may be." From the foregoing special
provisions, it cannot be seriously doubted that legislators have been accorded post-enactment
authority to identify PDAF projects.
188

Aside from the area of project identification, legislators have also been accorded postenactment authority in the areas of fund release and realignment. Under the 2013 PDAF Article,
the statutory authority of legislators to participate in the area of fund release through
congressional committees is contained in Special Provision 5 which explicitly states that "all
request for release of funds shall be supported by the documents prescribed under Special
Provision No. 1 and favorably endorsed by House Committee on Appropriations and the Senate
Committee on Finance, as the case may be"; while their statutory authority to participate in the
area of fund realignment is contained in: first , paragraph 2, Special Provision 4 which explicitly
state s, among others, that "any realignment of funds shall be submitted to the House
Committee on Appropriations and the Senate Committee on Finance for favorable endorsement
to the DBM or the implementing agency, as the case may be ; and, second , paragraph 1, also
of Special Provision 4 which authorizes the "Secretaries of Agriculture, Education, Energy,
Interior and Local Government, Labor and Employment, Public Works and Highways, Social
Welfare and Development and Trade and Industry x x x to approve realignment from one
project/scope to another within the allotment received from this Fund, subject to among others
(iii) the request is with the concurrence of the legislator concerned."
189

190

Clearly, these post-enactment measures which govern the areas of project identification, fund
release and fund realignment are not related to functions of congressional oversight and, hence,
allow legislators to intervene and/or assume duties that properly belong to the sphere of budget
execution. Indeed, by virtue of the foregoing, legislators have been, in one form or another,
authorized to participate in as Guingona, Jr. puts it "the various operational aspects of
budgeting," including "the evaluation of work and financial plans for individual activities" and the
"regulation and release of funds" in violation of the separation of powers principle. The
fundamental rule, as categorically articulated in Abakada, cannot be overstated from the
moment the law becomes effective, any provision of law that empowers Congress or any of its
members to play any role in the implementation or enforcement of the law violates the principle
of separation of powers and is thus unconstitutional. That the said authority is treated as
merely recommendatory in nature does not alter its unconstitutional tenor since the prohibition,
to repeat, covers any role in the implementation or enforcement of the law. Towards this end,
the Court must therefore abandon its ruling in Philconsa which sanctioned the conduct of
191

legislator identification on the guise that the same is merely recommendatory and, as such,
respondents reliance on the same falters altogether.
Besides, it must be pointed out that respondents have nonetheless failed to substantiate their
position that the identification authority of legislators is only of recommendatory import. Quite
the contrary, respondents through the statements of the Solicitor General during the Oral
Arguments have admitted that the identification of the legislator constitutes a mandatory
requirement before his PDAF can be tapped as a funding source, thereby highlighting the
indispensability of the said act to the entire budget execution process:
192

Justice Bernabe: Now, without the individual legislators identification of the project, can the
PDAF of the legislator be utilized?
Solicitor General Jardeleza: No, Your Honor.
Justice Bernabe: It cannot?
Solicitor General Jardeleza: It cannot (interrupted)
Justice Bernabe: So meaning you should have the identification of the project by the individual
legislator?
Solicitor General Jardeleza: Yes, Your Honor.
xxxx
Justice Bernabe: In short, the act of identification is mandatory?
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is
no identification.
xxxx
Justice Bernabe: Now, would you know of specific instances when a project was implemented
without the identification by the individual legislator?
Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific
examples. I would doubt very much, Your Honor, because to implement, there is a need for a
SARO and the NCA. And the SARO and the NCA are triggered by an identification from the
legislator.
xxxx
Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a
question, "How can a legislator make sure that he is able to get PDAF Funds?" It is mandatory
in the sense that he must identify, in that sense, Your Honor. Otherwise, if he does not identify,
he cannot avail of the PDAF Funds and his district would not be able to have PDAF Funds, only
in that sense, Your Honor. (Emphases supplied)

Thus, for all the foregoing reasons, the Court hereby declares the 2013 PDAF Article as well as
all other provisions of law which similarly allow legislators to wield any form of post-enactment
authority in the implementation or enforcement of the budget, unrelated to congressional
oversight, as violative of the separation of powers principle and thus unconstitutional. Corollary
thereto, informal practices, through which legislators have effectively intruded into the proper
phases of budget execution, must be deemed as acts of grave abuse of discretion amounting to
lack or excess of jurisdiction and, hence, accorded the same unconstitutional treatment. That
such informal practices do exist and have, in fact, been constantly observed throughout the
years has not been substantially disputed here. As pointed out by Chief Justice Maria Lourdes
P.A. Sereno (Chief Justice Sereno) during the Oral Arguments of these cases:
Chief Justice Sereno:
193

Now, from the responses of the representative of both, the DBM and two (2) Houses of
Congress, if we enforces the initial thought that I have, after I had seen the extent of this
research made by my staff, that neither the Executive nor Congress frontally faced the question
of constitutional compatibility of how they were engineering the budget process. In fact, the
words you have been using, as the three lawyers of the DBM, and both Houses of Congress
has also been using is surprise; surprised that all of these things are now surfacing. In fact, I
thought that what the 2013 PDAF provisions did was to codify in one section all the past
practice that had been done since 1991. In a certain sense, we should be thankful that they are
all now in the PDAF Special Provisions. x x x (Emphasis and underscoring supplied)
Ultimately, legislators cannot exercise powers which they do not have, whether through formal
measures written into the law or informal practices institutionalized in government agencies,
else the Executive department be deprived of what the Constitution has vested as its own.
2. Non-delegability of Legislative Power.
a. Statement of Principle.
As an adjunct to the separation of powers principle, legislative power shall be exclusively
exercised by the body to which the Constitution has conferred the same. In particular, Section 1,
Article VI of the 1987 Constitution states that such power shall be vested in the Congress of the
Philippines which shall consist of a Senate and a House of Representatives, except to the
extent reserved to the people by the provision on initiative and referendum. Based on this
provision, it is clear that only Congress, acting as a bicameral body, and the people, through the
process of initiative and referendum, may constitutionally wield legislative power and no other.
This premise embodies the principle of non-delegability of legislative power, and the only
recognized exceptions thereto would be: (a) delegated legislative power to local governments
which, by immemorial practice, are allowed to legislate on purely local matters; and (b)
constitutionally-grafted exceptions such as the authority of the President to, by law, exercise
powers necessary and proper to carry out a declared national policy in times of war or other
national emergency, or fix within specified limits, and subject to such limitations and
restrictions as Congress may impose, tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the framework of the national development
program of the Government.
194

195

196

197

198

Notably, the principle of non-delegability should not be confused as a restriction to delegate

rule-making authority to implementing agencies for the limited purpose of either filling up the
details of the law for its enforcement (supplementary rule-making) or ascertaining facts to bring

the law into actual operation (contingent rule-making). The conceptual treatment and
limitations of delegated rule-making were explained in the case of People v. Maceren as
follows:
199

200

The grant of the rule-making power to administrative agencies is a relaxation of the principle of
separation of powers and is an exception to the nondelegation of legislative powers.
Administrative regulations or "subordinate legislation" calculated to promote the public interest
are necessary because of "the growing complexity of modern life, the multiplication of the
subjects of governmental regulations, and the increased difficulty of administering the law."
xxxx
Nevertheless, it must be emphasized that the rule-making power must be confined to details for
regulating the mode or proceeding to carry into effect the law as it has been enacted. The power
cannot be extended to amending or expanding the statutory requirements or to embrace
matters not covered by the statute. Rules that subvert the statute cannot be sanctioned.
(Emphases supplied)
b. Application.
In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers postenactment identification authority to individual legislators, violates the principle of nondelegability since said legislators are effectively allowed to individually exercise the power of
appropriation, which as settled in Philconsa is lodged in Congress. That the power to
appropriate must be exercised only through legislation is clear from Section 29(1), Article VI of
the 1987 Constitution which states that: "No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." To understand what constitutes an act of
appropriation, the Court, in Bengzon v. Secretary of Justice and Insular Auditor (Bengzon),
held that the power of appropriation involves (a) the setting apart by law of a certain sum from
the public revenue for (b) a specified purpose. Essentially, under the 2013 PDAF Article,
individual legislators are given a personal lump-sum fund from which they are able to dictate (a)
how much from such fund would go to (b) a specific project or beneficiary that they themselves
also determine. As these two (2) acts comprise the exercise of the power of appropriation as
described in Bengzon, and given that the 2013 PDAF Article authorizes individual legislators to
perform the same, undoubtedly, said legislators have been conferred the power to legislate
which the Constitution does not, however, allow. Thus, keeping with the principle of nondelegability of legislative power, the Court hereby declares the 2013 PDAF Article, as well as all
other forms of Congressional Pork Barrel which contain the similar legislative identification
feature as herein discussed, as unconstitutional.
201

202

3. Checks and Balances.

a. Statement of Principle; Item-Veto Power.
The fact that the three great powers of government are intended to be kept separate and distinct
does not mean that they are absolutely unrestrained and independent of each other. The
Constitution has also provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the government.
203

A prime example of a constitutional check and balance would be the Presidents power to veto
an item written into an appropriation, revenue or tariff bill submitted to him by Congress for
approval through a process known as "bill presentment." The Presidents item-veto power is
found in Section 27(2), Article VI of the 1987 Constitution which reads as follows:
Sec. 27. x x x.
xxxx
(2) The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object.
The presentment of appropriation, revenue or tariff bills to the President, wherein he may
exercise his power of item-veto, forms part of the "single, finely wrought and exhaustively
considered, procedures" for law-passage as specified under the Constitution. As stated in
Abakada, the final step in the law-making process is the "submission of the bill to the President
for approval. Once approved, it takes effect as law after the required publication."
204

205

Elaborating on the Presidents item-veto power and its relevance as a check on the legislature,
the Court, in Bengzon, explained that:
206

The former Organic Act and the present Constitution of the Philippines make the Chief
Executive an integral part of the law-making power. His disapproval of a bill, commonly known
as a veto, is essentially a legislative act. The questions presented to the mind of the Chief
Executive are precisely the same as those the legislature must determine in passing a bill,
except that his will be a broader point of view.
The Constitution is a limitation upon the power of the legislative department of the government,
but in this respect it is a grant of power to the executive department. The Legislature has the
affirmative power to enact laws; the Chief Executive has the negative power by the
constitutional exercise of which he may defeat the will of the Legislature. It follows that the Chief
Executive must find his authority in the Constitution. But in exercising that authority he may not
be confined to rules of strict construction or hampered by the unwise interference of the
judiciary. The courts will indulge every intendment in favor of the constitutionality of a veto in the
same manner as they will presume the constitutionality of an act as originally passed by the
Legislature. (Emphases supplied)
The justification for the Presidents item-veto power rests on a variety of policy goals such as to
prevent log-rolling legislation, impose fiscal restrictions on the legislature, as well as to fortify
the executive branchs role in the budgetary process. In Immigration and Naturalization
Service v. Chadha, the US Supreme Court characterized the Presidents item-power as "a
salutary check upon the legislative body, calculated to guard the community against the effects
of factions, precipitancy, or of any impulse unfriendly to the public good, which may happen to
influence a majority of that body"; phrased differently, it is meant to "increase the chances in
favor of the community against the passing of bad laws, through haste, inadvertence, or
design."
207

208

209

For the President to exercise his item-veto power, it necessarily follows that there exists a
proper "item" which may be the object of the veto. An item, as defined in the field of
appropriations, pertains to "the particulars, the details, the distinct and severable parts of the

appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of the Philippine
Islands, the US Supreme Court characterized an item of appropriation as follows:
210

An item of an appropriation bill obviously means an item which, in itself, is a specific

appropriation of money, not some general provision of law which happens to be put into an
appropriation bill. (Emphases supplied)
On this premise, it may be concluded that an appropriation bill, to ensure that the President may
be able to exercise his power of item veto, must contain "specific appropriations of money" and
not only "general provisions" which provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be an item characterized
by singular correspondence meaning an allocation of a specified singular amount for a
specified singular purpose, otherwise known as a "line-item." This treatment not only allows
the item to be consistent with its definition as a "specific appropriation of money" but also
ensures that the President may discernibly veto the same. Based on the foregoing formulation,
the existing Calamity Fund, Contingent Fund and the Intelligence Fund, being appropriations
which state a specified amount for a specific purpose, would then be considered as "line- item"
appropriations which are rightfully subject to item veto. Likewise, it must be observed that an
appropriation may be validly apportioned into component percentages or values; however, it is
crucial that each percentage or value must be allocated for its own corresponding purpose for
such component to be considered as a proper line-item. Moreover, as Justice Carpio correctly
pointed out, a valid appropriation may even have several related purposes that are by
accounting and budgeting practice considered as one purpose, e.g., MOOE (maintenance and
other operating expenses), in which case the related purposes shall be deemed sufficiently
specific for the exercise of the Presidents item veto power. Finally, special purpose funds and
discretionary funds would equally square with the constitutional mechanism of item-veto for as
long as they follow the rule on singular correspondence as herein discussed. Anent special
purpose funds, it must be added that Section 25(4), Article VI of the 1987 Constitution requires
that the "special appropriations bill shall specify the purpose for which it is intended, and shall
be supported by funds actually available as certified by the National Treasurer, or t o be raised
by a corresponding revenue proposal therein." Meanwhile, with respect to discretionary funds,
Section 2 5(6), Article VI of the 1987 Constitution requires that said funds "shall be disbursed
only for public purposes to be supported by appropriate vouchers and subject to such guidelines
as may be prescribed by law."
211

In contrast, what beckons constitutional infirmity are appropriations which merely provide for a
singular lump-sum amount to be tapped as a source of funding for multiple purposes. Since
such appropriation type necessitates the further determination of both the actual amount to be
expended and the actual purpose of the appropriation which must still be chosen from the
multiple purposes stated in the law, it cannot be said that the appropriation law already indicates
a "specific appropriation of money and hence, without a proper line-item which the President
may veto. As a practical result, the President would then be faced with the predicament of either
vetoing the entire appropriation if he finds some of its purposes wasteful or undesirable, or
approving the entire appropriation so as not to hinder some of its legitimate purposes. Finally, it
may not be amiss to state that such arrangement also raises non-delegability issues considering
that the implementing authority would still have to determine, again, both the actual amount to
be expended and the actual purpose of the appropriation. Since the foregoing determinations
constitute the integral aspects of the power to appropriate, the implementing authority would, in
effect, be exercising legislative prerogatives in violation of the principle of non-delegability.

b. Application.
In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum
appropriation, the legislators identification of the projects after the passage of the GAA denies
the President the chance to veto that item later on." Accordingly, they submit that the "item
veto power of the President mandates that appropriations bills adopt line-item budgeting" and
that "Congress cannot choose a mode of budgeting which effectively renders the
constitutionally-given power of the President useless."
212

213

On the other hand, respondents maintain that the text of the Constitution envisions a process
which is intended to meet the demands of a modernizing economy and, as such, lump-sum
appropriations are essential to financially address situations which are barely foreseen when a
GAA is enacted. They argue that the decision of the Congress to create some lump-sum
appropriations is constitutionally allowed and textually-grounded.
214

The Court agrees with petitioners.

Under the 2013 PDAF Article, the amount of P24.79 Billion only appears as a collective
allocation limit since the said amount would be further divided among individual legislators who
would then receive personal lump-sum allocations and could, after the GAA is passed,
effectively appropriate PDAF funds based on their own discretion. As these intermediate
appropriations are made by legislators only after the GAA is passed and hence, outside of the
law, it necessarily means that the actual items of PDAF appropriation would not have been
written into the General Appropriations Bill and thus effectuated without veto consideration. This
kind of lump-sum/post-enactment legislative identification budgeting system fosters the creation
of a budget within a budget" which subverts the prescribed procedure of presentment and
consequently impairs the Presidents power of item veto. As petitioners aptly point out, the
above-described system forces the President to decide between (a) accepting the entire P24.79
Billion PDAF allocation without knowing the specific projects of the legislators, which may or
may not be consistent with his national agenda and (b) rejecting the whole PDAF to the
detriment of all other legislators with legitimate projects.
215

Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF
Article would remain constitutionally flawed since it would then operate as a prohibited form of
lump-sum appropriation above-characterized. In particular, the lump-sum amount of P24.79
Billion would be treated as a mere funding source allotted for multiple purposes of spending,
i.e., scholarships, medical missions, assistance to indigents, preservation of historical materials,
construction of roads, flood control, etc. This setup connotes that the appropriation law leaves
the actual amounts and purposes of the appropriation for further determination and, therefore,
does not readily indicate a discernible item which may be subject to the Presidents power of
item veto.
In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA
Chairperson relays, "limited state auditors from obtaining relevant data and information that
would aid in more stringently auditing the utilization of said Funds." Accordingly, she
recommends the adoption of a "line by line budget or amount per proposed program, activity or
project, and per implementing agency."
216

217

Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as
all Congressional Pork Barrel Laws of similar operation, to be unconstitutional. That such

budgeting system provides for a greater degree of flexibility to account for future contingencies
cannot be an excuse to defeat what the Constitution requires. Clearly, the first and essential
truth of the matter is that unconstitutional means do not justify even commendable ends.
218

c. Accountability.
Petitioners further relate that the system under which various forms of Congressional Pork
Barrel operate defies public accountability as it renders Congress incapable of checking itself or
its Members. In particular, they point out that the Congressional Pork Barrel "gives each
legislator a direct, financial interest in the smooth, speedy passing of the yearly budget" which
turns them "from fiscalizers" into "financially-interested partners." They also claim that the
system has an effect on re- election as "the PDAF excels in self-perpetuation of elective
officials." Finally, they add that the "PDAF impairs the power of impeachment" as such "funds
are indeed quite useful, to well, accelerate the decisions of senators."
219

220

The Court agrees in part.

The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that
"public office is a public trust," is an overarching reminder that every instrumentality of
government should exercise their official functions only in accordance with the principles of the
Constitution which embodies the parameters of the peoples trust. The notion of a public trust
connotes accountability, hence, the various mechanisms in the Constitution which are
designed to exact accountability from public officers.
221

Among others, an accountability mechanism with which the proper expenditure of public funds
may be checked is the power of congressional oversight. As mentioned in
Abakada, congressional oversight may be performed either through: (a) scrutiny based
primarily on Congress power of appropriation and the budget hearings conducted in connection
with it, its power to ask heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of confirmation; or (b)
investigation and monitoring of the implementation of laws pursuant to the power of Congress to
conduct inquiries in aid of legislation.
222

223

224

The Court agrees with petitioners that certain features embedded in some forms of
Congressional Pork Barrel, among others the 2013 PDAF Article, has an effect on
congressional oversight. The fact that individual legislators are given post-enactment roles in
the implementation of the budget makes it difficult for them to become disinterested "observers"
when scrutinizing, investigating or monitoring the implementation of the appropriation law. To a
certain extent, the conduct of oversight would be tainted as said legislators, who are vested with
post-enactment authority, would, in effect, be checking on activities in which they themselves
participate. Also, it must be pointed out that this very same concept of post-enactment
authorization runs afoul of Section 14, Article VI of the 1987 Constitution which provides that:
Sec. 14. No Senator or Member of the House of Representatives may personally appear as
counsel before any court of justice or before the Electoral Tribunals, or quasi-judicial and other
administrative bodies. Neither shall he, directly or indirectly, be interested financially in any
contract with, or in any franchise or special privilege granted by the Government, or any
subdivision, agency, or instrumentality thereof, including any government-owned or controlled
corporation, or its subsidiary, during his term of office. He shall not intervene in any matter

before any office of the Government for his pecuniary benefit or where he may be called upon to
act on account of his office. (Emphasis supplied)
Clearly, allowing legislators to intervene in the various phases of project implementation a
matter before another office of government renders them susceptible to taking undue
advantage of their own office.
The Court, however, cannot completely agree that the same post-enactment authority and/or
the individual legislators control of his PDAF per se would allow him to perpetuate himself in
office. Indeed, while the Congressional Pork Barrel and a legislators use thereof may be linked
to this area of interest, the use of his PDAF for re-election purposes is a matter which must be
analyzed based on particular facts and on a case-to-case basis.
Finally, while the Court accounts for the possibility that the close operational proximity between
legislators and the Executive department, through the formers post-enactment participation,
may affect the process of impeachment, this matter largely borders on the domain of politics
and does not strictly concern the Pork Barrel Systems intrinsic constitutionality. As such, it is an
improper subject of judicial assessment.
In sum, insofar as its post-enactment features dilute congressional oversight and violate Section
14, Article VI of the 1987 Constitution, thus impairing public accountability, the 2013 PDAF
Article and other forms of Congressional Pork Barrel of similar nature are deemed as
unconstitutional.
4. Political Dynasties.
One of the petitioners submits that the Pork Barrel System enables politicians who are members
of political dynasties to accumulate funds to perpetuate themselves in power, in contravention of
Section 26, Article II of the 1987 Constitution which states that:
225

Sec. 26. The State shall guarantee equal access to opportunities for public service, and prohibit
political dynasties as may be defined by law. (Emphasis and underscoring supplied)
At the outset, suffice it to state that the foregoing provision is considered as not self-executing
due to the qualifying phrase "as may be defined by law." In this respect, said provision does not,
by and of itself, provide a judicially enforceable constitutional right but merely specifies guideline
for legislative or executive action. Therefore, since there appears to be no standing law which
crystallizes the policy on political dynasties for enforcement, the Court must defer from ruling on
this issue.
226

In any event, the Court finds the above-stated argument on this score to be largely speculative
since it has not been properly demonstrated how the Pork Barrel System would be able to
propagate political dynasties.
5. Local Autonomy.
The States policy on local autonomy is principally stated in Section 25, Article II and Sections 2
and 3, Article X of the 1987 Constitution which read as follows:

ARTICLE II
Sec. 25. The State shall ensure the autonomy of local governments.
ARTICLE X
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among
the different local government units their powers, responsibilities, and resources, and provide for
the qualifications, election, appointment and removal, term, salaries, powers and functions and
duties of local officials, and all other matters relating to the organization and operation of the
local units.
Pursuant thereto, Congress enacted RA 7160, otherwise known as the "Local Government
Code of 1991" (LGC), wherein the policy on local autonomy had been more specifically
explicated as follows:
227

Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to
enable them to attain their fullest development as self-reliant communities and make them more
effective partners in the attainment of national goals. Toward this end, the State shall provide for
a more responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority,
responsibilities, and resources. The process of decentralization shall proceed from the National
Government to the local government units.
xxxx
(c) It is likewise the policy of the State to require all national agencies and offices to conduct
periodic consultations with appropriate local government units, nongovernmental and peoples
organizations, and other concerned sectors of the community before any project or program is
implemented in their respective jurisdictions. (Emphases and underscoring supplied)
The above-quoted provisions of the Constitution and the LGC reveal the policy of the State to
empower local government units (LGUs) to develop and ultimately, become self-sustaining and
effective contributors to the national economy. As explained by the Court in Philippine Gamefowl
Commission v. Intermediate Appellate Court:
228

This is as good an occasion as any to stress the commitment of the Constitution to the policy of
local autonomy which is intended to provide the needed impetus and encouragement to the
development of our local political subdivisions as "self - reliant communities." In the words of
Jefferson, "Municipal corporations are the small republics from which the great one derives its
strength." The vitalization of local governments will enable their inhabitants to fully exploit their
resources and more important, imbue them with a deepened sense of involvement in public
affairs as members of the body politic. This objective could be blunted by undue interference by
the national government in purely local affairs which are best resolved by the officials and
inhabitants of such political units. The decision we reach today conforms not only to the letter of

the pertinent laws but also to the spirit of the Constitution. (Emphases and underscoring
supplied)
229

In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the
constitutional principles on local autonomy since it allows district representatives, who are
national officers, to substitute their judgments in utilizing public funds for local
development. The Court agrees with petitioners.
230

Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is
also a recognition that individual members of Congress, far more than the President and their
congressional colleagues, are likely to be knowledgeable about the needs of their respective
constituents and the priority to be given each project." Drawing strength from this
pronouncement, previous legislators justified its existence by stating that "the relatively small
projects implemented under the Congressional Pork Barrel complement and link the national
development goals to the countryside and grassroots as well as to depressed areas which are
overlooked by central agencies which are preoccupied with mega-projects. Similarly, in his
August 23, 2013 speech on the "abolition" of PDAF and budgetary reforms, President Aquino
mentioned that the Congressional Pork Barrel was originally established for a worthy goal,
which is to enable the representatives to identify projects for communities that the LGU
concerned cannot afford.
231

232

233

Notwithstanding these declarations, the Court, however, finds an inherent defect in the system
which actually belies the avowed intention of "making equal the unequal." In particular, the Court
observes that the gauge of PDAF and CDF allocation/division is based solely on the fact of
office, without taking into account the specific interests and peculiarities of the district the
legislator represents. In this regard, the allocation/division limits are clearly not based on
genuine parameters of equality, wherein economic or geographic indicators have been taken
into consideration. As a result, a district representative of a highly-urbanized metropolis gets the
same amount of funding as a district representative of a far-flung rural province which would be
relatively "underdeveloped" compared to the former. To add, what rouses graver scrutiny is that
even Senators and Party-List Representatives and in some years, even the Vice-President
who do not represent any locality, receive funding from the Congressional Pork Barrel as well.
These certainly are anathema to the Congressional Pork Barrels original intent which is "to
make equal the unequal." Ultimately, the PDAF and CDF had become personal funds under the
effective control of each legislator and given unto them on the sole account of their office.
The Court also observes that this concept of legislator control underlying the CDF and PDAF
conflicts with the functions of the various Local Development Councils (LDCs) which are already
legally mandated to "assist the corresponding sanggunian in setting the direction of economic
and social development, and coordinating development efforts within its territorial
jurisdiction." Considering that LDCs are instrumentalities whose functions are essentially
geared towards managing local affairs, their programs, policies and resolutions should not be
overridden nor duplicated by individual legislators, who are national officers that have no lawmaking authority except only when acting as a body. The undermining effect on local autonomy
caused by the post-enactment authority conferred to the latter was succinctly put by petitioners
in the following wise:
234

235

236

With PDAF, a Congressman can simply bypass the local development council and initiate
projects on his own, and even take sole credit for its execution. Indeed, this type of personalitydriven project identification has not only contributed little to the overall development of the

district, but has even contributed to "further weakening infrastructure planning and coordination
efforts of the government."
Thus, insofar as individual legislators are authorized to intervene in purely local matters and
thereby subvert genuine local autonomy, the 2013 PDAF Article as well as all other similar forms
of Congressional Pork Barrel is deemed unconstitutional.
With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the
substantive issues involving the Presidential Pork Barrel.
C. Substantive Issues on the Presidential Pork Barrel.
1. Validity of Appropriation.
Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended
by PD 1993), which respectively provide for the Malampaya Funds and the Presidential Social
Fund, as invalid appropriations laws since they do not have the "primary and specific" purpose
of authorizing the release of public funds from the National Treasury. Petitioners submit that
Section 8 of PD 910 is not an appropriation law since the "primary and specific purpose of PD
910 is the creation of an Energy Development Board and Section 8 thereof only created a
Special Fund incidental thereto. In similar regard, petitioners argue that Section 12 of PD 1869
is neither a valid appropriations law since the allocation of the Presidential Social Fund is merely
incidental to the "primary and specific" purpose of PD 1869 which is the amendment of the
Franchise and Powers of PAGCOR. In view of the foregoing, petitioners suppose that such
funds are being used without any valid law allowing for their proper appropriation in violation of
Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall be paid out
of the Treasury except in pursuance of an appropriation made by law."
237

238

239

The Court disagrees.

