HON. EXECUTIVE SECRETARY, HON.

SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND On January 16, 2004, respondents Southwing Heavy Industries, Inc., (Southwing) United Auctioneers, Inc. (United
COMMUNICATIONS (DOTC), COMMISSIONER OF CUSTOMS, ASSISTANT SECRETARY, LAND TRANSPORTATION Auctioneers), and Microvan, Inc. (Microvan), instituted a declaratory relief case docketed as Civil Case No. 20-0-
OFFICE (LTO), COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE, AND CHIEF OF LTO, SUBIC BAY FREE PORT 04,1 against the Executive Secretary, Secretary of Transportation and Communication, Commissioner of Customs,
ZONE, Petitioners,  Assistant Secretary and Head of the Land Transportation Office, Subic Bay Metropolitan Authority (SBMA),
vs. Collector of Customs for the Port at Subic Bay Freeport Zone, and the Chief of the Land Transportation Office at
SOUTHWING HEAVY INDUSTRIES, INC., represented by its President JOSE T. DIZON, UNITED AUCTIONEERS, INC., Subic Bay Freeport Zone.
represented by its President DOMINIC SYTIN, and MICROVAN, INC., represented by its President MARIANO C.
SONON, Respondents. Southwing, United Auctioneers and Microvan prayed that judgment be rendered (1) declaring Article 2, Section
3.1 of EO 156 unconstitutional and illegal; (2) directing the Secretary of Finance, Commissioner of Customs,
x---------------x Collector of Customs and the Chairman of the SBMA to allow the importation of used motor vehicles; (2)
ordering the Land Transportation Office and its subordinates inside the Subic Special Economic Zone to process
G.R. No. 164172             February 20, 2006 the registration of the imported used motor vehicles; and (3) in general, to allow the unimpeded entry and
importation of used motor vehicles subject only to the payment of the required customs duties.
HON. EXECUTIVE SECRETARY, SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATION
(DOTC), COMMISSIONER OF CUSTOMS, ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), Upon filing of petitioners’ answer/comment, respondents Southwing and Microvan filed a motion for summary
COLLECTOR OF CUSTOMS, SUBIC BAY FREE PORT ZONE AND CHIEF OF LTO, SUBIC BAY FREE PORT judgment which was granted by the trial court. On May 24, 2004, a summary judgment was rendered declaring
ZONE, Petitioners,  that Article 2, Section 3.1 of EO 156 constitutes an unlawful usurpation of legislative power vested by the
vs. Constitution with Congress. The trial court further held that the proviso is contrary to the mandate of Republic
SUBIC INTEGRATED MACRO VENTURES CORP., represented by its President YOLANDA AMBAR, Respondent. Act No. 7227 (RA 7227) or the Bases Conversion and Development Act of 1992 which allows the free flow of
goods and capital within the Freeport. The dispositive portion of the said decision reads:
x---------------x
WHEREFORE, judgment is hereby rendered in favor of petitioner declaring Executive Order 156 [Article 2,
G.R. No. 168741             February 20, 2006 Section] 3.1 for being unconstitutional and illegal; directing respondents Collector of Customs based at SBMA to
allow the importation and entry of used motor vehicles pursuant to the mandate of RA 7227; directing
HON. EXECUTIVE SECRETARY, HON. SECRETARY OF FINANCE, THE CHIEF OF THE LAND TRANSPORTATION OFFICE, respondent Chief of the Land Transportation Office and its subordinates inside the Subic Special Economic Zone
THE COMMISSIONER OF CUSTOMS, and THE COLLECTOR OF CUSTOMS, SUBIC SPECIAL ECONOMIC or SBMA to process the registration of imported used motor vehicle; and in general, to allow unimpeded entry
ZONE, Petitioners,  and importation of used motor vehicles to the Philippines subject only to the payment of the required customs
vs. duties.
MOTOR VEHICLE IMPORTERS ASSOCIATION OF SUBIC BAY FREEPORT, INC., represented by its President ALFREDO
S. GALANG,Respondent. SO ORDERED.2

DECISION From the foregoing decision, petitioners sought relief before this Court via a petition for review on certiorari,
docketed as G.R. No. 164171.
YNARES-SANTIAGO, J.:
G.R. No. 164172:
The instant consolidated petitions seek to annul and set aside the Decisions of the Regional Trial Court of
Olongapo City, Branch 72, in Civil Case No. 20-0-04 and Civil Case No. 22-0-04, both dated May 24, 2004; and the On January 20, 2004, respondent Subic Integrated Macro Ventures Corporation (Macro Ventures) filed with the
February 14, 2005 Decision of the Court of Appeals in CA-G.R. SP. No. 83284, which declared Article 2, Section 3.1 same trial court, a similar action for declaratory relief docketed as Civil Case No. 22-0-04, 3 with the same prayer
of Executive Order No. 156 (EO 156) unconstitutional. Said executive issuance prohibits the importation into the and against the same parties4 as those in Civil Case No. 20-0-04.
country, inclusive of the Special Economic and Freeport Zone or the Subic Bay Freeport (SBF or Freeport), of used
motor vehicles, subject to a few exceptions. In this case, the trial court likewise rendered a summary judgment on May 24, 2004, holding that Article 2,
Section 3.1 of EO 156, is repugnant to the constitution.5 Elevated to this Court via a petition for review on
The undisputed facts show that on December 12, 2002, President Gloria Macapagal-Arroyo, through Executive certiorari, Civil Case No. 22-0-04 was docketed as G.R. No. 164172.
Secretary Alberto G. Romulo, issued EO 156, entitled "Providing for a comprehensive industrial policy and
directions for the motor vehicle development program and its implementing guidelines." The challenged G.R. No. 168741
provision states:
On January 22, 2003, respondent Motor Vehicle Importers Association of Subic Bay Freeport, Inc. (Association),
3.1 The importation into the country, inclusive of the Freeport, of all types of used motor vehicles is prohibited, filed another action for declaratory relief with essentially the same prayer as those in Civil Case No. 22-0-04 and
except for the following: Civil Case No. 20-0-04, against the Executive Secretary, Secretary of Finance, Chief of the Land Transportation
Office, Commissioner of Customs, Collector of Customs at SBMA and the Chairman of SBMA. This was docketed
The issuance of EO 156 spawned three separate actions for declaratory relief before Branch 72 of the Regional as Civil Case No. 30-0-2003,6 before the same trial court.
Trial Court of Olongapo City, all seeking the declaration of the unconstitutionality of Article 2, Section 3.1 of said
executive order. The cases were filed by herein respondent entities, who or whose members, are classified as In a decision dated March 10, 2004, the court a quo granted the Association’s prayer and declared the assailed
Subic Bay Freeport Enterprises and engaged in the business of, among others, importing and/or trading used proviso as contrary to the Constitution, to wit:
motor vehicles.
WHEREFORE, judgment is hereby rendered in favor of petitioner declaring Executive Order 156 [Article 2,
G.R. No. 164171: Section] 3.1 for being unconstitutional and illegal; directing respondents Collector of Customs based at SBMA to
allow the importation and entry of used motor vehicles pursuant to the mandate of RA 7227; directing presented need not be tried either because these are patently devoid of substance or that there is no genuine
respondent Chief of the Land Transportation Office and its subordinates inside the Subic Special Economic Zone issue as to any pertinent fact. It is a method sanctioned by the Rules of Court for the prompt disposition of a civil
or SBMA to process the registration of imported used motor vehicles; directing the respondent Chairman of the action in which the pleadings raise only a legal issue, not a genuine issue as to any material fact. 14
SBMA to allow the entry into the Subic Special Economic Zone or SBMA imported used motor vehicle; and in
general, to allow unimpeded entry and importation of used motor vehicles to the Philippines subject only to the At any rate, even assuming the procedural flaws raised by petitioners truly exist, the Court is not precluded from
payment of the required customs duties. brushing aside these technicalities and taking cognizance of the action filed by respondents considering its
importance to the public and in keeping with the duty to determine whether the other branches of the
SO ORDERED.7 government have kept themselves within the limits of the Constitution.15

Aggrieved, the petitioners in Civil Case No. 30-0-2003, filed a petition for certiorari8 with the Court of Appeals We now come to the substantive issues, which are: (1) whether there is statutory basis for the issuance of EO
(CA-G.R. SP. No. 83284) which denied the petition on February 14, 2005 and sustained the finding of the trial 156; and (2) if the answer is in the affirmative, whether the application of Article 2, Section 3.1 of EO 156,
court that Article 2, Section 3.1 of EO 156, is void for being repugnant to the constitution. The dispositive portion reasonable and within the scope provided by law.
thereof, reads:
The main thrust of the petition is that EO 156 is constitutional because it was issued pursuant to EO 226, the
WHEREFORE, the instant petition for certiorari is hereby DENIED. The assailed decision of the Regional Trial Omnibus Investment Code of the Philippines and that its application should be extended to the Freeport because
Court, Third Judicial Region, Branch 72, Olongapo City, in Civil Case No. 30-0-2003, accordingly, STANDS. the guarantee of RA 7227 on the free flow of goods into the said zone is merely an exemption from customs
duties and taxes on items brought into the Freeport and not an open floodgate for all kinds of goods and
SO ORDERED.9 materials without restriction.

The aforequoted decision of the Court of Appeals was elevated to this Court and docketed as G.R. No. 168741. In In G.R. No. 168741, the Court of Appeals invalidated Article 2, Section 3.1 of EO 156, on the ground of lack of any
a Resolution dated October 4, 2005,10 said case was consolidated with G.R. No. 164171 and G.R. No. 164172. statutory basis for the President to issue the same. It held that the prohibition on the importation of used motor
vehicles is an exercise of police power vested on the legislature and absent any enabling law, the exercise thereof
Petitioners are now before this Court contending that Article 2, Section 3.1 of EO 156 is valid and applicable to by the President through an executive issuance, is void.
the entire country, including the Freeeport. In support of their arguments, they raise procedural and substantive
issues bearing on the constitutionality of the assailed proviso. Theprocedural issues are: the lack of Police power is inherent in a government to enact laws, within constitutional limits, to promote the order, safety,
respondents’ locus standi to question the validity of EO 156, the propriety of challenging EO 156 in a declaratory health, morals, and general welfare of society. It is lodged primarily with the legislature. By virtue of a valid
relief proceeding and the applicability of a judgment on the pleadings in this case. delegation of legislative power, it may also be exercised by the President and administrative boards, as well as
the lawmaking bodies on all municipal levels, including the barangay.16 Such delegation confers upon the
Petitioners argue that respondents will not be affected by the importation ban considering that their certificate President quasi-legislative power which may be defined as the authority delegated by the law-making body to
of registration and tax exemption do not authorize them to engage in the importation and/or trading of used the administrative body to adopt rules and regulations intended to carry out the provisions of the law and
cars. They also aver that the actions filed by respondents do not qualify as declaratory relief cases. Section 1, Rule implement legislative policy.17 To be valid, an administrative issuance, such as an executive order, must comply
63 of the Rules of Court provides that a petition for declaratory relief may be filed before there is a breach or with the following requisites:
violation of rights. Petitioners claim that there was already a breach of respondents’ supposed right because the
cases were filed more than a year after the issuance of EO 156. In fact, in Civil Case No. 30-0-2003, numerous (1) Its promulgation must be authorized by the legislature;
warrants of seizure and detention were issued against imported used motor vehicles belonging to respondent
Association’s members. (2) It must be promulgated in accordance with the prescribed procedure;

Petitioners’ arguments lack merit. (3) It must be within the scope of the authority given by the legislature; and

The established rule that the constitutionality of a law or administrative issuance can be challenged by one who (4) It must be reasonable. 18
will sustain a direct injury as a result of its enforcement11 has been satisfied in the instant case. The broad subject
of the prohibited importation is "all types of used motor vehicles." Respondents would definitely suffer a direct Contrary to the conclusion of the Court of Appeals, EO 156 actually satisfied the first requisite of a valid
injury from the implementation of EO 156 because their certificate of registration and tax exemption authorize administrative order. It has both constitutional and statutory bases.
them to trade and/or import new and used motor vehicles and spare parts, except "used cars."12 Other types of
motor vehicles imported and/or traded by respondents and not falling within the category of used cars would Delegation of legislative powers to the President is permitted in Section 28(2) of Article VI of the Constitution. It
thus be subjected to the ban to the prejudice of their business. Undoubtedly, respondents have the legal provides:
standing to assail the validity of EO 156.
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations
As to the propriety of declaratory relief as a vehicle for assailing the executive issuance, suffice it to state that any and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other
breach of the rights of respondents will not affect the case. In Commission on Audit of the Province of Cebu v. duties or imposts within the framework of the national development program of the Government. 19 (Emphasis
Province of Cebu,13 the Court entertained a suit for declaratory relief to finally settle the doubt as to the proper supplied)
interpretation of the conflicting laws involved, notwithstanding a violation of the right of the party affected. We
find no reason to deviate from said ruling mindful of the significance of the present case to the national The relevant statutes to execute this provision are:
economy.
1) The Tariff and Customs Code which authorizes the President, in the interest of national economy, general
So also, summary judgments were properly rendered by the trial court because the issues involved in the instant welfare and/or national security, to,inter alia, prohibit the importation of any commodity. Section 401 thereof,
case were pure questions of law. A motion for summary judgment is premised on the assumption that the issues reads:
Sec. 401. Flexible Clause. — merely providing for the means that can facilitate or render less cumbersome the implementation of the law and
substantially increases the burden of those governed, it behooves the agency to accord at least to those directly
a. In the interest of national economy, general welfare and/or national security, and subject to the limitations affected a chance to be heard and, thereafter, to be duly informed, before the issuance is given the force and
herein prescribed, the President, upon recommendation of the National Economic and Development Authority effect of law.
(hereinafter referred to as NEDA), is hereby empowered: x x x (2) to establish import quota or to ban imports of
any commodity, as may be necessary; x x x Provided, That upon periodic investigations by the Tariff Commission In the instant case, EO 156 is obviously a legislative rule as it seeks to implement or execute primary legislative
and recommendation of the NEDA, the President may cause a gradual reduction of protection levels granted in enactments intended to protect the domestic industry by imposing a ban on the importation of a specified
Section One hundred and four of this Code, including those subsequently granted pursuant to this section. product not previously subject to such prohibition. The due process requirements in the issuance thereof are
(Emphasis supplied) embodied in Section 40128 of the Tariff and Customs Code and Sections 5 and 9 of the SMA29 which essentially
mandate the conduct of investigation and public hearings before the regulatory measure or importation ban may
2) Executive Order No. 226, the Omnibus Investment Code of the Philippines which was issued on July 16, 1987, be issued.
by then President Corazon C. Aquino, in the exercise of legislative power under the Provisional Freedom
Constitution,20 empowers the President to approve or reject the prohibition on the importation of any In the present case, respondents neither questioned before this Court nor with the courts below the procedure
equipment or raw materials or finished products. Pertinent provisions thereof, read: that paved the way for the issuance of EO 156. What they challenged in their petitions before the trial court was
the absence of "substantive due process" in the issuance of the EO.30Their main contention before the court a
ART. 4. Composition of the board. The Board of Investments shall be composed of seven (7) governors: The quo is that the importation ban is illogical and unfair because it unreasonably drives them out of business to the
Secretary of Trade and Industry, three (3) Undersecretaries of Trade and Industry to be chosen by the President; prejudice of the national economy.
and three (3) representatives from the government agencies and the private sector x x x.
Considering the settled principle that in the absence of strong evidence to the contrary, acts of the other
ART. 7. Powers and duties of the Board. branches of the government are presumed to be valid, 31 and there being no objection from the respondents as
to the procedure in the promulgation of EO 156, the presumption is that said executive issuance duly complied
(12) Formulate and implement rationalization programs for certain industries whose operation may result in with the procedures and limitations imposed by law.
dislocation, overcrowding or inefficient use of resources, thus impeding economic growth. For this purpose, the
Board may formulate guidelines for progressive manufacturing programs, local content programs, mandatory To determine whether EO 156 has complied with the third and fourth requisites of a valid administrative
sourcing requirements and dispersal of industries. In appropriate cases and upon approval of the President, the issuance, to wit, that it was issued within the scope of authority given by the legislature and that it is reasonable,
Board may restrict, either totally or partially, the importation of any equipment or raw materials or finished an examination of the nature of a Freeport under RA 7227 and the primordial purpose of the importation ban
products involved in the rationalization program; (Emphasis supplied) under the questioned EO is necessary.

3) Republic Act No. 8800, otherwise known as the "Safeguard Measures Act" (SMA), and entitled "An Act RA 7227 was enacted providing for, among other things, the sound and balanced conversion of the Clark and
Protecting Local Industries By Providing Safeguard Measures To Be Undertaken In Response To Increased Imports Subic military reservations and their extensions into alternative productive uses in the form of Special Economic
And Providing Penalties For Violation Thereof,"21designated the Secretaries22 of the Department of Trade and and Freeport Zone, or the Subic Bay Freeport, in order to promote the economic and social development of
Industry (DTI) and the Department of Agriculture, in their capacity as alter egos of the President, as the Central Luzon in particular and the country in general.
implementing authorities of the safeguard measures, which include, inter alia, modification or imposition of any
quantitative restriction on the importation of a product into the Philippines. The purpose of the SMA is stated in The Rules and Regulations Implementing RA 7227 specifically defines the territory comprising the Subic Bay
the declaration of policy, thus: Freeport, referred to as the Special Economic and Freeport Zone in Section 12 of RA 7227 as "a separate customs
territory consisting of the City of Olongapo and the Municipality of Subic, Province of Zambales, the lands
SEC. 2. Declaration of Policy. – The State shall promote competitiveness of domestic industries and producers occupied by the Subic Naval Base and its contiguous extensions as embraced, covered and defined by the 1947
based on sound industrial and agricultural development policies, and efficient use of human, natural and Philippine-U.S. Military Base Agreement as amended and within the territorial jurisdiction of Morong and
technical resources. In pursuit of this goal and in the public interest, the State shall provide safeguard measures Hermosa, Province of Bataan, the metes and bounds of which shall be delineated by the President of the
to protect domestic industries and producers from increased imports which cause or threaten to cause serious Philippines; provided further that pending establishment of secure perimeters around the entire SBF, the SBF
injury to those domestic industries and producers. shall refer to the area demarcated by the SBMA pursuant to Section 1332 hereof."

There are thus explicit constitutional and statutory permission authorizing the President to ban or regulate Among the salient provisions of RA 7227 are as follows:
importation of articles and commodities into the country.
SECTION 12. Subic Special Economic Zone. —
Anent the second requisite, that is, that the order must be issued or promulgated in accordance with the
prescribed procedure, it is necessary that the nature of the administrative issuance is properly determined. As in The abovementioned zone shall be subject to the following policies:
the enactment of laws, the general rule is that, the promulgation of administrative issuances requires previous
notice and hearing, the only exception being where the legislature itself requires it and mandates that the (a) Within the framework and subject to the mandate and limitations of the Constitution and the pertinent
regulation shall be based on certain facts as determined at an appropriate investigation.23 This exception pertains provisions of the Local Government Code, the Subic Special Economic Zone shall be developed into a self-
to the issuance oflegislative rules as distinguished from interpretative rules which give no real consequence sustaining, industrial, commercial, financial and investment center to generate employment opportunities in and
more than what the law itself has already prescribed;24 and are designed merely to provide guidelines to the law around the zone and to attract and promote productive foreign investments;
which the administrative agency is in charge of enforcing.25 A legislative rule, on the other hand, is in the nature
of subordinate legislation, crafted to implement a primary legislation. (b) The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring
free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as
In Commissioner of Internal Revenue v. Court of Appeals,26 and Commissioner of Internal Revenue v. Michel well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment.
J. Lhuillier Pawnshop, Inc.,27 the Court enunciated the doctrine that when an administrative rule goes beyond However, exportation or removal of goods from the territory of the Subic Special Economic Zone to the other
parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code We do not really care whether these goods are stored here. The only thing that we care is for our people to have
and other relevant tax laws of the Philippines; an employment because of the entry of these goods that are being discharged, warehoused and reloaded into
the ships so that they can be exported. That will generate employment for us. For as long as that is done, we are
The Freeport was designed to ensure free flow or movement of goods and capital within a portion of the saying, in effect, that we have the least contact with our tariff and customs laws and our tax laws. Therefore, we
Philippine territory in order to attract investors to invest their capital in a business climate with the least consider these goods as outside of the customs jurisdiction of the Republic of the Philippines as yet, until we
governmental intervention. The concept of this zone was explained by Senator Guingona in this wise: draw them from this territory and bring them inside our domestic commerce. In which case, they have to pass
through our customs gate. I thought we are carving out this entire area and convert it into this kind of concept. 34
Senator Guingona. Mr. President, the special economic zone is successful in many places, particularly Hong Kong,
which is a free port. The difference between a special economic zone and an industrial estate is simply expansive However, contrary to the claim of petitioners, there is nothing in the foregoing excerpts which absolutely limits
in the sense that the commercial activities, including the establishment of banks, services, financial institutions, the incentive to Freeport investors only to exemption from customs duties and taxes. Mindful of the legislative
agro-industrial activities, maybe agriculture to a certain extent. intent to attract investors, enhance investment and boost the economy, the legislature could not have limited
the enticement only to exemption from taxes. The minimum interference policy of the government on the
This delineates the activities that would have the least of government intervention, and the running of the affairs Freeport extends to the kind of business that investors may embark on and the articles which they may import or
of the special economic zone would be run principally by the investors themselves, similar to a housing export into and out of the zone. A contrary interpretation would defeat the very purpose of the Freeport and
subdivision, where the subdivision owners elect their representatives to run the affairs of the subdivision, to set drive away investors.
the policies, to set the guidelines.
It does not mean, however, that the right of Freeport enterprises to import all types of goods and article is
We would like to see Subic area converted into a little Hong Kong, Mr. President, where there is a hub of free absolute. Such right is of course subject to the limitation that articles absolutely prohibited by law cannot be
port and free entry, free duties and activities to a maximum spur generation of investment and jobs. imported into the Freeport.35 Nevertheless, in determining whether the prohibition would apply to the Freeport,
resort to the purpose of the prohibition is necessary.
While the investor is reluctant to come in the Philippines, as a rule, because of red tape and perceived delays, we
envision this special economic zone to be an area where there will be minimum government interference. In issuing EO 156, particularly the prohibition on importation under Article 2, Section 3.1, the President
envisioned to rationalize the importation of used motor vehicles and to enhance the capabilities of the Philippine
The initial outlay may not only come from the Government or the Authority as envisioned here, but from them motor manufacturing firms to be globally competitive producers of completely build-up units and their parts and
themselves, because they would be encouraged to invest not only for the land but also for the buildings and components for the local and export markets.36 In justifying the issuance of EO 156, petitioners alleged that there
factories. As long as they are convinced that in such an area they can do business and reap reasonable profits, has been a decline in the sales of new vehicles and a remarkable growth of the sales of imported used motor
then many from other parts, both local and foreign, would invest, Mr. President. 33 (Emphasis, added) vehicles. To address the same, the President issued the questioned EO to prevent further erosion of the already
depressed market base of the local motor vehicle industry and to curtail the harmful effects of the increase in the
With minimum interference from the government, investors can, in general, engage in any kind of business as importation of used motor vehicles.37
well as import and export any article into and out of the Freeport. These are among the rights accorded to Subic
Bay Freeport Enterprises under Section 39 of the Rules and Regulations Implementing RA 7227, thus – Taking our bearings from the foregoing discussions, we hold that the importation ban runs afoul the third
requisite for a valid administrative order. To be valid, an administrative issuance must not be ultra vires or
SEC. 39. Rights and Obligations.- SBF Enterprises shall have the following rights and obligations: beyond the limits of the authority conferred. It must not supplant or modify the Constitution, its enabling statute
and other existing laws, for such is the sole function of the legislature which the other branches of the
a. To freely engage in any business, trade, manufacturing, financial or service activity, and to import and export government cannot usurp. As held in United BF Homeowner’s Association v. BF Homes, Inc.:38
freely all types of goods into and out of the SBF, subject to the provisions of the Act, these Rules and other
regulations that may be promulgated by the SBMA; The rule-making power of a public administrative body is a delegated legislative power, which it may not use
either to abridge the authority given it by Congress or the Constitution or to enlarge its power beyond the scope
Citing, inter alia, the interpellations of Senator Enrile, petitioners claim that the "free flow or movement of goods intended. Constitutional and statutory provisions control what rules and regulations may be promulgated by such
and capital" only means that goods and material brought within the Freeport shall not be subject to customs a body, as well as with respect to what fields are subject to regulation by it. It may not make rules and
duties and other taxes and should not be construed as an open floodgate for entry of all kinds of goods. They regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is
thus surmise that the importation ban on motor vehicles is applicable within the Freeport. Pertinent administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.
interpellations of Senator Enrile on the concept of Freeport is as follows:
In the instant case, the subject matter of the laws authorizing the President to regulate or forbid importation of
Senator Enrile: Mr. President, I think we are talking here of sovereign concepts, not territorial concepts. The used motor vehicles, is thedomestic industry. EO 156, however, exceeded the scope of its application by
concept that we are supposed to craft here is to carve out a portion of our terrestrial domain as well as our extending the prohibition on the importation of used cars to the Freeport, which RA 7227, considers to some
adjacent waters and say to the world: "Well, you can set up your factories in this area that we are circumscribing, extent, a foreign territory. The domestic industry which the EO seeks to protect is actually the "customs
and bringing your equipment and bringing your goods, you are not subject to any taxes and duties because you territory" which is defined under the Rules and Regulations Implementing RA 7227, as follows:
are not within the customs jurisdiction of the Republic of the Philippines, whether you store the goods or only for
purposes of transshipment or whether you make them into finished products again to be reexported to other "the portion of the Philippines outside the Subic Bay Freeport where the Tariff and Customs Code of the
lands." Philippines and other national tariff and customs laws are in force and effect."39

My understanding of a "free port" is, we are in effect carving out a part of our territory and make it as if it were The proscription in the importation of used motor vehicles should be operative only outside the Freeport and the
foreign territory for purposes of our customs laws, and that people can come, bring their goods, store them there inclusion of said zone within the ambit of the prohibition is an invalid modification of RA 7227. Indeed, when the
and bring them out again, as long as they do not come into the domestic commerce of the Republic. application of an administrative issuance modifies existing laws or exceeds the intended scope, as in the instant
case, the issuance becomes void, not only for being ultra vires, but also for being unreasonable.
This brings us to the fourth requisite. It is an axiom in administrative law that administrative authorities should In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,45 the Court likewise struck down as unreasonable and
not act arbitrarily and capriciously in the issuance of rules and regulations. To be valid, such rules and regulations overbreadth a city ordinance granting an exclusive franchise for 25 years, renewable for another 25 years, to one
must be reasonable and fairly adapted to secure the end in view. If shown to bear no reasonable relation to the entity for the construction and operation of one common bus and jeepney terminal facility in Lucena City. While
purposes for which they were authorized to be issued, then they must be held to be invalid. 40 professedly aimed towards alleviating the traffic congestion alleged to have been caused by the existence of
various bus and jeepney terminals within the city, the ordinance was held to be beyond what is reasonably
There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable exercise of police necessary to solve the traffic problem in the city.
power. The deterioration of the local motor manufacturing firms due to the influx of imported used motor
vehicles is an urgent national concern that needs to be swiftly addressed by the President. In the exercise of By parity of reasoning, the importation ban in this case should also be declared void for its too sweeping and
delegated police power, the executive can therefore validly proscribe the importation of these vehicles. Thus, unnecessary application to the Freeport which has no bearing on the objective of the prohibition. If the aim of
in Taxicab Operators of Metro Manila, Inc. v. Board of Transportation,41 the Court held that a regulation phasing the EO is to prevent the entry of used motor vehicles from the Freeport to the customs territory, the solution is
out taxi cabs more than six years old is a valid exercise of police power. The regulation was sustained as not to forbid entry of these vehicles into the Freeport, but to intensify governmental campaign and measures to
reasonable holding that the purpose thereof was to promote the convenience and comfort and protect the thwart illegal ingress of used motor vehicles into the customs territory.
safety of the passengers.
At this juncture, it must be mentioned that on June 19, 1993, President Fidel V. Ramos issued Executive Order
The problem, however, lies with respect to the application of the importation ban to the Freeport. The Court No. 97-A, "Further Clarifying The Tax And Duty-Free Privilege Within The Subic Special Economic And Free Port
finds no logic in the all encompassing application of the assailed provision to the Freeport which is outside the Zone," Section 1 of which provides:
customs territory. As long as the used motor vehicles do not enter the customs territory, the injury or harm
sought to be prevented or remedied will not arise. The application of the law should be consistent with the SECTION 1. The following guidelines shall govern the tax and duty-free privilege within the Secured Area of the
purpose of and reason for the law. Ratione cessat lex, et cessat lex. When the reason for the law ceases, the law Subic Special Economic and Free Port Zone:
ceases. It is not the letter alone but the spirit of the law also that gives it life. 42 To apply the proscription to the
Freeport would not serve the purpose of the EO. Instead of improving the general economy of the country, the 1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be the only completely
application of the importation ban in the Freeport would subvert the avowed purpose of RA 7227 which is to tax and duty-free area in the SSEFPZ. Business enterprises and individuals (Filipinos and foreigners) residing
create a market that would draw investors and ultimately boost the national economy. within the Secured Area are free to import raw materials, capital goods, equipment, and consumer items tax and
dutry-free. Consumption items, however, must be consumed within the Secured Area. Removal of raw materials,
In similar cases, we also declared void the administrative issuance or ordinances concerned for being capital goods, equipment and consumer items out of the Secured Area for sale to non-SSEFPZ registered
unreasonable. To illustrate, in De la Cruz v. Paras,43 the Court held as unreasonable and unconstitutional an enterprises shall be subject to the usual taxes and duties, except as may be provided herein.
ordinance characterized by overbreadth. In that case, the Municipality of Bocaue, Bulacan, prohibited the
operation of all night clubs, cabarets and dance halls within its jurisdiction for the protection of public morals. As In Tiu v. Court of Appeals46 as reiterated in Coconut Oil Refiners Association, Inc. v. Torres,47 this provision
explained by the Court: limiting the special privileges on tax and duty-free importation in the presently fenced-in former Subic Naval Base
has been declared valid and constitutional and in accordance with RA 7227. Consistent with these rulings and for
x x x It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the easier management and monitoring of activities and to prevent fraudulent importation of merchandise and
term reasonable. The objective of fostering public morals, a worthy and desirable end can be attained by a smuggling, the free flow and importation of used motor vehicles shall be operative only within the "secured
measure that does not encompass too wide a field. Certainly the ordinance on its face is characterized by area."
overbreadth. The purpose sought to be achieved could have been attained by reasonable restrictions rather than
by an absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not lightly set In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void insofar as it is made applicable to the presently
aside legislative action when there is not a clear invasion of personal or property rights under the guise of police secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-A. Pursuant to the separability
regulation." It is clear that in the guise of a police regulation, there was in this instance a clear invasion of clause48 of EO 156, Section 3.1 is declared valid insofar as it applies to the customs territory or the Philippine
personal or property rights, personal in the case of those individuals desirous of patronizing those night clubs and territory outside the presently secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-
property in terms of the investments made and salaries to be earned by those therein employed. A. Hence, used motor vehicles that come into the Philippine territory via the secured fenced-in former Subic
Naval Base area may be stored, used or traded therein, or exported out of the Philippine territory, but they
Lupangco v. Court of Appeals,44 is a case involving a resolution issued by the Professional Regulation Commission cannot be imported into the Philippine territory outside of the secured fenced-in former Subic Naval Base area.
which prohibited examinees from attending review classes and receiving handout materials, tips, and the like
three days before the date of examination in order to preserve the integrity and purity of the licensure WHEREFORE, the petitions are PARTIALLY GRANTED and the May 24, 2004 Decisions of Branch 72, Regional Trial
examinations in accountancy. Besides being unreasonable on its face and violative of academic freedom, the Court of Olongapo City, in Civil Case No. 20-0-04 and Civil Case No. 22-0-04; and the February 14, 2005 Decision
measure was found to be more sweeping than what was necessary, viz: of the Court of Appeals in CA-G.R. SP No. 63284, are MODIFIED insofar as they declared Article 2, Section 3.1 of
Executive Order No. 156, void in its entirety.
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them Said provision is declared VALID insofar as it applies to the Philippine territory outside the presently fenced-in
of legitimate means of review or preparation on those last three precious days — when they should be refreshing former Subic Naval Base area and VOID with respect to its application to the secured fenced-in former Subic
themselves with all that they have learned in the review classes and preparing their mental and psychological Naval Base area.
make-up for the examination day itself — would be like uprooting the tree to get rid of a rotten branch. What is
needed to be done by the respondent is to find out the source of such leakages and stop it right there. If corrupt SO ORDERED.
officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be flushed
out. Strict guidelines to be observed by examiners should be set up and if violations are committed, then licenses LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships adversely
should be suspended or revoked. x x x affected. by Republic Act No. 1180, petitioner, 
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of Manila, respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner. national economic survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of obligations are infringed; (4) as regards hereditary succession, only the form is affected but the value of the
Finance. property is not impaired, and the institution of inheritance is only of statutory origin.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae. IV. Preliminary consideration of legal principles involved
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae. a. The police power. —

LABRADOR, J.: There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its
exercise in this instance is attended by a violation of the constitutional requirements of due process and equal
I. The case and issue, in general protection of the laws. But before proceeding to the consideration and resolution of the ultimate issue involved,
it would be well to bear in mind certain basic and fundamental, albeit preliminary, considerations in the
This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative determination of the ever recurrent conflict between police power and the guarantees of due process and equal
enactment, fundamental and far-reaching in significance. The enactment poses questions of due process, police protection of the laws. What is the scope of police power, and how are the due process and equal protection
power and equal protection of the laws. It also poses an important issue of fact, that is whether the conditions clauses related to it? What is the province and power of the legislature, and what is the function and duty of the
which the disputed law purports to remedy really or actually exist. Admittedly springing from a deep, militant, courts? These consideration must be clearly and correctly understood that their application to the facts of the
and positive nationalistic impulse, the law purports to protect citizen and country from the alien retailer. Through case may be brought forth with clarity and the issue accordingly resolved.
it, and within the field of economy it regulates, Congress attempts to translate national aspirations for economic
independence and national security, rooted in the drive and urge for national survival and welfare, into a It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its
concrete and tangible measures designed to free the national retailer from the competing dominance of the sweep. As it derives its existence from the very existence of the State itself, it does not need to be expressed or
alien, so that the country and the nation may be free from a supposed economic dependence and bondage. Do defined in its scope; it is said to be co-extensive with self-protection and survival, and as such it is the most
the facts and circumstances justify the enactment? positive and active of all governmental processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of nations have multiplied to almost
II. Pertinent provisions of Republic Act No. 1180 unimaginable proportions; the field and scope of police power has become almost boundless, just as the fields of
public interest and public welfare have become almost all-embracing and have transcended human foresight.
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade Otherwise stated, as we cannot foresee the needs and demands of public interest and welfare in this constantly
business. The main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines, and changing and progressive world, so we cannot delimit beforehand the extent or scope of police power by which
against associations, partnerships, or corporations the capital of which are not wholly owned by citizens of the and through which the State seeks to attain or achieve interest or welfare. So it is that Constitutions do not
Philippines, from engaging directly or indirectly in the retail trade; (2) an exception from the above prohibition in define the scope or extent of the police power of the State; what they do is to set forth the limitations thereof.
favor of aliens actually engaged in said business on May 15, 1954, who are allowed to continue to engaged The most important of these are the due process clause and the equal protection clause.
therein, unless their licenses are forfeited in accordance with the law, until their death or voluntary retirement in
case of natural persons, and for ten years after the approval of the Act or until the expiration of term in case of b. Limitations on police power. —
juridical persons; (3) an exception therefrom in favor of citizens and juridical entities of the United States; (4) a
provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on The basic limitations of due process and equal protection are found in the following provisions of our
nationalization, control weights and measures and labor and other laws relating to trade, commerce and Constitution:
industry; (5) a prohibition against the establishment or opening by aliens actually engaged in the retail business
of additional stores or branches of retail business, (6) a provision requiring aliens actually engaged in the retail SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor any person
business to present for registration with the proper authorities a verified statement concerning their businesses, be denied the equal protection of the laws. (Article III, Phil. Constitution)
giving, among other matters, the nature of the business, their assets and liabilities and their offices and principal
offices of judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who These constitutional guarantees which embody the essence of individual liberty and freedom in democracies, are
die, to continue such business for a period of six months for purposes of liquidation. not limited to citizens alone but are admittedly universal in their application, without regard to any differences of
race, of color, or of nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)
III. Grounds upon which petition is based-Answer thereto
c. The, equal protection clause. —
Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships
adversely affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
that said Act is unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him, discrimination or the oppression of inequality. It is not intended to prohibit legislation, which is limited either in
particularly city and municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of the object to which it is directed or by territory within which is to operate. It does not demand absolute equality
the Act, contending that: (1) it denies to alien residents the equal protection of the laws and deprives of their among residents; it merely requires that all persons shall be treated alike, under like circumstances and
liberty and property without due process of law ; (2) the subject of the Act is not expressed or comprehended in conditions both as to privileges conferred and liabilities enforced. The equal protection clause is not infringed by
the title thereof; (3) the Act violates international and treaty obligations of the Republic of the Philippines; (4) the legislation which applies only to those persons falling within a specified class, if it applies alike to all persons
provisions of the Act against the transmission by aliens of their retail business thru hereditary succession, and within such class, and reasonable grounds exists for making a distinction between those who fall within such
those requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail class and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)
business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution.
d. The due process clause. —
In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the
valid exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of
The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police b. The alien retailer's trait. —
power. Is there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for
the accomplishment of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there The alien retailer must have started plying his trades in this country in the bigger centers of population (Time
sufficient foundation or reason in connection with the matter involved; or has there not been a capricious use of there was when he was unknown in provincial towns and villages). Slowly but gradually be invaded towns and
the legislative power? Can the aims conceived be achieved by the means used, or is it not merely an unjustified villages; now he predominates in the cities and big centers of population. He even pioneers, in far away nooks
interference with private interest? These are the questions that we ask when the due process test is applied. where the beginnings of community life appear, ministering to the daily needs of the residents and purchasing
their agricultural produce for sale in the towns. It is an undeniable fact that in many communities the alien has
The conflict, therefore, between police power and the guarantees of due process and equal protection of the replaced the native retailer. He has shown in this trade, industry without limit, and the patience and forbearance
laws is more apparent than real. Properly related, the power and the guarantees are supposed to coexist. The of a slave.
balancing is the essence or, shall it be said, the indispensable means for the attainment of legitimate aspirations
of any democratic society. There can be no absolute power, whoever exercise it, for that would be tyranny. Yet Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent
there can neither be absolute liberty, for that would mean license and anarchy. So the State can deprive persons neighbors and customers are made in his face, but he heeds them not, and he forgets and forgives. The
of life, liberty and property, provided there is due process of law; and persons may be classified into classes and community takes note of him, as he appears to be harmless and extremely useful.
groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason. The
police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must c. Alleged alien control and dominance. —
exist between purposes and means. And if distinction and classification has been made, there must be a
reasonable basis for said distinction. There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and
dominant position that the alien retailer holds in the nation's economy. Food and other essentials, clothing,
e. Legislative discretion not subject to judicial review. — almost all articles of daily life reach the residents mostly through him. In big cities and centers of population he
has acquired not only predominance, but apparent control over distribution of almost all kinds of goods, such as
Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods and articles. And were
overlooked, in the first place, that the legislature, which is the constitutional repository of police power and it not for some national corporations like the Naric, the Namarco, the Facomas and the Acefa, his control over
exercises the prerogative of determining the policy of the State, is by force of circumstances primarily the judge principal foods and products would easily become full and complete.
of necessity, adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the police
power, or of the measures adopted to implement the public policy or to achieve public interest. On the other Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the
hand, courts, although zealous guardians of individual liberty and right, have nevertheless evinced a reluctance fear is unfounded and the threat is imagined; in another, it is charged that the law is merely the result of
to interfere with the exercise of the legislative prerogative. They have done so early where there has been a radicalism and pure and unabashed nationalism. Alienage, it is said, is not an element of control; also so many
clear, patent or palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are unmanageable factors in the retail business make control virtually impossible. The first argument which brings up
not supposed to override legitimate policy, and courts never inquire into the wisdom of the law. an issue of fact merits serious consideration. The others are matters of opinion within the exclusive competence
of the legislature and beyond our prerogative to pass upon and decide.
V. Economic problems sought to be remedied
The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between
With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the the constitutional convention year (1935), when the fear of alien domination and control of the retail trade
disputed legislation were merely a regulation, as its title indicates, there would be no question that it falls within already filled the minds of our leaders with fears and misgivings, and the year of the enactment of the
the legitimate scope of legislative power. But it goes further and prohibits a group of residents, the aliens, from nationalization of the retail trade act (1954), official statistics unmistakably point out to the ever-increasing
engaging therein. The problem becomes more complex because its subject is a common, trade or occupation, as dominance and control by the alien of the retail trade, as witness the following tables:
old as society itself, which from the immemorial has always been open to residents, irrespective of race, color or
citizenship. Assets Gross Sales

a. Importance of retail trade in the economy of the nation. —

Year and Retailers No.- Per cent Per
Pesos Pesos
In a primitive economy where families produce all that they consume and consume all that they produce, the Nationality Establishments Distribution Dist
dealer, of course, is unknown. But as group life develops and families begin to live in communities producing
more than what they consume and needing an infinite number of things they do not produce, the dealer comes 1941:
into existence. As villages develop into big communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards of living, in which man's needs have multiplied
and diversified to unlimited extents and proportions, the retailer comes as essential as the producer, because Filipino .......... 106,671 200,323,138 55.82 174,181,924 51.7
thru him the infinite variety of articles, goods and needed for daily life are placed within the easy reach of
consumers. Retail dealers perform the functions of capillaries in the human body, thru which all the needed food Nationality of Owners, Benchmark: 1948 Census, issued by the Bureau of Census and Statistics, Department of
and supplies are ministered to members of the communities comprising the nation. Commerce and Industry; pp. 18-19 of Answer.)

There cannot be any question about the importance of the retailer in the life of the community. He ministers to The above statistics do not include corporations and partnerships, while the figures on Filipino establishments
the resident's daily needs, food in all its increasing forms, and the various little gadgets and things needed for already include mere market vendors, whose capital is necessarily small..
home and daily life. He provides his customers around his store with the rice or corn, the fish, the salt, the
vinegar, the spices needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew The above figures reveal that in percentage distribution of assests and gross sales, alien participation has steadily
them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the owner of a small sari- increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers, but aliens
sari store, to the operator of a department store or, a supermarket is so much a part of day-to-day existence. more than make up for the numerical gap through their assests and gross sales which average between six and
seven times those of the very many Filipino retailers. Numbers in retailers, here, do not imply superiority; the We can even go farther than theoretical illustrations to show the pernicious influences of alien domination.
alien invests more capital, buys and sells six to seven times more, and gains much more. The same official report, Grave abuses have characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which
pointing out to the known predominance of foreign elements in the retail trade, remarks that the Filipino courts of justice may not properly overlook or ignore in the interests of truth and justice, that there exists a
retailers were largely engaged in minor retailer enterprises. As observed by respondents, the native investment is general feeling on the part of the public that alien participation in the retail trade has been attended by a
thinly spread, and the Filipino retailer is practically helpless in matters of capital, credit, price and supply. pernicious and intolerable practices, the mention of a few of which would suffice for our purposes; that at some
time or other they have cornered the market of essential commodities, like corn and rice, creating artificial
d. Alien control and threat, subject of apprehension in Constitutional convention. — scarcities to justify and enhance profits to unreasonable proportions; that they have hoarded essential foods to
the inconvenience and prejudice of the consuming public, so much so that the Government has had to establish
It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's the National Rice and Corn Corporation to save the public from their continuous hoarding practices and
target in the enactment of the disputed nationalization would never have been adopted. The framers of our tendencies; that they have violated price control laws, especially on foods and essential commodities, such that
Constitution also believed in the existence of this alien dominance and control when they approved a resolution the legislature had to enact a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and automatic
categorically declaring among other things, that "it is the sense of the Convention that the public interest deportation for price control convictions; that they have secret combinations among themselves to control
requires the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine Constitution, 662- prices, cheating the operation of the law of supply and demand; that they have connived to boycott honest
663, quoted on page 67 of Petitioner.) That was twenty-two years ago; and the events since then have not been merchants and traders who would not cater or yield to their demands, in unlawful restraint of freedom of trade
either pleasant or comforting. Dean Sinco of the University of the Philippines College of Law, commenting on the and enterprise. They are believed by the public to have evaded tax laws, smuggled goods and money into and
patrimony clause of the Preamble opines that the fathers of our Constitution were merely translating the general out of the land, violated import and export prohibitions, control laws and the like, in derision and contempt of
preoccupation of Filipinos "of the dangers from alien interests that had already brought under their control the lawful authority. It is also believed that they have engaged in corrupting public officials with fabulous bribes,
commercial and other economic activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and indirectly causing the prevalence of graft and corruption in the Government. As a matter of fact appeals to
analyzing the concern of the members of the constitutional convention for the economic life of the citizens, in unscrupulous aliens have been made both by the Government and by their own lawful diplomatic
connection with the nationalistic provisions of the Constitution, he says: representatives, action which impliedly admits a prevailing feeling about the existence of many of the above
practices.
But there has been a general feeling that alien dominance over the economic life of the country is not desirable
and that if such a situation should remain, political independence alone is no guarantee to national stability and The circumstances above set forth create well founded fears that worse things may come in the future. The
strength. Filipino private capital is not big enough to wrest from alien hands the control of the national economy. present dominance of the alien retailer, especially in the big centers of population, therefore, becomes a
Moreover, it is but of recent formation and hence, largely inexperienced, timid and hesitant. Under such potential source of danger on occasions of war or other calamity. We do not have here in this country isolated
conditions, the government as the instrumentality of the national will, has to step in and assume the initiative, if groups of harmless aliens retailing goods among nationals; what we have are well organized and powerful groups
not the leadership, in the struggle for the economic freedom of the nation in somewhat the same way that it did that dominate the distribution of goods and commodities in the communities and big centers of population. They
in the crusade for political freedom. Thus . . . it (the Constitution) envisages an organized movement for the owe no allegiance or loyalty to the State, and the State cannot rely upon them in times of crisis or emergency.
protection of the nation not only against the possibilities of armed invasion but also against its economic While the national holds his life, his person and his property subject to the needs of his country, the alien may
subjugation by alien interests in the economic field. (Phil. Political Law by Sinco, 10th ed., p. 476.) even become the potential enemy of the State.

Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen, f. Law enacted in interest of national economic survival and security. —
manufacturers and producers believe so; they fear the dangers coming from alien control, and they express
sentiments of economic independence. Witness thereto is Resolution No. 1, approved on July 18, 1953, of the We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the
Fifth National convention of Filipino Businessmen, and a similar resolution, approved on March 20, 1954, of the product of racial hostility, prejudice or discrimination, but the expression of the legitimate desire and
Second National Convention of Manufacturers and Producers. The man in the street also believes, and fears, determination of the people, thru their authorized representatives, to free the nation from the economic
alien predominance and control; so our newspapers, which have editorially pointed out not only to control but to situation that has unfortunately been saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in
alien stranglehold. We, therefore, find alien domination and control to be a fact, a reality proved by official the interest of the public, nay of the national security itself, and indisputably falls within the scope of police
statistics, and felt by all the sections and groups that compose the Filipino community. power, thru which and by which the State insures its existence and security and the supreme welfare of its
citizens.
e. Dangers of alien control and dominance in retail. —
VI. The Equal Protection Limitation
But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance
alone; there is a prevailing feeling that such predominance may truly endanger the national interest. With ample a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law
capital, unity of purpose and action and thorough organization, alien retailers and merchants can act in such deny the equal protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of
complete unison and concert on such vital matters as the fixing of prices, the determination of the amount of the distinction between the alien and the national as a trader. The alien resident owes allegiance to the country
goods or articles to be made available in the market, and even the choice of the goods or articles they would or of his birth or his adopted country; his stay here is for personal convenience; he is attracted by the lure of gain
would not patronize or distribute, that fears of dislocation of the national economy and of the complete and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral, but he is naturally lacking in
subservience of national economy and of the consuming public are not entirely unfounded. Nationals, producers that spirit of loyalty and enthusiasm for this country where he temporarily stays and makes his living, or of that
and consumers alike can be placed completely at their mercy. This is easily illustrated. Suppose an article of daily spirit of regard, sympathy and consideration for his Filipino customers as would prevent him from taking
use is desired to be prescribed by the aliens, because the producer or importer does not offer them sufficient advantage of their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go back
profits, or because a new competing article offers bigger profits for its introduction. All that aliens would do is to to his beloved country and his beloved kin and countrymen. The experience of the country is that the alien
agree to refuse to sell the first article, eliminating it from their stocks, offering the new one as a substitute. retailer has shown such utter disregard for his customers and the people on whom he makes his profit, that it has
Hence, the producers or importers of the prescribed article, or its consumers, find the article suddenly out of the been found necessary to adopt the legislation, radical as it may seem.
prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of trade is thus curtailed
and free enterprise correspondingly suppressed. Another objection to the alien retailer in this country is that he never really makes a genuine contribution to
national income and wealth. He undoubtedly contributes to general distribution, but the gains and profits he
makes are not invested in industries that would help the country's economy and increase national wealth. The
alien's interest in this country being merely transient and temporary, it would indeed be ill-advised to continue of an extensive system, the object of which is to encourage American shipping, and place them on an equal
entrusting the very important function of retail distribution to his hands. footing with the shipping of other nations. Almost every commercial nation reserves to its own subjects a
monopoly of its coasting trade; and a countervailing privilege in favor of American shipping is contemplated, in
The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret the whole legislation of the United States on this subject. It is not to give the vessel an American character, that
manipulations of stocks of commodities and prices, their utter disregard of the welfare of their customers and of the license is granted; that effect has been correctly attributed to the act of her enrollment. But it is to confer on
the ultimate happiness of the people of the nation of which they are mere guests, which practices, manipulations her American privileges, as contra distinguished from foreign; and to preserve the Government from fraud by
and disregard do not attend the exercise of the trade by the nationals, show the existence of real and actual, foreigners; in surreptitiously intruding themselves into the American commercial marine, as well as frauds upon
positive and fundamental differences between an alien and a national which fully justify the legislative the revenue in the trade coastwise, that this whole system is projected."
classification adopted in the retail trade measure. These differences are certainly a valid reason for the State to
prefer the national over the alien in the retail trade. We would be doing violence to fact and reality were we to The rule in general is as follows:
hold that no reason or ground for a legitimate distinction can be found between one and the other.
Aliens are under no special constitutional protection which forbids a classification otherwise justified simply
b. Difference in alien aims and purposes sufficient basis for distinction. — because the limitation of the class falls along the lines of nationality. That would be requiring a higher degree of
protection for aliens as a class than for similar classes than for similar classes of American citizens. Broadly
The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and real, speaking, the difference in status between citizens and aliens constitutes a basis for reasonable classification in
furnish sufficient grounds for legislative classification of retail traders into nationals and aliens. Some may the exercise of police power. (2 Am., Jur. 468-469.)
disagree with the wisdom of the legislature's classification. To this we answer, that this is the prerogative of the
law-making power. Since the Court finds that the classification is actual, real and reasonable, and all persons of In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and
one class are treated alike, and as it cannot be said that the classification is patently unreasonable and peddlers, which provided that no one can obtain a license unless he is, or has declared his intention, to become a
unfounded, it is in duty bound to declare that the legislature acted within its legitimate prerogative and it can not citizen of the United States, was held valid, for the following reason: It may seem wise to the legislature to limit
declare that the act transcends the limit of equal protection established by the Constitution. the business of those who are supposed to have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309
Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not (Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging in the traffic of
curtailed or denied by the equal protection of the laws clause. The legislative power admits of a wide scope of liquors, was found not to be the result of race hatred, or in hospitality, or a deliberate purpose to discriminate,
discretion, and a law can be violative of the constitutional limitation only when the classification is without but was based on the belief that an alien cannot be sufficiently acquainted with "our institutions and our life as
reasonable basis. In addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs. to enable him to appreciate the relation of this particular business to our entire social fabric", and was not,
Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the application of equal therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S. Supreme
protection clause to a law sought to be voided as contrary thereto: Court had under consideration an ordinance of the city of Cincinnati prohibiting the issuance of licenses (pools
and billiard rooms) to aliens. It held that plainly irrational discrimination against aliens is prohibited, but it does
. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the power to not follow that alien race and allegiance may not bear in some instances such a relation to a legitimate object of
classify in the adoption of police laws, but admits of the exercise of the wide scope of discretion in that regard, legislation as to be made the basis of permitted classification, and that it could not state that the legislation is
and avoids what is done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A clearly wrong; and that latitude must be allowed for the legislative appraisement of local conditions and for the
classification having some reasonable basis does not offend against that clause merely because it is not made legislative choice of methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129
with mathematical nicety, or because in practice it results in some inequality. 3. When the classification in such a (Ohio, 1919) is a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the
law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of business of pawn brooking was considered as having tendencies injuring public interest, and limiting it to citizens
that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such is within the scope of police power. A similar statute denying aliens the right to engage in auctioneering was also
a law must carry the burden of showing that it does not rest upon any reasonable basis but is essentially sustained in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340
arbitrary." (Oregon, 1924), the court said that aliens are judicially known to have different interests, knowledge, attitude,
psychology and loyalty, hence the prohibitions of issuance of licenses to them for the business of pawnbroker,
c. Authorities recognizing citizenship as basis for classification. — pool, billiard, card room, dance hall, is not an infringement of constitutional rights. In Templar vs. Michigan State
Board of Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held
The question as to whether or not citizenship is a legal and valid ground for classification has already been void, but the reason for the decision was the court's findings that the exercise of the business by the aliens does
affirmatively decided in this jurisdiction as well as in various courts in the United States. In the case of Smith Bell not in any way affect the morals, the health, or even the convenience of the community. InTakahashi vs. Fish and
& Co. vs. Natividad, 40 Phil. 136, where the validity of Act No. 2761 of the Philippine Legislature was in issue, Game Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance of commercial fishing licenses
because of a condition therein limiting the ownership of vessels engaged in coastwise trade to corporations to person ineligible to citizenship was held void, because the law conflicts with Federal power over immigration,
formed by citizens of the Philippine Islands or the United States, thus denying the right to aliens, it was held that and because there is no public interest in the mere claim of ownership of the waters and the fish in them, so
the Philippine Legislature did not violate the equal protection clause of the Philippine Bill of Rights. The there was no adequate justification for the discrimination. It further added that the law was the outgrowth of
legislature in enacting the law had as ultimate purpose the encouragement of Philippine shipbuilding and the antagonism toward the persons of Japanese ancestry. However, two Justices dissented on the theory that fishing
safety for these Islands from foreign interlopers. We held that this was a valid exercise of the police power, and rights have been treated traditionally as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257
all presumptions are in favor of its constitutionality. In substance, we held that the limitation of domestic (Pennsylvania, 1897), a state law which imposed a tax on every employer of foreign-born unnaturalized male
ownership of vessels engaged in coastwise trade to citizens of the Philippines does not violate the equal persons over 21 years of age, was declared void because the court found that there was no reason for the
protection of the law and due process or law clauses of the Philippine Bill of Rights. In rendering said decision we classification and the tax was an arbitrary deduction from the daily wage of an employee.
quoted with approval the concurring opinion of Justice Johnson in the case ofGibbons vs. Ogden, 9 Wheat., I, as
follows: d. Authorities contra explained. —

"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing gaming It is true that some decisions of the Federal court and of the State courts in the United States hold that the
houses, retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character, and forms part distinction between aliens and citizens is not a valid ground for classification. But in this decision the laws
declared invalid were found to be either arbitrary, unreasonable or capricious, or were the result or product of
racial antagonism and hostility, and there was no question of public interest involved or pursued. In Yu Cong Eng the legislature is to inquire whether the restriction it imposes on rights secured to individuals by the Bill of Rights
vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a Philippine law making are unreasonable, and not whether it imposes any restrictions on such rights. . . .
unlawful the keeping of books of account in any language other than English, Spanish or any other local dialect,
but the main reasons for the decisions are: (1) that if Chinese were driven out of business there would be no . . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it affects,
other system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud, because they would be must not be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am. Jur. Sec. 302.,
deprived of their right to be advised of their business and to direct its conduct. The real reason for the decision, 1:1)- 1074-1075.)
therefore, is the court's belief that no public benefit would be derived from the operations of the law and on the
other hand it would deprive Chinese of something indispensable for carrying on their business. In Yick Wo vs. In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:
Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold consent in the operation of
laundries both as to persons and place, was declared invalid, but the court said that the power granted was . . . . To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the
arbitrary, that there was no reason for the discrimination which attended the administration and implementation interests of the public generally, as distinguished from those of a particular class, require such interference; and
of the law, and that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly
1900), a law prohibiting aliens to engage as hawkers and peddlers was declared void, because the discrimination oppressive upon individuals. . . .
bore no reasonable and just relation to the act in respect to which the classification was proposed.
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality:
The case at bar is radically different, and the facts make them so. As we already have said, aliens do not naturally
possess the sympathetic consideration and regard for the customers with whom they come in daily contact, nor In determining whether a given act of the Legislature, passed in the exercise of the police power to regulate the
the patriotic desire to help bolster the nation's economy, except in so far as it enhances their profit, nor the operation of a business, is or is not constitutional, one of the first questions to be considered by the court is
loyalty and allegiance which the national owes to the land. These limitations on the qualifications of the aliens whether the power as exercised has a sufficient foundation in reason in connection with the matter involved, or
have been shown on many occasions and instances, especially in times of crisis and emergency. We can do no is an arbitrary, oppressive, and capricious use of that power, without substantial relation to the health, safety,
better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and morals, comfort, and general welfare of the public.
significance of the distinction between the alien and the national, thus:
b. Petitioner's argument considered. —
. . . . It may be judicially known, however, that alien coming into this country are without the intimate knowledge
of our laws, customs, and usages that our own people have. So it is likewise known that certain classes of aliens Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago
are of different psychology from our fellow countrymen. Furthermore, it is natural and reasonable to suppose recognized as essential to the orderly pursuant of happiness by free men; that it is a gainful and honest
that the foreign born, whose allegiance is first to their own country, and whose ideals of governmental occupation and therefore beyond the power of the legislature to prohibit and penalized. This arguments
environment and control have been engendered and formed under entirely different regimes and political overlooks fact and reality and rests on an incorrect assumption and premise, i.e., that in this country where the
systems, have not the same inspiration for the public weal, nor are they as well disposed toward the United occupation is engaged in by petitioner, it has been so engaged by him, by the alien in an honest creditable and
States, as those who by citizenship, are a part of the government itself. Further enlargement, is unnecessary. I unimpeachable manner, without harm or injury to the citizens and without ultimate danger to their economic
have said enough so that obviously it cannot be affirmed with absolute confidence that the Legislature was peace, tranquility and welfare. But the Legislature has found, as we have also found and indicated, that the
without plausible reason for making the classification, and therefore appropriate discriminations against aliens as privilege has been so grossly abused by the alien, thru the illegitimate use of pernicious designs and practices,
it relates to the subject of legislation. . . . . that he now enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on the nation's
economy endangering the national security in times of crisis and emergency.
VII. The Due Process of Law Limitation.
The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and
a. Reasonability, the test of the limitation; determination by legislature decisive. — circumstances, but this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary
capricious, taking into account the illegitimate and pernicious form and manner in which the aliens have
We now come to due process as a limitation on the exercise of the police power. It has been stated by the heretofore engaged therein? As thus correctly stated the answer is clear. The law in question is deemed
highest authority in the United States that: absolutely necessary to bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights and privileges (11 Am.
. . . . And the guaranty of due process, as has often been held, demands only that the law shall not be Jur. pp. 1080-1081.) The test of reasonableness of a law is the appropriateness or adequacy under all
unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to circumstances of the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed
the subject sought to be attained. . . . . legislation, which is not merely reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.
So far as the requirement of due process is concerned and in the absence of other constitutional restriction a
state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later
enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such was enacted into law:
policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable
relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens of the
process are satisfied, and judicial determination to that effect renders a court functus officio. . . . (Nebbia vs. New Philippines from having a strangle hold upon our economic life. If the persons who control this vital artery of our
York, 78 L. ed. 940, 950, 957.) economic life are the ones who owe no allegiance to this Republic, who have no profound devotion to our free
institutions, and who have no permanent stake in our people's welfare, we are not really the masters of our
Another authority states the principle thus: destiny. All aspects of our life, even our national security, will be at the mercy of other people.

. . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the police In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not citizens of
power in a constitutional sense, for the test used to determine the constitutionality of the means employed by the Philippines of their means of livelihood. While this bill seeks to take away from the hands of persons who are
not citizens of the Philippines a power that can be wielded to paralyze all aspects of our national life and with the wisdom of the law, it may not annul the legislation if not palpably in excess of the legislative power.
endanger our national security it respects existing rights. Furthermore, the test of the validity of a law attacked as a violation of due process, is not its reasonableness, but
its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various
The approval of this bill is necessary for our national survival. other arguments raised against the law, some of which are: that the law does not promote general welfare; that
thousands of aliens would be thrown out of employment; that prices will increase because of the elimination of
If political independence is a legitimate aspiration of a people, then economic independence is none the less competition; that there is no need for the legislation; that adequate replacement is problematical; that there
legitimate. Freedom and liberty are not real and positive if the people are subject to the economic control and may be general breakdown; that there would be repercussions from foreigners; etc. Many of these arguments
domination of others, especially if not of their own race or country. The removal and eradication of the shackles are directed against the supposed wisdom of the law which lies solely within the legislative prerogative; they do
of foreign economic control and domination, is one of the noblest motives that a national legislature may pursue. not import invalidity.
It is impossible to conceive that legislation that seeks to bring it about can infringe the constitutional limitation of
due process. The attainment of a legitimate aspiration of a people can never be beyond the limits of legislative VIII. Alleged defect in the title of the law
authority.
A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is
c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. — misleading or deceptive, as it conceals the real purpose of the bill which is to nationalize the retail business and
prohibit aliens from engaging therein. The constitutional provision which is claimed to be violated in Section 21
The framers of the Constitution could not have intended to impose the constitutional restrictions of due process (1) of Article VI, which reads:
on the attainment of such a noble motive as freedom from economic control and domination, thru the exercise
of the police power. The fathers of the Constitution must have given to the legislature full authority and power to No bill which may be enacted in the law shall embrace more than one subject which shall be expressed in the
enact legislation that would promote the supreme happiness of the people, their freedom and liberty. On the title of the bill.
precise issue now before us, they expressly made their voice clear; they adopted a resolution expressing their
belief that the legislation in question is within the scope of the legislative power. Thus they declared the their What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the
Resolution: public of the nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction,
Sec. 1707, p. 297.) A cursory consideration of the title and the provisions of the bill fails to show the presence of
That it is the sense of the Convention that the public interest requires the nationalization of retail trade; but it duplicity. It is true that the term "regulate" does not and may not readily and at first glance convey the idea of
abstain from approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and others on this "nationalization" and "prohibition", which terms express the two main purposes and objectives of the law. But
matter because it is convinced that the National Assembly is authorized to promulgate a law which limits to "regulate" is a broader term than either prohibition or nationalization. Both of these have always been included
Filipino and American citizens the privilege to engage in the retail trade. (11 Aruego, The Framing of the within the term regulation.
Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the Petitioner.)
Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale of
It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
in the preamble, a principle objective is the conservation of the patrimony of the nation and as corollary the
provision limiting to citizens of the Philippines the exploitation, development and utilization of its natural Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be stated in
resources. And in Section 8 of Article XIV, it is provided that "no franchise, certificate, or any other form of the tale, the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the subject of an
authorization for the operation of the public utility shall be granted except to citizens of the Philippines." The act prohibiting the sale of such liquors to minors and to persons in the habit of getting intoxicated; such matters
nationalization of the retail trade is only a continuance of the nationalistic protective policy laid down as a being properly included within the subject of regulating the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in
primary objective of the Constitution. Can it be said that a law imbued with the same purpose and spirit p. 42 of Answer.)
underlying many of the provisions of the Constitution is unreasonable, invalid and unconstitutional?
The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition of acts
The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the usually done in connection with the thing to be regulated. While word regulate does not ordinarily convey
radical measures is, therefore, fully justified. It would have been recreant to its duties towards the country and meaning of prohibit, there is no absolute reason why it should not have such meaning when used in delegating
its people would it view the sorry plight of the nationals with the complacency and refuse or neglect to adopt a police power in connection with a thing the best or only efficacious regulation of which involves suppression.
remedy commensurate with the demands of public interest and national survival. As the repository of the (State vs. Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.)
sovereign power of legislation, the Legislature was in duty bound to face the problem and meet, through
adequate measures, the danger and threat that alien domination of retail trade poses to national economy. The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be
an index to the entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above
d. Provisions of law not unreasonable. — rule was followed the title of the Act in question adopted the more general term "regulate" instead of
"nationalize" or "prohibit". Furthermore, the law also contains other rules for the regulation of the retail trade
A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature which may not be included in the terms "nationalization" or "prohibition"; so were the title changed from
has been. The law is made prospective and recognizes the right and privilege of those already engaged in the "regulate" to "nationalize" or "prohibit", there would have been many provisions not falling within the scope of
occupation to continue therein during the rest of their lives; and similar recognition of the right to continue is the title which would have made the Act invalid. The use of the term "regulate", therefore, is in accord with the
accorded associations of aliens. The right or privilege is denied to those only upon conviction of certain offenses. principle governing the drafting of statutes, under which a simple or general term should be adopted in the title,
In the deliberations of the Court on this case, attention was called to the fact that the privilege should not have which would include all other provisions found in the body of the Act.
been denied to children and heirs of aliens now engaged in the retail trade. Such provision would defeat the law
itself, its aims and purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It is well One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise
settled that the Court will not inquire into the motives of the Legislature, nor pass upon general matters of the legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law of
legislative judgment. The Legislature is primarily the judge of the necessity of an enactment or of any of its matters which have received the notice, action and study of the legislators or of the public. In the case at bar it
provisions, and every presumption is in favor of its validity, and though the Court may hold views inconsistent cannot be claimed that the legislators have been appraised of the nature of the law, especially the
nationalization and the prohibition provisions. The legislators took active interest in the discussion of the law, PADILLA, J., concurring and dissenting:
and a great many of the persons affected by the prohibitions in the law conducted a campaign against its
approval. It cannot be claimed, therefore, that the reasons for declaring the law invalid ever existed. The I agree to the proposition, principle or rule that courts may not inquire into the wisdom of an the Act passed by
objection must therefore, be overruled. the Congress and duly approved by the President of the Republic. But the rule does not preclude courts from
inquiring and determining whether the Act offends against a provision or provisions of the Constitution. I am
IX. Alleged violation of international treaties and obligations satisfied that the Act assailed as violative of the due process of law and the equal protection of the laws clauses
of the Constitution does not infringe upon them, insofar as it affects associations, partnership or corporations,
Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of the capital of which is not wholly owned by the citizens of the Philippines, and aliens, who are not and have not
the United Nations and of the Declaration of the Human Rights adopted by the United Nations General Assembly. been engaged in the retail business. I am, however, unable to persuade myself that it does not violate said
We find no merit in the Nations Charter imposes no strict or legal obligations regarding the rights and freedom of clauses insofar as the Act applies to associations and partnerships referred to in the Act and to aliens, who are
their subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration of Human and have heretofore been engaged in said business. When they did engage in the retail business there was no
Rights contains nothing more than a mere recommendation or a common standard of achievement for all prohibition on or against them to engage in it. They assumed and believed in good faith they were entitled to
peoples and all nations (Id. p. 39.) That such is the import of the United Nations Charter aid of the Declaration of engaged in the business. The Act allows aliens to continue in business until their death or voluntary retirement
Human Rights can be inferred the fact that members of the United Nations Organizations, such as Norway and from the business or forfeiture of their license; and corporations, associations or partnership, the capital of which
Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the world laws against is not wholly owned by the citizens of the Philippines to continue in the business for a period of ten years from
foreigners engaged in domestic trade are adopted. the date of the approval of the Act (19 June 1954) or until the expiry of term of the existence of the association
or partnership or corporation, whichever event comes first. The prohibition on corporations, the capital of which
The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also is not wholly owned by citizens of the Philippines, to engage in the retail business for a period of more than ten
claimed to be violated by the law in question. All that the treaty guarantees is equality of treatment to the years from the date of the approval of the Act or beyond the term of their corporate existence, whichever event
Chinese nationals "upon the same terms as the nationals of any other country." But the nationals of China are comes first, is valid and lawful, because the continuance of the existence of such corporations is subject to
not discriminating against because nationals of all other countries, except those of the United States, who are whatever the Congress may impose reasonably upon them by subsequent legislation. 1 But the prohibition to
granted special rights by the Constitution, are all prohibited from engaging in the retail trade. But even supposing engage in the retail business by associations and partnerships, the capital of which is not wholly owned by citizen
that the law infringes upon the said treaty, the treaty is always subject to qualification or amendment by a of the Philippines, after ten years from the date of the approval of the Act, even before the end of the term of
subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the same may never curtail or restrict the scope of their existence as agreed upon by the associates and partners, and by alien heirs to whom the retail business is
the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.) transmitted by the death of an alien engaged in the business, or by his executor or administrator, amounts to a
deprivation of their property without due process of law. To my mind, the ten-year period from the date of the
X. Conclusion approval of the Act or until the expiration of the term of the existence of the association and partnership,
whichever event comes first, and the six-month period granted to alien heirs of a deceased alien, his executor or
Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual administrator, to liquidate the business, do not cure the defect of the law, because the effect of the prohibition is
threat and danger to national economy posed by alien dominance and control of the retail business and free to compel them to sell or dispose of their business. The price obtainable at such forced sale of the business
citizens and country from dominance and control; that the enactment clearly falls within the scope of the police would be inadequate to reimburse and compensate the associates or partners of the associations or partnership,
power of the State, thru which and by which it protects its own personality and insures its security and future; and the alien heirs of a deceased alien, engaged in the retail business for the capital invested in it. The stock of
that the law does not violate the equal protection clause of the Constitution because sufficient grounds exist for merchandise bought and sold at retail does not alone constitute the business. The goodwill that the association,
the distinction between alien and citizen in the exercise of the occupation regulated, nor the due process of law partnership and the alien had built up during a long period of effort, patience and perseverance forms part of
clause, because the law is prospective in operation and recognizes the privilege of aliens already engaged in the such business. The constitutional provisions that no person shall be deprived of his property without due process
occupation and reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its of law2 and that no person shall be denied the equal protection of the laws3 would have no meaning as applied to
objectives appear to us to be plainly evident — as a matter of fact it seems not only appropriate but actually associations or partnership and alien heirs of an alien engaged in the retail business if they were to be compelled
necessary — and that in any case such matter falls within the prerogative of the Legislature, with whose power to sell or dispose of their business within ten years from the date of the approval of the Act and before the end
and discretion the Judicial department of the Government may not interfere; that the provisions of the law are of the term of the existence of the associations and partnership as agreed upon by the associations and partners
clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators or the segment and within six months after the death of their predecessor-in-interest.
of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations
because no treaty has actually been entered into on the subject and the police power may not be curtailed or The authors of the Constitution were vigilant, careful and zealous in the safeguard of the ownership of private
surrendered by any treaty or any other conventional agreement. agricultural lands which together with the lands of the public domain constitute the priceless patrimony and
mainstay of the nation; yet, they did not deem it wise and prudent to deprive aliens and their heirs of such
Some members of the Court are of the opinion that the radical effects of the law could have been made less lands.4
harsh in its impact on the aliens. Thus it is stated that the more time should have been given in the law for the
liquidation of existing businesses when the time comes for them to close. Our legal duty, however, is merely to For these reasons, I am of the opinion that section 1 of the Act, insofar as it compels associations and partnership
determine if the law falls within the scope of legislative authority and does not transcend the limitations of due referred to therein to wind up their retail business within ten years from the date of the approval of the Act even
process and equal protection guaranteed in the Constitution. Remedies against the harshness of the law should before the expiry of the term of their existence as agreed upon by the associates and partners and section 3 of
be addressed to the Legislature; they are beyond our power and jurisdiction. the Act, insofar as it compels the aliens engaged in the retail business in his lifetime his executor or
administrator, to liquidate the business, are invalid, for they violate the due process of law and the equal
The petition is hereby denied, with costs against petitioner. protection of the laws clauses of the Constitution.

Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur. THE MUNICIPALITY OF JOSE PANGANIBAN, PROVINCE OF CAMARINES NORTE, ETC., plaintiff and appellant, 
vs.
THE SHELL COMPANY OF THE PHILIPPINES, LTD., defendant and appellee.
Separate Opinions
Juanito S. Subia for plaintiff and appellant. (d) During the period starting on October 1, 1956 up to and including December 31, 1957, defendant Shell sold to
Lichauco, Picazo, Agcaoili and Mabanta, Jr. for defendant and appellee. the Philippine Iron Mines Inc. 1,006,400 liters of gasoline, 64,718 liters of lubricating oil and 855 metric tons of
diesoline. These goods were delivered to the Philippine Irons Mines, Inc. in the following manners:
REGALA, J.:
1. 295,200 liters of gasoline and 220 metric tons of diesoline were delivered by defendant Shell by its own lorries
This is an appeal from the decision of the Court of First Instance of Manila in Civil Case No. 43404, dated January to the Philippine Iron Mines, Inc. at Larap within the territorial jurisdiction of plaintiff municipality.
27, 1961, dismissing plaintiff-appellant's complaint for the collection of sales taxes from the defendant-appellee
on the ground that the law which authorizes the said plaintiff to impose and collect the same, Republic Act No. 2. 711,200 liters of gasoline and 635 metric tons of diesoline and 64,718 liters of lubricating oil were delivered by
1435, is unconstitutional. defendant Shell to the Philippine Iron Mines, Inc. through a common carrier, the A.L. Ammen Transportation Co.
(ALATCO).
Republic Act No. 1435, entitled "An Act To Provide Means For Increasing Highway Special Fund" is actually an
amendment to Sections 142 and 145 of the National Internal Revenue Code, Commonwealth Act No. 466, for as (e) During the period from January 1, 1958 up to and including May 17, 1960, defendant Shell sold to the
its first two sections read: Philippine Iron Mines, Inc. 2,224,900 liters of gasoline, 1,861 metric tons of diesoline and 294,339 liters of
lubricating oil. These goods were delivered to the Philippine Iron Mines, Inc. in the following manners:
SECTION 1. Section one hundred and forty-two of the National Internal Revenue Code, as amended, is further
amended to read as follows: 1. 1,318,500 liters of gasoline and 424 metric tons of diesoline were delivered by defendant Shell by its own
lorries to the Philippine Iron Mines, Inc. at Larap within the territorial jurisdiction of plaintiff municipality.
SEC. 2. Section one hundred and forty-five of the National Internal Revenue Code, as amended, to read as
follows: 2. 906,400 liters of gasoline, 1,437 metric tons of diesoline and 224,339 liters of lubricating oil were delivered by
defendant Shell to the Philippine Iron Mines, Inc. through a common carrier, the A.L. Ammen Transportation Co.
The amendments consist mainly in increasing the rate of specific tax on manufactured oils and other motor fuels, (ALATCO).
diesel fuel oil, naphtha gasoline and similar distilled products.
(f) The charges for the deliveries made through the ALATCO were paid for by defendant Shell, but were charged
Aside from introducing the aforementioned amendments, however, Republic Act No. 1435 likewise authorizes to the Philippine Iron Mines, Inc. which company paid for said charges to defendant Shell, together with the
municipal boards or councils to "levy an additional tax of not exceeding twenty-five per cent of the rates fixed in purchase price.
[Sections 142 and 145 of the National Internal Revenue Code] on manufactured oils sold or distributed within the
limits of the city or municipality" (Sec. 4), directing in the premises, however, that the proceeds from the above (h) Except for those above-mentioned, defendant Shell has not sold and/or delivered any other manufactured
levy "shall accrue to the road and bridge funds of the political subdivision for whose benefit the tax is collected." oils within the territorial jurisdiction of plaintiff municipality during the period from October 8, 1956 up to and
(Sec. 5). The full texts of Sections 4 and 5 read: including May 17, 1960. Plaintiff municipality, therefore, admits that it has no claims for taxes for said period
under the subject ordinances, except those mentioned in the next preceding paragraph.
SEC. 4. Municipal boards or councils may, notwithstanding the provisions of sections one hundred and forty-two
and one hundred forty-five of the National Internal Revenue Code, as hereinabove amended, levy an additional (i) Defendant Shell has no depot, establishment, office or place of business within the territorial jurisdiction of
tax of not exceeding twenty-five per cent of the rates fixed in said sections, on manufactured oils sold or plaintiff municipality. All the above-mentioned goods sold to the Philippine Iron Mines, Inc. originated from the
distributed within the limits of the city or municipality: Provided, That municipal taxes heretofore levied by cities orders therefor made, and the sales perfected, outside plaintiff municipality.
through city ordinances on gasoline, airplane, fuel, lubricating oil and other fuels, are hereby ratified and
declared valid. The method of collecting said additional tax shall be prescribed by the municipal board or council (j) Defendant Shell admits having received a letter of demand dated March 9, 1960 from plaintiff municipality
concerned. demanding payment of taxes.

SEC. 5. The proceeds of the additional tax on manufactured oils shall accrue to the road and bridge funds of the The defendant Shell resisted the above demand and, at the trial on the complaint filed by the plaintiff
political subdivision for whose benefit the tax is collected: Provided, however, That whenever any oils mentioned municipality for its collection, maintained that it is not liable on the said claims of the plaintiff because: First,
above are used by miners or forest concessionaires in their operations, twenty-five percentum of the specific tax Republic Act No. 1435, the law pursuant to which Ordinances Nos. 3 and 7 above were enacted, was
paid thereon shall be refunded by the Collector of Internal Revenue upon submission of proof of actual use of oils unconstitutional since it embraced more than one subject, contrary to Section 21, Article VI of the Constitution.
and under similar conditions enumerated in subparagraphs one and two of section one hereof, amending section And second, assuming the said law to be constitutional, still the levy made by the plaintiff municipality was illegal
one hundred forty-two of the Internal Revenue Code: Provided, further, That no new road shall be constructed because it referred to transactions made and consummated outside the territorial jurisdiction of the said
unless the routes or location thereof shall have been approved by the Commissioner of Public Highways after a municipality.
determination that such road can be made part of an integral and articulated route in the Philippine Highway
System, as required in section twenty-six of the Philippine Highway Act of 1953. In brief, the defendant-appellee argues that Republic Act No. 1435 actually legislates on two subject matters,
namely: (1) the amendment of Sections 142 and 145 of the National Internal Revenue Code and (2) the grant of a
Pursuant to the above provisions, the plaintiff Municipality enacted Ordinances Nos. 3 and 7, series of 1956 and taxing power to local governments, contrary to the provision of the Constitution that "no bill which may be
1957, respectively, levying taxes on all manufactured oils sold and distributed within its territorial jurisdiction. enacted into law shall embrace more than one subject which shall be expressed in the title of the bill." (Par. 1,
And, on the authority of the above-numbered ordinances, the plaintiff municipality assessed against the Section 21, Article VI). Moreover, the said defendant-appellee maintains that there is absolutely nothing in the
defendant-appellee herein a tax liability of P46,531.39 for the latter's admitted sales of the taxable product in the title of Republic Act No. 1435 — Act to Provide Means for Increasing Highway Special Fund — which suggests
plaintiff municipality for the period of October 1, 1956 to December 31, 1957 and from January 1, 1958 to May that it is a statute granting local governments certain specific taxing powers so that even if the said subject
17, 1960.1äwphï1.ñët matter were reasonably related to the task of increasing the Highway Special Fund, the law would still be fatally
defective because the recital in its body is not expressed in its title. In the premises, Shell points out that while
In connection with the sales which were taxed under the aforementioned ordinances, the parties hereto entered Republic Act No. 1435 announces in its title that it is an enactment to increase the Highway Special Fund, Section
into a partial stipulation of facts to the effect that: 5 of it decrees the accrual of the collections thereunder to the Road and Bridge Fund. According to the
defendant-appellee, the aforementioned variance testifies to the failure of the title of the law in question to The other issue raised in the instant appeal has long been settled by this Court. It is not the place where the
express its subject because the Highway Special Fund, by statutory definition, is separate and distinct from the contract was perfected, but the place of delivery which determines the taxable situs of the property sought to be
Road and Bridge Fund, the former being a national fund while the latter is a local appropriation. In support of this taxed. Thus, it is all inconsequential that, as the herein appellee makes much of, the subject transactions were
contention, the defendant-appellee cites Section 3 (g) of Republic Act No. 917 which reads: perfected and consummated in Manila and that payments therefor to Shell were made in Manila by the
purchasers. As We ruled in the case of Shell v. Sipocot, G.R. No, L-12680, March 20, 1959, sustaining the theory
(g) The term "local funds" includes funds raised under the authority of a province, chartered city, or municipality; advanced by the very appellee herein —
allotments of internal revenue accruing by law to their general funds and the "road and bridge" funds; and other
revenue accruing to their general funds and made available by resolution of the Board or Council concerned for From the explanatory note and the general discussion in Congress over the bill (House Bill No. 5288), it can be
expenditures, but does not include apportionments or allotments from the Highway Special Fund. readily gathered that one of the main purposes for the enactment of the law was to provide for the construction
and the improvement of principal road systems in municipalities. (Congressional Record, House of Rep., Vol. III,
The lower court sustained the above arguments and declared Republic Act No. 1435 as unconstitutional and, No. 67, pp. 2093, et seq.) The logical conclusion would accordingly follow that the taxable situs of the property to
consequently, dismissed the plaintiff's complaint. And so this appeal. be taxed should be where the same is used. This place is ordinarily the place of delivery. As correctly pointed out
by the appellants (SHELL) the term "sold" under the statute and the ordinance in question does not mean a mere
We find for the appellant. perfected contract but a consummated sale, where delivery becomes of the essence in determining the situs of
the sale. In the cases ofSoriano y Cia. v. Collector of Internal Revenue, 51 O.G. 4548; Vegetable Oil Corporation v.
Republic Act No. 1435 deals with only one subject and proclaims just one policy, namely, the necessity for Trinidad, 45 Phil. 822; and Earnshaw Docks and Honolulu Iron Works vs. Collector of Internal Revenue, 54 Phil.
increasing the Highway Special Fund. Its provisions that certain sections of the revenue code should be amended 696 it has been ruled that for a sale to be taxed in the Philippines it must be consummated there; thus indicating
and that local governments should be granted a taxing power not there before enjoyed by them are not really its that the place of consummation (associated with the delivery of the things subject matter of the contract) is the
subject matter, but rather, the two modes or means devised by Congress to realize or achieve the alleviation of accepted criterion in determining the situs of the contract for purposes of taxation, and not merely the place of
the Highway Special Fund. Plainly, therefore, the said law measure up to the standard set by aforequoted the perfection of the contract. (p. 5, Emphasis supplied.)
Constitutional provision.
It does not seem sporting of the appellee herein to disavow the above ruling now. It was the one who vigorously
Insofar as the assault on the constitutionality of Republic Act No. 1435 is concerned, the distinction drawn by argued its merit then, and now that it is sought to be given full effect and meaning, it complains that the said
Republic Act No. 917 between the Highway Special Fund and the Road and Bridge Fund proves hardly anything. ruling is wrong, evidently because it is the subject of the implementation. Such an attitude speaks very weakly of
On the contrary, Republic Act No. 917 is a documentary evidence on the direct and substantial relation of the the herein appellee's good faith.
above two funds one to the other.
Of course, Shell now maintains that while the Sipocot ruling was to the effect that the place where the contract
It is true that under Section 3 (g) of Republic Act No. 917 the Highway Special Fund should be distinguished from was perfected could not tax the sales thereunder if the delivery of its object was at some other locality, the said
the Road and Bridge Fund. But the distinction was made therein not for the purpose of separating one from the ruling did "not state that the tax can be imposed by the municipality where delivery is made." This argument is
other but merely, among others, "to control the disposition of all funds accruing to the Highway Special Fund." meritorious but only to the end that this Court has cast suspicion on the appellee's lack of good faith in asserting
(Section 2, Rep. Act No. 917). To be sure, fifty per centum of the apportionable balances in the Highway Special the same.
Fund is assigned or allocated by the said law to to the Road and Bridge Fund (Section 8). There can be nothing
constitutionally questionable, therefore, in a law which makes reference to the Road and Bridge Fund although In view of all the foregoing, judgment is hereby rendered reversing the decision appealed from. The appellee is
its title speaks alone of the Highway Special Fund. As above illustrated, the said two funds are, while ordered to pay the claims of the herein appellant as recited in the first three paragraphs of its prayer to its
distinguishable, directly and substantially germane to each other. Thus, they so relate to each other that the use complaint dated June 16, 1960, plus interest computed at the legal rate from the filing of the said complaint to
of one in the title do justify legislating in the body on the other. The constitutional rule at bar is satisfied if all their actual payment and costs.
parts of a law relate to the subject expressed in its title. (People v. Carlos, 78 Phil. 535; Gov't. v. Binalonan, 32
Phil. 634; and Nuval v. De la Fuente, L-5695, Jan. 21, 1953.) AGRIPINO A. DE GUZMAN, JR., NARCISO M. ARABE, LETICIA T. ENDOMA, ARISTIDES A. RAMOS, PANCHO M.
RIVERA, TERESITA A. DE CASTRO, CANDIDA C. HABANA, AZUCENA C. FALCON, MARIA LUZ P. CAEDO, YOLANDA V.
Besides, the definition of the Highway Special Fund as distinguished from the Road and Bridge Fund under RIO, RUBEN S. ANIEVAS, LELISA L. SANCHEZ, VILLARDO A. TRINIDAD, ENRIQUE CH. ZUNIGA, ROMEO A.
Section 3 (g) of Republic Act No. 917 is expressly qualified thereunder as the definition "when used in this Act and GONZALES, CASIANO G. ATUEL, JR., GEMMA L. BANARES, PERFECTO T. CAMPOS, ARNULFO A. AGUILAR,
in subsequent acts having reference thereto, unless the context indicates otherwise." It is evident that its use in RUDOLPH R. MELON, MAGDALENA M. LAO, MARINA GERONA, FLORIANA O. DE GUIA, EMETERIO B. BRUCAL,
the title of Republic Act No. 1435 is different from its use in Republic Act No. 917. NILDA C. CONCHA, YOLANDA P. FERMA, TEOTISTA C. ANGKIKO, FRANCISCO V. TRIAS, JENELYN E. ESTERNON,
MILAGROS M. ABELLAR, ALICIA T. MOJICA, ELVIRA E. BAYBAY, PRICILLA P. GOLFO, ELISEA M. HIERCO, TERESITA L.
The primary purpose of the constitutional provision that "no bill which may be enacted into law shall embrace DIMACUHA, MYRNA GUILLERMO, GRACIANO R. SAMELA, JR., NIMFA M. LAGASCA, JOSEFINA P. JARENO, NORMA
more that one subject which shall be expressed in the title of the bill," is to prohibit duplicity in legislation the V. ORDENES, FRANCISCO T. SERVANDO, VIOLETA M. ANONUEVO, ALFREDO O. BAYANI, MARIO J. RAMOS, EME
title of which might completely fail to apprise the legislators or the public of the nature, scope and consequences FEROLINO, LEONIDES P. COMIA, MILAGROS E. GENEBLAZO, LORNA L. MENORCA, REYNALDO DE LA CRUZ,
of the law or its operation. (Ichong v. Hernandez, G.R. No. L-7995, May 31, 1957). This does not seem to this ROMULO A. FAZ, LIMUEL G. GADO, REY G. FABELLA, DOMINGUITO G. TACASA, IMELDA R.B. ROTONI, TITA FOJA,
Court to have been ignored in the passage of Republic Act No. 1435 since, as the records of its proceedings bear NOEMI F. CASTRO, LILIA B. CAWALING, ROBERT A. REYES, CONCEPCION H. PARRENO, SERAFIN L. OLMEDO,
out, a full debate on precisely the issue of whether its title reflects its complete subject was had by the Congress ADOLFO L. ALLAN, PROSPERO D. CASTRO, ROSELLER C. GAPULAO, GLICERIO B. LAURENTE, BERNICE E. BERNABE,
which passed it. (See Congressional Record, House of Representatives, Vol. III, No. 67, p. 2098 ff.). ADINA L. FERNANDEZ, ANITA M. PAALAN, ROSA P. PINOON, INOCENCIA P. DANGUE, JULITA E. MENDOZA, ELENA
O. RAMOS, GENE BE BARTE, FLORENCIA Z. MAGANITO, PABLO A. ARGA, PEDRO S. LUNA, CARMELITA P. LAUREL,
In deciding the constitutionality of a statute alleged to be defectively titled, every presumption favors the validity VICTORINO I. MARASIGAN, ROMEO M. MENDOZA, JUAN C. MALABANAN, MANUEL B. ABRELI, JOSEPH T.
of the Act. As is true in cases presenting other constitutional issues, the courts avoid declaring an Act MACAHIYA, LEONOR P. ARADA, JULIA G. PEREZ, MODESTO M. VILLADELREY, ARNULFO Y. FAJILAN, MARLON P.
unconstitutional whenever possible. Where there is any doubt as to the insufficiency of either the title, or the HERRERA, JAIME A. BISCOCHO, MICHAEL D. CASTILLO, MILAGROS H. BAYLOSIS, ARSENIO T. GUSTE, ALFREDO V.
Act, the legislation should be sustained. (Sutherland, Statutory Construction, Vol. I, p. 295.) In the incident on ORAYANI, DANTE A. PENAMANTE, ROMEO A. DE CHAVEZ, MANUEL M. ILAGAN, ALFREDO O. MANZA, JR.,
hand, this Court does not even have any doubt. DOMINGO B. GUNIO, FIDEL V. PALERACIO, VICENTE V. DEL MORO, JUSTINO R. DEQUILLA, ERNESTO A. RUZOL,
ROMEO D. DELGADO, ERLINDA P. MAGSINO, VERONICA R. CAMBRONERO, NORMA A. DEQUINA, WELLIE R.
RAVINA, CORAZON T. LOPEZ, REMEDIOS R. QUIZON, LORETA E. VERGARA, MELECIA M. ASTRERA, VICENTA R. "SEC. 44. Reassignment of Election Officers. - No Election Officer shall hold office in a particular city or
SAMANTE, HELEN M. CUENTO-BUENDICHO, ANICIA V. MORALES, RISALINA C. GONZALES, ROSARIO CHARITO R. municipality for more than four (4) years. Any election officer who, either at the time of the approval of this Act
PABELLON, LOLITA L. MALADAGA, MAXIMO A. GLINDO, WILFREDO A. RODELAS, CELSO O. ROGO, RAMON C. or subsequent thereto, has served for at least four (4) years in a particular city or municipality shall automatically
VALENCIA, FELIPE R. FRANDO, ADEN B. DUNGO, OFELIA N. QUIBEN, LIGAYA S. VALENZUELA, EUNICE S. be reassigned by the Commission to a new station outside the original congressional district."
FAMILARIN, MARCELA DE LEON, ADELA M. JAMILLA, RENY ABLES, ADELA E. FABERES, ALICIA P. BALDOMAR,
EDNA C. GARCIA, ANGELINA V. GARRIDO, ELOISA P. TORRENO, CHARITO M. LACAMENTO, CLARENCIA M. By virtue of the aforequoted provision of law, the Commission on Elections (COMELEC) promulgated Resolution
AQUINO, HILDA DIMALANTA, ELSIE SIBAL, PURIFICACION TANGONAN, AMELITA FERNANDEZ, TEDDY C. Nos. 97-0002[1] and 97-0610[2] for the implementation thereof. Thereafter, the COMELEC issued several
MARIANO, LORETO SANGGALANG, GERARDO GONZALES, FEDERICO ONATE, JR., ARTURO BALIGNASAY, FELIX M. directives[3] reassigning the petitioners, who are either City or Municipal Election Officers, to different stations.
CABARIOS, JR., NORBERTO PUNZALAN, JAIME G. ALCANTARA, ERNESTO VILLANUEVA, ESTANISLAO SANCHEZ,
ADORACION L. PINEDA, LUCILA S. DUNGCA, ADELAIDA B. LAOIJINDANUM, ROLANDO A. BALUYUT, FRANCISCO M. Aggrieved by the issuance of the aforesaid directives and resolutions, petitioners found their way to this Court via
DAVID, LEONELLE S. MENDOZA, MA. LUZ A. BASILIO, NESTOR J. TIMBANG, HILDA P. DIZON, EMMANUEL E. the present petition assailing the validity of Section 44 of RA 8189, contending that:
IGNACIO, RAMON S. ABELLA, JOSELITO MATIAS, HEZEQUIAS B. GALANG, ERLINDA C. ZAPATA, IMELDA R.
MANALASTAS, PEDRO L. PALO, AURECIO C. TRASPE, JOSEPHINE GALANG, FLORINDA R. MADULID, MAGDALENA I
W. SADI, NYDIA V.A. BOLISAY, PRESENTACION A. PALOM, ANTONIO B. ANCHETA, MACARIO L. SADI, PACIFICO E.
GISAPON, FELICIANO C. CRUZ, IMELDA A. QUIMEL, LINDA D. SANDOVAL, MARILOU R. ORTIZ, NORMA F. SANTOS, SECTION 44 OF REPUBLIC ACT NO. 8189 VIOLATES THE EQUAL PROTECTION CLAUSE ENSHRINED IN THE
MAGPAYO V. ABESAMIS, BONIFACIO B. VILLAFLOR, DANIEL O. TABIOS, CONSTANTE T. CATRIZ, JESUS E. ALICANTE, CONSTITUTION;
FEDERICO SACLAYAN, JR., NOLY G. UMINGA, FE FRAELI L. DE GUZMAN, RODRIGO S. WYCOCO, JOVEN
HERMOGENES, RODOLFO D. BANAWA, ABELARDO O. CAPANZANA, ERNESTO Q. TIONGSON, ROSANNA CRUZ, II
OSCAR C. ONGOCO, CONSUELO A. KABIGTING, JULITA V. PASTELERO, ARSENIA V. BONDOC, ISIDRO A. TOMAS,
ANGELINA V. GARRIDO, CONSOLACION N. LABOG, ELENITA A. RIVERA, SOCORRO NOCES, RODOLFO GALLARDO, SECTION 44 OF REPUBLIC ACT NO. 8189 VIOLATES THE CONSTITUTIONAL GUARANTEE ON SECURITY OF TENURE
CARMENCITA M. ONGEO, CAMILO L. SEDURIFA, ARLEEN VIC B. OCHANDRA, EDGARDO E. APOSTOL, CLOTILDE C. OF CIVIL SERVANTS;
CANETE, ALEJANDRO B. DEL AGUA, PILAR R. BUENO, TEODOICO C. MAGALLANES, PETRONIO N. PIANGCO, JR.,
JOSE M. FLORENDO, BIBIANO A. CAGNAN, ALICIA A. TUBI, RODOLFO C. NATAN, JAIME B. MENDONEZ, EDILBERTO III
EDANG, ROSENDA T. JENOVEVA, VEDASTO B. ELIZAN, JR., MILAGROS P. DE LUNA, ATILANO L. ISAAC, CORAZON L.
J. PEPITO, LUCILA S. PINEDA, ROCHE B. CERRO, JOCELYN KL. LIBUT, REMBERTO L. GUTIERREZ, NAZARIO A. SECTION 44 OF REPUBLIC ACT NO. 8189 CONSTITUTES A DEPRIVATION OF PROPERTY WITHOUT DUE PROCESS OF
TRASMONTE, REYNALDO O. MACARAT, FLORENCIA M. MALIBAGO, IMELDA G. TUYAY, JUAN A. GIBA, JR., JOSE M. LAW;
CAPACITE, ARCITA M. GARCIA, ANGEL G. DACUNO, RITA M. BEDIANG, RENATO L. CANDIDO, NESTORIO B. BOCO,
JONATHAN C. AMBIDA, MONICA MACABARE, BENITO A. MONTALLANA, CLOTILDE C. APURA-VALDEMORO, IV
CIRIACO J. ARCENO, PABLO L. FORMARAN, JR., PROSPERO S. OLMEDO, IGNACIO V. CASCANO, SERAFIN L.
CLUTARIO, ARTURO L. DIN, JUCHITA C. SY, RODOLFO L. ASUERO, PIO T. PORTES, MARILOU F. TAMAYO, SECTION 44 OF REPUBLIC ACT NO. 8189 UNDERMINES THE CONSTITUTIONAL INDEPENDENCE OF COMELEC AND
MILAGROS P. LAMBINO, ESTANISLAO A. ESPINA, RENERIO D. ENGO, FERNANDO A. MOSCARE, CONCHITA A. COMELECS CONSTITUTIONAL AUTHORITY TO NAME, DESIGNATE AND APPOINT AND THEN REASSIGN AND
PICARDAL, ELIAS T. TURLA, BONIFACIO T. LIM, JOSEFINA A. AGUILAR, ANTONIO O. TEPACE, GAVINO S. ASOTES, TRANSFER ITS VERY OWN OFFICIALS AND EMPLOYEES;
RENE P. MAGBUTAY, NICOLAS C. UY, JR., JESUS B. LAVA, SENORA C. CALAGOS, RAFAEL A. PAYOD, MACARIO L.
CIEGO, SALVADOR T. CRUZ, VIRGINIA V. BESAS, RAUL S. FIGUERDA, EDGAR R. DELOS REYES, TERESO R. ROSEL, V
JOSE J. MABANGUE, PRIMO D. PALOMO, JOHN C. YANGZON, ROMULO D. JABON, FIDENCIO Z. LA TORRE, JR.,
LETICIA R. MACARIOLA, CARLOS P. VARELA, JR., ANTONIO L. PEDRAZA, SALVACION A. LAMBAN, LINO L. JAPSON, SECTION 44 OF REPUBLIC ACT NO. 8189 CONTRAVENES THE BASIC CONSTITUTIONAL PRECEPT [Article VI,
EUNIA H. VACAL, ANTONIO F. VALDEZ, NATIVIDAD E. PRADO, LORENZO C. MERKA, GAUDIOSO A. RUEGO, ETERIO SECTION 26(1), Phil. Constitution] THAT EVERY BILL PASSED BY CONGRESS SHALL EMBRACE ONLY ONE SUBJECT
Z. ABOCEJO, DEMETRIA O. COROLLO, MARIA S. OBEN, ARTHUR V. LEYSON, PEDRO L. AVILA, DOMINADOR S. WHICH MUST BE EXPRESSED IN THE TITLE THEREOF; and
RODILLA, MARCIAL MAGPATOC, FEDERICO D. BARCELON, EVANGELINE DELA ROSA, ELENO GIL, ARSENIA GARCIA,
HUMILDA ALICUM, DIOSDADO CAS, ABRAHAM MASAOY, SAMUEL ORALLO, AMELIA OLORES, CANDIDO URBANO, VI
LOURDES FRIAS, ROEL SORIANO, EMELDA AGUSTIN, PAQUITO SORIANO, GERMAN BALOLONG, BENJAMIN C.
ROSARIO, EFREN BUYA, LEONIDA LEGASPI, TOMAS ABELLA, JR., JOVENCIA CANTO, JUAN DACONO, MIGUEL SECTION 44 OF REPUBLIC ACT NO. 8189 IS VOID FOR FAILURE TO COMPLY WITH THE CONSTITUTIONAL
BAUTISTA, LORNA PASCUAL, FERDINAND BRAGANZA, PRISCILLA PEREZ, ALMA LUZ SORIANO, JUAN VALENCIA, JR., REQUIREMENT [ARTICLE VI, SECTION 26 (2)] OF THREE READINGS ON SEPARATE DAYS AND DISTRIBUTION OF
JULIAN APOSTOL, ROSARIO GUICO, BONITA VIDAL, GUIA GARCIA, LEOCADIO GINEZ, CATALINA BANEZ, VERONICA PRINTED COPIES IN ITS FINAL FORM THREE DAYS BEFORE ITS PASSAGE.
TABILIN, ELVIRA CALSADO, ALIPIO LOPEZ, JOSEPHINE MALANA, PIO ANONUEVO, ELMA DEL ROSARIO, RUFINO
FLORES, ANTONIO ORDONEZ, CARMEN CLAVERIA, ESTRELLA RAMOS,petitioners, vs. COMMISSION ON Petitioners contentions revolve on the pivotal issue, whether Section 44 of RA 8189 is valid and constitutional.
ELECTIONS, respondent.
The petition is barren of merit. Section 44 of RA 8189 enjoys the presumption of validity, and the Court discerns
DECISION no ground to invalidate it.
PURISIMA, J.: Petitioners theorize that Section 44 of RA 8189 is violative of the "equal protection clause" of the 1987
Constitution because it singles out the City and Municipal Election Officers of the COMELEC as prohibited from
At bar is a petition for certiorari and prohibition with urgent prayer for the issuance of a writ of preliminary holding office in the same city or municipality for more than four (4) years. They maintain that there is no
injunction and temporary restraining order, assailing the validity of Section 44 of Republic Act No. 8189 (RA 8189) substantial distinction between them and other COMELEC officials, and therefore, there is no valid classification
otherwise known as "The Voters Registration Act of 1996". to justify the objective of the provision of law under attack.

RA 8189 was enacted on June 10, 1996 and approved by President Fidel V. Ramos on June 11, 1996. Section 44
thereof provides:
The Court is not persuaded by petitioners arguments. The "equal protection clause" of the 1987 Constitution The independence of the COMELEC is not at issue here. There is no impairment or emasculation of its power to
permits a valid classification under the following conditions: appoint its own officials and employees. In fact, Section 44 even strengthens the COMELECs power of
appointment, as the power to reassign or transfer is within its exclusive jurisdiction and domain.
1. The classification must rest on substantial distinctions;
Petitioners contention that Section 44 has an isolated and different subject from that of RA 8189 and that the
2. The classification must be germane to the purpose of the law; same is not expressed in the title of the law, is equally untenable.

3. The classification must not be limited to existing conditions only; and The objectives of Section 26(1), Article VI of the 1987 Constitution, that "[e]very bill passed by the Congress shall
embrace only one subject which shall be expressed in the title thereof", are:
4. The classification must apply equally to all members of the same class. [4]
1. To prevent hodge-podge or log-rolling legislation;
After a careful study, the ineluctable conclusion is that the classification under Section 44 of RA 8189 satisfies the
aforestated requirements. 2. To prevent surprise or fraud upon the legislature by means of provisions in bills of which the titles gave no
information, and which might therefore be overlooked and carelessly and unintentionally adopted; and
The singling out of election officers in order to "ensure the impartiality of election officials by preventing them
from developing familiarity with the people of their place of assignment" does not violate the equal protection 3. To fairly apprise the people, through such publication of legislative proceedings as is usually made, of the
clause of the Constitution. subjects of legislation that are being considered, in order that they may have opportunity of being heard thereon
by petition or otherwise if they shall so desire.[7]
In Lutz vs. Araneta,[5] it was held that "the legislature is not required by the Constitution to adhere to a policy of
all or none". This is so for underinclusiveness is not an argument against a valid classification. It may be true that Section 26(1) of Article VI of the 1987 Constitution is sufficiently complied with where, as in this case, the title is
all the other officers of COMELEC referred to by petitioners are exposed to the same evils sought to be addressed comprehensive enough to embrace the general objective it seeks to achieve, and if all the parts of the statute are
by the statute. However, in this case, it can be discerned that the legislature thought the noble purpose of the related and germane to the subject matter embodied in the title or so long as the same are not inconsistent with
law would be sufficiently served by breaking an important link in the chain of corruption than by breaking up or foreign to the general subject and title.[8] Section 44 of RA 8189 is not isolated considering that it is related and
each and every link thereof. Verily, under Section 3(n) of RA 8189, election officers are the highest officials or germane to the subject matter stated in the title of the law. The title of RA 8189 is "The Voters Registration Act of
authorized representatives of the COMELEC in a city or municipality. It is safe to say that without the complicity 1996" with a subject matter enunciated in the explanatory note as "AN ACT PROVIDING FOR A GENERAL
of such officials, large scale anomalies in the registration of voters can hardly be carried out. REGISTRATION OF VOTERS, ADOPTING A SYSTEM OF CONTINUING REGISTRATION, PRESCRIBING THE
PROCEDURES THEREOF AND AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR." Section 44, which
Moreover, to require the COMELEC to reassign all employees (connected with the registration of voters) who provides for the reassignment of election officers, is relevant to the subject matter of registration as it seeks to
have served at least four years in a given city or municipality would entail a lot of administrative burden on the ensure the integrity of the registration process by providing a guideline for the COMELEC to follow in the
part of the COMELEC. reassignment of election officers. It is not an alien provision but one which is related to the conduct and
procedure of continuing registration of voters. In this regard, it bears stressing that the Constitution does not
Neither does Section 44 of RA 8189 infringe the security of tenure of petitioners nor unduly deprive them of due require Congress to employ in the title of an enactment, language of such precision as to mirror, fully index or
process of law. As held in Sta. Maria vs. Lopez.[6] catalogue, all the contents and the minute details therein.[9]

"xxx the rule that outlaws unconsented transfers as anathema to security of tenure applies only to an officer who In determining the constitutionality of a statute dubbed as defectively titled, the presumption is in favor of its
is appointed - not merely assigned - to a particular station. Such a rule does not pr[o]scribe a transfer carried out validity.[10]
under a specific statute that empowers the head of an agency to periodically reassign the employees and officers
in order to improve the service of the agency. xxx" (italics supplied) As regards the issue raised by petitioners - whether Section 44 of RA 8189 was enacted in accordance with
Section 26 (2), Article VI of the 1987 Constitution, petitioners have not convincingly shown grave abuse of
The guarantee of security of tenure under the Constitution is not a guarantee of perpetual employment. It only discretion on the part of Congress. Respect due to co-equal departments of the government in matters entrusted
means that an employee cannot be dismissed (or transferred) from the service for causes other than those to them by the Constitution, and the absence of a clear showing of grave abuse of discretion suffice to stay the
provided by law and after due process is accorded the employee. What it seeks to prevent is capricious exercise judicial hand.[11]
of the power to dismiss. But, where it is the law-making authority itself which furnishes the ground for the
transfer of a class of employees, no such capriciousness can be raised for so long as the remedy proposed to cure WHEREFORE, the petition is DISMISSED; and the constitutionality and validity of Section 44 of RA 8189 UPHELD.
a perceived evil is germane to the purposes of the law. No pronouncement as to costs.

Untenable is petitioners contention that Section 44 of RA 8189 undermines the authority of COMELEC to appoint SO ORDERED.
its own officials and employees. As stressed upon by the Solicitor General, Section 44 establishes a guideline for
the COMELEC to follow. Said section provides the criterion or basis for the reassignment or transfer of an election SANTIAGO P. ALALAYAN, ET AL., suing in his behalf and for the benefit of all other persons having common or
officer and does not deprive the COMELEC of its power to appoint, and maintain its authority over its officials and general interest with him in accordance with Sec. 12, Rule 3, Rules of Court, petitioners-appellants, 
employees. As a matter of fact, the questioned COMELEC resolutions and directives illustrate that it is still the vs.
COMELEC which has the power to reassign and transfer its officials and employees. But as a government agency NATIONAL POWER CORPORATION and ADMINISTRATOR OF ECONOMIC COORDINATION, respondents-appellees.
tasked with the implementation and enforcement of election laws, the COMELEC is duty bound to comply with
the laws passed by Congress. Alafriz Law Offices for petitioners-appellants. 
The Government Corporate Counsel and Office of the Solicitor General for respondents-appellees.

FERNANDO, J.:
This declaratory relief proceeding was started in the lower court by petitioners, Alalayan and Philippine Power P120.00 per kilowatt per year" payable in twelve equal monthly installments, "plus an energy charge of P0.013
and Development Company, both franchise holders of electric plants in Laguna, to test the validity of a section of per kilowatt hour, payable on the basis of monthly delivery"; a letter of June 22, 1962 of respondent National
an amendatory act,1 empowering respondent National Power Corporation "in any contract for the supply of Power Corporation to petitioner approving his 17.5% rate increase of power so that beginning July 1, 1962, the
electric power to a franchise holder," receiving at least 50% of its electric power and energy from it to require as demand charge would be P10.00 per kilowatt per month and the energy charge would be P0.02 per kilowatt
a condition that such franchise holder "shall not realize a net profit of more than twelve percent annually of its hour; a letter of August 15, 1962, wherein respondent National Power Corporation notified petitioner that it
investments plus two-month operating expenses." Respondent, under such provision, could likewise "renew all deferred the effectivity of the new rates, but it will be enforced on November 1, 1962; a letter of June 25, 1963
existing contracts with franchise holders for the supply of electric power and energy," so that the provisions of enforcing respondent National Power Corporation deferring once again the effectivity of the new rates until
the Act could be given effect.2 This statutory provision was assailed on the ground that, being a rider, it is January 1, 1964; as well as the congressional transcripts on House Bill No. 5377 and Senate Bill No. 613, now
violative of the constitutional provision requiring that a bill, which may be enacted into law, cannot embrace Republic Act No. 3043.15
more than one subject, which shall be expressed in its title,3 as well as the due process guarantee, the liberty to
contract of petitioners being infringed upon. The lower court sustained its validity. We sustain the lower court in In an order of November 5, 1964, the lower court gave the parties a period of twenty days within which to
this appeal. submit simultaneously their respective memoranda. After the submission thereof, the lower court, in a decision
of January 30, 1965, sustained the validity and constitutionality of the challenged provision. Hence, this appeal.
In the petition for declaratory relief, after the usual allegations as to parties, it was stated that respondent
National Power Corporation "has for some years now been, and still is, by virtue of similar, valid and existing As was set forth earlier, this appeal cannot prosper. We share the view of the lower court that the provision in
contracts entered into by it with one hundred and thirty seven (137) natural persons and corporations question cannot be impugned either on the ground of its being violative of the constitutional requirement that a
distributed all over the country, supplying, distributing, servicing and selling electric power and energy at fixed bill cannot embrace more than one subject to be expressed in its title or by virtue of its alleged failure to satisfy
rites schedules to the latter who have for some years now been and still are, legally engaged in resupplying, the due process criterion.
redistributing, reservicing and reselling the said electric power and energy to individual customers within the
coverage of their respective franchises." 4 Petitioners are included among the said 197 natural persons and 1. We consider first the objection that the statute in question is violative of the constitutional provision that no
entities.5 Then, reference was made to the particular contracts petitioners entered into with respondent, the bill "which may be enacted into law shall embrace more than one subject which shall be expressed in [its] title ...
contracts to continue indefinitely unless and until either party would give to the other two years previous notice "16 This provision is similar to those found in many American State Constitutions. It is aimed against the evils of
in writing of its intention to terminate the same.6 After which, it was noted that on June 18, 1960, an act the so-called omnibus bills and log-rolling legislation as well as surreptitious or unconsidered
authorizing the increase of the capital stock of the National Power Corporation to P100 million took effect. 7 A enactments.17 Where the subject of a bill is limited to a particular matter, the lawmakers along with the people
year later, on June 17, 1961, it was alleged that the challenged legislation became a law, purportedly to increase should be informed of the subject of proposed legislative measures. This constitutional provision thus precludes
further the authorized capital stock, but including the alleged rider referred to above, which, in the opinion of the insertion of riders in legislation, a rider being a provision not germane to the subject matter of the bill.
petitioners, transgressed the constitutional provision on the subject matter and title of bills as well as the due Petitioner Alalayan asserts that the provision objected to is such a rider.
process clause.8 Mention was then made of the National Power Corporation approving a rate increase of at least
17.5%, the effectivity of which, was at first deferred to November 1, 1962, then subsequently to January 15, To lend approval to such a plea is to construe the above constitutional provision as to cripple or impede proper
1963, with the threat that in case petitioners would fail to sign the revised contract providing for the increased legislation. To impart to it a meaning which is reasonable and not unduly technical, it must be deemed sufficient
rate, respondent National Power Corporation would then cease "to supply, distribute and service electric power that the title be comprehensive enough reasonably to include the general object which the statute seeks to
and energy to them."9 effect without expressing each and every end and means necessary for its accomplishment. Thus, mere details
need not be set forth. The legislature is not required to make the title of the act a complete index of its contents.
That would be, in the opinion of petitioners, violative of their rights, proceeding from legislation suffering from The provision merely calls for all parts of an act relating to its subject finding expression in its title. 18 More
constitutional infirmities.10 A declaration of unconstitutionality was therefore sought by them. It was prayed: "(1) specifically, if the law amends a section or part of a statute, it suffices if reference be made to the legislation to
To give due course to this petition; (2) To issue a writ of preliminary injunction, upon the posting of the requisite be amended, there being no need to state the precise nature of the amendment.19
bond, enjoining respondent NPC from carrying or prosecuting its threat to enforce the provisions of the rider or
Section 3 of Republic Act No. 3043 ... in the manner stated in paragraph 18 of this petition until this Honorable It was in 1938, in Government v. Hongkong & Shanghai Bank,20 where, for the first time after the inauguration of
Court shall have finally decided or disposed, by final judgment, of the issues raised in this petition; (3) After due the Commonwealth, this Court passed upon a provision of that character. We held there that the Reorganization
hearing, to declare the rider or Section 3 of Republic Act No. 3043 null and void for being illegal and Law,21 providing for the mode in which the total annual expenses of the Bureau of Banking could be reimbursed
unconstitutional, and to issue a permanent injunction requiring respondent NPC to refrain from enforcing or through assessment levied upon all banking institutions subject to inspection by the Bank Commissioner was not
implementing the provisions of the same law."11 violative of such a requirement in the Jones Law, the previous organic act. Justice Laurel, however, vigorously
dissented, his view being that while the main subject of the act was reorganization, the provision assailed did not
Soon after, petitioner Philippine Power and Development Company moved that insofar as it was concerned, the deal with reorganization but with taxation. This case of Government v. Hongkong & Shanghai Bank was decided
case be dismissed, which motion was granted by the lower court on January 25, 1963.12 The sole petitioner is by a bare majority of four justices against three. Thereafter, it would appear that the constitutional requirement
therefore Santiago P. Alalayan, suing in his behalf and for the benefit of all other persons having common or is to be given the liberal test as indicated in the majority opinion penned by Justice Abad Santos, and not the
general interest with him. Respondent National Power Corporation filed an opposition on February 15, 1963, strict test as desired by the minority headed by Justice Laurel.
opposing the issuance of a writ for preliminary injunction.13 On March 21, 1963, the lower court, considering that
there was "no sufficient ground for the issuance of the writ for preliminary injunction," denied the same. 14 Such a trend is made manifest in the cases beginning with Sumulong v. Commission on Elections, 22 up to and
including Felwa v. Salas,23 a 1966 decision, the opinion coming from Chief Justice Concepcion. There is nothing
There was in the answer, dated March 29, 1963, an admission of the main facts alleged, with a denial of the legal in Lidasan v. Commission on Elections,24 where a statute25was annulled on this ground, to indicate the contrary.
conclusion which petitioner would deduce therefrom, respondent National Power Corporation upholding the As aptly expressed by Justice Sanchez: "Of course, the Constitution does not require Congress to employ in the
validity of the challenged provision. Then, came a partial stipulation of facts submitted on October 1, 1964, title of an enactment, language of such precision as to mirror, fully index or catalogue all the contents and the
consisting of a resolution of the Philippine Electric Plant Owners Association to take the necessary steps to stop minute details therein. It suffices if the title should serve the purpose of the constitutional demand that it inform
respondent National Power Corporation from enforcing its announced increase, samples of contracts between the legislators, the persons interested in the subject of the bill, and the public, of the nature, scope and
electric plant operators on the one hand and respondent National Power Corporation on the other, the contract consequences of the proposed law and its operation. And this, to lead them to inquire into the body of the bill,
with petitioner Alalayan, dated May 26, 1956, showing that he did purchase and take power and energy as study and discuss the same, take appropriate action thereon, and, thus, prevent surprise or fraud upon the
follows: "Sixty (60) kilowatts and of not less than 140,000 kilowatt-hours in any contract year at the rate of legislators."
We thus hold that there is no violation of the constitutional provision which requires that any bill enacted into It would thus appear that unless this Court is prepared to overturn a doctrine so firmly adhered to in a number of
law shall embrace only one subject to be expressed in the title thereof. cases notable for the unanimity of their response to an objection similar to the one here raised, petitioner
Alalayan cannot prevail. Certainly, this Court is not prepared to take that step. For in the face of a constitutional
2. Nor is petitioner anymore successful in his plea for the nullification of the challenged provision on the ground provision that allows deprivation of liberty, including liberty of contract, as long as due process is observed, the
of his being deprived of the liberty to contract without due process of law. alleged nullity of a legislative act of this character can only be shown if in fact there is such a denial. The relevant
question then is, what does due process require?
It is to be admitted of course that property rights find shelter in specific constitutional provisions, one of which is
the due process clause. It is equally certain that our fundamental law framed at a time of "surging unrest and The holding of this Court in Ermita-Malate Hotel and Motel Operators Asso. v. City Mayor,48 sheds some light.
dissatisfaction",26 when there was the fear expressed in many quarters that a constitutional democracy, in view Thus: "There is no controlling and precise definition of due process. It furnishes though a standard to which
of its commitment to the claims of property, would not be able to cope effectively with the problems of poverty governmental action should conform in order that deprivation of life, liberty or property, in each appropriate
and misery that unfortunately afflict so many of our people, is not susceptible to the indictment that the case, be valid. What then is the standard of due process which must exist both as a procedural and as substantive
government therein established is impotent to take the necessary remedial measures. The framers saw to that. requisite to free the challenged ordinance, or any governmental action for that matter, from the imputation of
The welfare state concept is not alien to the philosophy of our Constitution.27 It is implicit in quite a few of its legal infirmity sufficient to spell its doom? It is responsiveness to the supremacy of reason, obedience to the
provisions. It suffices to mention two. dictates of justice. Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy the due process
requirement, official action, to paraphrase Cardozo, must not outrun the bounds of reason and result in sheer
There is the clause on the promotion of social justice to ensure the well-being and economic security of all the oppression. Due process is thus hostile to any official action marred by lack of reasonableness. Correctly has it
people,28 as well as the pledge of protection to labor with the specific authority to regulate the relations between been identified as freedom from arbitrariness. It is the embodiment of the sporting idea of fair play. It exacts
landowners and tenants and between labor and capital.29 This particularized reference to the rights of working fealty "to those strivings for justice" and judges the act of officialdom of whatever branch "in the light of reason
men whether in industry and agriculture certainly cannot preclude attention to and concern for the rights of drawn from considerations of fairness that reflect [democratic] traditions of legal and political thought." It is not
consumers, who are the objects of solicitude in the legislation now complained of. The police power as an a narrow or "technical conception with fixed content unrelated to time, place and circumstances," decisions
attribute to promote the common weal would be diluted considerably of its reach and effectiveness if on the based on such a clause requiring a "close and perceptive inquiry into fundamental principles of our society."
mere plea that the liberty to contract would be restricted, the statute complained of may be characterized as a Questions of due process are not to be treated narrowly or pedantically in slavery to form or phrases." .
denial of due process. The right to property cannot be pressed to such an unreasonable extreme.
The due process objection is sought to be bolstered by an allegation that such power conferred in the challenged
It is understandable though why business enterprises, not unnaturally evincing lack of enthusiasm for police legislation to limit the net profits to "12% annually of [petitioner's] investments plus two-month operating
power legislation that affect them adversely and restrict their profits could predicate alleged violation of their expenses" has a confiscatory aspect. This argument has the ring of futility. Precisely, in Manila Electric Co. v.
rights on the due process clause, which as interpreted by them is a bar to regulatory measures. Invariably, the Public Service Commission,49 this Court in an opinion by the present Chief Justice upheld such a figure as against
response from this Court, from the time the Constitution was enacted, has been far from sympathetic. Thus, the contention that it was rather too generous to the public utility. To speak of it as confiscatory then is to
during the Commonwealth, we sustained legislation providing for collective bargaining,30 security of employ the language by hyperbole. Moreover, in the absence any evidence to demonstrate the alleged
tenure,31 minimum wages,32compulsory arbitration,33 and tenancy regulation.34 Neither did the objections as to confiscatory effect of the provision in question, there would be no basis for its nullification, in view of the well-
the validity of measures regulating the issuance of securities35 and public services36 prevail. known presumption of validity that every statute has in its favor.50

For it is to be remembered that the liberty relied upon is not freedom of the mind, which occupies a preferred In the light of the above, there is thus clearly no occasion for yielding assent to the claim of petitioner that the
position, nor freedom of the person, but the liberty to contract, associated with business activities, which, as has legislation assailed contravenes the due process clause. 1äwphï1.ñët
been so repeatedly announced, may be subjected, in the interest of the general welfare under the police power,
to restrictions varied in character and wide ranging in scope as long as due process is observed. In Calalang v. 3. While not explicitly avowed by petitioner, there is the intimation that to apply the challenged legislation to
Williams,37 this Court found no objection to an enactment limiting the use of and traffic in the national roads and contracts then in existence would be an infringement of the constitutional prohibition against any law impairing
streets as against the assertion that the exercise of such an authority amounted to an unlawful interference with the obligation of contracts.51 No such fear need be entertained. A citation from a 1940 decision of this Court,
legitimate business and abridgment of personal liberty. The opinion by Justice Laurel explains why such an in Pangasinan Transportation Co. v. Public Service Commission,52 is particularly relevant. In the language of
argument was far from persuasive. Thus: "In enacting said law, therefore, the National Assembly was prompted Justice Laurel, speaking for the Court: "Upon the other hand, statutes enacted for the regulation of public
by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, utilities, being a proper exercise by the state of its police power, are applicable not only to those public utilities
which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of coming into existence after its passage, but likewise to those already, existence established and in
said law, and the state in order to promote the general welfare may interfere with personal liberty, with operation."53 Such a doctrine was followed in the case of a tenancy legislation, the Congress undoubtedly having
property, and with business and occupations. Persons and property may be subjected to all kinds of restraints in mind and not having failed to take notice "of the existence of contracts" which stipulated a division of the
and burdens, in order to secure the general comfort, health, and prosperity of the state ... " 38 The above doctrine, crops on a 50-50 basis and therefore must have intended to regulate the same. There was thus no impairment of
valid then and equally valid now, constituted more than sufficient justification for statutes curtailing the liberty an obligation of contract, such an enactment under the police power being remedial in nature, the non-
enjoyed by business enterprises, whether conducted by natural or juridical persons, to satisfy the needs of public applicability of which to existing conditions would be self-defeating in character.54
welfare.
In Abe v. Foster Wheeler Corp.,55 Justice Barrera, speaking for the Court, took note of the contention "that as the
So it continues to be under the Republic. This Court has invariably given the seal of approval to statutes intended contracts of employment were entered into at a time when there was no law granting the workers said right, the
to improve the lot of tenants,39who thereafter were given the option to transform their relationship with application as to them of the subsequent enactment restoring the same right constitutes an impairment of their
landowners to one of lease, which grant of authority was sustained in 1964.40 Retail trade was nationalized, the contractual obligations." Then he, made clear why the Court was of a contrary view as, "the constitutional
measure receiving judicial approval as against due process objection,41 a decision foreshadowed earlier with the guaranty of non-impairment ... is limited by the exercise of the police power of the State, in the interest of public
favorable action taken on legislation granting preference to Filipino citizens in the lease of public market health, safe, morals and general welfare." Thus was reaffirmed what previously had been announced as the rule.
stalls.42 It is easily understandable why the regulation of practice of medicine; 43 limitation of the hours of Such a doctrine was reiterated early this year inPhilippine American Life Insurance Co. v. Auditor General,56 where
labor;44 imposition of price control;45 requirement of separation pay for one month46 as well as a social security this Court found no objection to the applicability of the Margin Law,57 even if it be assumed that a reinsurance
scheme47 cannot be impugned as unconstitutional. While not exhaustive, the above decisions manifest in no treaty was already in existence and had imposed the corresponding obligation on the parties prior to its
certain terms the inherent difficulty of assailing regulatory legislation based on alleged denial of due process. enactment.
This is not to say that in each and every case the invocation of the protection of the non-impairment clause At the trial of the case the defendant made the following admissions: "That on the first of June, 1923, she had no
would be unavailing once the legislation complained of is shown to be an exercise of the police power. certificate from the Board of Medical Examiners authorizing her to practice medicine in the Philippine Islands;
Otherwise, that would render nugatory the constitutional guarantee of non-impairment, and for that matter that on that day she treated and manipulated the head and body of Regino Noble in order to cure him of
both the equal protection and due process clauses which equally serve to protect property rights. Here, as in ailments from which he pretended to suffer, the treatment consisting in a `thrust' by means of the application of
other cases where governmental authority may trench upon property rights, the process of balancing, the hand to the spinal column; that she for such treatment received and collected from said Regino Noble the
adjustment or harmonization is called for. sum of P1; that the said treatment took place in her office situated at No. 712 Calle Asuncion, District of Binondo,
City of Manila, Philippine Islands; that she on or about the first day of June, 1923, and for some time prior to that
Rutter v. Esteban58 lends support to such an approach. In that leading case, the continued operation and date, advertised herself as a `doctor of chiropractic,' in said City of Manila, said advertisement appearing upon
enforcement of the Moratorium Act59which allowed an eight-year period of grace for the payment of pre-war her business cards and in the newspaper `El Debate,' in its issue of April 29, 1923, edited and published in Manila
obligations on the part of debtors who suffered as a consequence of World War II was, in a 1953 decision, held and in which cards and newspaper advertisement the defendant prefixed the abbreviation `Dra.' to her name;
"unreasonable and oppressive, and should not be prolonged a minute longer" for being violative of the that she was graduated a doctor in chiropractic on the 13th day of August, 1919, as evidenced by a certificate
constitutional provision prohibiting the impairment of the obligation of the contracts "and, therefore, ... should marked Exhibit I and issued by the American University School of Chiropractic of Chicago, Illinois."chanrobles
be declared null and void and without effect."60 As of the date of its enactment in 1948, the police power could virtual law library
be relied upon to sustain its validity, in view of the serious economic condition faced by the country upon
liberation and the state of penury that then afflicted a greater portion of the Filipino people. By 1953 however, Upon this admission and some other evidence to the same effect, the trial court found the defendant guilty as
the Moratorium Act could be rightfully considered as an infringement of the non-impairment clause, as the charged in the information and, in accordance with section 2678 of the Administrative Code, sentenced her to
economy had in the meanwhile considerably changed for the better. pay a fine of P300, with subsidiary imprisonment in case of insolvency and to pay the costs. From this judgment
the defendant appeals to this court and presents four assignments of
There is no clearer instance then of the process of harmonization and balancing which is incumbent upon the error.chanroblesvirtualawlibrary chanrobles virtual law library
judiciary to undertake whenever a regulatory measure under the police power is assailed as violative of
constitucess or equal protection, all of which are intended to safeguard property rights. Three leading decisions I. In the first assignment of error counsel contends that the demurrer to the information should have been
of the United States Supreme Court, Home Building & Loan Astional guarantees, whether of non-impairment, sustained on the ground that said information charged more than one offense. The Medical Law is contained in
due prosociation v. Blaisdell,61 Nebbia v. New York,62 and Norman v. Baltimore and Ohio Railroad Co.,63 speak sections 758 to 783 of the Administrative Code and it is argued that inasmuch as some of the illegal acts with
similarly. which the defendant is charged are prohibited by section 770 of the Code and others by section 783, the
defendant is in reality accused of two separate and distinct offenses, namely, illegal practice of medicine and
Even if, therefore, reliance be had on the non-impairment clause by petitioner and the process of adjustment or illegally representing oneself as a doctor.chanroblesvirtualawlibrary chanrobles virtual law library
harmonization be undertaken to ascertain whether the applicability of the statutory provision assailed to existing
contracts would run counter to such a guarantee, still the same conclusion emerges. There is a failure to make We cannot accept this view. It may be noted that the Medical Law itself, as it appears in the Administrative Code,
out a case for its invalidity. does not declare any of the therein prohibited acts penal offenses. The penal provisions relating thereto are
contained in section 2678 of the Code, which reads as follows:
WHEREFORE, there being no showing that Section 3 of Republic Act No. 3043 is unconstitutional, the decision of
the lower court, dismissing the petition, is affirmed. With costs against petitioner Alalayan. SEC. 2678. Violation of Medical Law. - A person violating any provision of the Medical Law shall, upon
conviction, be punished by a fine of not more than three hundred pesos or by imprisonment for not more than
THE PEOPLE OF THE PHILIPPINE ISLANDS, Plaintiff-Appellee, vs. JOVITA V. ninety days, or both, in the discretion of the court.
BUENVIAJE, Defendant-Appellant.
The offense here penalized is "violation of the Medical Law." The statute makes no distinction between illegal
Francisco and Lualhati and Ariston Rivera for appellant. practice of medicine and illegally advertising oneself as a doctor. Both are in violation of the Medical Law and
Attorney-General Villa-Real for appellee. carry the same penalty. They are merely different ways or means of committing the same offense and both of
these means are closely related to each other and usually employed
OSTRAND, J.: together.chanroblesvirtualawlibrary chanrobles virtual law library

The defendant is accused of the violation of the Medical Act, the information alleging "that on or about the first In these circumstances and where, as alleged in the information in the present case, the various violations have
day of June, 1923, and for some time prior to said date, the said accused without having obtained from the Board taken place simultaneously, we do not think it was the intention of the legislator that each single act should be
of Medical Examiners the corresponding certificate of registration for the practice of medicine in the Philippine regarded as a separate offense and separate informations presented for each. The language of this court in the
Islands, voluntarily, illegally and criminally and for compensation, practiced medicine in the City of Manila, case of United States vs. Poh Chi (20 Phil., 140), in regard to the Opium Law, is opposite to the present case.
Philippine Islands, assisting, treating and manipulating the head and body of Regino Noble for the purpose of
curing him of the ailments, diseases, pains and physical defects from which he pretended to suffer, and It is true that the Commission has provided a certain punishment for the possession of a pipe used in the smoking
advertising and offering her services as a physician, by means of cards which she distributed and by letterheads of opium, for the smoking of opium, as well as a punishment for the illegal possession of opium, but it is not
and signs which she exposed on the door of her office, situated at No. 712 Calle Asuncion, and in newspapers believed that it was the intention of the legislature to have separate complaints filed against a person who was
which are published and circulated in the City of Manila, in which cards, letterheads, signs and advertising she found in the illegal possession of opium and a pipe at the same time. If that were true then every person who
added and prefixed to her name the letters `Dra.,' which is the abbreviation of the word `doctor,' for the purpose was found to be smoking opium could be charged in three different complaints: First, with the illegal possession
of causing the public to believe that she, the said defendant, had received the corresponding title of of the pipe; second, the illegal possession of the opium; and third, for smoking the opium. Certainly the
doctor."chanrobles virtual law library legislature did not intend any such consequences.

To this information the defendant demurred in the court below on the grounds: (1) That it stated more than one In the case of United States vs. Douglass (2 Phil., 461), the court said:
offense, and (2) that it was not drawn in accordance with the form prescribed by law. The demurrer was
overruled and the defendant pleaded not guilty.chanroblesvirtualawlibrary chanrobles virtual law library
It is not objectionable, when a single offense may be committed by the use of different means, to charge, in the All of the sections enumerated in the title quoted relate to the same general subject, namely, defining and
alternative, the various means by which the crime may have been committed. (U.S. vs. Potter, 27 Fed. Cases, regulating the practice of medicine, and section 770 is expressly mentioned as one of the sections
604; Bishop's New Criminal Procedure, sec. 434.) amended.chanroblesvirtualawlibrary chanrobles virtual law library

The same rule was followed in the case of United States vs. Dorr (2 Phil., 332); United States vs. Tolentino (5 This is sufficient. Under constitutional provisions similar to ours the general rule is that a title which declares the
Phil., 682); and United States vs. Gustilo (19 Phil., 208) and is in harmony with the views of the courts in other amendatory statute to be an act to amend a designated section or the like of a specified Code is sufficient and
jurisdictions. That the various means of committing the offense is described in more than one section of the the precise nature of the amendatory Act need not be further stated. (Ross vs. Aguirre, 191 U.S., 60; Udell vs.
statute does not necessarily effect the general principle involved; the subdivision of a statute into section is Citizens Street R. Co., 152 Ind., 507; McGuire vs. Chicago, etc., R. Co., 131 Iowa, 340; Lankford vs. County
merely a matter of convenience and while it sometimes may be of some aid in ascertaining the legislative intent, Commissioners of Somerset County, 73 Md., 105; Tabor vs. State, 34 Tex. Crim., 631; Com. vs. Brown, 91 Va.,
it is, of course, not conclusive thereof.chanroblesvirtualawlibrary chanrobles virtual law library 762.) For a full and authoritative discussion of this subject, see Note to Lewis vs. Dunne, 55 L.R.A., 833. See
also Government of the Philippine Islands vs. Municipality of Binalonan and Roman Catholic Bishop of Nueva
II. Under the second assignment of error the appellant argues in substance that chiropractic has nothing to do Segovia (32 Phil., 634) and Yu Cong Eng vs. Trinidad (p. 385, ante).chanroblesvirtualawlibrary chanrobles virtual
with medicine and that the practice of that profession can therefore not be regarded as practice of medicine. law library
There is no merit whatever in this contention. Assuming without conceding that chiropractic does not fall within
the term "practice of medicine" in its ordinary acceptation, we have the statutory definition contained in section We find no error in the judgment appealed from and the same is therefore affirmed, with the costs against the
770 of the Administrative Code and which clearly includes the manipulations employed in chiropractic. The appellant. So ordered.
statutory definition necessarily prevails over the ordinary one.chanroblesvirtualawlibrary chanrobles virtual law
library MANUEL A. CORDERO, Trial Attorney of the Tenancy Unit, Mediation Division, Agricultural Tenancy Commission
Department of Justice and VICENTE SALAZAR, petitioners, 
Under the same assignment of error the defendant also argues that the examination prescribed by section 776 of vs.
the Administrative Code for admission to the practice of medicine, embraces subjects which have no connection HON. JOSE R. CABATUANDO, Associate Judge of the Court of Agrarian Relations, and LEONARDO STA.
with chiropractic and that to require chiropractors to take that examination is unreasonable and, in effect ROMANA, respondents.
amounts to prohibition of the practice of their profession and therefore violates the constitutional principle that
all men have the right to life, liberty and the pursuit of happiness and are entitled to the equal protection of the Office of the Solicitor General for petitioners.
law.chanroblesvirtualawlibrary chanrobles virtual law library Manuel A. Cordero for and in his own behalf as petitioner.
Fausto F. Allado and Ludivico M. Ipac for respondent Associate Judge of the Court of Agrarian Relations.
There is very little force in this argument. The subjects in which an examination is required by section 778 of the Policarpio O. Sta. Romana for respondent Leonardo Sta. Romana.
Administrative Code, as amended by Act No. 3111, relate to matters of which a thorough knowledge seems
necessary for the proper diagnosis of diseases of the human body and it is within the police power of the State to REGALA, J.:
require that persons who devote themselves to the curing of human ills should possess such knowledge.
(State vs. Edmunds, 127 Iowa, 333; 69 L.R.A., 504; Underwood vs. Scott, 43 Kan., 714; People vs. Blue Mountain This is a petition for certiorari and mandamus "to declare null and void the disputed order dated September 22,
Joe, 129 Ill., 370; State vs. Mylod, 20 R. I., 632; 41 L.R.A., 428; Stewart vs. Raab, 55 Minn., 20; Matthei vs. 1958 and the resolution dated October 1, 1958" of the Court of Agrarian Relations, disqualifying petitioner
Wooley, 69 Ill. App., 654; State vs. Buswell, 40 Neb., 158; 24 L.R.A., 68; O'Connorvs. State, 46 Neb., 157; U. S. vs. Manuel A. Cordero, Trial Attorney, Tenancy Counsel Unit, Mediation Division, Agricultural Tenancy Commission,
Gomez Jesus, 31 Phil., 218.)chanrobles virtual law library Department of Justice "from appearing as counsel for petitioner tenant in this case, or for any tenant in any other
cases before this Court," and "to compel respondent Judge to allow petitioner trial attorney and all trial attorneys
III. The third assignment of error is closely related to the foregoing. The appellant contends that the prohibition of the Mediation Division of the Department of Justice to appear as counsel for indigent tenants in cases pending
in section 783 against the unauthorized use of the title "doctor" must be understood to refer to "Doctor of in his sala."
Medicine" and has no application to doctors of chiropractic. Under different circumstances that might possibly be
so, but where, as here, chiropractic is by statute made a form of the practice of medicine, it necessarily follows The record discloses that on July 21, 1958, the Tenancy Counsel Unit of the Agricultural Tenancy Commission of
that a person holding himself out as a doctor of chiropractic in legal effect represents himself as a doctor of the Department of Justice, thru its Trial Attorney the herein petitioner Manuel A. Cordero as counsel for indigent
medicine.chanroblesvirtualawlibrary chanrobles virtual law library petitioner tenant Vicente Salazar, filed with the Second Regional District of the Court of Agrarian Relations, CAR
Case No. 1379-NE-58 against respondent landlord Leonardo Sta. Romana and others "for reinstatement and
IV. In her fourth assignment of error the appellant attacks the constitutionality of Act No. 3111, amending section reliquidation of past harvests"; that on September 1958, respondent landlord Leonardo Sta. Romana file "Motion
770 of the Administrative Code, on the ground that the subject of the Act is not sufficiently expressed in its title to Disqualify Counsel and To Set Hearing at Cabanatuan City, praying among others for the disqualification of
and that it embraces more than one subject. There is no merit in this contention. The title of Act No. 3111 reads petitioner Manuel A. Cordero to act as counsel tenant Vicente Salazar; that on September 22, 1958, respondent
as follows: Judge, acting on the aforesaid motion to qualify, issued the order in question disqualifying petitioner Manuel A.
Cordero and/or any other attorney from the Mediation Division of the Department of Justice from appearing as
An Act to amend sections seven hundred and fifty-nine, seven hundred and sixty, seven hundred and sixty-one, counsel for petitioner tenant Vicente Salazar or for other tenants represented by the said division the said court;
seven hundred and sixty-two, seven hundred and sixty-five, seven hundred and sixty-seven, seven hundred and that on September 29, 1958, an "Urgent Motion for Reconsideration" was filed before the court, praying for the
seventy, seven hundred and seventy-four, seven hundred and seventy-five, seven hundred and seventy-six, setting aside of the order of September 22, 1958 but the same was denied on October 1958.
seven hundred and seventy-eight, seven hundred and eighty, seven hundred and eighty-two, seven hundred and
eighty-three, and twenty-six hundred and seventy-eight of Act Numbered Twenty-seven hundred and eleven, In its order dated September 22, 1958, the Court Agrarian Relations (Second Regional District) upheld
known as the Administrative Code, increasing the number of the members of the Board of Medical Examiners, respondents' claim and held, among others:
conferring upon the same certain additional powers and responsibilities and for other purposes.
(1) That representation by counsel of tenants who cannot afford to pay should be done by the public defendant
of the Department of Labor as provided for in section 54 of Republic Act No. 1199;
(2) That Circular No. 5, dated June 28, 1957, of Agricultural Tenancy Commission, as approved by Secretary of Constitutional provisions relating to the subject matter and titles of statutes should not be so narrowly construed
Justice, creating a Tenancy Unit Counsel in the Mediation Division, is ultra vires and has no legal force; and as to cripple or impede the power of legislation. The requirement that the subject of an act shall be expressed in
its title should receive a reasonable and not a technical construction. It is sufficient if the title be comprehensive
(3) That even the Mediation Division of the Agricultural Tenancy Commission, which has been performing many enough reasonably to include the general object which a statute seeks to effect, without expressing each and
functions, has been in existence without the sanction of any statute. every end and means necessary or convenient for the accomplishing of the object. Mere details need not be set
forth. The title need not be an abstract or index of the Act. (syllabus)
As a result of this order, the plaintiff filed the present petition before this Court. As prayed for, this Court on
August 21, 1958 issued a writ of preliminary injunction restraining the respondent judge from enforcing his order In the case of Sumulong v. Commission on Elections, 73 Phil. 288, the following doctrine was enunciated:
complained of until further orders from this Court.
The Constitutional requirement that the subject of an act shall be expressed in its title should be reasonably
Meanwhile, Congress passed Republic Act No. 2263, amending the Agricultural Tenancy Act of the Philippines construed so as not to interfere unduly with the enactment of necessary legislation. It should be given a practical
(Republic Act No. 1199) providing among others that — rather than technical construction. It should be a sufficient compliance with such requirement if the title
expresses the general subject and all the provisions of the statute are germane to that general subject. In the
In all cases wherein a tenant cannot afford to be represented by counsel, it shall be the duty of the trial attorney light of the relevant provisions of the Constitution, the challenged provision of section 5 of Commonwealth Act
of the tenancy mediation commission to represent him, upon proper notification by the party concerned, or the 657 has a necessary and proper connection with the reorganization of the Commission on Elections, which is the
court of competent jurisdiction shall assign or appoint counsel de oficio for the indigent tenant. (Section 54, subject expressed in the title of the Act. . . . (syllabus)
Republic Act No. 1199, as amended by Section 20 of Republic Act No. 2263).
And in the later case of People v. Carlos, 78 Phil. 535, We again said:
After the enactment of the aforementioned Republic Act No. 2263, on August 11, 1959, petitioner filed a
MANIFESTATION contending "that the issue in the case at bar is now moot and academic." As required by this The People's Court was intended to be a full and complete scheme with its own machinery for the indictment,
Court, respondent judge, thru counsel, filed on October 3, 1959 his COMMENT to the aforementioned trial and judgment of treason cases. The various provisos mentioned in appellants brief are allied and germane to
manifestation of petitioner alleging that, before the enactment of Republic Act No. 2263, there was no Tenancy the subject matter and purposes of the People's Court Act; they are subordinate to its end. The multitude of
Mediation Division in existence nor was there any law creating the same and defining its functions, and that its matters which the legislation, by its nature, has to embrace would make mention of all of them in the title of the
only basis for existence, therefore, are sections 19 and 20 of Republic Act No. 2263 which are null and void act cumbersome. It is not necessary, and the Congress is not expected, to make the title of an enactment a
because the Constitution provides that "no bill which may be enacted into law shall embrace more than one complete index of its contents. (Government of the Philippine Islands v. Municipality of Binalonan, 32 Phil. 634.)
subject which shall be expressed in the title of the bill." He contended further that nowhere in the titles of The constitutional rule is satisfied if all parts of a law relate to the subject expressed in its title.
Republic Act No. 1199 and Republic Act No. 2263 is the creation of the Tenancy Mediation Division ever
mentioned, thereby indicating that section 19, Republic Act No. 2263 falls under the first class of prohibited bills. The only amendment brought about by Republic Act No. 2263 is the transfer of the function of representing
these indigent tenants to the Department of Justice, apparently to consolidate in the latter Department the
The decisive issue in this case is the constitutionality of sections 19 and 20 of Republic Act No. 2263, amending functions relative to the enforcement of tenancy laws. In essence, therefore, there is no change in the set-up
sections 53 and 54 of Republic Act No. 1199. The fundamental objection of respondent to the presumed established by Republic Act No. 1199 and that provided for by Republic Act No. 2263. There is only a transfer of
constitutionality of these sections is that section 19 of Republic Act No. 226 authorizing the Secretary of Justice functions from one department of the government to another.
acting through a tenancy mediation division, to carry out a national enforcement program including the
mediation of tenancy disputes, is not expressed in the title of the bill as required by section 21, paragraph 1, of One salient aspect of this case We should not lose sight of is the fact that, shortly after the enactment of Republic
Article VI of the Philippine Constitution which reads: Act No. 2263 in 1959, the function of representing these indigents before the Agrarian Court by public defenders
of the Department of Labor had been actually transferred to the Tenancy Mediation Division of the Department
No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title of Justice by virtue of a Memorandum Circular of the department of Labor, dated July 15, 1959, addressed to
of the bill. Regional Labor Administrators, Officers-in-Charge Local Offices, Legal Advisers and Labor Attorneys of the
Department. The concluding paragraph of this circular reads:
It is to be noted that the basic law, Republic Act 1199, is called "The Agricultural Tenancy Act of the Philippines."
In view hereof, all legal personnel of this department shall henceforth desist from performing legal aid functions
The constitutional requirement in question is satisfied if all parts of the law are related, and are germane to in tenancy cases in any manner in their respective jurisdiction, and all such cases which they are handling and still
subject matter expressed in the title of the bill. The title of Republic Act No. 2263 reads as follows: "AN ACT pending adjudication settlement, as well as those which may be addressed to them in the future, should be
AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED ONE THOUSAND ONE HUNDRED NINETY-NINE, referred and turned over to the Commissioner of the Tenancy Mediation Commission at 758 Padilla St., San
OTHERWISE KNOWN AS THE AGRICULTURAL TENANCY ACT OF THE PHILIPPINE." The constitutional requirement Miguel, Manila.
is complied with as long the law, as in the instant case, has a single general subject which is the Agricultural
Tenancy Act and the amendatory provisions no matter how diverse they may be, so long as they are not To declare sections 19 and 20 of Republic Act No. 2 null and void would in effect upset the transfer of duty of
inconsistent with or foreign to the general subject, will be regarded as valid (Sinco, Philippine Political Law, 11th representing indigent tenants from the public defenders of the Department of Labor to the trial attorney in the
Ed., p. 225; Cooley, Constitutional Limitations, 6th Ed., p. 172; See also Public Service Commission v. Recteweald, Mediation Division of the Agricultural Tenancy Commission of the Department of Justice. In other words, a
290 Ill. 314, 8 A.L.R. 466.) declaration of nullity of these provisions of Republic Act No. 2263 would do harm to, and would be nugatory of,
intention of Congress to consolidate the function of enforcing our tenancy laws in the Department of Justice.
The provisions of sections 19 and 20 of Republic Act No. 2263 are certainly germane to, and are reasonably
necessary for the accomplishment of the one general subject, agricultural tenancy. For these reasons, We hereby declare sections 19 and 20 of Republic Act No. 2263 valid and constitutional.

In the case of Government v. Hongkong & Shanghai Banking Corporation, 66 Phil. 483, We laid down the rule WHEREFORE, the petition is hereby granted and writ of preliminary injunction heretofore issued, made
that — permanent.
INSULAR LUMBER COMPANY, petitioner,  THE COURT OF TAX APPEALS ERRED IN NOT HOLDING THAT THE PARTIAL EXEMPTION IN FAVOR OF MINERS AND
vs. FOREST CONCESSIONAIRES UNDER REPUBLIC ACT NO. 1435 IS LIMITED TO ONLY FIVE YEARS COUNTED FROM
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents. JUNE 14,1956, THE DATE OF APPROVAL AND EFFECTIVITY OF THE SAID ACT.

G.R. No. L-31137 May 29, 1981 III

COMMISSIONER OF INTERNAL REVENUE, petitioner,  THE COURT OF' TAX APPEALS ERRED IN NOT HOLDING THAT INSULAR LUMBER COMPANY USED THE OILS AND
vs. FUELS IN QUESTION AFTER THE EXEMPTION IN FAVOR OF MINERS AND FOREST CONCESSIONAIRES HAD ALREADY
COURT OF TAX APPEALS and INSULAR LUMBER COMPANY, respondents. LAPSED OR EXPIRED AND HENCE, NO LONGER IN FORCE.