"An appropriation made by law under the contemplation of Section 29(1), Article VI of the 1987
Constitution exists when a provision of law (a) sets apart a determinate or
determinable amount of money and (b) allocates the same for a particular public purpose.
These two minimum designations of amount and purpose stem from the very definition of the
word "appropriation," which means "to allot, assign, set apart or apply to a particular use or
purpose," and hence, if written into the law, demonstrate that the legislative intent to appropriate
exists. As the Constitution "does not provide or prescribe any particular form of words or
religious recitals in which an authorization or appropriation by Congress shall be made, except
that it be made by law," an appropriation law may according to Philconsa be "detailed and
as broad as Congress wants it to be" for as long as the intent to appropriate may be gleaned
from the same. As held in the case of Guingona, Jr.:
240

241

There is no provision in our Constitution that provides or prescribes any particular form of words
or religious recitals in which an authorization or appropriation by Congress shall be made,
except that it be "made by law," such as precisely the authorization or appropriation under the
questioned presidential decrees. In other words, in terms of time horizons, an appropriation may
be made impliedly (as by past but subsisting legislations) as well as expressly for the current
fiscal year (as by enactment of laws by the present Congress), just as said appropriation may
be made in general as well as in specific terms. The Congressional authorization may be
embodied in annual laws, such as a general appropriations act or in special provisions of laws

of general or special application which appropriate public funds for specific public purposes,
such as the questioned decrees. An appropriation measure is sufficient if the legislative intention
clearly and certainly appears from the language employed (In re Continuing Appropriations, 32
P. 272), whether in the past or in the present. (Emphases and underscoring supplied)
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave:

242

To constitute an appropriation there must be money placed in a fund applicable to the

designated purpose. The word appropriate means to allot, assign, set apart or apply to a
particular use or purpose. An appropriation in the sense of the constitution means the setting
apart a portion of the public funds for a public purpose. No particular form of words is necessary
for the purpose, if the intention to appropriate is plainly manifested. (Emphases supplied)
Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation
must be the "primary and specific" purpose of the law in order for a valid appropriation law to
exist. To reiterate, if a legal provision designates a determinate or determinable amount of
money and allocates the same for a particular public purpose, then the legislative intent to
appropriate becomes apparent and, hence, already sufficient to satisfy the requirement of an
"appropriation made by law" under contemplation of the Constitution.
Section 8 of PD 910 pertinently provides:
Section 8. Appropriations. x x x
All fees, revenues and receipts of the Board from any and all sources including receipts from
service contracts and agreements such as application and processing fees, signature bonus,
discovery bonus, production bonus; all money collected from concessionaires, representing
unspent work obligations, fines and penalties under the Petroleum Act of 1949; as well as the
government share representing royalties, rentals, production share on service contracts and
similar payments on the exploration, development and exploitation of energy resources, shall
form part of a Special Fund to be used to finance energy resource development and exploitation
programs and projects of the government and for such other purposes as may be hereafter
directed by the President. (Emphases supplied)
Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
Sec. 12. Special Condition of Franchise. After deducting five (5%) percent as Franchise Tax,
the Fifty (50%) percent share of the Government in the aggregate gross earnings of the
Corporation from this Franchise, or 60% if the aggregate gross earnings be less
than P150,000,000.00 shall be set aside and shall accrue to the General Fund to finance the
priority infrastructure development projects and to finance the restoration of damaged or
destroyed facilities due to calamities, as may be directed and authorized by the Office of the
President of the Philippines. (Emphases supplied)
Analyzing the legal text vis--vis the above-mentioned principles, it may then be concluded that
(a) Section 8 of PD 910, which creates a Special Fund comprised of "all fees, revenues, and
receipts of the Energy Development Board from any and all sources" (a determinable amount)
"to be used to finance energy resource development and exploitation programs and projects of
the government and for such other purposes as may be hereafter directed by the President" (a
specified public purpose), and (b) Section 12 of PD 1869, as amended by PD 1993, which

similarly sets aside, "after deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent
share of the Government in the aggregate gross earnings of PAGCOR, or 60%, if the aggregate
gross earnings be less than P150,000,000.00" (also a determinable amount) "to finance the
priority infrastructure development projects and x x x the restoration of damaged or destroyed
facilities due to calamities, as may be directed and authorized by the Office of the President of
the Philippines" (also a specified public purpose), are legal appropriations under Section 29(1),
Article VI of the 1987 Constitution.
In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a
legal appropriation under the said constitutional provision precisely because, as earlier stated, it
contains post-enactment measures which effectively create a system of intermediate
appropriations. These intermediate appropriations are the actual appropriations meant for
enforcement and since they are made by individual legislators after the GAA is passed, they
occur outside the law. As such, the Court observes that the real appropriation made under the
2013 PDAF Article is not the P24.79 Billion allocated for the entire PDAF, but rather the postenactment determinations made by the individual legislators which are, to repeat, occurrences
outside of the law. Irrefragably, the 2013 PDAF Article does not constitute an "appropriation
made by law" since it, in its truest sense, only authorizes individual legislators to appropriate in
violation of the non-delegability principle as afore-discussed.
2. Undue Delegation.
On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue
delegation of legislative power since the phrase "and for such other purposes as may be
hereafter directed by the President" gives the President "unbridled discretion to determine for
what purpose the funds will be used." Respondents, on the other hand, urged the Court to
apply the principle of ejusdem generis to the same section and thus, construe the phrase "and
for such other purposes as may be hereafter directed by the President" to refer only to other
purposes related "to energy resource development and exploitation programs and projects of
the government."
243

244

The Court agrees with petitioners submissions.

While the designation of a determinate or determinable amount for a particular public purpose is
sufficient for a legal appropriation to exist, the appropriation law must contain adequate
legislative guidelines if the same law delegates rule-making authority to the Executive either
for the purpose of (a) filling up the details of the law for its enforcement, known as
supplementary rule-making, or (b) ascertaining facts to bring the law into actual operation,
referred to as contingent rule-making. There are two (2) fundamental tests to ensure that the
legislative guidelines for delegated rule-making are indeed adequate. The first test is called the
"completeness test." Case law states that a law is complete when it sets forth therein the policy
to be executed, carried out, or implemented by the delegate. On the other hand, the second test
is called the "sufficient standard test." Jurisprudence holds that a law lays down a sufficient
standard when it provides adequate guidelines or limitations in the law to map out the
boundaries of the delegates authority and prevent the delegation from running riot. To be
sufficient, the standard must specify the limits of the delegates authority, announce the
legislative policy, and identify the conditions under which it is to be implemented.
245

246

247

248

In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other
purposes as may be hereafter directed by the President" under Section 8 of PD 910 constitutes

an undue delegation of legislative power insofar as it does not lay down a sufficient standard to
adequately determine the limits of the Presidents authority with respect to the purpose for which
the Malampaya Funds may be used. As it reads, the said phrase gives the President wide
latitude to use the Malampaya Funds for any other purpose he may direct and, in effect, allows
him to unilaterally appropriate public funds beyond the purview of the law. That the subject
phrase may be confined only to "energy resource development and exploitation programs and
projects of the government" under the principle of ejusdem generis, meaning that the general
word or phrase is to be construed to include or be restricted to things akin to, resembling, or
of the same kind or class as those specifically mentioned, is belied by three (3) reasons: first,
the phrase "energy resource development and exploitation programs and projects of the
government" states a singular and general class and hence, cannot be treated as a statutory
reference of specific things from which the general phrase "for such other purposes" may be
limited; second, the said phrase also exhausts the class it represents, namely energy
development programs of the government; and, third, the Executive department has, in fact,
used the Malampaya Funds for non-energy related purposes under the subject phrase, thereby
contradicting respondents own position that it is limited only to "energy resource development
and exploitation programs and projects of the government." Thus, while Section 8 of PD 910
may have passed the completeness test since the policy of energy development is clearly
deducible from its text, the phrase "and for such other purposes as may be hereafter directed by
the President" under the same provision of law should nonetheless be stricken down as
unconstitutional as it lies independently unfettered by any sufficient standard of the delegating
law. This notwithstanding, it must be underscored that the rest of Section 8, insofar as it allows
for the use of the Malampaya Funds "to finance energy resource development and exploitation
programs and projects of the government," remains legally effective and subsisting. Truth be
told, the declared unconstitutionality of the aforementioned phrase is but an assurance that the
Malampaya Funds would be used as it should be used only in accordance with the avowed
purpose and intention of PD 910.
249

250

251

As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of
PD 1869 has already been amended by PD 1993 which thus moots the parties submissions on
the same. Nevertheless, since the amendatory provision may be readily examined under the
current parameters of discussion, the Court proceeds to resolve its constitutionality.
252

Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that the Presidential

Social Fund may be used "to first, finance the priority infrastructure development projects and
second, to finance the restoration of damaged or destroyed facilities due to calamities, as may
be directed and authorized by the Office of the President of the Philippines." The Court finds
that while the second indicated purpose adequately curtails the authority of the President to
spend the Presidential Social Fund only for restoration purposes which arise from calamities,
the first indicated purpose, however, gives him carte blanche authority to use the same fund for
any infrastructure project he may so determine as a "priority". Verily, the law does not supply a
definition of "priority in frastructure development projects" and hence, leaves the President
without any guideline to construe the same. To note, the delimitation of a project as one of
"infrastructure" is too broad of a classification since the said term could pertain to any kind of
facility. This may be deduced from its lexicographic definition as follows: "the underlying
framework of a system, especially public services and facilities (such as highways, schools,
bridges, sewers, and water-systems) needed to support commerce as well as economic and
residential development." In fine, the phrase "to finance the priority infrastructure development
projects" must be stricken down as unconstitutional since similar to the above-assailed
provision under Section 8 of PD 910 it lies independently unfettered by any sufficient standard
253

of the delegating law. As they are severable, all other provisions of Section 12 of PD 1869, as
amended by PD 1993, remains legally effective and subsisting.
D. Ancillary Prayers. 1.
Petitioners Prayer to be Furnished Lists and Detailed Reports.
Aside from seeking the Court to declare the Pork Barrel System unconstitutional as the Court
did so in the context of its pronouncements made in this Decision petitioners equally pray that
the Executive Secretary and/or the DBM be ordered to release to the CoA and to the public: (a)
"the complete schedule/list of legislators who have availed of their PDAF and VILP from the
years 2003 to 2013, specifying the use of the funds, the project or activity and the recipient
entities or individuals, and all pertinent data thereto" (PDAF Use Schedule/List); and (b) "the
use of the Executives lump-sum, discretionary funds, including the proceeds from the x x x
Malampaya Funds and remittances from the PAGCOR x x x from 2003 to 2013, specifying the x
x x project or activity and the recipient entities or individuals, and all pertinent data
thereto" (Presidential Pork Use Report). Petitioners prayer is grounded on Section 28, Article II
and Section 7, Article III of the 1987 Constitution which read as follows:
254

255

ARTICLE II
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions involving public interest.
ARTICLE III Sec. 7.
The right of the people to information on matters of public concern shall be recognized. Access
to official records, and to documents and papers pertaining to official acts, transactions, or
decisions, as well as to government research data used as basis for policy development, shall
be afforded the citizen, subject to such limitations as may be provided by law.
The Court denies petitioners submission.
Case law instructs that the proper remedy to invoke the right to information is to file a petition for
mandamus. As explained in the case of Legaspi v. Civil Service Commission:
256

While the manner of examining public records may be subject to reasonable regulation by the
government agency in custody thereof, the duty to disclose the information of public concern,
and to afford access to public records cannot be discretionary on the part of said agencies.
Certainly, its performance cannot be made contingent upon the discretion of such agencies.
Otherwise, the enjoyment of the constitutional right may be rendered nugatory by any whimsical
exercise of agency discretion. The constitutional duty, not being discretionary, its performance
may be compelled by a writ of mandamus in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us, the public right to be
enforced and the concomitant duty of the State are unequivocably set forth in the Constitution.

The decisive question on the propriety of the issuance of the writ of mandamus in this case is,
whether the information sought by the petitioner is within the ambit of the constitutional
guarantee. (Emphases supplied)
Corollarily, in the case of Valmonte v. Belmonte Jr. (Valmonte), it has been clarified that the
right to information does not include the right to compel the preparation of "lists, abstracts,
summaries and the like." In the same case, it was stressed that it is essential that the "applicant
has a well -defined, clear and certain legal right to the thing demanded and that it is the
imperative duty of defendant to perform the act required." Hence, without the foregoing
substantiations, the Court cannot grant a particular request for information. The pertinent
portions of Valmonte are hereunder quoted:
257

258

Although citizens are afforded the right to information and, pursuant thereto, are entitled to
"access to official records," the Constitution does not accord them a right to compel custodians
of official records to prepare lists, abstracts, summaries and the like in their desire to acquire
information on matters of public concern.
It must be stressed that it is essential for a writ of mandamus to issue that the applicant has a
well-defined, clear and certain legal right to the thing demanded and that it is the imperative duty
of defendant to perform the act required. The corresponding duty of the respondent to perform
the required act must be clear and specific Lemi v. Valencia, G.R. No. L-20768, November
29,1968,126 SCRA 203; Ocampo v. Subido, G.R. No. L-28344, August 27, 1976, 72 SCRA 443.
The request of the petitioners fails to meet this standard, there being no duty on the part of
respondent to prepare the list requested. (Emphases supplied)
In these cases, aside from the fact that none of the petitions are in the nature of mandamus
actions, the Court finds that petitioners have failed to establish a "a well-defined, clear and
certain legal right" to be furnished by the Executive Secretary and/or the DBM of their requested
PDAF Use Schedule/List and Presidential Pork Use Report. Neither did petitioners assert any
law or administrative issuance which would form the bases of the latters duty to furnish them
with the documents requested. While petitioners pray that said information be equally released
to the CoA, it must be pointed out that the CoA has not been impleaded as a party to these
cases nor has it filed any petition before the Court to be allowed access to or to compel the
release of any official document relevant to the conduct of its audit investigations. While the
Court recognizes that the information requested is a matter of significant public concern,
however, if only to ensure that the parameters of disclosure are properly foisted and so as not to
unduly hamper the equally important interests of the government, it is constrained to deny
petitioners prayer on this score, without prejudice to a proper mandamus case which they, or
even the CoA, may choose to pursue through a separate petition.
It bears clarification that the Courts denial herein should only cover petitioners plea to be
furnished with such schedule/list and report and not in any way deny them, or the general
public, access to official documents which are already existing and of public record. Subject to
reasonable regulation and absent any valid statutory prohibition, access to these documents
should not be proscribed. Thus, in Valmonte, while the Court denied the application for
mandamus towards the preparation of the list requested by petitioners therein, it nonetheless
allowed access to the documents sought for by the latter, subject, however, to the custodians
reasonable regulations,viz.:
259

In fine, petitioners are entitled to access to the documents evidencing loans granted by the
GSIS, subject to reasonable regulations that the latter may promulgate relating to the manner
and hours of examination, to the end that damage to or loss of the records may be avoided, that
undue interference with the duties of the custodian of the records may be prevented and that
the right of other persons entitled to inspect the records may be insured Legaspi v. Civil Service
Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. The petition, as to
the second and third alternative acts sought to be done by petitioners, is meritorious.
However, the same cannot be said with regard to the first act sought by petitioners, i.e.,
"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to
the UNIDO and PDP-Laban who were able to secure clean loans immediately before the
February 7 election thru the intercession/marginal note of the then First Lady Imelda Marcos."
The Court, therefore, applies the same treatment here.
2. Petitioners Prayer to Include Matters in Congressional Deliberations.
Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the
Congress of all presently, off-budget, lump sum, discretionary funds including but not limited to,
proceeds from the x x x Malampaya Fund, remittances from the PAGCOR and the PCSO or the
Executives Social Funds."
260

Suffice it to state that the above-stated relief sought by petitioners covers a matter which is
generally left to the prerogative of the political branches of government. Hence, lest the Court
itself overreach, it must equally deny their prayer on this score.
3. Respondents Prayer to Lift TRO; Consequential Effects of Decision.
The final issue to be resolved stems from the interpretation accorded by the DBM to the concept
of released funds. In response to the Courts September 10, 2013 TRO that enjoined the
release of the remaining PDAF allocated for the year 2013, the DBM issued Circular Letter No.
2013-8 dated September 27, 2013 (DBM Circular 2013-8) which pertinently reads as follows:
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a Special Allotment
Release Order (SARO) has been issued by the DBM and such SARO has been obligated by the
implementing agencies prior to the issuance of the TRO, may continually be implemented and
disbursements thereto effected by the agencies concerned.
Based on the text of the foregoing, the DBM authorized the continued implementation and
disbursement of PDAF funds as long as they are: first, covered by a SARO; and, second, that
said SARO had been obligated by the implementing agency concerned prior to the issuance of
the Courts September 10, 2013 TRO.
Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does
not yet involve the release of funds under the PDAF, as release is only triggered by the issuance
of a Notice of Cash Allocation [(NCA)]." As such, PDAF disbursements, even if covered by an
obligated SARO, should remain enjoined.
261

For their part, respondents espouse that the subject TRO only covers "unreleased and
unobligated allotments." They explain that once a SARO has been issued and obligated by the
implementing agency concerned, the PDAF funds covered by the same are already "beyond the
reach of the TRO because they cannot be considered as remaining PDAF." They conclude that
this is a reasonable interpretation of the TRO by the DBM.
262

The Court agrees with petitioners in part.

At the outset, it must be observed that the issue of whether or not the Courts September 10,
2013 TRO should be lifted is a matter rendered moot by the present Decision. The
unconstitutionality of the 2013 PDAF Article as declared herein has the consequential effect of
converting the temporary injunction into a permanent one. Hence, from the promulgation of this
Decision, the release of the remaining PDAF funds for 2013, among others, is now permanently
enjoined.
The propriety of the DBMs interpretation of the concept of "release" must, nevertheless, be
resolved as it has a practical impact on the execution of the current Decision. In particular, the
Court must resolve the issue of whether or not PDAF funds covered by obligated SAROs, at the
time this Decision is promulgated, may still be disbursed following the DBMs interpretation in
DBM Circular 2013-8.
On this score, the Court agrees with petitioners posturing for the fundamental reason that funds
covered by an obligated SARO are yet to be "released" under legal contemplation. A SARO, as
defined by the DBM itself in its website, is "aspecific authority issued to identified agencies to
incur obligations not exceeding a given amount during a specified period for the purpose
indicated. It shall cover expenditures the release of which is subject to compliance with specific
laws or regulations, or is subject to separate approval or clearance by competent authority."
263

Based on this definition, it may be gleaned that a SARO only evinces the existence of an
obligation and not the directive to pay. Practically speaking, the SARO does not have the direct
and immediate effect of placing public funds beyond the control of the disbursing authority. In
fact, a SARO may even be withdrawn under certain circumstances which will prevent the actual
release of funds. On the other hand, the actual release of funds is brought about by the
issuance of the NCA, which is subsequent to the issuance of a SARO. As may be determined
from the statements of the DBM representative during the Oral Arguments:
264

265

Justice Bernabe: Is the notice of allocation issued simultaneously with the SARO?
xxxx
Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for the agencies to
obligate or to enter into commitments. The NCA, Your Honor, is already the go signal to the
treasury for us to be able to pay or to liquidate the amounts obligated in the SARO; so it comes
after. x x x The NCA, Your Honor, is the go signal for the MDS for the authorized governmentdisbursing banks to, therefore, pay the payees depending on the projects or projects covered by
the SARO and the NCA.
Justice Bernabe: Are there instances that SAROs are cancelled or revoked?

Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs
issued are withdrawn by the DBM.
Justice Bernabe: They are withdrawn?
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)
Thus, unless an NCA has been issued, public funds should not be treated as funds which have
been "released." In this respect, therefore, the disbursement of 2013 PDAF funds which are
only covered by obligated SAROs, and without any corresponding NCAs issued, must, at the
time of this Decisions promulgation, be enjoined and consequently reverted to the
unappropriated surplus of the general fund. Verily, in view of the declared unconstitutionality of
the 2013 PDAF Article, the funds appropriated pursuant thereto cannot be disbursed even
though already obligated, else the Court sanctions the dealing of funds coming from an
unconstitutional source.
This same pronouncement must be equally applied to (a) the Malampaya Funds which have
been obligated but not released meaning, those merely covered by a SARO under the
phrase "and for such other purposes as may be hereafter directed by the President" pursuant to
Section 8 of PD 910; and (b) funds sourced from the Presidential Social Fund under the phrase
"to finance the priority infrastructure development projects" pursuant to Section 12 of PD 1869,
as amended by PD 1993, which were altogether declared by the Court as unconstitutional.
However, these funds should not be reverted to the general fund as afore-stated but instead,
respectively remain under the Malampaya Funds and the Presidential Social Fund to be utilized
for their corresponding special purposes not otherwise declared as unconstitutional.
E. Consequential Effects of Decision.
As a final point, it must be stressed that the Courts pronouncement anent the unconstitutionality
of (a) the 2013 PDAF Article and its Special Provisions, (b) all other Congressional Pork Barrel
provisions similar thereto, and (c) the phrases (1) "and for such other purposes as may be
hereafter directed by the President" under Section 8 of PD 910, and (2) "to finance the priority
infrastructure development projects" under Section 12 of PD 1869, as amended by PD 1993,
must only be treated as prospective in effect in view of the operative fact doctrine.
To explain, the operative fact doctrine exhorts the recognition that until the judiciary, in an
appropriate case, declares the invalidity of a certain legislative or executive act, such act is
presumed constitutional and thus, entitled to obedience and respect and should be properly
enforced and complied with. As explained in the recent case of Commissioner of Internal
Revenue v. San Roque Power Corporation, the doctrine merely "reflects awareness that
precisely because the judiciary is the governmental organ which has the final say on whether or
not a legislative or executive measure is valid, a period of time may have elapsed before it can
exercise the power of judicial review that may lead to a declaration of nullity. It would be to
deprive the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication." "In the language of an American Supreme Court
decision: The actual existence of a statute, prior to such a determination of unconstitutionality,
is an operative fact and may have consequences which cannot justly be ignored."
266

267

268

For these reasons, this Decision should be heretofore applied prospectively.