  IV

DE CASTRO, J.:1äwphï1.ñët THE COURT OF TAX APPEALS ERRED IN HOLDING THAT INSULAR LUMBER COMPANY IS ENTITLED TO THE TAX
REFUND OF P10,560.20.
These two (2) cases are appeals by way of certiorari from the decision dated July 31, 1969 of the Court of Tax
Appeals ordering the Commissioner of Internal Revenue to refund to the Insular Lumber Company the amount of On the other hand, the Company, as appellant, has also assigned the following errors:1äwphï1.ñët
P10,560.20 instead of P19,921.37, representing 25% of the specific tax paid on manufactured oil and motor fuel
utilized by said company in the operation of its forest concession in the year 1963. I

The undesputed fats of these cases are as follows: THE RESPONDENT COURT ERRED IN RULING THAT THE PETITIONER IS NOT ENTITLED TO CLAIM A PARTIAL
REFUND OF THE SPECIFIC TAX PAID ON MANUFACTURED OILS USED IN THE OPERATION OF ITS SAWMILL.
Insular Lumber Company (Company for short). a corporation organized and existing under the laws of New York.
U.S.A., and duly authorized to do business in the Philippines is a licensed forest concessionaire. The Company II
purchase manufactured oil and motor fuel which it used in the operation of its forest cocession, sawmill,
planning mills, power units, vehicles, dry kilns, water pumps, lawn mowers, and in furnishing free water and light THE RESPONDENT COURT ERRED IN HOLDING THAT PETITIONER'S CLAIM FOR REFUND OF THE SPECIFIC TAX PAID
to its employees. on which specific tax was paid. On December 22, 1964, the Company filed with the ON MANUFACTURED OILS USED DURING THE PERIOD FROM 1 JANUARY 1963 TO 29 APRIL 1963 HAD ALREADY
Commissioner of Internal Revenue (Commissioner for short), a claim for refund of P19,921.37 representing 25% PRESCRIBED.
of the specific tax paid on the manufactured oil and fuel used in its operations pursuant to the provisions of
Section 5, Republic Act No. 1435. 1 In a letter dated February 11, 1965, received by the Company on March 31, III
1965, the commissioner denied the Company's claim for refund on the ground that the privilege of partial tax
refund granted by Section 5 of Republic Act No. 1435 to those using oil in the operation of forest and mining THE RESPONDENT COURT ERRED IN ORDERING THE RESPONDENT COMMISSIONER TO REFUND TO THE
concessions is limited to a period of five (5) years from June 14, 1956, the date effectivity of said Act. PETITIONER ONLY THE SUM OF P10,560.20; INSTEAD, IT SHOULD HAVE ORDERED THE REFUND OF P19,921.37 AS
Consequently, oil used in such concession after June 14, 1961 are subject to the full tax prescribed in Section 142 CLAIMED BY THE PETITIONER.
of the National Internal Revenue Code.
Appeal by the Commissioner
Its claim having been denied, the Company filed a petition for review before the respondent court on April 29,
1965. After hearing, the Court of Tax Appeals ruled that the operation of a sawmill is distinct from the operation In the first assignment of error, the Commissioner contends that the first proviso in Section 5 of Republic Act No.
of a forest concession, hence, the refund provision of Section 5 of Republic Act No. 1435 allowing partial refund 1435 is unconstitutional. In claiming the unconstitutionality of the aforesaid section, the Commissioner anchored
to forest and mining concessionaires cannot be extended to the operators of a sawmill. And out of the its argument on Article VI, Section 21(l) of the 1935 Constitution which provides:1äwphï1.ñët
P19,921.37 claimed, representing the 25% of specific tax paid, respondent court found out that only the amount
of P14,598.08 was paid on oil utilized in logging operations. Respondent court, however, did not allow the refund No bill which may be enacted into a law shall embrace more than one subject which shall be expressed in the
of the full amount of P14,598.08 because the Company's right to claim the refund of a portion thereof, title of the bill be
particularly those paid during the period from January 1, 1963 to April 29, 1963 had already prescribed. Hence,
the Company was credited the refund of P10,560.20 only. Both parties appealed from the decision of the Court The title of R.A. No. 1435 is "An Act to Provide Means for Increasing The Highway Special Fund." The
of Tax Appeals. Commissioner contends that the subject of R.A. No. 1435 was to increase Highway Special Fund. However,
Section 5 of, the Act deals with another subject which is the partial exemption of miners and loggers. And tills
In his appeal, the Commissioner assigns the following errors: 1äwphï1.ñët partial exemption on which the Company based its claim for refund is clearly not expressed in the title of the
aforesaid Act. More importantly, Section 5 provides for a decrease rather than an increase of the Highway Special
I Fund.

THE COURT OF TAX APPEALS ERRED IN NOT HOLDING THAT THE FIRST PROVISO IN SECTION 5 OF REPUBLIC ACT We find no merit in the argument. Republic Act No. 1435 deals with only one subject and proclaims just one
NO. 1435 INVOKED BY INSULAR LUMBER COMPANY AS LEGAL BASIS FOR ITS CLAIM FOR TAX REFUND, IS NULL policy, namely, the necessity for increasing the Highway Special Fund through the imposition of an increased
AND VOID FOR BEING UNCONSTITUTIONAL specific tax on manufactured oils. The proviso Id. Section 5 of the law is in effect a partial exemption from the
imposed increased tax. Said proviso, which has reference to specific tax on oil and fuel, is nor, a deviation from
II the general subject of the law. The primary purpose of the aforequoted constitutional provision is to prohibit
duplicity in legislation the title of which might completely fail to apprise the legislators or the public of the
nature, scope and consequences of the law or its operation. 2This does not seem to this Court to have been
ignored in the passage of Republic Act No. 1435 since, as the records of its proceedings bear out, a full debate on operation of the sawmill is not merely incidental to the operation of the forest concession but is indispensable
precisely the issue of whether its title reflects its complete subject was held by Congress which passed thereto, or forms part thereof. Within the framework of the terms and conditions of the timber License the
it. 3 Furthermore, in deciding the constitutionality of a statute alleged to be defectively titled, every presumption cutting of timber and the processing of the felled logs by the sawmill constitute one, continuous and integrated
favors the validity of the Act. As is true republic in cases presenting other constitutional issues, the courts avoid operation such that one cannot exists independently of the other. The Company also relies on Section 5 of
declaring an Act unconstitutional whenever possible. Where there is any doubt as to the insufficiency of either Republic Act No. 1435 wherein it is provided that "whenever any oils ... are used by miners or forest
the title, or the Art, the legislation should be sustained. 4 In the incident on hand, this Court does not even have concessionaires in their operations, they shall be entitled to claim a refund of 25% of the specific tax paid on said
any doubt. oils." The Company believes that the word operations include all activities of forest concessionaires which are
indispensable to, or required in, the exploitation of their forest concessions and not limited to purely logging
As regards the second and third assignment of errors, the commissioner contends that the five-year limitation operations.
period for partial refund of specific tax paid for oil and fuel used in agriculture and aviation provided in Section 1
of Republic Act No. 1435 is also applicable to Section 5 of said Act which grants partial refund of specific tax for We agree with respondent court that the operation of sawmill is distinct from the operation of a forest
oil used by miners or forest concessionaires. Such being the case, the Commissioner said that the tax exemption concessions. By the very nature of their operations, they are entirely two different business ventures. It is very
already expired on June 14,1961. clear from the language of Section 5 that only miners or forest concessionaries are given the privilege to claim
the partial refund. Sawmill operators are excluded, because they need not be forest concessionaires nor the
The pertinent portion of Section 1 of Republic Act. No. 1435 provides:1äwphï1.ñët latter, always are sawmill operators.

Section 1. Section one hundred and forty-two of the National Internal Revenue Code, as amended, is further Where the provision of the law is clear and unambiguous. so that there is no occasion for the court's seeking
amended to read as follow:1äwphï1.ñët legislative intent, the law must be taken as it is, devoid of judicial addition or subtraction. 5 Furthermore, the
authorized partial refund under said section partakes of a nature of a tax exemption and therefore it cannot be
Section 142: Specific tax on manufactured oils and other fuels. – On refined and manufactured mineral oils and allowed unless granted in the most explicit and categorical language. Well-settled is the rule that exemption from
motor fuels, there shall be collected the following taxes:1äwphï1.ñë taxation is never presumed. For tax exemption to be recognized, lie grant Trust be clear and express it cannot be
made to rest on vague implications. 6
Whenever any of the oils mentioned above are, during the five years from June eighteen, nineteen hundred and
fifty-two, used in agriculture and aviation, fifty per centrum of the specific tax paid thereon shall be refunded by As regards prescriptive period in claiming refund, it was ruled by respondent court that the Company's cause of
the Commissioner of International Ravenue upon submmission of the following: action for a partial refund of the specific tax paid on the oils used during the period from January 1, 1963 to April
29, 1963, had already prescribed. In making such pronouncement, respondent court relied on the doctrine laid
1. A sworn affidavit of the producer and two disinterested persons proving that the said oils were actually used in down by tax Court in the case of Commissioner of Internal Revenue vs. Insular Lumber Company  7 where The
agriculture, or in lieu thereof. same Company herein invoked the same Section 5 of Republic Act No. 1435 to claim partial refund on specific
flax paid on manufactured oils and fuels. This court, in dismissing the Company's claim for refund on the ground
2. Should the producers belong to any producers' association or federation, duly registered with the Securities of prescription, said that- in those cases where the tax sought to be refunded was illegally or erroneously
and Exchange Commission, the affidavit of the president of tile association or federation, attesting to the fact collected, the running of the two year prescriptive period provided for in Section 306 8 of the National Internal
that the oils were actually used in agriculture. Revenue Code starts from the date the tax was paid. But when the tax is legally collected as in the present case.
the two-year prescriptive period commences to run from the date of occurrence of the supervening cause which
Section 5 on the other hand provides:1äwphï1.ñët gave rise to the right of refund. The supervening cause in cases of this nature is the date of use of manufactured
of and fuels. Thus, the Court said that when the supervening cause happened in 1958 but the claim for refund
Section 5. Provided, however, that whenever any oils mentioned above are used by miners or forest was filed with the Commissioner op- February 23, 1961 and the petition for review was filed in the Court of Tax
concessionaires in their operations, twenty-five per centum of the specific tax paid thereon shall be refunded by Appeals on February 17, 1962, but later dates being more than two years after 1958, the right to claim refund of
the Commissioner of Internal Revenue upon submission of proof of actual use of oils and under similar conditions the tax paid has prescribed.
enumerated in subparagraph one and two of section one hereof, amending section one hundred forty-two of the
National Internal Revenue Code: ... . We agree with the respondent court. This Court has consistently adhered to the rule that the claim for refund
should first, be filed with the Commissioner of Internal Revenue, and the subsequent appeal to the Court of Tax
Based on the aforequoted provisions, it is very apparent that the partial refund of specific tax paid for oils used in Appeals must be instituted, within the said two-year period. If, however, the Commissioner takes time in
agriculture and aviation is limited to five years while there is no time limit for the partial refund of specific tax deciding the claim, and the period of two years is about to end, the suit of proceeding must be started in the
paid for oils used by miners and forest concessionaires. We find no basis in applying the limitation of the Court of Tax Appeals before the end of the two year period without awaiting the decision of the
operative period provided for oils used in agriculture and aviation to the provision on the refund to miners and Commissioner. 9 In the present case, it will be dated that although the claim for refund was filed with the
forest concessionaires. It should be noted that Section 5 makes reference to subparagraphs 1 and 2 of Section 1 Commissioner on December 22, 1964, the petition for review was filed by the Company only on April 29, 1965
only for the purpose of prescribing the procedure for refund. This express reference cannot be expanded in praying for the refund of specific tax covering several period starting from January 1, 1963. As found by
scope to include the limitation of the period of refund. If the limitation of the period of refund of specific taxes respondent court, portions of the amount claimed by the Company were used during the period from January 1,
paid on oils used in aviation and agriculture is intended to cover similar taxes paid on oil used by miners and 1963 to April 29, 1963. This Court is bound by said findings, the same being findings of fact. 10 Following,
forest concessionaires there would have been no need of dealing with oil used in mining and forest concessions therefore, the ruling in Commissioner of Internal Revenue vs. Insular Lumber Company, supra, We hold that the
separately and Section 5 should very well have been included in Section 1 of Republic Act No. 1435, Company is not entitled to the claim for refund for the oils used from January 1, 1963 to April 29, 1963, on the
notwithstanding the different rate of exemption. ground that the right to claim refund of the tax in question paid during the said periods has prescribed, the
petition for review having been filed with the respondent court only on April 29, 1965, which was beyond the
Appeal by the Company two-year prescriptive period provided for in Section 306 of the Tax Code.

Anent the first assignment of error, the Company contends that by express provision of its timber license, it is WHEREFORE, judgment is hereby rendered affirming the decision of the Court of Tax Appeals. No cost
required to "maintain a modern sawmill or sawmills of sufficient capacity." Clearly, the Company said, the
SO ORDERED.
PHILIPPINE CONSTITUTION ASSOCIATION, INC., JOSE E. ROMERO, SALVADOR ARANETA, GUILLERMO B. "(c) Retirement is likewise allowed to a member, regardless of age, who has rendered at least twenty years of
GUEVARA, PIO PEDROSA, CONRADO BENITEZ, JOSE M. ARUEGO, SOTERO H. LAUREL, FELIXBERTO M. SERRANO, service. The benefit shall, in addition to the return of his personal contributions plus interest and the payment of
and ROMAN OZAETA,petitioners,  the corresponding employer's premiums described in subsection (a) of Section five hereof, without interest, be
vs. only a gratuity equivalent to one month's salary for every year of service, based on the highest rate received, but
PEDRO M. GIMENEZ, JOSE VELASCO, ELADIO SALITA and JOSE AVILES, respondents. not to exceed twenty-four months: Provided, That the retiring officer or employee has been in the service of the
said employer or office for at least four years immediately preceding his retirement.
Roman Ozaeta, Guillermo B. Guevara, Jose M. Aruego, Sotero H. Laurel and Felixberto M. Serrano for themselves
and for other petitioners. "Retirement is also allowed to a senator or a member of the House of Representatives and to an elective officer
Office of the Solicitor General for respondents. of either House of the Congress, regardless of age, provided that in the case of a Senator or Member, he must
have served at least twelve years as a Senator and/or as a member of the House of Representatives, and, in the
REGALA, J.: case of an elective officer of either House, he must have served the government for at least twelve years, not less
than four years of which must have been rendered as such elective officer: Provided, That the gratuity payable to
We are called upon in this case to decide the grave and fundamental problem of the constitutionality of Republic a retiring senator, member of the House of Representatives, or elective officer, of either House, shall be
Act No. 3836 "insofar as the same allows retirement gratuity and commutation of vacation and sick leave to equivalent to one year's salary for every four years of service in the government and the same shall be exempt
Senators and Representatives, and to the elective officials of both houses (of Congress)." The suit was instituted from any tax whatsoever and shall be neither liable to attachment or execution nor refundable in case of
by the Philippine Constitution Association, Inc. (Philconsa, for short), a non-profit civic organization, duly reinstatement or re-election of the retiree.
incorporated under Philippine laws, by way of a petition for prohibition with preliminary injunction to restrain
the Auditor General of the Philippines and the disbursing officers of both Houses of Congress from "passing in "This gratuity is payable by the employer or office concerned which is hereby authorized to provide the necessary
audit the vouchers, and from countersigning the checks or treasury warrants for the payment to any former appropriation or pay the same from any unexpended items of appropriations or savings in its appropriations or
Senator or former Member of the House of Representatives of retirement and vacation gratuities pursuant to saving in its appropriations.
Republic Act No. 3836; and likewise restraining the respondent disbursing officers of the House and Senate,
respectively, and their successors in office from paying the said retirement and vacation gratuities." "Elective or appointive officials and employees paid gratuity under this subsection shall be entitled to the
commutation of the unused vacation and sick leave, based on the highest rate received, which they may have to
It is argued that the above-numbered Republic Act, at least to the end that it provided for the retirement of the their credit at the time of retirement."
members of Congress in the manner and terms that it did, is unconstitutional and void. The challenge to the
constitutionality of the law is centered on the following propositions: SECTION 2. This Act shall take effect upon its approval.

1. The provision for the retirement of the members and certain officers of Congress is not expressed in the title of Approved, June 22, 1963.
the bill, in violation of section 21 (1) of Article VI of the Constitution.
The Solicitor General's Office, in representation of the respondent, filed its answer on September 8, 1964, and
2. The provision on retirement gratuity is an attempt to circumvent the Constitutional ban on increase of salaries contends, by way of special and affirmative defenses that:
of the members of Congress during their term of office, contrary to the provisions of Article VI, Section 14 of the
Constitution. 1. The grant of retirement or pension benefits under Republic Act No. 3836 to the officers objected to by the
petitioner does not constitute "forbidden compensation" within the meaning of Section 14 of Article VI of the
3. The same provision constitutes "selfish class legislation" because it allows members and officers of Congress to Philippine Constitution.
retire after twelve (12) years of service and gives them a gratuity equivalent to one year salary for every four
years of service, which is not refundable in case of reinstatement or re-election of the retiree, while all other 2. The title of the law in question sufficiently complies with the provisions of Section 21, Article VI, of the
officers and employees of the government can retire only after at least twenty (20) years of service and are given Constitution that "no bill which may be enacted into law shall embrace more than one subject which shall be
a gratuity which is only equivalent to one month salary for every year of service, which, in any case, cannot expressed in the title of the bill.
exceed 24 months.
3. The law in question does not constitute legislation.
4. The provision on vacation and sick leave, commutable at the highest rate received, insofar as members of
Congress are concerned, is another attempt of the legislators to further increase their compensation in violation 4. Certain indispensable parties, specifically the elected officers of Congress who are authorized to approve
of the Constitution. vouchers for payments for funds under the law in question, and the claimants to the vouchers to be presented
for payment under said items, were not included in the petition.
The text of Republic Act No. 3836
5. The petitioner has no standing to institute this suit.
The text of Republic Act No. 3836 reads:
6. The payment of commutable vacation and sick leave benefits under the said Act is merely "in the nature of a
AN ACT AMENDING SUBSECTION (c), SECTION TWELVE OF COMMONWEALTH ACT NUMBERED ONE HUNDRED basis for computing the gratuity due each retiring member" and, therefore, is not an indirect scheme to increase
EIGHTY-SIX, AS AMENDED BY REPUBLIC ACT NUMBERED THIRTY HUNDRED NINETY-SIX: their salary.

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: A brief historical background of Republic Act No. 3836

SECTION 1. Subsection (c), Section twelve of Commonwealth Act Numbered One Hundred eighty-six, as amended Republic Act No. 3836 was originally House Bill No. 6051, which was introduced by Congressmen Marcial R.
by Republic Act Numbered Thirty hundred ninety-six, is further amended to read as follows: Pimentel of Camarines Norte and Marcelino R. Veloso of the Third District of Leyte, on May 6, 1963. On the same
date, it was referred to the Committee on Civil Service. which on the following May 8, submitted its REPORT No.
3129, recommending approval of the bill with amendments, among others, that the word "TWENTY" in the bill as have sufficient interest in preventing the illegal expenditure of moneys raised by taxation and may therefore
filed — representing the number of years that a senator or member must serve in Congress to entitle him to question the constitutionality of statutes requiring expenditure of public moneys. (11 Am. Jur. 761; emphasis
retirement under the bill — must be reduced to "TWELVE" years, and that the following words were inserted, supplied.)
namely, "AND THE SAME (referring to gratuity) SHALL BE EXEMPT FROM ANY TAX WHATSOEVER AND SHALL NOT
BE LIABLE FROM ATTACHMENT OR EXECUTION NOR REFUNDABLE IN CASE OF REINSTATEMENT OR REELECTION As far as the first point is concerned, We hold, therefore, that the contention of the Solicitor General is
OF THE RETIREE." On May 8, 1963, the bill with the proposed amendments was approved on second reading. It untenable.
was passed on third reading on May 13, 1963, and on the same day was sent to the Senate, which, in turn, on
May 23, 1963, passed it without amendment. The bill was finally approved on June 22, 1963. As explained in the Second legal point —Whether or not Republic Act No. 3836 falls within the prohibition embodied in Art. VI,
EXPLANATORY NOTE attached to the bill, among others — section 14 of the Constitution.

The inclusion of members of Congress in subsection (c), Section 12 of C.A. 186, as amended, will enable them to The first constitutional question is whether Republic Act 3836 violates Section 14, Article VI, of the Constitution,
retire voluntarily, regardless of age, after serving a minimum of twenty years as a Member of Congress. This which reads as follows:
gratuity will insure the security of the family of the retiring member of Congress with the latter engaging in other
activities which may detract from his exalted position and usefulness as lawmaker. It is expected that with this The senators and the Members of the House of Representatives shall, unless otherwise provided by law, receive
assurance of security for his loved ones, deserving and well-intentioned but poor men will be attracted to serve an annual compensation of seven thousand two hundred pesos each, including per diems and other
their people in Congress. emoluments or allowances, and exclusive only of travelling expenses to and from their respective districts in the
case of Members of the House of Representative and to and from their places of residence in the case of
As finally approved, the law (Subsection [c], paragraph 2, Section 1, R.A. 3836) allows a Senator or a Member of Senators, when attending sessions of the Congress. No increase in said compensation shall take effect until after
the House of Representatives and an elective officer of either House of Congress to retire regardless of age. To be the expiration of the full term of all the Members of the Senate and of the House of Representatives approving
eligible for retirement, he must have served for at least twelve years as such Senator and/or as member of the such increase. Until otherwise provided by law, the President of the Senate and the Speaker of the House of
House of Representatives. For an elective officer of either House, he must have served the government for at Representatives shall each receive an annual compensation of sixteen thousand pesos (emphasis supplied)
least twelve years, of which not less than four years must have been rendered as such elective officer. The
gratuity payable by the employer or office concerned is equivalent to one year's salary for every four years of Before discussing this point, it is worthy to note that the Constitution embodies some limitations and
service in the government. Said gratuity is exempt from taxation, not liable to attachment or execution, and not prohibitions upon the members of Congress, to wit:
refundable in case of reinstatement or re-election of the retiree.
1. They may not hold any other office or employment in the Government without forfeiting their respective
First legal point — personality of the Petitioner to bring suit. seats;

The first point to be considered is whether petitioner Philconsa has a standing to institute this action. This Court 2. They shall not be appointed, during the time for which they are elected, to any civil office which may have
has not hesitated to examine past decisions involving this matter. This Court has repeatedly held that when the been created or the emoluments whereof shall have been increased while they were members of Congress;
petitioner, like in this case, is composed of substantial taxpayers, and the outcome will affect their vital interests, (Section 16, Article VI, Constitution)
they are allowed to bring this suit. (Pascual v. Secretary, G.R. No. L-10405, December 29, 1960; and Gonzales v.
Hechanova, 60 Off. Gaz. 802 [1963]). 3. They cannot be financially interested in any franchise;

The petitioner, Philconsa, is precisely a non-profit, civic organization composed of several leaders from all walks 4. They cannot appear in any civil case wherein the Government is an adverse party;
of life whose main objective is to uphold the principles of the Constitution.
5. They cannot appear as counsel before any Electoral Tribunal; and
In rejecting the motion to dismiss in the case of Pascual v. Secretary, supra, this Court stated, among other
things, that "there are many decisions nullifying, at the instance of the taxpayers, laws providing the 6. They cannot appear as counsel in any criminal case where an officer or employee of the Government is
disbursement of public funds, upon the theory that the expenditure of public funds by an officer of the State for accused. (Section 17, Article VI, Constitution)
the purpose of administering an unconstitutional act constitutes a misappropriation of such funds, which may be
enjoined at the request of the taxpayers."1 This legislation (Republic Act 3836) involves the disbursement of In addition to the above prohibitions, the Anti-Graft Law (Republic Act 3019) also prohibits members of Congress
public funds. to have any special interest in any specific business which will directly or indirectly be favored by any law or
resolution authored by them during their term of office.
We are not, however, unmindful of the ruling laid down by the Supreme Court of the United States in the case
of Massachusetts v. Mellon, 262 U.S. 447, holding that: It is thus clear that the Constitutional Convention wisely surrounded the Constitution with these limitations and
prohibitions upon Members of Congress. This is a practical demonstration or application of the principle of the
... the relation of a taxpayer of the United States to the Federal Government is very different. His interest in the and balances which is one of the peculiar characteristics of our Constitution. In the light of this background, can
moneys of the Treasury — partly realized from taxation and partly from other sources — is shared with millions We conclude that Congress can validly enact Republic Act 3836, providing retirement benefits to its members,
of others; is comparatively minute and indeterminable; and the effect upon future taxation of any payment out without violating the provisions in the aforementioned Article VI, Section 14, of the Constitution, regarding
of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive increase of the compensation act including other emoluments?
powers of equity.
It is worthy to note that the original salary for the members of the National Assembly (unicameral body) was
The general view in the United States, which is followed here, is stated in the American Jurisprudence, thus — fixed at P5,000.00 per annum each. This was raised to P7,200 per annum by the enactment of the 1940
Constitutional amendment, when the unicameral body, the National Assembly, was changed to Congress,
In the determination of the degree of interest essential to give the requisite standing to attack the composed of two bodies, the Senate and the House of Representatives. Again, in 1964, by the enactment of
constitutionality of a statute the general rule is that not only persons individually affected, but also taxpayers Republic Act 4143, the salary for the Members of Congress was raised to P32,000.00 per annum for each of
them; and for the President of the Senate and the Speaker of the House of Representatives, to P40,000.00 per In the first place, while the said law grants retirement benefits to Senators and Members of the House of
annum each. Representatives who are elective officials, it does not include other elective officials such as the governors of
provinces and the members of the provincial boards, and the elective officials of the municipalities and chartered
Likewise, it is significant that, as stated above, when the Constitutional Convention first determined the cities.
compensation for the Members of Congress, the amount fixed by it was only P5,000.00 per annum, but it
embodies a special proviso which reads as follows: "No increase in said compensation shall take effect until after The principle of equal protection of law embodied in our Constitution has been fully explained by Us in the case
the expiration of the full term of all the members of the National Assembly elected subsequent to approval of of People v. Vera, 65 Phil. 56, 126, where We stated that the classification to be reasonable must be based upon
such increase." In other words, under the original constitutional provision regarding the power of the National substantial distinctions which make real differences and must be germane to the purposes of the law.
Assembly to increase the salaries of its members, no increase would take effect until after the expiration of the
full term of the members of the Assembly elected subsequent to the approval of such increase. (See Aruego, The As well stated by Willoughby on the Constitution of the United States (second edition), p. 1937, the principle of
Framing of the Constitution, Vol. 1, pp. 296-300; Sinco, Philippine Government and Political Law, 4th ed., p. 187) the requirement of equal protection of law applies to all persons similarly situated. Why limit the application of
the benefits of Republic Act 3836 to the elected members of Congress? We feel that the classification here is not
This goes to show how zealous were the members of the Constitutional Convention in guarding against the reasonable. (See also Sinco, Philippine Political Law, 11th ed. [1962]; Selected Essays on Constitutional Law
temptation for members of Congress to increase their salaries. However, the original strict prohibition was [1938-62], p. 789; The Equal Protection of the Laws, 37 Cal. Law Rev. 341.)
modified by the subsequent provision when the Constitutional amendments were approved in 19402
Secondly, all members of Congress under Republic Act 3836 are given retirement benefits after serving twelve
The Constitutional provision in the aforementioned Section 14, Article VI, includes in the term compensation years, not necessarily continuous, whereas, most government officers and employees are given retirement
"other emoluments." This is the pivotal point on this fundamental question as to whether the retirement benefits benefits after serving for at least twenty years. In fact, the original bill of Act 3836 provided for twenty years of
as provided for in Republic Act 3836 fall within the purview of the term "other emoluments." service.

Most of the authorities and decided cases have regarded "emolument" as "the profit arising from office or In the third place, all government officers and employees are given only one retirement benefit irrespective of
employment; that which is received as compensation for services or which is annexed to the possession of an their length of service in the government, whereas, under Republic Act 3836, because of no age limitation, a
office, as salary, fees and perquisites.3 Senator or Member of the House of Representatives upon being elected for 24 years will be entitled to two
retirement benefits or equivalent to six years' salary.
In another set of cases, "emolument" has been defined as "the profit arising from office or employment; that
which is received as compensation for services, or which is annexed to the possession of office, as salary, fees Also, while the payment of retirement benefits (annuity) to an employee who had been retired and reappointed
and perquisites; advantage, gain, public or private." The gain, profit or advantage which is contemplated in the is suspended during his new employment (under Commonwealth Act 186, as amended), this is not so under
definition or significance of the word "emolument" as applied to public officers, clearly comprehends, We think, a Republic Act 3836.
gain, profit, or advantage which is pecuniary in character. (citing Taxpayers' League of Cargon County v.
McPherson, 54 P. 2d. 897, 90l.: 49 Wy. 26; 106 A.L.R. 767) Lastly, it is peculiar that Republic Act 3836 grants retirement benefits to officials who are not members of the
Government Service Insurance System. Most grantees of retirement benefits under the various retirement laws
In Schieffelin v. Berry, 216 N.Y.S. (citing Wright v. Craig, 202 App. Div. 684, 195 N.Y.S. 391, affirmed 234 N.Y. 548, have to be members or must at least contribute a portion of their monthly salaries to the System. 4
138 N.E. 441), it has been established that pensions and retirement allowances are part of compensation of
public officials; otherwise their payment would be unconstitutional. The arguments advanced against the discriminatory features of Republic Act 3836, as far as Members of
Congress are concerned, apply with equal force to the elected officers of each House, such as the Secretaries and
In another case, State v. Schmahl, 145 N.W. 795, 125 Minn. 104, it is stated that "as used in Article 4, section 9, of the Sergeants-at-arms. Under Republic Act 3836, the Secretaries and Sergeants-at-arms of each House are given
the Constitution of Minnesota, providing that no Senator or Representative shall hold any office, the emoluments the benefits of retirement without having served for twenty years as required with other officers and employees
of which have been increased during the session of the Legislature of which he was a member, until after the of the Government.
expiration of his term of office in the Legislature, the word "emoluments" does not refer to the fixed salary alone,
but includes fees and compensation as the incumbent of the office is by law entitled to receive because he holds Fourth Legal Point — Whether or not the title of Republic Act No. 3836 is germane to the subject matter
such office and performed some service required of the occupant thereof." expressed in the act.

From the decisions of these cases, it is evident that retirement benefit is a form or another species of Another Constitutional point to determine is whether the title of Republic Act 3836 complies with the
emolument, because it is a part of compensation for services of one possessing any office. requirement of paragraph 1, section 21, Article VI of the Constitution, which reads as follows:

Republic Act No. 3836 provides for an increase in the emoluments of Senators and Members of the House of No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title
Representatives, to take effect upon the approval of said Act, which was on June 22, 1963. Retirement benefits of the bill.
were immediately available thereunder, without awaiting the expiration of the full term of all the Members of
the Senate and the House of Representatives approving such increase. Such provision clearly runs counter to the We are not unmindful of the fact that there has been a general disposition in all courts to construe the
prohibition in Article VI, Section 14 of the Constitution. constitutional provision with reference to the subject and title of the Act, liberally.

Third Legal Point — Whether or not the law in question violates the equal protection clause of the Constitution. It is the contention of petitioner that the said title of Republic Act 3836 gives no inkling or notice whatsoever to
the public regarding the retirement gratuities and commutable vacation and sick leave privileges to members of
Another reason in support of the conclusion reached herein is that the features of said Republic Act 3836 are Congress. It is claimed that petitioner learned of this law for the first time only when Jose Velasco, disbursing
patently discriminatory, and therefore violate the equal protection clause of the Constitution. (Art. III, Sec. 1, officer of the House, testified on January 30, 1964, before Justice Labrador, in connection with the hearing of the
part. 1.) case, and he revealed that in 1963, Congress enacted the retirement law for its members. In fact the
Appropriation Act for the fiscal year 1964-65, Republic Act No. 4164, provides:
13. For payment of retirement gratuities of members of the Senate pursuant to the provisions of Republic Act No. The Constitutional requirement that the subject of an act shall be expressed in its title should be reasonably
3836: PROVIDED, That no portion of this Appropriation shall be transferred to any other item until all approved construed so as not to interfere unduly with the enactment of necessary legislation. It should be given a practical,
claims shall have been paid — P210,000.00. rather than technical, construction. It should be a sufficient compliance with such requirement if the title
expresses the general subject and all the provisions of the statute are germane to that general subject.
In the appropriations for the House of Representatives the following items appear: (Sumulong v. The Commission on Elections, 73 Phil. 288, 291)

7. For government share of premiums on life insurance and retirement of Members and employees of the House The requirement that the subject of an act shall be expressed in its title is wholly illustrated and explained
of Representatives, as provided for under Republic Act No. 1616 — P300,000.00 in Central Capiz v. Ramirez, 40 Phil. 883. In this case, the question raised was whether Commonwealth Act 2784,
known as the Public Land Act, was limited in its application to lands of the public domain or whether its
8. For payment of the cash commutation of the accumulated vacation and sick leaves as provided for under provisions also extended to agricultural lands held in private ownership. The Court held that the act was limited
Republic Act No. 611, and retirement gratuities of Members and employees of the House of Representatives to lands of the public domain as indicated in its title, and did not include private agricultural lands. The Court
under Republic Act No. 1616 —P1,300,000.00. further stated that this provision of the Constitution expressing the subject matter of an Act in its title is not a
mere rule of legislative procedure, directory to Congress, but it is mandatory. It is the duty of the Court to
In the Appropriations Act of 1965-1966 (Republic Act No. 4642), the following item appears in the appropriations declare void any statute not conforming to this constitutional provision. (See Walker v. State, 49 Alabama 329;
for the Senate: Cooley, Constitutional Limitations, pp. 162-164;5 See also Agcaoili v. Suguitan, 48 Phil. 676; Sutherland on
Statutory Construction, Sec. 111.)
13. For payment of retirement gratuities of Senate personnel pursuant to the provisions of Republic Act No.
1616: PROVIDED, That no portion of this appropriation shall be transferred to any other item until all approved In the light of the history and analysis of Republic Act 3836, We conclude that the title of said Republic Act 3836
claims shall have been paid — P100,000.00. is void as it is not germane to the subject matter and is a violation of the aforementioned paragraph 1, section
21, Article VI of the Constitution.
It is thus clear that in the Appropriations Act for 1965-1966, the item in the Senate for P210,000.00 to implement
Republic Act 3836 was eliminated. In short, Republic Act 3836 violates three constitutional provisions, namely: first, the prohibition regarding
increase in the salaries of Members of Congress; second, the equal protection clause; and third, the prohibition
In the appropriations for the House (1965-1966), the following items appear: that the title of a bill shall not embrace more than one subject.

7. For government share of premiums on life insurance and retirement of Members and employees of the House IN VIEW OF THE FOREGOING CONSIDERATIONS, Republic Act No. 3836 is hereby declared null and void, in so far
Of Representatives as provided for under Republic Act No. 1616 — P1,200,000.00. as it refers to the retirement of Members of Congress and the elected officials thereof, as being unconstitutional.
The restraining order issued in our resolution on December 6, 1965 is hereby made permanent. No costs.
8. For payment of the cash commutation of the accumulated vacation and sick leaves as provided for under
Republic Act No. 611, and retirement gratuities of Members and employees of the House of Representatives THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, 
under Republic Act No. 1616 — P1,700,000.00. vs.
APOLONIO CARLOS, defendant-appellant.
It is to be observed that under Republic Act 3836, amending the first paragraph of section 12, subsection (c) of
Commonwealth Act 186, as amended by Republic Acts Nos. 660 and. 3096, the retirement benefits are granted Vicente J. Francisco, Felicisimo Ocampo and Alberto V. Francisco for appellant.
to members of the Government Service Insurance System, who have rendered at least twenty years of service Office of the First Assistant Solicitor General Reyes and Solicitor Tomacruz for appellee.
regardless of age. This paragraph is related and germane to the subject of Commonwealth Act No. 186.
TUASON, J.:
On the other hand, the succeeding paragraph of Republic Act 3836 refers to members of Congress and to elective
officers thereof who are not members of the Government Service Insurance System. To provide retirement The appellant was found guilty of treason by the People's Court and sentenced to reclusion perpetua, to pay a
benefits, therefore, for these officials, would relate to subject matter which is not germane to Commonwealth fine of P7,000, and costs.
Act No. 186. In other words, this portion of the amendment (re retirement benefits for Members of Congress and
elected officers, such as the Secretary and Sergeants-at-arms for each House) is not related in any manner to the The findings of the People's Court are not assigned as errors or disputed.
subject of Commonwealth Act 186 establishing the Government Service Insurance System and which provides for
both retirement and insurance benefits to its members. The lower court found that one day in July or August, 1944, about two or three o'clock in the morning, a truck
pulled up to the curb in front of a house on Constancia Street, Sampaloc, Manila, where one Martin Mateo lived.
Parenthetically, it may be added that the purpose of the requirement that the subject of an Act should be From the truck the accused, a Japanese spy, alighted together with members of the Japanese military police and
expressed in its title is fully explained by Cooley, thus: (1) to prevent surprise or fraud upon the Legislature; and pointed Martin Mateo's house and Fermin Javier's house to his Japanese companions, whereupon the Japanese
(2) to fairly apprise the people, through such publication of legislation that are being considered, in order that soldiers broke into Martin Mateo's dwelling first and Fermin Javier's afterwards. In those houses they seized
they may have the opportunity of being heard thereon by petition or otherwise, if they shall so desire (Cooley, Martin Mateo, Ladislao Mateo and Fermin Javier, bound their hands, and put them in the truck. Along with other
Constitutional Limitations, 8th ed., Vol. 1, p. 162; See also Martin, Political Law Reviewer, Book One [1965], p. persons who had been rounded up in the other places and who had been kept in the truck while it was parked,
119) they were taken to Fort Santiago where the two Mateos and Fermin Javier were tortured and from which they
were released six days later. The reason for the arrest and maltreatment of Martin and Ladislao Mateo was that
With respect to sufficiency of title this Court has ruled in two cases: they had refused to divulge the whereabouts of their brother, Marcelino Mateo, who was a guerrilla and who
had escaped from the Japanese. And Fermin Javier was arrested and tortured because he himself was a guerrilla,
The Constitutional requirement with respect to titles of statutes as sufficient to reflect their contents is satisfied a fact which Carlos knew or at least suspected.
if all parts of a law relate to the subject expressed in its title, and it is not necessary that the title be a complete
index of the content. (People v. Carlos, 78 Phil. 535) The defendant in this instance invokes only questions of law. He assigns four alleged errors, viz.:
I. The lower court erred in not holding that the accused cannot be convicted of the offense of treason committed (4) The first proviso of action 19 thereof, which changes the existing Rules of Court on the subject of bail
against the government of the United States and of the Philippines, because it is a settled principle in although its title speaks only of the creation of the People's Court and the Office of Special Prosecutors; and
international law that in a territory actually under the authority of the enemy, all laws of political complexion of
the previous government are suspended, and are without force and inasmuch as the laws of the United States (5) The second proviso of the same section, which suspends the provisions of article 125 of the Revised Penal
and the Commonwealth of the Philippines defining and penalyzing the crime of treason are all of political Code, a substantive law, which is not referred to in its title expressly or by implication.
complexion, they were suspended and had no binding effect whatsoever upon the inhabitants in the said
occupied territories. The People's Court was intended to be a full and complete scheme with its own machinery for the indictment,
trial and judgment of treason case. The various provisos mentioned, in our opinion, are allied and germane to the
II. The People's Court erred in not declaring the accused could not have violated the Philippine law on treason, subject matter and purposes of the People's Court Act; they are subordinate to its end. The multitude of matters
because it is also a settled principle in international law that in such occupied territories all laws inconsistent with which the legislation, by its nature, has to embrace would make mention of all of them in the title of the act
the occupation are being likewise suspended and without force and effect over the inhabitants, and since the cumbersome. It is not necessary, and the Congress is not expected, to make the title of an enactment a complete
laws of the United States and the Commonwealth of the Philippines defining and penalyzing treason against the index of its contents. (Government of the Philippine Islands vs. Municipality of Binalonan, 32 Phil., 634.) The
said government are by their very nature evidently inconsistent with the said occupation of the Philippines by the constitutional rule is satisfied if all parts of a law relate to the subject expressed in its title.
Imperial Japanese forces, the said laws must be deemed as having been suspended and without force and effect
upon the Filipinos, during the said occupation. The brief says:

III. The People's Court erred in not holding that the accused herein cannot be convicted of the crime of treason (b) It deprives persons similarly situated of the equal protection of the laws inasmuch as:
committed against the government of the United States and of the Philippines, because it is settled principle in
international law that once the territory is so occupied by the enemy, the allegiance is as a legal obligation (1) Only those political offenders against whom cases are filed within six months from the passage of the law are
distinguishable and distinguished from loyalty of the inhabitants therein to the former government or to be tried in the People's Court, while others are to be tried in the Courts of First Instance;
governments is temporarily suspended, and it being necessary and essential for the commission of the offense of
treason against the United States and the Commonwealth of the Philippines that the supposed offender should (2) Political offenders accused in the People's Court are denied preliminary examination and/or investigation
owe allegiance to said government at the time of the alleged offense, it follows that the accused cannot possibly whereas the others who shall be entitled thereto;
be chargeable with treason against the United States and the Commonwealth of the Philippines for acts allegedly
committed by him in the territory of the Philippines actually occupied by the Japanese during said occupation. (3) Political offenders accused in the People's Court have limited right to appeal, while those who may be
accused of the same crimes in the Courts of First Instance have absolute right of appeal inasmuch as under
IV. The decision rendered in this case should be reversed and, set aside, because the law creating the People's section 13 of the law, Rules 42 and 46 of the Rules of Court are made applicable to the latter;
Court is unconstitutional.
(4) Appeals in the case involving persons who held any office or position under either or both the Philippine
The questions propounded in the first, second and third assignments of error were squarely raised and decided in Executive Commission and the Philippine Republic or any branch, instrumentality and/or agency thereof are to
the case of Laurel vs. Misa (77 Phil., 856). That decision controls this appeal so far as the pleas of suspended heard and decided by a substantially different Supreme Court, thus causing lack of informity in rulings over the
allegiance and change of sovereignty are concerned. On the strength thereof, the first three assignments of error same subject;
must be overruled.
(5) The first proviso of section 19 thereof prescribes a different rule as to the granting of release on bail only with
The fourth assignment of error attacks the law creating the People's Court as unconstitutional. Numerous respect to the political offenders detained by the United States Army and released to the Commonwealth of the
provisions of the People's Court Act are singled out as contrary to the Organic Law. But in formulating many of Philippines but not as to others political offenders accused or accusable of the same crimes; and
his propositions the appellant has not indicated the reasons or the authorities which sustain them. We shall
dispose of them as briefly as they are presented. For better understanding, we shall reproduce the appellant's (6) The second proviso of section 19 thereof suspends article 125 of the Revised Penal Code only as to those
propositions and will comment on them separately. political detainees released by the United States Army to the Commonwealth of the Philippines or, at most, only
to those accused or accusable of the crimes specified in the law and not as to all persons accused or accusable of
The brief says: crimes against national security committed during the second world war, much less to all offenders,
notwithstanding the fact that there is no reasonable and real difference among said groups of offenders.
(a) It (People's Court Act) contains provisions which deal on matters entirely foreign to the subject matter
expressed in its title, such as: (1) The People's Court is a court of special and restricted jurisdiction created under the stress of an emergency
and national security. It was devised to operate for a limited period only, a limitation imposed by economic
(1) The first proviso of section 2 thereof, which retains the jurisdiction of the Court of First Instance to try and necessity and other factors of public policy. Obviously, the main concerning the creation of a special court was
decide cases of crimes against national security committed during the second world war not filed within six the trial and and disposition of the cases, numbering over 6,000, of accused who were being held by the United
months, notwithstanding the fact that according to its title, the People's Court is precisely created for that States military authorities and who were to be turned over to the Commonwealth Government. It was presumed
purpose, and impliedly, the People's Court jurisdiction in regard to said crimes is exclusive; that there were other cases of treason not included in this number — cases which might not be discovered until
years afterward — , and the possibility was not overlooked that even some of the cases which the United States
(2) The second proviso of the same section which grants the People's Court jurisdiction to convict and sentence Army was on the eve of placing under the jurisdiction of the Philippine Government could not be filed and
those accused therein even of crimes other than those against national security, although its title does not in any submitted for trial within a foreseeable future owing to lack of readily available evidence, absence of witnesses,
way indicate that such jurisdiction over other crimes would be granted to the said court; or other causes. On the other hand, considerations of economy and public interests forbade maintenance of the
People's Court for an indefinite period. Under the circumstances, it was necessary that a provision be made
(3) Section 14 thereof, which adds to the disqualifications of Justice of the Supreme Court and provides a requiring that only cases which could be brought to court within six months and which were deemed enough to
procedure for their substitution, a matter not indicated in any manner in its title; occupy the attention of the People's Court within the limited time of its life, should be cognizable by it, and the
rest should be instituted in the proper Courts of First Instance. Such provision is not an arbitrary and
international discrimination, and does not work as a deprivation of the right to equal protection of the laws. Both investigation. This proviso was held by this Court to be justified and reasonable under existing circumstances
in privileges or advantages conferred, if any, and in liabilities imposed, if any, person under equal circumstances in Laurel vs. Misa, supra.
are treated alike. It does not deprive appellant of the protection enjoyed by others failing within his class. The
equal protection of the laws guaranteed by the Constitution "does not prevent a state or municipality from The brief says:
adjusting its legislation to differences in situations and making a discrimination or distinction in its legislation in
respect of things that are different, provided that the discrimination or distinction has a reasonable foundation or "(d) Section 2 thereof which purports to define the jurisdiction of the People's Court constitutes an invalid and
rational basis and is not palpably, purely, and entirely arbitrary in the legislative sense, that is, outside of the void delegation of legislative power which is vested exclusively in the Congress of the Philippines by the
wide discretion which the legislative body may exercise." (16 C.J.S., 997.) Moreover, with its associate feature the Constitution, in so far as said section virtually leaves unqualifiedly in the discretion of the Solicitor General and/or
People's Court is designed to extend greater protection to persons charged with collaboration with the enemy. If the Office of Special Prosecutors the power to determine the actual cases over which the People's Court shall
others are prosecuted before a Court of First Instance, they and not the appellant should have cause to complain have jurisdiction."
of discrimination.
Granting the correctness of the premise of this proposition, it does not follow that the authority vested in the
(2) Section 22 in denying preliminary investigation to persons accused before the People's Court is justified by the Solicitor General amounts to a delegation of legislative power. We do not think that the power to institute
conditions prevailing when the law was enacted. In view of the great number of prisoners then under detention certain cases in one court or another in the discretion of the prosecuting attorney is an exercise of legislative
and the length of time and amount of labor that would be consumed if so many prisoners were allowed the right power. "The true distinction is between the delegation of power to make the law, which necessarily involves a
to have preliminary investigation, considered with the necessity of disposing of these cases at the earliest discretion as to what it shall be, and conferring authority or discretion as to its law. The first cannot be done; to
possible dates in the interest of the public and of the accused themselves, it was not an unwise measure which the latter no valid objection can be made." (Cincinnati, V. & Z. R. Co. vs. Clinton County Comr's [1852], 1 Ohio St.,
dispensed with such investigation in such cases. Preliminary investigation, it must be remembered, is not a 77, cited in Tañada on the constitution of the Philippines, p. 291.)
fundamental right guaranteed by the Constitution. For the rest, the constitutional prohibition against
discrimination among defendants placed in the same situation and condition is not infringed. The brief says:

(3) For the same reasons stated before, this contention cannot be upheld. There is a rational basis for the "(e) Sections 1, 4 and 18 thereof abridge, limit and curtail the power of appointment of the President or the Chief
distinction. The employment of two modes of appellate procedure in the two classes of cases involved are, in our Executive in that —
opinion, suitably adapted to the differences, in their composition, between the courts from which the appeals
are taken. The People's Court is a collegiate court whereas the Court of First Instance is presided over by a single (1) Section 1 practically leaves the President with such a very small field of choice in the appointment of the
judge. Appeal is not a constitutional but statutory right. The admitted fact that there is no discrimination among members of the court that he can hardly use his discretion in regard thereto; and
appeals from the same court or class of court saves the provision objected to from being unconstitutional.
(4) Sections 4 and 18 actually designate and appoint the persons who will occupy the positions left vacant by
(4) This objection does not seem to fall within the subject of constitutional guarantee against deprivation of those appointed to the People's Court and the Office of Special Prosecutors respectively.
equal protection of the laws. Be that as it may, we find no merit in the appellant's contention. The
disqualification under the People's Court Act of some or a majority of the members of this Court and their The power to create offices and courts is vested in the legislative department. Subject to constitutional
substitution by justices of the Court of Appeals or judges of the Courts of First Instance do not make the Supreme restrictions, the Congress may determine on the eligibility and qualification of officers and provide the method
Court, as thus constituted, a new court in the eyes of the law. A court is an entity possessing a personality for filing them. We find no valid objection on constitutional ground to a law which directs that a special
separate and distinct from the men who compose or sit on it. This objection is no more valid than that of a party temporary court should be filled by appointment by the Chief Executive himself from among judges already on
in an ordinary action who protests that his case is heard by a Supreme Court which, by reason of disability of a the bench and/or other quasi-judicial officers. As to outsiders who might have to be appointed by reason of
majority of its regular members, is made up mostly of judges from outside. As to the "lack of uniformity in rulings insufficiency of qualified men already in the service, the Chief Executive is left with a wide field of choice.
over the same subject," it need only be said that the Constitution does not insure uniformity of judicial decisions;
neither does it assure immunity from judicial error. The theory that "sections 4 and 18 actually designate and appoint the persons who will occupy the positions left
vacant by those appointed to the People's Court and the Office of Special Prosecutors respectively" loses sight of
(5) and (6) The two provisos in section 19 do no constitute denial of equal protection of the laws. The distinction the fact that the positions referred to are, as a matter of fact, vacant only in theory, and for the duration of the
made by these provisos between two sets of accused in the "granting or release on bail" and in the application of People's Court, and that the law does no more than say that after those judges and officers shall have
article 125 of the Revised Penal Code are not arbitrary or fanciful calculated to favor or prejudice one or the accomplished their work, they shall go back to their permanent posts.
other class. This point was discussed at length and made clear in Laurel vs. Misa (76 Phil., 372), in which this
Court explained the reasons which necessitated the extension to six months of the authorized detention of The brief says:
persons charged with treason before filing of information. The provisos rest "on some real and substantial
difference or distinction bearing a just and fair relation to the legislation." (16 C.J.S., 998.) "(f) The said law provides for the designation and/or transfer of judges appointed for particular districts to
another place outside of their respective districts without the consent of the Supreme Court."
The brief says:
Section 7 of Article VIII of the Constitution provides that "no judge appointed for a particular district shall be
"(c) It is a bill of attainder in that it virtually imposes upon specific, known and identified individuals or group of designated or transferred to another district without the approval of the Supreme Court. The Congress shall by
individual, the penalty of detention and imprisonment for a period not exceeding six months without any form of law determine the residence of judges of the inferior courts." This constitutional provision, as its language clearly
judicial trial or procedure." states, refers to transfers from one judicial district to another. It does not prohibit the appointment or
designation of a judge from being appointed temporarily or permanently with his consent to a court of different
"The bill of attainder is a legislative act which inflicts punishment without judicial trial." (Cummings vs. Missouri, 4 grade and make-up, such as the People's Court.
Wall., 232, etc.) Detention of a prisoner for a period not exceeding six months pending investigation or trial is not
a punishment but a necessary extension of the well-recognized power to hold the criminal suspected for The brief says:
"(g) Sections 13 and 19 thereof prescribed rules of procedure regarding appeal and bail which violate the rule of The appeal in this case raises only questions of law. Of the four assignments of error made in appellant's brief,
uniformity of rules for all courts of the same grade established in the Constitution." the first three are premised on the theory of suspended allegiance, and the last is premised on the theory that
the law creating the People's Court is unconstitutional.
It is the rules promulgated by the Supreme Court which are required by section 13 of Article VIII of the
Constitution to be uniform for all courts of the same grade. The People's Court is not a court of the same grade, The question of suspended allegiance was already rejected by a majority of this court in the case of Laurel vs.
considering many of its special features, and its purposes, as the Court of First Instance or any other existing Misa, in a resolution dated January 30, 1947 (77 Phil., 856),and our reasons for voting for the rejection are
court in the Philippines, so that the adoption of special rules of procedure for said court different from those expressed in our written opinion in said case.
applicable to Courts of First Instance is not violative of this constitutional mandate. More than this, the last
sentence of the section expressly authorizes the Congress "to repeal, alter, or supplement the rules concerning We do not see in appellant's brief any argument which may justify the changing of our opinion in the Laurel case
pleading, practice, and procedure, and the admission to the practice of law in the Philippines." where, by the way, the question of suspended allegiance appears to have been discussed, perhaps, thoroughly
and exhaustibly.
The brief says:
Regarding the fourth assignment of error, appellant advances the following proposition: "The People's Court Law
"(h) It is destructive of the independence of the judiciary and thereby violates the constitutional provision that (Commonwealth Act No. 682) is unconstitutional and void in many parts and as a whole because:
the Philippines is a republican state because:
"(a) it contains provisions which deal on matters entirely foreign to the subject matter expressed on its title;
(1) By creating a special court with jurisdiction over cases which were already within the jurisdiction of the
existing Courts of First Instance without any real necessity and urgent justification, considering that the persons "(b) It deprives persons similarly situated of the equal protection of the laws;
involved in said cases were more or less known and identified at the time of the creation of said special court, the
law establishes a precedent under which the legislature may at any time remove from the jurisdiction of existing "(c) It is a bill of attainder in that it virtually imposes upon specific, known, and identified individuals or group of
courts cases involving definite or specific individuals or groups of individuals to serve any purpose which said individuals, the penalty of detention and imprisonment for a period not exceeding six months without any form
legislature or the legislators composing the same may wish to accomplish, either to the benefit or damage of said or judicial trial or procedure;
individuals or groups of individuals;
"(d) Section 2 thereof constitutes an invalid and void delegation of legislative power, in so far as it virtually leaves
(2) By limiting the choice of the judges to compose the People's Court to those who did not hold any position in unqualifiedly in the discretion of the Solicitor General and/or the Office of Special Prosecutors the power to
the Philippine Executive Commission and/or the so-called Republic of the Philippines, the law makes a determine the actual case over which the People's Court shall have jurisdiction;
classification that has absolutely no rational basis inasmuch as the reason for discriminating against those who
served in said governments, which is, that they might be prejudiced or influenced in favor of the accused exists in "(e) Section 1, 4, and 18 thereof abridge, limit and curtail the power of appointment of the President;
equal measure for those who did not serve, in the sense that they may likewise be prejudiced or influenced
against the accused; and "(f) It provides for the designation and/or transfer of judges appointed for particular district to another place
outside of their respective district without the consent of the Supreme Court;
(3) In leaving practically in the hands of the Solicitor General the absolute right to choose, in which court he shall
prosecute the cases contemplated by the law, and in providing that the judges of the People's Court shall be "(g) Section 13 and 19 thereof prescribed rules of procedure regarding appeal and bail which violate the rule of
chosen from a limited group of the judges of the Court of First Instance, etc., the law does not leave a wide room uniformity of rules for all courts of the same grade established in the Constitution;
for the play of external factors in the administration of justice to those concerned but also destroys the
confidence of the people in the judiciary. "(h) It is destructive of the independence of the judiciary and thereby violates the constitutional provision that
the Philippines is a republican state;
(1 and 2) These objections go to the wisdom of the law and to matters of policy. This being so, it is enough that
the Congress deemed it necessary to incorporate these provisions in Commonwealth Act No. 682. It is not the "(i) Section 14 providing for disqualification of some Justice of the Supreme Court is unreasonable in its
province of the courts to supervise legislation and keep it within the bounds of propriety and common sense. operation."
That is primarily and exclusively a legislative concern. (Rubi vs. Provincial Board of Mindoro, 39 Phil., 661.)
Although it is regrettable that appellant failed to elaborate on the several grounds upon which he impugns the
(3) This proposition is covered by and answered in our comment on paragraph (d) of the brief. validity of the law in question, upon which theory he seeks reversal of the decision of the People's Court and his
acquittal from the treason charge, such failure does not relieve us from the duty of passing upon the questions
The judgment of the lower court is affirmed with costs against appellant. raised, much more because they are not of passing importance. Our opinion on the several grounds relied upon
by appellant to attack the validity of Commonwealth Act No. 682 as is follows:
Moran, C.J., Feria, Pablo, Hilado, Bengzon, and Briones, JJ., concur.
Hontiveros, and Padilla, JJ., concur in the result. (a) MULTIPLICITY OF SUBJECT MATTER

PARAS, J. On the first ground, appellant undoubtedly relies on the following provision of the Constitution:

I reserve my vote, the decision in the Laurel case is not as yet final. No bill which may be enacted into law shall embrace more than one subject which shall be expressed in the title
of the bill. (Section 21 [1], Article VI.)

Separate Opinions Five reasons are advanced by appellant to show that the acts violates the constitutional prohibition against
multiplicity of subject matter. We are going to deal with them separately.
PERFECTO, J., concurring and dissenting:
(1) It is alleged that, although the People's Court has been created precisely to try crimes against national (1) The first reason is that, under section 2, the People's Court is only to try the cases of political offenders
security with jurisdiction impliedly exclusive, section 2 thereof retains the jurisdiction of courts of first instance to against whom the information has been filed within six months., while others shall be tried in a Court of First
try and decide case not filed within six months. We do not believe that the provision violates the constitutional Instance. We believe that there is no unjust discrimination in it, complain of any unjust discrimination. They will
inhibition. There should not be any question that the creation of the People's Court was an answer to an unusual be tried by the regular tribunals created to try all other offenses. Those who are to be tried by the People's Court
situation, created by the extraordinary social upheaval provoked by the last war, demanding an uncommon cannot complain either, because said court is but another court of first instance, although especially created for
solution, compatible with the tenets of our democracy, with the provision of the Constitution, and with the noble the prompt disposal of the cases of political detainees. Congress made it collegiate as a guarantee against
aims of justice. The several thousands of persons detained upon liberation charged with treason and other possible miscarriage of justice due to popular excitement during the first months after the liberation. Congress
crimes against national security needed the creation of a judicial machinery for the prompt disposal of their cases believed that a three-person tribunal can defend itself better against any outside pressure than a one-man
so as not to violate their constitutional right to a speedy trial. It was admitted that the inferior courts then tribunal.
existing were not enough to cope with the situation. Those who are guilty, should be sentenced as soon as
possible, so they may expiate for the wrongs that they have committed, and those who are innocent are entitled (2) The second reason is that political offenders accused in the People's Court are denied the preliminary
to be cleared without any delay. The People's Court was, therefore, created to shoulder the burden that the investigation accorded to those who may be accused in the court of first instance. We are of opinion that the
courts of first instance could not bear. Congress estimate that six months was enough time for the cases of the allegation is groundless. There is nothing in the act in question depriving political offenders accused in the
thousands of detainees to be filed with the People's Court, while the cases of those who have not yet been People's Court of the preliminary investigation as provided by Rule 108.
detained, on the assumption that they will be few, there was no reason why these should not be disposed of by
the courts of first instance as is declared in the proviso of section 2. The proviso is germane with the subject (3) The third reason is that political offenders accused in the People's Court have limited right to appeal, while
matter of the law and does not violate the prohibition against multiplicity of subject matter. those who may be accused of the same crime in court of first instance have absolute right to appeal. The
allegation is partly true. There appears a discrimination against those who may be convicted by the People's
(2) The second objection is raised against the proviso authorizing the People's Court to convict and sentence Court in banc, by providing that they can only appeal in accordance with Rule 46, under which only questions of
those accused for any crime included in the acts alleged in the information and established by the evidence, law may be raised. We are of opinion that the discrimination is violative of the guarantee of the equal protection
although they are not classified as among those committed against national security. The objection cannot be of the laws, and should not be given effect. But the unconstitutional provision may be eliminated, without
entertained. The proviso is within the logical purview of the creation of the People's Court. The lawmaker must annulling the whole act. In practice, the invalid discriminating provision seems to have become obsolete as all
have had in mind the fact that among the thousands of detainees which motivated the creation of the court cases in the People's Court are tried and decided in division and not in banc.
there were persons who had committed crimes other than those against national security.
(4) The fourth reason is that appeals in cases involving persons who held any office under the governments
Although these are the crimes preliminary in the minds of those who arrested said detainees, there is nothing established by the Japanese during the occupation are to be heard and decided by a substantially different
unnatural that those who committed said crimes may have also committed offenses of different nature either in Supreme Court. The allegation is correct by virtue of the provisions of section 14 which is flagrantly
connection with the first ones or independently, and if said other offenses are included among the facts alleged unconstitutional because (a) the disqualification of some members of the Supreme Court provided therein
in the information filed with the People's Court and proved by the evidence, there is no reason why said court constitutes in effect partial removal form office in open violation of the guarantees and procedure provided by
should not punish them as a court of first instance would, it appearing that the People's Court is but a special Article IX of the Constitution, (b) it provides for sitting in the Supreme Court of persons not appointed in
court of first instance. accordance with section 5 of Article VIII of the constitution and without the qualifications provided in section 6 of
the same article, and (c) it provides for the existence of a second Supreme Court in violation of section 2 of
(3) The third objection points to the disqualification of certain Justice of the Supreme Court and the procedure of Article VIII of the Constitution which provides for only "one Supreme Court." But, as we have already stated,
their substitution as provided in section 14 of Commonwealth Act No. 682. Although said section is, in effect, null section 14 can be eliminated from Commonwealth Act No. 682, without declaring the act wholly
and void as unconstitutional, it is not enough ground to hold the whole act as unconstitutional, as said section unconstitutional.
can be eliminated without affecting the remaining provisions of the act.
(5) The fifth reason is that there is discrimination in the first proviso of section 19 as to the granting of release on
(4) The fourth objection points to the proviso of section 19, which provides for an exception concerning political bail. We are opinion that there is no substantial discrimination.
offenders in the existing rules of court on the subject of bail. Whether the proviso is valid or not, it cannot affect
the constitutionality of the whole act. If it is valid, it is within the purview of the creation of the People's Court. If (6) The sixth reason is the discrimination provided in the second proviso of section 19. The proviso is null and
it is invalid, it can be discarded without affecting the other provisions of the law. void, but it can be eliminated without annulling the whole act. It is a denial of the equal protection of the laws
and is violative of the constitutional guarantee against deprivation of liberty without due process of law. The
(5) The fifth objection points to the second proviso of section 19, suspending the provisions of article 125 of the proviso should not be given effect, without annulling the whole act.
Revised Penal Code. The proviso is evidently unconstitutional. It is within the purview of the creation of the
People's Court. It creates a discrimination violative of the constitutional guarantee of the equal protection of the (c) BILL OF ATTAINDER
laws. In effect, it authorizes deprivation of liberty of the political prisoners for a period of six months, which is
violated of the constitutional guarantee that no person shall be deprived of his liberty without due process of Appellant alleges that Commonwealth Act No. 682 is a bill of attainder in that it virtually impose upon specific,
law. But the proviso may be eliminated without affecting the remaining portions of the act and, therefore, is not known and identified individuals or group of individuals, the penalty of detention and imprisonment for a period
enough ground for declaring the whole act null and void. not exceeding six months without any form of judicial trial or procedure.

Our conclusion is that the first ground attacking the validity of the law is without merit. The allegation is justified by the second proviso of section 19 of the act. But it cannot affect it in whole as said
proviso can be eliminated without impairing the remaining proviso of the law.
(b) EQUAL PROTECTION OF THE LAWS
(d) DELEGATION OF LEGISLATIVE POWER
Appellant advances six reasons to show that the act violates the constitutional guarantee of the equal protection
of the laws. Appellant alleges that section 2 constitutes an invalid and void delegation of legislative power in so far as it
virtually leaves unqualifiedly in the discretion of the Solicitor General and/or the Office of Special Prosecutors the
power to determine the actual cases over which the People's Court shall have jurisdiction. There is no such Williams v. Standard Oil Co., 278 U.S. 235 (1929)
delegation. The People's Court is substantially but one court of first instance, only with limited jurisdiction.
Whether a case is to be tried by the People's Court or by an ordinary court of first instance, there is no Nos. 64 and 65
substantial difference for the purposes of the administration of justice and the jurisdictions of both courts are
specifically provided in the law. Argued November 23, 1928

(e) CURTAILMENT OF THE POWER OF APPOINTMENT OF THE PRESIDENT Decided January 2, 1929

Appellant's objection is directed against section 1, 4, and 18. The objection is untenable. Congress may validly APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES
provide for the qualifications of the members of the People's Court. Section 8 of Article VIII of the constitution
expressly grants that authority. FOR THE MIDDLE DISTRICT OF TENNESSEE

(f) TRANSFER OF JUSTICE WITHOUT APPROVAL OF THE SUPREME COURT Syllabus

Appellant alleges that Commonwealth Act No. 682 provides for the designation and/or transfer of judges to an 1. The business of dealing in gasoline, whatever its extent, is not a business "affected with a public interest," and
other place outside their respective districts without the consent of the Supreme Court, implying that section 7 state legislation undertaking to fix the prices at which gasoline may be sold violates the due process clause of the
of Article VIII of the Constitution is violated. The allegation is untenable. The fact that the act authorizes the Fourteenth Amendment. P. 278 U. S. 239.
appointment of person already holding positions in the judiciary to be members of the People's Court is no
violation of the constitutional mandate. What the authors of the Constitution contemplated were transfers from 2. A state may not impose as a condition on the doing of local business by a foreign corporation that it relinquish
one district to another, but not appointment of those already holding positions to other positions. rights guaranteed by the Federal Constitution. P. 278 U. S. 241.

(g) UNIFORMITY OF LAWS 3. A declaration in a statute that, if any of its provisions be held invalid, the validity of the others shall not be
thereby affected creates a presumption of separability in place of the general rule to the contrary -- a
The objections of appellant in paragraph (g) is but a repetition of his objections in paragraph (b) already dealt presumption overcome, however, when inseparability is evident or where there is a clear probability that, the
with above. invalid part being eliminated, the legislature would not have been satisfied with what remains. P. 278 U. S. 241.

(h) INDEPENDENCE OF THE JUDICIARY 4. In c. 22 of Public Acts of Tennessee, 1927, the provision for fixing the prices of gasoline, which is
unconstitutional, is inseparable from the other provisions relating to the creation of a Division of Motors and
Appellant sets the following propositions: Motor Fuels, the collection of information, issuance of permits, and taxation to defray the expenses of the
Division. P. 278 U. S. 242.
1. By creating a special court with jurisdiction over cases which were already within the jurisdiction of the existing
courts of first instance, considering that the persons involved in said cases were more or less known and 5. The provision of the Act forbidding any dealer to grant any rebate, concession, or gratuity to any purchaser for
identified at the time of the creation of said court, the law establishes a precedent under which Congress may at the purpose of inducing him to purchase, use, or handle the dealer's gasoline, and the provision forbidding
any time remove from the jurisdiction of existing court cases involving definite or specific individuals or groups of discrimination by selling at different prices to purchasers in the same or in different localities, are likewise mere
individuals to serve any purpose which the members of the Congress may wish to accomplish, either to the appendants to the main purpose of price regulation, or, if separable, they are unconstitutional restrictions on the
benefit or damage of said individuals. right of the dealer to fix his own prices. Fairmont Co. v. Minnesota, 274 U. S. 1. P. 278 U. S. 244.

2. By limiting the choice of the judges to compose the People's Court, the law makes a classification that has 6. In construing an act for the purpose of determining the separability of its provisions, it is to be presumed that
absolutely no rational basis. the legislature meant to obey a direction in the state constitution that each bill be confined to one subject, to be
expressed in the title. P. 278 U. S. 244.
3. In leaving to the hands of the Solicitor General the absolute right to choose in which court he shall prosecute
the cases contemplated by the law and in providing that the judges of the People's Court shall be chosen from a 24. F.2d 455 affirmed.
limited groups of individuals, etc., the law does not leave a wide room for the play of external factors in the
administration of justice to those concerned but also destroys the confidence of the people in the judiciary. Appeals from decrees of the district court (three judges sitting) which granted interlocutory injunctions in suits
brought by the two oil companies against officials of Tennessee to restrain enforcement of an act to regulate the
The question raised in the above three propositions are serious but none of them amounts to a violation of the price of gasoline.See Standard Oil Co. v. Hall, 24 F.2d 455.
fundamental law that may nullify the law in question, as they involve a matter of public policy, although the first
one points to a situation bordering into a transgression of the guarantee of the equal protection of the laws. If MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
the provisions of the law creating the special court should show a clear purpose of making a discrimination, pro
or against those who may be tried under it, then the law must be declared null and void in toto. Such is not the These cases were considered together by the court below, and are submitted together here. In both, the validity
case of the law under discussion. Matters of public policy not involving a violation of the fundamental law are of a statute of Tennessee is assailed as contravening the federal Constitution. Appellee in No. 64 is a corporation
within the province of Congress to legislate, subject only to the control of the people through the electorate. organized under the laws of Louisiana, and appellee in No. 65 is a corporation organized under the laws of
Delaware. From a time long prior to the passage of the statute, both have been engaged and are now engaged in
For all the foregoing, we vote to affirm the decision rendered by the lower court in this case. the business of selling gasoline in the state of Tennessee.

U.S. Supreme Court The statute was adopted in 1927. Its purpose and effect are to fix prices at which gasoline may be sold within the
state. A division of motors and motor fuels is created in the department of finance and taxation and authorized
to collect and record data concerning the manufacture and sale of gasoline, freight rates, differentials in price to Nor need we stop to consider the further contention that appellees, being foreign corporations, may not carry on
wholesalers and retailers, the cost and expense of production and sale, etc. The information thus collected is
made available for use by the Commissioner of Finance and Taxation in the regulation of prices at which gasoline their business within the state except by complying with the conditions prescribed by the state. While that is the
may be sold in the state. Permits for such sale are to be issued subject to the approval of the Commissioner, but general rule, a well settled limitation upon it is that the state may not impose conditions which require the
only at the prices fixed and determined. Prices of gasoline are to be fixed with a proper differential between the relinquishment of rights guaranteed by the federal Constitution. Frost Trucking Co. v. R. Comm'n, 271 U. S.
wholesale and retail price. Rebates, price concessions, and price discrimination between persons or localities are 583, 271 U. S. 593, et seq., where the applicable decisions of this Court are reviewed.
forbidden. The prices first are to be stated by the applicant for a permit, and, if not approved by the
superintendent of the division, are to be determined by that official, with a right of review by the Commissioner Finally, it is said that, even if the price-fixing provisions be held invalid, other provisions of the act should be
and finally by the courts. Chapter 22, p. 53, Public Acts Tennessee 1927. By a general statute, Shannon's upheld as separate and distinct. This contention is emphasized by a reference to § 12 of the act, which declares:
Tennessee Code, § 6437, a violation of the act is a misdemeanor and is punishable by fine and "That if any section or provision of this Act shall be held to be invalid, this shall not affect the validity of other
imprisonment. Pressly v. State, 114 Tenn. 534, 538. sections or provisions hereof."

In Hill v. Wallace, 259 U. S. 44, 259 U. S. 71, it is said that such a legislative declaration serves to assure the courts
that separate sections or provisions of a partly invalid act may be properly sustained "without hesitation or doubt
Appellees brought separate suits in the court below to enjoin the state officers named as appellants from as to whether they would have been adopted, even if the legislature had been advised of the invalidity of part."
carrying out their intention to enforce the act and institute criminal proceedings for violations of it against But the general rule is that the unobjectionable part of a statute cannot be held separable unless it appears that,
appellees, respectively, and to have the act declared unconstitutional and void. Under the facts alleged, the suits
were properly brought. Terrace v. Thompson, 263 U. S. 197, 263 U. S. 214; Tyson & Brother v. Banton, 273 U. S. "standing alone, legal effect can be given to it, and that the legislature intended the provision to stand in case
418, 273 U. S. 427-428. others included in the act and held bad should fall."