Conclusion
The Court renders this Decision to rectify an error which has persisted in the chronicles of our
history. In the final analysis, the Court must strike down the Pork Barrel System as
unconstitutional in view of the inherent defects in the rules within which it operates. To recount,
insofar as it has allowed legislators to wield, in varying gradations, non-oversight, postenactment authority in vital areas of budget execution, the system has violated the principle of
separation of powers; insofar as it has conferred unto legislators the power of appropriation by
giving them personal, discretionary funds from which they are able to fund specific projects
which they themselves determine, it has similarly violated the principle of non-delegability of
legislative power ; insofar as it has created a system of budgeting wherein items are not
textualized into the appropriations bill, it has flouted the prescribed procedure of presentment
and, in the process, denied the President the power to veto items ; insofar as it has diluted the
effectiveness of congressional oversight by giving legislators a stake in the affairs of budget
execution, an aspect of governance which they may be called to monitor and scrutinize, the
system has equally impaired public accountability ; insofar as it has authorized legislators, who
are national officers, to intervene in affairs of purely local nature, despite the existence of
capable local institutions, it has likewise subverted genuine local autonomy ; and again, insofar
as it has conferred to the President the power to appropriate funds intended by law for energyrelated purposes only to other purposes he may deem fit as well as other public funds under the
broad classification of "priority infrastructure development projects," it has once more
transgressed the principle of non-delegability.
For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional
methods and mechanisms the Court has herein pointed out should never again be adopted in
any system of governance, by any name or form, by any semblance or similarity, by any
influence or effect. Disconcerting as it is to think that a system so constitutionally unsound has
monumentally endured, the Court urges the people and its co-stewards in government to look
forward with the optimism of change and the awareness of the past. At a time of great civic
unrest and vociferous public debate, the Court fervently hopes that its Decision today, while it
may not purge all the wrongs of society nor bring back what has been lost, guides this nation to
the path forged by the Constitution so that no one may heretofore detract from its cause nor
stray from its course. After all, this is the Courts bounden duty and no others.
WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations
discussed in this Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire
2013 PDAF Article; (b) all legal provisions of past and present Congressional Pork Barrel Laws,
such as the previous PDAF and CDF Articles and the various Congressional Insertions, which
authorize/d legislators whether individually or collectively organized into committees to
intervene, assume or participate in any of the various post-enactment stages of the budget
execution, such as but not limited to the areas of project identification, modification and revision
of project identification, fund release and/or fund realignment, unrelated to the power of
congressional oversight; (c) all legal provisions of past and present Congressional Pork Barrel
Laws, such as the previous PDAF and CDF Articles and the various Congressional Insertions,
which confer/red personal, lump-sum allocations to legislators from which they are able to fund
specific projects which they themselves determine; (d) all informal practices of similar import
and effect, which the Court similarly deems to be acts of grave abuse of discretion amounting to
lack or excess of jurisdiction; and (e) the phrases (1) "and for such other purposes as may be
hereafter directed by the President" under Section 8 of Presidential Decree No. 910 and (2) "to
finance the priority infrastructure development projects" under Section 12 of Presidential Decree

No. 1869, as amended by Presidential Decree No. 1993, for both failing the sufficient standard
test in violation of the principle of non-delegability of legislative power.
Accordingly, the Courts temporary injunction dated September 10, 2013 is hereby declared to
be PERMANENT. Thus, the disbursement/release of the remaining PDAF funds allocated for
the year 2013, as well as for all previous years, and the funds sourced from (1) the Malampaya
Funds under the phrase "and for such other purposes as may be hereafter directed by the
President" pursuant to Section 8 of Presidential Decree No. 910, and (2) the Presidential Social
Fund under the phrase "to finance the priority infrastructure development projects" pursuant to
Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993,
which are, at the time this Decision is promulgated, not covered by Notice of Cash Allocations
(NCAs) but only by Special Allotment Release Orders (SAROs), whether obligated or not, are
hereby ENJOINED. The remaining PDAF funds covered by this permanent injunction shall not
be disbursed/released but instead reverted to the unappropriated surplus of the general fund,
while the funds under the Malampaya Funds and the Presidential Social Fund shall remain
therein to be utilized for their respective special purposes not otherwise declared as
unconstitutional.
On the other hand, due to improper recourse and lack of proper substantiation, the Court hereby
DENIES petitioners prayer seeking that the Executive Secretary and/or the Department of
Budget and Management be ordered to provide the public and the Commission on Audit
complete lists/schedules or detailed reports related to the availments and utilization of the funds
subject of these cases. Petitioners access to official documents already available and of public
record which are related to these funds must, however, not be prohibited but merely subjected
to the custodians reasonable regulations or any valid statutory prohibition on the same. This
denial is without prejudice to a proper mandamus case which they or the Commission on Audit
may choose to pursue through a separate petition.
The Court also DENIES petitioners prayer to order the inclusion of the funds subject of these
cases in the budgetary deliberations of Congress as the same is a matter left to the prerogative
of the political branches of government.
Finally, the Court hereby DIRECTS all prosecutorial organs of the government to, within the
bounds of reasonable dispatch, investigate and accordingly prosecute all government officials
and/or private individuals for possible criminal offenses related to the irregular, improper and/or
unlawful disbursement/utilization of all funds under the Pork Barrel System.
This Decision is immediately executory but prospective in effect.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
See Concurring Opinion
MARIA LOURDES P. A. SERENO
Chief Justice

See Concurring Opinion

ANTONIO T. CARPIO
Associate Justice

NO PART
PRESBITERO J. VELASCO, JR.
Associate Justice

I concur and also join the concurring

opinion of Justice Carpio.
TERESITA J. LEONARDO-DE
CASTRO
Associate Justice

I join the Opinion of Justice Carpio,

subject to my Concurring & Dissenting
Opinion.
ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

I join the concurring opinion of J. A.T.

Carpio of the ponencia
ROBERTO A. ABAD
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

BIENVENIDO L. REYES
Associate Justice

See Concurring Opinion

MARVIC MARIO VICTOR F. LEONEN
Associate Justice
C E R T I F I C AT I O N
I certify that the conclusions in the above Decision had been reached in consultation before the
cases were assigned to the writer of the opinion of the Court.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
*Dropped as a party per Memorandum dated October 17, 2013 filed by counsel for
petitioners Atty. Alfredo B. Molo III, et al. Rollo (G.R. No. 208566), p. 388.
** No part.
1

The Federalist Papers, Federalist No. 20.

Rollo (G.R. No. 208566), pp. 3-51; rollo (G.R. No. 208493), pp. 3-11; and rollo (G.R.
No. 209251), pp. 2-8.
2

"Pork barrel spending, a term that traces its origins back to the era of slavery before
the U.S. Civil War, when slave owners occasionally would present a barrel of salt pork as
a gift to their slaves. In the modern usage, the term refers to congressmen scrambling to
set aside money for pet projects in their districts." (Drudge, Michael W. "Pork Barrel
Spending Emerging as Presidential Campaign Issue," August 1, 2008
http://iipdigital.usembassy.gov/st/english/article/2008/08/20080801181504lcnirellep
0.1261713.html#axzz2iQrI8mHM> [visited October 17, 2013].)
3

Bernas, Joaquin G., S.J., The 1987 Constitution of the Republic of the Philippines: A
Commentary, 2003 Edition, p. 786, citing Bernas, "From Pork Barrel to Bronze Caskets,"
Today, January 30, 1994.
4

Heaser, Jason, "Pulled Pork: The Three Part Attack on Non-Statutory Earmarks,"
Journal of Legislation, 35 J. Legis. 32 (2009). <http://heinonline.org/HOL/LandingPage?
collection=&handle =hein.journals/jleg35&div=6&id=&page=> (visited October 17, 2013).
5

Nograles, Prospero C. and Lagman, Edcel C., House of Representatives of the

Philippines, "Understanding the Pork Barrel," p. 2.
<http://www.congress.gov.ph/download/14th/pork_barrel.pdf> (visited October 17, 2013).
6

Chua, Yvonne T. and Cruz, Booma, B., "Pork is a Political, Not A Developmental, Tool."
<http://pcij.org/stories/2004/pork.html> [visited October 22, 2013].) See also rollo (G.R.
No. 208566), pp. 328-329.
7

Morton, Jean, "What is a Pork Barrel?" Global Granary, Lifestyle Magazine and
Common Place Book Online: Something for Everyone, August 19, 2013.
<http://www.globalgranary.org/2013/08/19/what-is-a-pork-barrel/#.UnrnhFNavcw >
(visited October 17, 2013).
8

Jison, John Raymond, "What does the 'pork barrel' scam suggest about the Philippine
government?" International Association for Political Science Students, September 10,
2013. <http://www.iapss.org/ index.php/articles/item/93-what-does-the-pork-barrel-scamsuggest-about-the-philippine-government> (visited October 17, 2013). See also Llanes,
Jonathan, "Pork barrel Knowing the issue," Sunstar Baguio, October 23, 2013.
<http://www.sunstar.com.ph/ baguio/opinion/2013/09/05/llanes-pork- barrel-knowingissue-301598> (visited October 17, 2013).
9

Entitled "AN ACT MAKING APPROPRIATIONS FOR PUBLIC WORKS," approved on

March 10, 1922.
10

"Act 3044, the first pork barrel appropriation, essentially divided public works projects
into two types. The first typenational and other buildings, roads and bridges in
provinces, and lighthouses, buoys and beacons, and necessary mechanical equipment
of lighthousesfell directly under the jurisdiction of the director of public works, for which
his office received appropriations. The second grouppolice barracks, normal school
and other public buildings, and certain types of roads and bridges, artesian wells,
wharves, piers and other shore protection works, and cable, telegraph, and telephone
11

linesis the forerunner of the infamous pork barrel. Although the projects falling under
the second type were to be distributed at the discretion of the secretary of commerce
and communications, he needed prior approval from a joint committee elected by the
Senate and House of Representatives. The nod of either the joint committee or a
committee member it had authorized was also required before the commerce and
communications secretary could transfer unspent portions of one item to another item."
(Emphases supplied) (Chua, Yvonne T. and Cruz, Booma, B., "Pork by any name,"
VERA Files, August 23, 2013. <http://verafiles.org/pork-by-any-name/> [visited October
14, 2013]).
Sec. 3. The sums appropriated in paragraphs (c), (g), (l), and (s) of this Act shall be
available for immediate expenditure by the Director of Public Works, but those
appropriated in the other paragraphs shall be distributed in the discretion of the
Secretary of Commerce and Communications, subject to the approval of a joint
committee elected by the Senate and the House of Representatives. The committee
from each House may authorize one of its members to approve the distribution made by
the Secretary of Commerce and Communications, who with the approval of said joint
committee, or of the authorized members thereof may, for the purposes of said
distribution, transfer unexpended portions of any item of appropriation. (Emphases
supplied)
12

Those Section 1 (c), (g), (l), and (s) of Act 3044 "shall be available for immediate
expenditure by the Director of Public Works."
13

14

Section 3, Act 3044.

Chua, Yvonne T. and Cruz, Booma, B., "Pork by any name," VERA Files, August 23,
2013. <http://verafiles.org/pork-by-any-name/> (visited October 14, 2013).
15

16

Id.

17

Id.

18

Id.

Nograles, Prospero C. and Lagman, Edcel C., House of Representatives of the

Philippines, "Understanding the Pork Barrel," <http://www.congress.gov.ph/download/
14th/pork_barrel.pdf > (visited October 17, 2013).
19

Chua, Yvonne T. and Cruz, Booma, B., "Pork by any name," VERA Files, August 23,
2013. <http://verafiles.org/pork-by-any-name/> (visited October 14, 2013).
20

21

Id.

Priority Development Assistance Fund (PDAF) and Various Infrastructures including

Local Projects (VILP), Special Audits Office Report No. 2012-03, August 14, 2013 (CoA
Report), p. 2.
22

Ilagan, Karol, "Data A Day; CIA, CDF, PDAF? Pork is pork is pork," Moneypolitics, A
Date Journalism Project for the Philippine Center for Investigative Journalism, August 1,
2013 <http://moneypolitics.pcij.org/data-a-day/cia-cdf-pdaf-pork-is-pork-is-pork/> (visited
October 14, 2013).
23

24

Republic Act No. (RA) 6831.

Special Provision 1, Article XLIV, RA 7078 (1991 CDF Article), and Special Provision 1,
Article XLII (1992), RA 7180 (1992 CDF Article) are similarly worded as follows: Special
Provision 1.
25

Use and Release of Funds. The amount herein appropriated shall be used for
infrastructure and other priority projects and activities upon approval by the
President of the Philippines and shall be released directly to the appropriate
implementing agency [(x x x for 1991)], subject to the submission of the required
list of projects and activities. (Emphases supplied)
Chua, Yvonne T. and Cruz, Booma, B., "Pork by any name," VERA Files, August 23,
2013. <http://verafiles.org/pork-by-any-name/> (visited October 14, 2013).
26

27

Id.

28

Special Provision 1, Article XXXVIII, RA 7645 (1993 CDF Article) provides:

Special Provision
1. Use and Release of Funds.
The amount herein appropriated shall be used for infrastructure and other priority
projects and activities as proposed and identified by officials concerned
according to the following allocations: Representatives, P12,500,000 each;
Senators P18,000,000 each; Vice-President, P20,000,000. The fund shall be
automatically released quarterly by way of Advice of Allotment and Notice of
Cash Allocation directly to the assigned implementing agency not later than five
(5) days after the beginning of each quarter upon submission of the list of
projects and activities by the officials concerned. (Emphases supplied)

29

See Special Provision 1, 1993 CDF Article; id.

30

Special Provision 1, Article XLI, RA 7663 (1994 CDF Article) provides:

Special Provisions
1. Use and Release of Funds.
The amount herein appropriated shall be used for infrastructure, purchase of
ambulances and computers and other priority projects and activities, and credit
facilities to qualified beneficiaries as proposed and identified by officials
concerned according to the following allocations: Representatives, P12,500,000

each; Senators P18,000,000 each; Vice-President, P20,000,000; PROVIDED,

That, the said credit facilities shall be constituted as a revolving fund to be
administered by a government financial institution (GFI) as a trust fund for
lending operations. Prior years releases to local government units and national
government agencies for this purpose shall be turned over to the government
financial institution which shall be the sole administrator of credit facilities
released from this fund.
The fund shall be automatically released quarterly by way of Advice of Allotments
and Notice of Cash Allocation directly to the assigned implementing agency not
later than five (5) days after the beginning of each quarter upon submission of
the list of projects and activities by the officials concerned. (Emphases supplied)
31

Special Provision 1, Article XLII, RA 7845 (1995 CDF Article) provides:

Special Provisions
1. Use and Release of Funds.
The amount herein appropriated shall be used for infrastructure, purchase of
equipment and other priority projects and activities as proposed and identified by
officials concerned according to the following allocations:
Representatives, P12,500,000 each; Senators P18,000,000 each; VicePresident, P20,000,000.
The fund shall be automatically released semi-annually by way of Advice of
Allotment and Notice of Cash Allocation directly to the designated implementing
agency not later than five (5) days after the beginning of each semester upon
submission of the list of projects and activities by the officials concerned.
(Emphases supplied)

32

Special Provision 1, Article XLII, RA 8174 (1996 CDF Article) provides:

Special Provisions
1. Use and Release of Fund.
The amount herein appropriated shall be used for infrastructure, purchase of
equipment and other priority projects and activities, including current operating
expenditures, except creation of new plantilla positions, as proposed and
identified by officials concerned according to the following allocations:
Representatives, Twelve Million Five Hundred Thousand Pesos (P12,500,000)
each; Senators, Eighteen Million Pesos (P18,000,000) each; Vice-President,
Twenty Million Pesos (P20,000,000).
The Fund shall be released semi-annually by way of Special Allotment Release
Order and Notice of Cash Allocation directly to the designated implementing
agency not later than thirty (30) days after the beginning of each semester upon
submission of the list of projects and activities by the officials concerned.
(Emphases supplied)

Special Provision 2 of the 1994 CDF Article, Special Provision 2 of the 1995 CDF
Article and Special Provision 2 of the 1996 CDF Article are similarly worded as follows:
33

2. Submission of [Quarterly (1994)/Semi-Annual (1995 and 1996)] Reports. The

Department of Budget and Management shall submit within thirty (30) days after
the end of each [quarter (1994)/semester (1995 and 1996)] a report to the House
Committee on Appropriations and the Senate Committee on Finance on the
releases made from this Fund. The report shall include the listing of the projects,
locations, implementing agencies [stated (order of committees interchanged in
1994 and 1996)] and the endorsing officials. (Emphases supplied)
34

Special Provision 2, Article XLII, RA 8250 (1997 CDF Article) provides:

Special Provisions

G.R. No. 209287

July 1, 2014

MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN;

JUDY M. TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, COCHAIRPERSON, PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP.
LUZ ILAGAN, GABRIELA WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI
ZARATE, BAY AN MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR.,
SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN
PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN; VICTOR
VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD,
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209135
AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,
vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF
BUDGET AND MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A
CITY AS THE SENATE PRESIDENT OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. No. 209136
MANUELITO R. LUNA, Petitioner,
vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT; AND EXECUTIVE SECRETARY
PAQUITO OCHOA, IN HIS OFFICIAL CAPACITY AS ALTER EGO OF THE
PRESIDENT, Respondents.

x-----------------------x
G.R. No. 209155
ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner,
vs.
THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE
SECRETARY OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, Respondents.
x-----------------------x
G.R. No. 209164
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN
FROILAN M. BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B.
ABAD, Respondents.
x-----------------------x
G.R. No. 209260
INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,
vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT (DBM),Respondent.
x-----------------------x
G.R. No. 209442
GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L.
GONZALEZ,Petitioners,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES,
REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF
REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO BELMONTE, JR.; THE
EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA,
JR.; THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY
SECRETARY FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY
SECRETARY CESAR V. PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED
BY ROSALIA V. DE LEON,Respondents.
x-----------------------x
G.R. No. 209517

CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT

EMPLOYEES (COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO
DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF AND AS NATIONAL
PRESIDENT OF THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING
AUTHORITY (CUENHA); MANUEL BACLAGON, FOR HIMSELF AND AS PRESIDENT OF
THE SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES,
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT CENTRAL OFFICE (SWEAPDSWD CO); ANTONIA PASCUAL, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE
DEPARTMENT OF AGRARIAN REFORM EMPLOYEES ASSOCIATION (DAREA); ALBERT
MAGALANG, FOR HIMSELF AND AS PRESIDENT OF THE ENVIRONMENT AND
MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL ARABA, FOR
HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG MGA
KAW ANI NG MMDA (KKKMMDA),Petitioners,
vs.
BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD,
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209569
VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE
L. JIMENEZ,Petitioner,
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY
OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
BERSAMIN, J.:
For resolution are the consolidated petitions assailing the constitutionality of the Disbursement
Acceleration Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of
the Department of Budget and Management (DBM) implementing the DAP.
At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision
of the fundamental law that firmly ordains that "[n]o money shall be paid out of the Treasury
except in pursuance of an appropriation made by law." The tenor and context of the challenges
posed by the petitioners against the DAP indicate that the DAP contravened this provision by
allowing the Executive to allocate public money pooled from programmed and unprogrammed
funds of its various agencies in the guise of the President exercising his constitutional authority
under Section 25(5) of the 1987 Constitution to transfer funds out of savings to augment the
appropriations of offices within the Executive Branch of the Government. But the challenges are
further complicated by the interjection of allegations of transfer of funds to agencies or offices
outside of the Executive.
Antecedents
What has precipitated the controversy?

On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the
Senate of the Philippines to reveal that some Senators, including himself, had been allotted an
additional P50 Million each as "incentive" for voting in favor of the impeachment of Chief Justice
Renato C. Corona.
Responding to Sen. Estradas revelation, Secretary Florencio Abad of the DBM issued a public
statement entitled Abad: Releases to Senators Part of Spending Acceleration
Program, explaining that the funds released to the Senators had been part of the DAP, a
program designed by the DBM to ramp up spending to accelerate economic expansion. He
clarified that the funds had been released to the Senators based on their letters of request for
funding; and that it was not the first time that releases from the DAP had been made because
the DAP had already been instituted in 2011 to ramp up spending after sluggish disbursements
had caused the growth of the gross domestic product (GDP) to slow down. He explained that
the funds under the DAP were usually taken from (1) unreleased appropriations under
Personnel Services; (2) unprogrammed funds; (3) carry-over appropriations unreleased from
the previous year; and (4) budgets for slow-moving items or projects that had been realigned to
support faster-disbursing projects.
1

The DBM soon came out to claim in its website that the DAP releases had been sourced from
savings generated by the Government, and from unprogrammed funds; and that the savings
had been derived from (1) the pooling of unreleased appropriations, like unreleased Personnel
Services appropriations that would lapse at the end of the year, unreleased appropriations of
slow-moving projects and discontinued projects per zero based budgeting findings; and (2) the
withdrawal of unobligated allotments also for slow-moving programs and projects that had been
earlier released to the agencies of the National Government.
3

The DBM listed the following as the legal bases for the DAPs use of savings, namely: (1)
Section 25(5), Article VI of the 1987 Constitution, which granted to the President the authority to
augment an item for his office in the general appropriations law; (2) Section 49 (Authority to Use
Savings for Certain Purposes) and Section 38 (Suspension of Expenditure Appropriations),
Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative Code of 1987); and (3) the
General Appropriations Acts (GAAs) of 2011, 2012 and 2013, particularly their provisions on the
(a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of
savings.
6

As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special
provisions on unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.
The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to
the consciousness of the Nation for the first time, and made this present controversy inevitable.
That the issues against the DAP came at a time when the Nation was still seething in anger
over Congressional pork barrel "an appropriation of government spending meant for localized
projects and secured solely or primarily to bring money to a representatives district" excited
the Nation as heatedly as the pork barrel controversy.
7

Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP
were filed within days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013;
G.R. No. 209136 (Luna), on October 7, 2013; G.R. No. 209155 (Villegas), on October 16, 2013;
G.R. No. 209164 (PHILCONSA), on October 8, 2013; G.R. No. 209260 (IBP), on October 16,
2013; G.R. No. 209287 (Araullo), on October 17, 2013; G.R. No. 209442 (Belgica), on October
8

29, 2013; G.R. No. 209517 (COURAGE), on November6, 2013; and G.R. No. 209569 (VACC),
on November 8, 2013.
In G.R. No. 209287 (Araullo), the petitioners brought to the Courts attention NBC No. 541
(Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments
as of June 30, 2012), alleging that NBC No. 541, which was issued to implement the DAP,
directed the withdrawal of unobligated allotments as of June 30, 2012 of government agencies
and offices with low levels of obligations, both for continuing and current allotments.
In due time, the respondents filed their Consolidated Comment through the Office of the
Solicitor General (OSG).
The Court directed the holding of oral arguments on the significant issues raised and joined.
Issues
Under the Advisory issued on November 14, 2013, the presentations of the parties during the
oral arguments were limited to the following, to wit:
Procedural Issue:
A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the
constitutionality and validity of the Disbursement Acceleration Program (DAP), National Budget
Circular (NBC) No. 541, and all other executive issuances allegedly implementing the DAP.
Subsumed in this issue are whether there is a controversy ripe for judicial determination, and
the standing of petitioners.
Substantive Issues:
B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides:
"No money shall be paid out of the Treasury except in pursuance of an appropriation made by
law."
C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly
implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:
(a)They treat the unreleased appropriations and unobligated allotments
withdrawn from government agencies as "savings" as the term is used in Sec.
25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013;
(b)They authorize the disbursement of funds for projects or programs not
provided in the GAAs for the Executive Department; and
(c)They "augment" discretionary lump sum appropriations in the GAAs.
D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks
and balances, and (3) the principle of public accountability enshrined in the 1987 Constitution
considering that it authorizes the release of funds upon the request of legislators.

E. Whether or not factual and legal justification exists to issue a temporary restraining order to
restrain the implementation of the DAP, NBC No. 541, and all other executive issuances
allegedly implementing the DAP.
In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to
support its argument regarding the Presidents power to spend. During the oral arguments, the
propriety of releasing unprogrammed funds to support projects under the DAP was considerably
discussed. The petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) dwelled
on unprogrammed funds in their respective memoranda. Hence, an additional issue for the oral
arguments is stated as follows:
F. Whether or not the release of unprogrammed funds under the DAP was in accord with the
GAAs.
During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to submit
a list of savings brought under the DAP that had been sourced from (a) completed programs; (b)
discontinued or abandoned programs; (c) unpaid appropriations for compensation; (d) a certified
copy of the Presidents directive dated June 27, 2012 referred to in NBC No. 541; and (e) all
circulars or orders issued in relation to the DAP.
9

In compliance, the OSG submitted several documents, as follows:

(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus
Authority to Consolidate Savings/Unutilized Balances and their Realignment);
10

(2) Circulars and orders, which the respondents identified as related to the DAP, namely:
a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for
FY 2011);
b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds
for FY 2012);
c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure
Withdrawal of Agencies Unobligated Allotments as of June 30, 2012);
d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for
FY 2013);
e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment
of Commitments/Obligations of the National Government);
f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised
Guidelines on the Submission of Quarterly Accountability Reports on
Appropriations, Allotments, Obligations and Disbursements);
g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release
System in the Government).

(3) A breakdown of the sources of savings, including savings from discontinued projects
and unpaid appropriations for compensation from 2011 to 2013
On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014
directing the respondents to submit the documents not yet submitted in compliance with the
directives of the Court or its Members, submitted several evidence packets to aid the Court in
understanding the factual bases of the DAP, to wit:
(1) First Evidence Packet containing seven memoranda issued by the DBM through
Sec. Abad, inclusive of annexes, listing in detail the 116 DAP identified projects
approved and duly signed by the President, as follows:
11

a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed
Disbursement Acceleration Program (Projects and Sources of Funds);
b. Memorandum for the President dated December 12, 2011 (Omnibus Authority
to Consolidate Savings/Unutilized Balances and its Realignment);
c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment);
d. Memorandum for the President dated September 4, 2012 (Release of funds
for other priority projects and expenditures of the Government);
e. Memorandum for the President dated December 19, 2012 (Proposed Priority
Projects and Expenditures of the Government);
f. Memorandum for the President dated May 20, 2013 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment to Fund the
Quarterly Disbursement Acceleration Program); and
g. Memorandum for the President dated September 25, 2013 (Funding for the
Task Force Pablo Rehabilitation Plan).
(2) Second Evidence Packet consisting of 15 applications of the DAP, with their
corresponding Special Allotment Release Orders (SAROs) and appropriation covers;
12

(3) Third Evidence Packet containing a list and descriptions of 12 projects under the
DAP;
13

(4) Fourth Evidence Packet identifying the DAP-related portions of the Annual
Financial Report (AFR) of the Commission on Audit for 2011 and 2012;
14

(5) Fifth Evidence Packet containing a letter of Department of Transportation and

Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the
withdrawal of funds from his agency, inclusive of annexes; and
15

(6) Sixth Evidence Packet a print-out of the Solicitor Generals visual presentation for
the January 28, 2014 oral arguments.
16

On February 5, 2014, the OSG forwarded the Seventh Evidence Packet, which listed the
sources of funds brought under the DAP, the uses of such funds per project or activity pursuant
to DAP, and the legal bases thereof.
17

18

On February 14, 2014, the OSG submitted another set of documents in further compliance with
the Resolution dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the
revenue collections exceeded the original revenue targets for the years 2011, 2012 and 2013,
including collections arising from sources not considered in the original revenue targets, which
certifications were required for the release of the unprogrammed funds as provided in Special
Provision No. 1 of Article XLV, Article XVI, and Article XLV of the 2011, 2012 and 2013 GAAs;
and (2) A report on releases of savings of the Executive Department for the use of the
Constitutional Commissions and other branches of the Government, as well as the fund
releases to the Senate and the Commission on Elections (COMELEC).
RULING
I.
Procedural Issue:
a) The petitions under Rule 65 are proper remedies
All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the
issuance of writs of preliminary prohibitory injunction or temporary restraining orders. More
specifically, the nature of the petitions is individually set forth hereunder, to wit:
G.R. No. 209135 (Syjuco)

Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna)

Certiorariand Prohibition

G.R. No. 209155 (Villegas)

Certiorariand Prohibition

G.R. No. 209164 (PHILCONSA)

Certiorariand Prohibition

G.R. No. 209260 (IBP)

Prohibition

G.R. No. 209287 (Araullo)

Certiorariand Prohibition

G.R. No. 209442 (Belgica)

Certiorari

G.R. No. 209517 (COURAGE)

Certiorari and Prohibition

G.R. No. 209569 (VACC)

Certiorari and Prohibition

The respondents submit that there is no actual controversy that is ripe for adjudication in the
absence of adverse claims between the parties; that the petitioners lacked legal standing to
sue because no allegations were made to the effect that they had suffered any injury as a result
of the adoption of the DAP and issuance of NBC No. 541; that their being taxpayers did not
immediately confer upon the petitioners the legal standing to sue considering that the adoption
and implementation of the DAP and the issuance of NBC No. 541 were not in the exercise of
19

the taxing or spending power of Congress; and that even if the petitioners had suffered injury,
there were plain, speedy and adequate remedies in the ordinary course of law available to
them, like assailing the regularity of the DAP and related issuances before the Commission on
Audit (COA) or in the trial courts.
20

21

The respondents aver that the special civil actions of certiorari and prohibition are not proper
actions for directly assailing the constitutionality and validity of the DAP, NBC No. 541, and the
other executive issuances implementing the DAP.
22

In their memorandum, the respondents further contend that there is no authorized proceeding
under the Constitution and the Rules of Court for questioning the validity of any law unless there
is an actual case or controversy the resolution of which requires the determination of the
constitutional question; that the jurisdiction of the Court is largely appellate; that for a court of
law to pass upon the constitutionality of a law or any act of the Government when there is no
case or controversy is for that court to set itself up as a reviewer of the acts of Congress and of
the President in violation of the principle of separation of powers; and that, in the absence of a
pending case or controversy involving the DAP and NBC No. 541, any decision herein could
amount to a mere advisory opinion that no court can validly render.
23

The respondents argue that it is the application of the DAP to actual situations that the
petitioners can question either in the trial courts or in the COA; that if the petitioners are
dissatisfied with the ruling either of the trial courts or of the COA, they can appeal the decision
of the trial courts by petition for review on certiorari, or assail the decision or final order of the
COA by special civil action for certiorari under Rule 64 of the Rules of Court.
24

The respondents arguments and submissions on the procedural issue are bereft of merit.
Section 1, Article VIII of the 1987 Constitution expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
Thus, the Constitution vests judicial power in the Court and in such lower courts as may be
established by law. In creating a lower court, Congress concomitantly determines the jurisdiction
of that court, and that court, upon its creation, becomes by operation of the Constitution one of
the repositories of judicial power. However, only the Court is a constitutionally created court,
the rest being created by Congress in its exercise of the legislative power.
25

The Constitution states that judicial power includes the duty of the courts of justice not only "to
settle actual controversies involving rights which are legally demandable and enforceable" but
also "to determine whether or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or instrumentality of the Government." It has
thereby expanded the concept of judicial power, which up to then was confined to its traditional
ambit of settling actual controversies involving rights that were legally demandable and
enforceable.

The background and rationale of the expansion of judicial power under the 1987 Constitution
were laid out during the deliberations of the 1986 Constitutional Commission by Commissioner
Roberto R. Concepcion (a former Chief Justice of the Philippines) in his sponsorship of the
proposed provisions on the Judiciary, where he said:
The Supreme Court, like all other courts, has one main function: to settle actual controversies
involving conflicts of rights which are demandable and enforceable. There are rights which are
guaranteed by law but cannot be enforced by a judicial party. In a decided case, a husband
complained that his wife was unwilling to perform her duties as a wife. The Court said: "We can
tell your wife what her duties as such are and that she is bound to comply with them, but we
cannot force her physically to discharge her main marital duty to her husband. There are some
rights guaranteed by law, but they are so personal that to enforce them by actual compulsion
would be highly derogatory to human dignity." This is why the first part of the second paragraph
of Section 1 provides that: Judicial power includes the duty of courts to settle actual
controversies involving rights which are legally demandable or enforceable
The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a
presidential system of government, the Supreme Court has, also, another important function.
The powers of government are generally considered divided into three branches: the
Legislative, the Executive and the Judiciary. Each one is supreme within its own sphere and
independent of the others. Because of that supremacy power to determine whether a given law
is valid or not is vested in courts of justice.
Briefly stated, courts of justice determine the limits of power of the agencies and offices of the
government as well as those of its officers. In other words, the judiciary is the final arbiter on the
question whether or not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion
amounting to excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a
duty to pass judgmenton matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters constitute
a political question. (Bold emphasis supplied)
26

Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of

judicial power in the following manner:
MR. NOLLEDO. x x x
The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice
to settle actual controversies" The term "actual controversies" according to the Commissioner
should refer to questions which are political in nature and, therefore, the courts should not
refuse to decide those political questions. But do I understand it right that this is restrictive or
only an example? I know there are cases which are not actual yet the court can assume
jurisdiction. An example is the petition for declaratory relief.
May I ask the Commissioners opinion about that?
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments.

MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested
in the Supreme Court alone but also in other lower courts as may be created by law.
MR. CONCEPCION. Yes.
MR. NOLLEDO. And so, is this only an example?
MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions
with jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a
question as to whether the government had authority or had abused its authority to the extent of
lacking jurisdiction or excess of jurisdiction, that is not a political question. Therefore, the court
has the duty to decide.
27

Our previous Constitutions equally recognized the extent of the power of judicial review and the
great responsibility of the Judiciary in maintaining the allocation of powers among the three
great branches of Government. Speaking for the Court in Angara v. Electoral
Commission, Justice Jose P. Laurel intoned:
28

x x x In times of social disquietude or political excitement, the great landmarks of the

Constitution are apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the
judicial department is the only constitutional organ which can be called upon to determine the
proper allocation of powers between the several department and among the integral or
constituent units thereof.
xxxx
The Constitution is a definition of the powers of government. Who is to determine the nature,
scope and extent of such powers? The Constitution itself has provided for the instrumentality of
the judiciary as the rational way. And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other department; it does not in reality
nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is involved in what is termed
"judicial supremacy" which properly is the power of judicial review under the Constitution. x x x
29

What are the remedies by which the grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government may be determined
under the Constitution?
The present Rules of Court uses two special civil actions for determining and correcting grave
abuse of discretion amounting to lack or excess of jurisdiction. These are the special civil
actions for certiorari and prohibition, and both are governed by Rule 65. A similar remedy of
certiorari exists under Rule 64, but the remedy is expressly applicable only to the judgments and
final orders or resolutions of the Commission on Elections and the Commission on Audit.

The ordinary nature and function of the writ of certiorari in our present system are aptly
explained in Delos Santos v. Metropolitan Bank and Trust Company:
30

In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued
out of Chancery, or the Kings Bench, commanding agents or officers of the inferior courts to
return the record of a cause pending before them, so as to give the party more sure and speedy
justice, for the writ would enable the superior court to determine from an inspection of the record
whether the inferior courts judgment was rendered without authority. The errors were of such a
nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom
no other remedy was available. If the inferior court acted without authority, the record was then
revised and corrected in matters of law. The writ of certiorari was limited to cases in which the
inferior court was said to be exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or quasi-judicial acts.
The concept of the remedy of certiorari in our judicial system remains much the same as it has
been in the common law. In this jurisdiction, however, the exercise of the power to issue the writ
of certiorari is largely regulated by laying down the instances or situations in the Rules of Court
in which a superior court may issue the writ of certiorari to an inferior court or officer. Section 1,
Rule 65 of the Rules of Court compellingly provides the requirements for that purpose, viz:
xxxx
The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes
the commission of grave abuse of discretion amounting to lack of jurisdiction. In this regard,
mere abuse of discretion is not enough to warrant the issuance of the writ. The abuse of
discretion must be grave, which means either that the judicial or quasi-judicial power was
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, or that
the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform
the duty enjoined or to act in contemplation of law, such as when such judge, tribunal or board
exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be
equivalent to lack of jurisdiction.
31

Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be
distinguished from prohibition by the fact that it is a corrective remedy used for the reexamination of some action of an inferior tribunal, and is directed to the cause or proceeding in
the lower court and not to the court itself, while prohibition is a preventative remedy issuing to
restrain future action, and is directed to the court itself. The Court expounded on the nature
and function of the writ of prohibition in Holy Spirit Homeowners Association, Inc. v. Defensor:
32

33

A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of
a quasi-legislative function. Prohibition is an extraordinary writ directed against any tribunal,
corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial
functions, ordering said entity or person to desist from further proceedings when said
proceedings are without or in excess of said entitys or persons jurisdiction, or are accompanied
with grave abuse of discretion, and there is no appeal or any other plain, speedy and adequate
remedy in the ordinary course of law. Prohibition lies against judicial or ministerial functions, but
not against legislative or quasi-legislative functions. Generally, the purpose of a writ of
prohibition is to keep a lower court within the limits of its jurisdiction in order to maintain the
administration of justice in orderly channels. Prohibition is the proper remedy to afford relief
against usurpation of jurisdiction or power by an inferior court, or when, in the exercise of

jurisdiction in handling matters clearly within its cognizance the inferior court transgresses the
bounds prescribed to it by the law, or where there is no adequate remedy available in the
ordinary course of law by which such relief can be obtained. Where the principal relief sought is
to invalidate an IRR, petitioners remedy is an ordinary action for its nullification, an action which
properly falls under the jurisdiction of the Regional Trial Court. In any case, petitioners
allegation that "respondents are performing or threatening to perform functions without or in
excess of their jurisdiction" may appropriately be enjoined by the trial court through a writ of
injunction or a temporary restraining order.
With respect to the Court, however, the remedies of certiorari and prohibition are necessarily
broader in scope and reach, and the writ of certiorari or prohibition may be issued to correct
errors of jurisdiction committed not only by a tribunal, corporation, board or officer exercising
judicial, quasi-judicial or ministerial functions but also to set right, undo and restrain any act of
grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or
instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or
ministerial functions. This application is expressly authorized by the text of the second
paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional
issues and to review and/or prohibit or nullify the acts of legislative and executive officials.
34

Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of
grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or
instrumentality of the Government, the Court is not at all precluded from making the inquiry
provided the challenge was properly brought by interested or affected parties. The Court has
been thereby entrusted expressly or by necessary implication with both the duty and the
obligation of determining, in appropriate cases, the validity of any assailed legislative or
executive action. This entrustment is consistent with the republican system of checks and
balances.
35

Following our recent dispositions concerning the congressional pork barrel, the Court has
become more alert to discharge its constitutional duty. We will not now refrain from exercising
our expanded judicial power in order to review and determine, with authority, the limitations on
the Chief Executives spending power.
b) Requisites for the exercise of the
power of judicial review were
complied with
The requisites for the exercise of the power of judicial review are the following, namely: (1) there
must bean actual case or justiciable controversy before the Court; (2) the question before the
Court must be ripe for adjudication; (3) the person challenging the act must be a proper party;
and (4) the issue of constitutionality must be raised at the earliest opportunity and must be the
very litis mota of the case.
36

The first requisite demands that there be an actual case calling for the exercise of judicial power
by the Court. An actual case or controversy, in the words of Belgica v. Executive Secretary
Ochoa:
37

38

x x x is one which involves a conflict of legal rights, an assertion of opposite legal claims,
susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or
dispute. In other words, "[t]here must be a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudence." Related to the requirement of an
actual case or controversy is the requirement of "ripeness," meaning that the questions raised
for constitutional scrutiny are already ripe for adjudication. "A question is ripe for adjudication
when the act being challenged has had a direct adverse effect on the individual challenging it. It
is a prerequisite that something had then been accomplished or performed by either branch
before a court may come into the picture, and the petitioner must allege the existence of an
immediate or threatened injury to itself as a result of the challenged action." "Withal, courts will
decline to pass upon constitutional issues through advisory opinions, bereft as they are of
authority to resolve hypothetical or moot questions."
An actual and justiciable controversy exists in these consolidated cases. The incompatibility of
the perspectives of the parties on the constitutionality of the DAP and its relevant issuances
satisfy the requirement for a conflict between legal rights. The issues being raised herein meet
the requisite ripeness considering that the challenged executive acts were already being
implemented by the DBM, and there are averments by the petitioners that such implementation
was repugnant to the letter and spirit of the Constitution. Moreover, the implementation of the
DAP entailed the allocation and expenditure of huge sums of public funds. The fact that public
funds have been allocated, disbursed or utilized by reason or on account of such challenged
executive acts gave rise, therefore, to an actual controversy that is ripe for adjudication by the
Court.
It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the DAP as
a program had been meanwhile discontinued because it had fully served its purpose, saying: "In
conclusion, Your Honors, may I inform the Court that because the DAP has already fully served
its purpose, the Administrations economic managers have recommended its termination to the
President. x x x."
39

The Solicitor General then quickly confirmed the termination of the DAP as a program, and
urged that its termination had already mooted the challenges to the DAPs constitutionality, viz:
DAP as a program, no longer exists, thereby mooting these present cases brought to challenge
its constitutionality. Any constitutional challenge should no longer be at the level of the program,
which is now extinct, but at the level of its prior applications or the specific disbursements under
the now defunct policy. We challenge the petitioners to pick and choose which among the 116
DAP projects they wish to nullify, the full details we will have provided by February 5. We urge
this Court to be cautious in limiting the constitutional authority of the President and the
Legislature to respond to the dynamic needs of the country and the evolving demands of
governance, lest we end up straight jacketing our elected representatives in ways not consistent
with our constitutional structure and democratic principles.
40

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value.
41

The Court cannot agree that the termination of the DAP as a program was a supervening event
that effectively mooted these consolidated cases. Verily, the Court had in the past exercised its
power of judicial review despite the cases being rendered moot and academic by supervening
events, like: (1) when there was a grave violation of the Constitution; (2) when the case involved

a situation of exceptional character and was of paramount public interest; (3) when the
constitutional issue raised required the formulation of controlling principles to guide the Bench,
the Bar and the public; and (4) when the case was capable of repetition yet evading review.
42

Assuming that the petitioners several submissions against the DAP were ultimately sustained
by the Court here, these cases would definitely come under all the exceptions. Hence, the Court
should not abstain from exercising its power of judicial review.
Did the petitioners have the legal standing to sue?
Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance
in a court of justice on a given question." The concept of legal standing, or locus standi, was
particularly discussed in De Castro v. Judicial and Bar Council, where the Court said:
43

44

In public or constitutional litigations, the Court is often burdened with the determination of the
locus standi of the petitioners due to the ever-present need to regulate the invocation of the
intervention of the Court to correct any official action or policy in order to avoid obstructing the
efficient functioning of public officials and offices involved in public service. It is required,
therefore, that the petitioner must have a personal stake in the outcome of the controversy, for,
as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a personal stake in
the outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of difficult
constitutional questions." Accordingly, it has been held that the interest of a person assailing the
constitutionality of a statute must be direct and personal. He must be able to show, not only that
the law or any government act is invalid, but also that he sustained or is in imminent danger of
sustaining some direct injury as a result of its enforcement, and not merely that he suffers
thereby in some indefinite way. It must appear that the person complaining has been or is about
to be denied some right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for
determining whether a petitioner in a public action had locus standi. There, the Court held that
the person who would assail the validity of a statute must have "a personal and substantial
interest in the case such that he has sustained, or will sustain direct injury as a result." Vera was
followed in Custodio v. President of the Senate, Manila Race Horse Trainers Association v. De
la Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public
Works.
Yet, the Court has also held that the requirement of locus standi, being a mere procedural
technicality, can be waived by the Court in the exercise of its discretion. For instance, in 1949, in
Araneta v. Dinglasan, the Court liberalized the approach when the cases had "transcendental
importance." Some notable controversies whose petitioners did not pass the direct injury test
were allowed to be treated in the same way as in Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the
issues raised by the petition due to their "far reaching implications," even if the petitioner had no
personality to file the suit. The liberal approach of Aquino v. Commission on Elections has been
adopted in several notable cases, permitting ordinary citizens, legislators, and civic

organizations to bring their suits involving the constitutionality or validity of laws, regulations,
and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly illegal or
unconstitutional executive or legislative action rests on the theory that the petitioner represents
the public in general. Although such petitioner may not be as adversely affected by the action
complained against as are others, it is enough that he sufficiently demonstrates in his petition
that he is entitled to protection or relief from the Court in the vindication of a public right.
Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus
standi. That is not surprising, for even if the issue may appear to concern only the public in
general, such capacities nonetheless equip the petitioner with adequate interest to sue. In David
v. Macapagal-Arroyo, the Court aptly explains why:
Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public
actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the
plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the
former, the plaintiff is affected by the expenditure of public funds, while in the latter, he is but the
mere instrument of the public concern. As held by the New York Supreme Court in People ex rel
Case v. Collins: "In matter of mere public right, howeverthe people are the real partiesIt is at
least the right, if not the duty, of every citizen to interfere and see that a public offence be
properly pursued and punished, and that a public grievance be remedied." With respect to
taxpayers suits, Terr v. Jordan held that "the right of a citizen and a taxpayer to maintain an
action in courts to restrain the unlawful use of public funds to his injury cannot be denied."
45

The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co.,
Inc. that "[s]tanding is a peculiar concept in constitutional law because in some cases, suits are
not brought by parties who have been personally injured by the operation of a law or any other
government act but by concerned citizens, taxpayers or voters who actually sue in the public
interest."
46

Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their
capacities as taxpayers who, by averring that the issuance and implementation of the DAP and
its relevant issuances involved the illegal disbursements of public funds, have an interest in
preventing the further dissipation of public funds. The petitioners in G.R. No. 209287 (Araullo)
and G.R. No. 209442 (Belgica) also assert their right as citizens to sue for the enforcement and
observance of the constitutional limitations on the political branches of the Government.
47

On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to
bring cases upon constitutional issues. Luna, the petitioner in G.R. No. 209136, cites his
additional capacity as a lawyer. The IBP, the petitioner in G.R. No. 209260, stands by "its
avowed duty to work for the rule of law and of paramount importance of the question in this
action, not to mention its civic duty as the official association of all lawyers in this country."
48

49

Under their respective circumstances, each of the petitioners has established sufficient interest
in the outcome of the controversy as to confer locus standi on each of them.
In addition, considering that the issues center on the extent of the power of the Chief Executive
to disburse and allocate public funds, whether appropriated by Congress or not, these cases
pose issues that are of transcendental importance to the entire Nation, the petitioners included.

As such, the determination of such important issues call for the Courts exercise of its broad and
wise discretion "to waive the requirement and so remove the impediment to its addressing and
resolving the serious constitutional questions raised."
50

II.
Substantive Issues
1.
Overview of the Budget System
An understanding of the Budget System of the Philippines will aid the Court in properly
appreciating and justly resolving the substantive issues.
a) Origin of the Budget System
The term "budget" originated from the Middle English word bouget that had derived from the
Latin word bulga (which means bag or purse).
51

In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined "budget" as the
financial program of the National Government for a designated fiscal year, consisting of the
statements of estimated receipts and expenditures for the fiscal year for which it was intended
to be effective based on the results of operations during the preceding fiscal years. The term
was given a different meaning under Republic Act No. 992 (Revised Budget Act) by describing
the budget as the delineation of the services and products, or benefits that would accrue to the
public together with the estimated unit cost of each type of service, product or benefit. For a
forthright definition, budget should simply be identified as the financial plan of the
Government, or "the master plan of government."
52

53

54

The concept of budgeting has not been the product of recent economies. In reality, financing
public goals and activities was an idea that existed from the creation of the State. To protect the
people, the territory and sovereignty of the State, its government must perform vital functions
that required public expenditures. At the beginning, enormous public expenditures were spent
for war activities, preservation of peace and order, security, administration of justice, religion,
and supply of limited goods and services. In order to finance those expenditures, the State
raised revenues through taxes and impositions. Thus, budgeting became necessary to allocate
public revenues for specific government functions. The States budgeting mechanism
eventually developed through the years with the growing functions of its government and
changes in its market economy.
55

56

57

58

The Philippine Budget System has been greatly influenced by western public financial
institutions. This is because of the countrys past as a colony successively of Spain and the
United States for a long period of time. Many aspects of the countrys public fiscal
administration, including its Budget System, have been naturally patterned after the practices
and experiences of the western public financial institutions. At any rate, the Philippine Budget
System is presently guided by two principal objectives that are vital to the development of a
progressive democratic government, namely: (1) to carry on all government activities under a
comprehensive fiscal plan developed, authorized and executed in accordance with the
Constitution, prevailing statutes and the principles of sound public management; and (2) to
provide for the periodic review and disclosure of the budgetary status of the Government in such
detail so that persons entrusted by law with the responsibility as well as the enlightened

citizenry can determine the adequacy of the budget actions taken, authorized or proposed, as
well as the true financial position of the Government.
59

b) Evolution of the Philippine Budget System

The budget process in the Philippines evolved from the early years of the American Regime up
to the passage of the Jones Law in 1916. A Budget Office was created within the Department of
Finance by the Jones Law to discharge the budgeting function, and was given the responsibility
to assist in the preparation of an executive budget for submission to the Philippine Legislature.
60

As early as under the 1935 Constitution, a budget policy and a budget procedure were
established, and subsequently strengthened through the enactment of laws and executive
acts. EO No. 25, issued by President Manuel L. Quezon on April 25, 1936, created the Budget
Commission to serve as the agency that carried out the Presidents responsibility of preparing
the budget. CA No. 246, the first budget law, went into effect on January 1, 1938 and
established the Philippine budget process. The law also provided a line-item budget as the
framework of the Governments budgeting system, with emphasis on the observance of a
"balanced budget" to tie up proposed expenditures with existing revenues.
61

62

63

CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act
(RA) No. 992,whereby Congress introduced performance-budgeting to give importance to
functions, projects and activities in terms of expected results. RA No. 992 also enhanced the
role of the Budget Commission as the fiscal arm of the Government.
64

65

The 1973 Constitution and various presidential decrees directed a series of budgetary reforms
that culminated in the enactment of PD No. 1177 that President Marcos issued on July30, 1977,
and of PD No. 1405, issued on June 11, 1978. The latter decree converted the Budget
Commission into the Ministry of Budget, and gave its head the rank of a Cabinet member.
The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under
EO No. 711. The OBM became the DBM pursuant to EO No. 292 effective on November 24,
1989.
c) The Philippine Budget Cycle

66

Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2)
Budget Legislation; (3) Budget Execution; and (4) Accountability. Each phase is distinctly
separate from the others but they overlap in the implementation of the budget during the budget
year.
c.1.Budget Preparation

67

The budget preparation phase is commenced through the issuance of a Budget Call by the
DBM. The Budget Call contains budget parameters earlier set by the Development Budget
Coordination Committee (DBCC) as well as policy guidelines and procedures to aid government
agencies in the preparation and submission of their budget proposals. The Budget Call is of two
kinds, namely: (1) a National Budget Call, which is addressed to all agencies, including state
universities and colleges; and (2) a Corporate Budget Call, which is addressed to all
government-owned and -controlled corporations (GOCCs) and government financial institutions
(GFIs).