The principal ground of attack, and the only one we need to consider here, is that the legislature is without The question is one of interpretation and of legislative intent, and the legislative declaration "provides a rule of
power to authorize agencies of the state to fix prices at which gasoline may be sold in the state, because the construction which may sometimes aid in determining that intent. But it is an aid merely, not an inexorable
effect will be to deprive the vendors of such gasoline of their property without due process of law in violation of command."Dorchy v. Kansas, 264 U. S. 286, 264 U. S. 290.
the Fourteenth Amendment. Appellees applied for a temporary injunction against appellants, upon which there
was a hearing, and the court below, consisting of three judges (§ 266, Judicial Code), granted the injunction as In the absence of such a legislative declaration, the presumption is that the legislature intends an act to be
prayed. 24 F.2d 455, sub nom. Standard Oil Co. v. Hall. effective as an entirety. This is well stated in Riccio v. Hoboken, 69 N.J.Law, 649, 662, where the New Jersey Court

It is settled by recent decisions of this Court that a state legislature is without constitutional power to fix prices at of Errors and Appeals, in an opinion delivered by Judge Pitney (afterward a Justice of this Court), after setting
which commodities may be sold, services rendered, or property used unless the business or property involved is forth the rule as above, said:
"affected with a public interest." Wolff Packing Co. v. Industrial Court, 262 U. S. 522; Tyson & Brother v. Banton,
supra; Fairmont Creamery Co. v. Minnesota, 274 U. S. 1; Ribnik v. McBride, 277 U. S. 350. Nothing is gained by "In seeking the legislative intent, the presumption is against any mutilation of a statute, and the courts will resort
reiterating the statement that the phrase is indefinite. By repeated decisions of this Court, beginning with Munn to elimination only where an unconstitutional provision is interjected into a statute otherwise valid, and is so
v. Illinois, 94 U. S. 113, that phrase, however it may be characterized, has become the established test by which independent and separable that its removal will leave the constitutional features and purposes of the act
the legislative power to fix prices of commodities, use of property, or services must be measured. As applied in substantially unaffected by the process."
particular instances, its meaning may be considered both from an affirmative and a negative point of view.
Affirmatively, it means that a business or property, in order to Compare Illinois Central Railroad Co. v. McKendree, 203 U. S. 514, 203 U. S. 528-530; Employers' Liability
Cases, 207 U. S. 463,207 U. S. 501; Butts v. Merchants' Transportation Co., 230 U. S. 126, 230 U. S. 132 et seq.,
be affected with a public interest, must be such or be so employed as to justify the conclusion that it has been and see 1 Cooley's Constitutional Limitations (8th ed.) 362-363 and note.
devoted to a public use, and its use thereby in effect granted to the public. Tyson & Brother v. Banton,
supra, p. 273 U. S. 434. Negatively, it does not mean that a business is affected with a public interest merely The effect of the statutory declaration is to create in the place of the presumption just stated the opposite one of
because it is large or because the public are warranted in having a feeling of concern in respect of its separability -- that is to say, we begin, in the light of the declaration, with the presumption that the legislature
maintenance. Id., p. 273 U. S. 430. The meaning and application of the phrase are examined at length in intended the act to be divisible, and this presumption must be overcome by considerations which make evident
the Tyson case, and we see no reason for restating what is there said. the inseparability of its provisions or the clear probability that, the invalid part being eliminated, the legislature
would not have been satisfied with what remains.
In support of the act under review, it is urged that gasoline is of widespread use; that enormous quantities of it
are sold in the State of Tennessee, and that it has become necessary and indispensable in carrying on commercial In the present case, it requires no extended argument to overcome the presumption and to demonstrate the
and other activities within the state. But we are here concerned with the character of the business, not with its indivisible character of the act under consideration. The particular parts of the act sought to be saved are found
size or the extent to which the commodity is used. Gasoline is one of the ordinary commodities of trade, in §§ 1, 2, 3, 4 and 10. Section 1, after a preamble in respect of the importance of controlling the sale of gasoline
differing, so far as the question here is affected, in no essential respect from a great variety of other articles and a declaration that such sale is impressed with a public use, creates the division of motors and motor fuels as
commonly bought and sold by merchants and private dealers in the country. The decisions referred to above already stated. Section 2 requires the superintendent of the division and other employees to make
make it perfectly clear that the business of dealing in such articles, irrespective of its extent, does not come investigations, collect and record data concerning the manufacture and sale of gasoline, the cost of refining,
within the phrase "affected with a public interest." Those decisions control the present case. freight rates, differentials

There is nothing in the point that the act in question may be justified on the ground that the sale of gasoline in in wholesale and retail prices, costs, and expenses incident to the sale, methods employed in the distribution of
Tennessee is monopolized by appellees, or by either of them, because, objections to the materiality of the gasoline, and other data and information as may be material in ascertaining and determining fair and reasonable
contention aside, an inspection of the pleadings and of the affidavits submitted to the lower court discloses an prices to be paid for gasoline. This information is declared to be available for use in the regulation of prices and
utter failure to show the existence of such monopoly. for the inspection and information of the public. The superintendent is directed to issue permits for the sale of
gasoline at prices fixed and determined as provided in other parts of the statute. Section 3 makes it unlawful for DECISION
anyone to engage in the sale of gasoline without first having obtained a permit signed by the superintendent and
approved by the Commissioner of finance and taxation, for which permit application must be made in QUISUMBING, J.:
accordance with and in compliance with all the requirements of the act. Section 4 requires that the application
shall set forth whether the applicant proposes to do a wholesale or retail business, or both, the number and This is a petition for review on certiorari of the decision of the Court of Appeals dated July 22, 1996, in CA-G.R.
location of the different places where he is to operate, and other like information. He must also set forth the CV No. 38607, as well as of its resolution of January 23, 1997, denying petitioners motion for reconsideration.
price or prices at which he is at the time selling gasoline, the cost price thereof, including various items which The challenged decision reversed the judgment of the Regional Trial Court of Bacolod City, Branch 42 in Civil Case
enter into the price, and the price at which he proposes to sell. Section 10 imposes a special permit tax of $10 per No. 14725.
annum for each place of sale at wholesale and $1 per annum for each retail service station or curb pump. The tax
thus imposed is constituted a special maintenance fund to aid in defraying the expenses of the division of motors The factual background of this case, as gleaned from the records, is as follows:
and motor fuels.
The Mirasols are sugarland owners and planters. In 1973-1974, they produced 70,501.08 piculs[1] of sugar,
The bare recital of these details shows conclusively that they are mere adjuncts of the price-fixing provisions of 25,662.36 of which were assigned for export. The following crop year, their acreage planted to the same crop
the law or mere aids to their effective execution. The function of the division created by § 1 is to carry these was lower, yielding 65,100 piculs of sugar, with 23,696.40 piculs marked for export.
provisions into effect, and if they be stricken down as invalid, the existence of the division becomes without
object. The purpose of collection the data set forth in § 2 is to Private respondent Philippine National Bank (PNB) financed the Mirasols sugar production venture for crop
years, 1973-1974 and 1974-1975 under a crop loan financing scheme. Under said scheme, the Mirasols signed
furnish information to aid in the fixing of proper prices. The requirements in § 3 that a permit must be obtained Credit Agreements, a Chattel Mortgage on Standing Crops, and a Real Estate Mortgage in favor of PNB. The
before any person can engage in the business of selling gasoline and those in § 4 that the application therefor Chattel Mortgage empowered PNB as the petitioners attorney-in-fact to negotiate and to sell the latters sugar in
must state the character of the business, the number and location of the places where business is to be carried both domestic and export markets and to apply the proceeds to the payment of their obligations to it.
on, the price or prices at which the applicant is then selling gasoline, the cost price thereof, and the price at
which he proposes to sell obviously constitute data for intelligently putting into effect the price-fixing provisions Exercising his law-making powers under Martial Law, then President Ferdinand Marcos issued Presidential
of the law, or means to that end. The taxes imposed by § 10 are solely for the purpose of defraying the expenses Decree (P.D.) No. 579[2] in November, 1974. The decree authorized private respondent Philippine Exchange Co.,
of the division of motors and motor fuels, and, since the functions of that division practically come to an end with Inc. (PHILEX) to purchase sugar allocated for export to the United States and to other foreign markets. The price
the failure of the price-fixing features of the law, it is unreasonable to suppose that the legislature would be and quantity was determined by the Sugar Quota Administration, PNB, the Department of Trade and Industry,
willing to authorize the collection of a fund for a use which no longer exists. and finally, by the Office of the President. The decree further authorized PNB to finance PHILEXs purchases.
Finally, the decree directed that whatever profit PHILEX might realize from sales of sugar abroad was to be
Appellants also insist that certain provisions in respect of rebating and discrimination contained in § 8 of the act remitted to a special fund of the national government, after commissions, overhead expenses and liabilities had
are separable. Those provisions are that it shall be unlawful to grant any rebate, concession, or gratuity to any been deducted. The government offices and entities tasked by existing laws and administrative regulations to
purchaser for the purpose or inducing the purchaser to purchase, use, or handle the gasoline of the particular oversee the sugar export pegged the purchase price of export sugar in crop years 1973-1974 and 1974-1975
dealer, and that it shall likewise be unlawful to discriminate for or against any purchaser by selling at different at P180.00 per picul.
prices to purchasers in the same locality or in different localities. It seems clear that these provisions are mere
appendants in aid of the main purpose; but, if treated as separable, they are unconstitutional restrictions upon PNB continued to finance the sugar production of the Mirasols for crop years 1975-1976 and 1976-1977. These
the right of the private dealer to fix his own prices, and fall within the principle of the decisions already cited. See crop loans and similar obligations were secured by real estate mortgages over several properties of the Mirasols
especially Fairmont Creamery Co. v. Minnesota, supra. and chattel mortgages over standing crops. Believing that the proceeds of their sugar sales to PNB, if properly
accounted for, were more than enough to pay their obligations, petitioners asked PNB for an accounting of the
This interpretation of the various provisions of the act is fortified by a requirement of the Tennessee Constitution proceeds of the sale of their export sugar. PNB ignored the request. Meanwhile, petitioners continued to avail of
(Article II, § 17) that "no bill shall become a law which embraces more than one subject, that subject to be other loans from PNB and to make unfunded withdrawals from their current accounts with said bank. PNB then
asked petitioners to settle their due and demandable accounts. As a result of these demands for payment,
expressed in the title." It is fair to conclude, and there is nothing to suggest the contrary, that, in the passage of petitioners on August 4, 1977, conveyed to PNB real properties valued at P1,410,466.00 by way of dacion en
the present act, the legislature intended to observe this requirement and confine the provisions of the act to the pago, leaving an unpaid overdrawn account of P1,513,347.78.
one subject of price-fixing.
On August 10, 1982, the balance of outstanding sugar crop and other loans owed by petitioners to PNB stood
Accordingly, we must hold that the object of the statute under review was to accomplish the single general at P15,964,252.93. Despite demands, the Mirasols failed to settle said due and demandable accounts. PNB then
purpose which we have stated, and, that purpose failing for want of constitutional power to effect it, the proceeded to extrajudicially foreclose the mortgaged properties. After applying the proceeds of the auction sale
remaining portions of the act, serving merely to facilitate or contribute to the consummation of the purpose, of the mortgaged realties, PNB still had a deficiency claim of P12,551,252.93.
must likewise fall.
Petitioners continued to ask PNB to account for the proceeds of the sale of their export sugar for crop years
Decrees affirmed. 1973-1974 and 1974-1975, insisting that said proceeds, if properly liquidated, could offset their outstanding
obligations with the bank. PNB remained adamant in its stance that under P.D. No. 579, there was nothing to
MR. JUSTICE HOLMES dissents. account since under said law, all earnings from the export sales of sugar pertained to the National Government
and were subject to the disposition of the President of the Philippines for public purposes.
MR. JUSTICE BRANDEIS and MR. JUSTICE STONE concur in the result.
On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and damages against PNB with
SPOUSES ALEJANDRO MIRASOL and LILIA E. MIRASOL, petitioners, vs. THE COURT OF APPEALS, PHILIPPINE the Regional Trial Court of Bacolod City, docketed as Civil Case No. 14725.
NATIONAL BANK, and PHILIPPINE EXCHANGE CO., INC.,respondents.
On June 16, 1987, the complaint was amended to implead PHILEX as party-defendant.
The parties agreed at pre-trial to limit the issues to the following: 2. Ordering the PNB to render an accounting of the sugar account of the Mirasol[s] specifically stating the
indebtedness of the latter to the former and the proceeds of Mirasols 1973-1974 and 1974-1975 sugar
1. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and 1192; production sold pursuant to and in accordance with P.D. 579 and the issuances therefrom;

2. The determination of the total amount allegedly due the plaintiffs from the defendants corresponding to the 3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols indebtedness to it crediting to the latter
allege(d) unliquidated cost price of export sugar during crop years 1973-1974 and 1974-1975.[3] payments already made as well as the auction price of their foreclosed real estate and stipulated value of their
properties ceded to PNB in the dacon (sic) en pago;
After trial on the merits, the trial court decided as follows:
4. Whatever the result of the recomputation of Mirasols account, the outstanding balance or the excess payment
WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of the plaintiffs and shall be governed by the pertinent provisions of RA 7202.
against the defendants Philippine National Bank (PNB) and Philippine Exchange Co., Inc. (PHILEX):
SO ORDERED.[6]
(1)Declaring Presidential Decree 579 enacted on November 12, 1974 and all circulars, as well as policies, orders
and other issuances issued in furtherance thereof, unconstitutional and therefore, NULL and VOID being in gross On August 28, 1996, petitioners moved for reconsideration, which the appellate court denied on January 23,
violation of the Bill of Rights; 1997.

(2) Ordering defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the whole amount corresponding Hence, the instant petition, with petitioners submitting the following issues for our resolution:
to the residue of the unliquidated actual cost price of 25,662 piculs in export sugar for crop year 1973-1974 at an
average price of P300.00 per picul, deducting therefrom however, the amount of P180.00 already paid in 1. Whether the Trial Court has jurisdiction to declare a statute unconstitutional without notice to the Solicitor
advance plus the allowable deductions in service fees and other charges; General where the parties have agreed to submit such issue for the resolution of the Trial Court.

(3) And also, for the same defendants to pay, jointly and severally, same plaintiffs the whole amount 2. Whether PD 579 and subsequent issuances[7] thereof are unconstitutional.
corresponding to the unpaid actual price of 14,596 piculs of export sugar for crop year 1974-1975 at an average
rate of P214.14 per picul minus however, the sum of P180.00 per picul already paid by the defendants in advance 3. Whether the Honorable Court of Appeals committed manifest error in not applying the doctrine of piercing the
and the allowable deducting (sic) in service fees and other charges. corporate veil between respondents PNB and PHILEX.

The unliquidated amount of money due the plaintiffs but withheld by the defendants, shall earn the legal rate of 4. Whether the Honorable Court of Appeals committed manifest error in upholding the validity of the foreclosure
interest at 12% per annum computed from the date this action was instituted until fully paid; and, finally on petitioners property and in upholding the validity of the dacion en pago in this case.

(4) Directing the defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the sum of P50,000.00 in 5. Whether the Honorable Court of Appeals committed manifest error in not awarding damages to
moral damages and the amount of P50,000.00 as attorneys fees, plus the costs of this litigation. petitioners grounds relied upon the allowance of the petition. (Underscored in the original)[8]

SO ORDERED.[4] On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the
constitutionality of a statute, presidential decree, or executive order.[9] The Constitution vests the power of
The same was, however, modified by a Resolution of the trial court dated May 14, 1992, which added the judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree,
following paragraph: order, instruction, ordinance, or regulation not only in this Court, but in all Regional Trial Courts. [10] In J.M.
Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we held:
This decision should however, be interpreted without prejudice to whatever benefits that may have accrued in
favor of the plaintiffs with the passage and approval of Republic Act 7202 otherwise known as the Sugar Plainly, the Constitution contemplates that the inferior courts should have jurisdiction in cases involving
Restitution Law, authorizing the restitution of losses suffered by the plaintiffs from Crop year 1974-1975 to Crop constitutionality of any treaty or law, for it speaks of appellate review of final judgments of inferior courts in
year 1984-1985 occasioned by the actuations of government-owned and controlled agencies. (Underscoring in cases where such constitutionality happens to be in issue.[11]
the original).
Furthermore, B.P. Blg. 129 grants Regional Trial Courts the authority to rule on the conformity of laws or treaties
SO ORDERED.[5] with the Constitution, thus:

The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CV No. 38607, faulting the trial SECTION 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
court for not nullifying the dacion en pago and the mortgage contracts, as well as the foreclosure of their
mortgaged properties. Also faulted was the trial courts failure to award them the full money claims and damages (1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation;
sought from both PNB and PHILEX.
The pivotal issue, which we must address, is whether it was proper for the trial court to have exercised judicial
On July 22, 1996, the Court of Appeals reversed the trial court as follows: review.

WHEREFORE, this Court renders judgment REVERSING the appealed Decision and entering the following verdict: Petitioners argue that the Court of Appeals erred in finding that it was improper for the trial court to have
declared P.D. No. 579[12] unconstitutional, since petitioners had not complied with Rule 64, Section 3, of the Rules
1. Declaring the dacion en pago and the foreclosure of the mortgaged properties valid; of Court. Petitioners contend that said Rule specifically refers only to actions for declaratory relief and not to an
ordinary action for accounting, specific performance, and damages.
Petitioners contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court provides: in question be the very lis mota of the case is absent. Thus we cannot rule on the constitutionality of P.D. No.
579.
SEC. 3. Notice to Solicitor General. In any action which involves the validity of a statute, or executive order or
regulation, the Solicitor General shall be notified by the party attacking the statute, executive order, or Petitioners further contend that the passage of R.A. No. 7202[19] rendered P.D. No. 579 unconstitutional, since
regulation, and shall be entitled to be heard upon such question. R.A. No. 7202 affirms that under P.D. 579, the due process clause of the Constitution and the right of the sugar
planters not to be deprived of their property without just compensation were violated.
This should be read in relation to Section 1 [c] of P.D. No. 478,[13] which states in part:
A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law merely reads:
SECTION 1. Functions and Organizations (1) The Office of the Solicitor General shallhave the following specific
powers and functions: SEC. 10. All laws, acts, executive orders and circulars in conflict herewith are hereby repealed or modified
accordingly.
xxx
The settled rule of statutory construction is that repeals by implication are not favored. [20] R.A. No. 7202 cannot
[c] Appear in any court in any action involving the validity of any treaty, law, executive order or proclamation, be deemed to have repealed P.D. No. 579. In addition, the power to declare a law unconstitutional does not lie
rule or regulation when in his judgment his intervention is necessary or when requested by the court. with the legislature, but with the courts.[21] Assuming arguendo that R.A. No. 7202 did indeed repeal P.D. No.
579, said repeal is not a legislative declaration finding the earlier law unconstitutional.
It is basic legal construction that where words of command such as shall, must, or ought are employed, they are
generally and ordinarily regarded as mandatory.[14] Thus, where, as in Rule 64, Section 3 of the Rules of Court, the To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil of corporate fiction with
word shall is used, a mandatory duty is imposed, which the courts ought to enforce. respect to PNB and PHILEX. Petitioners submit that PHILEX was a wholly-owned subsidiary of PNB prior to the
latters privatization.
The purpose of the mandatory notice in Rule 64, Section 3 is to enable the Solicitor General to decide whether or
not his intervention in the action assailing the validity of a law or treaty is necessary. To deny the Solicitor We note, however, that the appellate court made the following finding of fact:
General such notice would be tantamount to depriving him of his day in court. We must stress that, contrary to
petitioners stand, the mandatory notice requirement is not limited to actions involving declaratory relief and 1. PNB and PHILEX are separate juridical persons and there is no reason to pierce the veil of corporate
similar remedies. The rule itself provides that such notice is required in any action and not just actions involving personality. Both existed by virtue of separate organic acts. They had separate operations and different purposes
declaratory relief. Where there is no ambiguity in the words used in the rule, there is no room for construction. and powers.[22]
[15]
 In all actions assailing the validity of a statute, treaty, presidential decree, order, or proclamation, notice to
the Solicitor General is mandatory. Findings of fact by the Court of Appeals are conclusive and binding upon this Court unless said findings are not
supported by the evidence.[23] Our jurisdiction in a petition for review under Rule 45 of the Rules of Court is
In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor did the trial court ever limited only to reviewing questions of law and factual issues are not within its province.[24] In view of the
require him to appear in person or by a representative or to file any pleading or memorandum on the aforequoted finding of fact, no manifest error is chargeable to the respondent court for refusing to pierce the veil
constitutionality of the assailed decree. Hence, the Court of Appeals did not err in holding that lack of the of corporate fiction.
required notice made it improper for the trial court to pass upon the constitutional validity of the questioned
presidential decrees. On the fourth issue, the appellate court found that there were two sets of accounts between petitioners and
PNB, namely:
As regards the second issue, petitioners contend that P.D. No. 579 and its implementing issuances are void for
violating the due process clause and the prohibition against the taking of private property without just 1. The accounts relative to the loan financing scheme entered into by the Mirasols with PNB (PNBs Brief, p. 16)
compensation. Petitioners now ask this Court to exercise its power of judicial review. On the question of how much the PNB lent the Mirasols for crop years 1973-1974 and 1974-1975, the evidence
recited by the lower court in its decision was deficient. We are offered (sic) PNB the amount of FIFTEEN MILLION
Jurisprudence has laid down the following requisites for the exercise of this power: First, there must be before NINE HUNDRED SIXTY FOUR THOUSAND TWO HUNDRED FIFTY TWO PESOS and NINETY THREE Centavos
the Court an actual case calling for the exercise of judicial review. Second, the question before the Court must be (Ps15,964,252.93) but this is the alleged balance the Mirasols owe PNB covering the years 1975 to 1982.
ripe for adjudication. Third, the person challenging the validity of the act must have standing to
challenge. Fourth, the question of constitutionality must have been raised at the earliest opportunity, and lastly, 2. The account relative to the Mirasols current account Numbers 5186 and 5177 involving the amount of THREE
the issue of constitutionality must be the very lis mota of the case. [16] MILLION FOUR HUNDRED THOUSAND Pesos (P3,400,000.00) PNB claims against the Mirasols. (PNBs Brief, p. 17)

As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on other In regard to the first set of accounts, besides the proceeds from PNBs sale of sugar (involving the defendant
grounds.[17] The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts of PHILEX in relation to the export portion of the stock), the PNB foreclosed the Mirasols mortgaged properties
the political departments are valid, absent a clear and unmistakable showing to the contrary. To doubt is to realizing therefrom in 1982 THREE MILLION FOUR HUNDRED THIRTEEN THOUSAND Pesos (P3,413,000.00), the
sustain. This presumption is based on the doctrine of separation of powers. This means that the measure had PNB itself having acquired the properties as the highest bidder.
first been carefully studied by the legislative and executive departments and found to be in accord with the
Constitution before it was finally enacted and approved.[18] As to the second set of accounts, PNB proposed, and the Mirasols accepted, a dacion en pago scheme by which
the Mirasols conveyed to PNB pieces of property valued at ONE MILLION FOUR HUNDRED TEN THOUSAND FOUR
The present case was instituted primarily for accounting and specific performance. The Court of Appeals correctly HUNDRED SIXTY-SIX Pesos (Ps1,410,466.00) (PNBs Brief, pp. 16-17).[25]
ruled that PNBs obligation to render an accounting is an issue, which can be determined, without having to rule
on the constitutionality of P.D. No. 579. In fact there is nothing in P.D. No. 579, which is applicable to PNBs Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged properties were void for
intransigence in refusing to give an accounting. The governing law should be the law on agency, it being want of consideration. Petitioners insist that the loans granted them by PNB from 1975 to 1982 had been fully
undisputed that PNB acted as petitioners agent. In other words, the requisite that the constitutionality of the law paid by virtue of legal compensation. Hence, the foreclosure was invalid and of no effect, since the mortgages
were already fully discharged. It is also averred that they agreed to the dacion only by virtue of a martial law Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any
Arrest, Search, and Seizure Order (ASSO). manner contravene the tenor thereof, are liable for damages.

We find petitioners arguments unpersuasive. Both the lower court and the appellate court found that the Article 1170 of the Civil Code, however, must be construed in relation to Article 2217 of said Code which reads:
Mirasols admitted that they were indebted to PNB in the sum stated in the latters counterclaim. [26] Petitioners
nonetheless insist that the same can be offset by the unliquidated amounts owed them by PNB for crop years Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
1973-74 and 1974-75. Petitioners argument has no basis in law. For legal compensation to take place, the wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary
requirements set forth in Articles 1278 and 1279 of the Civil Code must be present. Said articles read as follows: computation, moral damages may be recovered if they are the proximate result of the defendants wrongful act
or omission.
Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and debtors of each
other. Moral damages are explicitly authorized in breaches of contract where the defendant acted fraudulently or in
bad faith.[31] Good faith, however, is always presumed and any person who seeks to be awarded damages due to
Art. 1279. In order that compensation may be proper, it is necessary: the acts of another has the burden of proving that the latter acted in bad faith, with malice, or with ill motive. In
the instant case, petitioners have failed to show malice or bad faith [32] on the part of PNB in failing to render an
(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the accounting. Absent such showing, moral damages cannot be awarded.
other;
Nor can we restore the award of attorneys fees and costs of suit in favor of petitioners. Under Article 2208 (5) of
(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and the Civil Code, attorneys fees are allowed in the absence of stipulation only if the defendant acted in gross and
also of the same quality if the latter has been stated; evident bad faith in refusing to satisfy the plaintiffs plainly valid, just, and demandable claim. As earlier stated,
petitioners have not proven bad faith on the part of PNB and PHILEX.
(3) That the two debts are due;
WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent court in CA-G.R. CV
(4) That they be liquidated and demandable; 38607 AFFIRMED. Costs against petitioners.

(5) That over neither of them there be any retention or controversy, commenced by third persons and SO ORDERED.
communicated in due time to the debtor.
NATIONAL ELECTRIFICATION ADMINISTRATION, petitioner, vs. COMMISSION ON AUDIT, respondent.
In the present case, set-off or compensation cannot take place between the parties because:
DECISION
First, neither of the parties are mutually creditors and debtors of each other. Under P.D. No. 579, neither PNB
nor PHILEX could retain any difference claimed by the Mirasols in the price of sugar sold by the two firms. P.D. CARPIO, J.:
No. 579 prescribed where the profits from the sales are to be paid, to wit:
The Case
SECTION 7. x x x After deducting its commission of two and one-half (2-1/2%) percent of gross sales, the balance
of the proceeds of sugar trading operations for every crop year shall be set aside by the Philippine Exchange This is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure with prayer for preliminary
Company, Inc,. as profits which shall be paid to a special fund of the National Government subject to the injunction and temporary restraining order, to reverse and set aside Decision No. 2000-132 dated May 16, 2000
disposition of the President for public purposes. of the Commission on Audit[1] (Commission for brevity) in RE: Appeal of Mr. Conrado Estrella III, Administrator,
National Electrification Administration (NEA) Quezon City, for the lifting of the disallowance on the payment of
Thus, as correctly found by the Court of Appeals, there was nothing with which PNB was supposed to have off-set accelerated increases under Joint Resolution No. 01 totaling P14,155,342.00. The dispositive portion of the
Mirasols admitted indebtedness.[27] Decision reads:

Second, compensation cannot take place where one claim, as in the instant case, is still the subject of litigation, Premises considered, the instant appeal has to be, as it is hereby denied for lack of legal basis. Consequently, the
as the same cannot be deemed liquidated.[28] Notice of Disallowance issued by the NEA Auditor covering the subject disbursement is hereby
sustained.Accordingly, all NEA officials and employees who received compensation and allowances in violation of
With respect to the duress allegedly employed by PNB, which impugned petitioners consent to the dacion en the provisions of Executive Order No. 389 and National Budget Circular No. 458 are hereby directed to refund the
pago, both the trial court and the Court of Appeals found that there was no evidence to support said claim. same within a period of one year after the promulgation of this decision. NEA management is enjoined to effect
Factual findings of the trial court, affirmed by the appellate court, are conclusive upon this Court. [29] said refund under the supervision of the NEA Auditor who shall ensure the proper and strict implementation of
this decision.[2]
On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages and P50,000.00 in attorneys
fees. Petitioners now theorize that it was error for the Court of Appeals to have deleted these awards, The Antecedent Facts
considering that the appellate court found PNB breached its duty as an agent to render an accounting to
petitioners. Petitioner National Electrification Administration (NEA for brevity) is a government-owned and controlled
corporation created under Presidential Decree No. 269, as amended. NEA is charged with the responsibility of
An agents failure to render an accounting to his principal is contrary to Article 1891 of the Civil Code.[30] The organizing, financing and regulating electric cooperatives throughout the country.
erring agent is liable for damages under Article 1170 of the Civil Code, which states:
On July 1, 1989, Republic Act No. 6758 (RA 6758), entitled An Act Prescribing A Revised Compensation and
Position Classification System in the Government and For Other Purposes, took effect. RA 6758 provided, among
others, a salary schedule for all government positions, appointive or elective, including positions in government- In sustaining the disallowance made by the resident auditor, the Commission explained thus:
owned or controlled corporations and government financial institutions.
After a careful evaluation of the facts and pertinent laws obtaining in this case, this Commission finds the instant
In response to pressing economic difficulties and the need to alleviate the plight of government personnel, the appeal bereft of merit. Pursuant to Article 29 (1) of the 1987 Constitution No money shall be paid out of the
Senate and the House of Representatives passed on March 3, 1994 Joint Resolution No. 01 entitled Urging the Treasury except in pursuance of an appropriation made by law. Also, under R.A. 8244, a law appropriating
President of the Philippines to Revise the Existing Compensation and Position Classification System in the twenty-seven billion pesos for the fourth and final year of implementation of the salary increases pursuant to the
Government and to Implement the Same Initially Effective January 1, 1994. Approved by then President Fidel V. Senate-House of Representatives Resolution No. 01 Series of 1994 for all National Government civilian and
Ramos on March 7, 1994, Joint Resolution No. 01 adjusted the salary schedule of all officials and employees of uniformed personnel, it is specifically provided that the salary increases shall be effective on the following
the government. Paragraph 10 of Joint Resolution No. 01 provides that the new salary schedule shall be schedule of payments:
implemented within four (4) years beginning in 1994.
1. Effective January 1, 1997 for the first 50% of the unimplemented balance as of December 31, 1996; and
On December 28, 1996, then President Fidel V. Ramos issued Executive Order No. 389 (EO 389)
entitled Implementing the Fourth and Final Year Salary Increases Authorized by Joint Senate and House of 2. Effective November 1, 1997 the remaining fifty percent (50%) of said unimplemented balance to effect full
Representatives Resolution No. 01, Series of 1994. EO 389 directed payment of the fourth and final salary salary adjustment.
increases authorized under Joint Resolution No. 01 in two tranches, as follows:
Perusal of the provision of E.O. No. 389 and National Budget Circular No. 458 Series of 1997 would show the
SEC. 2. Full Implementation. The Department of Budget and Management is hereby directed to implement in full same effectivity dates or schedule of payments. Suffice it to say, that the aforequoted provisions of law treating
in FY 1997 the remaining balance of said Salary Schedule after the partial implementation made of the same in on the subject salary implementation is clear and unequivocal such that there could never be any room for a
1994, 1995 and 1996 to civilian and uniformed personnel, as follows: different interpretation regarding the effectivity dates except that which is explicitly stated therein. Thus, when
the NEA effected full implementation of the new salary schedule on January 1, 1997, instead of November 1,
1. For Civilian Personnel 1997, NEA was, then, clearly acting in violation of the mandates of the law. Consequently, said wrongful
implementation must be struck down for being baseless and unlawful, and all its employees who received the
a. Effective January 1, 1997 = in accordance with the Fourth Interim Salary Schedule hereto attached and marked undue increases must necessarily return the amount thus received.
as Annex A of this Order. The adjustment shall be to the designated salary step of the employee in the salary
grade allocation of his position as of December 31, 1996; The Issues

b. Effective November 1, 1997 = in accordance with the attached Salary Schedule marked as Annex B of this In its Memorandum,[3] NEA avers that the Commission committed grave abuse of discretion amounting to lack or
Order. The adjustment shall be to the designated salary step of the employee in the salary grade allocation of his excess of jurisdiction in disallowing the increased salaries of NEAs officials and employees for the periodJanuary
position as of October 31, 1997. 1, 1997 to October 31, 1997 for the following reasons:

x x x. 1. NEAs accelerated implementation of SSL II is in accordance with law, Joint Senate-House of Representatives

Resolution No. 01 dated March 3, 1994, particularly Section 10 thereof x x x.
The Department of Budget and Management (DBM for brevity) issued Implementing Guidelines under National
Budget Circular No. 458 (NBC No. 458), series of 1997, reiterating the schedule of payments in EO 389. 2. The fund to pay such increase had the imprimatur of the DBM and was included in the General Appropriations
Act of 1997 (R.A. 8250) x x x.[4]
In January 1997, NEA implemented the salary increases prescribed for the year 1997 pursuant to Joint Resolution
No. 01. However, NEA did not implement the salary increases in accordance with the schedule of payment In the main, NEA argues that it may accelerate the implementation of the salary increases for the year 1997 due
specified in EO 389 and NBC No. 458. Instead, NEA implemented in one lump sum beginning January 1, 1997 the to the availability of funds.
salary increases required to be paid in two tranches, the first tranche on January 1, 1997 and the second tranche
on November 1, 1997. Otherwise stated, NEA accelerated the implementation of the salary increase by paying The Courts Ruling
the second tranche starting January 1, 1997 instead of November 1, 1997.
The Petition has no merit.
On September 26, 1997, the Commissions resident auditor in NEA issued a Notice of Suspension requiring the
submission of the legal basis for the full implementation of the new salary schedule effective January 1, First, we find that NEAs accelerated implementation of the Salary Standardization Law II is not in accordance
1997instead of November 1, 1997. The NEA failed to submit the basis for its advance implementation of the with law.
prescribed salary rates. Thus, the Commissions resident auditor issued on May 14 and 27, 1998, Notices of
Disallowance Nos. 98-010-101 and 98-011-101, respectively. The resident auditor issued another Notice of We reject NEAs claim that Republic Act No. 8250, otherwise known as the General Appropriations Act of 1997
Disallowance on September 18, 1998. On September 28, 1998 the resident auditor denied NEAs September 23, (1997 GAA), serves as legal basis for NEAs accelerated implementation of the last phase of the Salary
1998 request to reconsider the disallowance. Consequently, NEA appealed to the Corporate Audit Office II of the Standardization Law II. The 1997 GAA is not self-executory so as to serve as outright legal authority for NEA to
Commission but the appeal was denied on February 5, 1999. On March 12, 1999, NEA filed an appeal with the spend what had been appropriated for NEAs Personal Services under the 1997 GAA. Budgetary appropriations
Commission en bancbut the latter denied the same on May 16, 2000 and sustained the disallowance made by under the GAA do not constitute unbridled authority to government agencies to spend the appropriated
the resident auditor. amounts as they may wish.

Hence, this Petition. Pursuant to the provisions on National Government Budgeting[5] found in the Revised Administrative Code of
1987 (Administrative Code), appropriations for Personal Services are not itemized. Thus, the 1997 GAA contains a
Ruling of the Commission on Audit lump sum appropriation of P210,766,000.00 for NEAs Personal Services, broken down into P37,476,000.00 for
General Administration and Support, P103,855,000.00 for Support to Operations, and P69,435,000.00 for
Operations.There is no itemization of Personal Services in the 1997 GAA, and nothing is mentioned therein about the Executive Department. The funds authorized for disbursement under the GAA are usually still to be collected
the acceleration or full payment of the Salary Standardization Law II. during the fiscal year. The revenue collections of the government, largely from taxes, may fall short of the
approved budget, as has been the normal occurrence almost every year.
The itemization of Personal Services is prepared after the enactment of the annual GAA and requires the
approval of the President. Thus, Section 23, Chapter 4, Book IV of the Administrative Code provides that: This puts the Executive Department in a dilemma: borrow money to bridge the deficit, or cut down on spending
even if the expenditure is authorized by the general appropriations law. Borrowing money locally puts an upward
SEC. 23. Content of the General Appropriations Act. The General Appropriations Act shall be presented in the pressure on interest rates, while borrowing from abroad increases our foreign debt stock and eventually puts a
form of budgetary programs and projects for each agency of the government, with the corresponding downward pressure on the peso. On the other hand, cutting down on spending impairs the delivery of basic
appropriations for each program and project, including statutory provisions of specific agency or general services and dampens the economy. The Executive Department must balance carefully these economic and
applicability. The General Appropriations Act shall not contain any itemization of personal services, which shall be social factors, and to do this it must calibrate government disbursements to match, as much as possible, receipt
prepared by the Secretary after enactment of the General Appropriations Act, for consideration and approval of of revenues. This is the rationale behind the rules on National Government Budgeting.
the President. (Emphasis supplied)
Next, NEA argues that an intention to exempt adequately funded government-owned or controlled corporations
Further, the execution of the annual GAA is subject to a program of expenditure to be approved by the President (GOCCs for brevity) from the two-tranche payment can be gleaned from the last paragraph of Section 10 of EO
and this approved program of expenditure is the basis for the fund release. Thus, Section 34, Chapter 5, Book IV 389 which reads:
of the Administrative Code states that
GOCCs, GFIs and LGUs which do not have adequate or sufficient funds to pay the salary increases prescribed
Sec. 34. Program of Expenditure - The Secretary of Budget shall recommend to the President the years program herein, may only partially implement the established rate; Provided, That, any partial implementation should be
of expenditure for each agency of the government on the basis of authorized appropriations. The approved fixed at a uniform percentage such that no official or employee shall receive a percentage adjustment higher
expenditure program shall constitute the basis for fund release during the fiscal period, subject to such policies, than that of any other official/employee in the same corporate entity and local government unit.
rules and regulations as may be approved by the President. (Emphasis supplied)
The interpretation placed by NEA on Section 10 does not find support in the text thereof expressium facit cessare
Moreover, Section 60, Chapter 7, Book VI of the Administrative Code provides that no portion of the tacitum what is expressed puts an end to that which is implied.[6] Section 10 refers only to GOCCs with
appropriations in the GAA shall be used for payment of any salary increase or adjustment unless specifically insufficient funds to pay the salary increases. Section 10 expressly authorizes GOCCs with insufficient funds
authorized by law or appropriate budget circular. It reads: to partially implement the prescribed salary increases in a uniform and non-discriminatory manner. Nothing in
Section 10 authorizes GOCCs with sufficient funds to accelerate the prescribed schedule of salary
SEC. 60. Restrictions on Salary Increases. No portion of the appropriations provided in the General Appropriations increases. Clearly, Section 10 of EO 389 does not authorize, expressly or impliedly, the advance implementation
Act shall be used for payment of any salary increase or adjustment unless specifically authorized by law or of the salary increases just because a GOCC has the available funds.
appropriate budget circular nor shall any appropriation for salaries authorized in the General Appropriations Act,
save as otherwise provided for under the Compensation and Position Classification Act, be paid unless the NEA also contends that its accelerated implementation of the salary increases is supported by the Memorandum
positions have been classified by the Budget Commission. (Emphasis supplied) of the Office of the President dated November 7, 1995, the subject of which reads, xxx: Authorizing the
Acceleration of the Implementation of the Revised Compensation and Position Classification Plan provided in
Finally, Section 33 of the 1997 GAA itself expressly provides that the salary increases authorized by the Senate- Senate-House of Representatives Joint Resolution No. 01 Adopted and Approved on 07 March 1994 to
House of Representatives Joint Resolution No. 01 or the Salary Standardization Law II are subject to approval by Government-Owned and/or Controlled Corporations (GOCCs) and Government Financial Institutions
the President. It reads: (GFIs). According to NEA, the Memorandum allows full implementation of salary increases x x x not earlier
than November 1, 1996. The specific provision referred to by NEA reads as follows:
Sec. 33. Compensation Adjustment and Productivity Incentive Benefits. The amount authorized for Compensation
Adjustment and Productivity Incentive Benefits shall be used for the adjustment in basic salary and associated The three tranches scheme for GOCCs are as follows:
benefits of national government personnel pursuant to Joint Resolution No. 01, s. 1994 of Congress, as well as
Productivity Incentive Benefits as may be approved by the President: PROVIDED, That such compensation FIRST - effective not earlier than 01 November 1997 at an amount as may be determined by the governing Board
adjustment shall be fully implemented within FY 1997: PROVIDED, FURTHER, That transportation allowance, if of the GOCC concerned, provided such amount shall not exceed 30% of the unimplemented balance of said
any, shall be deducted from or reduced by the salary adjustment: PROVIDED, FURTHERMORE, That Salary Schedule;
compensation adjustment for government-owned or controlled corporations and local government units shall be
charged to their corporate and local funds, respectively: xxx. (Emphasis supplied) SECOND - the 30% of the said balance or any lower amount as may be determined by the governing Board of the
concerned GOCC may be implemented not earlier than 01 April 1996; and
Clearly, NEA cannot automatically spend its authorized appropriation for Personal Services under the 1997
GAA. The Budget Secretary must first prepare an itemization of the Personal Services, and submit the same for THIRD the remaining balance may be implemented not earlier than 01 November 1996. (Emphasis supplied)
approval of the President. Next, the Budget Secretary must recommend to the President NEAs program of
expenditure for the current year based on NEAs authorized appropriation. The President may approve the The Memorandum, which allows full implementation of the salary increases [n]ot earlier than November 1,
expenditure program subject to certain policies and rules. The salary adjustments as well as the associated 1996, does not automatically accelerate the staggered salary increases for 1997. On the contrary, the
benefits granted by the Salary Standardization Law II are, under the 1997 GAA, expressly subject to the Memorandum specifically provides that accelerated implementation can be availed of by GOCCs and GFIs x x x
Presidents approval.Appropriations for salary increases or adjustments shall be released as specifically only upon prior approval of the DBM. In order to secure such prior approval from the DBM, GOCCs and GFIs must
authorized by law or appropriate budget circular, which in this case is National Budget Circular No. 458. Hence, submit an application for acceleration to the DBM which will evaluate and act on the same on the basis of nine
compliance with said budget circular is mandatory. terms and conditions specifically enumerated in the Memorandum. The Memorandum provides thus:

The rules on National Government Budgeting as prescribed by the Administrative Code are not idle or empty
exercises. The mere approval by Congress of the GAA does not instantly make the funds available for spending by
The GOCC and GFI can avail of the above accelerated implementation only upon prior approval by the DBM. For (13) Implementing Guidelines - The Department of Budget and Management shall prepare and issue the
this purpose, GOCC and GFI will submit an application for acceleration to DBM which will evaluate and act on necessary guidelines for the implementation of the revised compensation and position classification
same on the basis of the following terms and conditions: system consistent with the governing executive order to be issued by the Office of the President. (Emphasis
supplied)
1. the GOCC and GFI shall have never been seriously/critically assailed to have caused or contributed to the
economic problems of the country as evidenced by duly verified/proven facts presented in a As the administrative head of the government, the President is vested with the power to execute, administer and
responsible published public criticism; carry out laws into practical operation. Hence, the Court has held that -

2. that it must not have received any subsidy or other forms of financial support from the national government in While Congress is vested with the power to enact laws, the President executes the laws. The executive power is
financing its operation or in the implementation of projects for the last three (3) years; vested in the President. It is generally defined as the power to enforce and administer the laws. It is the power of
carrying (out) the laws into practical operation and enforcing their due observance. [10]
3. that its operational performance for the same period, as well as its present financial position, is indicative that
the concerned GOCC and GFI will remain financially viable and capable of financing its operations; There could be no doubt that EO 389 has been issued on authority and within the confines of the law. Joint
Resolution No. 01 established a time frame of four years[11] for the implementation of the Salary Standardization
4. that it has actually remitted all mandatory dividends to the national government through the National Law II. Consonant with this time frame, the initial implementation was effected in 1994 through Executive Order
Treasury equivalent to 50% of its net income pursuant to R.A. No. 7656, dated 09 November 1993, and has no No. 164; in 1995 through Executive Order No. 218; in 1996 through Executive Order No. 290 and clarified by
unpaid taxes due the national government or local government units, and their respective agencies and Presidential Memorandum to the Secretary of Budget and Management dated November 7, 1995. For the fourth
instrumentalities; and final year, Executive Order No. 389 dated December 28, 1996 was issued by the President. Oddly, NEA does
not question the authority of the President to issue the executive orders implementing the Salary
5. that all advances made by the national government for debt service and other obligations shall have been Standardization Law II previous to EO 389. Apparently, NEA complied with the
accordingly liquidated; previous executive orders implementing Joint Resolution No. 01.

6. that it has not incurred any losses from operations for the last three (3) years; NEA argues that the Commission failed to take note that RA 8244, which provides for the same schedule of
payment as EO 389 and NBC No. 458, is intended only for all national government civilian and uniformed
7. that the financial position and earning performance of the GOCC and GFI shall in no case be affected by SSL personnel and not GOCCs and GFIs. A reading of the decision of the Commission would show that reference to
acceleration; RA 8244 by the Commission was resorted to give effect to the relevant law and rules. Since RA 8244 and EO 389
are in pari materia, relating as they are to the fourth year implementation of the salary increases authorized by
8. that the accelerated implementation herein authorized shall strictly be based on the Position Allocation List Joint Resolution No. 01, the Commission applied said law and rules in harmony with each other. The Commission
(PAL) specifically approved by the DBM for such GOCC and GFI pursuant to R.A. No. 6758, or Organizational thus stated that a perusal of RA 8244, EO 389 and NBC No. 458 would show the same effectivity dates or
Structure and Staffing Pattern pursuant to existing budgeting laws, and shall be based on the 33-grade Salary schedule of payments.
Schedule; and
Similarly untenable is NEAs contention that the Commission acted beyond the scope of its functions in
9. that no funding support shall be required from the national government nor funds already released and determining whether or not NEA violated the law. According to NEA, the Commission exceeded its authority in
earmarked for a specific purpose be used therefore. Funds for the purpose shall solely be sourced from inquiring whether NEAs advance release of the salary increases violated certain laws considering that the
corporate funds: Commissions power is limited to a determination of whether or not there is a law appropriating funds for that
purpose. To support this theory, NEA cites Guevara vs. Gimenez,[12] wherein the Supreme Court allegedly
x x x. (Emphasis supplied) outlined the scope of authority of the Commission as follows:

Evidently, in order to avail of the benefits of accelerated implementation, NEA must secure the approval of the Under the Constitution, the authority of the Auditor General in connection with the expenditures of the
DBM by complying with the terms and conditions prescribed by the Memorandum. NEA failed to do this. Absent government is limited to the auditing of expenditures of fund or property pertaining to, or held in trust by, the
any authority or approval from the DBM or the President authorizing NEA to accelerate implementation of the government or the provinces or municipalities thereof. xxx xxx Such function is limited to a determination of
last phase of the salary increase, NEAs accelerated payment is without legal basis. whether there is a law appropriating funds for a given purpose.

Neither could NEA successfully assail the authority of the President to issue EO 389. The Administrative Code has The ruling in Guevara has already been overturned by the Court in Caltex Philippines, Inc. vs. Commission on
unequivocally vested the President with rule-making powers in the form of executive orders, administrative Audit,[13] as follows:
orders, proclamations, memorandum orders and circulars and general or special orders. [7] An executive order,
like the one prescribing the salary schedules, is defined in the Administrative Code as follows: The ruling on this particular point, quoted by petitioner from the cases of Guevara vs. Gimenez and Ramos vs.
Aquino, are no longer controlling as the two (2) were decided in the light of the 1935 Constitution.
Sec. 2. Executive Orders. Acts of the President providing for rules of a general or permanent character in
implementation or execution of constitutional or statutory powers shall be promulgated in executive orders. xxx. As observed by one of the Commissioners of the 1986 Constitutional Commission, Fr. Joaquin G. Bernas:
[8]
 (Italics supplied)
It should be noted, however, that whereas under Article XI, Section 2, of the 1935 Constitution the Auditor
Joint Resolution No. 01 expressly acknowledges the authority of the President to revise the existing General could not correct irregular, unnecessary, excessive or extravagant expenditures of public funds but could
compensation and position classification under the standards and guidelines provided by said Resolution. only bring [the matter] to the attention of the proper administrative officer, under the 1987 Constitution, as also
[9]
 Further, paragraph 13 of the Resolution states that: under the 1973 Constitution, the Commission on Audit can promulgate accounting and auditing rules and
regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant,
or unconscionable expenditures or uses of government funds and properties. Hence, since the Commission on
Audit must ultimately be responsible for the enforcement of these rules and regulations, the failure to comply executing and does not require statutory implementation, nor may its exercise be limited, much less withdrawn,
with these regulations can be a ground for disapproving the payment of a proposed expenditure. by the legislature.[19]

Indeed, the powers of the Commission as provided in the 1987 Constitution are broader and more extensive. Executive officials who are subordinate to the President should not trifle with the Presidents constitutional power
Section 2, Paragraph D, Article IX of the 1987 Constitution reads: of control over the executive branch. There is only one Chief Executive who directs and controls the entire
executive branch[20], and all other executive officials must implement in good faith his directives and orders. This
Sec. 2. (1) The Commission on Audit shall have the power, authority and duty to examine, audit, and settle all is necessary to provide order, efficiency and coherence in carrying out the plans, policies and programs of the
accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or executive branch.
held in trust by, or pertaining to, the government, or any of its subdivisions, agencies, or instrumentalities,
including government-owned and controlled corporations with original charters and on a post-audit basis: (a) This case would not have arisen had NEA complied in good faith with the directives and orders of the President in
constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; the implementation of the last phase of the Salary Standardization Law II. The directives and orders are clearly
(b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their and manifestly in accordance with all relevant laws. The reasons advanced by NEA in disregarding the Presidents
subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or directives and orders are patently flimsy, even ill-conceived. This cannot be countenanced as it will result in
through the Government, which are required by law or the granting institution to submit to such audit as a chaos and disorder in the executive branch to the detriment of public service.
condition of subsidy or equity. x x x.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the Decision of the Commission on Audit
(2) The Commission shall have exclusive authority, subject to the limitations in the Article, to define the scope of dated May 16, 2000 is AFFIRMED in toto.
its audit and examination, establish the techniques and methods required therefor, and promulgate accounting
and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, SO ORDERED.
excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.
PHILIPPINE CONSTITUTION ASSOCIATION, EXEQUIEL B. GARCIA and A. GONZALES, petitioners, 
The Constitution and existing laws[14] mandate the Commission to audit all government agencies, including vs.
government-owned or controlled corporations. The Constitution specifically vests in the Commission the HON. SALVADOR ENRIQUEZ, as Secretary of Budget and Management; HON. VICENTE T. TAN, as National
authority to determine whether government entities comply with laws and regulations in the disbursement of Treasurer and COMMISSION ON AUDIT, respondents.
government funds and to disallow illegal or irregular disbursements of government funds.
G.R. No. 113174 August 19, 1994
Second, there is no merit in NEAs contention that the DBM, upon its approval of NEAs proposed budget, had
effectively stamped its imprimatur on the accelerated implementation of the salary increases starting January 1, RAUL S. ROCO, as Member of the Philippine Senate, NEPTALI A. GONZALES, Chairman of the Committee on
1997 because NEAs proposed budget for 1997 included funds for such accelerated implementation. This is not Finance of the Philippine Senate, and EDGARDO J. ANGARA, as President and Chief Executive of the Philippine
the approval contemplated by the Presidential Memorandum dated November 7, 1995, which requires Senate, all of whom also sue as taxpayers, in their own behalf and in representation of Senators HEHERSON
compliance with specific terms and conditions. The DBMs approval of NEAs proposed budget cannot be deemed ALVAREZ, AGAPITO A. AQUINO, RODOLFO G. BIAZON, JOSE D. LINA, JR., ERNESTO F. HERRERA, BLAS F. OPLE,
sufficient authority to execute the same in disregard of the relevant orders and circulars providing for its manner JOHN H. OSMENA, GLORIA MACAPAGAL- ARROYO, VICENTE C. SOTTO III, ARTURO M. TOLENTINO, FRANCISCO S.
of execution.The budget process is a cycle of sequential and interrelated budget activities regularly recurring TATAD, WIGBERTO E. TAÑADA and FREDDIE N. WEBB, petitioners, 
within a specific time frame (a twelve-month period called fiscal year). [15] vs.
THE EXECUTIVE SECRETARY, THE DEPARTMENT OF BUDGET AND MANAGEMENT, and THE NATIONAL
The DBMs approval of NEAs proposed budget is only a part of the first phase of the entire budget process which TREASURER, THE COMMISSION ON AUDIT, impleaded herein as an unwilling 
consists of four major phases, namely: Budget Preparation, Budget Authorization, Budget Execution and Budget co-petitioner, respondents.
Accountability.[16] After approval of the proposed budget by the DBM, the same is submitted to Congress for
evaluation and inclusion in the appropriations law which sets forth the authorized appropriations of the G.R. No. 113766 August 19, 1994
departments and agencies. However, this authorization does not include the authority to disburse. A program of
expenditures is first prepared showing approved programs and projects. An itemization of personal services is WIGBERTO E. TAÑADA and ALBERTO G. ROMULO, as Members of the Senate and as taxpayers, and FREEDOM
also prepared listing authorized itemized positions and their corresponding classifications and authorized FROM DEBT COALITION, petitioners, 
salaries. As clearly stated in Section 60, Chapter 7, Book VI of the Administrative Code, no portion of the vs.
appropriations in the GAA shall be used for payment of any salary increase or adjustment unless specifically HON. TEOFISTO T. GUINGONA, JR. in his capacity as Executive Secretary, HON. SALVADOR ENRIQUEZ, JR., in his
authorized by law or appropriate budget circular.[17] NBC No. 458 is the appropriate budget circular referred to by capacity as Secretary of the Department of Budget and Management, HON. CARIDAD VALDEHUESA, in her
the law with respect to the payment of the last phase of the Salary Standardization Law II. capacity as National Treasurer, and THE COMMISSION ON AUDIT, respondents.

Third, under our system of government all executive departments, bureaus and offices are under the control of G.R. No. 113888 August 19, 1994
the President of the Philippines. This precept is embodied in Article VII, Section 17 of the Constitution which
provides as follows: WIGBERTO E. TAÑADA and ALBERTO G. ROMULO, as Members of the Senate and as taxpayers, petitioners, 
vs.
Sec. 17. The President shall have control of all the executive departments, bureaus and offices. He shall ensure HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, HON. SALVADOR ENRIQUEZ, JR., in his
that the laws be faithfully executed. capacity as Secretary of the Department of Budget and Management, HON. CARIDAD VALDEHUESA, in her
capacity as National Treasurer, and THE COMMISSION ON AUDIT, respondents.
The presidential power of control over the executive branch of government extends to all executive employees
from Cabinet Secretary to the lowliest clerk.[18] The constitutional vesture of this power in the President is self- Ramon R. Gonzales for petitioners in G.R. No. 113105.
Eddie Tamondong for petitioners in G.R. Nos. 113766 & 113888. In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Tañada (a co-petitioner in G.R. No. 113174),
together with the Freedom from Debt Coalition, a non-stock domestic corporation, sought the issuance of the
Roco, Buñag, Kapunan, Migallos & Jardeleza for petitioners Raul S. Roco, Neptali A. Gonzales and Edgardo writs of prohibition and mandamus against the Executive Secretary, the Secretary of the Department of Budget
Angara. and Management, the National Treasurer, and the COA.

Ceferino Padua Law Office fro intervenor Lawyers Against Monopoly and Poverty (Lamp). Petitioners Tañada and Romulo sued as members of the Philippine Senate and taxpayers, while petitioner
Freedom from Debt Coalition sued as a taxpayer. They challenge the constitutionality of the Presidential veto of
  the special provision in the appropriations for debt service and the automatic appropriation of funds therefor.

QUIASON, J.: In G.R. No. 11388, Senators Tañada and Romulo sought the issuance of the writs of prohibition and mandamus
against the same respondents in G.R. No. 113766. In this petition, petitioners contest the constitutionality of: (1)
Once again this Court is called upon to rule on the conflicting claims of authority between the Legislative and the the veto on four special provision added to items in the GAA of 1994 for the Armed Forces of the Philippines
Executive in the clash of the powers of the purse and the sword. Providing the focus for the contest between the (AFP) and the Department of Public Works and Highways (DPWH); and (2) the conditions imposed by the
President and the Congress over control of the national budget are the four cases at bench. Judicial intervention President in the implementation of certain appropriations for the CAFGU's, the DPWH, and the National Housing
is being sought by a group of concerned taxpayers on the claim that Congress and the President have Authority (NHA).
impermissibly exceeded their respective authorities, and by several Senators on the claim that the President has
committed grave abuse of discretion or acted without jurisdiction in the exercise of his veto power. Petitioners also sought the issuance of temporary restraining orders to enjoin respondents Secretary of Budget
and Management, National Treasurer and COA from enforcing the questioned provisions of the GAA of 1994, but
I the Court declined to grant said provisional reliefs on the time- honored principle of according the presumption
of validity to statutes and the presumption of regularity to official acts.
House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed and approved by both
houses of Congress on December 17, 1993. As passed, it imposed conditions and limitations on certain items of In view of the importance and novelty of most of the issues raised in the four petitions, the Court invited former
appropriations in the proposed budget previously submitted by the President. It also authorized members of Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes to submit their respective
Congress to propose and identify projects in the "pork barrels" allotted to them and to realign their respective memoranda as Amicus curiae, which they graciously did.
operating budgets.
II
Pursuant to the procedure on the passage and enactment of bills as prescribed by the Constitution, Congress
presented the said bill to the President for consideration and approval. Locus Standi

On December 30, 1993, the President signed the bill into law, and declared the same to have become Republic When issues of constitutionality are raised, the Court can exercise its power of judicial review only if the
Act No. 7663, entitled "AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE following requisites are compresent: (1) the existence of an actual and appropriate case; (2) a personal and
PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE, NINETEEN HUNDRED AND NINETY-FOUR, AND substantial interest of the party raising the constitutional question; (3) the exercise of judicial review is pleaded
FOR OTHER PURPOSES" (GAA of 1994). On the same day, the President delivered his Presidential Veto Message, at the earliest opportunity; and (4) the constitutional question is the lis mota of the case (Luz Farms v. Secretary
specifying the provisions of the bill he vetoed and on which he imposed certain conditions. of the Department of Agrarian Reform, 192 SCRA 51 [1990]; Dumlao v. Commission on Elections, 95 SCRA 392
[1980]; People v. Vera, 65 Phil. 56 [1937]).
No step was taken in either House of Congress to override the vetoes.
While the Solicitor General did not question the locus standi of petitioners in G.R. No. 113105, he claimed that
In G.R. No. 113105, the Philippine Constitution Association, Exequiel B. Garcia and Ramon A. Gonzales as the remedy of the Senators in the other petitions is political (i.e., to override the vetoes) in effect saying that they
taxpayers, prayed for a writ of prohibition to declare as unconstitutional and void: (a) Article XLI on the do not have the requisite legal standing to bring the suits.
Countrywide Development Fund, the special provision in Article I entitled Realignment of Allocation for
Operational Expenses, and Article XLVIII on the Appropriation for Debt Service or the amount appropriated under The legal standing of the Senate, as an institution, was recognized in Gonzales v. Macaraig, Jr., 191 SCRA 452
said Article XLVIII in excess of the P37.9 Billion allocated for the Department of Education, Culture and Sports; (1990). In said case, 23 Senators, comprising the entire membership of the Upper House of Congress, filed a
and (b) the veto of the President of the Special Provision of  petition to nullify the presidential veto of Section 55 of the GAA of 1989. The filing of the suit was authorized by
Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105) Senate Resolution No. 381, adopted on February 2, 1989, and which reads as follows:

In G.R. No. 113174, sixteen members of the Senate led by Senate President Edgardo J. Angara, Senator Neptali A. Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of the Philippines the
Gonzales, the Chairman of the Committee on Finance, and Senator Raul S. Roco, sought the issuance of the writs Proper Suit with the Supreme Court of the Philippines contesting the Constitutionality of the Veto by the
of certiorari, prohibition and mandamus against the Executive Secretary, the Secretary of the Department of President of Special and General Provisions, particularly Section 55, of the General Appropriation Bill of 1989
Budget and Management, and the National Treasurer. (H.B. No. 19186) and For Other Purposes.

Suing as members of the Senate and taxpayers, petitioners question: (1) the constitutionality of the conditions In the United States, the legal standing of a House of Congress to sue has been recognized (United States v.
imposed by the President in the items of the GAA of 1994: (a) for the Supreme Court, (b) Commission on Audit American Tel. & Tel. Co., 551 F. 2d 384, 391 [1976]; Notes: Congressional Access To The Federal Courts, 90
(COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e) Citizen Armed Forces Geographical Units Harvard Law Review 1632 [1977]).
(CAFGU'S) and (f) State Universities and Colleges (SUC's); and (2) the constitutionality of the veto of the special
provision in the appropriation for debt service. While the petition in G.R. No. 113174 was filed by 16 Senators, including the Senate President and the Chairman
of the Committee on Finance, the suit was not authorized by the Senate itself. Likewise, the petitions in 
G.R. Nos. 113766 and 113888 were filed without an enabling resolution for the purpose.
Therefore, the question of the legal standing of petitioners in the three cases becomes a preliminary issue before Personal Maintenance Capital Total
this Court can inquire into the validity of the presidential veto and the conditions for the implementation of some Services and Other Outlays
items in the GAA of 1994. Operating
Expenses
We rule that a member of the Senate, and of the House of Representatives for that matter, has the legal standing
to question the validity of a presidential veto or a condition imposed on an item in an appropriation bill. 1. For Countrywide
Developments Projects P250,000,000 P2,727,000,000 P2,977,000,000
Where the veto is claimed to have been made without or in excess of the authority vested on the President by
the Constitution, the issue of an impermissible intrusion of the Executive into the domain of the Legislature arises TOTAL NEW
(Notes: Congressional Standing To Challenge Executive Action, 122 University of Pennsylvania Law Review 1366 APPROPRIATIONS P250,000,000 P2,727,000,000 P2,977,000,000
[1974]).
Special Provisions
To the extent the power of Congress are impaired, so is the power of each member thereof, since his office
confers a right to participate in the exercise of the powers of that institution (Coleman v. Miller, 307 U.S. 433 1. Use and Release of Funds. The amount herein appropriated shall be used for infrastructure, purchase of
[1939]; Holtzman v. Schlesinger, 484 F. 2d 1307 [1973]). 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:
An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial Representatives, P12,500,000 each; Senators, P18,000,000 each; Vice-President, P20,000,000; PROVIDED, That,
injury, which can be questioned by a member of Congress (Kennedy v. Jones, 412 F. Supp. 353 [1976]). In such a the said credit facilities shall be constituted as a revolving fund to be administered by a government financial
case, any member of Congress can have a resort to the courts. 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
Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted: the sole administrator of credit facilities released from this fund.

This is, then, the clearest case of the Senate as a whole or individual Senators as such having a substantial The fund shall be automatically released quarterly by way of Advice of Allotments and Notice of Cash Allocation
interest in the question at issue. It could likewise be said that there was the requisite injury to their rights as directly to the assigned implementing agency not later than five (5) days after the beginning of each quarter
Senators. It would then be futile to raise any locus standi issue. Any intrusion into the domain appertaining to the upon submission of the list of projects and activities by the officials concerned.
Senate is to be resisted. Similarly, if the situation were reversed, and it is the Executive Branch that could allege a
transgression, its officials could likewise file the corresponding action. What cannot be denied is that a Senator 2. Submission of Quarterly Reports. The Department of Budget and Management shall submit within thirty (30)
has standing to maintain inviolate the prerogatives, powers and privileges vested by the Constitution in his office days after the end of each quarter a report to the Senate Committee on Finance and the House Committee on
(Memorandum, p. 14). Appropriations on the releases made from this Fund. The report shall include the listing of the projects, locations,
implementing agencies and the endorsing officials (GAA of 1994, p. 1245).
It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]). Said remedy,
however, is available only when the presidential veto is based on policy or political considerations but not when Petitioners claim that the power given to the members of Congress to propose and identify the projects and
the veto is claimed to be ultra vires. In the latter case, it becomes the duty of the Court to draw the dividing line activities to be funded by the Countrywide Development Fund is an encroachment by the legislature on executive
where the exercise of executive power ends and the bounds of legislative jurisdiction begin. power, since said power in an appropriation act in implementation of a law. They argue that the proposal and
identification of the projects do not involve the making of laws or the repeal and amendment thereof, the only
III function given to the Congress by the Constitution (Rollo, pp. 78- 86).

G.R. No. 113105 Under the Constitution, the spending power called by James Madison as "the power of the purse," belongs to
Congress, subject only to the veto power of the President. The President may propose the budget, but still the
1. Countrywide Development Fund final say on the matter of appropriations is lodged in the Congress.

Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of P2,977,000,000.00 to "be used for The power of appropriation carries with it the power to specify the project or activity to be funded under the
infrastructure, purchase of ambulances and computers and other priority projects and activities and credit appropriation law. It can be as detailed and as broad as Congress wants it to be.
facilities to qualified beneficiaries." Said Article provides:
The Countrywide Development Fund is explicit that it shall be used "for infrastructure, purchase of ambulances
COUNTRYWIDE DEVELOPMENT FUND and computers and other priority projects and activities and credit facilities to qualified beneficiaries . . ." It was
Congress itself that determined the purposes for the appropriation.
For Fund requirements of countrywide 
development projects P 2,977,000,000 Executive function under the Countrywide Development Fund involves implementation of the priority projects
——————— specified in the law.

New Appropriations, by Purpose The authority given to the members of Congress is only to propose and identify projects to be implemented by
Current Operating Expenditures the President. Under Article XLI of the GAA of 1994, the President must perforce examine whether the proposals
submitted by the members of Congress fall within the specific items of expenditures for which the Fund was set
A. PURPOSE up, and if qualified, he next determines whether they are in line with other projects planned for the locality.
Thereafter, if the proposed projects qualify for funding under the Funds, it is the President who shall implement
them. In short, the proposals and identifications made by the members of Congress are merely recommendatory.
The procedure of proposing and identifying by members of Congress of particular projects or activities under 05 Repair and Maintenance of Government Vehicles 318
Article XLI of the GAA of 1994 is imaginative as it is innovative. 06 Transportation Services 128
07 Supplies and Materials 20,189
The Constitution is a framework of a workable government and its interpretation must take into account the 08 Rents 24,584
complexities, realities and politics attendant to the operation of the political branches of government. Prior to 14 Water/Illumination and Power 6,561
the GAA of 1991, there was an uneven allocation of appropriations for the constituents of the members of 15 Social Security Benefits and Other Claims 3,270
Congress, with the members close to the Congressional leadership or who hold cards for "horse-trading," getting 17 Training and Seminars Expenses 2,225
more than their less favored colleagues. The members of Congress also had to reckon with an unsympathetic 18 Extraordinary and Miscellaneous Expenses 9,360
President, who could exercise his veto power to cancel from the appropriation bill a pet project of a 23 Advertising and Publication
Representative or Senator. 24 Fidelity Bonds and Insurance Premiums 1,325
29 Other Services 89,778
The Countrywide Development Fund attempts to make equal the unequal. It is also a recognition that individual ————
members of Congress, far more than the President and their congressional colleagues are likely to be Total Maintenance and Other Operating Expenditures 200,415
knowledgeable about the needs of their respective constituents and the priority to be given each project. ————
Total Current Operating Expenditures 464,447
2. Realignment of Operating Expenses =======

Under the GAA of 1994, the appropriation for the Senate is P472,000,000.00 of which P464,447,000.00 is (GAA of 1994, pp. 3-4)
appropriated for current operating expenditures, while the appropriation for the House of Representatives is
P1,171,924,000.00 of which P1,165,297,000.00 is appropriated for current operating expenditures (GAA of 1994, The 1994 operating expenditures for the House of Representatives are as follows:
pp. 2, 4, 9, 12).
Personal Services
The 1994 operating expenditures for the Senate are as follows:
Salaries, Permanent 261,557
Personal Services Salaries/Wages, Contractual/Emergency 143,643
————
Salaries, Permanent 153,347 Total Salaries and Wages 405,200
Salaries/Wage, Contractual/Emergency 6,870 =======
————
Total Salaries and Wages 160,217 Other Compensation
=======
Step Increments 4,312
Other Compensation Honoraria and Commutable
Allowances 4,764
  Compensation Insurance
Premiums 1,159
Step Increments 1,073 Pag-I.B.I.G. Contributions 5,231
Honoraria and Commutable Allowances 3,731 Medicare Premiums 2,281
Compensation Insurance Premiums 1,579
Pag-I.B.I.G. Contributions 1,184 Bonus and Cash Gift 35,669
Medicare Premiums 888 Terminal Leave Benefits 29
Bonus and Cash Gift 14,791 Personnel Economic Relief
Terminal Leave Benefits 2,000 Allowance 21,150
Personnel Economic Relief Allowance 10,266 Additional Compensation of P500 under A.O. 53
Additional Compensation of P500 under A.O. 53 11,130 Others 106,140
Others 57,173 ————
———— Total Other Compensation 202,863
Total Other Compensation 103,815 ————
———— 01 Total Personal Services 608,063
01 Total Personal Services 264,032 =======
=======
Maintenance and Other Operating Expenses
Maintenance and Other Operating Expenses
02 Traveling Expenses 139,611
02 Traveling Expenses 32,841 03 Communication Services 22,514
03 Communication Services 7,666 04 Repair and Maintenance of Government Facilities 5,116
04 Repair and Maintenance of Government Facilities 1,220 05 Repair and Maintenance of Government Vehicles 1,863
06 Transportation Services 178 are in the best position to do so because they are the ones who know whether there are savings available in
07 Supplies and Materials 55,248 some items and whether there are deficiencies in other items of their operating expenses that need
10 Grants/Subsidies/Contributions 940 augmentation. However, it is the Senate President and the Speaker of the House of Representatives, as the case
14 Water/Illumination and Power 14,458 may be, who shall approve the realignment. Before giving their stamp of approval, these two officials will have to
15 Social Security Benefits and Other Claims 325 see to it that:
17 Training and Seminars Expenses 7,236
18 Extraordinary and Miscellaneous Expenses 14,474 (1) The funds to be realigned or transferred are actually savings in the items of expenditures from which the
20 Anti-Insurgency/Contingency Emergency Expenses 9,400 same are to be taken; and
23 Advertising and Publication 242
24 Fidelity Bonds and Insurance Premiums 1,420 (2) The transfer or realignment is for the purposes of augmenting the items of expenditure to which said transfer
29 Other Services 284,209 or realignment is to be made.
————
Total Maintenance and Other Operating Expenditures 557,234 3. Highest Priority for Debt Service
————
Total Current Operating Expenditures 1,165,297 While Congress appropriated P86,323,438,000.00 for debt service (Article XLVII of the GAA of 1994), it
======= appropriated only P37,780,450,000.00 for the Department of Education Culture and Sports. Petitioners urged
that Congress cannot give debt service the highest priority in the GAA of 1994 (Rollo, pp. 93-94) because under
(GAA of 1994, pp. 11-12) the Constitution it should be education that is entitled to the highest funding. They invoke Section 5(5), Article
XIV thereof, which provides:
The Special Provision Applicable to the Congress of the Philippines provides:
(5) The State shall assign the highest budgetary priority to education and ensure that teaching will attract and
4. Realignment of Allocation for Operational Expenses. A member of Congress may realign his allocation for retain its rightful share of the best available talents through adequate remuneration and other means of job
operational expenses to any other expenses category provide the total of said allocation is not exceeded. (GAA of satisfaction and fulfillment.
1994, p. 14).
This issue was raised in Guingona, Jr. v. Carague, 196 SCRA 221 (1991), where this Court held that Section 5(5),
The appropriation for operating expenditures for each House is further divided into expenditures for salaries, Article XIV of the Constitution, is merely directory, thus:
personal services, other compensation benefits, maintenance expenses and other operating expenses. In turn,
each member of Congress is allotted for his own operating expenditure a proportionate share of the While it is true that under Section 5(5), Article XIV of the Constitution, Congress is mandated to "assign the
appropriation for the House to which he belongs. If he does not spend for one items of expense, the provision in highest budgetary priority to education" in order to "insure that teaching will attract and retain its rightful share
question allows him to transfer his allocation in said item to another item of expense. of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment,"
it does not thereby follow that the hands of Congress are so hamstrung as to deprive it the power to respond to
Petitioners assail the special provision allowing a member of Congress to realign his allocation for operational the imperatives of the national interest and for the attainment of other state policies or objectives.
expenses to any other expense category (Rollo, pp. 82-92), claiming that this practice is prohibited by Section
25(5), Article VI of the Constitution. Said section provides: As aptly observed by respondents, since 1985, the budget for education has tripled to upgrade and improve the
facility of the public school system. The compensation of teachers has been doubled. The amount of
No law shall be passed authorizing any transfer of appropriations: however, the President, the President of the P29,740,611,000.00 set aside for the Department of Education, Culture and Sports under the General
Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Appropriations Act (R.A. No. 6381), is the highest budgetary allocation among all department budgets. This is a
Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law clear compliance with the aforesaid constitutional mandate according highest priority to education.
for their respective offices from savings in other items of their respective appropriations.
Having faithfully complied therewith, Congress is certainly not without any power, guided only by its good
The proviso of said Article of the Constitution grants the President of the Senate and the Speaker of the House of judgment, to provide an appropriation, that can reasonably service our enormous debt, the greater portion of
Representatives the power to augment items in an appropriation act for their respective offices from savings in which was inherited from the previous administration. It is not only a matter of honor and to protect the credit
other items of their appropriations, whenever there is a law authorizing such augmentation. standing of the country. More especially, the very survival of our economy is at stake. Thus, if in the process
Congress appropriated an amount for debt service bigger than the share allocated to education, the Court finds
The special provision on realignment of the operating expenses of members of Congress is authorized by Section and so holds that said appropriation cannot be thereby assailed as unconstitutional.
16 of the General Provisions of the GAA of 1994, which provides:
G.R. No. 113105
Expenditure Components. Except by act of the Congress of the Philippines, no change or modification shall be G.R. No. 113174
made in the expenditure items authorized in this Act and other appropriation laws unless in cases 
of augmentations from savings in appropriations as authorized under Section 25(5) of Article VI of the Veto of Provision on Debt Ceiling
Constitution (GAA of 1994, p. 1273).
The Congress added a Special Provision to Article XLVIII (Appropriations for Debt Service) of the GAA of 1994
Petitioners argue that the Senate President and the Speaker of the House of Representatives, but not the which provides:
individual members of Congress are the ones authorized to realign the savings as appropriated.
Special Provisions
Under the Special Provisions applicable to the Congress of the Philippines, the members of Congress only
determine the necessity of the realignment of the savings in the allotments for their operating expenses. They
1. Use of the Fund. The appropriation authorized herein shall be used for payment of principal and interest of The bases of the petition in Gonzales, which are similar to those invoked in the present case, are stated as
foreign and domestic indebtedness; PROVIDED, That any payment in excess of the amount herein appropriated follows:
shall be subject to the approval of the President of the Philippines with the concurrence of the Congress of the
Philippines; PROVIDED, FURTHER,That in no case shall this fund be used to pay for the liabilities of the Central In essence, petitioners' cause is anchored on the following grounds: (1) the President's line-veto power as
Bank Board of Liquidators. regards appropriation bills is limited to item/s and does not cover provision/s; therefore, she exceeded her
authority when she vetoed Section 55 (FY '89) and Section 16 (FY '90) which are provisions; (2) when the
2. Reporting Requirement. The Bangko Sentral ng Pilipinas and the Department of Finance shall submit a President objects to a provision of an appropriation bill, she cannot exercise the item-veto power but should veto
quarterly report of actual foreign and domestic debt service payments to the House Committee on the entire bill; (3) the item-veto power does not carry with it the power to strike out conditions or restrictions for
Appropriations and Senate Finance Committee within one (1) month after each quarter (GAA of 1944, pp. 1266). that would be legislation, in violation of the doctrine of separation of powers; and (4) the power of augmentation
in Article VI, Section 25 [5] of the 1987 Constitution, has to be provided for by law and, therefore, Congress is
The President vetoed the first Special Provision, without vetoing the P86,323,438,000.00 appropriation for debt also vested with the prerogative to impose restrictions on the exercise of that power.
service in said Article. According to the President's Veto Message:
The restrictive interpretation urged by petitioners that the President may not veto a provision without vetoing
IV. APPROPRIATIONS FOR DEBT SERVICE the entire bill not only disregards the basic principle that a distinct and severable part of a bill may be the subject
of a separate veto but also overlooks the Constitutional mandate that any provision in the general appropriations
I would like to emphasize that I concur fully with the desire of Congress to reduce the debt burden by decreasing bill shall relate specifically to some particular appropriation therein and that any such provision shall be limited in
the appropriation for debt service as well as the inclusion of the Special Provision quoted below. Nevertheless, I its operation to the appropriation to which it relates (1987 Constitution, Article VI, Section 25 [2]). In other
believe that this debt reduction scheme cannot be validly done through the 1994 GAA. This must be addressed words, in the true sense of the term, a provision in an Appropriations Bill is limited in its operation to some
by revising our debt policy by way of innovative and comprehensive debt reduction programs conceptualized particular appropriation to which it relates, and does not relate to the entire bill.
within the ambit of the Medium-Term Philippine Development Plan.
The Court went one step further and ruled that even assuming arguendo that "provisions" are beyond the
Appropriations for payment of public debt, whether foreign or domestic, are automatically appropriated executive power to veto, and Section 55 
pursuant to the Foreign Borrowing Act and Section 31 of P.D. No. 1177 as reiterated under Section 26, Chapter 4, (FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary sense of the term, they are "inappropriate
Book VI of E.O. No. 292, the Administrative Code of 1987. I wish to emphasize that the constitutionality of such provisions" that should be treated as "items" for the purpose of the President's veto power.
automatic provisions on debt servicing has been upheld by the Supreme Court in the case of "Teofisto T.
Guingona, Jr., and Aquilino Q. Pimentel, Jr. v. Hon. Guillermo N. Carague, in his capacity as Secretary of Budget The Court, citing Henry v. Edwards, La., 346 So. 2d 153 (1977), said that Congress cannot include in a general
and Management, et al.," G.R. No. 94571, dated April 22, 1991. appropriations bill matters that should be more properly enacted in separate legislation, and if it does that, the
inappropriate provisions inserted by it must be treated as "item", which can be vetoed by the President in the
I am, therefore vetoing the following special provision for the reason that the GAA is not the appropriate exercise of his item-veto power.
legislative measure to amend the provisions of the Foreign Borrowing Act, P.D. No. 1177 and E.O. No. 292:
It is readily apparent that the Special Provision applicable to the appropriation for debt service insofar as it refers
Use of the Fund. The appropriation authorized herein shall be used for payment of principal and interest of to funds in excess of the amount appropriated in the bill, is an "inappropriate" provision referring to funds other
foreign and domestic indebtedness: PROVIDED, That any payment in excess of the amount herein appropriated than the P86,323,438,000.00 appropriated in the General Appropriations Act of 1991.
shall be subject to the approval of the President of the Philippines with the concurrence of the Congress of the
Philippines: PROVIDED, FURTHER, That in no case shall this fund be used to pay for the liabilities of the Central Likewise the vetoed provision is clearly an attempt to repeal Section 31 of P.D. No. 1177 (Foreign Borrowing Act)
Bank Board of Liquidators (GAA of 1994, p. 1290). and E.O. No. 292, and to reverse the debt payment policy. As held by the Court in Gonzales, the repeal of these
laws should be done in a separate law, not in the appropriations law.
Petitioners claim that the President cannot veto the Special Provision on the appropriation for debt service
without vetoing the entire amount of P86,323,438.00 for said purpose (Rollo, G.R. No. 113105, pp. 93-98; Rollo, The Court will indulge every intendment in favor of the constitutionality of a veto, the same as it will presume the
G.R. No. 113174, pp. 16-18). The Solicitor General counterposed that the Special Provision did not relate to the constitutionality of an act of Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz, 485, 53 A.L.R. 258 [1927]).
item of appropriation for debt service and could therefore be the subject of an item veto (Rollo, G.R. No. 113105,
pp. 54-60; Rollo, G.R. No. 113174, pp. 72-82). The veto power, while exercisable by the President, is actually a part of the legislative process (Memorandum of
Justice Irene Cortes as AmicusCuriae, pp. 3-7). That is why it is found in Article VI on the Legislative Department
This issue is a mere rehash of the one put to rest in Gonzales v. Macaraig, Jr., 191 SCRA 452 (1990). In that case, rather than in Article VII on the Executive Department in the Constitution. There is, therefore, sound basis to
the issue was stated by the Court, thus: indulge in the presumption of validity of a veto. The burden shifts on those questioning the validity thereof to
show that its use is a violation of the Constitution.
The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989
Appropriations Bill (Section 55 Under his general veto power, the President has to veto the entire bill, not merely parts thereof (1987
FY '89), and subsequently of its counterpart Section 16 of the 1990 Appropriations Bill (Section 16 FY '90), is Constitution, Art. VI, Sec. 27[1]). The exception to the general veto power is the power given to the President to
unconstitutional and without effect. veto any particular item or items in a general appropriations bill (1987 Constitution, Art. VI, 
Sec. 27[2]). In so doing, the President must veto the entire item.
The Court re-stated the issue, just so there would not be any misunderstanding about it, thus:
A general appropriations bill is a special type of legislation, whose content is limited to specified sums of money
The focal issue for resolution is whether or not the President exceeded the item-veto power accorded by the dedicated to a specific purpose or a separate fiscal unit (Beckman, The Item Veto Power of the Executive, 
Constitution. Or differently put, has the President the power to veto "provisions" of an Appropriations Bill? 31 Temple Law Quarterly 27 [1957]).
The item veto was first introduced by the Organic Act of the Philippines passed by the U.S. Congress on August . . . Legislative control cannot be exercised in such a manner as to encumber the general appropriation bill with
29, 1916. The concept was adopted from some State Constitutions. veto-proof "logrolling measures", special interest provisions which could not succeed if separately enacted, or
"riders", substantive pieces of legislation incorporated in a bill to insure passage without veto . . . (Emphasis
Cognizant of the legislative practice of inserting provisions, including conditions, restrictions and limitations, to supplied).
items in appropriations bills, the Constitutional Convention added the following sentence to Section 20(2), Article
VI of the 1935 Constitution: Petitioners contend that granting arguendo that the veto of the Special Provision on the ceiling for debt payment
is valid, the President cannot automatically appropriate funds for debt payment without complying with the
. . . When a provision of an appropriation bill affect one or more items of the same, the President cannot veto the conditions for automatic appropriation under the provisions of R.A. No. 4860 as amended by P.D. No. 81 and the
provision without at the same time vetoing the particular item or items to which it relates . . . . provisions of P.D. No. 1177 as amended by the Administrative Code of 1987 and P.D. No. 1967 (Rollo, G.R. No.
113766, pp. 9-15).
In short, under the 1935 Constitution, the President was empowered to veto separately not only items in an
appropriations bill but also "provisions". Petitioners cannot anticipate that the President will not faithfully execute the laws. The writ of prohibition will
not issue on the fear that official actions will be done in contravention of the laws.
While the 1987 Constitution did not retain the aforementioned sentence added to Section 11(2) of Article VI of
the 1935 Constitution, it included the following provision: The President vetoed the entire paragraph one of the Special Provision of the item on debt service, including the
provisions that the appropriation authorized in said item "shall be used for payment of the principal and interest
No provision or enactment shall be embraced in the general appropriations bill unless it relates specifically to of foreign and domestic indebtedness" and that "in no case shall this fund be used to pay for the liabilities of the
some particular appropriation therein. Any such provision or enactment shall be limited in its operation to the Central Bank Board of Liquidators." These provisions are germane to and have a direct connection with the item
appropriation to which it relates (Art. VI, Sec. 25[2]). on debt service. Inherent in the power of appropriation is the power to specify how the money shall be spent
(Henry v. Edwards, LA, 346 So., 2d., 153). The said provisos, being appropriate provisions, cannot be vetoed
In Gonzales, we made it clear that the omission of that sentence of Section 16(2) of the 1935 Constitution in the separately. Hence the item veto of said provisions is void.
1987 Constitution should not be interpreted to mean the disallowance of the power of the President to veto a
"provision". We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of the Special Provision
of the item on debt service only with respect to the proviso therein requiring that "any payment in excess of the
As the Constitution is explicit that the provision which Congress can include in an appropriations bill must "relate amount herein, appropriated shall be subject to the approval of the President of the Philippines with the
specifically to some particular appropriation therein" and "be limited in its operation to the appropriation to concurrence of the Congress of the Philippines . . ."
which it relates," it follows that any provision which does not relate to any particular item, or which extends in its
operation beyond an item of appropriation, is considered "an inappropriate provision" which can be vetoed G.R. NO. 113174
separately from an item. Also to be included in the category of "inappropriate provisions" are unconstitutional G.R. NO. 113766
provisions and provisions which are intended to amend other laws, because clearly these kind of laws have no G.R. NO. 11388
place in an appropriations bill. These are matters of general legislation more appropriately dealt with in separate
enactments. Former Justice Irene Cortes, as Amicus Curiae, commented that Congress cannot by law establish 1. Veto of provisions for revolving funds of SUC's.
conditions for and regulate the exercise of powers of the President given by the Constitution for that would be an
unconstitutional intrusion into executive prerogative. In the appropriation for State Universities and Colleges (SUC's), the President vetoed special provisions which
authorize the use of income and the creation, operation and maintenance of revolving funds. The Special
The doctrine of "inappropriate provision" was well elucidated in Henry v. Edwards, supra., thus: Provisions vetoed are the following:

Just as the President may not use his item-veto to usurp constitutional powers conferred on the legislature, (H. 7) West Visayas State University
neither can the legislature deprive the Governor of the constitutional powers conferred on him as chief executive
officer of the state by including in a general appropriation bill matters more properly enacted in separate Equal Sharing of Income. Income earned by the University subject to Section 13 of the special provisions
legislation. The Governor's constitutional power to veto bills of general legislation . . . cannot be abridged by the applicable to all State Universities and Colleges shall be equally shared by the University and the University
careful placement of such measures in a general appropriation bill, thereby forcing the Governor to choose Hospital (GAA of 1994, p. 395).
between approving unacceptable substantive legislation or vetoing "items" of expenditures essential to the
operation of government. The legislature cannot by location of a bill give it immunity from executive veto. Nor xxx xxx xxx
can it circumvent the Governor's veto power over substantive legislation by artfully drafting general law
measures so that they appear to be true conditions or limitations on an item of appropriation. Otherwise, the (J. 3) Leyte State College
legislature would be permitted to impair the constitutional responsibilities and functions of a co-equal branch of
government in contravention of the separation of powers doctrine . . . We are no more willing to allow the Revolving Fund for the Operation of LSC House and Human Resources Development Center (HRDC). The income
legislature to use its appropriation power to infringe on the Governor's constitutional right to veto matters of of Leyte State College derived from the operation of its LSC House and HRDC shall be constituted into a Revolving
substantive legislation than we are to allow the Governor to encroach on the Constitutional powers of the Fund to be deposited in an authorized government depository bank for the operational expenses of these
legislature. In order to avoid this result, we hold that, when the legislature inserts inappropriate provisions in a projects/services. The net income of the Revolving Fund at the end of the year shall be remitted to the National
general appropriation bill, such provisions must be treated as "items" for purposes of the Governor's item veto Treasury and shall accrue to the General Fund. The implementing guidelines shall be issued by the Department of
power over general appropriation bills. Budget and Management (GAA of 1994, p. 415).

xxx xxx xxx The vetoed Special Provisions applicable to all SUC's are the following:
12. Use of Income from Extension Services. State Universities and Colleges are authorized to use their income by virtue of the special laws authorizing such practices as exceptions to the "one-fund policy" (e.g., R.A. No. 4618
from their extension services. Subject to the approval of the Board of Regents and the approval of a special for the National Stud Farm, P.D. No. 902-A for the Securities and Exchange Commission; E.O. No. 359 for the
budget pursuant to Sec. 35, Chapter 5, Book VI of E.O.  Department of Budget and Management's Procurement Service).
No. 292, such income shall be utilized solely for faculty development, instructional materials and work study
program (GAA of 1994, p. 490). 2. Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance.

xxx xxx xxx In the appropriation for the Department of Public Works and Highways, the President vetoed the second
paragraph of Special Provision No. 2, specifying the 30% maximum ration of works to be contracted for the
13. Income of State Universities and Colleges. The income of State Universities and Colleges derived from tuition maintenance of national roads and bridges. The said paragraph reads as follows:
fees and other sources as may be imposed by governing boards other than those accruing to revolving funds
created under LOI Nos. 872 and 1026 and those authorized to be recorded as trust receipts pursuant to Section 2. Release and Use of Road Maintenance Funds. Funds allotted for the maintenance and repair of roads which
40, Chapter 5, Book VI of E.O. No. 292 shall be deposited with the National Treasury and recorded as a Special are provided in this Act for the Department of Public Works and Highways shall be released to the respective
Account in the General Fund pursuant to P.D. No. 1234 and P.D. No. 1437 for the use of the institution, subject to Engineering District, subject to such rules and regulations as may be prescribed by the Department of Budget and
Section 35, Chapter 5, Book VI of E.O. No. 292L PROVIDED, That disbursements from the Special Account shall Management. Maintenance funds for roads and bridges shall be exempt from budgetary reserve.
not exceed the amount actually earned and deposited: PROVIDED, FURTHER,That a cash advance on such
income may be allowed State half of income actually realized during the preceding year and this cash advance Of the amount herein appropriated for the maintenance of national roads and bridges, a maximum of thirty
shall be charged against income actually earned during the budget year: AND PROVIDED, FINALLY, That in no percent (30%) shall be contracted out in accordance with guidelines to be issued by the Department of Public
case shall such funds be used to create positions, nor for payment of salaries, wages or allowances, except as Works and Highways. The balance shall be used for maintenance by force account.
may be specifically approved by the Department of Budge and Management for income-producing activities, or
to purchase equipment or books, without the prior approval of the President of the Philippines pursuant to Letter Five percent (5%) of the total road maintenance fund appropriated herein to be applied across the board to the
of Implementation No. 29. allocation of each region shall be set aside for the maintenance of roads which may be converted to or taken
over as national roads during the current year and the same shall be released to the central office of the said
All collections of the State Universities and Colleges for fees, charges and receipts intended for private recipient department for eventual 
units, including private foundations affiliated with these institutions shall be duly acknowledged with official sub-allotment to the concerned region and district: PROVIDED, That any balance of the said five percent (5%)
receipts and deposited as a trust receipt before said income shall be subject to Section 35, Chapter 5, Book VI of shall be restored to the regions on a pro-rata basis for the maintenance of existing national roads.
E.O. No. 292 
(GAA of 1994, p. 490). No retention or deduction as reserves or overhead expenses shall be made, except as authorized by law or upon
direction of the President 
The President gave his reason for the veto thus: (GAA of 1994, pp. 785-786; Emphasis supplied).

Pursuant to Section 65 of the Government Auditing Code of the Philippines, Section 44, Chapter 5, Book VI of E.O. The President gave the following reason for the veto:
No. 292, s. 1987 and Section 22, Article VII of the Constitution, all income earned by all Government offices and
agencies shall accrue to the General Fund of the Government in line with the One Fund Policy enunciated by While I am cognizant of the well-intended desire of Congress to impose certain restrictions contained in some
Section 29 (1), Article VI and Section 22, Article VII of the Constitution. Likewise, the creation and establishment special provisions, I am equally aware that many programs, projects and activities of agencies would require
of revolving funds shall be authorized by substantive law pursuant to Section 66 of the Government Auditing some degree of flexibility to ensure their successful implementation and therefore risk their completion.
Code of the Philippines and Section 45, Chapter 5, Book VI of E.O. No. 292. Furthermore, not only could these restrictions and limitations derail and impede program implementation but
they may also result in a breach of contractual obligations.
Notwithstanding the aforementioned provisions of the Constitution and existing law, I have noted the
proliferation of special provisions authorizing the use of agency income as well as the creation, operation and D.1.a. A study conducted by the Infrastructure Agencies show that for practical intent and purposes,
maintenance of revolving funds. maintenance by contract could be undertaken to an optimum of seventy percent (70%) and the remaining thirty
percent (30%) by force account. Moreover, the policy of maximizing implementation through contract
I would like to underscore the facts that such income were already considered as integral part of the revenue and maintenance is a covenant of the Road and Road Transport Program Loan from the Asian Development Bank
financing sources of the National Expenditure Program which I previously submitted to Congress. Hence, the (ADB Loan No. 1047-PHI-1990) and Overseas Economic Cooperation Fund (OECF Loan No. PH-C17-199). The same
grant of new special provisions authorizing the use of agency income and the establishment of revolving funds is a covenant under the World Bank (IBRD) Loan for the Highway Management Project (IBRD Loan 
over and above the agency appropriations authorized in this Act shall effectively reduce the financing sources of No. PH-3430) obtained in 1992.
the 1994 GAA and, at the same time, increase the level of expenditures of some agencies beyond the well-
coordinated, rationalized levels for such agencies. This corresponding increases the overall deficit of the National In the light of the foregoing and considering the policy of the government to encourage and maximize private
Government (Veto Message, p. 3). sector participation in the regular repair and maintenance of infrastructure facilities, I am directly vetoing the
underlined second paragraph of Special Provision No. 2 of the Department of Public Works and Highways (Veto
Petitioners claim that the President acted with grave abuse of discretion when he disallowed by his veto the "use Message, p. 11).
of income" and the creation of "revolving fund" by the Western Visayas State University and Leyte State Colleges
when he allowed other government offices, like the National Stud Farm, to use their income for their operating The second paragraph of Special Provision No. 2 brings to fore the divergence in policy of Congress and the
expenses (Rollo, G.R. No. 113174, pp. 15-16). President. While Congress expressly laid down the condition that only 30% of the total appropriation for road
maintenance should be contracted out, the President, on the basis of a comprehensive study, believed that
There was no undue discrimination when the President vetoed said special provisions while allowing similar contracting out road maintenance projects at an option of 70% would be more efficient, economical and
provisions in other government agencies. If some government agencies were allowed to use their income and practical.
maintain a revolving fund for that purpose, it is because these agencies have been enjoying such privilege before
The Special Provision in question is not an inappropriate provision which can be the subject of a veto. It is not 3. Specific Prohibition. The said Modernization Fund shall not be used for payment of six (6) additional S-211
alien to the appropriation for road maintenance, and on the other hand, it specified how the said item shall be Trainer planes, 18 SF-260 Trainer planes and 150 armored personnel carriers (GAA of 1994, p. 747).
expended — 70% by administrative and 30% by contract.
As reason for the veto, the President stated that the said condition and prohibition violate the Constitutional
The 1987 Constitution allows the addition by Congress of special provisions, conditions to items in an mandate of non-impairment of contractual obligations, and if allowed, "shall effectively alter the original intent
expenditure bill, which cannot be vetoed separately from the items to which they relate so long as they are of the AFP Modernization Fund to cover all military equipment deemed necessary to modernize the Armed
"appropriate" in the budgetary sense (Art. VII, Sec. 25[2]). Forces of the Philippines" (Veto Message, p. 12).

The Solicitor General was hard put in justifying the veto of this special provision. He merely argued that the Petitioners claim that Special Provision No. 2 on the "Use of Fund" and Special Provision No. 3 are conditions or
provision is a complete turnabout from an entrenched practice of the government to maximize contract limitations related to the item on the AFP modernization plan.
maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to veto a provision separate from the item
to which it refers. The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP modernization program that the
President must submit all purchases of military equipment to Congress for its approval, is an exercise of the
The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is therefore "congressional or legislative veto." By way of definition, a congressional veto is a means whereby the legislature
unconstitutional. can block or modify administrative action taken under a statute. It is a form of legislative control in the
implementation of particular executive actions. The form may be either negative, that is requiring disapproval of
3. Veto of provision on purchase of medicines by AFP. the executive action, or affirmative, requiring approval of the executive action. This device represents a
significant attempt by Congress to move from oversight of the executive to shared administration (Dixon, The
In the appropriation for the Armed Forces of the Philippines (AFP), the President vetoed the special provision on Congressional Veto and Separation of Powers: The Executive on a Leash, 
the purchase by the AFP of medicines in compliance with the Generics Drugs Law (R.A. No. 6675). The vetoed 56 North Carolina Law Review, 423 [1978]).
provision reads:
A congressional veto is subject to serious questions involving the principle of separation of powers.
12. Purchase of Medicines. The purchase of medicines by all Armed Forces of the Philippines units, hospitals and
clinics shall strictly comply with the formulary embodied in the National Drug Policy of the Department of Health However the case at bench is not the proper occasion to resolve the issues of the validity of the legislative veto
(GAA of 1994, p. 748). as provided in Special Provisions Nos. 2 and 3 because the issues at hand can be disposed of on other grounds.
Any provision blocking an administrative action in implementing a law or requiring legislative approval of
According to the President, while it is desirable to subject the purchase of medicines to a standard formulary, "it executive acts must be incorporated in a separate and substantive bill. Therefore, being "inappropriate"
is believed more prudent to provide for a transition period for its adoption and smooth implementation in the provisions, Special Provisions Nos. 2 and 3 were properly vetoed.
Armed Forces of the Philippines" (Veto Message, p. 12).
As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: "What Congress cannot do directly
The Special Provision which requires that all purchases of medicines by the AFP should strictly comply with the by law it cannot do indirectly by attaching conditions to the exercise of that power (of the President as
formulary embodied in the National Drug Policy of the Department of Health is an "appropriate" provision. it is a Commander-in-Chief) through provisions in the appropriation law."
mere advertence by Congress to the fact that there is an existing law, the Generics Act of 1988, that requires "the
extensive use of drugs with generic names through a rational system of procurement and distribution." The Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Funds for payment of the trainer
President believes that it is more prudent to provide for a transition period for the smooth implementation of planes and armored personnel carriers, which have been contracted for by the AFP, is violative of the
the law in the case of purchases by the Armed Forces of the Philippines, as implied by Section 11 (Education Constitutional prohibition on the passage of laws that impair the obligation of contracts (Art. III, Sec. 10), more
Drive) of the law itself. This belief, however, cannot justify his veto of the provision on the purchase of medicines so, contracts entered into by the Government itself.
by the AFP.
The veto of said special provision is therefore valid.
Being directly related to and inseparable from the appropriation item on purchases of medicines by the AFP, the
special provision cannot be vetoed by the President without also vetoing the said item (Bolinao Electronics 5. Veto of provision on use of savings to augment AFP pension funds.
Corporation v. Valencia, 11 SCRA 486 [1964]).
In the appropriation for the AFP Pension and Gratuity Fund, the President vetoed the new provision authorizing
4. Veto of provision on prior approval of Congress for purchase of military equipment. the Chief of Staff to use savings in the AFP to augment pension and gratuity funds. The vetoed provision reads:

In the appropriation for the modernization of the AFP, the President vetoed the underlined proviso of Special 2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the approval of the Secretary of National
Provision No. 2 on the "Use of Fund," which requires the prior approval of Congress for the release of the Defense, to use savings in the appropriations provided herein to augment the pension fund being managed by
corresponding modernization funds, as well as the entire Special Provisions  the AFP Retirement and Separation Benefits System as provided under Sections 2(a) and 3 of P.D. No. 361 (GAA
No. 3 on the "Specific Prohibition": of 1994, 
p. 746).
2. Use of the Fund. Of the amount herein appropriated, priority shall be given for the acquisition of AFP assets
necessary for protecting marine, mineral, forest and other resources within Philippine territorial borders and its According to the President, the grant of retirement and separation benefits should be covered by direct
economic zone, detection, prevention or deterrence of air or surface intrusions and to support diplomatic moves appropriations specifically approved for the purpose pursuant to Section 29(1) of Article VI of the Constitution.
aimed at preserving national dignity, sovereignty and patrimony: PROVIDED, That the said modernization fund Moreover, he stated that the authority to use savings is lodged in the officials enumerated in Section 25(5) of
shall not be released until a Table of Organization and Equipment for FY 1994-2000 is submitted to and approved Article VI of the Constitution (Veto Message, pp. 7-8).
by Congress.
Petitioners claim that the Special Provision on AFP Pension and Gratuity Fund is a condition or limitation which is failure to spend or obligate budget authority of any type (Notes: Impoundment of Funds, 86 Harvard Law Review
so intertwined with the item of appropriation that it could not be separated therefrom. 1505 [1973]).

The Special Provision, which allows the Chief of Staff to use savings to augment the pension fund for the AFP Those who deny to the President the power to impound argue that once Congress has set aside the fund for a
being managed by the AFP Retirement and Separation Benefits System is violative of Sections 25(5) and 29(1) of specific purpose in an appropriations act, it becomes mandatory on the part of the President to implement the
the Article VI of the Constitution. project and to spend the money appropriated therefor. The President has no discretion on the matter, for the
Constitution imposes on him the duty to faithfully execute the laws.
Under Section 25(5), no law shall be passed authorizing any transfer of appropriations, and under Section 29(1),
no money shall be paid out of  In refusing or deferring the implementation of an appropriation item, the President in effect exercises a veto
the Treasury except in pursuance of an appropriation made by law. While Section 25(5) allows as an exception power that is not expressly granted by the Constitution. As a matter of fact, the Constitution does not say
the realignment of savings to augment items in the general appropriations law for the executive branch, such anything about impounding. The source of the Executive authority must be found elsewhere.
right must and can be exercised only by the President pursuant to a specific law.
Proponents of impoundment have invoked at least three principal sources of the authority of the President.
6. Condition on the deactivation of the CAFGU's. Foremost is the authority to impound given to him either expressly or impliedly by Congress. Second is the
executive power drawn from the President's role as Commander-in-Chief. Third is the Faithful Execution Clause
Congress appropriated compensation for the CAFGU's, including the payment of separation benefits but it added which ironically is the same provision invoked by petitioners herein.
the following Special Provision:
The proponents insist that a faithful execution of the laws requires that the President desist from implementing
1. CAFGU Compensation and Separation Benefit. The appropriation authorized herein shall be used for the the law if doing so would prejudice public interest. An example given is when through efficient and prudent
compensation of CAFGU's including the payment of their separation benefit not exceeding one (1) year management of a project, substantial savings are made. In such a case, it is sheer folly to expect the President to
subsistence allowance for the 11,000 members who will be deactivated in 1994. The Chief of Staff, AFP, shall, spend the entire amount budgeted in the law (Notes: Presidential Impoundment: Constitutional Theories and
subject to the approval of the Secretary of National Defense, promulgate policies and procedures for the Political Realities, 61 Georgetown Law Journal 1295 [1973]; Notes; Protecting the Fisc: Executive Impoundment
payment of separation benefit (GAA of 1994, p. 740). and Congressional Power, 82 Yale Law Journal 1686 [1973).

The President declared in his Veto Message that the implementation of this Special Provision to the item on the We do not find anything in the language used in the challenged Special Provision that would imply that Congress
CAFGU's shall be subject to prior Presidential approval pursuant to P.D. No. 1597 and R.A.. No. 6758. He gave the intended to deny to the President the right to defer or reduce the spending, much less to deactivate 11,000
following reasons for imposing the condition: CAFGU members all at once in 1994. But even if such is the intention, the appropriation law is not the proper
vehicle for such purpose. Such intention must be embodied and manifested in another law considering that it
I am well cognizant of the laudable intention of Congress in proposing the amendment of Special Provision No. 1 abrades the powers of the Commander-in-Chief and there are existing laws on the creation of the CAFGU's to be
of the CAFGU. However, it is premature at this point in time of our peace process to earmark and declare through amended. Again we state: a provision in an appropriations act cannot 
special provision the actual number of CAFGU members to be deactivated in CY 1994. I understand that the be used to repeal or amend other laws, in this case, P.D. No. 1597 and R.A. No. 6758.
number to be deactivated would largely depend on the result or degree of success of the on-going peace
initiatives which are not yet precisely determinable today. I have desisted, therefore, to directly veto said 7. Condition on the appropriation for the Supreme Court, etc.
provisions because this would mean the loss of the entire special provision to the prejudice of its beneficient
provisions. I therefore declare that the actual implementation of this special provision shall be subject to prior (a) In the appropriations for the Supreme Court, Ombudsman, COA, and CHR, the Congress added the following
Presidential approval pursuant to the provisions of P.D. No. 1597 and  provisions:
R.A. No. 6758 (Veto Message, p. 13).
The Judiciary
Petitioners claim that the Congress has required the deactivation of the CAFGU's when it appropriated the
money for payment of the separation pay of the members of thereof. The President, however, directed that the Special Provisions
deactivation should be done in accordance to his timetable, taking into consideration the peace and order
situation in the affected localities. 1. Augmentation of any Item in the Court's Appropriations. Any savings in the appropriations for the Supreme
Court and the Lower Courts may be utilized by the Chief Justice of the Supreme Court to augment any item of the
Petitioners complain that the directive of the President was tantamount to an administrative embargo of the Court's appropriations for (a) printing of decisions and publication of "Philippine Reports"; (b) Commutable
congressional will to implement the Constitution's command to dissolve the CAFGU's (Rollo, G.R. No. 113174,  terminal leaves of Justices and other personnel of the Supreme Court and payment of adjusted pension rates to
p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President cannot impair or withhold expenditures retired Justices entitled thereto pursuant to Administrative Matter No. 91-8-225-C.A.; (c) repair, maintenance,
authorized and appropriated by Congress when neither the Appropriations Act nor other legislation authorize improvement and other operating expenses of the courts' libraries, including purchase of books and periodicals;
such impounding (Rollo, G.R. No. 113888, pp. 15-16). (d) purchase, maintenance and improvement of printing equipment; (e) necessary expenses for the employment
of temporary employees, contractual and casual employees, for judicial administration; (f) maintenance and
The Solicitor General contends that it is the President, as Commander-in-Chief of the Armed Forces of the improvement of the Court's Electronic Data 
Philippines, who should determine when the services of the CAFGU's are no longer needed (Rollo, G.R. No. Processing System; (g) extraordinary expenses of the Chief Justice, attendance in international conferences and
113888,  conduct of training programs; (h) commutable transportation and representation allowances and fringe benefits
pp. 92-95.). for Justices, Clerks of Court, Court Administrator, Chiefs of Offices and other Court personnel in accordance with
the rates prescribed by law; and (i) compensation of attorney-de-officio: PROVIDED, That as mandated by LOI No.
This is the first case before this Court where the power of the President to impound is put in issue. Impoundment 489 any increase in salary and allowances shall be subject to the usual procedures and policies as provided for
refers to a refusal by the President, for whatever reason, to spend funds made available by Congress. It is the under 
P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis supplied).
Commission on Audit to enhance audit services and audit-related activities. The fund shall be deposited in an authorized government
depository ban, and withdrawals therefrom shall be made in accordance with the procedure prescribed by law
5. Use of Savings. The Chairman of the Commission on Audit is hereby authorized, subject to appropriate and implementing rules and regulations: PROVIDED, That any interests earned on such deposit shall be remitted
accounting and auditing rules and regulations, to use savings for the payment of fringe benefits as may be at the end of each quarter to the national Treasury and shall accrue to the General Fund: PROVIDED
authorized by law for officials and personnel of the Commission (GAA of 1994, p. 1161; Emphasis supplied). FURTHER, That the Commission on Audit shall submit to the Department of Budget and Management a quarterly
report of income and expenditures of said revolving fund (GAA of 1994, pp. 1160-1161).
Office of the Ombudsman
The President cited the "imperative need to rationalize" the implementation, applicability and operation of use of
6. Augmentation of Items in the appropriation of the Office of the Ombudsman. The Ombudsman is hereby income and revolving funds. The Veto Message stated:
authorized, subject to appropriate accounting and auditing rules and regulations to augment items of
appropriation in the Office of the Ombudsman from savings in other items of appropriation actually released, for: . . . I have observed that there are old and long existing special provisions authorizing the use of income and the
(a) printing and/or publication of decisions, resolutions, training and information materials; (b) repair, creation of revolving funds. As a rule, such authorizations should be discouraged. However, I take it that these
maintenance and improvement of OMB Central and Area/Sectoral facilities; (c) purchase of books, journals, authorizations have legal/statutory basis aside from being already a vested right to the agencies concerned which
periodicals and equipment;  should not be jeopardized through the Veto Message. There is, however, imperative need to rationalize their
(d) payment of commutable representation and transportation allowances of officials and employees who by implementation, applicability and operation. Thus, in order to substantiate the purpose and intention of said
reason of their positions are entitled thereto and fringe benefits as may be authorized specifically by law for provisions, I hereby declare that the operationalization of the following provisions during budget implementation
officials and personnel of OMB pursuant to Section 8 of Article IX-B of the Constitution; and (e) for other official shall be subject to the guidelines to be issued by the President pursuant to Section 35, Chapter 5, Book VI of E.O.
purposes subject to accounting and auditing rules and regulations (GAA of 1994, p. 1174; Emphasis supplied). No. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General Provisions of this
Act (Veto Message, p. 6; Emphasis Supplied.)
Commission on Human Rights
(c) In the appropriation for the DPWH, the President imposed the condition that in the implementation of DPWH
1. Use of Savings. The Chairman of the Commission on Human Rights (CHR) is hereby authorized, subject to projects, the administrative and engineering overhead of 5% and 3% "shall be subject to the necessary
appropriate accounting and auditing rules and regulations, to augment any item of appropriation in the office of administrative guidelines to be formulated by the Executive pursuant to existing laws." The condition was
the CHR from savings in other items of appropriations actually released, for: (a) printing and/or publication of imposed because the provision "needs further study" according to the President.
decisions, resolutions, training materials and educational publications; (b) repair, maintenance and improvement
of Commission's central and regional facilities; (c) purchase of books, journals, periodicals and equipment, (d) The following provision was made subject to said condition:
payment of commutable representation and transportation allowances of officials and employees who by reason
of their positions are entitled thereto and fringe benefits, as may be authorized by law for officials and personnel 9. Engineering and Administrative Overhead. Not more than five percent (5%) of the amount for infrastructure
of CHR, subject to accounting and auditing rules and regulations (GAA of 1994, p. 1178; Emphasis supplied). project released by the Department of Budget and Management shall be deducted by DPWH for administrative
overhead, detailed engineering and construction supervision, testing and quality control, and the like, thus
In his Veto Message, the President expressed his approval of the conditions included in the GAA of 1994. He insuring that at least ninety-five percent (95%) of the released fund is available for direct implementation of the
noted that: project. PROVIDED, HOWEVER, That for school buildings, health centers, day-care centers and barangay halls,
the deductible amount shall not exceed three percent (3%).
The said condition is consistent with the Constitutional injunction prescribed under Section 8, Article IX-B of the
Constitution which states that "no elective or appointive public officer or employee shall receive additional, Violation of, or non-compliance with, this provision shall subject the government official or employee concerned
double, or indirect compensation unless specifically authorized by law." I am, therefore, confident that the heads to administrative, civil and/or criminal sanction under Sections 43 and 80, Book VI of E.O. 
of the said offices shall maintain fidelity to the law and faithfully adhere to the well-established principle on No. 292 (GAA of 1994, p. 786).
compensation standardization (Veto Message, p. 10).
(d) In the appropriation for the National Housing Authority (NHA), the President imposed the condition that
Petitioners claim that the conditions imposed by the President violated the independence and fiscal autonomy of allocations for specific projects shall be released and disbursed "in accordance with the housing program of the
the Supreme Court, the Ombudsman, the COA and the CHR. government, subject to prior Executive approval."

In the first place, the conditions questioned by petitioners were placed in the GAB by Congress itself, not by the The provision subject to the said condition reads:
President. The Veto Message merely highlighted the Constitutional mandate that additional or indirect
compensation can only be given pursuant to law. 3. Allocations for Specified Projects. The following allocations for the specified projects shall be set aside for
corollary works and used exclusively for the repair, rehabilitation and construction of buildings, roads, pathwalks,
In the second place, such statements are mere reminders that the disbursements of appropriations must be drainage, waterworks systems, facilities and amenities in the area: PROVIDED, That any road to be constructed
made in accordance with law. Such statements may, at worse, be treated as superfluities. or rehabilitated shall conform with the specifications and standards set by the Department of Public Works and
Highways for such kind of road: PROVIDED,FURTHER, That savings that may be available in the future shall be
(b) In the appropriation for the COA, the President imposed the condition that the implementation of the budget used for road repair, rehabilitation and construction:
of the COA be subject to "the guidelines to be issued by the President."
(1) Maharlika Village Road — Not less than P5,000,000
The provisions subject to said condition reads:
(2) Tenement Housing Project (Taguig) — Not less than P3,000,000
3. Revolving Fund. The income of the Commission on Audit derived from sources authorized by the Government
Auditing Code of the Philippines (P.D. No. 1445) not exceeding Ten Million Pesos (P10,000,000) shall be (3) Bagong Lipunan Condominium Project (Taguig) — Not less than P2,000,000
constituted into a revolving fund which shall be used for maintenance, operating and other incidental expenses
4. Allocation of Funds. Out of the amount appropriated for the implementation of various projects in on debt service specifying that the fund therein appropriated "shall be used for payment of the principal and
resettlement areas, Seven Million Five Hundred Thousand Pesos (P7,500,000) shall be allocated to the interest of foreign and domestic indebtedness" prohibiting the use of the said funds "to pay for the liabilities of
Dasmariñas Bagong Bayan resettlement area, Eighteen Million Pesos (P18,000,000) to the Carmona Relocation the Central Bank Board of Liquidators", and (2) G.R. No. 113888 only insofar as it prays for the annulment of the
Center Area (Gen. Mariano Alvarez) and Three Million Pesos (P3,000,000) to the Bulihan Sites and Services, all of veto of: (a) the second paragraph of Special Provision No. 2 of the item of appropriation for the Department of
which will be for the cementing of roads in accordance with DPWH standards. Public Works and Highways (GAA of 1994, pp. 785-786); and (b) Special Provision No. 12 on the purchase of
medicines by the Armed Forces of the Philippines (GAA of 1994, p. 748), which is GRANTED.
5. Allocation for Sapang Palay. An allocation of Eight Million Pesos (P8,000,000) shall be set aside for the
asphalting of seven (7) kilometer main road of Sapang Palay, San Jose Del Monte, Bulacan  SO ORDERED.
(GAA of 1994, p. 1216).
Narvasa, C.J., Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan and Mendoza, JJ.,
The President imposed the conditions: (a) that the "operationalization" of the special provision on revolving concur.
funds of the COA "shall be subject to guidelines to be issued by the President pursuant to Section 35, Chapter 5, 
Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General  
Provisions of this Act" (Rollo, G.R. 
No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision No. 9 of the DPWH on the mandatory  
retention of 5% and 3% of the amounts released by said Department "be subject to the necessary administrative
guidelines to be formulated by the Executive pursuant to existing law" (Rollo, G.R. No. 113888; pp. 10, 14-16); Separate Opinions
and (c) that the appropriations authorized for the NHA can be released only "in accordance with the housing
program of the government subject to prior Executive approval" (Rollo, G.R. No. 113888, pp. 10-11;   
14-16).
PADILLA, J., concurring and dissenting:
The conditions objected to by petitioners are mere reminders that the implementation of the items on which the
said conditions were imposed, should be done in accordance with existing laws, regulations or policies. They did I concur with the ponencia of Mr. Justice Camilo D. Quiason except in so far as it re-affirms the Court's decision
not add anything to what was already in place at the time of the approval of the GAA of 1994. in Gonzalez v. Macaraig (191 SCRA 452).

There is less basis to complain when the President said that the expenditures shall be subject to guidelines he will Sec. 27(2), Art. VI of the Constitution states:
issue. Until the guidelines are issued, it cannot be determined whether they are proper or inappropriate. The
issuance of administrative guidelines on the use of public funds authorized by Congress is simply an exercise by The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill,
the President of his constitutional duty to see that the laws are faithfully executed (1987 Constitution, Art. VII, but the veto shall not effect the item or items to which he does not object.
Sec. 17; Planas v. Gil 67 Phil. 62 [1939]). Under the Faithful Execution Clause, the President has the power to take
"necessary and proper steps" to carry into execution the law (Schwartz, On Constitutional Law, p. 147 [1977]). In my dissenting opinion in Gonzalez, I stated that:
These steps are the ones to be embodied in the guidelines.
The majority opinion positions the veto questioned in this case within the scope of Section 27(2) [Article VI of the
IV Constitution]. I do not see how this can be done without doing violence to the constitutional design. The
distinction between an item-veto and aprovision veto has been traditionally recognized in constitutional
Petitioners chose to avail of the special civil actions but those remedies can be used only when respondents have litigation and budgetary practice. As stated by Mr. Justice Sutherland, speaking for the U.S. Supreme Court
acted "without or in excess" of jurisdiction, or "with grave abuse of discretion," (Revised Rules of Court,  in Bengzon v. Secretary of Justice, 299 U.S. 410-416:
Rule 65, Section 2). How can we begrudge the President for vetoing the Special Provision on the appropriation for
debt payment when he merely followed our decision in Gonzales? How can we say that Congress has abused its . . . An item of an appropriation bill obviously means an item which in itself is a specific appropriation of money,
discretion when it appropriated a bigger sum for debt payment than the amount appropriated for education, not some general provisions of law which happens to be put into an appropriation bill . . .
when it merely followed our dictum in Guingona?
When the Constitution in Section 27(2) empowers the President to veto any particular item or items in the
Article 8 of the Civil Code of Philippines, provides: appropriation act, it does not 
confer — in fact, it excludes — the power to veto any particular provision or provisions in said act.
Judicial decisions applying or interpreting the laws or the constitution shall from a part of the legal system of the
Philippines. In an earlier case, Sarmiento v. Mison, et al., 156 SCRA 549, this court referred to its duty to construe the
Constitution, not in accordance with how the executive or the legislative would want it construed, but in
The Court's interpretation of the law is part of that law as of the date of its enactment since the court's accordance with what it says and provides. When the Constitution states that the President has the power to
interpretation merely establishes the contemporary legislative intent that the construed law purports to carry veto any particular item or items in the appropriation act, this must be taken as a component of that delicate
into effect (People v. Licera, 65 SCRA 270 [1975]). Decisions of the Supreme Court assume the same authority as balance of power between the executive and legislative, so that, for this Court to construe Sec. 27(2) of the
statutes (Floresca v. Philex Mining Corporation, 136 SCRA 141 [1985]). Constitution as also empowering the President to veto any particular provision or provisions in the
appropriations act, is to load the scale in favor of the executive, at the expense of that delicate balance of power.
Even if Guingona and Gonzales are considered hard cases that make bad laws and should be reversed, such
reversal cannot nullify prior acts done in reliance thereof. I therefore disagree with the majority's pronouncements which would validate the veto by the President of
specific provisions in the appropriations act based on the contention that such are "inappropriate provisions."
WHEREFORE, the petitions are DISMISSED, except with respect to  Even assuming, for the sake of argument, that a provision in the appropriations act is "inappropriate" from the
(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the annulment of the veto of the special provision
Presidential standpoint, it is still a provision, not an item, in an appropriations act and, therefore, outside the In an earlier case, Sarmiento v. Mison, et al., 156 SCRA 549, this court referred to its duty to construe the
veto power of the Executive. Constitution, not in accordance with how the executive or the legislative would want it construed, but in
accordance with what it says and provides. When the Constitution states that the President has the power to
VITUG, J., concurring: veto any particular item or items in the appropriation act, this must be taken as a component of that delicate
balance of power between the executive and legislative, so that, for this Court to construe Sec. 27(2) of the
I concur on the points so well expounded by a most respected colleague, Mr. Justice Camilo D. Quiason. I should Constitution as also empowering the President to veto any particular provision or provisions in the
like to highlight a bit, however, that part of the ponencia dealing on the Countrywide Development Fund or, so appropriations act, is to load the scale in favor of the executive, at the expense of that delicate balance of power.
commonly referred to as, the infamous "pork barrel".
I therefore disagree with the majority's pronouncements which would validate the veto by the President of
I agree that it lies with Congress to determine in an appropriation act the activities and the projects that are specific provisions in the appropriations act based on the contention that such are "inappropriate provisions."
desirable and may thus be funded. Once, however, such identification and the corresponding appropriation Even assuming, for the sake of argument, that a provision in the appropriations act is "inappropriate" from the
therefore is done, the legislative act is completed and it ends there. Thereafter, the Executive is behooved, with Presidential standpoint, it is still a provision, not an item, in an appropriations act and, therefore, outside the
exclusive responsibility and authority, to see to it that the legislative will is properly carried out. I cannot veto power of the Executive.
subscribe to another theory invoked by some quarters that, in so implementing the law, the Executive does so
only by way of delegation. Congress neither may delegate what it does not have nor may encroach on the VITUG, J., concurring:
powers of a co-equal, independent and coordinate branch.
I concur on the points so well expounded by a most respected colleague, Mr. Justice Camilo D. Quiason. I should
Within its own sphere, Congress acts as a body, not as the individuals that comprise it, in any action or decision like to highlight a bit, however, that part of the ponencia dealing on the Countrywide Development Fund or, so
that can bind it, or be said to have been done by it, under its constitutional authority. Even assuming that commonly referred to as, the infamous "pork barrel".
overseeing the laws it enacts continues to be a legislative process, one that I find difficult to accept, it is Congress
itself, not any of its members, that must exercise that function. I agree that it lies with Congress to determine in an appropriation act the activities and the projects that are
desirable and may thus be funded. Once, however, such identification and the corresponding appropriation
I cannot debate the fact that the members of Congress, more than the President and his colleagues, would have therefore is done, the legislative act is completed and it ends there. Thereafter, the Executive is behooved, with
the best feel on the needs of their own respective cosntituents. I see no legal obstacle, however, in their making, exclusive responsibility and authority, to see to it that the legislative will is properly carried out. I cannot
just like anyone else, the proper recommendations to albeit not necessarily conclusive on, the President for the subscribe to another theory invoked by some quarters that, in so implementing the law, the Executive does so
purpose. Neother would it be objectionable for Congrss, by law, to appropriate funds for specific projects as it only by way of delegation. Congress neither may delegate what it does not have nor may encroach on the
may be minded; to give that authoriy, however, to the individual members of Congress in whatever guise, I am powers of a co-equal, independent and coordinate branch.
afraid, would be constitutionality impermissible.
Within its own sphere, Congress acts as a body, not as the individuals that comprise it, in any action or decision
  that can bind it, or be said to have been done by it, under its constitutional authority. Even assuming that
overseeing the laws it enacts continues to be a legislative process, one that I find difficult to accept, it is Congress
# Separate Opinions
itself, not any of its members, that must exercise that function.

PADILLA, J., concurring and dissenting: I cannot debate the fact that the members of Congress, more than the President and his colleagues, would have
the best feel on the needs of their own respective constituents. I see no legal obstacle, however, in their making,
I concur with the ponencia of Mr. Justice Camilo D. Quiason except in so far as it re-affirms the Court's decision just like anyone else, the proper recommendations to, albeit not necessarily conclusive on, the President for the
in Gonzalez v. Macaraig (191 SCRA 452). purpose. 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
Sec. 27(2), Art. VI of the Constitution states: afraid, would be constitutionally impermissible.

The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, THE PROVINCE OF BATANGAS, represented by its Governor, HERMILANDO I. MANDANAS, petitioner, vs. HON.
but the veto shall not effect the item or items to which he does not object. ALBERTO G. ROMULO, Executive Secretary and Chairman of the Oversight Committee on Devolution; HON.
EMILIA BONCODIN, Secretary, Department of Budget and Management; HON. JOSE D. LINA, JR., Secretary,
In my dissenting opinion in Gonzalez, I stated that: Department of Interior and Local Government, respondents.

The majority opinion positions the veto questioned in this case within the scope of Section 27(2) [Article VI of the DECISION
Constitution]. I do not see how this can be done without doing violence to the constitutional design. The
distinction between an item-veto and aprovision veto has been traditionally recognized in constitutional CALLEJO, SR., J.:
litigation and budgetary practice. As stated by Mr. Justice Sutherland, speaking for the U.S. Supreme Court
in Bengzon v. Secretary of Justice, 299 U.S. 410-416: The Province of Batangas, represented by its Governor, Hermilando I. Mandanas, filed the present petition
for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court, as amended, to declare as
. . . An item of an appropriation bill obviously means an item which in itself is a specific appropriation of money, unconstitutional and void certain provisos contained in the General Appropriations Acts (GAA) of 1999, 2000 and
not some general provisions of law which happens to be put into an appropriation bill . . . 2001, insofar as they uniformly earmarked for each corresponding year the amount of five billion pesos
(P5,000,000,000.00) of the Internal Revenue Allotment (IRA) for the Local Government Service Equalization Fund
When the Constitution in Section 27(2) empowers the President to veto any particular item or items in the (LGSEF) and imposed conditions for the release thereof.
appropriation act, it does not 
confer — in fact, it excludes — the power to veto any particular provision or provisions in said act.
Named as respondents are Executive Secretary Alberto G. Romulo, in his capacity as Chairman of the Oversight RESOLUTION REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA TO APPROVE THE REQUEST
Committee on Devolution, Secretary Emilia Boncodin of the Department of Budget and Management (DBM) and OF THE OVERSIGHT COMMITTEE ON DEVOLUTION TO SET ASIDE TWENTY PERCENT (20%) OF THE LOCAL
Secretary Jose Lina of the Department of Interior and Local Government (DILG). GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF) FOR LOCAL AFFIRMATIVE ACTION PROJECTS AND OTHER
PRIORITY INITIATIVES FOR LGUs INSTITUTIONAL AND CAPABILITY BUILDING IN ACCORDANCE WITH THE
Background IMPLEMENTING GUIDELINES AND MECHANICS AS PROMULGATED BY THE COMMITTEE.

On December 7, 1998, then President Joseph Ejercito Estrada issued Executive Order (E.O.) No. 48 entitled These OCD resolutions were approved by then President Estrada on October 6, 1999.
ESTABLISHING A PROGRAM FOR DEVOLUTION ADJUSTMENT AND EQUALIZATION. The program was established
to facilitate the process of enhancing the capacities of local government units (LGUs) in the discharge of the Under the allocation scheme adopted pursuant to Resolution No. OCD-99-005, the five billion pesos LGSEF was to
functions and services devolved to them by the National Government Agencies concerned pursuant to the Local be allocated as follows:
Government Code.[1] The Oversight Committee (referred to as the Devolution Committee in E.O. No. 48)
constituted under Section 533(b) of Republic Act No. 7160 (The Local Government Code of 1991) has been tasked 1. The PhP4 Billion of the LGSEF shall be allocated in accordance with the allocation scheme and implementing
to formulate and issue the appropriate rules and regulations necessary for its effective implementation. guidelines and mechanics promulgated and adopted by the OCD. To wit:
[2]
 Further, to address the funding shortfalls of functions and services devolved to the LGUs and other funding
requirements of the program, the Devolution Adjustment and Equalization Fund was created. [3] For 1998, the a. The first PhP2 Billion of the LGSEF shall be allocated in accordance with the codal formula sharing scheme as
DBM was directed to set aside an amount to be determined by the Oversight Committee based on the devolution prescribed under the 1991 Local Government Code;
status appraisal surveys undertaken by the DILG.[4] The initial fund was to be sourced from the available savings
of the national government for CY 1998.[5] For 1999 and the succeeding years, the corresponding amount b. The second PhP2 Billion of the LGSEF shall be allocated in accordance with a modified 1992 cost of devolution
required to sustain the program was to be incorporated in the annual GAA. [6] The Oversight Committee has been fund (CODEF) sharing scheme, as recommended by the respective leagues of provinces, cities and municipalities
authorized to issue the implementing rules and regulations governing the equitable allocation and distribution of to the OCD. The modified CODEF sharing formula is as follows:
said fund to the LGUs.[7]
Province : 40%
The LGSEF in the GAA of 1999
Cities : 20%
In Republic Act No. 8745, otherwise known as the GAA of 1999, the program was renamed as the LOCAL
GOVERNMENT SERVICE EQUALIZATION FUND (LGSEF). Under said appropriations law, the amount Municipalities : 40%
ofP96,780,000,000 was allotted as the share of the LGUs in the internal revenue taxes. Item No. 1, Special
Provisions, Title XXXVI A. Internal Revenue Allotment of Rep. Act No. 8745 contained the following proviso: This is applied to the P2 Billion after the approved amounts granted to individual provinces, cities and
municipalities as assistance to cover decrease in 1999 IRA share due to reduction in land area have been taken
... PROVIDED, That the amount of FIVE BILLION PESOS (P5,000,000,000) shall be earmarked for the Local out.
Government Service Equalization Fund for the funding requirements of projects and activities arising from the
full and efficient implementation of devolved functions and services of local government units pursuant to R.A. 2. The remaining PhP1 Billion of the LGSEF shall be earmarked to support local affirmative action projects and
No. 7160, otherwise known as the Local Government Code of 1991: PROVIDED, FURTHER, That such amount shall other priority initiatives submitted by LGUs to the Oversight Committee on Devolution for approval in accordance
be released to the local government units subject to the implementing rules and regulations, including such with its prescribed guidelines as promulgated and adopted by the OCD.
mechanisms and guidelines for the equitable allocations and distribution of said fund among local government
units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution as constituted In Resolution No. OCD-99-003, the Oversight Committee set aside the one billion pesos or 20% of the LGSEF to
pursuant to Book IV, Title III, Section 533(b) of R.A. No. 7160. The Internal Revenue Allotment shall be released support Local Affirmative Action Projects (LAAPs) of LGUs. This remaining amount was intended to respond to
directly by the Department of Budget and Management to the Local Government Units concerned. the urgent need for additional funds assistance, otherwise not available within the parameters of other existing
fund sources. For LGUs to be eligible for funding under the one-billion-peso portion of the LGSEF, the OCD
On July 28, 1999, the Oversight Committee (with then Executive Secretary Ronaldo B. Zamora as Chairman) promulgated the following:
passed Resolution Nos. OCD-99-003, OCD-99-005 and OCD-99-006 entitled as follows:
III. CRITERIA FOR ELIGIBILITY:
OCD-99-005
1. LGUs (province, city, municipality, or barangay), individually or by group or multi-LGUs or leagues of LGUs,
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP5 BILLION CY 1999 LOCAL GOVERNMENT especially those belonging to the 5th and 6th class, may access the fund to support any projects or activities that
SERVICE EQUALIZATION FUND (LGSEF) AND REQUESTING HIS EXCELLENCY PRESIDENT JOSEPH EJERCITO ESTRADA satisfy any of the aforecited purposes. A barangay may also access this fund directly or through their respective
TO APPROVE SAID ALLOCATION SCHEME. municipality or city.

OCD-99-006 2. The proposed project/activity should be need-based, a local priority, with high development impact and are
congruent with the socio-cultural, economic and development agenda of the Estrada Administration, such as
RESOLUTION ADOPTING THE ALLOCATION SCHEME FOR THE PhP4.0 BILLION OF THE 1999 LOCAL GOVERNMENT food security, poverty alleviation, electrification, and peace and order, among others.
SERVICE EQUALIZATION FUND AND ITS CONCOMITANT GENERAL FRAMEWORK, IMPLEMENTING GUIDELINES
AND MECHANICS FOR ITS IMPLEMENTATION AND RELEASE, AS PROMULGATED BY THE OVERSIGHT COMMITTEE 3. Eligible for funding under this fund are projects arising from, but not limited to, the following areas of concern:
ON DEVOLUTION.
a. delivery of local health and sanitation services, hospital services and other tertiary services;
OCD-99-003
b. delivery of social welfare services;
c. provision of socio-cultural services and facilities for youth and community development; (e) total cost requirement of the project;

d. provision of agricultural and on-site related research; (f) proponents counterpart funding share, if any, and identified source(s) of counterpart funds for the full
implementation of the project;
e. improvement of community-based forestry projects and other local projects on environment and natural
resources protection and conservation; (g) requested amount of project cost to be covered by the LGSEF.

f. improvement of tourism facilities and promotion of tourism; Further, under the guidelines formulated by the Oversight Committee as contained in Attachment - Resolution
No. OCD-99-003, the LGUs were required to identify the projects eligible for funding under the one-billion-peso
g. peace and order and public safety; portion of the LGSEF and submit the project proposals thereof and other documentary requirements to the DILG
for appraisal. The project proposals that passed the DILGs appraisal would then be submitted to the Oversight
h. construction, repair and maintenance of public works and infrastructure, including public buildings and Committee for review, evaluation and approval. Upon its approval, the Oversight Committee would then serve
facilities for public use, especially those destroyed or damaged by man-made or natural calamities and disaster as notice to the DBM for the preparation of the Special Allotment Release Order (SARO) and Notice of Cash
well as facilities for water supply, flood control and river dikes; Allocation (NCA) to effect the release of funds to the said LGUs.

i. provision of local electrification facilities; The LGSEF in the GAA of 2000

j. livelihood and food production services, facilities and equipment; Under Rep. Act No. 8760, otherwise known as the GAA of 2000, the amount of P111,778,000,000 was allotted as
the share of the LGUs in the internal revenue taxes. As in the GAA of 1999, the GAA of 2000 contained a proviso
k. other projects that may be authorized by the OCD consistent with the aforementioned objectives and earmarking five billion pesos of the IRA for the LGSEF. This proviso, found in Item No. 1, Special Provisions, Title
guidelines; XXXVII A. Internal Revenue Allotment, was similarly worded as that contained in the GAA of 1999.

4. Except on extremely meritorious cases, as may be determined by the Oversight Committee on Devolution, this The Oversight Committee, in its Resolution No. OCD-2000-023 dated June 22, 2000, adopted the following
portion of the LGSEF shall not be used in expenditures for personal costs or benefits under existing laws allocation scheme governing the five billion pesos LGSEF for 2000:
applicable to governments. Generally, this fund shall cover the following objects of expenditures for programs,
projects and activities arising from the implementation of devolved and regular functions and services: 1. The PhP3.5 Billion of the CY 2000 LGSEF shall be allocated to and shared by the four levels of LGUs, i.e.,
provinces, cities, municipalities, and barangays, using the following percentage-sharing formula agreed upon and
a. acquisition/procurement of supplies and materials critical to the full and effective implementation of devolved jointly endorsed by the various Leagues of LGUs:
programs, projects and activities;
For Provinces 26% or P 910,000,000
b. repair and/or improvement of facilities;
For Cities 23% or 805,000,000
c. repair and/or upgrading of equipment;
For Municipalities 35% or 1,225,000,000
d. acquisition of basic equipment;
For Barangays 16% or 560,000,000
e. construction of additional or new facilities;
Provided that the respective Leagues representing the provinces, cities, municipalities and barangays shall draw
f. counterpart contribution to joint arrangements or collective projects among groups of municipalities, cities up and adopt the horizontal distribution/sharing schemes among the member LGUs whereby the Leagues
and/or provinces related to devolution and delivery of basic services. concerned may opt to adopt direct financial assistance or project-based arrangement, such that the LGSEF
allocation for individual LGU shall be released directly to the LGU concerned;
5. To be eligible for funding, an LGU or group of LGU shall submit to the Oversight Committee on Devolution
through the Department of Interior and Local Governments, within the prescribed schedule and timeframe, a Provided further that the individual LGSEF shares to LGUs are used in accordance with the general purposes and
Letter Request for Funding Support from the Affirmative Action Program under the LGSEF, duly signed by the guidelines promulgated by the OCD for the implementation of the LGSEF at the local levels pursuant to Res. No.
concerned LGU(s) and endorsed by cooperators and/or beneficiaries, as well as the duly signedResolution of OCD-99-006 dated October 7, 1999 and pursuant to the Leagues guidelines and mechanism as approved by the
Endorsement by the respective Sanggunian(s) of the LGUs concerned. The LGU-proponent shall also be required OCD;
to submit the Project Request (PR), using OCD Project Request Form No. 99-02, that details the following:
Provided further that each of the Leagues shall submit to the OCD for its approval their respective allocation
(a) general description or brief of the project; scheme, the list of LGUs with the corresponding LGSEF shares and the corresponding project categories if
project-based;
(b) objectives and justifications for undertaking the project, which should highlight the benefits to the locality
and the expected impact to the local program/project arising from the full and efficient implementation of social Provided further that upon approval by the OCD, the lists of LGUs shall be endorsed to the DBM as the basis for
services and facilities, at the local levels; the preparation of the corresponding NCAs, SAROs, and related budget/release documents.

(c) target outputs or key result areas; 2. The remaining P1,500,000,000 of the CY 2000 LGSEF shall be earmarked to support the following initiatives
and local affirmative action projects, to be endorsed to and approved by the Oversight Committee on Devolution
(d) schedule of activities and details of requirements; in accordance with the OCD agreements, guidelines, procedures and documentary requirements:
On July 5, 2000, then President Estrada issued a Memorandum authorizing then Executive Secretary Zamora and Upon receipt of a copy of the above resolution, Gov. Mandanas wrote to the individual members of the Oversight
the DBM to implement and release the 2.5 billion pesos LGSEF for 2000 in accordance with Resolution No. OCD- Committee seeking the reconsideration of Resolution No. OCD-2002-001. He also wrote to Pres. Macapagal-
2000-023. Arroyo urging her to disapprove said resolution as it violates the Constitution and the Local Government Code of
1991.
Thereafter, the Oversight Committee, now under the administration of President Gloria Macapagal-Arroyo,
promulgated Resolution No. OCD-2001-29 entitled ADOPTING RESOLUTION NO. OCD-2000-023 IN THE On January 25, 2002, Pres. Macapagal-Arroyo approved Resolution No. OCD-2002-001.
ALLOCATION, IMPLEMENTATION AND RELEASE OF THE REMAINING P2.5 BILLION LGSEF FOR CY 2000. Under this
resolution, the amount of one billion pesos of the LGSEF was to be released in accordance with paragraph 1 of The Petitioners Case
Resolution No. OCD-2000-23, to complete the 3.5 billion pesos allocated to the LGUs, while the amount of 1.5
billion pesos was allocated for the LAAP. However, out of the latter amount, P400,000,000 was to be allocated The petitioner now comes to this Court assailing as unconstitutional and void the provisos in the GAAs of 1999,
and released as follows: P50,000,000 as financial assistance to the LAAPs of LGUs; P275,360,227 as financial 2000 and 2001, relating to the LGSEF. Similarly assailed are the Oversight Committees Resolutions Nos. OCD-99-
assistance to cover the decrease in the IRA of LGUs concerned due to reduction in land area; andP74,639,773 for 003, OCD-99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001 issued pursuant thereto. The
the LGSEF Capability-Building Fund. petitioner submits that the assailed provisos in the GAAs and the OCD resolutions, insofar as they earmarked the
amount of five billion pesos of the IRA of the LGUs for 1999, 2000 and 2001 for the LGSEF and imposed
The LGSEF in the GAA of 2001 conditions for the release thereof, violate the Constitution and the Local Government Code of 1991.

In view of the failure of Congress to enact the general appropriations law for 2001, the GAA of 2000 was deemed Section 6, Article X of the Constitution is invoked as it mandates that the just share of the LGUs shall be
re-enacted, together with the IRA of the LGUs therein and the proviso earmarking five billion pesos thereof for automatically released to them. Sections 18 and 286 of the Local Government Code of 1991, which enjoin that
the LGSEF. the just share of the LGUs shall be automatically and directly released to them without need of further action
are, likewise, cited.
On January 9, 2002, the Oversight Committee adopted Resolution No. OCD-2002-001 allocating the five billion
pesos LGSEF for 2001 as follows: The petitioner posits that to subject the distribution and release of the five-billion-peso portion of the IRA,
classified as the LGSEF, to compliance by the LGUs with the implementing rules and regulations, including the
Modified Codal Formula P 3.000 billion mechanisms and guidelines prescribed by the Oversight Committee, contravenes the explicit directive of the
Constitution that the LGUs share in the national taxes shall be automatically released to them. The petitioner
Priority Projects 1.900 billion maintains that the use of the word shall must be given a compulsory meaning.

Capability Building Fund .100 billion To further buttress this argument, the petitioner contends that to vest the Oversight Committee with the
authority to determine the distribution and release of the LGSEF, which is a part of the IRA of the LGUs, is an
P 5.000 billion anathema to the principle of local autonomy as embodied in the Constitution and the Local Government Code of
1991. The petitioner cites as an example the experience in 2001 when the release of the LGSEF was long delayed
RESOLVED FURTHER, that the P3.0 B of the CY 2001 LGSEF which is to be allocated according to the modified because the Oversight Committee was not able to convene that year and no guidelines were issued
codal formula shall be released to the four levels of LGUs, i.e., provinces, cities, municipalities and barangays, as therefor. Further, the possible disapproval by the Oversight Committee of the project proposals of the LGUs
follows: would result in the diminution of the latters share in the IRA.

LGUs Percentage Amount Another infringement alleged to be occasioned by the assailed OCD resolutions is the improper amendment to
Section 285 of the Local Government Code of 1991 on the percentage sharing of the IRA among the LGUs. Said
Provinces 25 P 0.750 billion provision allocates the IRA as follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays 20%.[8] This
formula has been improperly amended or modified, with respect to the five-billion-peso portion of the IRA
Cities 25 0.750 allotted for the LGSEF, by the assailed OCD resolutions as they invariably provided for a different sharing scheme.

Municipalities 35 1.050 The modifications allegedly constitute an illegal amendment by the executive branch of a substantive
law. Moreover, the petitioner mentions that in the Letter dated December 5, 2001 of respondent Executive
Barangays 15 0.450 Secretary Romulo addressed to respondent Secretary Boncodin, the former endorsed to the latter the release of
funds to certain LGUs from the LGSEF in accordance with the handwritten instructions of President Arroyo. Thus,
100 P 3.000 billion the LGUs are at a loss as to how a portion of the LGSEF is actually allocated. Further, there are still portions of the
LGSEF that, to date, have not been received by the petitioner; hence, resulting in damage and injury to the
RESOLVED FURTHER, that the P1.9 B earmarked for priority projects shall be distributed according to the petitioner.
following criteria:
The petitioner prays that the Court declare as unconstitutional and void the assailed provisos relating to the
1.0 For projects of the 4th, 5th and 6th class LGUs; or LGSEF in the GAAs of 1999, 2000 and 2001 and the assailed OCD resolutions (Resolutions Nos. OCD-99-003, OCD-
99-005, OCD-99-006, OCD-2000-023, OCD-2001-029 and OCD-2002-001) issued by the Oversight Committee
2.0 Projects in consonance with the Presidents State of the Nation Address (SONA)/summit commitments. pursuant thereto. The petitioner, likewise, prays that the Court direct the respondents to rectify the unlawful and
illegal distribution and releases of the LGSEF for the aforementioned years and release the same in accordance
RESOLVED FURTHER, that the remaining P100 million LGSEF capability building fund shall be distributed in with the sharing formula under Section 285 of the Local Government Code of 1991. Finally, the petitioner urges
accordance with the recommendation of the Leagues of Provinces, Cities, Municipalities and Barangays, and the Court to declare that the entire IRA should be released automatically without further action by the LGUs as
approved by the OCD. required by the Constitution and the Local Government Code of 1991.
The Respondents Arguments The gist of the question of standing is whether a party has 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
The respondents, through the Office of the Solicitor General, urge the Court to dismiss the petition on procedural court so largely depends for illumination of difficult constitutional questions.[9] Accordingly, it has been held that
and substantive grounds. On the latter, the respondents contend that the assailed provisos in the GAAs of 1999, the interest of a party assailing the constitutionality of a statute must be direct and personal. Such party must be
2000 and 2001 and the assailed resolutions issued by the Oversight Committee are not constitutionally able to show, not only that the law or any government act is invalid, but also that he has sustained or is in
infirm. The respondents advance the view that Section 6, Article X of the Constitution does not specify that the imminent danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers
just share of the LGUs shall be determined solely by the Local Government Code of 1991. Moreover, the phrase thereby in some indefinite way. It must appear that the person complaining has been or is about to be denied
as determined by law in the same constitutional provision means that there exists no limitation on the power of some right or privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or
Congress to determine what is the just share of the LGUs in the national taxes. In other words, Congress is the penalties by reason of the statute or act complained of.[10]
arbiter of what should be the just share of the LGUs in the national taxes.
The Court holds that the petitioner possesses the requisite standing to maintain the present suit. The petitioner,
The respondents further theorize that Section 285 of the Local Government Code of 1991, which provides for the a local government unit, seeks relief in order to protect or vindicate an interest of its own, and of the other
percentage sharing of the IRA among the LGUs, was not intended to be a fixed determination of their just share LGUs.This interest pertains to the LGUs share in the national taxes or the IRA. The petitioners constitutional claim
in the national taxes. Congress may enact other laws, including appropriations laws such as the GAAs of 1999, is, in substance, that the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions
2000 and 2001, providing for a different sharing formula. Section 285 of the Local Government Code of 1991 was contravene Section 6, Article X of the Constitution, mandating the automatic release to the LGUs of their share in
merely intended to be the default share of the LGUs to do away with the need to determine annually by law their the national taxes. Further, the injury that the petitioner claims to suffer is the diminution of its share in the IRA,
just share. However, the LGUs have no vested right in a permanent or fixed percentage as Congress may increase as provided under Section 285 of the Local Government Code of 1991, occasioned by the implementation of the
or decrease the just share of the LGUs in accordance with what it believes is appropriate for their assailed measures. These allegations are sufficient to grant the petitioner standing to question the validity of the
operation. There is nothing in the Constitution which prohibits Congress from making such determination assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions as the petitioner clearly has a
through the appropriations laws. If the provisions of a particular statute, the GAA in this case, are within the plain, direct and adequate interest in the manner and distribution of the IRA among the LGUs.
constitutional power of the legislature to enact, they should be sustained whether the courts agree or not in the
wisdom of their enactment. The petition involves a significant

On procedural grounds, the respondents urge the Court to dismiss the petition outright as the same is legal issue
defective. The petition allegedly raises factual issues which should be properly threshed out in the lower courts,
not this Court, not being a trier of facts. Specifically, the petitioners allegation that there are portions of the The crux of the instant controversy is whether the assailed provisos contained in the GAAs of 1999, 2000 and
LGSEF that it has not, to date, received, thereby causing it (the petitioner) injury and damage, is subject to proof 2001, and the OCD resolutions infringe the Constitution and the Local Government Code of 1991. This is
and must be substantiated in the proper venue, i.e., the lower courts. undoubtedly a legal question. On the other hand, the following facts are not disputed:

Further, according to the respondents, the petition has already been rendered moot and academic as it no longer 1. The earmarking of five billion pesos of the IRA for the LGSEF in the assailed provisos in the GAAs of 1999, 2000
presents a justiciable controversy. The IRAs for the years 1999, 2000 and 2001, have already been released and and re-enacted budget for 2001;
the government is now operating under the 2003 budget. In support of this, the respondents submitted
certifications issued by officers of the DBM attesting to the release of the allocation or shares of the petitioner in 2. The promulgation of the assailed OCD resolutions providing for the allocation schemes covering the said five
the LGSEF for 1999, 2000 and 2001. There is, therefore, nothing more to prohibit. billion pesos and the implementing rules and regulations therefor; and

Finally, the petitioner allegedly has no legal standing to bring the suit because it has not suffered any injury. In 3. The release of the LGSEF to the LGUs only upon their compliance with the implementing rules and regulations,
fact, the petitioners just share has even increased. Pursuant to Section 285 of the Local Government Code of including the guidelines and mechanisms, prescribed by the Oversight Committee.
1991, the share of the provinces is 23%. OCD Nos. 99-005, 99-006 and 99-003 gave the provinces 40% of P2
billion of the LGSEF. OCD Nos. 2000-023 and 2001-029 apportioned 26% of P3.5 billion to the provinces. On the Considering that these facts, which are necessary to resolve the legal question now before this Court, are no
other hand, OCD No. 2001-001 allocated 25% of P3 billion to the provinces. Thus, the petitioner has not suffered longer in issue, the same need not be determined by a trial court.[11] In any case, the rule on hierarchy of courts
any injury in the implementation of the assailed provisos in the GAAs of 1999, 2000 and 2001 and the OCD will not prevent this Court from assuming jurisdiction over the petition. The said rule may be relaxed when the
resolutions. redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances
justify availment of a remedy within and calling for the exercise of this Courts primary jurisdiction. [12]
The Ruling of the Court
The crucial legal issue submitted for resolution of this Court entails the proper legal interpretation of
Procedural Issues constitutional and statutory provisions. Moreover, the transcendental importance of the case, as it necessarily
involves the application of the constitutional principle on local autonomy, cannot be gainsaid. The nature of the
Before resolving the petition on its merits, the Court shall first rule on the following procedural issues raised by present controversy, therefore, warrants the relaxation by this Court of procedural rules in order to resolve the
the respondents: (1) whether the petitioner has legal standing or locus standi to file the present suit; (2) whether case forthwith.
the petition involves factual questions that are properly cognizable by the lower courts; and (3) whether the issue
had been rendered moot and academic. The substantive issue needs to be resolved

The petitioner has locus standi notwithstanding the supervening events

to maintain the present suit Granting arguendo that, as contended by the respondents, the resolution of the case had already been
overtaken by supervening events as the IRA, including the LGSEF, for 1999, 2000 and 2001, had already been
released and the government is now operating under a new appropriations law, still, there is compelling reason
for this Court to resolve the substantive issue raised by the instant petition. Supervening events, whether constitutional precept on local autonomy
intended or accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the
Constitution.[13] Even in cases where supervening events had made the cases moot, the Court did not hesitate to Section 6, Article X of the Constitution reads:
resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar and
public.[14] Sec. 6. Local government units shall have a just share, as determined by law, in the national taxes which shall
be automatically released to them.
Another reason justifying the resolution by this Court of the substantive issue now before it is the rule that courts
will decide a question otherwise moot and academic if it is capable of repetition, yet evading review. [15] For the When parsed, it would be readily seen that this provision mandates that (1) the LGUs shall have a just share in
GAAs in the coming years may contain provisos similar to those now being sought to be invalidated, and yet, the the national taxes; (2) the just share shall be determined by law; and (3) the just share shall be automatically
question may not be decided before another GAA is enacted. It, thus, behooves this Court to make a categorical released to the LGUs.
ruling on the substantive issue now.
The Local Government Code of 1991, among its salient provisions, underscores the automatic release of the LGUs
Substantive Issue just share in this wise:

As earlier intimated, the resolution of the substantive legal issue in this case calls for the application of a most Sec. 18. Power to Generate and Apply Resources. Local government units shall have the power and authority to
important constitutional policy and principle, that of local autonomy.[16] In Article II of the Constitution, the State establish an organization that shall be responsible for the efficient and effective implementation of their
has expressly adopted as a policy that: development plans, program objectives and priorities; to create their own sources of revenue and to levy taxes,
fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by
Section 25. The State shall ensure the autonomy of local governments. them; to have a just share in national taxes which shall be automatically and directly released to them without
need of further action;
An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of
LGUs. Section 2 thereof reiterates the State policy in this wise: ...