Following the issuance of the Budget Call, the various departments and agencies submit their
respective Agency Budget Proposals to the DBM. To boost citizen participation, the current
administration has tasked the various departments and agencies to partner with civil society
organizations and other citizen-stakeholders in the preparation of the Agency Budget Proposals,
which proposals are then presented before a technical panel of the DBM in scheduled budget
hearings wherein the various departments and agencies are given the opportunity to defend
their budget proposals. DBM bureaus thereafter review the Agency Budget Proposals and come
up with recommendations for the Executive Review Board, comprised by the DBM Secretary
and the DBMs senior officials. The discussions of the Executive Review Board cover the
prioritization of programs and their corresponding support vis--vis the priority agenda of the
National Government, and their implementation.
The DBM next consolidates the recommended agency budgets into the National Expenditure
Program (NEP)and a Budget of Expenditures and Sources of Financing (BESF). The NEP
provides the details of spending for each department and agency by program, activity or project
(PAP), and is submitted in the form of a proposed GAA. The Details of Selected Programs and
Projects is the more detailed disaggregation of key PAPs in the NEP, especially those in line
with the National Governments development plan. The Staffing Summary provides the staffing
complement of each department and agency, including the number of positions and amounts
allocated.
The NEP and BESF are thereafter presented by the DBM and the DBCC to the President and
the Cabinet for further refinements or reprioritization. Once the NEP and the BESF are
approved by the President and the Cabinet, the DBM prepares the budget documents for
submission to Congress. The budget documents consist of: (1) the Presidents Budget
Message, through which the President explains the policy framework and budget priorities; (2)
the BESF, mandated by Section 22, Article VII of the Constitution, which contains the
macroeconomic assumptions, public sector context, breakdown of the expenditures and funding
sources for the fiscal year and the two previous years; and (3) the NEP.
68

Public or government expenditures are generally classified into two categories, specifically: (1)
capital expenditures or outlays; and (2) current operating expenditures. Capital expenditures are
the expenses whose usefulness lasts for more than one year, and which add to the assets of
the Government, including investments in the capital of government-owned or controlled
corporations and their subsidiaries. Current operating expenditures are the purchases of goods
and services in current consumption the benefit of which does not extend beyond the fiscal
year. The two components of current expenditures are those for personal services (PS), and
those for maintenance and other operating expenses(MOOE).
69

70

Public expenditures are also broadly grouped according to their functions into: (1) economic
development expenditures (i.e., expenditures on agriculture and natural resources,
transportation and communications, commerce and industry, and other economic development
efforts); (2) social services or social development expenditures (i.e., government outlay on
education, public health and medicare, labor and welfare and others); (3) general government
or general public services expenditures (i.e., expenditures for the general government,
legislative services, the administration of justice, and for pensions and gratuities); (4) national
defense expenditures (i.e., sub-divided into national security expenditures and expenditures for
the maintenance of peace and order); and (5) public debt.
71

72

73

74

75

Public expenditures may further be classified according to the nature of funds, i.e., general fund,
special fund or bond fund.
76

On the other hand, public revenues complement public expenditures and cover all income or
receipts of the government treasury used to support government expenditures.
77

Classical economist Adam Smith categorized public revenues based on two principal sources,
stating: "The revenue which must defraythe necessary expenses of government may be
drawn either, first from some fund which peculiarly belongs to the sovereign or commonwealth,
and which is independent of the revenue of the people, or, secondly, from the revenue of the
people." Adam Smiths classification relied on the two aspects of the nature of the State: first,
the State as a juristic person with an artificial personality, and, second, the State as a sovereign
or entity possessing supreme power. Under the first aspect, the State could hold property and
engage in trade, thereby deriving what is called its quasi private income or revenues, and which
"peculiarly belonged to the sovereign." Under the second aspect, the State could collect by
imposing charges on the revenues of its subjects in the form of taxes.
78

79

In the Philippines, public revenues are generally derived from the following sources, to wit: (1)
tax revenues(i.e., compulsory contributions to finance government activities); 80 (2) capital
revenues(i.e., proceeds from sales of fixed capital assets or scrap thereof and public domain,
and gains on such sales like sale of public lands, buildings and other structures, equipment, and
other properties recorded as fixed assets); 81 (3) grants(i.e., voluntary contributions and aids
given to the Government for its operation on specific purposes in the form of money and/or
materials, and do not require any monetary commitment on the part of the recipient); (4)
extraordinary income(i.e., repayment of loans and advances made by government corporations
and local governments and the receipts and shares in income of the Banko Sentral ng Pilipinas,
and other receipts); and (5) public borrowings(i.e., proceeds of repayable obligations generally
with interest from domestic and foreign creditors of the Government in general, including the
National Government and its political subdivisions).
82

83

84

More specifically, public revenues are classified as follows:

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

General Income
Subsidy Income from National
Government
Subsidy from Central Office
Subsidy from Regional
Office/Staff Bureaus
Income from Government
Services
Income from Government
Business Operations
Sales Revenue
Rent Income
Insurance Income
Dividend Income
Interest Income

85

Specific Income
1.
2.
3.
4.

Income Taxes
Property Taxes
Taxes on Goods and Services
Taxes on International Trade and
Transactions
5. Other Taxes 6.Fines and Penalties-Tax Revenue
7. Other Specific Income

11.
12.
13.
14.
15.

Sale of Confiscated Goods and

Properties
Foreign Exchange (FOREX)
Gains
Miscellaneous Operating and
Service Income
Fines and Penalties-Government
Services and Business Operations
Income from Grants and
Donations

c.2. Budget Legislation

86

The Budget Legislation Phase covers the period commencing from the time Congress receives
the Presidents Budget, which is inclusive of the NEPand the BESF, up to the Presidents
approval of the GAA. This phase is also known as the Budget Authorization Phase, and involves
the significant participation of the Legislative through its deliberations.
Initially, the Presidents Budget is assigned to the House of Representatives Appropriations
Committee on First Reading. The Appropriations Committee and its various Sub-Committees
schedule and conduct budget hearings to examine the PAPs of the departments and agencies.
Thereafter, the House of Representatives drafts the General Appropriations Bill (GAB).
87

The GABis sponsored, presented and defended by the House of Representatives

Appropriations Committee and Sub-Committees in plenary session. As with other laws, the GAB
is approved on Third Reading before the House of Representatives version is transmitted to the
Senate.
88

After transmission, the Senate conducts its own committee hearings on the GAB. To expedite
proceedings, the Senate may conduct its committee hearings simultaneously with the House of
Representatives deliberations. The Senates Finance Committee and its Sub-Committees may
submit the proposed amendments to the GAB to the plenary of the Senate only after the House
of Representatives has formally transmitted its version to the Senate. The Senate version of the
GAB is likewise approved on Third Reading.
89

The House of Representatives and the Senate then constitute a panel each to sit in the
Bicameral Conference Committee for the purpose of discussing and harmonizing the conflicting
provisions of their versions of the GAB. The "harmonized" version of the GAB is next presented
to the President for approval. The President reviews the GAB, and prepares the Veto Message
where budget items are subjected to direct veto, or are identified for conditional
implementation.
90

91

If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the ensuing
fiscal year, the GAA for the preceding fiscal year shall be deemed re-enacted and shall remain
in force and effect until the GAB is passed by the Congress.
92

c.3. Budget Execution

93

With the GAA now in full force and effect, the next step is the implementation of the budget. The
Budget Execution Phase is primarily the function of the DBM, which is tasked to perform the
following procedures, namely: (1) to issue the programs and guidelines for the release of funds;
(2) to prepare an Allotment and Cash Release Program; (3) to release allotments; and (4) to
issue disbursement authorities.
The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this,
the various departments and agencies are required to submit Budget Execution
Documents(BED) to outline their plans and performance targets by laying down the physical
and financial plan, the monthly cash program, the estimate of monthly income, and the list of
obligations that are not yet due and demandable.
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release
Program (CRP).The ARP sets a limit for allotments issued in general and to a specific agency.
The CRP fixes the monthly, quarterly and annual disbursement levels.
Allotments, which authorize an agency to enter into obligations, are issued by the DBM.
Allotments are lesser in scope than appropriations, in that the latter embrace the general
legislative authority to spend. Allotments may be released in two forms through a
comprehensive Agency Budget Matrix (ABM), or, individually, by SARO.
94

95

Armed with either the ABM or the SARO, agencies become authorized to incur obligations on
behalf of the Government in order to implement their PAPs. Obligations may be incurred in
various ways, like hiring of personnel, entering into contracts for the supply of goods and
services, and using utilities.
96

In order to settle the obligations incurred by the agencies, the DBM issues a disbursement
authority so that cash may be allocated in payment of the obligations. A cash or disbursement
authority that is periodically issued is referred to as a Notice of Cash Allocation (NCA), which
issuance is based upon an agencys submission of its Monthly Cash Program and other
required documents. The NCA specifies the maximum amount of cash that can be withdrawn
from a government servicing bank for the period indicated. Apart from the NCA, the DBM may
issue a Non-Cash Availment Authority(NCAA) to authorize non-cash disbursements, or a Cash
Disbursement Ceiling(CDC) for departments with overseas operations to allow the use of
income collected by their foreign posts for their operating requirements.
97

Actual disbursement or spending of government funds terminates the Budget Execution Phase
and is usually accomplished through the Modified Disbursement Scheme under which
disbursements chargeable against the National Treasury are coursed through the government
servicing banks.
c.4. Accountability

98

Accountability is a significant phase of the budget cycle because it ensures that the government
funds have been effectively and efficiently utilized to achieve the States socio-economic goals.
It also allows the DBM to assess the performance of agencies during the fiscal year for the
purpose of implementing reforms and establishing new policies.

An agencys accountability may be examined and evaluated through (1) performance targets
and outcomes; (2) budget accountability reports; (3) review of agency performance; and (4)
audit conducted by the Commission on Audit(COA).
2.
Nature of the DAP as a fiscal plan
a. DAP was a program designed to
promote economic growth
Policy is always a part of every budget and fiscal decision of any Administration. The national
budget the Executive prepares and presents to Congress represents the Administrations
"blueprint for public policy" and reflects the Governments goals and strategies. As such, the
national budget becomes a tangible representation of the programs of the Government in
monetary terms, specifying therein the PAPs and services for which specific amounts of public
funds are proposed and allocated. Embodied in every national budget is government
spending.
99

100

101

102

When he assumed office in the middle of 2010, President Aquino made efficiency and
transparency in government spending a significant focus of his Administration. Yet, although
such focus resulted in an improved fiscal deficit of 0.5% in the gross domestic product (GDP)
from January to July of 2011, it also unfortunately decelerated government project
implementation and payment schedules. The World Bank observed that the Philippines
economic growth could be reduced, and potential growth could be weakened should the
Government continue with its underspending and fail to address the large deficiencies in
infrastructure. The economic situation prevailing in the middle of 2011 thus paved the way for
the development and implementation of the DAP as a stimulus package intended to fast-track
public spending and to push economic growth by investing on high-impact budgetary PAPs to
be funded from the "savings" generated during the year as well as from unprogrammed
funds. In that respect, the DAP was the product of "plain executive policy-making" to stimulate
the economy by way of accelerated spending. The Administration would thereby accelerate
government spending by: (1) streamlining the implementation process through the clustering of
infrastructure projects of the Department of Public Works and Highways (DPWH) and the
Department of Education (DepEd),and (2) front loading PPP-related projects due for
implementation in the following year.
103

104

105

106

107

108

Did the stimulus package work?

The March 2012 report of the World Bank, released after the initial implementation of the DAP,
revealed that the DAP was partially successful. The disbursements under the DAP contributed
1.3 percentage points to GDP growth by the fourth quarter of 2011. The continued
implementation of the DAP strengthened growth by 11.8% year on year while infrastructure
spending rebounded from a 29% contraction to a 34% growth as of September 2013.
109

110

111

The DAP thus proved to be a demonstration that expenditure was a policy instrument that the
Government could use to direct the economies towards growth and development. The
Government, by spending on public infrastructure, would signify its commitment of ensuring
profitability for prospective investors. The PAPs funded under the DAP were chosen for this
112

113

reason based on their: (1) multiplier impact on the economy and infrastructure development; (2)
beneficial effect on the poor; and (3) translation into disbursements.
114

b. History of the implementation of

the DAP, and sources of funds
under the DAP
How the Administrations economic managers conceptualized and developed the DAP, and
finally presented it to the President remains unknown because the relevant documents appear
to be scarce.
The earliest available document relating to the genesis of the DAP was the memorandum of
October 12,2011 from Sec. Abad seeking the approval of the President to implement the
proposed DAP. The memorandum, which contained a list of the funding sources for P72.11
billion and of the proposed priority projects to be funded, reads:
115

MEMORANDUM FOR THE PRESIDENT

xxxx
SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS
AND SOURCES OF FUNDS)
DATE: OCTOBER 12, 2011
Mr. President, this is to formally confirm your approval of the Disbursement Acceleration
Program totaling P72.11 billion. We are already working with all the agencies concerned for the
immediate execution of the projects therein.
A. Fund Sources for the Acceleration Program

Fund Sources

Amount
(In million
Php)

FY 2011
Unreleased
Personal
Services (PS)
Appropriations

30,000

FY 2011
Unreleased
Appropriations

482

Description
Unreleased Personnel
Services (PS)
appropriations which
will lapse at the end of
FY 2011 but may be
pooled as savings and
realigned for priority
programs that require
immediate funding
Unreleased
appropriations (slow
moving projects and

Action
Requested
Declare as
savings and
approve/
authorize its use
for the 2011
Disbursement
Acceleration
Program

programs for
discontinuance)
FY 2010
Unprogrammed
Fund

12,336

Supported by the GFI

Dividends

Approve and
authorize its use
for the 2011
Disbursement
Acceleration
Program

FY 2010
Carryover
Appropriation

21,544

Unreleased
appropriations (slow
moving projects and
programs for
discontinuance) and
savings from Zero-based Budgeting
Initiative

With prior
approval from
the President in
November 2010
to declare as
savings and with
authority to use
for priority
projects

FY 2011 Budget
items for
realignment

7,748

FY 2011 Agency
Budget items that can
be realigned within the
agency to fund new fast
disbursing projects
DPWH-3.981 Billion
DA 2.497 Billion
DOT 1.000 Billion
DepEd 270 Million

For information

TOTAL

72.110

B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)
GOCCs and GFIs
Agency/Project
(SARO and NCA Release)
1. LRTA: Rehabilitation of LRT 1 and 2
2. NHA:
a. Resettlement of North Triangle residents to
Camarin A7
b. Housing for BFP/BJMP

Allotment
(in Million Php)
1,868
11,050
450
500

10,000
c. On-site development for families living
along dangerous

100

3. PHIL. HEART CENTER: Upgrading of

ageing physical plant and medical equipment

357
75

4. CREDIT INFO CORP: Establishment of

centralized credit information system
100
5. PIDS: purchase of land to relocate the PIDS
office and building construction
400
6. HGC: Equity infusion for credit insurance
and mortgage guaranty operations of HGC
7. PHIC: Obligations incurred (premium
subsidy for indigent families) in January-June
2010, booked for payment in Jul[y] Dec
2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
pay the full amount.

1,496

8. Philpost: Purchase of foreclosed property.

Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege

644

10,000
9. BSP: First equity infusion out of Php 40B
capitalization under the BSP Law
280
10. PCMC: Capital and Equipment Renovation
11. LCOP:
a. Pediatric Pulmonary Program
b. Bio-regenerative Technology Program
(Stem-Cell Research subject to legal
review and presentation)

105
35
70

570
12. TIDCORP: NG Equity infusion
TOTAL

26,945

NGAs/LGUs
Agency/Project

Allotment
(SARO)
(In Million
Php)

Cash
Requirement
(NCA)

13. DOF-BIR: NPSTAR

centralization of data
processing and others (To be
synchronized with GFMIS
activities)

758

758

14. COA: IT infrastructure

program and hiring of
additional litigational experts

144

144

15. DND-PAF: On Base Housing

Facilities and Communication
Equipment

30

30

2,959

2,223

1,629

1,629

919

183

411

411

1,293

1,293

1,293

132
5,432

625

625

11

11

16. DA:
a. Irrigation, FMRs and
Integrated Community Based Multi-Species
Hatchery and Aquasilvi
Farming
b. Mindanao Rural
Development Project
c. NIA Agno River Integrated
Irrigation Project
17. DAR:
a. Agrarian Reform
Communities Project 2
b. Landowners Compensation
18. DBM: Conduct of National
Survey of
Farmers/Fisherfolks/Ips
19. DOJ: Operating requirements
of 50 investigation agents and
15 state attorneys

20. DOT: Preservation of the Cine

Corregidor Complex

25

25

1,819

1,819

425

425

275

275

190

190

2,800

2,800

24. OEO-FDCP: Establishment of

the National Film Archive and
local cinematheques, and other
local activities

20

20

25. DPWH: Various infrastructure

projects

5,500

5,500

26. DepEd/ERDT/DOST: Thin

Client Cloud Computing
Project

270

270

27. DOH: Hiring of nurses and

midwives

294

294

1,100

1,100

250

50

21. OPAPP: Activities for Peace

Process (PAMANA- Project
details: budget breakdown,
implementation plan, and
conditions on fund release
attached as Annex B)
22. DOST
a. Establishment of National
Meterological and Climate
Center
b. Enhancement of Doppler
Radar Network for National
Weather Watch, Accurate
Forecasting and Flood Early
Warning
23. DOF-BOC: To settle the
principal obligations with
PDIC consistent with the
agreement with the CISS and
SGS

28. TESDA: Training Program in

partnership with BPO industry
and other sectors
29. DILG: Performance Challenge
Fund (People Empowered
Community Driven
Development with DSWD and
NAPC)

30. ARMM: Comprehensive Peace

and Development Intervention

8,592

8,592

31. DOTC-MRT: Purchase of

additional MRT cars

4,500

32. LGU Support Fund

6,500

6,500

33. Various Other Local Projects

6,500

6,500

750

750

45,165

44,000

34. Development Assistance to the

Province of Quezon
TOTAL
C. Summary
Fund Sources
Identified for
Approval
(In Million
Php)

Allotments
for Release

Cash
Requirements for
Release in FY
2011

72,110

70,895

GOCCs

26,895

26,895

NGAs/LGUs

45,165

44,000

Total

72,110

For His Excellencys Consideration

(Sgd.) FLORENCIO B. ABAD
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
OCT 12, 2011
The memorandum of October 12, 2011 was followed by another memorandum for the President
dated December 12, 2011 requesting omnibus authority to consolidate the savings and
unutilized balances for fiscal year 2011. Pertinent portions of the memorandum of December 12,
2011 read:
116

MEMORANDUM FOR THE PRESIDENT

xxxx

SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment

DATE: December 12, 2011
This is to respectfully request for the grant of Omnibus Authority to consolidate
savings/unutilized balances in FY 2011 corresponding to completed or discontinued projects
which may be pooled to fund additional projects or expenditures.
In addition, Mr. President, this measure will allow us to undertake projects even if their
implementation carries over to 2012 without necessarily impacting on our budget deficit cap
next year.
BACKGROUND
1.0 The DBM, during the course of performance reviews conducted on the
agencies operations, particularly on the implementation of their
projects/activities, including expenses incurred in undertaking the same, have
identified savings out of the 2011 General Appropriations Act. Said savings
correspond to completed or discontinued projects under certain
departments/agencies which may be pooled, for the following:
1.1 to provide for new activities which have not been anticipated during
preparation of the budget;
1.2 to augment additional requirements of on-going priority projects; and
1.3 to provide for deficiencies under the Special Purpose Funds, e.g.,
PDAF, Calamity Fund, Contingent Fund
1.4 to cover for the modifications of the original allotment class allocation
as a result of on-going priority projects and implementation of new
activities
2.0 x x x x
2.1 x x x
2.2 x x x
ON THE UTILIZATION OF POOLED SAVINGS
3.0 It may be recalled that the President approved our request for omnibus
authority to pool savings/unutilized balances in FY 2010 last November 25, 2010.
4.0 It is understood that in the utilization of the pooled savings, the DBM shall
secure the corresponding approval/confirmation of the President. Furthermore, it
is assured that the proposed realignments shall be within the authorized
Expenditure level.

5.0 Relative thereto, we have identified some expenditure items that may be
sourced from the said pooled appropriations in FY 2010 that will expire on
December 31, 2011 and appropriations in FY 2011 that may be declared as
savings to fund additional expenditures.
5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to
be spent for the projects that we have identified to be immediate actual
disbursements considering that this same fund source will expire on
December 31, 2011.
5.2 With respect to the proposed expenditure items to be funded from the
FY 2011 Unreleased Appropriations, most of these are the same projects
for which the DBM is directed by the Office of the President, thru the
Executive Secretary, to source funds.
6.0 Among others, the following are such proposed additional projects that have
been chosen given their multiplier impact on economy and infrastructure
development, their beneficial effect on the poor, and their translation into
disbursements. Please note that we have classified the list of proposed projects
as follows:
7.0 x x x
FOR THE PRESIDENTS APPROVAL
8.0 Foregoing considered, may we respectfully request for the Presidents
approval for the following:
8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized
balances and its realignment; and
8.2 The proposed additional projects identified for funding.
For His Excellencys consideration and approval.
(Sgd.)
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
DEC 21, 2011
Substantially identical requests for authority to pool savings and to fund proposed projects were
contained in various other memoranda from Sec. Abad dated June 25, 2012, September 4,
2012, December 19, 2012, May 20, 2013, and September 25, 2013. The President
apparently approved all the requests, withholding approval only of the proposed projects
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119

120

121

contained in the June 25, 2012 memorandum, as borne out by his marginal note therein to the
effect that the proposed projects should still be "subject to further discussions."
122

In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541
(Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments
as of June 30, 2012), reproduced herein as follows:
123

NATIONAL BUDGET CIRCULAR No. 541

July 18, 2012
TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the
National Government, Budget and Planning Officers; Heads of Accounting Units and All Others
Concerned
SUBJECT : Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated
Allotments as of June 30, 2012
1.0 Rationale
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987),
periodically reviews and evaluates the departments/agencies efficiency and effectiveness in
utilizing budgeted funds for the delivery of services and production of goods, consistent with the
government priorities.
In the event that a measure is necessary to further improve the operational efficiency of the
government, the President is authorized to suspend or stop further use of funds allotted for any
agency or expenditure authorized in the General Appropriations Act. Withdrawal and pooling of
unutilized allotment releases can be effected by DBM based on authority of the President, as
mandated under Sections 38 and 39, Chapter 5, Book VI of EO 292.
For the first five months of 2012, the National Government has not met its spending targets. In
order to accelerate spending and sustain the fiscal targets during the year, expenditure
measures have to be implemented to optimize the utilization of available resources.
Departments/agencies have registered low spending levels, in terms of obligations and
disbursements per initial review of their 2012 performance. To enhance agencies performance,
the DBM conducts continuous consultation meetings and/or send call-up letters, requesting
them to identify slow-moving programs/projects and the factors/issues affecting their
performance (both pertaining to internal systems and those which are outside the agencies
spheres of control). Also, they are asked to formulate strategies and improvement plans for the
rest of 2012.
Notwithstanding these initiatives, some departments/agencies have continued to post low
obligation levels as of end of first semester, thus resulting to substantial unobligated allotments.
In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of
unobligated allotments of agencies with low levels of obligations as of June 30, 2012, both for

continuing and current allotments. This measure will allow the maximum utilization of available
allotments to fund and undertake other priority expenditures of the national government.
2.0 Purpose
2.1 To provide the conditions and parameters on the withdrawal of unobligated
allotments of agencies as of June 30, 2012 to fund priority and/or fast-moving
programs/projects of the national government;
2.2 To prescribe the reports and documents to be used as bases on the
withdrawal of said unobligated allotments; and
2.3 To provide guidelines in the utilization or reallocation of the withdrawn
allotments.
3.0 Coverage
3.1 These guidelines shall cover the withdrawal of unobligated allotments as of
June 30, 2012 of all national government agencies (NGAs) charged against FY
2011 Continuing Appropriation (R.A. No.10147) and FY 2012 Current
Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the
implementation of programs and projects, as well as capitalized MOOE;
and
3.1.3 Personal Services corresponding to unutilized pension benefits
declared as savings by the agencies concerned based on their
updated/validated list of pensioners.
3.2 The withdrawal of unobligated allotments may cover the identified programs,
projects and activities of the departments/agencies reflected in the DBM list
shown as Annex A or specific programs and projects as may be identified by the
agencies.
4.0 Exemption
These guidelines shall not apply to the following:
4.1 NGAs
4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal
autonomy under the Philippine Constitution; and
4.1.2 State Universities and Colleges, adopting the Normative Funding
allocation scheme i.e., distribution of a predetermined budget ceiling.