Section 2. The territorial and political subdivisions shall enjoy local autonomy. Sec. 286. Automatic Release of Shares. (a) The share of each local government unit shall be released, without
need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be,
Consistent with the principle of local autonomy, the Constitution confines the Presidents power over the LGUs to on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien
one of general supervision.[17] This provision has been interpreted to exclude the power of control. The or holdback that may be imposed by the national government for whatever purpose.
distinction between the two powers was enunciated in Drilon v. Lim:[18]
(b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing
An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, laws.
order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not
cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he Websters Third New International Dictionary defines automatic as involuntary either wholly or to a major extent
himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are so that any activity of the will is largely negligible; of a reflex nature; without volition; mechanical; like or
not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not suggestive of an automaton. Further, the word automatically is defined as in an automatic manner: without
prescribe his own manner for doing the act. He has no judgment on this matter except to see to it that the rules thought or conscious intention. Being automatic, thus, connotes something mechanical, spontaneous and
are followed.[19] perfunctory. As such, the LGUs are not required to perform any act to receive the just share accruing to them
from the national coffers. As emphasized by the Local Government Code of 1991, the just share of the LGUs shall
The Local Government Code of 1991[20] was enacted to flesh out the mandate of the Constitution.[21] The State be released to them without need of further action. Construing Section 286 of the LGC, we held in Pimentel, Jr.
policy on local autonomy is amplified in Section 2 thereof: v. Aguirre,[22] viz:

Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political Section 4 of AO 372 cannot, however, be upheld. A basic feature of local fiscal autonomy is
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest the automatic release of the shares of LGUs in the National internal revenue. This is mandated by no less than
development as self-reliant communities and make them more effective partners in the attainment of national the Constitution. The Local Government Code specifies further that the release shall be made directly to the LGU
goals. Toward this end, the State shall provide for a more responsive and accountable local government structure concerned within five (5) days after every quarter of the year and shall not be subject to any lien or holdback that
instituted through a system of decentralization whereby local government units shall be given more powers, may be imposed by the national government for whatever purpose. As a rule, the term SHALL is a word of
authority, responsibilities, and resources. The process of decentralization shall proceed from the National command that must be given a compulsory meaning. The provision is, therefore, IMPERATIVE.
Government to the local government units.
Section 4 of AO 372, however, orders the withholding, effective January 1, 1998, of 10 percent of the LGUs IRA
Guided by these precepts, the Court shall now determine whether the assailed provisos in the GAAs of 1999, pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging
2000 and 2001, earmarking for each corresponding year the amount of five billion pesos of the IRA for the LGSEF fiscal situation in the country. Such withholding clearly contravenes the Constitution and the law. Although
and the OCD resolutions promulgated pursuant thereto, transgress the Constitution and the Local Government temporary, it is equivalent to a holdback, which means something held back or withheld, often
Code of 1991. temporarily. Hence, the temporary nature of the retention by the national government does not matter. Any
retention is prohibited.
The assailed provisos in the GAAs of 1999, 2000
In sum, while Section 1 of AO 372 may be upheld as an advisory effected in times of national crisis, Section 4
and 2001 and the OCD resolutions violate the thereof has no color of validity at all. The latter provision effectively encroaches on the fiscal autonomy of local
governments. Concededly, the President was well-intentioned in issuing his Order to withhold the LGUs IRA, but
the rule of law requires that even the best intentions must be carried out within the parameters of the Where the law, the Constitution in this case, is clear and unambiguous, it must be taken to mean exactly what it
Constitution and the law. Verily, laudable purposes must be carried out by legal methods. [23] says, and courts have no choice but to see to it that the mandate is obeyed.[27] Moreover, as correctly posited by
the petitioner, the use of the word shall connotes a mandatory order. Its use in a statute denotes an imperative
The just share of the LGUs is incorporated as the IRA in the appropriations law or GAA enacted by Congress obligation and is inconsistent with the idea of discretion.[28]
annually. Under the assailed provisos in the GAAs of 1999, 2000 and 2001, a portion of the IRA in the amount of
five billion pesos was earmarked for the LGSEF, and these provisos imposed the condition that such amount shall Indeed, the Oversight Committee exercising discretion, even control, over the distribution and release of a
be released to the local government units subject to the implementing rules and regulations, including such portion of the IRA, the LGSEF, is an anathema to and subversive of the principle of local autonomy as embodied
mechanisms and guidelines for the equitable allocations and distribution of said fund among local government in the Constitution. Moreover, it finds no statutory basis at all as the Oversight Committee was created merely to
units subject to the guidelines that may be prescribed by the Oversight Committee on Devolution. Pursuant formulate the rules and regulations for the efficient and effective implementation of the Local Government Code
thereto, the Oversight Committee, through the assailed OCD resolutions, apportioned the five billion pesos LGSEF of 1991 to ensure compliance with the principles of local autonomy as defined under the Constitution.[29] In fact,
such that: its creation was placed under the title of Transitory Provisions, signifying its ad hoc character. According to
Senator Aquilino Q. Pimentel, the principal author and sponsor of the bill that eventually became Rep. Act No.
For 1999 7160, the Committees work was supposed to be done a year from the approval of the Code, or on October 10,
1992.[30] The Oversight Committees authority is undoubtedly limited to the implementation of the Local
P2 billion - allocated according to Sec. 285 LGC Government Code of 1991, not to supplant or subvert the same. Neither can it exercise control over the IRA, or
even a portion thereof, of the LGUs.
P2 billion - Modified Sharing Formula (Provinces 40%;
That the automatic release of the IRA was precisely intended to guarantee and promote local autonomy can be
Cities 20%; Municipalities 40%) gleaned from the discussion below between Messrs. Jose N. Nolledo and Regalado M. Maambong, then
members of the 1986 Constitutional Commission, to wit:
P1 billion projects (LAAP) approved by OCD.[24]
MR. MAAMBONG. Unfortunately, under Section 198 of the Local Government Code, the existence of
For 2000 subprovinces is still acknowledged by the law, but the statement of the Gentleman on this point will have to be
taken up probably by the Committee on Legislation. A second point, Mr. Presiding Officer, is that under Article 2,
P3.5 billion Modified Sharing Formula (Provinces 26%; Section 10 of the 1973 Constitution, we have a provision which states:

Cities 23%; Municipalities 35%; Barangays 16%); The State shall guarantee and promote the autonomy of local government units, especially the barrio, to insure
their fullest development as self-reliant communities.
P1.5 billion projects (LAAP) approved by the OCD.[25]
This provision no longer appears in the present configuration; does this mean that the concept of giving local
For 2001 autonomy to local governments is no longer adopted as far as this Article is concerned?

P3 billion Modified Sharing Formula (Provinces 25%; MR. NOLLEDO. No. In the report of the Committee on Preamble, National Territory, and Declaration of Principles,
that concept is included and widened upon the initiative of Commissioner Bennagen.
Cities 25%; Municipalities 35%; Barangays 15%)
MR. MAAMBONG. Thank you for that.
P1.9 billion priority projects
With regard to Section 6, sources of revenue, the creation of sources as provided by previous law was subject to
P100 million capability building fund.[26] limitations as may be provided by law, but now, we are using the term subject to such guidelines as may be fixed
by law. In Section 7, mention is made about the unique, distinct and exclusive charges and contributions, and in
Significantly, the LGSEF could not be released to the LGUs without the Oversight Committees prior Section 8, we talk about exclusivity of local taxes and the share in the national wealth. Incidentally, I was one of
approval. Further, with respect to the portion of the LGSEF allocated for various projects of the LGUs (P1 billion the authors of this provision, and I am very thankful. Does this indicate local autonomy, or was the wording of
for 1999;P1.5 billion for 2000 and P2 billion for 2001), the Oversight Committee, through the assailed OCD the law changed to give more autonomy to the local government units?[31]
resolutions, laid down guidelines and mechanisms that the LGUs had to comply with before they could avail of
funds from this portion of the LGSEF. The guidelines required (a) the LGUs to identify the projects eligible for MR. NOLLEDO. Yes. In effect, those words indicate also decentralization because local political units can collect
funding based on the criteria laid down by the Oversight Committee; (b) the LGUs to submit their project taxes, fees and charges subject merely to guidelines, as recommended by the league of governors and city
proposals to the DILG for appraisal; (c) the project proposals that passed the appraisal of the DILG to be mayors, with whom I had a dialogue for almost two hours. They told me that limitations may be questionable in
submitted to the Oversight Committee for review, evaluation and approval. It was only upon approval thereof the sense that Congress may limit and in effect deny the right later on.
that the Oversight Committee would direct the DBM to release the funds for the projects.
MR. MAAMBONG. Also, this provision on automatic release of national tax share points to more local
To the Courts mind, the entire process involving the distribution and release of the LGSEF is constitutionally autonomy. Is this the intention?
impermissible. The LGSEF is part of the IRA or just share of the LGUs in the national taxes. To subject its
distribution and release to the vagaries of the implementing rules and regulations, including the guidelines and MR. NOLLEDO. Yes, the Commissioner is perfectly right.[32]
mechanisms unilaterally prescribed by the Oversight Committee from time to time, as sanctioned by the assailed
provisos in the GAAs of 1999, 2000 and 2001 and the OCD resolutions, makes the release not automatic, a The concept of local autonomy was explained in Ganzon v. Court of Appeals[33] in this wise:
flagrant violation of the constitutional and statutory mandate that the just share of the LGUs shall be
automatically released to them. The LGUs are, thus, placed at the mercy of the Oversight Committee.
As the Constitution itself declares, local autonomy means a more responsive and accountable local government and 2001 and the OCD resolutions cannot amend
structure instituted through a system of decentralization. The Constitution, as we observed, does nothing more
than to break up the monopoly of the national government over the affairs of local governments and as put by Section 285 of the Local Government Code of 1991
political adherents, to liberate the local governments from the imperialism of Manila. Autonomy, however, is not
meant to end the relation of partnership and interdependence between the central administration and local Section 284[38] of the Local Government Code provides that, beginning the third year of its effectivity, the LGUs
government units, or otherwise, to usher in a regime of federalism. The Charter has not taken such a radical share in the national internal revenue taxes shall be 40%. This percentage is fixed and may not be reduced except
step. Local governments, under the Constitution, are subject to regulation, however limited, and for no other in the event the national government incurs an unmanageable public sector deficit" and only upon compliance
purpose than precisely, albeit paradoxically, to enhance self-government. with stringent requirements set forth in the same section:

As we observed in one case, decentralization means devolution of national administration but not power to the Sec. 284. ...
local levels. Thus:
Provided, That in the event that the national government incurs an unmanageable public sector deficit, the
Now, autonomy is either decentralization of administration or decentralization of power. There is President of the Philippines is hereby authorized, upon recommendation of Secretary of Finance, Secretary of
decentralization of administration when the central government delegates administrative powers to political Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the
subdivisions in order to broaden the base of government power and in the process to make local governments presiding officers of both Houses of Congress and the presidents of the liga, to make the necessary adjustments
more responsive and accountable and ensure their fullest development as self-reliant communities and make in the internal revenue allotment of local government units but in no case shall the allotment be less than thirty
them more effective partners in the pursuit of national development and social progress. At the same time, it percent (30%) of the collection of the national internal revenue taxes of the third fiscal year preceding the
relieves the central government of the burden of managing local affairs and enables it to concentrate on national current fiscal year;Provided, further That in the first year of the effectivity of this Code, the local government
concerns. The President exercises general supervision over them, but only to ensure that local affairs are units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of
administered according to law. He has no control over their acts in the sense that he can substitute their devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of
judgments with his own. devolved personnel services.

Decentralization of power, on the other hand, involves an abdication of political power in the [sic] favor of local Thus, from the above provision, the only possible exception to the mandatory automatic release of the LGUs IRA
governments [sic] units declared to be autonomous. In that case, the autonomous government is free to chart its is if the national internal revenue collections for the current fiscal year is less than 40 percent of the collections of
own destiny and shape its future with minimum intervention from central authorities. According to a the preceding third fiscal year, in which case what should be automatically released shall be a proportionate
constitutional author, decentralization of power amounts to self-immolation, since in that event, the amount of the collections for the current fiscal year. The adjustment may even be made on a quarterly basis
autonomous government becomes accountable not to the central authorities but to its constituency. [34] depending on the actual collections of national internal revenue taxes for the quarter of the current fiscal year. In
the instant case, however, there is no allegation that the national internal revenue tax collections for the fiscal
Local autonomy includes both administrative and fiscal autonomy. The fairly recent case of Pimentel v. years 1999, 2000 and 2001 have fallen compared to the preceding three fiscal years.
Aguirre[35] is particularly instructive. The Court declared therein that local fiscal autonomy includes the power of
the LGUs to, inter alia, allocate their resources in accordance with their own priorities: Section 285 then specifies how the IRA shall be allocated among the LGUs:

Under existing law, local government units, in addition to having administrative autonomy in the exercise of their Sec. 285. Allocation to Local Government Units. The share of local government units in the internal revenue
functions, enjoy fiscal autonomy as well. Fiscal autonomy means that local governments have the power to allotment shall be allocated in the following manner:
create their own sources of revenue in addition to their equitable share in the national taxes released by the
national government, as well as the power to allocate their resources in accordance with their own priorities. It (a) Provinces Twenty-three (23%)
extends to the preparation of their budgets, and local officials in turn have to work within the constraints
thereof. They are not formulated at the national level and imposed on local governments, whether they are (b) Cities Twenty-three percent (23%);
relevant to local needs and resources or not ...[36]
(c) Municipalities Thirty-four (34%); and
Further, a basic feature of local fiscal autonomy is the constitutionally mandated automatic release of the shares
of LGUs in the national internal revenue.[37] (d) Barangays Twenty percent (20%).

Following this ratiocination, the Court in Pimentel struck down as unconstitutional Section 4 of Administrative However, this percentage sharing is not followed with respect to the five billion pesos LGSEF as the assailed OCD
Order (A.O.) No. 372 which ordered the withholding, effective January 1, 1998, of ten percent of the LGUs IRA resolutions, implementing the assailed provisos in the GAAs of 1999, 2000 and 2001, provided for a different
pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging sharing scheme. For example, for 1999, P2 billion of the LGSEF was allocated as follows: Provinces 40%; Cities
fiscal situation. 20%; Municipalities 40%.[39] For 2000, P3.5 billion of the LGSEF was allocated in this manner: Provinces 26%;
Cities 23%; Municipalities 35%; Barangays 26%.[40] For 2001, P3 billion of the LGSEF was allocated, thus: Provinces
In like manner, the assailed provisos in the GAAs of 1999, 2000 and 2001, and the OCD resolutions constitute a 25%; Cities 25%; Municipalities 35%; Barangays 15%.[41]
withholding of a portion of the IRA. They put on hold the distribution and release of the five billion pesos LGSEF
and subject the same to the implementing rules and regulations, including the guidelines and mechanisms The respondents argue that this modification is allowed since the Constitution does not specify that the just
prescribed by the Oversight Committee from time to time. Like Section 4 of A.O. 372, the assailed provisos in the share of the LGUs shall only be determined by the Local Government Code of 1991. That it is within the power of
GAAs of 1999, 2000 and 2001 and the OCD resolutions effectively encroach on the fiscal autonomy enjoyed by Congress to enact other laws, including the GAAs, to increase or decrease the just share of the LGUs. This
the LGUs and must be struck down. They cannot, therefore, be upheld. contention is untenable. The Local Government Code of 1991 is a substantive law. And while it is conceded that
Congress may amend any of the provisions therein, it may not do so through appropriations laws or GAAs. Any
The assailed provisos in the GAAs of 1999, 2000 amendment to the Local Government Code of 1991 should be done in a separate law, not in the appropriations
law, because Congress cannot include in a general appropriation bill matters that should be more properly Secretary of Department of Budget and Management, and HON. ROSALINA CAJUCOM, in her capacity as National
enacted in a separate legislation.[42] Treasurer, respondents.

A general appropriations bill is a special type of legislation, whose content is limited to specified sums of money A.M. No. 91-8-225-CA April 15, 1992
dedicated to a specific purpose or a separate fiscal unit.[43] Any provision therein which is intended to amend
another law is considered an inappropriate provision. The category of inappropriate provisions includes REQUEST OF RETIRED JUSTICES MANUEL P. BARCELONA, JUAN P. ENRIQUEZ, JUAN O. REYES, JR. and GUARDSON
unconstitutional provisions and provisions which are intended to amend other laws, because clearly these kinds R. LOOD FOR READJUSTMENT OF THEIR MONTHLY PENSION.
of laws have no place in an appropriations bill.[44]
 
Increasing or decreasing the IRA of the LGUs or modifying their percentage sharing therein, which are fixed in the
Local Government Code of 1991, are matters of general and substantive law. To permit Congress to undertake GUTIERREZ, JR., J.:
these amendments through the GAAs, as the respondents contend, would be to give Congress the unbridled
authority to unduly infringe the fiscal autonomy of the LGUs, and thus put the same in jeopardy every year.This, The issue in this petition is the constitutionality of the veto by the President of certain provisions in the General
the Court cannot sanction. Appropriations Act for the Fiscal Year 1992 relating to the payment of the adjusted pensions of retired Justices of
the Supreme Court and the Court of Appeals.
It is relevant to point out at this juncture that, unlike those of 1999, 2000 and 2001, the GAAs of 2002 and 2003
do not contain provisos similar to the herein assailed provisos. In other words, the GAAs of 2002 and 2003 have The petitioners are retired Justices of the Supreme Court and Court of Appeals who are currently receiving
not earmarked any amount of the IRA for the LGSEF. Congress had perhaps seen fit to discontinue the practice as monthly pensions under Republic Act No. 910 as amended by Republic Act No. 1797. They filed the instant
it recognizes its infirmity. Nonetheless, as earlier mentioned, this Court has deemed it necessary to make a petition on their own behalf and in representation of all other retired Justices of the Supreme Court and the
definitive ruling on the matter in order to prevent its recurrence in future appropriations laws and that the Court of Appeals similarly situated.
principles enunciated herein would serve to guide the bench, bar and public.
Named respondents are Hon. Franklin Drilon the Executive Secretary, Hon. Guillermo Carague as Secretary of the
Conclusion Department of Budget and Management, and Hon. Rosalinda Cajucom, the Treasurer of the Philippines. The
respondents are sued in their official capacities, being officials of the Executive Department involved in the
In closing, it is well to note that the principle of local autonomy, while concededly expounded in greater detail in implementation of the release of funds appropriated in the Annual Appropriations Law.
the present Constitution, dates back to the turn of the century when President William McKinley, in his
Instructions to the Second Philippine Commission dated April 7, 1900, ordered the new Government to devote We treat the Comments of the Office of the Solicitor General (OSG) as an Answer and decide the petition on its
their attention in the first instance to the establishment of municipal governments in which the natives of the merits.
Islands, both in the cities and in the rural communities, shall be afforded the opportunity to manage their own
affairs to the fullest extent of which they are capable, and subject to the least degree of supervision and control The factual backdrop of this case is as follows:
in which a careful study of their capacities and observation of the workings of native control show to be
consistent with the maintenance of law, order and loyalty. [45] While the 1935 Constitution had no specific article On June 20, 1953, Republic Act No, 910 was enacted to provide the retirement pensions of Justices of the
on local autonomy, nonetheless, it limited the executive power over local governments to general supervision ... Supreme Court and of the Court of Appeals who have rendered at least twenty (20) years service either in the
as may be provided by law.[46] Subsequently, the 1973 Constitution explicitly stated that [t]he State shall Judiciary or in any other branch of the Government or in both, having attained the age of seventy (70) years or
guarantee and promote the autonomy of local government units, especially the barangay to ensure their fullest who resign by reason of incapacity to discharge the duties of the office. The retired Justice shall receive during
development as self-reliant communities.[47] An entire article on Local Government was incorporated therein. The the residue of his natural life the salary which he was receiving at the time of his retirement or resignation.
present Constitution, as earlier opined, has broadened the principle of local autonomy. The 14 sections in Article
X thereof markedly increased the powers of the local governments in order to accomplish the goal of a more Republic Act No. 910 was amended by Republic Act No. 1797 (approved on June 21, 1957) which provided that:
meaningful local autonomy.
Sec. 3-A. In case the salary of Justices of the Supreme Court or of the Court of Appeals is increased or decreased,
Indeed, the value of local governments as institutions of democracy is measured by the degree of autonomy that such increased or decreased salary shall, for purposes of this Act, be deemed to be the salary or the retirement
they enjoy.[48] As eloquently put by M. De Tocqueville, a distinguished French political writer, [l]ocal assemblies of pension which a Justice who as of June twelve, nineteen hundred fifty-four had ceased to be such to accept
citizens constitute the strength of free nations. Township meetings are to liberty what primary schools are to another position in the Government or who retired was receiving at the time of his cessation in office. Provided,
science; they bring it within the peoples reach; they teach men how to use and enjoy it. A nation may establish a that any benefits that have already accrued prior to such increase or decrease shall not be affected thereby.
system of free governments but without the spirit of municipal institutions, it cannot have the spirit of liberty. [49]
Identical retirement benefits were also given to the members of the Constitutional Commissions under Republic
Our national officials should not only comply with the constitutional provisions on local autonomy but should also Act No. 1568, as amended by Republic Act No. 3595. On November 12, 1974, on the occasion of the Armed
appreciate the spirit and liberty upon which these provisions are based. [50] Forces Loyalty Day, President Marcos signed Presidential Decree 578 which extended similar retirement benefits
to the members of the Armed Forces giving them also the automatic readjustment features of Republic Act No.
WHEREFORE, the petition is GRANTED. The assailed provisos in the General Appropriations Acts of 1999, 2000 1797 and Republic Act No. 3595.
and 2001, and the assailed OCD Resolutions, are declared UNCONSTITUTIONAL.
Two months later, however, President Marcos issued Presidential Decree 644 on January 25, 1975 repealing
SO ORDERED. Section 3-A of Republic Act No. 1797 and Republic Act No. 3595 (amending Republic Act No. 1568 and
Presidential Decree No. 578) which authorized the adjustment of the pension of the retired Justices of the
CESAR BENGZON, QUERUBE MAKALINTAL, LINO M. PATAJO, JOSE LEUTERIO, ET AL., petitioners,  Supreme Court, Court of Appeals, Chairman and members of the Constitutional Commissions and the officers and
vs. enlisted members of the Armed Forces to the prevailing rates of salaries.
HON. FRANKLIN N. DRILON, in his capacity as Executive Secretary, HON. GUILLERMO CARAGUE, in his capacity as
Significantly, under Presidential Decree 1638 the automatic readjustment of the retirement pension of officers For general administration, administration of personnel benefits, supervision of courts, adjudication of
and enlisted men was subsequently restored by President Marcos. A later decree Presidential Decree 1909 was constitutional questions appealed and other cases, operation and maintenance of the Judicial and Bar Council in
also issued providing for the automatic readjustment of the pensions of members of the Armed Forces who have the Supreme Court, and the adjudication of regional court cases, metropolitan court cases, municipal trial court
retired prior to September 10, 1979. cases in Cities, municipal circuit court cases, municipal, court cases, Shari'a district court cases and Shari'a circuit
court cases as indicated hereunder P2,095,651,000
While the adjustment of the retirement pensions for members of the Armed Forces who number in the tens of
thousands was restored, that of the retired Justices of the Supreme Court and Court of Appeals who are only a Special Provisions.
handful and fairly advanced in years, was not.
1. Augmentation of any Item in the Court's Appropriations. Any savings in the appropriation for the Supreme
Realizing the unfairness of the discrimination against the members of the Judiciary and the Constitutional Court and the Lower Courts may be utilized by the Chief Justice of the Supreme Court to augment any item of the
Commissions, Congress approved in 1990 a bill for the reenactment of the repealed provisions of Republic Act Court's appropriations for: (a) printing of decisions and publications of Philippine Reports; b) commutable
No. 1797 and Republic Act No. 3595. Congress was under the impression that Presidential Decree 644 became terminal leaves of Justices and other personnel of the Supreme Court and any payment of adjusted pension rates
law after it was published in the Official Gazette on April 7, 1977. In the explanatory note of House Bill No. 16297 to retired Justices entitled thereto pursuant to Administrative Matter No. 91-8-225-CA; (c) repair, maintenance,
and Senate Bill No. 740, the legislature saw the need to reenact Republic Act Nos. 1797 and 3595 to restore said improvement, and other operating expenses of the courts' books and periodicals; (d) purchase, maintenance and
retirement pensions and privileges of the retired Justices and members of the Constitutional Commissions, in improvement of printing equipment; e) necessary expenses for the employment of temporary employees,
order to assure those serving in the Supreme Court, Court of Appeals and Constitutional Commissions adequate contractual and casual employees, for judicial administration; f) maintenance and improvement of the Court's
old age pensions even during the time when the purchasing power of the peso has been diminished substantially Electronic Data Processing; (g) extraordinary expenses of the Chief Justice, attendance in international
by worldwide recession or inflation. This is underscored by the fact that the petitioner retired Chief Justice, a conferences and conduct of training programs; (h) commutable transportation and representation allowances
retired Associate Justice of the Supreme Court and the retired Presiding Justice are presently receiving monthly and fringe benefits for Justices, Clerks of Court, Court Administrator, Chief of Offices and other Court personnel in
pensions of P3,333.33, P2,666.66 and P2,333.33 respectively. accordance with the rates prescribed by law; and (i) compensation of attorneys-de-oficio; PROVIDED, that as
mandated by LOI No. 489 any increases in salary and allowances shall be subject to the usual procedures and
President Aquino, however vetoed House Bill No. 16297 on July 11, 1990 on the ground that according to her "it policies as provided for under P.D. No. 985 and other pertinent laws. (page 1071, General Appropriations Act, FY
would erode the very foundation of the Government's collective effort to adhere faithfully to and enforce strictly 1992; Emphasis supplied)
the policy on standardization of compensation as articulated in Republic Act No. 6758 known as Compensation
and Position Classification Act of 1989." She further said that "the Government should not grant distinct 4. Payment of Adjusted Pension Rates to Retired Justices. The amount herein appropriated for payment of
privileges to select group of officials whose retirement benefits under existing laws already enjoy preferential pensions to retired judges and justices shall include the payment of pensions at the adjusted rates to retired
treatment over those of the vast majority of our civil service servants." justices of the Supreme Court entitled thereto pursuant to the ruling of the Court in Administrative Matter No.
91-8-225-C.A. (page 1071, General Appropriations Act, FY 1992).
Prior to the instant petition, however, Retired Court of Appeals Justices Manuel P. Barcelona, Juan P. Enriquez,
Juan O. Reyes, Jr. and Guardson R. Lood filed a letter/petition dated April 22, 1991 which we treated as Activities and Purposes
Administrative Matter No. 91-8-225-CA. The petitioners asked this Court far a readjustment of their monthly
pensions in accordance with Republic Act No. 1797. They reasoned out that Presidential Decree 644 repealing 1. General Administration and Support Services.
Republic Act No. 1797 did not become law as there was no valid publication pursuant to Tañada v. Tuvera, (136
SCRA 27 [1985]) and 146 SCRA 446 [1986]). Presidential Decree 644 promulgated on January 24, 1975 appeared a. General administrative Services P 43,515,000
for the first time only in the supplemental issue of the Official Gazette, (Vol. 74, No. 14) purportedly dated April 4, b. Payment of retirement gratuity
1977 but published only on September 5, 1983. Since Presidential Decree 644 has no binding force and effect of of national goverment officials
law, it therefore did not repeal Republic Act No. 1797. and employees P 206,717,000
c. Payment of terminal leave benefits to
In a Resolution dated November 28, 1991 the Court acted favorably on the request. The dispositive portion reads officials and employees antitled thereto P 55,316,000
as follows: d. Payment of pension totired jude
and justice entitled thereto P 22,500,000
WHEREFORE, the requests of retired Justices Manuel P. Barcelona, Juan P. Enriquez, Juan O. Reyes and Guardson
Lood are GRANTED. It is hereby AUTHORIZED that their monthly pensions be adjusted and paid on the basis of RA (page 1071, General Appropriations Act, FY 1992)
1797 effective January 1, 1991 without prejudice to the payment on their pension differentials corresponding to
the previous years upon the availability of funds for the purpose. C. COURT OF APPEALS

Pursuant to the above resolution, Congress included in the General Appropriations Bill for Fiscal Year 1992 For general administration, administration
certain appropriations for the Judiciary intended for the payment of the adjusted pension rates due the retired of personnel benefit, benefits and the
Justices of the Supreme Court and Court of Appeals. adjudication of appealed and other cases
as indicated hereunder P114,615,000
The pertinent provisions in House Bill No. 34925 are as follows:
Special Provisions.
XXVIII. THE JUDICIARY
1. Authority to Use Savings. Subject to the approval of the Chief Justice of the Supreme Court in accordance with
A. Supreme Court of the Philippines and the Lower Courts. Section 25(5), Article VI of the Constitution of the Republic of the Philippines, the Presiding Justice may be
authorized to use any savings in any item of the appropriation for the Court of Appeals for purposes of: (1)
improving its compound and facilities; and (2) for augmenting any deficiency in any item of its appropriation
including its extraordinary expenses and payment of adjusted pension rates to retired justices entitled thereto On February 14, 1992, the Court resolved to consolidate Administrative Matter No. 91-8-225-CA with G.R. No.
pursuant to Administrative Matter No. 91-8-225-C.A. (page 1079, General Appropriations Act, FY 1992; Emphasis 103524.
supplied)
The petitioners' contentions are well-taken.
2. Payment of adjustment Pension Rates to Retired Justices. The amount herein appropriated for payment of
pensions to retired judges and justices shall include the payment of pensions at the adjusted rates to retired I
justices of the Court of Appeals entitled thereto pursuant to the Ruling of the Supreme Court in Administrative
Matter No. 91-6-225-C.A. (page 1079 General Appropriations Act, FY 1992). It cannot be overstressed that in a constitutional government such as ours, the rule of law must prevail. The
Constitution is the basic and paramount law to which all other laws must conform and to which all persons
XL. GENERAL FUND ADJUSTMENT including the highest official of this land must defer. From this cardinal postulate, it follows that the three
branches of government must discharge their respective functions within the limits of authority conferred by the
For general fund adjustment for Constitution. Under the principle of separation of powers, neither Congress, the President nor the Judiciary may
operational and special requirements encroach on fields allocated to the other branches of government. The legislature is generally limited to the
as indicated hereunder P500,000,000 enactment of laws, the executive to the enforcement of laws and the judiciary to their interpretation and
application to cases and controversies.
Special Provisions
The Constitution expressly confers or the judiciary the power to maintain inviolate what it decrees. As the
1. Use of the Fund. This fund shall be used for: guardian of the Constitution we cannot shirk the duty of seeing to it that the officers in each branch of
government do not go beyond their constitutionally allocated boundaries and that the entire Government itself
1.3. Authorized overdrafts and/or valid unbooked obligations, including the payment of back salaries and related or any of its branches does not violate the basic liberties of the people. The essence of this judicial duty was
personnel benefits arising from decision of competent authority including the Supreme Court decision in emphatically explained by Justice Laurel in the leading case of Angara v. Electoral Commission, (63 Phil. 139
Administrative Matter No. 91-8-225-C.A. and COA decision in No. 1704." (page 11649 Gen. Appropriations Act, FY [1936]) to wit:
1992; Emphasis supplied)
The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent
On January 15, 1992, the President vetoed the underlined portions of Section 1 and the entire Section 4 the of such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational way.
Special Provisions for the Supreme Court of the Philippines and the Lower Courts (General Appropriations Act, FY And when the judiciary mediates to allocate constitutional boundaries it does not assert any superiority over the
1992, page 1071) and the underlined portions of Section 1 and the entire Section 2, of the Special Provisions for other department, it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn
the Court of Appeals (page 1079) and the underlined portions of Section 1.3 of Article XLV of the Special and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the
Provisions of the General Fund Adjustments (page 1164, General Appropriations Act, FY 1992). Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and
guarantees to them. (Emphasis supplied)
The reason given for the veto of said provisions is that "the resolution of this Honorable Court in Administrative
Matter No. 91-8-225-CA pursuant to which the foregoing appropriations for the payment of the retired Justices The act of the Executive in vetoing the particular provisions is an exercise of a constitutionally vested power. But
of the Supreme Court and the Court of Appeals have been enacted effectively nullified the veto of the President even as the Constitution grants the power, it also provides limitations to its exercise. The veto power is not
on House Bill No. 16297, the bill which provided for the automatic increase in the retirement pensions of the absolute.
Justices of the Supreme Court and the Court of Appeals and chairmen of the Constitutional Commissions by re-
enacting Republic Act No. 1797 and Republic Act No. 3595. The President's veto of the aforesaid provisions was The pertinent provision of the Constitution reads:
further justified by reiterating the earlier reasons for vetoing House Bill No. 16297: "they would erode the very
foundation of our collective effort to adhere faithfully to and enforce strictly the policy and standardization of The President shall have the power to veto any particular item or items in an appropriation, revenue or tariff bill
compensation. We should not permit the grant of distinct privileges to select group of officials whose retirement but the veto shall not affect the item or items to which he does not object. (Section 27(2), Article VI, Constitution)
pensions under existing laws already enjoy preferential treatment over those of the vast majority of our civil
servants." The OSG is correct when it states that the Executive must veto a bill in its entirety or not at all. He or she cannot
act like an editor crossing out specific lines, provisions, or paragraphs in a bill that he or she dislikes. In the
Hence, the instant petition filed by the petitioners with the assertions that: exercise of the veto power, it is generally all or nothing. However, when it comes to appropriation, revenue or
tariff bills, the Administration needs the money to run the machinery of government and it can not veto the
1) The subject veto is not an item veto; entire bill even if it may contain objectionable features. The President is, therefore, compelled to approve into
law the entire bill, including its undesirable parts. It is for this reason that the Constitution has wisely provided
2) The veto by the Executive is violative of the doctrine of separation of powers; the "item veto power" to avoid inexpedient riders being attached to an indispensable appropriation or revenue
measure.
3) The veto deprives the retired Justices of their rights to the pensions due them;
The Constitution provides that only a particular item or items may be vetoed. The power to disapprove any item
4) The questioned veto impairs the Fiscal Autonomy guaranteed by the Constitution. or items in an appropriate bill does not grant the authority to veto a part of an item and to approve the
remaining portion of the same item. (Gonzales v. Macaraig, Jr., 191 SCRA 452, 464 [1990])
Raising similar grounds, the petitioners in AM-91-8-225-CA, brought to the attention of this Court that the veto
constitutes no legal obstacle to the continued payment of the adjusted pensions pursuant to the Court's We distinguish an item from a provision in the following manner:
resolution.
The terms item and provision in budgetary legislation and practice are concededly different. An item in a bill
refers to the particulars, the details, the distinct and severable parts . . . of the bill (Bengzon, supra, at 916.) It is
an indivisible sum of money dedicated to a stated purpose (Commonwealth v. Dodson, 11 S.E. 2d 120, 124, 125, It turns out, however, that P.D. No. 644 never became valid law. If P.D. No. 644 was not law, it follows that Rep.
etc., 176 Va. 281) The United States Supreme Court, in the case of Bengzon v. Secretary of Justice (299 U.S. 410, Act No. 1797 was not repealed and continues to be effective up to the present. In the same way that it was
414, 57 Ct. 252, 81 L. Ed, 312) declared "that an"tem" of an appropriation bill obviously means an item which in enforced from 1951 to 1975, so should it be enforced today.
itself is a specific appropriation of money, not some general provision of law, which happens to be put into an
appropriation bill." (id. at page 465) House Bill No. 16297 was superfluous as it tried to restore benefits which were never taken away validly. The
veto of House Bill No. 16297 in 1991 did not also produce any effect. Both were based on erroneous and non-
We regret having to state that misimpressions or unfortunately wrong advice must have been the basis of the existent premises.
disputed veto.
From the foregoing discussion, it can be seen that when the President vetoed certain provisions of the 1992
The general fund adjustment is an item which appropriates P500,000,000.00 to enable the Government to meet General Appropriations Act, she was actually vetoing Republic Act No. 1797 which, of course, is beyond her
certain unavoidable obligations which may have been inadequately funded by the specific items for the different power to accomplish.
branches, departments, bureaus, agencies, and offices of the government.
Presidential Decree No. 644 which purportedly repealed Republic Act No. 1717 never achieved that purpose
The President did not veto this item. What were vetoed were methods or systems placed by Congress to insure because it was not properly published. It never became a law.
that permanent and continuing obligations to certain officials would be paid when they fell due.
The case of Tañda v. Tuvera (134 SCRA 27 [1985]and 146 SCRA 446 [1986]) specifically requires that "all laws
An examination of the entire sections and the underlined portions of the law which were vetoed will readily show shall immediately upon their approval or as soon thereafter as possible, be published in full in the Official
that portions of the item have been chopped up into vetoed and unvetoed parts. Less than all of an item has Gazette, to become effective only after fifteen days from their publication, or on another date specified by the
been vetoed. Moreover, the vetoed portions are not items. They areprovisions. legislature, in accordance with Article 2 of the Civil Code." This was the Court's answer to the petition of Senator
Lorenzo Tañada and other opposition leaders who challenged the validity of Marcos' decrees which, while never
Thus, the augmentation of specific appropriations found inadequate to pay retirement payments, by transferring published, were being enforced. Secret decrees are anathema in a free society.
savings from other items of appropriation is a provision and not an item. It gives power to the Chief Justice to
transfer funds from one item to another. There is no specific appropriation of money involved. In support of their request, the petitioners in Administrative Matter No. 91-9-225-CA secured certification from
Director Lucita C. Sanchez of the National Printing Office that the April 4, 1977 Supplement to the Official Gazette
In the same manner, the provision which states that in compliance with decisions of the Supreme Court and the was published only on September 5, 1983 and officially released on September 29, 1983.
Commission on Audit, funds still undetermined in amount may be drawn from the general fund adjustment is not
an item. It is the "general fund adjustment" itself which is the item. This was not touched. It was not vetoed. On the issue of whether or not Presidential Decree 644 became law, the Court has already categorically spoken in
a definitive ruling on the matter, to wit:
More ironic is the fact that misinformation led the Executive to believe that the items in the 1992 Appropriations
Act were being vetoed when, in fact, the veto struck something else. PD 644 was promulgated by President Marcos on January 24, 1975, but was not immediately or soon thereafter
published although preceding and subsequent decrees were duly published in the Official Gazette. It now
What were really vetoed are: appears that it was intended as a secret decree "NOT FOR PUBLICATION" as the notation on the face of the
original copy thereof plainly indicates (Annex B). It is also clear that the decree was published in the back-dated
(1) Republic Act No. 1797 enacted as early as June 21, 1957; and Supplement only after it was challenged in the Tañada case as among the presidential decrees that had not
become effective for lack of the required publication. The petition was filed on May 7, 1983, four months before
(2) The Resolution of the Supreme Court dated November 28, 1991 in Administrative Matter No. 91-8-225-CA. the actual publication of the decree.

We need no lengthy justifications or citations of authorities to declare that no President may veto the provisions It took more than eight years to publish the decree after its promulgation in 1975. Moreover, the publication was
of a law enacted thirty-five (35) years before his or her term of office. Neither may the President set aside or made in bad faith insofar as it purported to show that it was done in 1977 when the now demonstrated fact is
reverse a final and executory judgment of this Court through the exercise of the veto power. that the April 4, 1977 supplement was actually published and released only in September 1983. The belated
publication was obviously intended to refute the petitioner's claim in the Tañada case and to support the
A few background facts may be reiterated to fully explain the unhappy situation. Solicitor General's submission that the petition had become moot and academic.

Republic Act No. 1797 provided for the adjustment of pensions of retired Justices which privilege was extended We agree that PD 644 never became a law because it was not validly published and that, consequently, it did not
to retired members of Constitutional Commissions by Republic Act No. 3595. have the effect of repealing RA 1797. The requesting Justices (including Justice Lood, whose request for the
upgrading of his pension was denied on January 15, 1991) are therefore entitled to be paid their monthly
On January 25, 1975, President Marcos issued Presidential Decree No. 644 which repealed Republic Acts 1797 pensions on the basis of the latter measure, which remains unchanged to date.
and 3595. Subsequently, automatic readjustment of pensions for retired Armed Forces officers and men was
surreptitiously restored through Presidential Decree Nos. 1638 and 1909. The Supreme Court has spoken and it has done so with finality, logically and rightly so as to assure stability in
legal relations, and avoid confusion. (see Ver v. Quetullo, 163 SCRA 80 [1988]) Like other decisions of this Court,
It was the impression that Presidential Decree No. 644 had reduced the pensions of Justices and Constitutional the ruling and principles set out in the Court resolution constitute binding precedent. (Bulig-Bulig Kita Kamaganak
Commissioners which led Congress to restore the repealed provisions through House Bill No. 16297 in 1990. Association, et al. v. Sulpicio Lines, Inc., Regional Trial Court, etc., G.R. 847500 16 May 1989, En Banc, Minute
When her finance and budget advisers gave the wrong information that the questioned provisions in the 1992 Resolution)
General Appropriations Act were simply an attempt to overcome her earlier 1990 veto, she issued the veto now
challenged in this petition. The challenged veto has far-reaching implications which the Court can not countenance as they undermine the
principle of separation of powers. The Executive has no authority to set aside and overrule a decision of the
Supreme Court.
We must emphasize that the Supreme Court did not enact Rep. Act No. 1797. It is not within its powers to pass The DBM requires the Supreme Court, with Constitutional Commissions, and the Ombudsman to submit budget
laws in the first place. Its duty is confined to interpreting or defining what the law is and whether or not it proposals in accordance with parameters it establishes. DBM evaluates the proposals, asks each agency to
violates a provision of the Constitution. defend its proposals during DBM budget hearings, submits its own version of the proposals to Congress without
informing the agency of major alterations and mutilations inflicted on their proposals, and expects each agency
As early as 1953, Congress passed a law providing for retirement pensions to retired Justices of the Supreme to defend in Congress proposals not of the agency's making.
Court and the Court of Appeals. This law was amended by Republic Act 1797 in 1957. Funds necessary to pay the
retirement pensions under these statutes are deemed automatically appropriated every year. After the general appropriations bill is passed by Congress and signed into law by the President, the tight and
officious control by DBM continues. For the release of appropriated funds, the Judiciary, Constitutional
Thus, Congress included in the General Appropriations Act of 1992, provisions identifying funds and savings Commissions, and Ombudsman are instructed through "guidelines", how to prepare Work and Financial Plans
which may be used to pay the adjusted pensions pursuant to the Supreme Court Resolution. As long as and requests for monthly allotments. The DBM evaluates and approves these plans and requests and on the
retirement laws remain in the statute book, there is an existing obligation on the part of the government to pay basis of its approval authorizes the release of allotments with corresponding notices of cash allocation. These
the adjusted pension rate pursuant to RA 1797 and AM-91-8-225-CA. notices specify the maximum withdrawals each month which the Supreme Court, the Commissions and the
Ombudsman may make from the servicing government bank. The above agencies are also required to submit to
Neither may the veto power of the President be exercised as a means of repealing RA 1797. This is arrogating DBM monthly, quarterly and year-end budget accountability reports to indicate their performance, physical and
unto the Presidency legislative powers which are beyond its authority. The President has no power to enact or financial operations and income,
amend statutes promulgated by her predecessors much less to repeal existing laws. The President's power is
merely to execute the laws as passed by Congress. The DBM reserves to itself the power to review the accountability reports and when importuned for needed
funds, to release additional allotments to the agency. Since DBM always prunes the budget proposals to below
II subsistence levels and since emergency situations usually occur during the fiscal year, the Chief Justices,
Chairmen of the Commissions, and Ombudsman are compelled to make pilgrimages to DBM for additional funds
There is a matter of greater consequence arising from this petition. The attempt to use the veto power to set to tide their respective agencies over the emergency.
aside a Resolution of this Court and to deprive retirees of benefits given them by Rep. Act No. 1797 trenches
upon the constitutional grant of fiscal autonomy to the Judiciary. What is fiscal autonomy?

Sec. 3, Art. VIII mandates that: As envisioned in the Constitution, the fiscal autonomy enjoyed by the Judiciary, the Civil Service Commission, the
Commission on Audit, the Commission on Elections, and the Office of the Ombudsman contemplates a guarantee
Sec. 3 The Judiciary shall enjoy fiscal autonomy. Appropriations for the Judiciary may not be reduced by the on full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require. It
legislature below the amount appropriated for the previous year and, after approval, shall be automatically and recognizes the power and authority to levy, assess and collect fees, fix rates of compensation not exceeding the
regularly released. highest rates authorized by law for compensation and pay plans of the government and allocate and disburse
such sums as may be provided by law or prescribed by them in the course of the discharge of their functions.
We can not overstress the importance of and the need for an independent judiciary. The Court has on various
past occasions explained the significance of judicial independence. In the case of De la Llana v. Alba (112 SCRA Fiscal autonomy means freedom from outside control. If the Supreme Court says it needs 100 typewriters but
294 [1982]), it ruled: DBM rules we need only 10 typewriters and sends its recommendations to Congress without even informing us,
the autonomy given by the Constitution becomes an empty and illusory platitude.
It is a cardinal rule of faith of our constitutional regime that it is the people who are endowed with rights, to
secure which a government is instituted. Acting as it does through public officials, it has to grant them either The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence end flexibility
expressly or implicitly certain powers. These they exercise not for their own benefit but for the body politic. . . . 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
A public office is a public trust. That is more than a moral adjuration. It is a legal imperative. The law may vest in a anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as
public official certain rights. It does so to enable them to perform his functions and fulfill his responsibilities more regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our
efficiently. . . . It is an added guarantee that justices and judges can administer justice undeterred by any fear of constitutional system is based. In the interest of comity and cooperation, the Supreme Court, Constitutional
reprisal or untoward consequence. Their judgments then are even more likely to be inspired solely by their Commissions, and the Ombudsman have so far limited their objections to constant reminders. We now agree
knowledge of the law and the dictates of their conscience, free from the corrupting influence of base or with the petitioners that this grant of autonomy should cease to be a meaningless provision.
unworthy motives. The independence of which they are assured is impressed with a significance transcending
that of a purely personal right. (At pp. 338-339) In the case at bar, the veto of these specific provisions in the General Appropriations Act is tantamount to
dictating to the Judiciary how its funds should be utilized, which is clearly repugnant to fiscal autonomy. The
The exercise of the veto power in this case may be traced back to the efforts of the Department of Budget and freedom of the Chief Justice to make adjustments in the utilization of the funds appropriated for the
Management (DBM) to ignore or overlook the plain mandate of the Constitution on fiscal autonomy. The OSG expenditures of the judiciary, including the use of any savings from any particular item to cover deficits or
Comment reflects the same truncated view of the provision. shortages in other items of the Judiciary is withheld. Pursuant to the Constitutional mandate, the Judiciary must
enjoy freedom in the disposition of the funds allocated to it in the appropriations law. It knows its priorities just
We have repeatedly in the past few years called the attention of DBM that not only does it allocate less than one as it is aware of the fiscal restraints. The Chief Justice must be given a free hand on how to augment
percent (1%) of the national budget annually for the 22,769 Justices, Judges, and court personnel all over the appropriations where augmentation is needed.
country but it also examines with a fine-toothed come how we spend the funds appropriated by Congress based
on DBM recommendations. Furthermore, in the case of Gonzales v. Macaraig (191 SCRA 452 [1990]), the Court upheld the authority of the
President and other key officials to augment any item or any appropriation from savings in the interest of
The gist of our position papers and arguments before Congress is as follows: expediency and efficiency. The Court stated that:
There should be no question, therefore, that statutory authority has, in fact, been granted. And once given, the equal protection clause should first be directed to retirees in the military or civil service where the reason for the
heads of the different branches of the Government and those of the Constitutional Commissions are afforded retirement provision is not based on indubitable and constitutionally sanctioned grounds, not to a handful of
considerable flexibility in the use of public funds and resources (Demetria v. Alba, supra). The doctrine of retired Justices whose retirement pensions are founded on constitutional reasons.
separation of powers is in no way endangered because the transfer is made within a department (or branch of
government) and not from one department (branch) to another. The provisions regarding retirement pensions of justices arise from the package of protections given by the
Constitution to guarantee and preserve the independence of the Judiciary.
The Constitution, particularly Article VI, Section 25(5) also provides:
The Constitution expressly vests the power of judicial review in this Court. Any institution given the power to
Sec. 25. (5) No law shall be passed authorizing any transfer of appropriations; however, the President, the declare, in proper cases, that act of both the President and Congress are unconstitutional needs a high degree of
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, independence in the exercise of its functions. Our jurisdiction may not be reduced by Congress. Neither may it be
and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general increased without our advice and concurrence. Justices may not be removed until they reach age 70 except
appropriations law for their respective offices from savings in other items of their respective appropriations. through impeachment. All courts and court personnel are under the administrative supervision of the Supreme
Court. The President may not appoint any Judge or Justice unless he or she has been nominated by the Judicial
In the instant case, the vetoed provisions which relate to the use of savings for augmenting items for the and Bar Council which, in turn, is under the Supreme Court's supervision. Our salaries may not be decreased
payment of the pension differentials, among others, are clearly in consonance with the abovestated during our continuance in office. We cannot be designated to any agency performing administrative or quasi-
pronouncements of the Court. The veto impairs the power of the Chief Justice to augment other items in the judicial functions. We are specifically given fiscal autonomy. The Judiciary is not only independent of, but also co-
Judiciary's appropriation, in contravention of the constitutional provision on "fiscal autonomy." equal and coordinate with the Executive and Legislative Departments. (Article VIII and section 30, Article VI,
Constitution)
III
Any argument which seeks to remove special privileges given by law to former Justices of this Court and the
Finally, it can not be denied that the retired Justices have a vested right to the accrued pensions due them ground that there should be no "grant of distinct privileges" or "preferential treatment" to retired Justices
pursuant to RA 1797. ignores these provisions of the Constitution and, in effect, asks that these Constitutional provisions on special
protections for the Judiciary be repealed. The integrity of our entire constitutional system is premised to a large
The right to a public pension is of statutory origin and statutes dealing with pensions have been enacted by extent on the independence of the Judiciary. All these provisions are intended to preserve that independence. So
practically all the states in the United States (State ex rel. Murray v, Riley, 44 Del 505, 62 A2d 236), and are the laws on retirement benefits of Justices.
presumably in most countries of the world. Statutory provisions for the support of Judges or Justices on
retirement are founded on services rendered to the state. Where a judge has complied with the statutory One last point.
prerequisite for retirement with pay, his right to retire and draw salary becomes vested and may not, thereafter,
be revoked or impaired. (Gay v. Whitehurst, 44 So ad 430) The Office of the Solicitor General argues that:

Thus, in the Philippines, a number of retirement laws have been enacted, the purpose of which is to entice . . . Moreover, by granting these benefits to retired Justices implies that public funds, raised from taxes on other
competent men and women to enter the government service and to permit them to retire therefrom with citizens, will be paid off to select individuals who are already leading private lives and have ceased performing
relative security, not only those who have retained their vigor but, more so, those who have been incapacitated public service. Said the United States Supreme Court, speaking through Mr. Justice Miller: "To lay with one hand
by illness or accident. (In re: Amount of the Monthly Pension of Judges and Justices Starting From the Sixth Year the power of the government on the property of the citizen, and with the other to bestow upon favored
of their Retirement and After the Expiration of the Initial Five-year Period of Retirement, (190 SCRA 315 [1990]). individuals . . . is nonetheless a robbery because it is done under the forms of law . . ." (Law Association V. Topeka,
20 Wall. 655) (Comment, p. 16)
As early as 1953, Rep. Act No. 910 was enacted to grant pensions to retired Justices of the Supreme Court and
Court of Appeals. The above arguments are not only specious, impolite and offensive; they certainly are unbecoming of an office
whose top officials are supposed to be, under their charter, learned in the law.
This was amended by RA 1797 which provided for an automatic adjustment of the pension rates. Through the
years, laws were enacted and jurisprudence expounded to afford retirees better benefits. Chief Justice Cesar Bengzon and Chief Justice Querube Makalintal, Justices J.B.L. Reyes, Cecilia Muñoz Palma,
Efren Plana, Vicente Abad Santos, and, in fact, all retired Justices of the Supreme Court and the Court of Appeals
P.D. No. 1438, for one, was promulgated on June 10, 1978 amending RA 910 providing that the lump sum of 5 may no longer be in the active service. Still, the Solicitor General and all lawyers under him who represent the
years gratuity to which the retired Justices of the Supreme Court and Court of Appeals were entitled was to be government before the two courts and whose predecessors themselves appeared before these retirees, should
computed on the basis of the highest monthly aggregate of transportation, living and representation allowances show some continuing esteem and good manners toward these Justices who are now in the evening of their
each Justice was receiving on the date of his resignation. The Supreme Court in a resolution dated October 4, years.
1990, stated that this law on gratuities covers the monthly pensions of retired Judges and Justices which should
include the highest monthly aggregate of transportation, living and representation allowances the retiree was All that the retirees ask is to be given the benefits granted by law. To characterize them as engaging in "robbery"
receiving on the date of retirement. (In Re: Amount of the Monthly Pension of Judges and Justices, supra) is intemperate, abrasive, and disrespectful more so because the argument is unfounded.

The rationale behind the veto which implies that Justices and Constitutional officers are unduly favored is, again, If the Comment is characteristic of OSG pleadings today, then we are sorry to state that the then quality of
a misimpression. research in that institution has severely deteriorated.

Immediately, we can state that retired Armed Forces officers and enlisted men number in the tens of thousands In the first place, the citation of the case is, wrong. The title is not LAW Association v. Topeka but Citizen's
while retired Justices are so few they can be immediately identified. Justices retire at age 70 while military men Savings and Loan Association of Cleveland, Ohio v. Topeka City (20 Wall. 655; 87 U.S. 729; 22 Law. Ed. 455 [1874].
retire at a much younger age — some retired Generals left the military at age 50 or earlier. Yet the benefits in Second, the case involved the validity of a statute authorizing cities and counties to issue bonds for the purpose
Rep. Act No. 1797 are made to apply equally to both groups. Any ideas arising from an alleged violation of the of building bridges, waterpower, and other public works to aid private railroads improve their services. The law
was declared void on the ground that the right of a municipality to impose a tax cannot be used for private G.R. No. 209136
interests.
MANUELITO R. LUNA, Petitioner, 
The case was decided in 1874. The world has turned over more than 40,000 times since that ancient period. vs.
Public use is now equated with public interest. Public money may now be used for slum clearance, low-cost SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT OF BUDGET AND
housing, squatter resettlement, urban and agrarian reform where only private persons are the immediate MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS OFFICIAL CAPACITY AS ALTER EGO OF THE
beneficiaries. What was "robbery" in 1874 is now called "social justice." There is nothing about retirement PRESIDENT, Respondents.
benefits in the cited case. Obviously, the OSG lawyers cited from an old textbook or encyclopedia which could
not even spell "loan" correctly. Good lawyers are expected to go to primary sources and to use only relevant x-----------------------x
citations.
G.R. No. 209155
The Court has been deluged with letters and petitions by former colleagues in the Judiciary requesting
adjustments in their pensions just so they would be able to cope with the everyday living expenses not to ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner, 
mention the high cost of medical bills that old age entails. As Justice Cruz aptly stated in Teodoro J. Santiago v. vs.
COA, (G.R. No. 92284, July 12, 1991); THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY OF BUDGET AND
MANAGEMENT FLORENCIO B. ABAD, Respondents.
Retirement laws should be interpreted liberally in favor of the retiree because their intention is to provide for his
sustenance, and hopefully even comfort, when he no longer has the stamina to continue earning his livelihood. x-----------------------x
After devoting the best years of his life to the public service, he deserves the appreciation of a grateful
government as best concretely expressed in a generous retirement gratuity commensurate with the value and G.R. No. 209164
length of his services. That generosity is the least he should expect now that his work is done and his youth is
gone. Even as he feels the weariness in his bones and glimpses the approach of the lengthening shadows, he PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN M. BACUNGAN,
should be able to luxuriate in the thought that he did his task well, and was rewarded for it. BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners, 
vs.
For as long as these retired Justices are entitled under laws which continue to be effective, the government can DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B. ABAD, Respondents.
not deprive them of their vested right to the payment of their pensions.
x-----------------------x
WHEREFORE, the petition is hereby GRANTED. The questioned veto is SET ASIDE as illegal and unconstitutional.
The vetoed provisions of the 1992 Appropriations Act are declared valid and subsisting. The respondents are G.R. No. 209260
ordered to automatically and regularly release pursuant to the grant of fiscal autonomy the funds appropriated
for the subject pensions as well as the other appropriations for the Judiciary. The resolution in Administrative INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner, 
Matter No. 91-8-225-CA dated November 28, 1991 is likewise ordered to be implemented as promulgated. vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM), Respondent.
SO ORDERED.
x-----------------------x
MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN; JUDY M. TAGUIWALO,
PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON, PAGBABAGO; HENRI KAHN, G.R. No. 209442
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 GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L. GONZALEZ, Petitioners, 
GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO, vs.
CHAIRPERSON, ANAKBAYAN; VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW,Petitioners,  PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES, REPRESENTED BY SENATE
vs. PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO N. OCHOA, JR., BELMONTE, JR.; THE EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; THE
EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY SECRETARY FLORENCIO ABAD; THE
MANAGEMENT, Respondents. DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY CESAR V. PURISIMA; AND THE BUREAU OF TREASURY,
REPRESENTED BY ROSALIA V. DE LEON, Respondents.
x-----------------------x
x-----------------------x
G.R. No. 209135
G.R. No. 209517
AUGUSTO L. SY JUCO JR., Ph.D., Petitioner, 
vs. CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT EMPLOYEES (COURAGE),
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET AND MANAGEMENT; REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF
AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A CITY AS THE SENATE PRESIDENT OF THE AND AS NATIONAL PRESIDENT OF THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING AUTHORITY
PHILIPPINES, Respondents. (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
x-----------------------x (SWEAP-DSWD 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 the year, unreleased appropriations of slow-moving projects and discontinued projects per zero based budgeting
OF THE ENVIRONMENT AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL ARABA, FOR findings;5 and (2) the withdrawal of unobligated allotments also for slow-moving programs and projects that had
HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG MGA KAW ANI NG MMDA been earlier released to the agencies of the National Government.
(KKKMMDA), Petitioners, 
vs. The DBM listed the following as the legal bases for the DAP’s use of savings, 6 namely: (1) Section 25(5), Article VI
BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO OCHOA, JR., of the 1987 Constitution, which granted to the President the authority to augment an item for his office in the
EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND general appropriations law; (2) Section 49 (Authority to Use Savings for Certain Purposes) and Section 38
MANAGEMENT, Respondents. (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
x-----------------------x provisions on the (a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of
savings.
G.R. No. 209569
As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special provisions on
VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE L. JIMENEZ, Petitioner,  unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to the consciousness
BUDGET AND MANAGEMENT, Respondents. 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
DECISION government spending meant for localized projects and secured solely or primarily to bring money to a
representative’s district"7 – excited the Nation as heatedly as the pork barrel controversy.
BERSAMIN, J.:
Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP were filed within
For resolution are the consolidated petitions assailing the constitutionality of the Disbursement Acceleration days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013; G.R. No. 209136 (Luna), on October
Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of the Department of Budget and 7, 2013; G.R. No. 209155 (Villegas), 8 on October 16, 2013; G.R. No. 209164 (PHILCONSA), on October 8, 2013;
Management (DBM) implementing the DAP. 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 29, 2013; G.R. No. 209517 (COURAGE), on November6, 2013; and G.R. No. 209569 (VACC),
At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision of the on November 8, 2013.
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 In G.R. No. 209287 (Araullo), the petitioners brought to the Court’s attention NBC No. 541 (Adoption of
indicate that the DAP contravened this provision by allowing the Executive to allocate public money pooled from Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012), alleging
programmed and unprogrammed funds of its various agencies in the guise of the President exercising his that NBC No. 541, which was issued to implement the DAP, directed the withdrawal of unobligated allotments as
constitutional authority under Section 25(5) of the 1987 Constitution to transfer funds out of savings to augment of June 30, 2012 of government agencies and offices with low levels of obligations, both for continuing and
the appropriations of offices within the Executive Branch of the Government. But the challenges are further current allotments.
complicated by the interjection of allegations of transfer of funds to agencies or offices outside of the Executive.
In due time, the respondents filed their Consolidated Comment through the Office of the Solicitor General (OSG).
Antecedents
The Court directed the holding of oral arguments on the significant issues raised and joined.
What has precipitated the controversy?
Issues
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" Under the Advisory issued on November 14, 2013, the presentations of the parties during the oral arguments
for voting in favor of the impeachment of Chief Justice Renato C. Corona. were limited to the following, to wit:

Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the DBM issued a public statement entitled Procedural Issue:
Abad: Releases to Senators Part of Spending Acceleration Program,1 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 A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the constitutionality and
expansion. He clarified that the funds had been released to the Senators based on their letters of request for validity of the Disbursement Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and all other
funding; and that it was not the first time that releases from the DAP had been made because the DAP had executive issuances allegedly implementing the DAP. Subsumed in this issue are whether there is a controversy
already been instituted in 2011 to ramp up spending after sluggish disbursements had caused the growth of the ripe for judicial determination, and the standing of petitioners.
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 (2) unprogrammed funds; (3) carry-over appropriations Substantive Issues:
unreleased from the previous year; and (4) budgets for slow-moving items or projects that had been realigned to
support faster-disbursing projects. 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."
The DBM soon came out to claim in its website3 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 C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP
of unreleased appropriations, like unreleased Personnel Services4 appropriations that would lapse at the end of 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 Members, submitted several evidence packets to aid the Court in understanding the factual bases of the DAP, to
"savings" as the term is used in Sec. 25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013; wit:

(b)They authorize the disbursement of funds for projects or programs not provided in the GAAs for the Executive (1) First Evidence Packet11 – containing seven memoranda issued by the DBM through Sec. Abad, inclusive of
Department; and annexes, listing in detail the 116 DAP identified projects approved and duly signed by the President, as follows:

(c)They "augment" discretionary lump sum appropriations in the GAAs. a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed Disbursement Acceleration
Program (Projects and Sources of Funds);
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 b. Memorandum for the President dated December 12, 2011 (Omnibus Authority to Consolidate
release of funds upon the request of legislators. Savings/Unutilized Balances and its Realignment);

E. Whether or not factual and legal justification exists to issue a temporary restraining order to restrain the c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate Savings/Unutilized
implementation of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP. Balances and their Realignment);

In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to support its d. Memorandum for the President dated September 4, 2012 (Release of funds for other priority projects and
argument regarding the President’s power to spend. During the oral arguments, the propriety of releasing expenditures of the Government);
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. e. Memorandum for the President dated December 19, 2012 (Proposed Priority Projects and Expenditures of the
Hence, an additional issue for the oral arguments is stated as follows: Government);

F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs. 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
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 g. Memorandum for the President dated September 25, 2013 (Funding for the Task Force Pablo Rehabilitation
programs; (c) unpaid appropriations for compensation; (d) a certified copy of the President’s directive dated June Plan).
27, 2012 referred to in NBC No. 541; and (e) all circulars or orders issued in relation to the DAP. 9
(2) Second Evidence Packet12 – consisting of 15 applications of the DAP, with their corresponding Special
In compliance, the OSG submitted several documents, as follows: Allotment Release Orders (SAROs) and appropriation covers;

(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority to (3) Third Evidence Packet13 – containing a list and descriptions of 12 projects under the DAP;
Consolidate Savings/Unutilized Balances and their Realignment);10
(4) Fourth Evidence Packet14 – identifying the DAP-related portions of the Annual Financial Report (AFR) of the
(2) Circulars and orders, which the respondents identified as related to the DAP, namely: Commission on Audit for 2011 and 2012;

a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011); (5) Fifth Evidence Packet15 – 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
b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY 2012); annexes; and

c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ (6) Sixth Evidence Packet16 – a print-out of the Solicitor General’s visual presentation for the January 28, 2014
Unobligated Allotments as of June 30, 2012); oral arguments.

d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013); On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet, 18 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
e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of Commitments/Obligations of thereof.
the National Government);
On February 14, 2014, the OSG submitted another set of documents in further compliance with the Resolution
f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the Submission of Quarterly dated January 28, 2014, viz:
Accountability Reports on Appropriations, Allotments, Obligations and Disbursements);
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the revenue
g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in the Government). 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
(3) A breakdown of the sources of savings, including savings from discontinued projects and unpaid the unprogrammed funds as provided in Special Provision No. 1 of Article XLV, Article XVI, and Article XLV of the
appropriations for compensation from 2011 to 2013 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
On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014 directing the Senate and the Commission on Elections (COMELEC).
respondents to submit the documents not yet submitted in compliance with the directives of the Court or its
RULING 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
I.
The respondents argue that it is the application of the DAP to actual situations that the petitioners can question
Procedural Issue: 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
a) The petitions under Rule 65 are proper remedies the decision or final order of the COA by special civil action for certiorari under Rule 64 of the Rules of Court. 24

All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the issuance of writs of The respondents’ arguments and submissions on the procedural issue are bereft of merit.
preliminary prohibitory injunction or temporary restraining orders. More specifically, the nature of the petitions
is individually set forth hereunder, to wit: 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
G.R. No. 209135 (Syjuco) Certiorari, Prohibition and Mandamus
established by law.

G.R. No. 209136 (Luna) Certiorariand Prohibition 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
G.R. No. 209155 (Villegas) Certiorariand Prohibition Government.

Thus, the Constitution vests judicial power in the Court and in such lower courts as may be established by law. In
G.R. No. 209164 (PHILCONSA) Certiorariand Prohibition 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.25 However, only the
Court is a constitutionally created court, the rest being created by Congress in its exercise of the legislative
G.R. No. 209260 (IBP) Prohibition
power.

G.R. No. 209287 (Araullo) Certiorariand Prohibition 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
G.R. No. 209442 (Belgica) Certiorari 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.
G.R. No. 209517 (COURAGE) Certiorari and Prohibition
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
G.R. No. 209569 (VACC) Certiorari and Prohibition former Chief Justice of the Philippines) in his sponsorship of the proposed provisions on the Judiciary, where he
said:–
The respondents submit that there is no actual controversy that is ripe for adjudication in the absence of adverse
claims between the parties;19 that the petitioners lacked legal standing to sue because no allegations were made The Supreme Court, like all other courts, has one main function: to settle actual controversies involving conflicts
to the effect that they had suffered any injury as a result of the adoption of the DAP and issuance of NBC No. 541; of rights which are demandable and enforceable. There are rights which are guaranteed by law but cannot be
that their being taxpayers did not immediately confer upon the petitioners the legal standing to sue considering enforced by a judicial party. In a decided case, a husband complained that his wife was unwilling to perform her
that the adoption and implementation of the DAP and the issuance of NBC No. 541 were not in the exercise of duties as a wife. The Court said: "We can tell your wife what her duties as such are and that she is bound to
the taxing or spending power of Congress;20 and that even if the petitioners had suffered injury, there were plain, comply with them, but we cannot force her physically to discharge her main marital duty to her husband. There
speedy and adequate remedies in the ordinary course of law available to them, like assailing the regularity of the are some rights guaranteed by law, but they are so personal that to enforce them by actual compulsion would be
DAP and related issuances before the Commission on Audit (COA) or in the trial courts. 21 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
The respondents aver that the special civil actions of certiorari and prohibition are not proper actions for directly demandable or enforceable…
assailing the constitutionality and validity of the DAP, NBC No. 541, and the other executive issuances
implementing the DAP.22 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
In their memorandum, the respondents further contend that there is no authorized proceeding under the considered divided into three branches: the Legislative, the Executive and the Judiciary. Each one is supreme
Constitution and the Rules of Court for questioning the validity of any law unless there is an actual case or within its own sphere and independent of the others. Because of that supremacy power to determine whether a
controversy the resolution of which requires the determination of the constitutional question; that the given law is valid or not is vested in courts of justice.
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 Briefly stated, courts of justice determine the limits of power of the agencies and offices of the government as
the acts of Congress and of the President in violation of the principle of separation of powers; and that, in the 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 What are the remedies by which the grave abuse of discretion amounting to lack or excess of jurisdiction on the
is not only a judicial power but a duty to pass judgmenton matters of this nature. part of any branch or instrumentality of the Government may be determined under the Constitution?

This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the duty The present Rules of Court uses two special civil actions for determining and correcting grave abuse of discretion
to settle matters of this nature, by claiming that such matters constitute a political question. (Bold emphasis amounting to lack or excess of jurisdiction. These are the special civil actions for certiorari and prohibition, and
supplied)26 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
Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of judicial power in Commission on Audit.
the following manner:–
The ordinary nature and function of the writ of certiorari in our present system are aptly explained in Delos
MR. NOLLEDO. x x x Santos v. Metropolitan Bank and Trust Company:30

The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice to settle actual In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of
controversies…" The term "actual controversies" according to the Commissioner should refer to questions which Chancery, or the King’s Bench, commanding agents or officers of the inferior courts to return the record of a
are political in nature and, therefore, the courts should not refuse to decide those political questions. But do I cause pending before them, so as to give the party more sure and speedy justice, for the writ would enable the
understand it right that this is restrictive or only an example? I know there are cases which are not actual yet the superior court to determine from an inspection of the record whether the inferior court’s judgment was
court can assume jurisdiction. An example is the petition for declaratory relief. 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
May I ask the Commissioner’s opinion about that? 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
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments. requirements of law and would lie only to review judicial or quasi-judicial acts.

MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested in the Supreme The concept of the remedy of certiorari in our judicial system remains much the same as it has been in the
Court alone but also in other lower courts as may be created by law. 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
MR. CONCEPCION. Yes. 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:
MR. NOLLEDO. And so, is this only an example?
xxxx
MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions with jurisdictional
questions. But there is a difference. 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
MR. NOLLEDO. Because of the expression "judicial power"? 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
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a question as to hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform
whether the government had authority or had abused its authority to the extent of lacking jurisdiction or excess the duty enjoined or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial
of jurisdiction, that is not a political question. Therefore, the court has the duty to decide.27 or quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction. 31

Our previous Constitutions equally recognized the extent of the power of judicial review and the great Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be distinguished
responsibility of the Judiciary in maintaining the allocation of powers among the three great branches of from prohibition by the fact that it is a corrective remedy used for the re-examination of some action of an
Government. Speaking for the Court in Angara v. Electoral Commission, 28 Justice Jose P. Laurel intoned: 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. 32 The
x x x In times of social disquietude or political excitement, the great landmarks of the Constitution are apt to be Court expounded on the nature and function of the writ of prohibition in Holy Spirit Homeowners Association,
forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department is the only Inc. v. Defensor:33
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. 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,
xxxx 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 entity’s or person’s jurisdiction, or are
The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent accompanied with grave abuse of discretion, and there is no appeal or any other plain, speedy and adequate
of such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational way. remedy in the ordinary course of law. Prohibition lies against judicial or ministerial functions, but not against
And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the legislative or quasi-legislative functions. Generally, the purpose of a writ of prohibition is to keep a lower court
other department; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn within the limits of its jurisdiction in order to maintain the administration of justice in orderly channels.
and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Prohibition is the proper remedy to afford relief against usurpation of jurisdiction or power by an inferior court,
Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and or when, in the exercise of jurisdiction in handling matters clearly within its cognizance the inferior court
guarantees to them. This is in truth all that is involved in what is termed "judicial supremacy" which properly is transgresses the bounds prescribed to it by the law, or where there is no adequate remedy available in the
the power of judicial review under the Constitution. x x x29 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 been allocated, disbursed or utilized by reason or on account of such challenged executive acts gave rise,
jurisdiction of the Regional Trial Court. In any case, petitioners’ allegation that "respondents are performing or therefore, to an actual controversy that is ripe for adjudication by the Court.
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. 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
With respect to the Court, however, the remedies of certiorari and prohibition are necessarily broader in scope inform the Court that because the DAP has already fully served its purpose, the Administration’s economic
and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not managers have recommended its termination to the President. x x x."39
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 The Solicitor General then quickly confirmed the termination of the DAP as a program, and urged that its
any branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or termination had already mooted the challenges to the DAP’s constitutionality, viz:
ministerial functions. This application is expressly authorized by the text of the second paragraph of Section 1,
supra. 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
Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to review extinct, but at the level of its prior applications or the specific disbursements under the now defunct policy. We
and/or prohibit or nullify the acts of legislative and executive officials.34 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
Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of grave abuse of authority of the President and the Legislature to respond to the dynamic needs of the country and the evolving
discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, the demands of governance, lest we end up straight jacketing our elected representatives in ways not consistent
Court is not at all precluded from making the inquiry provided the challenge was properly brought by interested with our constitutional structure and democratic principles. 40
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 A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events,
action. This entrustment is consistent with the republican system of checks and balances. 35 so that a declaration thereon would be of no practical use or value.41

Following our recent dispositions concerning the congressional pork barrel, the Court has become more alert to The Court cannot agree that the termination of the DAP as a program was a supervening event that effectively
discharge its constitutional duty. We will not now refrain from exercising our expanded judicial power in order to mooted these consolidated cases. Verily, the Court had in the past exercised its power of judicial review despite
review and determine, with authority, the limitations on the Chief Executive’s spending power. 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
b) Requisites for the exercise of the interest; (3) when the constitutional issue raised required the formulation of controlling principles to guide the
power of judicial review were Bench, the Bar and the public; and (4) when the case was capable of repetition yet evading review. 42
complied with
Assuming that the petitioners’ several submissions against the DAP were ultimately sustained by the Court here,
The requisites for the exercise of the power of judicial review are the following, namely: (1) there must bean these cases would definitely come under all the exceptions. Hence, the Court should not abstain from exercising
actual case or justiciable controversy before the Court; (2) the question before the Court must be ripe for its power of judicial review.
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 Did the petitioners have the legal standing to sue?

The first requisite demands that there be an actual case calling for the exercise of judicial power by the Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance in a court of
Court.37 An actual case or controversy, in the words of Belgica v. Executive Secretary Ochoa: 38 justice on a given question."43 The concept of legal standing, or locus standi, was particularly discussed in De
Castro v. Judicial and Bar Council,44 where the Court said:
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 In public or constitutional litigations, the Court is often burdened with the determination of the locus standi of
a contrariety of legal rights that can be interpreted and enforced on the basis of existing law and jurisprudence." the petitioners due to the ever-present need to regulate the invocation of the intervention of the Court to
Related to the requirement of an actual case or controversy is the requirement of "ripeness," meaning that the correct any official action or policy in order to avoid obstructing the efficient functioning of public officials and
questions raised for constitutional scrutiny are already ripe for adjudication. "A question is ripe for adjudication offices involved in public service. It is required, therefore, that the petitioner must have a personal stake in the
when the act being challenged has had a direct adverse effect on the individual challenging it. It is a prerequisite outcome of the controversy, for, as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
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 question on legal standing is whether such parties have "alleged such a personal stake in the outcome of the
the challenged action." "Withal, courts will decline to pass upon constitutional issues through advisory opinions, controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the
bereft as they are of authority to resolve hypothetical or moot questions." 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
An actual and justiciable controversy exists in these consolidated cases. The incompatibility of the perspectives of to show, not only that the law or any government act is invalid, but also that he sustained or is in imminent
the parties on the constitutionality of the DAP and its relevant issuances satisfy the requirement for a conflict danger of sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in
between legal rights. The issues being raised herein meet the requisite ripeness considering that the challenged some indefinite way. It must appear that the person complaining has been or is about to be denied some right or
executive acts were already being implemented by the DBM, and there are averments by the petitioners that privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by
such implementation was repugnant to the letter and spirit of the Constitution. Moreover, the implementation of reason of the statute or act complained of.
the DAP entailed the allocation and expenditure of huge sums of public funds. The fact that public funds have
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for determining Under their respective circumstances, each of the petitioners has established sufficient interest in the outcome
whether a petitioner in a public action had locus standi. There, the Court held that the person who would assail of the controversy as to confer locus standi on each of them.
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 In addition, considering that the issues center on the extent of the power of the Chief Executive to disburse and
Trainers’ Association v. De la Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of allocate public funds, whether appropriated by Congress or not, these cases pose issues that are of
Public Works. transcendental importance to the entire Nation, the petitioners included. As such, the determination of such
important issues call for the Court’s exercise of its broad and wise discretion "to waive the requirement and so
Yet, the Court has also held that the requirement of locus standi, being a mere procedural technicality, can be remove the impediment to its addressing and resolving the serious constitutional questions raised." 50
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 II.
petitioners did not pass the direct injury test were allowed to be treated in the same way as in Araneta v. Substantive Issues
Dinglasan.
1.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues raised by the Overview of the Budget System
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 An understanding of the Budget System of the Philippines will aid the Court in properly appreciating and justly
ordinary citizens, legislators, and civic organizations to bring their suits involving the constitutionality or validity resolving the substantive issues.
of laws, regulations, and rulings.
a) Origin of the Budget System
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 The term "budget" originated from the Middle English word bouget that had derived from the Latin word bulga
such petitioner may not be as adversely affected by the action complained against as are others, it is enough that (which means bag or purse).51
he sufficiently demonstrates in his petition that he is entitled to protection or relief from the Court in the
vindication of a public right. 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
Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus standi. That is not expenditures for the fiscal year for which it was intended to be effective based on the results of operations
surprising, for even if the issue may appear to concern only the public in general, such capacities nonetheless during the preceding fiscal years. The term was given a different meaning under Republic Act No. 992 (Revised
equip the petitioner with adequate interest to sue. In David v. Macapagal-Arroyo, the Court aptly explains why: 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. 52 For a
Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public actions. The distinction forthright definition, budget should simply be identified as the financial plan of the Government,53 or "the master
was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayer’s suit is in a different plan of government."54
category from the plaintiff in a citizen’s 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 The concept of budgeting has not been the product of recent economies. In reality, financing public goals and
Court in People ex rel Case v. Collins: "In matter of mere public right, however…the people are the real parties…It activities was an idea that existed from the creation of the State.55 To protect the people, the territory and
is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued sovereignty of the State, its government must perform vital functions that required public expenditures. At the
and punished, and that a public grievance be remedied." With respect to taxpayer’s suits, Terr v. Jordan held that beginning, enormous public expenditures were spent for war activities, preservation of peace and order, security,
"the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds administration of justice, religion, and supply of limited goods and services.56 In order to finance those
to his injury cannot be denied."45 expenditures, the State raised revenues through taxes and impositions. 57 Thus, budgeting became necessary to
allocate public revenues for specific government functions.58The State’s budgeting mechanism eventually
The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co., Inc. 46 that "[s]tanding is developed through the years with the growing functions of its government and changes in its market economy.
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 The Philippine Budget System has been greatly influenced by western public financial institutions. This is because
voters who actually sue in the public interest." of the country’s past as a colony successively of Spain and the United States for a long period of time. Many
aspects of the country’s public fiscal administration, including its Budget System, have been naturally patterned
Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their capacities as taxpayers after the practices and experiences of the western public financial institutions. At any rate, the Philippine Budget
who, by averring that the issuance and implementation of the DAP and its relevant issuances involved the illegal System is presently guided by two principal objectives that are vital to the development of a progressive
disbursements of public funds, have an interest in preventing the further dissipation of public funds. The democratic government, namely: (1) to carry on all government activities under a comprehensive fiscal plan
petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert their right as citizens to sue for developed, authorized and executed in accordance with the Constitution, prevailing statutes and the principles of
the enforcement and observance of the constitutional limitations on the political branches of the Government. 47 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
On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring cases upon citizenry can determine the adequacy of the budget actions taken, authorized or proposed, as well as the true
constitutional issues.48 Luna, the petitioner in G.R. No. 209136, cites his additional capacity as a lawyer. The IBP, financial position of the Government.59
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 b) Evolution of the Philippine Budget System
this country."49
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 The NEP and BESF are thereafter presented by the DBM and the DBCC to the President and the Cabinet for
budget for submission to the Philippine Legislature.60 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:
As early as under the 1935 Constitution, a budget policy and a budget procedure were established, and (1) the President’s Budget Message, through which the President explains the policy framework and budget
subsequently strengthened through the enactment of laws and executive acts.61 EO No. 25, issued by President priorities; (2) the BESF, mandated by Section 22, Article VII of the Constitution,68 which contains the
Manuel L. Quezon on April 25, 1936, created the Budget Commission to serve as the agency that carried out the macroeconomic assumptions, public sector context, breakdown of the expenditures and funding sources for the
President’s responsibility of preparing the budget.62 CA No. 246, the first budget law, went into effect on January fiscal year and the two previous years; and (3) the NEP.
1, 1938 and established the Philippine budget process. The law also provided a line-item budget as the
framework of the Government’s budgeting system,63 with emphasis on the observance of a "balanced budget" to Public or government expenditures are generally classified into two categories, specifically: (1) capital
tie up proposed expenditures with existing revenues. 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
CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act (RA) No. 992,whereby in the capital of government-owned or controlled corporations and their subsidiaries. 69 Current operating
Congress introduced performance-budgeting to give importance to functions, projects and activities in terms of expenditures are the purchases of goods and services in current consumption the benefit of which does not
expected results.64 RA No. 992 also enhanced the role of the Budget Commission as the fiscal arm of the extend beyond the fiscal year.70 The two components of current expenditures are those for personal services
Government.65 (PS), and those for maintenance and other operating expenses(MOOE).

The 1973 Constitution and various presidential decrees directed a series of budgetary reforms that culminated in Public expenditures are also broadly grouped according to their functions into: (1) economic development
the enactment of PD No. 1177 that President Marcos issued on July30, 1977, and of PD No. 1405, issued on June expenditures (i.e., expenditures on agriculture and natural resources, transportation and communications,
11, 1978. The latter decree converted the Budget Commission into the Ministry of Budget, and gave its head the commerce and industry, and other economic development efforts);71 (2) social services or social development
rank of a Cabinet member. expenditures (i.e., government outlay on education, public health and medicare, labor and welfare and
others);72 (3) general government or general public services expenditures (i.e., expenditures for the general
The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under EO No. 711. The government, legislative services, the administration of justice, and for pensions and gratuities); 73 (4) national
OBM became the DBM pursuant to EO No. 292 effective on November 24, 1989. defense expenditures (i.e., sub-divided into national security expenditures and expenditures for the maintenance
of peace and order);74 and (5) public debt.75
c) The Philippine Budget Cycle66
Public expenditures may further be classified according to the nature of funds, i.e., general fund, special fund or
Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget Legislation; bond fund.76
(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. 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
c.1.Budget Preparation67
Classical economist Adam Smith categorized public revenues based on two principal sources, stating: "The
The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The Budget Call revenue which must defray…the necessary expenses of government may be drawn either, first from some fund
contains budget parameters earlier set by the Development Budget Coordination Committee (DBCC) as well as which peculiarly belongs to the sovereign or commonwealth, and which is independent of the revenue of the
policy guidelines and procedures to aid government agencies in the preparation and submission of their budget people, or, secondly, from the revenue of the people."78 Adam Smith’s classification relied on the two aspects of
proposals. The Budget Call is of two kinds, namely: (1) a National Budget Call, which is addressed to all agencies, the nature of the State: first, the State as a juristic person with an artificial personality, and, second, the State as
including state universities and colleges; and (2) a Corporate Budget Call, which is addressed to all government- a sovereign or entity possessing supreme power. Under the first aspect, the State could hold property and
owned and -controlled corporations (GOCCs) and government financial institutions (GFIs). 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
Following the issuance of the Budget Call, the various departments and agencies submit their respective Agency revenues of its subjects in the form of taxes.79
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 In the Philippines, public revenues are generally derived from the following sources, to wit: (1) tax revenues(i.e.,
preparation of the Agency Budget Proposals, which proposals are then presented before a technical panel of the compulsory contributions to finance government activities); 80 (2) capital revenues(i.e., proceeds from sales of
DBM in scheduled budget hearings wherein the various departments and agencies are given the opportunity to fixed capital assets or scrap thereof and public domain, and gains on such sales like sale of public lands, buildings
defend their budget proposals. DBM bureaus thereafter review the Agency Budget Proposals and come up with and other structures, equipment, and other properties recorded as fixed assets); 81 (3) grants(i.e., voluntary
recommendations for the Executive Review Board, comprised by the DBM Secretary and the DBM’s senior contributions and aids given to the Government for its operation on specific purposes in the form of money
officials. The discussions of the Executive Review Board cover the prioritization of programs and their and/or materials, and do not require any monetary commitment on the part of the recipient); 82 (4) extraordinary
corresponding support vis-à-vis the priority agenda of the National Government, and their implementation. 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); 83and (5) public
The DBM next consolidates the recommended agency budgets into the National Expenditure Program (NEP)and a borrowings(i.e., proceeds of repayable obligations generally with interest from domestic and foreign creditors of
Budget of Expenditures and Sources of Financing (BESF). The NEP provides the details of spending for each the Government in general, including the National Government and its political subdivisions). 8486
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, The Budget Legislation Phase covers the period commencing from the time Congress receives the President’s
especially those in line with the National Government’s development plan. The Staffing Summary provides the Budget, which is inclusive of the NEPand the BESF, up to the President’s approval of the GAA. This phase is also
staffing complement of each department and agency, including the number of positions and amounts allocated. known as the Budget Authorization Phase, and involves the significant participation of the Legislative through its
deliberations.
Initially, the President’s Budget is assigned to the House of Representatives’ Appropriations Committee on First Actual disbursement or spending of government funds terminates the Budget Execution Phase and is usually
Reading. The Appropriations Committee and its various Sub-Committees schedule and conduct budget hearings accomplished through the Modified Disbursement Scheme under which disbursements chargeable against the
to examine the PAPs of the departments and agencies. Thereafter, the House of Representatives drafts the National Treasury are coursed through the government servicing banks.
General Appropriations Bill (GAB).87
c.4. Accountability98
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 Accountability is a significant phase of the budget cycle because it ensures that the government funds have been
of Representatives’ version is transmitted to the Senate.88 effectively and efficiently utilized to achieve the State’s 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
After transmission, the Senate conducts its own committee hearings on the GAB. To expedite proceedings, the policies.
Senate may conduct its committee hearings simultaneously with the House of Representatives’ deliberations.
The Senate’s Finance Committee and its Sub-Committees may submit the proposed amendments to the GAB to An agency’s accountability may be examined and evaluated through (1) performance targets and outcomes; (2)
the plenary of the Senate only after the House of Representatives has formally transmitted its version to the budget accountability reports; (3) review of agency performance; and (4) audit conducted by the Commission on
Senate. The Senate version of the GAB is likewise approved on Third Reading. 89 Audit(COA).

The House of Representatives and the Senate then constitute a panel each to sit in the Bicameral Conference 2.
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. 90 The President reviews the Nature of the DAP as a fiscal plan
GAB, and prepares the Veto Message where budget items are subjected to direct veto, 91 or are identified for
conditional implementation. a. DAP was a program designed to
promote economic growth
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 Policy is always a part of every budget and fiscal decision of any Administration. 99 The national budget the
passed by the Congress.92 Executive prepares and presents to Congress represents the Administration’s "blueprint for public policy" and
reflects the Government’s goals and strategies. 100 As such, the national budget becomes a tangible
c.3. Budget Execution93 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. 101 Embodied in every national budget is
With the GAA now in full force and effect, the next step is the implementation of the budget. The Budget government spending.102
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 When he assumed office in the middle of 2010, President Aquino made efficiency and transparency in
Release Program; (3) to release allotments; and (4) to issue disbursement authorities. 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
The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this, the various decelerated government project implementation and payment schedules. 103 The World Bank observed that the
departments and agencies are required to submit Budget Execution Documents(BED) to outline their plans and Philippines’ economic growth could be reduced, and potential growth could be weakened should the
performance targets by laying down the physical and financial plan, the monthly cash program, the estimate of Government continue with its underspending and fail to address the large deficiencies in infrastructure. 104 The
monthly income, and the list of obligations that are not yet due and demandable. 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
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release Program (CRP).The ARP growth by investing on high-impact budgetary PAPs to be funded from the "savings" generated during the year
sets a limit for allotments issued in general and to a specific agency. The CRP fixes the monthly, quarterly and as well as from unprogrammed funds.105 In that respect, the DAP was the product of "plain executive policy-
annual disbursement levels. making" to stimulate the economy by way of accelerated spending.106 The Administration would thereby
accelerate government spending by: (1) streamlining the implementation process through the clustering of
Allotments, which authorize an agency to enter into obligations, are issued by the DBM. Allotments are lesser in infrastructure projects of the Department of Public Works and Highways (DPWH) and the Department of
scope than appropriations, in that the latter embrace the general legislative authority to spend. Allotments may Education (DepEd),and (2) front loading PPP-related projects107 due for implementation in the following year.108
be released in two forms – through a comprehensive Agency Budget Matrix (ABM), 94 or, individually, by SARO.95
Did the stimulus package work?
Armed with either the ABM or the SARO, agencies become authorized to incur obligations 96 on behalf of the
Government in order to implement their PAPs. Obligations may be incurred in various ways, like hiring of The March 2012 report of the World Bank,109 released after the initial implementation of the DAP, revealed that
personnel, entering into contracts for the supply of goods and services, and using utilities. the DAP was partially successful. The disbursements under the DAP contributed 1.3 percentage points to GDP
growth by the fourth quarter of 2011.110 The continued implementation of the DAP strengthened growth by
In order to settle the obligations incurred by the agencies, the DBM issues a disbursement authority so that cash 11.8% year on year while infrastructure spending rebounded from a 29% contraction to a 34% growth as of
may be allocated in payment of the obligations. A cash or disbursement authority that is periodically issued is September 2013.111
referred to as a Notice of Cash Allocation (NCA),97 which issuance is based upon an agency’s submission of its
Monthly Cash Program and other required documents. The NCA specifies the maximum amount of cash that can The DAP thus proved to be a demonstration that expenditure was a policy instrument that the Government could
be withdrawn from a government servicing bank for the period indicated. Apart from the NCA, the DBM may use to direct the economies towards growth and development. 112 The Government, by spending on public
issue a Non-Cash Availment Authority(NCAA) to authorize non-cash disbursements, or a Cash Disbursement infrastructure, would signify its commitment of ensuring profitability for prospective investors. 113 The PAPs
Ceiling(CDC) for departments with overseas operations to allow the use of income collected by their foreign funded under the DAP were chosen for this reason based on their: (1) multiplier impact on the economy and
posts for their operating requirements. 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 Program
under the DAP

How the Administration’s economic managers conceptualized and developed the DAP, and finally presented it to 21,544 Unreleased With prior
the President remains unknown because the relevant documents appear to be scarce. Carryover appropriations (slow approval from
Appropriation moving projects and the President in
The earliest available document relating to the genesis of the DAP was the memorandum of October 12,2011 programs for November 2010
from Sec. Abad seeking the approval of the President to implement the proposed DAP. The memorandum, which discontinuance) and to declare as
contained a list of the funding sources for P72.11 billion and of the proposed priority projects to be savings from Zero-based Budgeting savings and with
funded,115 reads: Initiative authority to use
for priority
MEMORANDUM FOR THE PRESIDENT projects

xxxx
FY 2011 Budget 7,748 FY 2011 Agency For information
SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS AND SOURCES OF FUNDS)
items for Budget items that can
realignment be realigned within the
DATE: OCTOBER 12, 2011 agency to fund new fast
disbursing projects
Mr. President, this is to formally confirm your approval of the Disbursement Acceleration Program DPWH-3.981 Billion
totaling P72.11 billion. We are already working with all the agencies concerned for the immediate execution of DA – 2.497 Billion
the projects therein. DOT – 1.000 Billion
DepEd – 270 Million
A. Fund Sources for the Acceleration Program

72.110    
Amount
Action
d Sources (In million Description
Requested
Php) B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)

2011 30,000 Unreleased Personnel Declare as
eleased Services (PS) savings and
sonal appropriations which approve/ GOCCs and GFIs
vices (PS) will lapse at the end of authorize its use
propriations FY 2011 but may be for the 2011
Agency/Project Allotment
pooled as savings and Disbursement
(SARO and NCA Release) (in Million Php)
realigned for priority Acceleration
programs that require Program
immediate funding
1. LRTA: Rehabilitation of LRT 1 and 2 1,868

2011 482 Unreleased   2. NHA: 11,050

eleased appropriations (slow
propriations moving projects and a. Resettlement of North Triangle residents to
programs for Camarin A7 450
discontinuance) b. Housing for BFP/BJMP
c. On-site development for families living 500
along dangerous 10,000
2010 12,336 Supported by the GFI Approve and d. Relocation sites for informal settlers
programmed Dividends authorize its use along Iloilo River and its tributaries 100
d for the 2011
Disbursement
Acceleration
3. PHIL. HEART CENTER: Upgrading of 357 Agency/Project Allotment
ageing physical plant and medical equipment (SARO) Cash
(In Million Requirement
Php) (NCA)
4. CREDIT INFO CORP: Establishment of 75
centralized credit information system
13. DOF-BIR: NPSTAR
centralization of data    
5. PIDS: purchase of land to relocate the PIDS 100 processing and others (To be    
office and building construction synchronized with GFMIS    
activities) 758 758

6. HGC: Equity infusion for credit insurance 400

and mortgage guaranty operations of HGC 14. COA: IT infrastructure
program and hiring of    
additional litigational experts 144 144
7. PHIC: Obligations incurred (premium 1,496
subsidy for indigent families) in January-June
2010, booked for payment in Jul[y] – Dec 15. DND-PAF: On Base Housing
2010. The delay in payment is due to the Facilities and Communication    
delay in the certification of the LGU Equipment 30 30
counterpart. Without it, the NG is obliged to
pay the full amount.
16. DA: 2,959 2,223
a. Irrigation, FMRs and
8. Philpost: Purchase of foreclosed property. 644 Integrated Community Based Multi-Species    
Payment of Mandatory Obligations, (GSIS, Hatchery and Aquasilvi    
PhilHealth, ECC), Franking Privilege Farming 1,629 1,629
b. Mindanao Rural
Development Project 919 183
9. BSP: First equity infusion out of Php 40B 10,000
capitalization under the BSP Law
c. NIA Agno River Integrated
Irrigation Project 411 411
10. PCMC: Capital and Equipment Renovation 280

17. DAR: 1,293 1,293

11. LCOP: 105 a. Agrarian Reform
a. Pediatric Pulmonary Program Communities Project 2 1,293 132
b. Bio-regenerative Technology Program b. Landowners Compensation 5,432
(Stem-Cell Research – subject to legal 35
review and presentation)
18. DBM: Conduct of National
70 Survey of    
Farmers/Fisherfolks/Ips 625 625

12. TIDCORP: NG Equity infusion 570

19. DOJ: Operating requirements
of 50 investigation agents and    
TOTAL 26,945 15 state attorneys 11 11

20. DOT: Preservation of the Cine

Corregidor Complex 25 25
NGAs/LGUs

21. OPAPP: Activities for Peace

Process (PAMANA- Project     and Development Intervention 8,592 8,592
details: budget breakdown,    
implementation plan, and    
conditions on fund release     31. DOTC-MRT: Purchase of
attached as Annex B) 1,819 1,819 additional MRT cars 4,500 -

22. DOST 425 425 32. LGU Support Fund 6,500 6,500
a. Establishment of National
Meterological and Climate    
Center 275 275 33. Various Other Local Projects 6,500 6,500
b. Enhancement of Doppler
Radar Network for National    
Weather Watch, Accurate     34. Development Assistance to the
Forecasting and Flood Early     Province of Quezon 750 750
Warning 190 190

TOTAL 45,165 44,000

23. DOF-BOC: To settle the
principal obligations with    
C. Summary
PDIC consistent with the    
agreement with the CISS and    
SGS 2,800 2,800   Fund Sources
Identified for Allotments Cash
Approval for Release Requirements for
24. OEO-FDCP: Establishment of (In Million Release in FY
the National Film Archive and     Php) 2011
local cinematheques, and other    
local activities 20 20
Total 72,110 72,110 70,895

25. DPWH: Various infrastructure

projects 5,500 5,500 GOCCs 26,895 26,895

26. DepEd/ERDT/DOST: Thin NGAs/LGUs 45,165 44,000

Client Cloud Computing    
Project 270 270
For His Excellency’s Consideration

27. DOH: Hiring of nurses and (Sgd.) FLORENCIO B. ABAD

midwives 294 294
[/] APPROVED

28. TESDA: Training Program in [ ] DISAPPROVED

partnership with BPO industry    
and other sectors 1,100 1,100 (Sgd.) H.E. BENIGNO S. AQUINO, III

OCT 12, 2011

29. DILG: Performance Challenge
Fund (People Empowered     The memorandum of October 12, 2011 was followed by another memorandum for the President dated
Community Driven     December 12, 2011116 requesting omnibus authority to consolidate the savings and unutilized balances for fiscal
Development with DSWD and     year 2011. Pertinent portions of the memorandum of December 12, 2011 read:
NAPC) 250 50
MEMORANDUM FOR THE PRESIDENT

30. ARMM: Comprehensive Peace xxxx

SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment 7.0 x x x

DATE: December 12, 2011 FOR THE PRESIDENT’S APPROVAL

This is to respectfully request for the grant of Omnibus Authority to consolidate savings/unutilized balances in FY 8.0 Foregoing considered, may we respectfully request for the President’s approval for the following:
2011 corresponding to completed or discontinued projects which may be pooled to fund additional projects or
expenditures. 8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized balances and its realignment; and

In addition, Mr. President, this measure will allow us to undertake projects even if their implementation carries 8.2 The proposed additional projects identified for funding.
over to 2012 without necessarily impacting on our budget deficit cap next year.
For His Excellency’s consideration and approval.
BACKGROUND
(Sgd.)
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 [/] APPROVED
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: [ ] DISAPPROVED

1.1 to provide for new activities which have not been anticipated during preparation of the budget; (Sgd.) H.E. BENIGNO S. AQUINO, III

1.2 to augment additional requirements of on-going priority projects; and DEC 21, 2011

1.3 to provide for deficiencies under the Special Purpose Funds, e.g., PDAF, Calamity Fund, Contingent Fund 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, 2012,117 September 4, 2012,118 December 19,
1.4 to cover for the modifications of the original allotment class allocation as a result of on-going priority projects 2012,119 May 20, 2013,120 and September 25, 2013.121 The President apparently approved all the requests,
and implementation of new activities withholding approval only of the proposed projects 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
2.0 x x x x discussions."122

2.1 x x x 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), 123 reproduced herein
2.2 x x x as follows:

ON THE UTILIZATION OF POOLED SAVINGS NATIONAL BUDGET CIRCULAR No. 541

3.0 It may be recalled that the President approved our request for omnibus authority to pool savings/unutilized July 18, 2012
balances in FY 2010 last November 25, 2010.
TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the National
4.0 It is understood that in the utilization of the pooled savings, the DBM shall secure the corresponding Government, Budget and Planning Officers; Heads of Accounting Units and All Others Concerned
approval/confirmation of the President. Furthermore, it is assured that the proposed realignments shall be
within the authorized Expenditure level. SUBJECT : Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of
June 30, 2012
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 1.0 Rationale
declared as savings to fund additional expenditures.
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987), periodically reviews and
5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to be spent for the projects that we have evaluates the departments/agencies’ efficiency and effectiveness in utilizing budgeted funds for the delivery of
identified to be immediate actual disbursements considering that this same fund source will expire on December services and production of goods, consistent with the government priorities.
31, 2011.
In the event that a measure is necessary to further improve the operational efficiency of the government, the
5.2 With respect to the proposed expenditure items to be funded from the FY 2011 Unreleased Appropriations, President is authorized to suspend or stop further use of funds allotted for any agency or expenditure authorized
most of these are the same projects for which the DBM is directed by the Office of the President, thru the in the General Appropriations Act. Withdrawal and pooling of unutilized allotment releases can be effected by
Executive Secretary, to source funds. DBM based on authority of the President, as mandated under Sections 38 and 39, Chapter 5, Book VI of EO 292.

6.0 Among others, the following are such proposed additional projects that have been chosen given their For the first five months of 2012, the National Government has not met its spending targets. In order to
multiplier impact on economy and infrastructure development, their beneficial effect on the poor, and their accelerate spending and sustain the fiscal targets during the year, expenditure measures have to be
translation into disbursements. Please note that we have classified the list of proposed projects as follows: implemented to optimize the utilization of available resources.
Departments/agencies have registered low spending levels, in terms of obligations and disbursements per initial 4.2.1 Personal Services other than pension benefits;
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 4.2.2 MOOE items earmarked for specific purposes or subject to realignment conditions per General Provisions of
and the factors/issues affecting their performance (both pertaining to internal systems and those which are the GAA:
outside the agencies’ spheres of control). Also, they are asked to formulate strategies and improvement plans for
the rest of 2012. • Confidential and Intelligence Fund;

Notwithstanding these initiatives, some departments/agencies have continued to post low obligation levels as of • Savings from Traveling, Communication, Transportation and Delivery, Repair and Maintenance, Supplies and
end of first semester, thus resulting to substantial unobligated allotments. Materials and Utility which shall be used for the grant of Collective Negotiation Agreement incentive benefit;

In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of unobligated • Savings from mandatory expenditures which can be realigned only in the last quarter after taking into
allotments of agencies with low levels of obligations as of June 30, 2012, both for continuing and current consideration the agency’s full year requirements, i.e., Petroleum, Oil and Lubricants, Water, Illumination, Power
allotments. This measure will allow the maximum utilization of available allotments to fund and undertake other Services, Telephone, other Communication Services and Rent.
priority expenditures of the national government.
4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);
2.0 Purpose
4.2.4 Special Purpose Funds such as: E-Government Fund, International Commitments Fund, PAMANA, Priority
2.1 To provide the conditions and parameters on the withdrawal of unobligated allotments of agencies as of June Development Assistance Fund, Calamity Fund, Budgetary Support to GOCCs and Allocation to LGUs, among
30, 2012 to fund priority and/or fast-moving programs/projects of the national government; others;

2.2 To prescribe the reports and documents to be used as bases on the withdrawal of said unobligated 4.2.5 Quick Response Funds; and
allotments; and
4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium and Special Accounts in the General
2.3 To provide guidelines in the utilization or reallocation of the withdrawn allotments. Fund.

3.0 Coverage 5.0 Guidelines

3.1 These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 of all national 5.1 National government agencies shall continue to undertake procurement activities notwithstanding the
government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A. No.10147) and FY 2012 implementation of the policy of withdrawal of unobligated allotments until the end of the third quarter, FY 2012.
Current Appropriation (R.A. No. 10155), pertaining to: 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
3.1.1 Capital Outlays (CO); Nos. 02-2008 and 01-2009 and DBM Circular Letter No. 2010-9.

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of programs and 5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all
projects, as well as capitalized MOOE; and 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;
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. • Statement of Allotments, Obligations and Balances (SAOB);

3.2 The withdrawal of unobligated allotments may cover the identified programs, projects and activities of the • Financial Report of Operations (FRO); and
departments/agencies reflected in the DBM list shown as Annex A or specific programs and projects as may be
identified by the agencies. • Physical Report of Operations.

4.0 Exemption 5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agency’s latest report
available shall be used by DBM as basis for withdrawal of allotment. The DBM shall compute/approximate the
These guidelines shall not apply to the following: agency’s 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
4.1 NGAs to P1,600 M (i.e., P800 M x 2 quarters).

4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal autonomy under the Philippine Constitution; 5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained unobligated as of June 30,
and 2012 shall be immediately considered for withdrawal. This policy is based on the following considerations:

4.1.2 State Universities and Colleges, adopting the Normative Funding allocation scheme i.e., distribution of a 5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be implementation-
predetermined budget ceiling. ready and doable during the given fiscal year; and

4.2 Fund Sources 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 President’s directive, the DBM shall, based on evaluation of the reports cited above and 10155) were subject to withdrawal through the issuance of negative SAROs, but such allotments could be either:
results of consultations with the departments/agencies, withdraw the unobligated allotments as of June 30, 2012 (1) reissued for the original PAPs of the concerned agencies from which they were withdrawn; or (2) realigned to
through issuance of negative Special Allotment Release Orders (SAROs). 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
5.6 DBM shall prepare and submit to the President, a report on the magnitude of withdrawn allotments. The implemented in 2012. Financing the other priority PAPs was made subject to the approval of the President. Note
report shall highlight the agencies which failed to submit the June 30 reports required under this Circular. here that NBC No. 541 used terminologies like "realignment" and "augmentation" in the application of the
withdrawn unobligated allotments.
5.7 The withdrawn allotments may be:
Taken together, all the issuances showed how the DAP was to be implemented and funded, that is — (1) by
5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned, from which the allotments declaring "savings" coming from the various departments and agencies derived from pooling unobligated
were withdrawn; 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.
5.7.2 Realigned to cover additional funding for other existing programs and projects of the agency/OU; or
c. DAP was not an appropriation
5.7.3 Used to augment existing programs and projects of any agency and to fund priority programs and projects measure; hence, no appropriation
not considered in the 2012 budget but expected to be started or implemented during the current year. law was required to adopt or to
implement it
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: 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,
5.8.1 Physical and Financial Plan (PFP); 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
5.8.2 Monthly Cash Program (MCP); and 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
5.8.3 Proof that the project/activity has started the procurement processes i.e., Proof of Posting and/or the GAAs without congressional authorization and control.
Advertisement of the Invitation to Bid.
The petitioners contend in unison that based on how it was developed and implemented the DAP violated the
5.9 The deadline for submission of request/s pertaining to these categories shall be until the end of the third mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money shall be paid out of the Treasury
quarter i.e., September 30, 2012. After said cut-off date, the withdrawn allotments shall be pooled and form part except in pursuance of an appropriation made by law."
of the overall savings of the national government.
The OSG posits, however, that no law was necessary for the adoption and implementation of the DAP because of
5.10 Utilization of the consolidated withdrawn allotments for other priority programs and projects as cited under its being neither a fund nor an appropriation, but a program or an administrative system of prioritizing spending;
item 5.7.3 of this Circular, shall be subject to approval of the President. Based on the approval of the President, and that the adoption of the DAP was by virtue of the authority of the President as the Chief Executive to ensure
DBM shall issue the SARO to cover the approved priority expenditures subject to submission by the agency/OU that laws were faithfully executed.
concerned of the SBR and supported with PFP and MCP.
We agree with the OSG’s position.
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 DAP was a government policy or strategy designed to stimulate the economy through accelerated spending.
the current year. The SAROs to be issued shall properly disclose the appropriation source of the release to In the context of the DAP’s adoption and implementation being a function pertaining to the Executive as the
determine the extent of allotment validity, as follows: 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
• For charges under R.A. 10147 – allotments shall be valid up to December 31, 2012; and 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
• For charges under R.A. 10155 – allotments shall be valid up to December 31, 2013. of the money in the public treasury, to be applied to some general object of governmental expenditure, or to
some individual purchase or expense."124 As pointed out in Gonzales v. Raquiza:125 ‘"In a strict sense,
5.12 Timely compliance with the submission of existing BARs and other reportorial requirements is reiterated for appropriation has been defined ‘as nothing more than the legislative authorization prescribed by the Constitution
monitoring purposes. 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
6.0 Effectivity from the State to its creditors.’"126

This circular shall take effect immediately. 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 country’s economic situation. 127 He
(Sgd.) FLORENCIO B. ABAD could adopt a plan like the DAP for the purpose. He could pool the savings and identify the PAPs to be funded
Secretary 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
As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies and departments as of June public treasury by Congress through the GAAs. In such actions, the Executive did not usurp the power vested in
30, 2012 that were charged against the continuing appropriations for fiscal year 2011 and the 2012 GAA (R.A. No. Congress under Section 29(1), Article VI of the Constitution.
3. In contrast, by allowing to the heads of offices some power to transfer funds within their respective offices, the
Unreleased appropriations and withdrawn Constitution itself ensures the fiscal autonomy of their offices, and at the same time maintains the separation of
unobligated allotments under the DAP powers among the three main branches of the Government. The Court has recognized this, and emphasized so in
were not savings, and the use of such Bengzon v. Drilon,133 viz:
appropriations contravened Section 25(5),
Article VI of the 1987 Constitution. 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
Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the Executive to ramp up manner the independent constitutional offices allocate and utilize the funds appropriated for their operations is
spending to accelerate economic growth, the challenges posed by the petitioners constrain us to dissect the anathema to fiscal autonomy and violative not only of the express mandate of the Constitution but especially as
mechanics of the actual execution of the DAP. The management and utilization of the public wealth inevitably regards the Supreme Court, of the independence and separation of powers upon which the entire fabric of our
demands a most careful scrutiny of whether the Executive’s implementation of the DAP was consistent with the constitutional system is based.
Constitution, the relevant GAAs and other existing laws.
In the case of the President, the power to transfer funds from one item to another within the Executive has not
a. Although executive discretion been the mere offshoot of established usage, but has emanated from law itself. It has existed since the time of
and flexibility are necessary in the American Governors-General.134 Act No. 1902 (An Act authorizing the Governor-General to direct any
the execution of the budget, any unexpended balances of appropriations be returned to the general fund of the Insular Treasury and to transfer
transfer of appropriated funds from the general fund moneys which have been returned thereto), passed on May 18, 1909 by the First
should conform to Section 25(5), Philippine Legislature,135 was the first enabling law that granted statutory authority to the President to transfer
Article VI of the Constitution 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
We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that may come into balance as if it had originally been appropriated for that bureau or office.
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 From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be transferred,
President, require flexibility in their operations under performance budgeting to enable them to make whatever thereby limiting the power to transfer funds. Only 10% of the amounts appropriated for contingent or
adjustments are needed to meet established work goals under changing conditions. 128 In particular, the power to miscellaneous expenses could be transferred to a bureau or office, and the transferred funds were to be used to
transfer funds can give the President the flexibility to meet unforeseen events that may otherwise impede the cover deficiencies in the appropriations also for miscellaneous expenses of said bureau or office.
efficient implementation of the PAPs set by Congress in the GAA.
In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous expenses to any
Congress has traditionally allowed much flexibility to the President in allocating funds pursuant to the other item of a certain bureau or office was removed.
GAAs,129 particularly when the funds are grouped to form lump sum accounts. 130 It is assumed that the agencies
of the Government enjoy more flexibility when the GAAs provide broader appropriation items. 131 This flexibility During the Commonwealth period, the power of the President to transfer funds continued to be governed by the
comes in the form of policies that the Executive may adopt during the budget execution phase. The DAP – as a GAAs despite the enactment of the Constitution in 1935. It is notable that the 1935 Constitution did not include a
strategy to improve the country’s economic position – was one policy that the President decided to carry out in provision on the power to transfer funds. At any rate, a shift in the extent of the President’s power to transfer
order to fulfill his mandate under the GAAs. 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
Denying to the Executive flexibility in the expenditure process would be counterproductive. In Presidential Department could be made in the "interest of the public, as the President may determine." 136
Spending Power,132 Prof. Louis Fisher, an American constitutional scholar whose specialties have included budget
policy, has justified extending discretionary authority to the Executive thusly: In its time, the 1971 Constitutional Convention wanted to curtail the President’s seemingly unbounded discretion
in transferring funds.137 Its Committee on the Budget and Appropriation proposed to prohibit the transfer of
[T]he impulse to deny discretionary authority altogether should be resisted. There are many number of reasons funds among the separate branches of the Government and the independent constitutional bodies, but to allow
why obligations and outlays by administrators may have to differ from appropriations by legislators. instead their respective heads to augment items of appropriations from savings in their respective budgets under
Appropriations are made many months, and sometimes years, in advance of expenditures. Congress acts with certain limitations.138 The clear intention of the Convention was to further restrict, not to liberalize, the power to
imperfect knowledge in trying to legislate in fields that are highly technical and constantly undergoing change. transfer appropriations.139 Thus, the Committee on the Budget and Appropriation initially considered setting
New circumstances will develop to make obsolete and mistaken the decisions reached by Congress at the stringent limitations on the power to augment, and suggested that the augmentation of an item of appropriation
appropriation stage. It is not practicable for Congress to adjust to each new development by passing separate could be made "by not more than ten percent if the original item of appropriation to be augmented does not
supplemental appropriation bills. Were Congress to control expenditures by confining administrators to narrow exceed one million pesos, or by not more than five percent if the original item of appropriation to be augmented
statutory details, it would perhaps protect its power of the purse but it would not protect the purse itself. The exceeds one million pesos."140 But two members of the Committee objected to the P1,000,000.00 threshold,
realities and complexities of public policy require executive discretion for the sound management of public funds. saying that the amount was arbitrary and might not be reasonable in the future. The Committee agreed to
eliminate the P1,000,000.00 threshold, and settled on the ten percent limitation. 141
xxxx
In the end, the ten percent limitation was discarded during the plenary of the Convention, which adopted the
x x x The expenditure process, by its very nature, requires substantial discretion for administrators. They need to following final version under Section 16, Article VIII of the 1973 Constitution, to wit:
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 (5) No law shall be passed authorizing any transfer of appropriations; however, the President, the Prime Minister,
programs and priorities established by Congress. 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, respective appropriations. The plain language of the constitutional restriction leaves no room for the petitioner’s
unless Congress enacted a law authorizing the President, the Prime Minister, the Speaker, the Chief Justice of the posture, which we should now dispose of as untenable.
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 It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article VI of the
augmentation only, and was further constricted by the condition that the funds to be transferred should come Constitution limiting the authority to transfer savings only to augment another item in the GAA is strictly but
from savings from another item in the appropriation of the office. 142 reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v. Commission on Elections:

On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that: 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
Section 44. Authority to Approve Fund Transfers. The President shall have the authority to transfer any fund doubts should be resolved in favor of the general provision rather than the exceptions. Where the general rule is
appropriated for the different departments, bureaus, offices and agencies of the Executive Department which are established by a statute with exceptions, none but the enacting authority can curtail the former. Not even the
included in the General Appropriations Act, to any program, project, or activity of any department, bureau or courts may add to the latter by implication, and it is a rule that an express exception excludes all others, although
office included in the General Appropriations Act or approved after its enactment. 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 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 The appropriate and natural office of the exception is to exempt something from the scope of the general words
agency within the Executive Branch, pursuant to the provisions of Article VIII, Section 16 (5) of the Constitution. 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.
In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for contravening Section Exceptions are subject to the rule of strict construction; hence, any doubt will be resolved in favor of the general
16(5)of the 1973 Constitution, ruling: 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
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under said Section 16. It restricted construction.
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 Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the President’s discretion
General Appropriations Act or approved after its enactment, without regard as to whether or not the funds to be over the appropriations during the Budget Execution Phase.
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 b. Requisites for the valid transfer of
disregard the standards set in the fundamental law, thereby amounting to an undue delegation of legislative appropriated funds under Section
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the provision 25(5), Article VI of the 1987
in question null and void.143 Constitution

It is significant that Demetria was promulgated 25 days after the ratification by the people of the 1987 The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a concurrence of
Constitution, whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of the 1973 Constitution, to the following requisites, namely:
wit:
(1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of
Section 25. x x x Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to
transfer funds within their respective offices;
xxxx
(2) The funds to be transferred are savings generated from the appropriations for their respective offices; and (3)
5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the The purpose of the transfer is to augment an item in the general appropriations law for their respective offices.
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 b.1. First Requisite–GAAs of 2011 and
for their respective offices from savings in other items of their respective appropriations. 2012 lacked valid provisions to
authorize transfers of funds under
xxxx the DAP; hence, transfers under the
DAP were unconstitutional
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 Section 25(5), supra, not being a self-executing provision of the Constitution, must have an implementing law for
other high officials of the Government named therein. The Court stated in Nazareth v. Villar: 144 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.
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 Did the GAAs expressly authorize the transfer of funds?
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 In the 2011 GAA, the provision that gave the President and the other high officials the authority to transfer funds
Justice of the Supreme Court, and the heads of Constitutional Commissions are authorized to transfer was Section 59, as follows:
appropriations to augmentany item in the GAA for their respective offices from the savings in other items of their
Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of "savings" in the GAAs set only the parameters for determining when savings occurred; that it was still the
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal President (as well as the other officers vested by the Constitution with the authority to augment) who ultimately
autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other determined when savings actually existed because savings could be determined only during the stage of budget
items of their respective appropriations. 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
In the 2012 GAA, the empowering provision was Section 53, to wit: appropriation…free 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…"
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 We partially find for the petitioners.
autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other
items of their respective appropriations. 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
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as justification for the use of the amounts of money to be spent for each PAP. The second principle is that the Executive, as the department of
savings under the DAP.145 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.149 The Executive is expected to faithfully implement the PAPs for
A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were textually which Congress allocated funds, and to limit the expenditures within the allocations, unless exigencies result to
unfaithful to the Constitution for not carrying the phrase "for their respective offices" contained in Section 25(5), deficiencies for which augmentation is authorized, subject to the conditions provided by law. The third principle
supra. The impact of the phrase "for their respective offices" was to authorize only transfers of funds within their is that in making the President’s power to augment operative under the GAA, Congress recognizes the need for
offices (i.e., in the case of the President, the transfer was to an item of appropriation within the Executive). The flexibility in budget execution. In so doing, Congress diminishes its own power of the purse, for it delegates a
provisions carried a different phrase ("to augment any item in this Act"), and the effect was that the 2011 and fraction of its power to the Executive. But Congress does not thereby allow the Executive to override its authority
2012 GAAs thereby literally allowed the transfer of funds from savings to augment any item in the GAAs even if over the purse as to let the Executive exceed its delegated authority. And the fourth principle is that savings
the item belonged to an office outside the Executive. To that extent did the 2011 and 2012 GAAs contravene the should be actual. "Actual" denotes something that is real or substantial, or something that exists presently in
Constitution. At the very least, the aforequoted provisions cannot be used to claim authority to transfer fact, as opposed to something that is merely theoretical, possible, potential or hypothetical. 150
appropriations from the Executive to another branch, or to a constitutional commission.
The foregoing principles caution us to construe savings strictly against expanding the scope of the power to
Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart provision in the 2013 augment. It is then indubitable that the power to augment was to be used only when the purpose for which the
GAA, to wit: 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
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of Congress’ power of the purse.
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 The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this interpretation and
augment actual deficiencies incurred for the current year in any item of their respective appropriations. made it operational, viz:

Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed, there still Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation or
remained two other requisites to be met, namely: that the source of funds to be transferred were savings from encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the
appropriations within the respective offices; and that the transfer must be for the purpose of augmenting an work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from
item of appropriation within the respective offices. 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
b.2. Second Requisite – There were efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and
no savings from which funds services approved in this Act at a lesser cost.
could be sourced for the DAP
Were the funds used in the DAP actually savings? 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
The petitioners claim that the funds used in the DAP — the unreleased appropriations and withdrawn being no longer existent.
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 The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs conveyed the
items that needed to be funded have been funded, or those that needed to be paid have been paid pursuant to notion that the appropriation was at that stage when the appropriation was already obligated and the
the budget.146 The petitioners posit that there could be savings only when the PAPs for which the funds had been appropriation was already released. This interpretation was reinforced by the enumeration of the three instances
appropriated were actually implemented and completed, or finally discontinued or abandoned. They insist that for savings to arise, which showed that the appropriation referred to had reached the agency level. It could not
savings could not be realized with certainty in the middle of the fiscal year; and that the funds for "slow-moving" be otherwise, considering that only when the appropriation had reached the agency level could it be determined
PAPs could not be considered as savings because such PAPs had not actually been abandoned or discontinued whether (a) the PAP for which the appropriation had been authorized was completed, finally discontinued, or
yet.147 They stress that NBC No. 541, by allowing the withdrawn funds to be reissued to the "original program or abandoned; or (b) there were vacant positions and leaves of absence without pay; or (c) the required or planned
project from which it was withdrawn," conceded that the PAPs from which the supposed savings were taken had targets, programs and services were realized at a lesser cost because of the implementation of measures
not been completed, abandoned or discontinued.148 resulting in improved systems and efficiencies.

The OSG represents that "savings" were "appropriations balances," being the difference between the The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriation authorized by Congress and the actual amount allotted for the appropriation; that the definition of 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 9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving projects
findings." to be identified by the agencies and their catch up plans to be evaluated by the DBM.

The declaration of the DBM by itself does not state the clear legal basis for the treatment of unreleased or It is apparent from the foregoing text that the withdrawal of unobligated allotments would be based on whether
unalloted appropriations as savings. 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:
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 3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 ofall national
generated. Appropriations have been considered "released" if there has already been an allotment or government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A. No. 10147) and FY 2012
authorization to incur obligations and disbursement authority. This means that the DBM has issued either an Current Appropriation (R.A. No. 10155), pertaining to:
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 3.1.1 Capital Outlays (CO);
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 3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of programs and
remained with the DBM technically speaking. Ergo, unreleased appropriations refer to appropriations with projects, as well as capitalized MOOE; and
allotments but without disbursement authority.
3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by the agencies
For us to consider unreleased appropriations as savings, unless these met the statutory definition of savings, concerned based on their undated/validated list of pensioners.
would seriously undercut the congressional power of the purse, because such appropriations had not even
reached and been used by the agency concerned vis-à-vis the PAPs for which Congress had allocated them. A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of unobligated allotments
However, if an agency has unfilled positions in its plantilla and did not receive an allotment and NCA for such of agencies with low levels of obligations"151 "to fund priority and/or fast-moving programs/projects."152 But the
vacancies, appropriations for such positions, although unreleased, may already constitute savings for that agency fact that the withdrawn allotments could be "[r]eissued for the original programs and projects of the
under the second instance. agencies/OUs concerned, from which the allotments were withdrawn" 153 supported the conclusion that the PAPs
had not yet been finally discontinued or abandoned. Thus, the purpose for which the withdrawn funds had been
Unobligated allotments, on the other hand, were encompassed by the first part of the definition of "savings" in appropriated was not yet fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings
the GAA, that is, as "portions or balances of any programmed appropriation in this Act free from any obligation impossible.
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 Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011 charged against the
savings without first determining whether any of the three instances existed. This signified that the DBM’s 2011 GAA that had remained unobligated based on the following considerations, to wit:
withdrawal of unobligated allotments had disregarded the definition of savings under the GAAs.
5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be implementation-
Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE appropriations are deemed ready and doable during the given fiscal year; and
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 5.4.2 The practice of having substantial carryover appropriations may imply that the agency has a slower-than-
Business-type Activities because of the physical impossibility to obligate and spend such funds as MOOE for a programmed implementation capacity or agency tends to implement projects within a two-year timeframe.
period that already lapsed. Following this observation, MOOE for future months are not savings and cannot be
transferred. 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
The DBM’s Memorandum for the President dated June 25, 2012 (which became the basis of NBC No. 541) stated: for MOOE and capital outlay extended under Section 65, General Provisions of the 2011 GAA, viz:

ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS 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
5.0 The DBM, during the course of performance reviews conducted on the agencies’ operations, particularly on applicable thereto, for a period extending to one fiscal year after the end of the year in which such items were
the implementation of their projects/activities, including expenses incurred in undertaking the same, have been appropriated: PROVIDED, That appropriations for MOOE and capital outlays under R.A. No. 9970 shall be made
continuously calling the attention of all National Government agencies (NGAs) with low levels of obligations as of available up to the end of FY 2011: PROVIDED, FURTHER, That a report on these releases and obligations shall be
end of the first quarter to speedup the implementation of their programs and projects in the second quarter. submitted to the Senate Committee on Finance and the House Committee on Appropriations.

6.0 Said reminders were made in a series of consultation meetings with the concerned agencies and with call-up and Section 63 General Provisions of the 2012 GAA, viz:
letters sent.
Section 63. Availability of Appropriations. — Appropriations for MOOE and capital outlays authorized in this Act
7.0 Despite said reminders and the availability of funds at the department’s disposal, the level of financial shall be available for release and obligation for the purpose specified, and under the same special provisions
performance of some departments registered below program, with the targeted obligations/disbursements for applicable thereto, for a period extending to one fiscal year after the end of the year in which such items were
the first semester still not being met. 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
8.0 In order to maximize the use of the available allotment, all unobligated balances as of June 30, 2012, both for electronic document.154
continuing and current allotments shall be withdrawn and pooled to fund fast moving programs/projects.
Thus, another alleged area of constitutional infirmity was that the DAP and its relevant issuances shortened the The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments and the
period of availability of the appropriations for MOOE and capital outlays. 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
Congress provided a one-year period of availability of the funds for all allotment classes in the 2013 GAA (R.A. case of "unmanageable national government budget deficit" under the GAAs, 157 thus violating the provisions of
No. 10352), to wit: the GAAs of 2011, 2012 and 2013 prohibiting the retention or deduction of allotments. 158

Section 63. Availability of Appropriations.— All appropriations authorized in this Act shall be available for release In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a last-ditch
and obligation for the purposes specified, and under the same special provisions applicable thereto, until the end effort of the Executive to push agencies into actually spending their appropriations; that such policy did not
of FY 2013: PROVIDED, That a report on these releases and obligations shall be submitted to the Senate amount to an impoundment scheme, because impoundment referred to the decision of the Executive to refuse
Committee on Finance and House Committee on Appropriations, either in printed form or by way of electronic to spend funds for political or ideological reasons; and that the withdrawal of allotments under NBC No. 541 was
document. 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
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus authority to judgment the public interest so required.
consolidate savings and unutilized balances to fund the DAP on a quarterly basis, viz:
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and the
7.0 If the level of financial performance of some department will register below program, even with the pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such withdrawal
availability of funds at their disposal, the targeted obligations/disbursements for each quarter will not be met. It of unobligated allotments and the retention of appropriated funds cannot be considered as impoundment.
is important to note that these funds will lapse at the end of the fiscal year if these remain unobligated.
According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers to a refusal by the
8.0 To maximize the use of the available allotment, all unobligated balances at the end of every quarter, both for President, for whatever reason, to spend funds made available by Congress. It is the failure to spend or obligate
continuing and current allotments shall be withdrawn and pooled to fund fast moving programs/projects. 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
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving projects budget deficit, to wit:
to be identified by the agencies and their catch up plans to be evaluated by the DBM.
Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act
The validity period of the affected appropriations, already given the brief Lifes pan of one year, was further shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be
shortened to only a quarter of a year under the DBM’s memorandum dated May 20, 2013. 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
The petitioners accuse the respondents of forcing the generation of savings in order to have a larger fund Section 33 (3), Chapter 5, Book VI of E.O. No. 292.
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 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
The respondents belie the accusation, insisting that the unobligated allotments were being withdrawn upon the budget deficit.
instance of the implementing agencies based on their own assessment that they could not obligate those
allotments pursuant to the President’s directive for them to spend their appropriations as quickly as they could in Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the
order to ramp up the economy.156 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
We agree with the petitioners.
Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section
Contrary to the respondents’ insistence, the withdrawals were upon the initiative of the DBM itself. The text of 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such
NBC No. 541 bears this out, to wit: condition, as determined by the Development Budget Coordinating Committee and approved by the President.

5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all The 2012 and 2013 GAAs contained similar provisions.
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; 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.
• Statement of Allotments, Obligation and Balances (SAOB);
Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs) be applicable. They
• Financial Report of Operations (FRO); and uniformly stated:

• Physical Report of Operations. 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
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agency’s latest report reserves or overhead shall be made, except as authorized by law, or upon direction of the President of the
available shall be used by DBM as basis for withdrawal of allotment. The DBM shall compute/approximate the Philippines. The COA shall ensure compliance with this provision to the extent that sub-allotments by agencies to
agency’s obligation level as of June 30 to derive its unobligated allotments as of same period. Example: If the their subordinate offices are in conformity with the release documents issued by the DBM.
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 provision obviously pertained to the retention or deduction of allotments upon their release from the DBM, Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
which was a different matter altogether. The Court should not expand the meaning of the provision by applying it Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal
to the withdrawal of allotments. 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.
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 As of 2013, a total of P144.4 billion worth of PAPs were implemented through the DAP. 161
expenditures, not the withdrawal of unobligated allotments, to wit:
Of this amount P82.5 billion were released in 2011 and P54.8 billion in 2012.162 Sec. Abad has reported that 9% of
Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the General the total DAP releases were applied to the PAPs identified by the legislators. 163
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 The petitioners disagree, however, and insist that the DAP supported the following PAPs that had not been
any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services covered with appropriations in the respective GAAs, namely:
appropriations used for permanent officials and employees.
(i) P1.5 billion for the Cordillera People’s Liberation Army;
Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but
instead transferred the funds to other PAPs. (ii) P1.8 billion for the Moro National Liberation Front;

It is relevant to remind at this juncture that the balances of appropriations that remained unexpended at the end (iii) P700 million for assistance to Quezon Province;164
of the fiscal year were to be reverted to the General Fund.1âwphi1 This was the mandate of Section 28, Chapter
IV, Book VI of the Administrative Code, to wit: (iv) P50 million to P100 (million) each to certain senators;165

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.- Unexpended (v) P10 billion for the relocation of families living along dangerous zones under the National Housing Authority;
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 (vi) P10 billion and P20 billion equity infusion under the Bangko Sentral;
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 (vii) P5.4 billion landowners’ compensation under the Department of Agrarian Reform;
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 (viii) P8.6 billion for the ARMM comprehensive peace and development program;
savings realized by an agency during given year to meet non-recurring expenditures in a subsequent year.
(ix) P6.5 billion augmentation of LGU internal revenue allotments
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 (x) P5 billion for crucial projects like tourism road construction under the Department of Tourism and the
reversion of funds no longer needed in connection with the activities funded by said continuing appropriations. Department of Public Works and Highways;

The Executive could not circumvent this provision by declaring unreleased appropriations and unobligated (xi) P1.8 billion for the DAR-DPWH Tulay ng Pangulo;
allotments as savings prior to the end of the fiscal year.
(xii) P1.96 billion for the DOH-DPWH rehabilitation of regional health units; and
b.3. Third Requisite – No funds from
savings could be transferred under (xiii) P4 billion for the DepEd-PPP school infrastructure projects. 166
the DAP to augment deficient items
not provided in the GAA 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
The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to augment an item standard practices adopted by the DBM.167 In support of its argument, the OSG has submitted seven evidence
in the general appropriations law for the respective offices." The term "augment" means to enlarge or increase in packets containing memoranda, SAROs, and other pertinent documents relative to the implementation and fund
size, amount, or degree.160 transfers under the DAP.168

The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for the PAP item to Upon careful review of the documents contained in the seven evidence packets, we conclude that the "savings"
be augmented must be deficient, to wit: – pooled under the DAP were allocated to PAPs that were not covered by any appropriations in the pertinent
GAAs.
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 For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk, Exposure, Assessment
case shall a non-existent program, activity, or project, be funded by augmentation from savings or by the use of and Mitigation (DREAM) project under the Department of Science and Technology (DOST) covered the amount
appropriations otherwise authorized in this Act. of P1.6 Billion,169 broken down as follows:

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: APPROPRIATION PARTICULARS AMOUNT
 AUTHORIZEDAPPROPRIATIO PARTICULARS AMOUNT
AUTHORIZED

3.a.01.a Generation of new knowledge and technologies and research

capability building in priority areas identified as strategic to National
Development Development, integration and coordination of the National Research System for Industry,
Personnel Services Energy and Emerging Technology and Related Fields
Maintenance and Other Operating Expenses  P 43,504,024 Capital Outlays P 300,000,000
Capital Outlays 1,164,517,589
391,978,387 the appropriation code and the particulars appearing in the SARO did not correspond to the program specified in
P 1,600,000,000 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.
the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had appropriated
Even assuming that Development, integration and coordination of the National Research System for Industry,
only P537,910,000 for MOOE, but nothing for personnel services and capital outlays, to wit:
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
Personnel Maintenance Capital TOTAL nonetheless remain a new activity by reason of its not being specifically stated in the GAA. As such, the DBM,
Services and Other Outlays sans legislative authorization, could not validly fund and implement such PAP under the DAP.
Operating
Expenditures 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;172 and that the President enjoyed unlimited authority to spend the initial appropriations under his
III. Operations authority to declare and utilize savings,173 and in keeping with his duty to faithfully execute the laws.

Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate to
a. Funding Assistance to Science 177,406,000 1,887,365,000 49,090,000 2,113,861,000
faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered discretion
and Technology Activities
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
1. Central Office 1,554,238,000 1,554,238,000 from Congress. Verily, the power to spend the public wealth resided in Congress, not in the
Executive.174 Moreover, leaving the spending power of the Executive unrestricted would threaten to undo the
principle of separation of powers.175
a. Generation of new
knowledge and Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse whenever it
technologies and research deliberates and acts on the budget proposal submitted by the Executive.176 Its power of the purse is touted as the
capability building in very foundation of its institutional strength,177 and underpins "all other legislative decisions and regulating the
priority areas identified as balance of influence between the legislative and executive branches of government."178 Such enormous power
strategic to National encompasses the capacity to generate money for the Government, to appropriate public funds, and to spend the
Development 537,910,000 537,910,000 money.179Pertinently, when it exercises its power of the purse, Congress wields control by specifying the PAPs for
which public money should be spent.
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 It is the President who proposes the budget but it is Congress that has the final say on matters of
priority areas identified as strategic to National Development, the Executive allotted funds for personnel services appropriations.180 For this purpose, appropriation involves two governing principles, namely: (1) "a Principle of
and capital outlays. The Executive thereby substituted its will to that of Congress. Worse, the Executive had not the Public Fisc, asserting that all monies received from whatever source by any part of the government are public
earlier proposed any amount for personnel services and capital outlays in the NEP that became the basis of the funds;" and (2) "a Principle of Appropriations Control, prohibiting expenditure of any public money without
2011 GAA.170 legislative authorization."181 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. 182 Nor could
It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for an expense the Executive transfer appropriated funds resulting in an increase in the budget for one PAP, for by so doing the
category sufficiently indicated that Congress purposely did not see fit to fund, much less implement, the PAP appropriation for another PAP is necessarily decreased. The terms of both appropriations will thereby be
concerned. This indication becomes clearer when even the President himself did not recommend in the NEP to violated.
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 b.4 Third Requisite – Cross-border
Congress in enacting the GAAs. That happened in some instances under the DAP. augmentations from savings were
prohibited by the Constitution
In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy and Emerging
Technology Research and Development (DOST-PCIEETRD)171 for Establishment of the Advanced Failure Analysis By providing that the President, the President of the Senate, the Speaker of the House of Representatives, the
Laboratory, which reads: 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 item in the General Appropriations Law for their respective offices." Did you not feel constricted by this
in the guise of augmentation of a deficient item or items. Thus, we call such transfers of funds cross-border provision?
transfers or cross-border augmentations.
SECRETARY ABAD:
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 Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations, Your Honor.
respect to the Speaker; the Judiciary, with respect to the Chief Justice; the Constitutional Commissions, with What we thought we did was to transfer savings which was needed by the Commission to address deficiency in
respect to their respective Chairpersons. an existing item in both the Commission as well as in the House of Representatives; that’s how we saw…
(interrupted)
Did any cross-border transfers or augmentations transpire?
JUSTICE BERSAMIN:
During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border augmentations,
to wit: So your position as Secretary of Budget is that you could do that?

JUSTICE BERSAMIN: SECRETARY ABAD:

Alright, the whole time that you have been Secretary of Department of Budget and Management, did the In an extreme instances because…(interrupted)
Executive Department ever redirect any part of savings of the National Government under your control cross
border to another department? JUSTICE BERSAMIN:

SECRETARY ABAD: No, no, in all instances, extreme or not extreme, you could do that, that’s your feeling.

Well, in the Memos that we submitted to you, such an instance, Your Honor SECRETARY ABAD:

JUSTICE BERSAMIN: 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
Can you tell me two instances? I don’t recall having read your material.
The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00 were transferred
SECRETARY ABAD: under the DAP respectively to the COA184 and the House of Representatives.185 Those transfers of funds, which
constituted cross-border augmentations for being from the Executive to the COA and the House of
Well, the first instance had to do with a request from the House of Representatives. They started building their e- Representatives, are graphed as follows:186
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 The respondents further stated in their memorandum that the President "made available" to the "Commission
complete 250 Million, they wrote to the President requesting for an augmentation of that particular item, which on Elections the savings of his department upon [its] request for funds…" 187 This was another instance of a cross-
was granted, Your Honor. The second instance in the Memos is a request from the Commission on Audit. At the border augmentation.
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 The respondents justified all the cross-border transfers thusly:
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 99. The Constitution does not prevent the President from transferring savings of his department to another
Executive and the President saw that it was important for the Commission to be provided with those IT department upon the latter’s request, provided it is the recipient department that uses such funds to augment its
equipments and litigators and consultants and the request was granted, Your Honor. 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
JUSTICE BERSAMIN: Constitution.188

These cross border examples, cross border augmentations were not supported by appropriations… 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
SECRETARY ABAD: "augmentation," viz:

They were, we were augmenting existing items within their… (interrupted) HONORABLE MENDOZA:

JUSTICE BERSAMIN: 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
No, appropriations before you augmented because this is a cross border and the tenor or text of the Constitution similar to the DAP, the use of savings. There was a cross-border which appears to be in violation of Section 25,
is quite clear as far as I am concerned. It says here, "The power to augment may only be made to increase any 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 JUSTICE LEONEN:
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. He’s in charge of the whole operation But Counsel, this would be new doctrine, in case?
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 HONORABLE MENDOZA:
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 Yes, if Your Honor please.190
that the other heads, given the power to augment, are not. So, he cannot very well allow this, if Your Honor
please.189 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
JUSTICE LEONEN: aid, were prohibited under Section 25(5), supra.

May I move to another point, maybe just briefly. I am curious that the position now, I think, of government is 4.
that some transfers of savings is now considered to be, if I’m not mistaken, aid not augmentation. Am I correct in Sourcing the DAP from unprogrammed
my hearing of your argument? funds despite the original revenue targets
not having been exceeded was invalid
HONORABLE MENDOZA:
Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for 2011, 2012,and
That’s our submission, if Your Honor, please. 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
JUSTICE LEONEN: were not subject to the restrictions under Section 25(5), supra.

May I know, Justice, where can we situate this in the text of the Constitution? Where do we actually derive the The documents contained in the Evidence Packets by the OSG have confirmed that the unprogrammed funds
concepts that transfers of appropriation from one branch to the other or what happened in DAP can be were treated as separate sources of funds. Even so, the release and use of the unprogrammed funds were still
considered a said? What particular text in the Constitution can we situate this? 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.
HONORABLE MENDOZA:
The petitioners point out that a condition for the release of the unprogrammed funds was that the revenue
There is no particular provision or statutory provision for that matter, if Your Honor please. It is drawn from the collections must exceed revenue targets; and that the release of the unprogrammed funds was illegal because
fact that the Executive is the executive in-charge of the success of the government. such condition was not met.191

JUSTICE LEONEN: 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
So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of the government? 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
HONORABLE MENDOZA: 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,
Yes, if Your Honor, please. such as perfected loan agreements for foreign-assisted projects. 192 This view of the DBM was adopted by all the
respondents in their Consolidated Comment.193
JUSTICE LEONEN:
The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as appropriations that
A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That there are provided standby authority to incur additional agency obligations for priority PAPs when revenue collections
opportunities and there have been opportunities of the President to actually go to Congress and ask for exceeded targets, and when additional foreign funds are generated.194Contrary to the DBM’s averment that there
supplemental budgets? 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
HONORABLE MENDOZA: 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
If there is time to do that, I would say yes. collected or generated, the basic condition that the revenue collections should exceed the revenue targets must
still be complied with in order to justify the release of the unprogrammed funds.
JUSTICE LEONEN:
The view that there were only two instances when the unprogrammed funds could be released was bolstered by
So, the theory of aid rather than augmentation applies in extra-ordinary situation? the following texts of the Special Provisions of the 2011 and 2012 GAAs, to wit:

HONORABLE MENDOZA: 2011 GAA

Very extra-ordinary situations. 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: TAX REVENUES
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 Taxes on Net Income and Profits
loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient Taxes on Property
basis for the issuance of a SARO covering the loan proceeds: PROVIDED, FURTHERMORE, That if there are savings Taxes on Domestic Goods and Services
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 General Sales, Turnover or VAT
corresponding to only fifty percent (50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That Selected Excises on Goods
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. Selected Taxes on Services
Taxes on the Use of Goods or Property or Permission to Perform Activities
2012 GAA Other Taxes
Taxes on International Trade and Transactions
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 NON-TAX REVENUES
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, Fees and Charges
FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan BTR Income
agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.
Government Services
As can be noted, the provisos in both provisions to the effect that "collections arising from sources not Interest on NG Deposits
considered in the aforesaid original revenue targets may be used to cover releases from appropriations in this Interest on Advances to Government Corporations
Fund" gave the authority to use such additional revenues for appropriations funded from the unprogrammed Income from Investments
funds. They did not at all waive compliance with the basic requirement that revenue collections must still exceed
the original revenue targets. Interest on Bond Holdings

In contrast, the texts of the provisos with regard to additional revenues generated from newly-approved foreign Guarantee Fee
loans were clear to the effect that the perfected loan agreement would be in itself "sufficient basis" for the Gain on Foreign Exchange
issuance of a SARO to release the funds but only to the extent of the amount of the loan. In such instance, the NG Income Collected by BTr
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. Dividends on Stocks
NG Share from Airport Terminal Fee
It can be inferred from the foregoing that under these provisions of the GAAs the additional revenues from NG Share from PAGCOR Income
sources not considered in the BESFs must be taken into account in determining if the revenue collections NG Share from MIAA Profit
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: Privatization
Foreign Grants
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 Thus, when the Court required the respondents to submit a certification from the Bureau of Treasury (BTr) to the
22, Article VII of the Constitution, including collections arising from sources not considered in the aforesaid effect that the revenue collections had exceeded the original revenue targets, 195 they complied by submitting
original revenue target, as certified by the BTr: PROVIDED, That in case of newly approved loans for foreign- certifications from the BTr and Department of Finance (DOF) pertaining to only one identified source of revenue
assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the – the dividends from the shares of stock held by the Government in government-owned and controlled
issuance of a SARO covering the loan proceeds. corporations.

Consequently, that there were additional revenues from sources not considered in the revenue target would not To justify the release of the unprogrammed funds for 2011, the OSG presented the certification dated March 4,
be enough. The total revenue collections must still exceed the original revenue targets to justify the release of 2011 issued by DOF Undersecretary Gil S. Beltran, as follows:
the unprogrammed funds (other than those from newly-approved foreign loans).
This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the programmed
The present controversy on the unprogrammed funds was rooted in the correct interpretation of the phrase income from dividends from shares of stock in government-owned and controlled corporations is 5.5 billion.
"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 This is to certify further that based on the records of the Bureau of Treasury, the National Government has
understand the phrase to refer only to the collections for each source of revenue as enumerated in the BESF, recorded dividend income amounting toP23.8 billion as of 31 January 2011.196
with the condition being deemed complied with once the revenue collections from a particular source already
exceeded the stated target. For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer Roberto B. Tan,
viz:
The BESF provided for the following sources of revenue, with the corresponding revenue target stated for each
source of revenue, to wit:
This is to certify that the actual dividend collections remitted to the National Government for the period January authorized them to take part in the implementation and execution of the GAAs, a function that exclusively
to March 2012 amounted toP19.419 billion compared to the full year program of P5.5 billion for 2012.197 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
And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National Treasurer Rosalia Congress because NBC No. 541 authorized the use of the funds under the DAP for PAPs not considered in the
V. De Leon, to wit: 2012 budget.

This is to certify that the actual dividend collections remitted to the National Government for the period January Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability enshrined in the
to May 2013 amounted to P12.438 billion compared to the full year program of P10.0198 billion for 2013. Constitution,204 because the legislators relinquished the power of appropriation to the Executive, and exhibited a
reluctance to inquire into the legality of the DAP.
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 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
The certifications reflected that by collecting dividends amounting to P23.8 billion in 2011, P19.419 billion in violation of the Equal Protection Clause was really against the constitutionality of the DAP, the arguments of the
2012, and P12.438 billion in 2013 the BTr had exceeded only the P5.5 billion in target revenues in the form of petitioners should be directed to the entitlement of the legislators to the funds, not to the proposition that all of
dividends from stocks in each of 2011 and 2012, and only the P10 billion in target revenues in the form of the legislators should have been given such entitlement.
dividends from stocks in 2013.
The challenge based on the contravention of the Equal Protection Clause, which focuses on the release of funds
However, the requirement that revenue collections exceed the original revenue targets was to be construed in under the DAP to legislators, lacks factual and legal basis. The allegations about Senators and Congressmen being
light of the purpose for which the unprogrammed funds were incorporated in the GAAs as standby unaware of the existence and implementation of the DAP, and about some of them having refused to accept
appropriations to support additional expenditures for certain priority PAPs should the revenue collections exceed such funds were unsupported with relevant data. Also, the claim that the Executive discriminated against some
the resource targets assumed in the budget or when additional foreign project loan proceeds were realized. The legislators on the ground alone of their receiving less than the others could not of itself warrant a finding of
unprogrammed funds were included in the GAAs to provide ready cover so as not to delay the implementation of contravention of the Equal Protection Clause. The denial of equal protection of any law should be an issue to be
the PAPs should new or additional revenue sources be realized during the year. 200 Given the tenor of the raised only by parties who supposedly suffer it, and, in these cases, such parties would be the few legislators
certifications, the unprogrammed funds were thus not yet supported by the corresponding resources. 201 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
The revenue targets stated in the BESF were intended to address the funding requirements of the proposed denial of equal protection occurred, and explain why there was a denial in their situation. The requirement was
programmed appropriations. In contrast, the unprogrammed funds, as standby appropriations, were to be not met here. Consequently, the Court was not put in the position to determine if there was a denial of equal
released only when there were revenues in excess of what the programmed appropriations required. As such, protection. To have the Court do so despite the inadequacy of the showing of factual and legal support would be
the revenue targets should be considered as a whole, not individually; otherwise, we would be dealing with to compel it to speculate, and the outcome would not do justice to those for whose supposed benefit the claim
artificial revenue surpluses. The requirement that revenue collections must exceed revenue target should be of denial of equal protection has been made.
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 The argument that the release of funds under the DAP effectively stayed the hands of the legislators from
source of revenue would be an unsound fiscal management measure because it would disregard the budget plan conducting congressional inquiries into the legality and propriety of the DAP is speculative. That deficiency
and foster budget deficits, in contravention of the Government’s surplus budget policy. 202 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
We cannot, therefore, subscribe to the respondents’ view. 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. 205 Simply put, guesswork
5. and speculation cannot overcome the presumption of the constitutionality of the assailed executive act.
Equal protection, checks and balances,
and public accountability challenges 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.
The DAP is further challenged as violative of the Equal Protection Clause, the system of checks and balances, and Our earlier expositions on the DAP and its implementing issuances infringing the doctrine of separation of
the principle of public accountability. powers effectively addressed this particular concern.