4.2 Fund Sources

4.2.1 Personal Services other than pension benefits;
4.2.2 MOOE items earmarked for specific purposes or subject to
realignment conditions per General Provisions of the GAA:
Confidential and Intelligence Fund;
Savings from Traveling, Communication, Transportation and
Delivery, Repair and Maintenance, Supplies and Materials and
Utility which shall be used for the grant of Collective Negotiation
Agreement incentive benefit;
Savings from mandatory expenditures which can be realigned
only in the last quarter after taking into consideration the agencys
full year requirements, i.e., Petroleum, Oil and Lubricants, Water,
Illumination, Power Services, Telephone, other Communication
Services and Rent.
4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);
4.2.4 Special Purpose Funds such as: E-Government Fund, International
Commitments Fund, PAMANA, Priority Development Assistance Fund,
Calamity Fund, Budgetary Support to GOCCs and Allocation to LGUs,
among others;
4.2.5 Quick Response Funds; and
4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium
and Special Accounts in the General Fund.
5.0 Guidelines
5.1 National government agencies shall continue to undertake procurement
activities notwithstanding the implementation of the policy of withdrawal of
unobligated allotments until the end of the third quarter, FY 2012. Even without
the allotments, the agency shall proceed in undertaking the procurement
processes (i.e., procurement planning up to the conduct of bidding but short of
awarding of contract) pursuant to GPPB Circular Nos. 02-2008 and 01-2009 and
DBM Circular Letter No. 2010-9.
5.2 For the purpose of determining the amount of unobligated allotments that
shall be withdrawn, all departments/agencies/operating units (OUs) shall submit
to DBM not later than July 30, 2012, the following budget accountability reports
as of June 30, 2012;
Statement of Allotments, Obligations and Balances (SAOB);

 Financial Report of Operations (FRO); and

Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this
Circular, the agencys latest report available shall be used by DBM as basis for
withdrawal of allotment. The DBM shall compute/approximate the agencys
obligation level as of June 30 to derive its unobligated allotments as of same
period. Example: If the March 31 SAOB or FRO reflects actual obligations of P
800M then the June 30 obligation level shall approximate to P1,600 M (i.e., P800
M x 2 quarters).
5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which
remained unobligated as of June 30, 2012 shall be immediately considered for
withdrawal. This policy is based on the following considerations:
5.4.1 The departments/agencies approved priority programs and projects
are assumed to be implementation-ready and doable during the given
fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may
imply that the agency has a slower-than-programmed implementation
capacity or agency tends to implement projects within a two-year
timeframe.
5.5. Consistent with the Presidents directive, the DBM shall, based on evaluation
of the reports cited above and results of consultations with the
departments/agencies, withdraw the unobligated allotments as of June 30, 2012
through issuance of negative Special Allotment Release Orders (SAROs).
5.6 DBM shall prepare and submit to the President, a report on the magnitude of
withdrawn allotments. The report shall highlight the agencies which failed to
submit the June 30 reports required under this Circular.
5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and projects of the
agencies/OUs concerned, from which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs
and projects of the agency/OU; or
5.7.3 Used to augment existing programs and projects of any agency and
to fund priority programs and projects not considered in the 2012 budget
but expected to be started or implemented during the current year.
5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit to
DBM a Special Budget Request (SBR), supported with the following:

5.8.1 Physical and Financial Plan (PFP);

5.8.2 Monthly Cash Program (MCP); and
5.8.3 Proof that the project/activity has started the procurement
processes i.e., Proof of Posting and/or Advertisement of the Invitation to
Bid.
5.9 The deadline for submission of request/s pertaining to these categories shall
be until the end of the third quarter i.e., September 30, 2012. After said cut-off
date, the withdrawn allotments shall be pooled and form part of the overall
savings of the national government.
5.10 Utilization of the consolidated withdrawn allotments for other priority
programs and projects as cited under item 5.7.3 of this Circular, shall be subject
to approval of the President. Based on the approval of the President, DBM shall
issue the SARO to cover the approved priority expenditures subject to
submission by the agency/OU concerned of the SBR and supported with PFP
and MCP.
5.11 It is understood that all releases to be made out of the withdrawn allotments
(both 2011 and 2012 unobligated allotments) shall be within the approved
Expenditure Program level of the national government for the current year. The
SAROs to be issued shall properly disclose the appropriation source of the
release to determine the extent of allotment validity, as follows:
For charges under R.A. 10147 allotments shall be valid up to
December 31, 2012; and
For charges under R.A. 10155 allotments shall be valid up to
December 31, 2013.
5.12 Timely compliance with the submission of existing BARs and other
reportorial requirements is reiterated for monitoring purposes.
6.0 Effectivity
This circular shall take effect immediately.
(Sgd.) FLORENCIO B. ABAD
Secretary
As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies and
departments as of June 30, 2012 that were charged against the continuing appropriations for
fiscal year 2011 and the 2012 GAA (R.A. No. 10155) were subject to withdrawal through the
issuance of negative SAROs, but such allotments could be either: (1) reissued for the original
PAPs of the concerned agencies from which they were withdrawn; or (2) realigned to cover
additional funding for other existing PAPs of the concerned agencies; or (3) used to augment
existing PAPs of any agency and to fund priority PAPs not considered in the 2012 budget but

expected to be started or implemented in 2012. Financing the other priority PAPs was made
subject to the approval of the President. Note here that NBC No. 541 used terminologies like
"realignment" and "augmentation" in the application of the withdrawn unobligated allotments.
Taken together, all the issuances showed how the DAP was to be implemented and funded, that
is (1) by declaring "savings" coming from the various departments and agencies derived from
pooling unobligated allotments and withdrawing unreleased appropriations; (2) releasing
unprogrammed funds; and (3) applying the "savings" and unprogrammed funds to augment
existing PAPs or to support other priority PAPs.
c. DAP was not an appropriation
measure; hence, no appropriation
law was required to adopt or to
implement it
Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a law to
establish the DAP, or to authorize the disbursement and release of public funds to implement
the DAP. Villegas, PHILCONSA, IBP, Araullo, and COURAGE observe that the appropriations
funded under the DAP were not included in the 2011, 2012 and 2013 GAAs. To petitioners IBP,
Araullo, and COURAGE, the DAP, being actually an appropriation that set aside public funds for
public use, should require an enabling law for its validity. VACC maintains that the DAP,
because it involved huge allocations that were separate and distinct from the GAAs,
circumvented and duplicated the GAAs without congressional authorization and control.
The petitioners contend in unison that based on how it was developed and implemented the
DAP violated the mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money
shall be paid out of the Treasury except in pursuance of an appropriation made by law."
The OSG posits, however, that no law was necessary for the adoption and implementation of
the DAP because of its being neither a fund nor an appropriation, but a program or an
administrative system of prioritizing spending; and that the adoption of the DAP was by virtue of
the authority of the President as the Chief Executive to ensure that laws were faithfully
executed.
We agree with the OSGs position.
The DAP was a government policy or strategy designed to stimulate the economy through
accelerated spending. In the context of the DAPs adoption and implementation being a function
pertaining to the Executive as the main actor during the Budget Execution Stage under its
constitutional mandate to faithfully execute the laws, including the GAAs, Congress did not need
to legislate to adopt or to implement the DAP. Congress could appropriate but would have
nothing more to do during the Budget Execution Stage. Indeed, appropriation was the act by
which Congress "designates a particular fund, or sets apart a specified portion of the public
revenue or of the money in the public treasury, to be applied to some general object of
governmental expenditure, or to some individual purchase or expense." As pointed out in
Gonzales v. Raquiza: "In a strict sense, appropriation has been defined as nothing more than
the legislative authorization prescribed by the Constitution that money may be paid out of the
Treasury, while appropriation made by law refers to the act of the legislature setting apart or
assigning to a particular use a certain sum to be used in the payment of debt or dues from the
State to its creditors."
124

125

126

On the other hand, the President, in keeping with his duty to faithfully execute the laws, had
sufficient discretion during the execution of the budget to adapt the budget to changes in the
countrys economic situation. He could adopt a plan like the DAP for the purpose. He could
pool the savings and identify the PAPs to be funded under the DAP. The pooling of savings
pursuant to the DAP, and the identification of the PAPs to be funded under the DAP did not
involve appropriation in the strict sense because the money had been already set apart from the
public treasury by Congress through the GAAs. In such actions, the Executive did not usurp the
power vested in Congress under Section 29(1), Article VI of the Constitution.
127

3.
Unreleased appropriations and withdrawn
unobligated allotments under the DAP
were not savings, and the use of such
appropriations contravened Section 25(5),
Article VI of the 1987 Constitution.
Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the
Executive to ramp up spending to accelerate economic growth, the challenges posed by the
petitioners constrain us to dissect the mechanics of the actual execution of the DAP. The
management and utilization of the public wealth inevitably demands a most careful scrutiny of
whether the Executives implementation of the DAP was consistent with the Constitution, the
relevant GAAs and other existing laws.
a. Although executive discretion
and flexibility are necessary in
the execution of the budget, any
transfer of appropriated funds
should conform to Section 25(5),
Article VI of the Constitution
We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that
may come into play once the budget reaches its execution stage. Executive discretion is
necessary at that stage to achieve a sound fiscal administration and assure effective budget
implementation. The heads of offices, particularly the President, require flexibility in their
operations under performance budgeting to enable them to make whatever adjustments are
needed to meet established work goals under changing conditions. In particular, the power to
transfer funds can give the President the flexibility to meet unforeseen events that may
otherwise impede the efficient implementation of the PAPs set by Congress in the GAA.
128

Congress has traditionally allowed much flexibility to the President in allocating funds pursuant
to the GAAs, particularly when the funds are grouped to form lump sum accounts. It is
assumed that the agencies of the Government enjoy more flexibility when the GAAs provide
broader appropriation items. This flexibility comes in the form of policies that the Executive
may adopt during the budget execution phase. The DAP as a strategy to improve the
countrys economic position was one policy that the President decided to carry out in order to
fulfill his mandate under the GAAs.
129

130

131

Denying to the Executive flexibility in the expenditure process would be counterproductive. In

Presidential Spending Power, Prof. Louis Fisher, an American constitutional scholar whose
132

specialties have included budget policy, has justified extending discretionary authority to the
Executive thusly:
[T]he impulse to deny discretionary authority altogether should be resisted. There are many
number of reasons why obligations and outlays by administrators may have to differ from
appropriations by legislators. Appropriations are made many months, and sometimes years, in
advance of expenditures. Congress acts with imperfect knowledge in trying to legislate in fields
that are highly technical and constantly undergoing change. New circumstances will develop to
make obsolete and mistaken the decisions reached by Congress at the appropriation stage. It is
not practicable for Congress to adjust to each new development by passing separate
supplemental appropriation bills. Were Congress to control expenditures by confining
administrators to narrow statutory details, it would perhaps protect its power of the purse but it
would not protect the purse itself. The realities and complexities of public policy require
executive discretion for the sound management of public funds.
xxxx
x x x The expenditure process, by its very nature, requires substantial discretion for
administrators. They need to exercise judgment and take responsibility for their actions, but
those actions ought to be directed toward executing congressional, not administrative policy. Let
there be discretion, but channel it and use it to satisfy the programs and priorities established by
Congress.
In contrast, by allowing to the heads of offices some power to transfer funds within their
respective offices, the Constitution itself ensures the fiscal autonomy of their offices, and at the
same time maintains the separation of powers among the three main branches of the
Government. The Court has recognized this, and emphasized so in Bengzon v. Drilon, viz:
133

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The
imposition of restrictions and constraints on the manner the independent constitutional offices
allocate and utilize the funds appropriated for their operations is anathema to fiscal autonomy
and violative not only of the express mandate of the Constitution but especially as regards the
Supreme Court, of the independence and separation of powers upon which the entire fabric of
our constitutional system is based.
In the case of the President, the power to transfer funds from one item to another within the
Executive has not been the mere offshoot of established usage, but has emanated from law
itself. It has existed since the time of the American Governors-General. Act No. 1902 (An Act
authorizing the Governor-General to direct any unexpended balances of appropriations be
returned to the general fund of the Insular Treasury and to transfer from the general fund
moneys which have been returned thereto), passed on May 18, 1909 by the First Philippine
Legislature, was the first enabling law that granted statutory authority to the President to
transfer funds. The authority was without any limitation, for the Act explicitly empowered the
Governor-General to transfer any unexpended balance of appropriations for any bureau or
office to another, and to spend such balance as if it had originally been appropriated for that
bureau or office.
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135

From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be
transferred, thereby limiting the power to transfer funds. Only 10% of the amounts appropriated

for contingent or miscellaneous expenses could be transferred to a bureau or office, and the
transferred funds were to be used to cover deficiencies in the appropriations also for
miscellaneous expenses of said bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous
expenses to any other item of a certain bureau or office was removed.
During the Commonwealth period, the power of the President to transfer funds continued to be
governed by the GAAs despite the enactment of the Constitution in 1935. It is notable that the
1935 Constitution did not include a provision on the power to transfer funds. At any rate, a shift
in the extent of the Presidents power to transfer funds was again experienced during this era,
with the President being given more flexibility in implementing the budget. The GAAs provided
that the power to transfer all or portions of the appropriations in the Executive Department could
be made in the "interest of the public, as the President may determine."
136

In its time, the 1971 Constitutional Convention wanted to curtail the Presidents seemingly
unbounded discretion in transferring funds. Its Committee on the Budget and Appropriation
proposed to prohibit the transfer of funds among the separate branches of the Government and
the independent constitutional bodies, but to allow instead their respective heads to augment
items of appropriations from savings in their respective budgets under certain limitations. The
clear intention of the Convention was to further restrict, not to liberalize, the power to transfer
appropriations. Thus, the Committee on the Budget and Appropriation initially considered
setting stringent limitations on the power to augment, and suggested that the augmentation of
an item of appropriation could be made "by not more than ten percent if the original item of
appropriation to be augmented does not exceed one million pesos, or by not more than five
percent if the original item of appropriation to be augmented exceeds one million pesos." But
two members of the Committee objected to the P1,000,000.00 threshold, saying that the
amount was arbitrary and might not be reasonable in the future. The Committee agreed to
eliminate theP1,000,000.00 threshold, and settled on the ten percent limitation.
137

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139

140

141

In the end, the ten percent limitation was discarded during the plenary of the Convention, which
adopted the following final version under Section 16, Article VIII of the 1973 Constitution, to wit:
(5) No law shall be passed authorizing any transfer of appropriations; however, the President,
the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may by law be authorized to augment any item in the general
appropriations law for their respective offices from savings in other items of their respective
appropriations.
The 1973 Constitution explicitly and categorically prohibited the transfer of funds from one item
to another, unless Congress enacted a law authorizing the President, the Prime Minister, the
Speaker, the Chief Justice of the Supreme Court, and the heads of the Constitutional omissions
to transfer funds for the purpose of augmenting any item from savings in another item in the
GAA of their respective offices. The leeway was limited to augmentation only, and was further
constricted by the condition that the funds to be transferred should come from savings from
another item in the appropriation of the office.
142

On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:

Section 44. Authority to Approve Fund Transfers. The President shall have the authority to
transfer any fund appropriated for the different departments, bureaus, offices and agencies of
the Executive Department which are included in the General Appropriations Act, to any program,
project, or activity of any department, bureau or office included in the General Appropriations Act
or approved after its enactment.
The President shall, likewise, have the authority to augment any appropriation of the Executive
Department in the General Appropriations Act, from savings in the appropriations of another
department, bureau, office or agency within the Executive Branch, pursuant to the provisions of
Article VIII, Section 16 (5) of the Constitution.
In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for
contravening Section 16(5)of the 1973 Constitution, ruling:
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under
said Section 16. It empowers the President to indiscriminately transfer funds from one
department, bureau, office or agency of the Executive Department to any program, project or
activity of any department, bureau or office included in the General Appropriations Act or
approved after its enactment, without regard as to whether or not the funds to be transferred are
actually savings in the item from which the same are to be taken, or whether or not the transfer
is for the purpose of augmenting the item to which said transfer is to be made. It does not only
completely disregard the standards set in the fundamental law, thereby amounting to an undue
delegation of legislative powers, but likewise goes beyond the tenor thereof. Indeed, such
constitutional infirmities render the provision in question null and void.
143

It is significant that Demetria was promulgated 25 days after the ratification by the people of the
1987 Constitution, whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of
the 1973 Constitution, to wit:
Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations; however, the President,
the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of
the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to
augment any item in the general appropriations law for their respective offices from savings in
other items of their respective appropriations.
xxxx
The foregoing history makes it evident that the Constitutional Commission included Section
25(5), supra, to keep a tight rein on the exercise of the power to transfer funds appropriated by
Congress by the President and the other high officials of the Government named therein. The
Court stated in Nazareth v. Villar:
144

In the funding of current activities, projects, and programs, the general rule should still be that
the budgetary amount contained in the appropriations bill is the extent Congress will determine
as sufficient for the budgetary allocation for the proponent agency. The only exception is found
in Section 25 (5), Article VI of the Constitution, by which the President, the President of the

Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court,
and the heads of Constitutional Commissions are authorized to transfer appropriations to
augmentany item in the GAA for their respective offices from the savings in other items of their
respective appropriations. The plain language of the constitutional restriction leaves no room for
the petitioners posture, which we should now dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named in Section 25(5),
Article VI of the Constitution limiting the authority to transfer savings only to augment another
item in the GAA is strictly but reasonably construed as exclusive. As the Court has expounded in
Lokin, Jr. v. Commission on Elections:
When the statute itself enumerates the exceptions to the application of the general rule, the
exceptions are strictly but reasonably construed. The exceptions extend only as far as their
language fairly warrants, and all doubts should be resolved in favor of the general provision
rather than the exceptions. Where the general rule is established by a statute with exceptions,
none but the enacting authority can curtail the former. Not even the courts may add to the latter
by implication, and it is a rule that an express exception excludes all others, although it is
always proper in determining the applicability of the rule to inquire whether, in a particular case,
it accords with reason and justice.
The appropriate and natural office of the exception is to exempt something from the scope of
the general words of a statute, which is otherwise within the scope and meaning of such general
words. Consequently, the existence of an exception in a statute clarifies the intent that the
statute shall apply to all cases not excepted. Exceptions are subject to the rule of strict
construction; hence, any doubt will be resolved in favor of the general provision and against the
exception. Indeed, the liberal construction of a statute will seem to require in many
circumstances that the exception, by which the operation of the statute is limited or abridged,
should receive a restricted construction.
Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the
Presidents discretion over the appropriations during the Budget Execution Phase.
b. Requisites for the valid transfer of
appropriated funds under Section
25(5), Article VI of the 1987
Constitution
The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon
a concurrence of the following requisites, namely:
(1) There is a law authorizing the President, the President of the Senate, the Speaker of
the House of Representatives, the Chief Justice of the Supreme Court, and the heads of
the Constitutional Commissions to transfer funds within their respective offices;
(2) The funds to be transferred are savings generated from the appropriations for their
respective offices; and (3) The purpose of the transfer is to augment an item in the
general appropriations law for their respective offices.
b.1. First RequisiteGAAs of 2011 and
2012 lacked valid provisions to

authorize transfers of funds under

the DAP; hence, transfers under the
DAP were unconstitutional
Section 25(5), supra, not being a self-executing provision of the Constitution, must have an
implementing law for it to be operative. That law, generally, is the GAA of a given fiscal year. To
comply with the first requisite, the GAAs should expressly authorize the transfer of funds.
Did the GAAs expressly authorize the transfer of funds?
In the 2011 GAA, the provision that gave the President and the other high officials the authority
to transfer funds was Section 59, as follows:
Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker
of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of
Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby
authorized to augment any item in this Act from savings in other items of their respective
appropriations.
In the 2012 GAA, the empowering provision was Section 53, to wit:
Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker
of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of
Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby
authorized to augment any item in this Act from savings in other items of their respective
appropriations.
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as
justification for the use of savings under the DAP.
145

A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were
textually unfaithful to the Constitution for not carrying the phrase "for their respective offices"
contained in Section 25(5), supra. The impact of the phrase "for their respective offices" was to
authorize only transfers of funds within their offices (i.e., in the case of the President, the
transfer was to an item of appropriation within the Executive). The provisions carried a different
phrase ("to augment any item in this Act"), and the effect was that the 2011 and 2012 GAAs
thereby literally allowed the transfer of funds from savings to augment any item in the GAAs
even if the item belonged to an office outside the Executive. To that extent did the 2011 and
2012 GAAs contravene the Constitution. At the very least, the aforequoted provisions cannot be
used to claim authority to transfer appropriations from the Executive to another branch, or to a
constitutional commission.
Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart
provision in the 2013 GAA, to wit:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker
of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of
Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby
authorized to use savings in their respective appropriations to augment actual deficiencies
incurred for the current year in any item of their respective appropriations.

Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed,
there still remained two other requisites to be met, namely: that the source of funds to be
transferred were savings from appropriations within the respective offices; and that the transfer
must be for the purpose of augmenting an item of appropriation within the respective offices.
b.2. Second Requisite There were
no savings from which funds
could be sourced for the DAP
Were the funds used in the DAP actually savings?
The petitioners claim that the funds used in the DAP the unreleased appropriations and
withdrawn unobligated allotments were not actual savings within the context of Section 25(5),
supra, and the relevant provisions of the GAAs. Belgica argues that "savings" should be
understood to refer to the excess money after the items that needed to be funded have been
funded, or those that needed to be paid have been paid pursuant to the budget. The
petitioners posit that there could be savings only when the PAPs for which the funds had been
appropriated were actually implemented and completed, or finally discontinued or abandoned.
They insist that savings could not be realized with certainty in the middle of the fiscal year; and
that the funds for "slow-moving" PAPs could not be considered as savings because such PAPs
had not actually been abandoned or discontinued yet. They stress that NBC No. 541, by
allowing the withdrawn funds to be reissued to the "original program or project from which it was
withdrawn," conceded that the PAPs from which the supposed savings were taken had not been
completed, abandoned or discontinued.
146

147

148

The OSG represents that "savings" were "appropriations balances," being the difference
between the appropriation authorized by Congress and the actual amount allotted for the
appropriation; that the definition of "savings" in the GAAs set only the parameters for
determining when savings occurred; that it was still the President (as well as the other officers
vested by the Constitution with the authority to augment) who ultimately determined when
savings actually existed because savings could be determined only during the stage of budget
execution; that the President must be given a wide discretion to accomplish his tasks; and that
the withdrawn unobligated allotments were savings inasmuch as they were clearly "portions or
balances of any programmed appropriationfree from any obligation or encumbrances which
are (i) still available after the completion or final discontinuance or abandonment of the work,
activity or purpose for which the appropriation is authorized"
We partially find for the petitioners.
In ascertaining the meaning of savings, certain principles should be borne in mind. The first
principle is that Congress wields the power of the purse. Congress decides how the budget will
be spent; what PAPs to fund; and the amounts of money to be spent for each PAP. The second
principle is that the Executive, as the department of the Government tasked to enforce the laws,
is expected to faithfully execute the GAA and to spend the budget in accordance with the
provisions of the GAA. The Executive is expected to faithfully implement the PAPs for which
Congress allocated funds, and to limit the expenditures within the allocations, unless exigencies
result to deficiencies for which augmentation is authorized, subject to the conditions provided by
law. The third principle is that in making the Presidents power to augment operative under the
GAA, Congress recognizes the need for flexibility in budget execution. In so doing, Congress
diminishes its own power of the purse, for it delegates a fraction of its power to the Executive.
But Congress does not thereby allow the Executive to override its authority over the purse as to
149

let the Executive exceed its delegated authority. And the fourth principle is that savings should
be actual. "Actual" denotes something that is real or substantial, or something that exists
presently in fact, as opposed to something that is merely theoretical, possible, potential or
hypothetical.
150

The foregoing principles caution us to construe savings strictly against expanding the scope of
the power to augment. It is then indubitable that the power to augment was to be used only
when the purpose for which the funds had been allocated were already satisfied, or the need for
such funds had ceased to exist, for only then could savings be properly realized. This
interpretation prevents the Executive from unduly transgressing Congress power of the purse.
The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this
interpretation and made it operational, viz:
Savings refer to portions or balances of any programmed appropriation in this Act free from any
obligation or encumbrance which are: (i) still available after the completion or final
discontinuance or abandonment of the work, activity or purpose for which the appropriation is
authorized; (ii) from appropriations balances arising from unpaid compensation and related
costs pertaining to vacant positions and leaves of absence without pay; and (iii) from
appropriations balances realized from the implementation of measures resulting in improved
systems and efficiencies and thus enabled agencies to meet and deliver the required or planned
targets, programs and services approved in this Act at a lesser cost.
The three instances listed in the GAAs aforequoted definition were a sure indication that
savings could be generated only upon the purpose of the appropriation being fulfilled, or upon
the need for the appropriation being no longer existent.
The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs
conveyed the notion that the appropriation was at that stage when the appropriation was
already obligated and the appropriation was already released. This interpretation was reinforced
by the enumeration of the three instances for savings to arise, which showed that the
appropriation referred to had reached the agency level. It could not be otherwise, considering
that only when the appropriation had reached the agency level could it be determined whether
(a) the PAP for which the appropriation had been authorized was completed, finally
discontinued, or abandoned; or (b) there were vacant positions and leaves of absence without
pay; or (c) the required or planned targets, programs and services were realized at a lesser cost
because of the implementation of measures resulting in improved systems and efficiencies.
The DBM declares that part of the savings brought under the DAP came from "pooling of
unreleased appropriations such as unreleased Personnel Services appropriations which will
lapse at the end of the year, unreleased appropriations of slow moving projects and
discontinued projects per Zero-Based Budgeting findings."
The declaration of the DBM by itself does not state the clear legal basis for the treatment of
unreleased or unalloted appropriations as savings.
The fact alone that the appropriations are unreleased or unalloted is a mere description of the
status of the items as unalloted or unreleased. They have not yet ripened into categories of
items from which savings can be generated. Appropriations have been considered "released" if
there has already been an allotment or authorization to incur obligations and disbursement

authority. This means that the DBM has issued either an ABM (for those not needing clearance),
or a SARO (for those needing clearance), and consequently an NCA, NCAA or CDC, as the
case may be. Appropriations remain unreleased, for instance, because of noncompliance with
documentary requirements (like the Special Budget Request), or simply because of the
unavailability of funds. But the appropriations do not actually reach the agencies to which they
were allocated under the GAAs, and have remained with the DBM technically speaking. Ergo,
unreleased appropriations refer to appropriations with allotments but without disbursement
authority.
For us to consider unreleased appropriations as savings, unless these met the statutory
definition of savings, would seriously undercut the congressional power of the purse, because
such appropriations had not even reached and been used by the agency concerned vis--vis
the PAPs for which Congress had allocated them. However, if an agency has unfilled positions
in its plantilla and did not receive an allotment and NCA for such vacancies, appropriations for
such positions, although unreleased, may already constitute savings for that agency under the
second instance.
Unobligated allotments, on the other hand, were encompassed by the first part of the definition
of "savings" in the GAA, that is, as "portions or balances of any programmed appropriation in
this Act free from any obligation or encumbrance." But the first part of the definition was further
qualified by the three enumerated instances of when savings would be realized. As such,
unobligated allotments could not be indiscriminately declared as savings without first
determining whether any of the three instances existed. This signified that the DBMs withdrawal
of unobligated allotments had disregarded the definition of savings under the GAAs.
Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE
appropriations are deemed divided into twelve monthly allocations within the fiscal year; hence,
savings could be generated monthly from the excess or unused MOOE appropriations other
than the Mandatory Expenditures and Expenditures for Business-type Activities because of the
physical impossibility to obligate and spend such funds as MOOE for a period that already
lapsed. Following this observation, MOOE for future months are not savings and cannot be
transferred.
The DBMs Memorandum for the President dated June 25, 2012 (which became the basis of
NBC No. 541) stated:
ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS
5.0 The DBM, during the course of performance reviews conducted on the agencies
operations, particularly on the implementation of their projects/activities, including
expenses incurred in undertaking the same, have been continuously calling the attention
of all National Government agencies (NGAs) with low levels of obligations as of end of
the first quarter to speedup the implementation of their programs and projects in the
second quarter.
6.0 Said reminders were made in a series of consultation meetings with the concerned
agencies and with call-up letters sent.

7.0 Despite said reminders and the availability of funds at the departments disposal, the
level of financial performance of some departments registered below program, with the
targeted obligations/disbursements for the first semester still not being met.
8.0 In order to maximize the use of the available allotment, all unobligated balances as
of June 30, 2012, both for continuing and current allotments shall be withdrawn and
pooled to fund fast moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of
slow moving projects to be identified by the agencies and their catch up plans to be
evaluated by the DBM.
It is apparent from the foregoing text that the withdrawal of unobligated allotments would be
based on whether the allotments pertained to slow-moving projects, or not. However, NBC No.
541 did not set in clear terms the criteria for the withdrawal of unobligated allotments, viz:
3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30,
2012 ofall national government agencies (NGAs) charged against FY 2011 Continuing
Appropriation (R.A. No. 10147) and FY 2012 Current Appropriation (R.A. No. 10155),
pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the
implementation of programs and projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension benefits declared as
savings by the agencies concerned based on their undated/validated list of
pensioners.
A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of
unobligated allotments of agencies with low levels of obligations" "to fund priority and/or fastmoving programs/projects." But the fact that the withdrawn allotments could be "[r]eissued for
the original programs and projects of the agencies/OUs concerned, from which the allotments
were withdrawn" supported the conclusion that the PAPs had not yet been finally discontinued
or abandoned. Thus, the purpose for which the withdrawn funds had been appropriated was not
yet fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings
impossible.
151

152

153

Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011
charged against the 2011 GAA that had remained unobligated based on the following
considerations, to wit:
5.4.1 The departments/agencies approved priority programs and projects are assumed
to be implementation-ready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may imply that the
agency has a slower-than-programmed implementation capacity or agency tends to
implement projects within a two-year timeframe.

Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated allotments
for continuing and current appropriations as of June 30, 2012, disregarded the 2-year period of
availability of the appropriations for MOOE and capital outlay extended under Section 65,
General Provisions of the 2011 GAA, viz:
Section 65. Availability of Appropriations. Appropriations for MOOE and capital outlays
authorized in this Act shall be available for release and obligation for the purpose specified, and
under the same special provisions applicable thereto, for a period extending to one fiscal year
after the end of the year in which such items were appropriated: PROVIDED, That
appropriations for MOOE and capital outlays under R.A. No. 9970 shall be made available up to
the end of FY 2011: PROVIDED, FURTHER, That a report on these releases and obligations
shall be submitted to the Senate Committee on Finance and the House Committee on
Appropriations.
and Section 63 General Provisions of the 2012 GAA, viz:
Section 63. Availability of Appropriations. Appropriations for MOOE and capital outlays
authorized in this Act shall be available for release and obligation for the purpose specified, and
under the same special provisions applicable thereto, for a period extending to one fiscal year
after the end of the year in which such items were appropriated: PROVIDED, That a report on
these releases and obligations shall be submitted to the Senate Committee on Finance and the
House Committee on Appropriations, either in printed form or by way of electronic document.
154

Thus, another alleged area of constitutional infirmity was that the DAP and its relevant
issuances shortened the period of availability of the appropriations for MOOE and capital
outlays.
Congress provided a one-year period of availability of the funds for all allotment classes in the
2013 GAA (R.A. No. 10352), to wit:
Section 63. Availability of Appropriations. All appropriations authorized in this Act shall be
available for release and obligation for the purposes specified, and under the same special
provisions applicable thereto, until the end of FY 2013: PROVIDED, That a report on these
releases and obligations shall be submitted to the Senate Committee on Finance and House
Committee on Appropriations, either in printed form or by way of electronic document.
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus
authority to consolidate savings and unutilized balances to fund the DAP on a quarterly basis,
viz:
7.0 If the level of financial performance of some department will register below program,
even with the availability of funds at their disposal, the targeted
obligations/disbursements for each quarter will not be met. It is important to note that
these funds will lapse at the end of the fiscal year if these remain unobligated.
8.0 To maximize the use of the available allotment, all unobligated balances at the end of
every quarter, both for continuing and current allotments shall be withdrawn and pooled
to fund fast moving programs/projects.

9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of
slow moving projects to be identified by the agencies and their catch up plans to be
evaluated by the DBM.
The validity period of the affected appropriations, already given the brief Lifes pan of one year,
was further shortened to only a quarter of a year under the DBMs memorandum dated May 20,
2013.
The petitioners accuse the respondents of forcing the generation of savings in order to have a
larger fund available for discretionary spending. They aver that the respondents, by withdrawing
unobligated allotments in the middle of the fiscal year, in effect deprived funding for PAPs with
existing appropriations under the GAAs.
155

The respondents belie the accusation, insisting that the unobligated allotments were being
withdrawn upon the instance of the implementing agencies based on their own assessment that
they could not obligate those allotments pursuant to the Presidents directive for them to spend
their appropriations as quickly as they could in order to ramp up the economy.
156

We agree with the petitioners.

Contrary to the respondents insistence, the withdrawals were upon the initiative of the DBM
itself. The text of NBC No. 541 bears this out, to wit:
5.2 For the purpose of determining the amount of unobligated allotments that shall be
withdrawn, all departments/agencies/operating units (OUs) shall submit to DBM not later than
July 30, 2012, the following budget accountability reports as of June 30, 2012;
Statement of Allotments, Obligation and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the
agencys latest report available shall be used by DBM as basis for withdrawal of allotment. The
DBM shall compute/approximate the agencys obligation level as of June 30 to derive its
unobligated allotments as of same period. Example: If the March 31 SAOB or FRO reflects
actual obligations of P 800M then the June 30 obligation level shall approximate to P1,600 M
(i.e., P800 M x 2 quarters).
The petitioners assert that no law had authorized the withdrawal and transfer of unobligated
allotments and the pooling of unreleased appropriations; and that the unbridled withdrawal of
unobligated allotments and the retention of appropriated funds were akin to the impoundment of
appropriations that could be allowed only in case of "unmanageable national government
budget deficit" under the GAAs, thus violating the provisions of the GAAs of 2011, 2012 and
2013 prohibiting the retention or deduction of allotments.
157

158

In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving,
policy as a last-ditch effort of the Executive to push agencies into actually spending their

appropriations; that such policy did not amount to an impoundment scheme, because
impoundment referred to the decision of the Executive to refuse to spend funds for political or
ideological reasons; and that the withdrawal of allotments under NBC No. 541 was made
pursuant to Section 38, Chapter 5, Book VI of the Administrative Code, by which the President
was granted the authority to suspend or otherwise stop further expenditure of funds allotted to
any agency whenever in his judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated
allotments and the pooling of unreleased appropriations were invalid for being bereft of legal
support. Nonetheless, such withdrawal of unobligated allotments and the retention of
appropriated funds cannot be considered as impoundment.
According to Philippine Constitution Association v. Enriquez: "Impoundment refers to a refusal
by the President, for whatever reason, to spend funds made available by Congress. It is the
failure to spend or obligate budget authority of any type." Impoundment under the GAA is
understood to mean the retention or deduction of appropriations. The 2011 GAA authorized
impoundment only in case of unmanageable National Government budget deficit, to wit:
159

Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized

under this Act shall be impounded through retention or deduction, unless in accordance with the
rules and regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for
the purposes, programs, projects and activities authorized under this Act, except those covered
under the Unprogrammed Fund, shall be released pursuant to Section 33 (3), Chapter 5, Book
VI of E.O. No. 292.
Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of
appropriations authorized in this Act shall be effected only in cases where there is an
unmanageable national government budget deficit.
Unmanageable national government budget deficit as used in this section shall be construed to
mean that (i) the actual national government budget deficit has exceeded the quarterly budget
deficit targets consistent with the full-year target deficit as indicated in the FY 2011 Budget of
Expenditures and Sources of Financing submitted by the President and approved by Congress
pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications
of an impending occurrence of such condition, as determined by the Development Budget
Coordinating Committee and approved by the President.
The 2012 and 2013 GAAs contained similar provisions.
The withdrawal of unobligated allotments under the DAP should not be regarded as
impoundment because it entailed only the transfer of funds, not the retention or deduction of
appropriations.
Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs)
be applicable. They uniformly stated:
Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from
appropriations provided in this Act shall be transmitted intact or in full to the office or agency
concerned. No retention or deduction as reserves or overhead shall be made, except as

authorized by law, or upon direction of the President of the Philippines. The COA shall ensure
compliance with this provision to the extent that sub-allotments by agencies to their subordinate
offices are in conformity with the release documents issued by the DBM.
The provision obviously pertained to the retention or deduction of allotments upon their release
from the DBM, which was a different matter altogether. The Court should not expand the
meaning of the provision by applying it to the withdrawal of allotments.
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to
justify the withdrawal of unobligated allotments. But the provision authorized only the
suspension or stoppage of further expenditures, not the withdrawal of unobligated allotments, to
wit:
Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the
General Appropriations Act and whenever in his judgment the public interest so requires, the
President, upon notice to the head of office concerned, is authorized to suspend or otherwise
stop further expenditure of funds allotted for any agency, or any other expenditure authorized in
the General Appropriations Act, except for personal services appropriations used for permanent
officials and employees.
Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38,
supra, but instead transferred the funds to other PAPs.
It is relevant to remind at this juncture that the balances of appropriations that remained
unexpended at the end of the fiscal year were to be reverted to the General Fund. This was the
mandate of Section 28, Chapter IV, Book VI of the Administrative Code, to wit:
1wphi1

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.Unexpended balances of appropriations authorized in the General Appropriation Act shall revert
to the unappropriated surplus of the General Fund at the end of the fiscal year and shall not
thereafter be available for expenditure except by subsequent legislative enactment: Provided,
that appropriations for capital outlays shall remain valid until fully spent or reverted: provided,
further, that continuing appropriations for current operating expenditures may be specifically
recommended and approved as such in support of projects whose effective implementation
calls for multi-year expenditure commitments: provided, finally, that the President may authorize
the use of savings realized by an agency during given year to meet non-recurring expenditures
in a subsequent year.
The balances of continuing appropriations shall be reviewed as part of the annual budget
preparation process and the preparation process and the President may approve upon
recommendation of the Secretary, the reversion of funds no longer needed in connection with
the activities funded by said continuing appropriations.
The Executive could not circumvent this provision by declaring unreleased appropriations and
unobligated allotments as savings prior to the end of the fiscal year.
b.3. Third Requisite No funds from
savings could be transferred under
the DAP to augment deficient items
not provided in the GAA

The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to
augment an item in the general appropriations law for the respective offices." The term
"augment" means to enlarge or increase in size, amount, or degree.
160

The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation
for the PAP item to be augmented must be deficient, to wit:
x x x Augmentation implies the existence in this Act of a program, activity, or project with an
appropriation, which upon implementation, or subsequent evaluation of needed resources, is
determined to be deficient. In no case shall a non-existent program, activity, or project, be
funded by augmentation from savings or by the use of appropriations otherwise authorized in
this Act.
In other words, an appropriation for any PAP must first be determined to be deficient before it
could be augmented from savings. Note is taken of the fact that the 2013 GAA already made
this quite clear, thus:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker
of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of
Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby
authorized to use savings in their respective appropriations to augment actual deficiencies
incurred for the current year in any item of their respective appropriations.
As of 2013, a total of P144.4 billion worth of PAPs were implemented through the DAP.

161

Of this amount P82.5 billion were released in 2011 and P54.8 billion in 2012. Sec. Abad has
reported that 9% of the total DAP releases were applied to the PAPs identified by the
legislators.
162

163

The petitioners disagree, however, and insist that the DAP supported the following PAPs that
had not been covered with appropriations in the respective GAAs, namely:
(i) P1.5 billion for the Cordillera Peoples Liberation Army;
(ii) P1.8 billion for the Moro National Liberation Front;
(iii) P700 million for assistance to Quezon Province;

164

(iv) P50 million to P100 (million) each to certain senators;

165

(v) P10 billion for the relocation of families living along dangerous zones under the
National Housing Authority;
(vi) P10 billion and P20 billion equity infusion under the Bangko Sentral;
(vii) P5.4 billion landowners compensation under the Department of Agrarian Reform;
(viii) P8.6 billion for the ARMM comprehensive peace and development program;

(ix) P6.5 billion augmentation of LGU internal revenue allotments

(x) P5 billion for crucial projects like tourism road construction under the Department of
Tourism and the Department of Public Works and Highways;
(xi) P1.8 billion for the DAR-DPWH Tulay ng Pangulo;
(xii) P1.96 billion for the DOH-DPWH rehabilitation of regional health units; and
(xiii) P4 billion for the DepEd-PPP school infrastructure projects.

166

In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented, had
appropriation covers, and could properly be accounted for because the funds were released
following and pursuant to the standard practices adopted by the DBM. In support of its
argument, the OSG has submitted seven evidence packets containing memoranda, SAROs,
and other pertinent documents relative to the implementation and fund transfers under the
DAP.
167

168

Upon careful review of the documents contained in the seven evidence packets, we conclude
that the "savings" pooled under the DAP were allocated to PAPs that were not covered by any
appropriations in the pertinent GAAs.
For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk,
Exposure, Assessment and Mitigation (DREAM) project under the Department of Science and
Technology (DOST) covered the amount ofP1.6 Billion, broken down as follows:
169

APPROPRIATION
CODE

PARTICULARS

A.03.a.01.a

Generation of new knowledge and

technologies and research capability building
in priority areas identified as strategic to
National Development
Personnel Services
Maintenance and Other Operating Expenses
Capital Outlays

AMOUNT
AUTHORIZED

P 43,504,024
1,164,517,589
391,978,387
P 1,600,000,000

the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had
appropriated onlyP537,910,000 for MOOE, but nothing for personnel services and capital
outlays, to wit:
Personnel
Services

III. Operations

Maintenance
and Other
Operating
Expenditures

Capital
Outlays

TOTAL

a. Funding Assistance to
Science
and Technology Activities
1. Central Office
a. Generation of new
knowledge and
technologies and
research
capability building in
priority areas identified
as
strategic to National
Development

177,406,000

1,887,365,00 49,090,000 2,113,861,000

0
1,554,238,00
0

1,554,238,000

537,910,000

537,910,000

Aside from this transfer under the DAP to the DREAM project exceeding by almost 300% the
appropriation by Congress for the program Generation of new knowledge and technologies and
research capability building in priority areas identified as strategic to National Development, the
Executive allotted funds for personnel services and capital outlays. The Executive thereby
substituted its will to that of Congress. Worse, the Executive had not earlier proposed any
amount for personnel services and capital outlays in the NEP that became the basis of the 2011
GAA.
170

It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for
an expense category sufficiently indicated that Congress purposely did not see fit to fund, much
less implement, the PAP concerned. This indication becomes clearer when even the President
himself did not recommend in the NEP to fund the PAP. The consequence was that any PAP
requiring expenditure that did not receive any appropriation under the GAAs could only be a
new PAP, any funding for which would go beyond the authority laid down by Congress in
enacting the GAAs. That happened in some instances under the DAP.
In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy
and Emerging Technology Research and Development (DOST-PCIEETRD) for Establishment
of the Advanced Failure Analysis Laboratory, which reads:
171

APPROPRIATION
CODE

A.02.a

PARTICULARS

AMOUNT
AUTHORIZED

Development, integration and coordination of the

National Research System for Industry, Energy and
Emerging Technology and Related Fields
Capital Outlays
P 300,000,000

the appropriation code and the particulars appearing in the SARO did not correspond to the
program specified in the GAA, whose particulars were Research and Management
Services(inclusive of the following activities: (1) Technological and Economic Assessment for

Industry, Energy and Utilities; (2) Dissemination of Science and Technology Information; and (3)
Management of PCIERD Information System for Industry, Energy and Utilities. Even assuming
that Development, integration and coordination of the National Research System for Industry,
Energy and Emerging Technology and Related Fields the particulars stated in the SARO
could fall under the broad program description of Research and Management Services as
appearing in the SARO, it would nonetheless remain a new activity by reason of its not being
specifically stated in the GAA. As such, the DBM, sans legislative authorization, could not validly
fund and implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the Executive enjoyed sound
discretion in implementing the budget given the generality in the language and the broad policy
objectives identified under the GAAs; and that the President enjoyed unlimited authority to
spend the initial appropriations under his authority to declare and utilize savings, and in
keeping with his duty to faithfully execute the laws.
172

173

Although the OSG rightly contends that the Executive was authorized to spend in line with its
mandate to faithfully execute the laws (which included the GAAs), such authority did not
translate to unfettered discretion that allowed the President to substitute his own will for that of
Congress. He was still required to remain faithful to the provisions of the GAAs, given that his
power to spend pursuant to the GAAs was but a delegation to him from Congress. Verily, the
power to spend the public wealth resided in Congress, not in the Executive. Moreover, leaving
the spending power of the Executive unrestricted would threaten to undo the principle of
separation of powers.
174

175

Congress acts as the guardian of the public treasury in faithful discharge of its power of the
purse whenever it deliberates and acts on the budget proposal submitted by the Executive. Its
power of the purse is touted as the very foundation of its institutional strength, and underpins
"all other legislative decisions and regulating the balance of influence between the legislative
and executive branches of government." Such enormous power encompasses the capacity to
generate money for the Government, to appropriate public funds, and to spend the
money. Pertinently, when it exercises its power of the purse, Congress wields control by
specifying the PAPs for which public money should be spent.
176

177

178

179

It is the President who proposes the budget but it is Congress that has the final say on matters
of appropriations. For this purpose, appropriation involves two governing principles, namely: (1)
"a Principle of the Public Fisc, asserting that all monies received from whatever source by any
part of the government are public funds;" and (2) "a Principle of Appropriations Control,
prohibiting expenditure of any public money without legislative authorization." To conform with
the governing principles, the Executive cannot circumvent the prohibition by Congress of an
expenditure for a PAP by resorting to either public or private funds. Nor could the Executive
transfer appropriated funds resulting in an increase in the budget for one PAP, for by so doing
the appropriation for another PAP is necessarily decreased. The terms of both appropriations
will thereby be violated.
180

181

182

b.4 Third Requisite Cross-border

augmentations from savings were
prohibited by the Constitution
By providing that the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the Heads of the Constitutional

Commissions may be authorized to augment any item in the GAA "for their respective offices,"
Section 25(5), supra, has delineated borders between their offices, such that funds appropriated
for one office are prohibited from crossing over to another office even in the guise of
augmentation of a deficient item or items. Thus, we call such transfers of funds cross-border
transfers or cross-border augmentations.
To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire
Executive, with respect to the President; the Senate, with respect to the Senate President; the
House of Representatives, with respect to the Speaker; the Judiciary, with respect to the Chief
Justice; the Constitutional Commissions, with respect to their respective Chairpersons.
Did any cross-border transfers or augmentations transpire?
During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border
augmentations, to wit:
JUSTICE BERSAMIN:
Alright, the whole time that you have been Secretary of Department of Budget and
Management, did the Executive Department ever redirect any part of savings of the National
Government under your control cross border to another department?
SECRETARY ABAD:
Well, in the Memos that we submitted to you, such an instance, Your Honor
JUSTICE BERSAMIN:
Can you tell me two instances? I dont recall having read your material.
SECRETARY ABAD:
Well, the first instance had to do with a request from the House of Representatives. They started
building their e-library in 2010 and they had a budget for about 207 Million but they lack about
43 Million to complete its 250 Million requirements. Prior to that, the COA, in an audit
observation informed the Speaker that they had to continue with that construction otherwise the
whole building, as well as the equipments therein may suffer from serious deterioration. And at
that time, since the budget of the House of Representatives was not enough to complete 250
Million, they wrote to the President requesting for an augmentation of that particular item, which
was granted, Your Honor. The second instance in the Memos is a request from the Commission
on Audit. At the time they were pushing very strongly the good governance programs of the
government and therefore, part of that is a requirement to conduct audits as well as review
financial reports of many agencies. And in the performance of that function, the Commission on
Audit needed information technology equipment as well as hire consultants and litigators to help
them with their audit work and for that they requested funds from the Executive and the
President saw that it was important for the Commission to be provided with those IT equipments
and litigators and consultants and the request was granted, Your Honor.
JUSTICE BERSAMIN:

These cross border examples, cross border augmentations were not supported by
appropriations
SECRETARY ABAD:
They were, we were augmenting existing items within their (interrupted)
JUSTICE BERSAMIN:
No, appropriations before you augmented because this is a cross border and the tenor or text of
the Constitution is quite clear as far as I am concerned. It says here, "The power to augment
may only be made to increase any item in the General Appropriations Law for their respective
offices." Did you not feel constricted by this provision?
SECRETARY ABAD:
Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations,
Your Honor. What we thought we did was to transfer savings which was needed by the
Commission to address deficiency in an existing item in both the Commission as well as in the
House of Representatives; thats how we saw(interrupted)
JUSTICE BERSAMIN:
So your position as Secretary of Budget is that you could do that?
SECRETARY ABAD:
In an extreme instances because(interrupted)
JUSTICE BERSAMIN:
No, no, in all instances, extreme or not extreme, you could do that, thats your feeling.
SECRETARY ABAD:
Well, in that particular situation when the request was made by the Commission and the House
of Representatives, we felt that we needed to respond because we felt(interrupted).
183

The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00
were transferred under the DAP respectively to the COA and the House of
Representatives. Those transfers of funds, which constituted cross-border augmentations for
being from the Executive to the COA and the House of Representatives, are graphed as
follows:
184

185

186

OFFICE

PURPOSE

DATE
RELEASED

AMOUNT
(In thousand pesos)
Reserve

Releases

Imposed
Commission on
Audit

IT Infrastructure Program and

hiring of additional litigation
experts

11/11/11

Congress
House of
Representative
s

Completion of the construction

of the Legislative Library and
Archives
Building/Congressional elibrary

07/23/12

143,700

207,034
(Savings of HOR)

250,000

The respondents further stated in their memorandum that the President "made available" to the
"Commission on Elections the savings of his department upon [its] request for funds" This
was another instance of a cross-border augmentation.
187

The respondents justified all the cross-border transfers thusly:

99. The Constitution does not prevent the President from transferring savings of his department
to another department upon the latters request, provided it is the recipient department that uses
such funds to augment its own appropriation. In such a case, the President merely gives the
other department access to public funds but he cannot dictate how they shall be applied by that
department whose fiscal autonomy is guaranteed by the Constitution.
188

In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza, representing
Congress, announced a different characterization of the cross-border transfers of funds as in
the nature of "aid" instead of "augmentation," viz:
HONORABLE MENDOZA:
The cross-border transfers, if Your Honors please, is not an application of the DAP. What were
these cross-border transfers? They are transfers of savings as defined in the various General
Appropriations Act. So, that makes it similar to the DAP, the use of savings. There was a crossborder which appears to be in violation of Section 25, paragraph 5 of Article VI, in the sense that
the border was crossed. But never has it been claimed that the purpose was to augment a
deficient item in another department of the government or agency of the government. The
cross-border transfers, if Your Honors please, were in the nature of [aid] rather than
augmentations. Here is a government entity separate and independent from the Executive
Department solely in need of public funds. The President is there 24 hours a day, 7 days a
week. Hes in charge of the whole operation although six or seven heads of government offices
are given the power to augment. Only the President stationed there and in effect in-charge and
has the responsibility for the failure of any part of the government. You have election, for one
reason or another, the money is not enough to hold election. There would be chaos if no money
is given as an aid, not to augment, but as an aid to a department like COA. The President is
responsible in a way that the other heads, given the power to augment, are not. So, he cannot
very well allow this, if Your Honor please.
189

JUSTICE LEONEN:

May I move to another point, maybe just briefly. I am curious that the position now, I think, of
government is that some transfers of savings is now considered to be, if Im not mistaken, aid
not augmentation. Am I correct in my hearing of your argument?
HONORABLE MENDOZA:
Thats our submission, if Your Honor, please.
JUSTICE LEONEN:
May I know, Justice, where can we situate this in the text of the Constitution? Where do we
actually derive the concepts that transfers of appropriation from one branch to the other or what
happened in DAP can be considered a said? What particular text in the Constitution can we
situate this?
HONORABLE MENDOZA:
There is no particular provision or statutory provision for that matter, if Your Honor please. It is
drawn from the fact that the Executive is the executive in-charge of the success of the
government.
JUSTICE LEONEN:
So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of
the government?
HONORABLE MENDOZA:
Yes, if Your Honor, please.
JUSTICE LEONEN:
A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That
there are opportunities and there have been opportunities of the President to actually go to
Congress and ask for supplemental budgets?
HONORABLE MENDOZA:
If there is time to do that, I would say yes.
JUSTICE LEONEN:
So, the theory of aid rather than augmentation applies in extra-ordinary situation?
HONORABLE MENDOZA:
Very extra-ordinary situations.
JUSTICE LEONEN:

But Counsel, this would be new doctrine, in case?

HONORABLE MENDOZA:
Yes, if Your Honor please.

190

Regardless of the variant characterizations of the cross-border transfers of funds, the plain text
of Section 25(5), supra, disallowing cross border transfers was disobeyed. Cross-border
transfers, whether as augmentation, or as aid, were prohibited under Section 25(5), supra.
4.
Sourcing the DAP from unprogrammed
funds despite the original revenue targets
not having been exceeded was invalid
Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for
2011, 2012,and 2013. The respondents stress, however, that the unprogrammed funds were not
brought under the DAP as savings, but as separate sources of funds; and that, consequently,
the release and use of unprogrammed funds were not subject to the restrictions under Section
25(5), supra.
The documents contained in the Evidence Packets by the OSG have confirmed that the
unprogrammed funds were treated as separate sources of funds. Even so, the release and use
of the unprogrammed funds were still subject to restrictions, for, to start with, the GAAs precisely
specified the instances when the unprogrammed funds could be released and the purposes for
which they could be used.
The petitioners point out that a condition for the release of the unprogrammed funds was that
the revenue collections must exceed revenue targets; and that the release of the
unprogrammed funds was illegal because such condition was not met.
191

The respondents disagree, holding that the release and use of the unprogrammed funds under
the DAP were in accordance with the pertinent provisions of the GAAs. In particular, the DBM
avers that the unprogrammed funds could be availed of when any of the following three
instances occur, to wit: (1) the revenue collections exceeded the original revenue targets
proposed in the BESFs submitted by the President to Congress; (2) new revenues were
collected or realized from sources not originally considered in the BESFs; or(3) newly-approved
loans for foreign assisted projects were secured, or when conditions were triggered for other
sources of funds, such as perfected loan agreements for foreign-assisted projects. This view of
the DBM was adopted by all the respondents in their Consolidated Comment.
192

193

The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as
appropriations that provided standby authority to incur additional agency obligations for priority
PAPs when revenue collections exceeded targets, and when additional foreign funds are
generated. Contrary to the DBMs averment that there were three instances when
unprogrammed funds could be released, the BESFs envisioned only two instances. The third
mentioned by the DBM the collection of new revenues from sources not originally considered
in the BESFs was not included. This meant that the collection of additional revenues from new
sources did not warrant the release of the unprogrammed funds. Hence, even if the revenues
not considered in the BESFs were collected or generated, the basic condition that the revenue
194

collections should exceed the revenue targets must still be complied with in order to justify the
release of the unprogrammed funds.
The view that there were only two instances when the unprogrammed funds could be released
was bolstered by the following texts of the Special Provisions of the 2011 and 2012 GAAs, to
wit:
2011 GAA
1. Release of Fund. The amounts authorized herein shall be released only when the revenue
collections exceed the original revenue targets submitted by the President of the Philippines to
Congress pursuant to Section 22, Article VII of the Constitution, including savings generated
from programmed appropriations for the year: PROVIDED, That collections arising from sources
not considered in the aforesaid original revenue targets may be used to cover releases from
appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for
foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be
sufficient basis for the issuance of a SARO covering the loan proceeds: PROVIDED,
FURTHERMORE, That if there are savings generated from the programmed appropriations for
the first two quarters of the year, the DBM may, subject to the approval of the President, release
the pertinent appropriations under the Unprogrammed Fund corresponding to only fifty percent
(50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That the release of the
balance of the total savings from programmed appropriations for the year shall be subject to
fiscal programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the
revenue collections exceed the original revenue targets submitted by the President of the
Philippines to Congress pursuant to Section 22, Article VII of the Constitution: PROVIDED, That
collections arising from sources not considered in the aforesaid original revenue targets may be
used to cover releases from appropriations in this Fund: PROVIDED, FURTHER, That in case
of newly approved loans for foreign-assisted projects, the existence of a perfected loan
agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the
loan proceeds.
As can be noted, the provisos in both provisions to the effect that "collections arising from
sources not considered in the aforesaid original revenue targets may be used to cover releases
from appropriations in this Fund" gave the authority to use such additional revenues for
appropriations funded from the unprogrammed funds. They did not at all waive compliance with
the basic requirement that revenue collections must still exceed the original revenue targets.
In contrast, the texts of the provisos with regard to additional revenues generated from newlyapproved foreign loans were clear to the effect that the perfected loan agreement would be in
itself "sufficient basis" for the issuance of a SARO to release the funds but only to the extent of
the amount of the loan. In such instance, the revenue collections need not exceed the revenue
targets to warrant the release of the loan proceeds, and the mere perfection of the loan
agreement would suffice.
It can be inferred from the foregoing that under these provisions of the GAAs the additional
revenues from sources not considered in the BESFs must be taken into account in determining

if the revenue collections exceeded the revenue targets. The text of the relevant provision of the
2013 GAA, which was substantially similar to those of the GAAs for 2011 and 2012, already
made this explicit, thus:
1. Release of the Fund. The amounts authorized herein shall be released only when the
revenue collections exceed the original revenue targets submitted by the President of the
Philippines to Congress pursuant to Section 22, Article VII of the Constitution, including
collections arising from sources not considered in the aforesaid original revenue target, as
certified by the BTr: PROVIDED, That in case of newly approved loans for foreign-assisted
projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis
for the issuance of a SARO covering the loan proceeds.
Consequently, that there were additional revenues from sources not considered in the revenue
target would not be enough. The total revenue collections must still exceed the original revenue
targets to justify the release of the unprogrammed funds (other than those from newly-approved
foreign loans).
The present controversy on the unprogrammed funds was rooted in the correct interpretation of
the phrase "revenue collections should exceed the original revenue targets." The petitioners
take the phrase to mean that the total revenue collections must exceed the total revenue target
stated in the BESF, but the respondents understand the phrase to refer only to the collections
for each source of revenue as enumerated in the BESF, with the condition being deemed
complied with once the revenue collections from a particular source already exceeded the
stated target.
The BESF provided for the following sources of revenue, with the corresponding revenue target
stated for each source of revenue, to wit:
TAX REVENUES
Taxes on Net Income and Profits
Taxes on Property
Taxes on Domestic Goods and Services
General Sales, Turnover or VAT
Selected Excises on Goods
Selected Taxes on Services
Taxes on the Use of Goods or Property or Permission to Perform Activities
Other Taxes
Taxes on International Trade and Transactions
NON-TAX REVENUES
Fees and Charges
BTR Income
Government Services
Interest on NG Deposits

Interest on Advances to Government Corporations

Income from Investments
Interest on Bond Holdings
Guarantee Fee
Gain on Foreign Exchange
NG Income Collected by BTr
Dividends on Stocks
NG Share from Airport Terminal Fee
NG Share from PAGCOR Income
NG Share from MIAA Profit
Privatization
Foreign Grants
Thus, when the Court required the respondents to submit a certification from the Bureau of
Treasury (BTr) to the effect that the revenue collections had exceeded the original revenue
targets, they complied by submitting certifications from the BTr and Department of Finance
(DOF) pertaining to only one identified source of revenue the dividends from the shares of
stock held by the Government in government-owned and controlled corporations.
195

To justify the release of the unprogrammed funds for 2011, the OSG presented the certification
dated March 4, 2011 issued by DOF Undersecretary Gil S. Beltran, as follows:
This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the
programmed income from dividends from shares of stock in government-owned and controlled
corporations is 5.5 billion.
This is to certify further that based on the records of the Bureau of Treasury, the National
Government has recorded dividend income amounting to P23.8 billion as of 31 January 2011.

196

For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer
Roberto B. Tan, viz:
This is to certify that the actual dividend collections remitted to the National Government for the
period January to March 2012 amounted to P19.419 billion compared to the full year program
of P5.5 billion for 2012.
197

And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National
Treasurer Rosalia V. De Leon, to wit:
This is to certify that the actual dividend collections remitted to the National Government for the
period January to May 2013 amounted to P12.438 billion compared to the full year program
of P10.0 billion for 2013.
198

Moreover, the National Government accounted for the sale of the right to build and operate the
NAIA expressway amounting to P11.0 billion in June 2013.
199

The certifications reflected that by collecting dividends amounting to P23.8 billion in

2011, P19.419 billion in 2012, and P12.438 billion in 2013 the BTr had exceeded only the P5.5
billion in target revenues in the form of dividends from stocks in each of 2011 and 2012, and
only the P10 billion in target revenues in the form of dividends from stocks in 2013.
However, the requirement that revenue collections exceed the original revenue targets was to
be construed in light of the purpose for which the unprogrammed funds were incorporated in the
GAAs as standby appropriations to support additional expenditures for certain priority PAPs
should the revenue collections exceed the resource targets assumed in the budget or when
additional foreign project loan proceeds were realized. The unprogrammed funds were included
in the GAAs to provide ready cover so as not to delay the implementation of the PAPs should
new or additional revenue sources be realized during the year. Given the tenor of the
certifications, the unprogrammed funds were thus not yet supported by the corresponding
resources.
200

201

The revenue targets stated in the BESF were intended to address the funding requirements of
the proposed programmed appropriations. In contrast, the unprogrammed funds, as standby
appropriations, were to be released only when there were revenues in excess of what the
programmed appropriations required. As such, the revenue targets should be considered as a
whole, not individually; otherwise, we would be dealing with artificial revenue surpluses. The
requirement that revenue collections must exceed revenue target should be understood to
mean that the revenue collections must exceed the total of the revenue targets stated in the
BESF. Moreover, to release the unprogrammed funds simply because there was an excess
revenue as to one source of revenue would be an unsound fiscal management measure
because it would disregard the budget plan and foster budget deficits, in contravention of the
Governments surplus budget policy.
202

We cannot, therefore, subscribe to the respondents view.

5.
Equal protection, checks and balances,
and public accountability challenges
The DAP is further challenged as violative of the Equal Protection Clause, the system of checks
and balances, and the principle of public accountability.
With respect to the challenge against the DAP under the Equal Protection Clause, Luna
argues that the implementation of the DAP was "unfair as it [was] selective" because the funds
released under the DAP was not made available to all the legislators, with some of them
refusing to avail themselves of the DAP funds, and others being unaware of the availability of
such funds. Thus, the DAP practised "undue favoritism" in favor of select legislators in
contravention of the Equal Protection Clause.
203

Similarly, COURAGE contends that the DAP violated the Equal Protection Clause because no
reasonable classification was used in distributing the funds under the DAP; and that the
Senators who supposedly availed themselves of said funds were differently treated as to the
amounts they respectively received.
Anent the petitioners theory that the DAP violated the system of checks and balances, Luna
submits that the grant of the funds under the DAP to some legislators forced their silence about

the issues and anomalies surrounding the DAP. Meanwhile, Belgica stresses that the DAP, by
allowing the legislators to identify PAPs, authorized them to take part in the implementation and
execution of the GAAs, a function that exclusively belonged to the Executive; that such situation
constituted undue and unjustified legislative encroachment in the functions of the Executive; and
that the President arrogated unto himself the power of appropriation vested in Congress
because NBC No. 541 authorized the use of the funds under the DAP for PAPs not considered
in the 2012 budget.
Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability
enshrined in the Constitution, because the legislators relinquished the power of appropriation
to the Executive, and exhibited a reluctance to inquire into the legality of the DAP.
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The OSG counters the challenges, stating that the supposed discrimination in the release of
funds under the DAP could be raised only by the affected Members of Congress themselves,
and if the challenge based on the violation of the Equal Protection Clause was really against the
constitutionality of the DAP, the arguments of the petitioners should be directed to the
entitlement of the legislators to the funds, not to the proposition that all of the legislators should
have been given such entitlement.
The challenge based on the contravention of the Equal Protection Clause, which focuses on the
release of funds under the DAP to legislators, lacks factual and legal basis. The allegations
about Senators and Congressmen being unaware of the existence and implementation of the
DAP, and about some of them having refused to accept such funds were unsupported with
relevant data. Also, the claim that the Executive discriminated against some legislators on the
ground alone of their receiving less than the others could not of itself warrant a finding of
contravention of the Equal Protection Clause. The denial of equal protection of any law should
be an issue to be raised only by parties who supposedly suffer it, and, in these cases, such
parties would be the few legislators claimed to have been discriminated against in the releases
of funds under the DAP. The reason for the requirement is that only such affected legislators
could properly and fully bring to the fore when and how the denial of equal protection occurred,
and explain why there was a denial in their situation. The requirement was not met here.
Consequently, the Court was not put in the position to determine if there was a denial of equal
protection. To have the Court do so despite the inadequacy of the showing of factual and legal
support would be to compel it to speculate, and the outcome would not do justice to those for
whose supposed benefit the claim of denial of equal protection has been made.
The argument that the release of funds under the DAP effectively stayed the hands of the
legislators from conducting congressional inquiries into the legality and propriety of the DAP is
speculative. That deficiency eliminated any need to consider and resolve the argument, for it is
fundamental that speculation would not support any proper judicial determination of an issue
simply because nothing concrete can thereby be gained. In order to sustain their constitutional
challenges against official acts of the Government, the petitioners must discharge the basic
burden of proving that the constitutional infirmities actually existed. Simply put, guesswork and
speculation cannot overcome the presumption of the constitutionality of the assailed executive
act.
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We do not need to discuss whether or not the DAP and its implementation through the various
circulars and memoranda of the DBM transgressed the system of checks and balances in place
in our constitutional system. Our earlier expositions on the DAP and its implementing issuances
infringing the doctrine of separation of powers effectively addressed this particular concern.

Anent the principle of public accountability being transgressed because the adoption and
implementation of the DAP constituted an assumption by the Executive of Congress power of
appropriation, we have already held that the DAP and its implementing issuances were policies
and acts that the Executive could properly adopt and do in the execution of the GAAs to the
extent that they sought to implement strategies to ramp up or accelerate the economy of the
country.
6.
Doctrine of operative fact was applicable
After declaring the DAP and its implementing issuances constitutionally infirm, we must now
deal with the consequences of the declaration.
Article 7 of the Civil Code provides:
Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance
shall not be excused by disuse, or custom or practice to the contrary.
When the courts declared a law to be inconsistent with the Constitution, the former shall be void
and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not
contrary to the laws or the Constitution.
A legislative or executive act that is declared void for being unconstitutional cannot give rise to
any right or obligation. However, the generality of the rule makes us ponder whether rigidly
applying the rule may at times be impracticable or wasteful. Should we not recognize the need
to except from the rigid application of the rule the instances in which the void law or executive
act produced an almost irreversible result?
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The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one,
has been exhaustively explained in De Agbayani v. Philippine National Bank:
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The decision now on appeal reflects the orthodox view that an unconstitutional act, for that
matter an executive order or a municipal ordinance likewise suffering from that infirmity, cannot
be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its
repugnancy to the fundamental law once judicially declared results in its being to all intents and
purposes a mere scrap of paper. As the new Civil Code puts it: When the courts declare a law
to be inconsistent with the Constitution, the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not
contrary to the laws of the Constitution. It is understandable why it should be so, the
Constitution being supreme and paramount. Any legislative or executive act contrary to its terms
cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be complied with.
This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their positions.
What could be more fitting than that in a subsequent litigation regard be had to what has been

done while such legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact
must be reckoned with. This is merely to reflect awareness that precisely because the judiciary
is the governmental organ which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to deprive the law of its quality of
fairness and justice then, if there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: The actual existence of a statute,
prior to such a determination [of unconstitutionality], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects, with respect to particular relations, individual and corporate, and
particular conduct, private and official."
The doctrine of operative fact recognizes the existence of the law or executive act prior to the
determination of its unconstitutionality as an operative fact that produced consequences that
cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive
act but sustains its effects. It provides an exception to the general rule that a void or
unconstitutional law produces no effect. But its use must be subjected to great scrutiny and
circumspection, and it cannot be invoked to validate an unconstitutional law or executive act, but
is resorted to only as a matter of equity and fair play. It applies only to cases where
extraordinary circumstances exist, and only when the extraordinary circumstances have met the
stringent conditions that will permit its application.
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209

We find the doctrine of operative fact applicable to the adoption and implementation of the DAP.
Its application to the DAP proceeds from equity and fair play. The consequences resulting from
the DAP and its related issuances could not be ignored or could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act.
The term executive act is broad enough to include any and all acts of the Executive, including
those that are quasi legislative and quasi-judicial in nature. The Court held so in Hacienda
Luisita, Inc. v. Presidential Agrarian Reform Council:
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Nonetheless, the minority is of the persistent view that the applicability of the operative fact
doctrine should be limited to statutes and rules and regulations issued by the executive
department that are accorded the same status as that of a statute or those which are quasilegislative in nature. Thus, the minority concludes that the phrase executive act used in the
case of De Agbayani v. Philippine National Bank refers only to acts, orders, and rules and
regulations that have the force and effect of law. The minority also made mention of the
Concurring Opinion of Justice Enrique Fernando in Municipality of Malabang v. Benito, where it
was supposedly made explicit that the operative fact doctrine applies to executive acts, which
are ultimately quasi-legislative in nature.
We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang case
elaborates what executive act mean. Moreover, while orders, rules and regulations issued by
the President or the executive branch have fixed definitions and meaning in the Administrative
Code and jurisprudence, the phrase executive act does not have such specific definition under
existing laws. It should be noted that in the cases cited by the minority, nowhere can it be found

that the term executive act is confined to the foregoing. Contrarily, the term executive act is
broad enough to encompass decisions of administrative bodies and agencies under the
executive department which are subsequently revoked by the agency in question or nullified by
the Court.
A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the
Presidential Commission on Good Government (PCGG) and as Chief Presidential Legal
Counsel (CPLC) which was declared unconstitutional by this Court in Public Interest Center, Inc.
v. Elma. In said case, this Court ruled that the concurrent appointment of Elma to these offices
is in violation of Section 7, par. 2, Article IX-B of the 1987 Constitution, since these are
incompatible offices. Notably, the appointment of Elma as Chairman of the PCGG and as CPLC
is, without a question, an executive act. Prior to the declaration of unconstitutionality of the said
executive act, certain acts or transactions were made in good faith and in reliance of the
appointment of Elma which cannot just be set aside or invalidated by its subsequent
invalidation.
In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the
invalidity of the jurisdiction of the military courts over civilians, certain operative facts must be
acknowledged to have existed so as not to trample upon the rights of the accused therein.
Relevant thereto, in Olaguer v. Military Commission No. 34, it was ruled that military tribunals
pertain to the Executive Department of the Government and are simply instrumentalities of the
executive power, provided by the legislature for the President as Commander-in-Chief to aid him
in properly commanding the army and navy and enforcing discipline therein, and utilized under
his orders or those of his authorized military representatives.
Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued
by the executive department that are accorded the same status as that of a statute or those
which are quasi-legislative in nature.
Even assuming that De Agbayani initially applied the operative fact doctrine only to executive
issuances like orders and rules and regulations, said principle can nonetheless be applied, by
analogy, to decisions made by the President or the agencies under the executive department.
This doctrine, in the interest of justice and equity, can be applied liberally and in a broad sense
to encompass said decisions of the executive branch. In keeping with the demands of equity,
the Court can apply the operative fact doctrine to acts and consequences that resulted from the
reliance not only on a law or executive act which is quasi-legislative in nature but also on
decisions or orders of the executive branch which were later nullified. This Court is not
unmindful that such acts and consequences must be recognized in the higher interest of justice,
equity and fairness.
Significantly, a decision made by the President or the administrative agencies has to be
complied with because it has the force and effect of law, springing from the powers of the
President under the Constitution and existing laws. Prior to the nullification or recall of said
decision, it may have produced acts and consequences in conformity to and in reliance of said
decision, which must be respected. It is on this score that the operative fact doctrine should be
applied to acts and consequences that resulted from the implementation of the PARC
Resolution approving the SDP of HLI. (Bold underscoring supplied for emphasis)
In Commissioner of Internal Revenue v. San Roque Power Corporation, the Court likewise
declared that "for the operative fact doctrine to apply, there must be a legislative or executive
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measure, meaning a law or executive issuance." Thus, the Court opined there that the
operative fact doctrine did not apply to a mere administrative practice of the Bureau of Internal
Revenue, viz:
Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from
the time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The
reversal is not given retroactive effect. This, in essence, is the doctrine of operative fact. There
must, however, be a rule or ruling issued by the Commissioner that is relied upon by the
taxpayer in good faith. A mere administrative practice, not formalized into a rule or ruling, will not
suffice because such a mere administrative practice may not be uniformly and consistently
applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the
general public and can be availed of only by those with informal contacts with the government
agency.
It is clear from the foregoing that the adoption and the implementation of the DAP and its related
issuances were executive acts. The DAP itself, as a policy, transcended a merely
administrative practice especially after the Executive, through the DBM, implemented it by
issuing various memoranda and circulars. The pooling of savings pursuant to the DAP from the
allotments made available to the different agencies and departments was consistently applied
throughout the entire Executive. With the Executive, through the DBM, being in charge of the
third phase of the budget cycle the budget execution phase, the President could legitimately
adopt a policy like the DAP by virtue of his primary responsibility as the Chief Executive of
directing the national economy towards growth and development. This is simply because
savings could and should be determined only during the budget execution phase.
1avvphi1

As already mentioned, the implementation of the DAP resulted into the use of savings pooled by
the Executive to finance the PAPs that were not covered in the GAA, or that did not have proper
appropriation covers, as well as to augment items pertaining to other departments of the
Government in clear violation of the Constitution. To declare the implementation of the DAP
unconstitutional without recognizing that its prior implementation constituted an operative fact
that produced consequences in the real as well as juristic worlds of the Government and the
Nation is to be impractical and unfair. Unless the doctrine is held to apply, the Executive as the
disburser and the offices under it and elsewhere as the recipients could be required to undo
everything that they had implemented in good faith under the DAP. That scenario would be
enormously burdensome for the Government. Equity alleviates such burden.
The other side of the coin is that it has been adequately shown as to be beyond debate that the
implementation of the DAP yielded undeniably positive results that enhanced the economic
welfare of the country. To count the positive results may be impossible, but the visible ones, like
public infrastructure, could easily include roads, bridges, homes for the homeless, hospitals,
classrooms and the like. Not to apply the doctrine of operative fact to the DAP could literally
cause the physical undoing of such worthy results by destruction, and would result in most
undesirable wastefulness.
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative
fact does not always apply, and is not always the consequence of every declaration of
constitutional invalidity. It can be invoked only in situations where the nullification of the effects
of what used to be a valid law would result in inequity and injustice; but where no such result
would ensue, the general rule that an unconstitutional law is totally ineffective should apply.
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In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the
PAPs that can no longer be undone, and whose beneficiaries relied in good faith on the validity
of the DAP, but cannot apply to the authors, proponents and implementors of the DAP, unless
there are concrete findings of good faith in their favor by the proper tribunals determining their
criminal, civil, administrative and other liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and
DECLARES the following acts and practices under the Disbursement Acceleration Program,
National Budget Circular No. 541 and related executive issuances UNCONSTITUTIONAL for
being in violation of Section 25(5), Article VI of the 1987 Constitution and the doctrine of
separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing agencies, and the
declaration of the withdrawn unobligated allotments and unreleased appropriations as
savings prior to the end of the fiscal year and without complying with the statutory
definition of savings contained in the General Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to augment the
appropriations of other offices outside the Executive; and
(c) The funding of projects, activities and programs that were not covered by any
appropriation in the General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a
certification by the National Treasurer that the revenue collections exceeded the revenue targets
for non-compliance with the conditions provided in the relevant General Appropriations Acts.
SO ORDERED.