With respect to the challenge against the DAP under the Equal Protection Clause, 203 Luna argues that the Anent the principle of public accountability being transgressed because the adoption and implementation of the
implementation of the DAP was "unfair as it [was] selective" because the funds released under the DAP was not DAP constituted an assumption by the Executive of Congress’ power of appropriation, we have already held that
made available to all the legislators, with some of them refusing to avail themselves of the DAP funds, and others the DAP and its implementing issuances were policies and acts that the Executive could properly adopt and do in
being unaware of the availability of such funds. Thus, the DAP practised "undue favoritism" in favor of select the execution of the GAAs to the extent that they sought to implement strategies to ramp up or accelerate the
legislators in contravention of the Equal Protection Clause. economy of the country.

Similarly, COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable 6.
classification was used in distributing the funds under the DAP; and that the Senators who supposedly availed Doctrine of operative fact was applicable
themselves of said funds were differently treated as to the amounts they respectively received.
After declaring the DAP and its implementing issuances constitutionally infirm, we must now deal with the
Anent the petitioners’ theory that the DAP violated the system of checks and balances, Luna submits that the consequences of the declaration.
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, 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 To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The term executive
by disuse, or custom or practice to the contrary. 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: 210
When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter
shall govern. 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
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the status as that of a statute or those which are quasi-legislative in nature. Thus, the minority concludes that the
laws or the Constitution. 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
A legislative or executive act that is declared void for being unconstitutional cannot give rise to any right or Opinion of Justice Enrique Fernando in Municipality of Malabang v. Benito, where it was supposedly made
obligation.206 However, the generality of the rule makes us ponder whether rigidly applying the rule may at times explicit that the operative fact doctrine applies to executive acts, which are ultimately quasi-legislative in nature.
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? 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
The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has been branch have fixed definitions and meaning in the Administrative Code and jurisprudence, the phrase ‘executive
exhaustively explained in De Agbayani v. Philippine National Bank:207 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
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive ‘executive act’ is broad enough to encompass decisions of administrative bodies and agencies under the
order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or executive department which are subsequently revoked by the agency in question or nullified by the Court.
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: A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the Presidential
‘When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter Commission on Good Government (PCGG) and as Chief Presidential Legal Counsel (CPLC) which was declared
shall govern.’ Administrative or executive acts, orders and regulations shall be valid only when they are not unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In said case, this Court ruled that the
contrary to the laws of the Constitution. It is understandable why it should be so, the Constitution being supreme concurrent appointment of Elma to these offices is in violation of Section 7, par. 2, Article IX-B of the 1987
and paramount. Any legislative or executive act contrary to its terms cannot survive. 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
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. executive act, certain acts or transactions were made in good faith and in reliance of the appointment of Elma
It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must which cannot just be set aside or invalidated by its subsequent invalidation.
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 In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the invalidity of the
changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to have existed so
has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It as not to trample upon the rights of the accused therein. Relevant thereto, in Olaguer v. Military Commission No.
is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is 34, it was ruled that ‘military tribunals pertain to the Executive Department of the Government and are simply
merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final instrumentalities of the executive power, provided by the legislature for the President as Commander-in-Chief to
say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can aid him in properly commanding the army and navy and enforcing discipline therein, and utilized under his orders
exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its or those of his authorized military representatives.’
quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by the executive
In the language of an American Supreme Court decision: ‘The actual existence of a statute, prior to such a department that are accorded the same status as that of a statute or those which are quasi-legislative in nature.
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 Even assuming that De Agbayani initially applied the operative fact doctrine only to executive issuances like
invalidity may have to be considered in various aspects, with respect to particular relations, individual and orders and rules and regulations, said principle can nonetheless be applied, by analogy, to decisions made by the
corporate, and particular conduct, private and official.’" 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
The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of demands of equity, the Court can apply the operative fact doctrine to acts and consequences that resulted from
its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or the reliance not only on a law or executive act which is quasi-legislative in nature but also on decisions or orders
disregarded. In short, it nullifies the void law or executive act but sustains its effects. It provides an exception to of the executive branch which were later nullified. This Court is not unmindful that such acts and consequences
the general rule that a void or unconstitutional law produces no effect.208 But its use must be subjected to great must be recognized in the higher interest of justice, equity and fairness.
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. 209 It applies only to cases where extraordinary circumstances Significantly, a decision made by the President or the administrative agencies has to be complied with because it
exist, and only when the extraordinary circumstances have met the stringent conditions that will permit its has the force and effect of law, springing from the powers of the President under the Constitution and existing
application. 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
We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its application doctrine should be applied to acts and consequences that resulted from the implementation of the PARC
to the DAP proceeds from equity and fair play. The consequences resulting from the DAP and its related Resolution approving the SDP of HLI. (Bold underscoring supplied for emphasis)
issuances could not be ignored or could no longer be undone.
In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court likewise declared that "for (a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the
the operative fact doctrine to apply, there must be a ‘legislative or executive measure,’ meaning a law or withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year
executive issuance." Thus, the Court opined there that the operative fact doctrine did not apply to a mere and without complying with the statutory definition of savings contained in the General Appropriations Acts;
administrative practice of the Bureau of Internal Revenue, viz:
(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other offices
Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule outside the Executive; and
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 (c) The funding of projects, activities and programs that were not covered by any appropriation in the General
Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized Appropriations Act.
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 The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the
general public and can be availed of only by those with informal contacts with the government agency. National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
It is clear from the foregoing that the adoption and the implementation of the DAP and its related issuances were
executive acts.1avvphi1 The DAP itself, as a policy, transcended a merely administrative practice especially after SO ORDERED.
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 WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-appellant, 
consistently applied throughout the entire Executive. With the Executive, through the DBM, being in charge of vs.
the third phase of the budget cycle – the budget execution phase, the President could legitimately adopt a policy THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL., respondents-appellees.
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 Asst. Fiscal Noli M. Cortes and Jose P. Santos for appellant.
the budget execution phase. Office of the Asst. Solicitor General Jose G. Bautista and Solicitor A. A. Torres for appellee.

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 CONCEPCION, J.:
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 Appeal, by petitioner Wenceslao Pascual, from a decision of the Court of First Instance of Rizal, dismissing the
and the Nation is to be impractical and unfair. Unless the doctrine is held to apply, the Executive as the disburser above entitled case and dissolving the writ of preliminary injunction therein issued, without costs.
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. On August 31, 1954, petitioner Wenceslao Pascual, as Provincial Governor of Rizal, instituted this action for
Equity alleviates such burden. declaratory relief, with injunction, upon the ground that Republic Act No. 920, entitled "An Act Appropriating
Funds for Public Works", approved on June 20, 1953, contained, in section 1-C (a) thereof, an item (43[h]) of
The other side of the coin is that it has been adequately shown as to be beyond debate that the implementation P85,000.00 "for the construction, reconstruction, repair, extension and improvement" of Pasig feeder road
of the DAP yielded undeniably positive results that enhanced the economic welfare of the country. To count the terminals (Gen. Roxas — Gen. Araneta — Gen. Lucban — Gen. Capinpin — Gen. Segundo — Gen. Delgado —
positive results may be impossible, but the visible ones, like public infrastructure, could easily include roads, Gen. Malvar — Gen. Lim)"; that, at the time of the passage and approval of said Act, the aforementioned feeder
bridges, homes for the homeless, hospitals, classrooms and the like. Not to apply the doctrine of operative fact to roads were "nothing but projected and planned subdivision roads, not yet constructed, . . . within the Antonio
the DAP could literally cause the physical undoing of such worthy results by destruction, and would result in most Subdivision . . . situated at . . . Pasig, Rizal" (according to the tracings attached to the petition as Annexes A and B,
undesirable wastefulness. near Shaw Boulevard, not far away from the intersection between the latter and Highway 54), which projected
feeder roads "do not connect any government property or any important premises to the main highway"; that
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not the aforementioned Antonio Subdivision (as well as the lands on which said feeder roads were to be construed)
always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be were private properties of respondent Jose C. Zulueta, who, at the time of the passage and approval of said Act,
invoked only in situations where the nullification of the effects of what used to be a valid law would result in was a member of the Senate of the Philippines; that on May, 1953, respondent Zulueta, addressed a letter to the
inequity and injustice;212 but where no such result would ensue, the general rule that an unconstitutional law is Municipal Council of Pasig, Rizal, offering to donate said projected feeder roads to the municipality of Pasig, Rizal;
totally ineffective should apply. that, on June 13, 1953, the offer was accepted by the council, subject to the condition "that the donor would
submit a plan of the said roads and agree to change the names of two of them"; that no deed of donation in
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can no favor of the municipality of Pasig was, however, executed; that on July 10, 1953, respondent Zulueta wrote
longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the another letter to said council, calling attention to the approval of Republic Act. No. 920, and the sum of
authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor P85,000.00 appropriated therein for the construction of the projected feeder roads in question; that the
by the proper tribunals determining their criminal, civil, administrative and other liabilities. municipal council of Pasig endorsed said letter of respondent Zulueta to the District Engineer of Rizal, who, up to
the present "has not made any endorsement thereon" that inasmuch as the projected feeder roads in question
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES the were private property at the time of the passage and approval of Republic Act No. 920, the appropriation of
following acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541 and P85,000.00 therein made, for the construction, reconstruction, repair, extension and improvement of said
related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the 1987 projected feeder roads, was illegal and, therefore, void ab initio"; that said appropriation of P85,000.00 was
Constitution and the doctrine of separation of powers, namely: made by Congress because its members were made to believe that the projected feeder roads in question were
"public roads and not private streets of a private subdivision"'; that, "in order to give a semblance of legality,
when there is absolutely none, to the aforementioned appropriation", respondents Zulueta executed on
December 12, 1953, while he was a member of the Senate of the Philippines, an alleged deed of donation — of appellant herein. According to said petition, respondent Zulueta is the owner of several parcels of residential
copy of which is annexed to the petition — of the four (4) parcels of land constituting said projected feeder land situated in Pasig, Rizal, and known as the Antonio Subdivision, certain portions of which had been reserved
roads, in favor of the Government of the Republic of the Philippines; that said alleged deed of donation was, on for the projected feeder roads aforementioned, which, admittedly, were private property of said respondent
the same date, accepted by the then Executive Secretary; that being subject to an onerous condition, said when Republic Act No. 920, appropriating P85,000.00 for the "construction, reconstruction, repair, extension and
donation partook of the nature of a contract; that, such, said donation violated the provision of our fundamental improvement" of said roads, was passed by Congress, as well as when it was approved by the President on June
law prohibiting members of Congress from being directly or indirectly financially interested in any contract with 20, 1953. The petition further alleges that the construction of said roads, to be undertaken with the
the Government, and, hence, is unconstitutional, as well as null and void ab initio, for the construction of the aforementioned appropriation of P85,000.00, would have the effect of relieving respondent Zulueta of the
projected feeder roads in question with public funds would greatly enhance or increase the value of the burden of constructing his subdivision streets or roads at his own expenses, 1and would "greatly enhance or
aforementioned subdivision of respondent Zulueta, "aside from relieving him from the burden of constructing his increase the value of the subdivision" of said respondent. The lower court held that under these circumstances,
subdivision streets or roads at his own expense"; that the construction of said projected feeder roads was then the appropriation in question was "clearly for a private, not a public purpose."
being undertaken by the Bureau of Public Highways; and that, unless restrained by the court, the respondents
would continue to execute, comply with, follow and implement the aforementioned illegal provision of law, "to Respondents do not deny the accuracy of this conclusion, which is self-evident. 2However, respondent Zulueta
the irreparable damage, detriment and prejudice not only to the petitioner but to the Filipino nation." contended, in his motion to dismiss that:

Petitioner prayed, therefore, that the contested item of Republic Act No. 920 be declared null and void; that the A law passed by Congress and approved by the President can never be illegal because Congress is the source of
alleged deed of donation of the feeder roads in question be "declared unconstitutional and, therefor, illegal"; all laws . . . Aside from the fact that movant is not aware of any law which makes illegal the appropriation of
that a writ of injunction be issued enjoining the Secretary of Public Works and Communications, the Director of public funds for the improvement of what we, in the meantime, may assume as private property . . . (Record on
the Bureau of Public Works and Highways and Jose C. Zulueta from ordering or allowing the continuance of the Appeal, p. 33.)
above-mentioned feeder roads project, and from making and securing any new and further releases on the
aforementioned item of Republic Act No. 920, and the disbursing officers of the Department of Public Works and The first proposition must be rejected most emphatically, it being inconsistent with the nature of the
Highways from making any further payments out of said funds provided for in Republic Act No. 920; and that Government established under the Constitution of the Republic of the Philippines and the system of checks and
pending final hearing on the merits, a writ of preliminary injunction be issued enjoining the aforementioned balances underlying our political structure. Moreover, it is refuted by the decisions of this Court invalidating
parties respondent from making and securing any new and further releases on the aforesaid item of Republic Act legislative enactments deemed violative of the Constitution or organic laws. 3
No. 920 and from making any further payments out of said illegally appropriated funds.
As regards the legal feasibility of appropriating public funds for a public purpose, the principle according to Ruling
Respondents moved to dismiss the petition upon the ground that petitioner had "no legal capacity to sue", and Case Law, is this:
that the petition did "not state a cause of action". In support to this motion, respondent Zulueta alleged that the
Provincial Fiscal of Rizal, not its provincial governor, should represent the Province of Rizal, pursuant to section It is a general rule that the legislature is without power to appropriate public revenue for anything but a public
1683 of the Revised Administrative Code; that said respondent is " not aware of any law which makes illegal the purpose. . . . It is the essential character of the direct object of the expenditure which must determine its validity
appropriation of public funds for the improvements of . . . private property"; and that, the constitutional as justifying a tax, and not the magnitude of the interest to be affected nor the degree to which the general
provision invoked by petitioner is inapplicable to the donation in question, the same being a pure act of liberality, advantage of the community, and thus the public welfare, may be ultimately benefited by their
not a contract. The other respondents, in turn, maintained that petitioner could not assail the appropriation in promotion. Incidental to the public or to the state, which results from the promotion of private interest and the
question because "there is no actual bona fide case . . . in which the validity of Republic Act No. 920 is necessarily prosperity of private enterprises or business, does not justify their aid by the use public money. (25 R.L.C. pp.
involved" and petitioner "has not shown that he has a personal and substantial interest" in said Act "and that its 398-400; Emphasis supplied.)
enforcement has caused or will cause him a direct injury."
The rule is set forth in Corpus Juris Secundum in the following language:
Acting upon said motions to dismiss, the lower court rendered the aforementioned decision, dated October 29,
1953, holding that, since public interest is involved in this case, the Provincial Governor of Rizal and the provincial In accordance with the rule that the taxing power must be exercised for public purposes only,
fiscal thereof who represents him therein, "have the requisite personalities" to question the constitutionality of discussed supra sec. 14, money raised by taxation can be expended only for public purposes and not for the
the disputed item of Republic Act No. 920; that "the legislature is without power appropriate public revenues for advantage of private individuals. (85 C.J.S. pp. 645-646; emphasis supplied.)
anything but a public purpose", that the instructions and improvement of the feeder roads in question, if such
roads where private property, would not be a public purpose; that, being subject to the following condition: Explaining the reason underlying said rule, Corpus Juris Secundum states:

The within donation is hereby made upon the condition that the Government of the Republic of the Philippines Generally, under the express or implied provisions of the constitution, public funds may be used only for public
will use the parcels of land hereby donated for street purposes only and for no other purposes whatsoever; it purpose. The right of the legislature to appropriate funds is correlative with its right to tax, and, under
being expressly understood that should the Government of the Republic of the Philippines violate the condition constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for
hereby imposed upon it, the title to the land hereby donated shall, upon such violation, ipso facto revert to the one purpose and the devotion thereof to another purpose, no appropriation of state funds can be made for
DONOR, JOSE C. ZULUETA. (Emphasis supplied.) other than for a public purpose.

which is onerous, the donation in question is a contract; that said donation or contract is "absolutely forbidden x x x           x x x          x x x
by the Constitution" and consequently "illegal", for Article 1409 of the Civil Code of the Philippines, declares in
existence and void from the very beginning contracts "whose cause, objector purpose is contrary to law, The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to
morals . . . or public policy"; that the legality of said donation may not be contested, however, by petitioner promote the public interest, as opposed to the furtherance of the advantage of individuals, although each
herein, because his "interest are not directly affected" thereby; and that, accordingly, the appropriation in advantage to individuals might incidentally serve the public. (81 C.J.S. pp. 1147; emphasis supplied.)
question "should be upheld" and the case dismissed.
Needless to say, this Court is fully in accord with the foregoing views which, apart from being patently sound, are
At the outset, it should be noted that we are concerned with a decision granting the aforementioned motions to a necessary corollary to our democratic system of government, which, as such, exists primarily for the promotion
dismiss, which as much, are deemed to have admitted hypothetically the allegations of fact made in the petition
of the general welfare. Besides, reflecting as they do, the established jurisprudence in the United States, after The relation between the people of the Philippines and its taxpayers, on the other hand, and the Republic of the
whose constitutional system ours has been patterned, said views and jurisprudence are, likewise, part and parcel Philippines, on the other, is not identical to that obtaining between the people and taxpayers of the U.S. and its
of our own constitutional law.lawphil.net Federal Government. It is closer, from a domestic viewpoint, to that existing between the people and taxpayers
of each state and the government thereof, except that the authority of the Republic of the Philippines over the
This notwithstanding, the lower court felt constrained to uphold the appropriation in question, upon the ground people of the Philippines is more fully direct than that of the states of the Union, insofar as
that petitioner may not contest the legality of the donation above referred to because the same does not affect the simple and unitary type of our national government is not subject to limitations analogous to those imposed
him directly. This conclusion is, presumably, based upon the following premises, namely: (1) that, if valid, said by the Federal Constitution upon the states of the Union, and those imposed upon the Federal Government in
donation cured the constitutional infirmity of the aforementioned appropriation; (2) that the latter may not be the interest of the Union. For this reason, the rule recognizing the right of taxpayers to assail the constitutionality
annulled without a previous declaration of unconstitutionality of the said donation; and (3) that the rule set forth of a legislation appropriating local or state public funds — which has been upheld by the Federal Supreme Court
in Article 1421 of the Civil Code is absolute, and admits of no exception. We do not agree with these premises. (Crampton vs.Zabriskie, 101 U.S. 601) — has greater application in the Philippines than that adopted with respect
to acts of Congress of the United States appropriating federal funds.
The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon
events occurring, or acts performed, subsequently thereto, unless the latter consists of an amendment of the Indeed, in the Province of Tayabas vs. Perez (56 Phil., 257), involving the expropriation of a land by the Province
organic law, removing, with retrospective operation, the constitutional limitation infringed by said statute. of Tayabas, two (2) taxpayers thereof were allowed to intervene for the purpose of contesting the price being
Referring to the P85,000.00 appropriation for the projected feeder roads in question, the legality thereof paid to the owner thereof, as unduly exorbitant. It is true that in Custodio vs. President of the Senate (42 Off.
depended upon whether said roads were public or private property when the bill, which, latter on, became Gaz., 1243), a taxpayer and employee of the Government was not permitted to question the constitutionality of
Republic Act 920, was passed by Congress, or, when said bill was approved by the President and the an appropriation for backpay of members of Congress. However, in Rodriguez vs. Treasurer of the Philippines
disbursement of said sum became effective, or on June 20, 1953 (see section 13 of said Act). Inasmuch as the and Barredo vs.Commission on Elections (84 Phil., 368; 45 Off. Gaz., 4411), we entertained the action of
land on which the projected feeder roads were to be constructed belonged then to respondent Zulueta, the taxpayers impugning the validity of certain appropriations of public funds, and invalidated the same. Moreover,
result is that said appropriation sought a private purpose, and hence, was null and void. 4 The donation to the the reason that impelled this Court to take such position in said two (2) cases — the importance of the issues
Government, over five (5) months after the approval and effectivity of said Act, made, according to the petition, therein raised — is present in the case at bar. Again, like the petitioners in the Rodriguez and Barredo cases,
for the purpose of giving a "semblance of legality", or legalizing, the appropriation in question, did not cure its petitioner herein is not merely a taxpayer. The Province of Rizal, which he represents officially as its Provincial
aforementioned basic defect. Consequently, a judicial nullification of said donation need not precede the Governor, is our most populated political subdivision, 8and, the taxpayers therein bear a substantial portion of
declaration of unconstitutionality of said appropriation. the burden of taxation, in the Philippines.

Again, Article 1421 of our Civil Code, like many other statutory enactments, is subject to exceptions. For instance, Hence, it is our considered opinion that the circumstances surrounding this case sufficiently justify petitioners
the creditors of a party to an illegal contract may, under the conditions set forth in Article 1177 of said Code, action in contesting the appropriation and donation in question; that this action should not have been dismissed
exercise the rights and actions of the latter, except only those which are inherent in his person, including by the lower court; and that the writ of preliminary injunction should have been maintained.
therefore, his right to the annulment of said contract, even though such creditors are not affected by the same,
except indirectly, in the manner indicated in said legal provision. Wherefore, the decision appealed from is hereby reversed, and the records are remanded to the lower court for
further proceedings not inconsistent with this decGRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR.
Again, it is well-stated that the validity of a statute may be contested only by one who will sustain a direct injury JOSE L. GONZALEZ REUBEN M. ABANTE and QUINTIN PAREDES SAN DIEGO, Petitioners, 
in consequence of its enforcement. Yet, there are many decisions nullifying, at the instance of taxpayers, laws vs.
providing for the disbursement of public funds, 5upon the theory that "the expenditure of public funds by an HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET AND MANAGEMENT
officer of the State for the purpose of administering an unconstitutional act constitutes amisapplication of such FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON SENATE OF THE PHILIPPINES represented by
funds," which may be enjoined at the request of a taxpayer. 6Although there are some decisions to the FRANKLIN M. DRILON m his capacity as SENATE PRESIDENT and HOUSE OF REPRESENTATIVES represented by
contrary, 7the prevailing view in the United States is stated in the American Jurisprudence as follows: FELICIANO S. BELMONTE, JR. in his capacity as SPEAKER OF THE HOUSE, Respondents.

In the determination of the degree of interest essential to give the requisite standing to attack the x-----------------------x
constitutionality of a statute, the general rule is that not only persons individually affected, but also taxpayers,
have sufficient interest in preventing the illegal expenditure of moneys raised by taxation and may therefore G.R. No. 208493
question the constitutionality of statutes requiring expenditure of public moneys. (11 Am. Jur. 761; emphasis
supplied.) SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner, 
vs.
However, this view was not favored by the Supreme Court of the U.S. in Frothingham vs. Mellon (262 U.S. 447), HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and HONORABLE FELICIANO S.
insofar as federal laws are concerned, upon the ground that the relationship of a taxpayer of the U.S. to its BELMONTE, JR., in his capacity as SPEAKER OF THE HOUSE OF REPRESENTATIVES, Respondents.
Federal Government is different from that of a taxpayer of a municipal corporation to its government. Indeed,
under the composite system of government existing in the U.S., the states of the Union are integral part of the x-----------------------x
Federation from an international viewpoint, but, each state enjoys internally a substantial measure of
sovereignty, subject to the limitations imposed by the Federal Constitution. In fact, the same was made by G.R. No. 209251
representatives of each state of the Union, not of the people of the U.S., except insofar as the former
represented the people of the respective States, and the people of each State has, independently of that of the PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board Member -Province of
others, ratified said Constitution. In other words, the Federal Constitution and the Federal statutes have become Marinduque, Petitioner, 
binding upon the people of the U.S. in consequence of an act of, and, in this sense, through the respective states vs.
of the Union of which they are citizens. The peculiar nature of the relation between said people and the Federal PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD, DEPARTMENT OF
Government of the U.S. is reflected in the election of its President, who is chosen directly, not by the people of BUDGET AND MANAGEMENT, Respondents.
the U.S., but by electors chosen by each State, in such manner as the legislature thereof may direct (Article II,
section 2, of the Federal Constitution).lawphi1.net
DECISION the Public Works Act.17 In the 1960‘s, however, pork barrel legislation reportedly ceased in view of the stalemate
between the House of Representatives and the Senate. 18
PERLAS-BERNABE, J.:
B. Martial Law Era (1972-1986).
"Experience is the oracle of truth."1
While the previous" Congressional Pork Barrel" was apparently discontinued in 1972 after Martial Law was
-James Madison declared, an era when "one man controlled the legislature," 19 the reprieve was only temporary. By 1982, the
Batasang Pambansa had already introduced a new item in the General Appropriations Act (GAA) called the"
Before the Court are consolidated petitions2 taken under Rule 65 of the Rules of Court, all of which assail the Support for Local Development Projects" (SLDP) under the article on "National Aid to Local Government Units".
constitutionality of the Pork Barrel System. Due to the complexity of the subject matter, the Court shall Based on reports,20 it was under the SLDP that the practice of giving lump-sum allocations to individual legislators
heretofore discuss the system‘s conceptual underpinnings before detailing the particulars of the constitutional began, with each assemblyman receivingP500,000.00. Thereafter, assemblymen would communicate their
challenge. 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
The Facts city or municipal treasurers in the assemblyman‘s 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",
I. Pork Barrel: General Concept. but also "soft projects",21 or non-public works projects such as those which would fall under the categories of,
among others, education, health and livelihood.22
"Pork Barrel" is political parlance of American -English origin. 3 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 C. Post-Martial Law Era:
famished bodies into the porcine feast to assuage their hunger with morsels coming from the generosity of their
well-fed master.4 This practice was later compared to the actions of American legislators in trying to direct Corazon Cojuangco Aquino Administration (1986-1992).
federal budgets in favor of their districts.5 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 legislator‘s district and After the EDSA People Power Revolution in 1986 and the restoration of Philippine democracy, "Congressional
constituents.6 In a more technical sense, "Pork Barrel" refers to an appropriation of government spending meant Pork Barrel" was revived in the form of the "Mindanao Development Fund" and the "Visayas Development Fund"
for localized projects and secured solely or primarily to bring money to a representative's district. 7 Some scholars which were created with lump-sum appropriations of P480 Million and P240 Million, respectively, for the funding
on the subject further use it to refer to legislative control of local appropriations. 8 of development projects in the Mindanao and Visayas areas in 1989. It has been documented23 that the clamor
raised by the Senators and the Luzon legislators for a similar funding, prompted the creation of the "Countrywide
In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary funds of Members of Development Fund" (CDF) which was integrated into the 1990 GAA24 with an initial funding of P2.3 Billion to
the Legislature,9although, as will be later discussed, its usage would evolve in reference to certain funds of the cover "small local infrastructure and other priority community projects."
Executive.
Under the GAAs for the years 1991 and 1992,25 CDF funds were, with the approval of the President, to be
II. History of Congressional Pork Barrel in the Philippines. 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
A. Pre-Martial Law Era (1922-1972). legislators, as well as their participation in the identification of projects, it has been reported 26 that by 1992,
Representatives were receiving P12.5 Million each in CDF funds, while Senators were receiving P18 Million each,
Act 3044,10 or the Public Works Act of 1922, is considered11 as the earliest form of "Congressional Pork Barrel" in without any limitation or qualification, and that they could identify any kind of project, from hard or
the Philippines since the utilization of the funds appropriated therein were subjected to post-enactment infrastructure projects such as roads, bridges, and buildings to "soft projects" such as textbooks, medicines, and
legislator approval. Particularly, in the area of fund release, Section 312 provides that the sums appropriated for scholarships.27
certain public works projects13 "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 D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).
members to approve the distribution made by the Secretary of Commerce and Communications." 14 Also, in the
area of fund realignment, the same section provides that the said secretary, "with the approval of said joint The following year, or in 1993,28 the GAA explicitly stated that the release of CDF funds was to be made upon the
committee, or of the authorized members thereof, may, for the purposes of said distribution, transfer submission of the list of projects and activities identified by, among others, individual legislators. For the first
unexpended portions of any item of appropriation under this Act to any other item hereunder." time, the 1993 CDF Article included an allocation for the Vice-President.29 As such, Representatives were
allocated P12.5 Million each in CDF funds, Senators, P18 Million each, and the Vice-President, P20 Million.
In 1950, it has been documented15 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 In 1994,30 1995,31 and 1996,32 the GAAs contained the same provisions on project identification and fund release
act was modified to the extent that the discretion of choosing projects was transferred from the Secretary of as found in the 1993 CDF Article. In addition, however, the Department of Budget and Management (DBM) was
Commerce and Communications to legislators. "For the first time, the law carried a list of projects selected by directed to submit reports to the Senate Committee on Finance and the House Committee on Appropriations on
Members of Congress, they ‘being the representatives of the people, either on their own account or by the releases made from the funds.33
consultation with local officials or civil leaders.‘"16 During this period, the pork barrel process commenced with
local government councils, civil groups, and individuals appealing to Congressmen or Senators for projects. Under the 199734 CDF Article, Members of Congress and the Vice-President, in consultation with the
Petitions that were accommodated formed part of a legislator‘s allocation, and the amount each legislator would implementing agency concerned, were directed to submit to the DBM the list of 50% of projects to be funded
eventually get is determined in a caucus convened by the majority. The amount was then integrated into the from their respective CDF allocations which shall be duly endorsed by (a) the Senate President and the Chairman
administration bill prepared by the Department of Public Works and Communications. Thereafter, the Senate and of the Committee on Finance, in the case of the Senate, and (b) the Speaker of the House of Representatives and
the House of Representatives added their own provisions to the bill until it was signed into law by the President – 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,35 "shall be the basis for the release of funds" and that "no Significantly, it was during this era that provisions which allowed formal participation of non-governmental
funds appropriated herein shall be disbursed for projects not included in the list herein required." 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.
The following year, or in 1998,36 the foregoing provisions regarding the required lists and endorsements were For such purpose, the law stated that "the amount of at least P250 Million of the P500 Million allotted for the
reproduced, except that the publication of the project list was no longer required as the list itself sufficed for the construction and completion of school buildings shall be made available to NGOs including the Federation of
release of CDF Funds. Filipino-Chinese 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."62 The same allocation was
The CDF was not, however, the lone form of "Congressional Pork Barrel" at that time. Other forms of made available to NGOs in the 2007 and 2009 GAAs under the DepEd Budget.63 Also, it was in 2007 that the
"Congressional Pork Barrel" were reportedly fashioned and inserted into the GAA (called "Congressional Government Procurement Policy Board64 (GPPB) issued Resolution No. 12-2007 dated June 29, 2007 (GPPB
Insertions" or "CIs") in order to perpetuate the ad ministration‘s political agenda. 37 It has been articulated that Resolution 12-2007), amending the implementing rules and regulations65 of RA 9184,66 the Government
since CIs "formed part and parcel of the budgets of executive departments, they were not easily identifiable and Procurement Reform Act, to include, as a form of negotiated procurement,67 the procedure whereby the
were thus harder to monitor." Nonetheless, the lawmakers themselves as well as the finance and budget officials Procuring Entity68 (the implementing agency) may enter into a memorandum of agreement with an NGO,
of the implementing agencies, as well as the DBM, purportedly knew about the insertions. 38 Examples of these provided that "an appropriation law or ordinance earmarks an amount to be specifically contracted out to
CIs are the Department of Education (DepEd) School Building Fund, the Congressional Initiative Allocations, the NGOs."69
Public Works Fund, the El Niño Fund, and the Poverty Alleviation Fund.39 The allocations for the School Building
Fund, particularly, ―shall be made upon prior consultation with the representative of the legislative district G. Present Administration (2010-Present).
concerned.”40 Similarly, the legislators had the power to direct how, where and when these appropriations were
to be spent.41 Differing from previous PDAF Articles but similar to the CDF Articles, the 2011 70 PDAF Article included an express
statement on lump-sum amounts allocated for individual legislators and the Vice-President: Representatives
E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001). were givenP70 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
In 1999,42 the CDF was removed in the GAA and replaced by three (3) separate forms of CIs, namely, the "Food for "hard" and "soft projects." Likewise, a provision on realignment of funds was included, but with the
Security Program Fund,"43 the "Lingap Para Sa Mahihirap Program Fund,"44 and the "Rural/Urban Development qualification that it may be allowed only once. The same provision also allowed the Secretaries of Education,
Infrastructure Program Fund,"45 all of which contained a special provision requiring "prior consultation" with the Health, Social Welfare and Development, Interior and Local Government, Environment and Natural Resources,
Member s of Congress for the release of the funds. 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
It was in the year 200046 that the "Priority Development Assistance Fund" (PDAF) appeared in the GAA. The projects; (b) allotment released has not yet been obligated for the original scope of work, and (c) the request for
requirement of "prior consultation with the respective Representative of the District" before PDAF funds were realignment is with the concurrence of the legislator concerned. 71
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 In the 201272 and 201373 PDAF Articles, it is stated that the "identification of projects and/or designation of
amount shall be used to fund personal services and other personnel benefits. 47 The succeeding PDAF provisions beneficiaries shall conform to the priority list, standard or design prepared by each implementing agency (priority
remained the same in view of the re-enactment48 of the 2000 GAA for the year 2001. 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.74
F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).
Provisions on legislator allocations75 as well as fund realignment76 were included in the 2012 and 2013 PDAF
49
The 2002  PDAF Article was brief and straightforward as it merely contained a single special provision ordering Articles; but the allocation for the Vice-President, which was pegged at P200 Million in the 2011 GAA, had been
the release of the funds directly to the implementing agency or local government unit concerned, without further deleted. In addition, the 2013 PDAF Article now allowed LGUs to be identified as implementing agencies if they
qualifications. The following year, 2003,50 the same single provision was present, with simply an expansion of have the technical capability to implement the projects. 77 Legislators were also allowed to identify
purpose and express authority to realign. Nevertheless, the provisions in the 2003 budgets of the Department of programs/projects, except for assistance to indigent patients and scholarships, outside of his legislative district
Public Works and Highways51 (DPWH) and the DepEd52 required prior consultation with Members of Congress on provided that he secures the written concurrence of the legislator of the intended outside-district, endorsed by
the aspects of implementation delegation and project list submission, respectively. In 2004, the 2003 GAA was the Speaker of the House.78 Finally, any realignment of PDAF funds, modification and revision of project
re-enacted.53 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.79
In 2005,54 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 III. History of Presidential Pork Barrel in the Philippines.
also introduced the program menu concept,55 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 While the term "Pork Barrel" has been typically associated with lump-sum, discretionary funds of Members of
2005 GAA was re-enacted56 in 2006 and hence, operated on the same bases. In similar regard, the program menu Congress, the present cases and the recent controversies on the matter have, however, shown that the term‘s
concept was consistently integrated into the 2007,57 2008,58 2009,59 and 201060 GAAs. usage has expanded to include certain funds of the President such as the Malampaya Funds and the Presidential
Social Fund.
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 On the one hand, the Malampaya Funds was created as a special fund under Section 880 of Presidential Decree
funded. In contrast to the PDAF Articles, however, the provisions under the DepEd School Building Program and No. (PD) 910,81 issued by then President Ferdinand E. Marcos (Marcos) on March 22, 1976. In enacting the said
the DPWH budget, similar to its predecessors, explicitly required prior consultation with the concerned Member law, Marcos recognized the need to set up a special fund to help intensify, strengthen, and consolidate
of Congress61 anent certain aspects of project implementation. government efforts relating to the exploration, exploitation, and development of indigenous energy resources
vital to economic growth.82 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",83 the special fund created under PD 910 ● Amounts were released for projects outside of legislative districts of sponsoring members of the Lower House.
has been currently labeled as Malampaya Funds.
● Total VILP releases for the period exceeded the total amount appropriated under the 2007 to 2009 GAAs.
On the other hand the Presidential Social Fund was created under Section 12, Title IV84 of PD 1869,85 or the
Charter of the Philippine Amusement and Gaming Corporation (PAGCOR). PD 1869 was similarly issued by ● Infrastructure projects were constructed on private lots without these having been turned over to the
Marcos on July 11, 1983. More than two (2) years after, he amended PD 1869 and accordingly issued PD 1993 on government.
October 31, 1985,86 amending Section 1287 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 ● Significant amounts were released to implementing agencies without the latter‘s endorsement and without
which the President provides direct assistance to priority programs and projects not funded under the regular considering their mandated functions, administrative and technical capabilities to implement projects.
budget. It is sourced from the share of the government in the aggregate gross earnings of PAGCOR. 88
● Implementation of most livelihood projects was not undertaken by the implementing agencies themselves but
IV. Controversies in the Philippines. by NGOs endorsed by the proponent legislators to which the Funds were transferred.

Over the decades, "pork" funds in the Philippines have increased tremendously, 89 owing in no small part to ● The funds were transferred to the NGOs in spite of the absence of any appropriation law or ordinance.
previous Presidents who reportedly used the "Pork Barrel" in order to gain congressional support. 90 It was in
1996 when the first controversy surrounding the "Pork Barrel" erupted. Former Marikina City Representative ● Selection of the NGOs were not compliant with law and regulations.
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." 91 He said that "the kickbacks were ● Eighty-Two (82) NGOs entrusted with implementation of seven hundred seventy two (772) projects amount
‘SOP‘ (standard operating procedure) among legislators and ranged from a low 19 percent to a high 52 percent of to P6.156 Billion were either found questionable, or submitted questionable/spurious documents, or failed to
the cost of each project, which could be anything from dredging, rip rapping, sphalting, concreting, and liquidate in whole or in part their utilization of the Funds.
construction of school buildings." 92 "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 ● Procurement by the NGOs, as well as some implementing agencies, of goods and services reportedly used in
the Philippine Daily Inquirer issue of August 13, 1996, accompanied by an illustration of a roasted pig."93 "The the projects were not compliant with law.
publication of the stories, including those about congressional initiative allocations of certain lawmakers,
including P3.6 Billion for a Congressman, sparked public outrage."94 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
Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as enacted in the 2004 GAA gone into a dummy NGO."104 According to incumbent CoA Chairperson Maria Gracia Pulido Tan (CoA
for being unconstitutional. Unfortunately, for lack of "any pertinent evidentiary support that illegal misuse of Chairperson), the CoA is, as of this writing, in the process of preparing "one consolidated report" on the
PDAF in the form of kickbacks has become a common exercise of unscrupulous Members of Congress," the Malampaya Funds.105
petition was dismissed.95
V. The Procedural Antecedents.
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 Spurred in large part by the findings contained in the CoA Report and the Napoles controversy, several petitions
from the pork barrel of lawmakers and various government agencies for scores of ghost projects." 96 The were lodged before the Court similarly seeking that the "Pork Barrel System" be declared unconstitutional. To
investigation was spawned by sworn affidavits of six (6) whistle-blowers who declared that JLN Corporation – recount, the relevant procedural antecedents in these cases are as follows:
"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 On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice Society, filed a
ultimate recipients of PDAF funds, the whistle-blowers declared that the money was diverted into Napoles‘ Petition for Prohibition of even date under Rule 65 of the Rules of Court (Alcantara Petition), seeking that the
private accounts.97 Thus, after its investigation on the Napoles controversy, criminal complaints were filed before "Pork Barrel System" be declared unconstitutional, and a writ of prohibition be issued permanently restraining
the Office of the Ombudsman, charging five (5) lawmakers for Plunder, and three (3) other lawmakers for respondents Franklin M. Drilon and Feliciano S. Belmonte, Jr., in their respective capacities as the incumbent
Malversation, Direct Bribery, and Violation of the Anti-Graft and Corrupt Practices Act. Also recommended to be Senate President and Speaker of the House of Representatives, from further taking any steps to enact legislation
charged in the complaints are some of the lawmakers‘ chiefs -of-staff or representatives, the heads and other appropriating funds for the "Pork Barrel System," in whatever form and by whatever name it may be called, and
officials of three (3) implementing agencies, and the several presidents of the NGOs set up by Napoles. 98 from approving further releases pursuant thereto.106The Alcantara Petition was docketed as G.R. No. 208493.

On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year audit On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez, Reuben M. Abante, Quintin
investigation99 covering the use of legislators' PDAF from 2007 to 2009, or during the last three (3) years of the Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent Petition For Certiorari and
Arroyo administration. The purpose of the audit was to determine the propriety of releases of funds under PDAF Prohibition With Prayer For The Immediate Issuance of Temporary Restraining Order (TRO) and/or Writ of
and the Various Infrastructures including Local Projects (VILP) 100 by the DBM, the application of these funds and Preliminary Injunction dated August 27, 2013 under Rule 65 of the Rules of Court (Belgica Petition), seeking that
the implementation of projects by the appropriate implementing agencies and several government-owned-and- the annual "Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which provided for the
controlled corporations (GOCCs).101 The total releases covered by the audit amounted to P8.374 Billion in PDAF 2013 PDAF, and the Executive‘s lump-sum, discretionary funds, such as the Malampaya Funds and the
andP32.664 Billion in VILP, representing 58% and 32%, respectively, of the total PDAF and VILP releases that were Presidential Social Fund,107 be declared unconstitutional and null and void for being acts constituting grave abuse
found to have been made nationwide during the audit period.102 Accordingly, the Co A‘s findings contained in its of discretion. Also, they pray that the Court issue a TRO against respondents Paquito N. Ochoa, Jr., Florencio B.
Report No. 2012-03 (CoA Report), entitled "Priority Development Assistance Fund (PDAF) and Various Abad (Secretary Abad) and Rosalia V. De Leon, in their respective capacities as the incumbent Executive
Infrastructures including Local Projects (VILP)," were made public, the highlights of which are as follows: 103 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 the
● Amounts released for projects identified by a considerable number of legislators significantly exceeded their Court order the foregoing respondents to release to the CoA and to the public: (a) "the complete schedule/list of
respective allocations. 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 Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable controversy;
the Executive‘s lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds and (b) the issues raised in the consolidated petitions are matters of policy not subject to judicial review; (c)
remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the recipient petitioners have legal standing to sue; and (d) the Court‘s Decision dated August 19, 1994 in G.R. Nos. 113105,
entities or individuals, and all pertinent data thereto."108 Also, they pray for the "inclusion in budgetary 113174, 113766, and 113888, entitled "Philippine Constitution Association v. Enriquez"114 (Philconsa) and
deliberations with the Congress of all presently off-budget, lump-sum, discretionary funds including, but not Decision dated April 24, 2012 in G.R. No. 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of
limited to, proceeds from the Malampaya Funds and remittances from the PAGCOR." 109 The Belgica Petition was Budget and Management"115 (LAMP) bar the re-litigatio n of the issue of constitutionality of the "Pork Barrel
docketed as G.R. No. 208566.110 System" under the principles of res judicata and stare decisis.

Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition dated August II. Substantive Issues on the "Congressional Pork Barrel."
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 Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto are
releasing such funds to Members of Congress and, instead, allow their release to fund priority projects identified unconstitutional considering that they violate the principles of/constitutional provisions on (a) separation of
and approved by the Local Development Councils in consultation with the executive departments, such as the powers; (b) non-delegability of legislative power; (c) checks and balances; (d) accountability; (e) political
DPWH, the Department of Tourism, the Department of Health, the Department of Transportation, and dynasties; and (f) local autonomy.
Communication and the National Economic Development Authority.111 The Nepomuceno Petition was docketed
as UDK-14951.112 III. Substantive Issues on the "Presidential Pork Barrel."

On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases; (b) requiring public Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the President"
respondents to comment on the consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO) enjoining the under Section 8 of PD 910,116 relating to the Malampaya Funds, and (b) "to finance the priority infrastructure
DBM, National Treasurer, the Executive Secretary, or any of the persons acting under their authority from development projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may
releasing (1) the remaining PDAF allocated to Members of Congress under the GAA of 2013, and (2) Malampaya be directed and authorized by the Office of the President of the Philippines" under Section 12 of PD 1869, as
Funds under the phrase "for such other purposes as may be hereafter directed by the President" pursuant to amended by PD 1993, relating to the Presidential Social Fund, are unconstitutional insofar as they constitute
Section 8 of PD 910 but not for the purpose of "financing energy resource development and exploitation undue delegations of legislative power.
programs and projects of the government‖ under the same provision; and (d) setting the consolidated cases for
Oral Arguments on October 8, 2013. 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.
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 The Court’s Ruling
and medical assistance purposes, of the Court‘s September 10, 2013 TRO, and that the consolidated petitions be
dismissed for lack of merit.113 The petitions are partly granted.

On September 24, 2013, the Court issued a Resolution of even date directing petitioners to reply to the I. Procedural Issues.
Comment.
The prevailing rule in constitutional litigation is that no question involving the constitutionality or validity of a law
Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a) on September or governmental act may be heard and decided by the Court unless there is compliance with the legal requisites
30, 2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas Reply); (b) on October 1, 2013, for judicial inquiry,117 namely: (a) there must be an actual case or controversy calling for the exercise of judicial
Belgica, et al. filed a Reply dated September 30, 2013 (Belgica Reply); and (c) on October 2, 2013, Alcantara filed power; (b) the person challenging the act must have the standing to question the validity of the subject act or
a Reply dated October 1, 2013. 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.118 Of these requisites, case law states that the first two are
On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by the parties for the most important119 and, therefore, shall be discussed forthwith.
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 A. Existence of an Actual Case or Controversy.
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, By constitutional fiat, judicial power operates only when there is an actual case or controversy. 120 This is
the CoA Chairperson was appointed as amicus curiae and thereby requested to appear before the Court during embodied in Section 1, Article VIII of the 1987 Constitution which pertinently states that "judicial power includes
the Oral Arguments. 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
On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed the parties to legal rights, an assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a
submit their respective memoranda within a period of seven (7) days, or until October 17, 2013, which the hypothetical or abstract difference or dispute.121 In other words, "there must be a contrariety of legal rights that
parties subsequently did. can be interpreted and enforced on the basis of existing law and jurisprudence."122 Related to the requirement of
an actual case or controversy is the requirement of "ripeness," meaning that the questions raised for
The Issues Before the Court 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
Based on the pleadings, and as refined during the Oral Arguments, the following are the main issues for the then been accomplished or performed by either branch before a court may come into the picture, and the
Court‘s resolution: petitioner must allege the existence of an immediate or threatened injury to itself as a result of the challenged
action."123 "Withal, courts will decline to pass upon constitutional issues through advisory opinions, bereft as they
I. Procedural Issues. are of authority to resolve hypothetical or moot questions."124
Based on these principles, the Court finds that there exists an actual and justiciable controversy in these cases. 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
The requirement of contrariety of legal rights is clearly satisfied by the antagonistic positions of the parties on the decide cases, otherwise moot, if: first, there is a grave violation of the Constitution; second, the exceptional
constitutionality of the "Pork Barrel System." Also, the questions in these consolidated cases are ripe for character of the situation and the paramount public interest is involved; third, when the constitutional issue
adjudication since the challenged funds and the provisions allowing for their utilization – such as the 2013 GAA raised requires formulation of controlling principles to guide the bench, the bar, and the public; and fourth, the
for the PDAF, PD 910 for the Malampaya Funds and PD 1869, as amended by PD 1993, for the Presidential Social case is capable of repetition yet evading review.129
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. 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-
As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered moot and delegability of legislative power, checks and balances, accountability and local autonomy.
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.125 Differing from The applicability of the second exception is also apparent from the nature of the interests involved
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 constitutionality of the very system within which significant amounts of public funds have been and
the 2014 budget, and not the 2013 PDAF Article which, being a distinct subject matter, remains legally effective continue to be utilized and expended undoubtedly presents a situation of exceptional character as well as a
and existing. Neither will the President‘s declaration that he had already "abolished the PDAF" render the issues matter of paramount public interest. The present petitions, in fact, have been lodged at a time when the
on PDAF moot precisely because the Executive branch of government has no constitutional authority to nullify or system‘s flaws have never before been magnified. To the Court‘s mind, the coalescence of the CoA Report, the
annul its legal existence. By constitutional design, the annulment or nullification of a law may be done either by accounts of numerous whistle-blowers, and the government‘s own recognition that reforms are needed "to
Congress, through the passage of a repealing law, or by the Court, through a declaration of unconstitutionality. address the reported abuses of the PDAF"130 demonstrates a prima facie pattern of abuse which only underscores
Instructive on this point is the following exchange between Associate Justice Antonio T. Carpio (Justice Carpio) the importance of the matter. It is also by this finding that the Court finds petitioners‘ claims as not merely
and the Solicitor General during the Oral Arguments:126 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, 131 a recent case
Justice Carpio: The President has taken an oath to faithfully execute the law,127 correct? Solicitor General wherein the Court upheld the CoA‘s disallowance of irregularly disbursed PDAF funds, it was emphasized that:
Jardeleza: Yes, Your Honor.
The COA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive,
Justice Carpio: And so the President cannot refuse to implement the General Appropriations Act, correct? 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
Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the PDAF, the general audit power is among the constitutional mechanisms that gives life to the check and balance system
President has a duty to execute the laws but in the face of the outrage over PDAF, the President was saying, "I inherent in our form of government.
am not sure that I will continue the release of the soft projects," and that started, Your Honor. Now, whether or
not that … (interrupted) 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
Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the power to stop the for their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are
releases in the meantime, to investigate, and that is Section 38 of Chapter 5 of Book 6 of the Revised accorded not only respect but also finality when the decision and order are not tainted with unfairness or
Administrative Code128 x x x. So at most the President can suspend, now if the President believes that the PDAF is arbitrariness that would amount to grave abuse of discretion. It is only when the CoA has acted without or in
unconstitutional, can he just refuse to implement it? 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)
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, Thus, if only for the purpose of validating the existence of an actual and justiciable controversy in these cases,
outside of the COA Report, you have the report of the whistle-blowers, the President was just exercising precisely the Court deems the findings under the CoA Report to be sufficient.
the duty ….
The Court also finds the third exception to be applicable largely due to the practical need for a definitive ruling on
xxxx the system‘s 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
Justice Carpio: Yes, and that is correct. You‘ve seen the CoA Report, there are anomalies, you stop and Report. In this relation, Associate Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed out that all of
investigate, and prosecute, he has done that. But, does that mean that PDAF has been repealed? these would eventually find their way to the courts.132 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, not
Solicitor General Jardeleza: No, Your Honor x x x. 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.
xxxx
Finally, the application of the fourth exception is called for by the recognition that the preparation and passage of
Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a law to repeal it, or the national budget is, by constitutional imprimatur, an affair of annual occurrence.133 The relevance of the issues
this Court declares it unconstitutional, correct? before the Court does not cease with the passage of a "PDAF -free budget for 2014."134 The evolution of the "Pork
Barrel System," by its multifarious iterations throughout the course of history, lends a semblance of truth to
Solictor General Jardeleza: Yes, Your Honor. petitioners‘ claim that "the same dog will just resurface wearing a different collar." 135 In Sanlakas v. Executive
Secretary,136the government had already backtracked on a previous course of action yet the Court used the
Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied) "capable of repetition but evading review" exception in order "to prevent similar questions from re-
emerging."137 The situation similarly holds true to these cases. Indeed, the myriad of issues underlying the "The gist of the question of standing is whether a party alleges such personal stake in the outcome of the
manner in which certain public funds are spent, if not resolved at this most opportune time, are capable of controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the
repetition and hence, must not evade judicial review. 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." 145
B. Matters of Policy: the Political Question Doctrine.
Petitioners have come before the Court in their respective capacities as citizen-taxpayers and accordingly, assert
The "limitation on the power of judicial review to actual cases and controversies‖ carries the assurance that "the that they "dutifully contribute to the coffers of the National Treasury." 146 Clearly, as taxpayers, they possess the
courts will not intrude into areas committed to the other branches of government." 138 Essentially, the foregoing requisite standing to question the validity of the existing "Pork Barrel System" under which the taxes they pay
limitation is a restatement of the political question doctrine which, under the classic formulation of Baker v. have been and continue to be utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer from
Carr,139 applies when there is found, among others, "a textually demonstrable constitutional commitment of the the unconstitutional usage of public funds, if the Court so rules. Invariably, taxpayers have been allowed to sue
issue to a coordinate political department," "a lack of judicially discoverable and manageable standards for where there is a claim that public funds are illegally disbursed or that public money is being deflected to any
resolving it" or "the impossibility of deciding without an initial policy determination of a kind clearly for non- improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional
judicial discretion." Cast against this light, respondents submit that the "the political branches are in the best law,147 as in these cases.
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."140 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
The Court must deny respondents‘ submission. paramount public interest."148 The CoA Chairperson‘s statement during the Oral Arguments that the present
controversy involves "not merely a systems failure" but a "complete breakdown of controls" 149 amplifies, in
Suffice it to state that the issues raised before the Court do not present political but legal questions which are addition to the matters above-discussed, the seriousness of the issues involved herein. Indeed, of greater import
within its province to resolve. A political question refers to "those questions which, under the Constitution, are to than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the
be decided by the people in their sovereign capacity, or in regard to which full discretionary authority has been fundamental law by the enforcement of an invalid statute.150 All told, petitioners have sufficient locus standi to
delegated to the Legislature or executive branch of the Government. It is concerned with issues dependent upon file the instant cases.
the wisdom, not legality, of a particular measure."141 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 D. Res Judicata and Stare Decisis.
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 Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or simply, stare decisis
because it is an exercise of judicial power. More importantly, the present Constitution has not only vested the which means "follow past precedents and do not disturb what has been settled") are general procedural law
Judiciary the right to exercise judicial power but essentially makes it a duty to proceed therewith. Section 1, principles which both deal with the effects of previous but factually similar dispositions to subsequent cases. For
Article VIII of the 1987 Constitution cannot be any clearer: "The judicial power shall be vested in one Supreme the cases at bar, the Court examines the applicability of these principles in relation to its prior rulings in Philconsa
Court and in such lower courts as may be established by law. It includes the duty of the courts of justice to settle and LAMP.
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 The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a previous
branch or instrumentality of the Government." In Estrada v. Desierto, 142 the expanded concept of judicial power case rendered by a court of competent jurisdiction would bind a subsequent case if, between the first and
under the 1987 Constitution and its effect on the political question doctrine was explained as follows: 143 second actions, there exists an identity of parties, of subject matter, and of causes of action. 151 This required
identity is not, however, attendant hereto since Philconsa and LAMP, respectively involved constitutional
To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine when it challenges against the 1994 CDF Article and 2004 PDAF Article, whereas the cases at bar call for a broader
expanded the power of judicial review of this court not only to settle actual controversies involving rights which constitutional scrutiny of the entire "Pork Barrel System." Also, the ruling in LAMP is essentially a dismissal based
are legally demandable and enforceable but also to determine whether or not there has been a grave abuse of on a procedural technicality – and, thus, hardly a judgment on the merits – in that petitioners therein failed to
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. present any "convincing proof x x x showing that, indeed, there were direct releases of funds to the Members of
Heretofore, the judiciary has focused on the "thou shalt not's" of the Constitution directed against the exercise of Congress, who actually spend them according to their sole discretion" or "pertinent evidentiary support to
its jurisdiction. With the new provision, however, courts are given a greater prerogative to determine what it can demonstrate the illegal misuse of PDAF in the form of kickbacks and has become a common exercise of
do to prevent grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or unscrupulous Members of Congress." As such, the Court up held, in view of the presumption of constitutionality
instrumentality of government. Clearly, the new provision did not just grant the Court power of doing nothing. x accorded to every law, the 2004 PDAF Article, and saw "no need to review or reverse the standing
x x (Emphases supplied) 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.
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 On the other hand, the focal point of stare decisis is the doctrine created. The principle, entrenched under Article
legislature or the executive, but only asserts the solemn and sacred obligation assigned to it by the 8152 of the Civil Code, evokes the general rule that, for the sake of certainty, a conclusion reached in one case
Constitution."144 To a great extent, the Court is laudably cognizant of the reforms undertaken by its co-equal should be doctrinally applied to those that follow if the facts are substantially the same, even though the parties
branches of government. But it is by constitutional force that the Court must faithfully perform its duty. may be different. It proceeds from the first principle of justice that, absent any powerful countervailing
Ultimately, it is the Court‘s avowed intention that a resolution of these cases would not arrest or in any manner considerations, like cases ought to be decided alike. Thus, where the same questions relating to the same event
impede the endeavors of the two other branches but, in fact, help ensure that the pillars of change are erected have been put forward by the parties similarly situated as in a previous case litigated and decided by a
on firm constitutional grounds. After all, it is in the best interest of the people that each great branch of competent court, the rule of stare decisis is a bar to any attempt to re-litigate the same issue. 153
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. 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
C. Locus Standi. 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 (d) projects funded are intended to benefit a definite constituency in a particular part of the country and to help
implementation of the law" and that "the proposal and identification of the projects do not involve the making of the political careers of the disbursing official by yielding rich patronage benefits. 157They further state that the
laws or the repeal and amendment thereof, the only function given to the Congress by the Constitution." 154 In Pork Barrel System is comprised of two (2) kinds of discretionary public funds: first, the Congressional (or
deference to the foregoing submissions, the Court reached the following main conclusions: one, under the Legislative) Pork Barrel, currently known as the PDAF; 158 and, second, the Presidential (or Executive) Pork Barrel,
Constitution, the power of appropriation, or the "power of the purse," belongs to Congress; two, the power of specifically, the Malampaya Funds under PD 910 and the Presidential Social Fund under PD 1869, as amended by
appropriation carries with it the power to specify the project or activity to be funded under the appropriation law PD 1993.159
and it can be detailed and as broad as 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 Considering petitioners‘ submission and in reference to its local concept and legal history, the Court defines the
limited response to a separation of powers problem, specifically on the propriety of conferring post-enactment Pork Barrel System as the collective body of rules and practices that govern the manner by which lump-sum,
identification authority to Members of Congress. On the contrary, the present cases call for a more holistic discretionary funds, primarily intended for local projects, are utilized through the respective participations of the
examination of (a) the inter-relation between the CDF and PDAF Articles with each other, formative as they are of Legislative and Executive branches of government, including its members. The Pork Barrel System involves two
the entire "Pork Barrel System" as well as (b) the intra-relation of post-enactment measures contained within a (2) kinds of lump-sum discretionary funds:
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 First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
warranted may be, therefore, considered as a powerful countervailing reason against a wholesale application of wherein legislators, either individually or collectively organized into committees, are able to effectively control
the stare decisis principle. certain aspects of the fund’s 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
In addition, the Court observes that the Philconsa ruling was actually riddled with inherent constitutional alia, a post-enactment measure that allows individual legislators to wield a collective power;160 and
inconsistencies which similarly countervail against a full resort to stare decisis. As may be deduced from the main
conclusions of the case, Philconsa‘s fundamental premise in allowing Members of Congress to propose and Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
identify of projects would be that the said identification authority is but an aspect of the power of appropriation which allows the President to determine the manner of its utilization. For reasons earlier stated, 161 the Court shall
which has been constitutionally lodged in Congress. From this premise, the contradictions may be easily seen. If delimit the use of such term to refer only to the Malampaya Funds and the Presidential Social Fund.
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 With these definitions in mind, the Court shall now proceed to discuss the substantive issues of these cases.
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 B. Substantive Issues on the Congressional Pork Barrel.
authority, as embodied in the GAA, has the force of law and, hence, cannot be merely recommendatory. Justice
Vitug‘s Concurring Opinion in the same case sums up the Philconsa quandary in this wise: "Neither would it be 1. Separation of Powers.
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 a. Statement of Principle.
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 The principle of separation of powers refers to the constitutional demarcation of the three fundamental powers
as it validated the post-enactment identification authority of Members of Congress on the guise that the same of government. In the celebrated words of Justice Laurel in Angara v. Electoral Commission, 162 it means that the
was merely recommendatory. This postulate raises serious constitutional inconsistencies which cannot be simply "Constitution has blocked out with deft strokes and in bold lines, allotment of power to the executive, the
excused on the ground that such mechanism is "imaginative as it is innovative." Moreover, it must be pointed out legislative and the judicial departments of the government."163 To the legislative branch of government, through
that the recent case of Abakada Guro Party List v. Purisima 155 (Abakada) has effectively overturned Philconsa‘s Congress,164 belongs the power to make laws; to the executive branch of government, through the
allowance of post-enactment legislator participation in view of the separation of powers principle. These President,165 belongs the power to enforce laws; and to the judicial branch of government, through the
constitutional inconsistencies and the Abakada rule will be discussed in greater detail in the ensuing section of Court,166 belongs the power to interpret laws. Because the three great powers have been, by constitutional
this Decision. 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."167 Thus, "the legislature has no authority to execute or
As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality and, hence, has construe the law, the executive has no authority to make or construe the law, and the judiciary has no power to
not set any controlling doctrine susceptible of current application to the substantive issues in these cases. In fine, make or execute the law."168 The principle of separation of powers and its concepts of autonomy and
stare decisis would not apply. 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
II. Substantive Issues. over the other branches or the citizenry.169 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
A. Definition of Terms. 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.170
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 Broadly speaking, there is a violation of the separation of powers principle when one branch of government
discourse. 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
Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and Executive other’s performance of its constitutionally assigned function";171 and "alternatively, the doctrine may be violated
branches of government to accumulate lump-sum public funds in their offices with unchecked discretionary when one branch assumes a function that more properly is entrusted to another."172 In other words, there is a
powers to determine its distribution as political largesse." 156 They assert that the following elements make up the violation of the principle when there is impermissible (a) interference with and/or (b) assumption of another
Pork Barrel System: (a) lump-sum funds are allocated through the appropriations process to an individual officer; department‘s functions.
(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
The enforcement of the national budget, as primarily contained in the GAA, is indisputably a function both discretion to reject" the legislators‘ proposals. 182 They maintain that the Court, in Philconsa, "upheld the
constitutionally assigned and properly entrusted to the Executive branch of government. In Guingona, Jr. v. Hon. constitutionality of the power of members of Congress to propose and identify projects so long as such proposal
Carague173 (Guingona, Jr.), the Court explained that the phase of budget execution "covers the various and identification are recommendatory."183 As such, they claim that "everything in the Special Provisions [of the
operational aspects of budgeting" and accordingly includes "the evaluation of work and financial plans for 2013 PDAF Article follows the Philconsa framework, and hence, remains constitutional." 184
individual activities," the "regulation and release of funds" as well as all "other related activities" that comprise
the budget execution cycle.174 This is rooted in the principle that the allocation of power in the three principal The Court rules in favor of petitioners.
branches of government is a grant of all powers inherent in them.175 Thus, unless the Constitution provides
otherwise, the Executive department should exclusively exercise all roles and prerogatives which go into the As may be observed from its legal history, the defining feature of all forms of Congressional Pork Barrel would be
implementation of the national budget as provided under the GAA as well as any other appropriation law. the authority of legislators to participate in the post-enactment phases of project implementation.

In view of the foregoing, the Legislative branch of government, much more any of its members, should not cross At its core, legislators – may it be through project lists, 185 prior consultations186 or program menus187 – have been
over the field of implementing the national budget since, as earlier stated, the same is properly the domain of consistently accorded post-enactment authority to identify the projects they desire to be funded through various
the Executive. Again, in Guingona, Jr., the Court stated that "Congress enters the picture when it deliberates or Congressional Pork Barrel allocations. Under the 2013 PDAF Article, the statutory authority of legislators to
acts on the budget proposals of the President. Thereafter, Congress, "in the exercise of its own judgment and identify projects post-GAA may be construed from the import of Special Provisions 1 to 3 as well as the second
wisdom, formulates an appropriation act precisely following the process established by the Constitution, which paragraph of Special Provision 4. To elucidate, Special Provision 1 embodies the program menu feature which, as
specifies that no money may be paid from the Treasury except in accordance with an appropriation made by evinced from past PDAF Articles, allows individual legislators to identify PDAF projects for as long as the identified
law." Upon approval and passage of the GAA, Congress‘ law -making role necessarily comes to an end and from project falls under a general program listed in the said menu. Relatedly, Special Provision 2 provides that the
there the Executive‘s role of implementing the national budget begins. So as not to blur the constitutional implementing agencies shall, within 90 days from the GAA is passed, submit to Congress a more detailed priority
boundaries between them, Congress must "not concern it self with details for implementation by the list, standard or design prepared and submitted by implementing agencies from which the legislator may make
Executive."176 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
The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that "from the that PDAF projects refer to "projects to be identified by legislators" 188 and thereunder provides the allocation
moment the law becomes effective, any provision of law that empowers Congress or any of its members to play limit for the total amount of projects identified by each legislator. Finally, paragraph 2 of Special Provision 4
any role in the implementation or enforcement of the law violates the principle of separation of powers and is requires that any modification and revision of the project identification "shall be submitted to the House
thus unconstitutional."177 It must be clarified, however, that since the restriction only pertains to "any role in the Committee on Appropriations and the Senate Committee on Finance for favorable endorsement to the DBM or
implementation or enforcement of the law," Congress may still exercise its oversight function which is a the implementing agency, as the case may be." From the foregoing special provisions, it cannot be seriously
mechanism of checks and balances that the Constitution itself allows. But it must be made clear that Congress‘ doubted that legislators have been accorded post-enactment authority to identify PDAF projects.
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 Aside from the area of project identification, legislators have also been accorded post-enactment authority in the
assumption of executive functions. As the Court ruled in Abakada:178 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
Any post-enactment congressional measure x x x should be limited to scrutiny and investigation.1âwphi1 In which explicitly states that "all request for release of funds shall be supported by the documents prescribed
particular, congressional oversight must be confined to the following: 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
(1) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings conducted in realignment is contained in: first , paragraph 2, Special Provision 4 189 which explicitly state s, among others, that
connection with it, its power to ask heads of departments to appear before and be heard by either of its Houses "any realignment of funds shall be submitted to the House Committee on Appropriations and the Senate
on any matter pertaining to their departments and its power of confirmation; and 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,
(2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct Energy, Interior and Local Government, Labor and Employment, Public Works and Highways, Social Welfare and
inquiries in aid of legislation. Development and Trade and Industry190 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
Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. legislator concerned."
(Emphases supplied)
Clearly, these post-enactment measures which govern the areas of project identification, fund release and fund
b. Application. 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,
In these cases, petitioners submit that the Congressional Pork Barrel – among others, the 2013 PDAF Article – legislators have been, in one form or another, authorized to participate in – as Guingona, Jr. puts it – "the various
"wrecks the assignment of responsibilities between the political branches" as it is designed to allow individual operational aspects of budgeting," including "the evaluation of work and financial plans for individual activities"
legislators to interfere "way past the time it should have ceased" or, particularly, "after the GAA is and the "regulation and release of funds" in violation of the separation of powers principle. The fundamental
passed."179 They state that the findings and recommendations in the CoA Report provide "an illustration of how rule, as categorically articulated in Abakada, cannot be overstated – from the moment the law becomes
absolute and definitive the power of legislators wield over project implementation in complete violation of the effective, any provision of law that empowers Congress or any of its members to play any role in the
constitutional principle of separation of powers."180 Further, they point out that the Court in the Philconsa case implementation or enforcement of the law violates the principle of separation of powers and is thus
only allowed the CDF to exist on the condition that individual legislators limited their role to recommending unconstitutional.191 That the said authority is treated as merely recommendatory in nature does not alter its
projects and not if they actually dictate their implementation.181 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
For their part, respondents counter that the separations of powers principle has not been violated since the conduct of legislator identification on the guise that the same is merely recommendatory and, as such,
President maintains "ultimate authority to control the execution of the GAA‖ and that he "retains the final respondents‘ reliance on the same falters altogether.
Besides, it must be pointed out that respondents have nonetheless failed to substantiate their position that the that what the 2013 PDAF provisions did was to codify in one section all the past practice that had been done
identification authority of legislators is only of recommendatory import. Quite the contrary, respondents – since 1991. In a certain sense, we should be thankful that they are all now in the PDAF Special Provisions. x x x
through the statements of the Solicitor General during the Oral Arguments – have admitted that the (Emphasis and underscoring supplied)
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 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
Justice Bernabe: Now, without the individual legislator’s identification of the project, can the PDAF of the deprived of what the Constitution has vested as its own.
legislator be utilized?
2. Non-delegability of Legislative Power.
Solicitor General Jardeleza: No, Your Honor.
a. Statement of Principle.
Justice Bernabe: It cannot?
As an adjunct to the separation of powers principle,194 legislative power shall be exclusively exercised by the body
Solicitor General Jardeleza: It cannot… (interrupted) 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
Justice Bernabe: So meaning you should have the identification of the project by the individual legislator? House of Representatives, except to the extent reserved to the people by the provision on initiative and
referendum.195 Based on this provision, it is clear that only Congress, acting as a bicameral body, and the people,
Solicitor General Jardeleza: Yes, Your Honor. 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
xxxx thereto would be: (a) delegated legislative power to local governments which, by immemorial practice, are
allowed to legislate on purely local matters;196 and (b) constitutionally-grafted exceptions such as the authority of
Justice Bernabe: In short, the act of identification is mandatory? 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,197 or fix within specified limits, and subject to such limitations and restrictions
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is no identification. 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. 198
xxxx
Notably, the principle of non-delegability should not be confused as a restriction to delegate rule-making
Justice Bernabe: Now, would you know of specific instances when a project was implemented without the authority to implementing agencies for the limited purpose of either filling up the details of the law for its
identification by the individual legislator? enforcement (supplementary rule-making) or ascertaining facts to bring the law into actual operation (contingent
rule-making).199 The conceptual treatment and limitations of delegated rule-making were explained in the case of
Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific examples. I would People v. Maceren200 as follows:
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. 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
xxxx "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
Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a question, "How difficulty of administering the law."
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 xxxx
would not be able to have PDAF Funds, only in that sense, Your Honor. (Emphases supplied)
Nevertheless, it must be emphasized that the rule-making power must be confined to details for regulating the
Thus, for all the foregoing reasons, the Court hereby declares the 2013 PDAF Article as well as all other provisions mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to
of law which similarly allow legislators to wield any form of post-enactment authority in the implementation or amending or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that
enforcement of the budget, unrelated to congressional oversight, as violative of the separation of powers subvert the statute cannot be sanctioned. (Emphases supplied)
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 b. Application.
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 In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers post-enactment
been substantially disputed here. As pointed out by Chief Justice Maria Lourdes P.A. Sereno (Chief Justice Sereno) identification authority to individual legislators, violates the principle of non-delegability since said legislators are
during the Oral Arguments of these cases:193 effectively allowed to individually exercise the power of appropriation, which – as settled in Philconsa – is lodged
Chief Justice Sereno: in Congress.201 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
Now, from the responses of the representative of both, the DBM and two (2) Houses of Congress, if we enforces pursuance of an appropriation made by law." To understand what constitutes an act of appropriation, the Court,
the initial thought that I have, after I had seen the extent of this research made by my staff, that neither the in Bengzon v. Secretary of Justice and Insular Auditor202 (Bengzon), held that the power of appropriation involves
Executive nor Congress frontally faced the question of constitutional compatibility of how they were engineering (a) the setting apart by law of a certain sum from the public revenue for (b) a specified purpose. Essentially,
the budget process. In fact, the words you have been using, as the three lawyers of the DBM, and both Houses of under the 2013 PDAF Article, individual legislators are given a personal lump-sum fund from which they are able
Congress has also been using is surprise; surprised that all of these things are now surfacing. In fact, I thought 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, may happen to influence a majority of that body"; phrased differently, it is meant to "increase the chances in
and given that the 2013 PDAF Article authorizes individual legislators to perform the same, undoubtedly, said favor of the community against the passing of bad laws, through haste, inadvertence, or design." 209
legislators have been conferred the power to legislate which the Constitution does not, however, allow. Thus,
keeping with the principle of non-delegability of legislative power, the Court hereby declares the 2013 PDAF For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which
Article, as well as all other forms of Congressional Pork Barrel which contain the similar legislative identification may be the object of the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the
feature as herein discussed, as unconstitutional. 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, 210 the US Supreme Court characterized an item of appropriation as follows:
3. Checks and Balances.
An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of money, not
a. Statement of Principle; Item-Veto Power. some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)

The fact that the three great powers of government are intended to be kept separate and distinct does not mean On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to
that they are absolutely unrestrained and independent of each other. The Constitution has also provided for an exercise his power of item veto, must contain "specific appropriations of money" and not only "general
elaborate system of checks and balances to secure coordination in the workings of the various departments of provisions" which provide for parameters of appropriation.
the government.203
Further, it is significant to point out that an item of appropriation must be an item characterized by singular
A prime example of a constitutional check and balance would be the President’s power to veto an item written correspondence – meaning an allocation of a specified singular amount for a specified singular purpose,
into an appropriation, revenue or tariff bill submitted to him by Congress for approval through a process known otherwise known as a "line-item."211 This treatment not only allows the item to be consistent with its definition as
as "bill presentment." The President‘s item-veto power is found in Section 27(2), Article VI of the 1987 a "specific appropriation of money" but also ensures that the President may discernibly veto the same. Based on
Constitution which reads as follows: 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"
Sec. 27. x x x. 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
xxxx 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
(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff purposes that are by accounting and budgeting practice considered as one purpose, e.g., MOOE (maintenance
bill, but the veto shall not affect the item or items to which he does not object. and other operating expenses), in which case the related purposes shall be deemed sufficiently specific for the
exercise of the President‘s item veto power. Finally, special purpose funds and discretionary funds would equally
The presentment of appropriation, revenue or tariff bills to the President, wherein he may exercise his power of square with the constitutional mechanism of item-veto for as long as they follow the rule on singular
item-veto, forms part of the "single, finely wrought and exhaustively considered, procedures" for law-passage as correspondence as herein discussed. Anent special purpose funds, it must be added that Section 25(4), Article VI
specified under the Constitution.204 As stated in Abakada, the final step in the law-making process is the of the 1987 Constitution requires that the "special appropriations bill shall specify the purpose for which it is
"submission of the bill to the President for approval. Once approved, it takes effect as law after the required intended, and shall be supported by funds actually available as certified by the National Treasurer, or t o be
publication."205 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
Elaborating on the President‘s item-veto power and its relevance as a check on the legislature, the Court, in supported by appropriate vouchers and subject to such guidelines as may be prescribed by law."
Bengzon, explained that:206
In contrast, what beckons constitutional infirmity are appropriations which merely provide for a singular lump-
The former Organic Act and the present Constitution of the Philippines make the Chief Executive an integral part sum amount to be tapped as a source of funding for multiple purposes. Since such appropriation type
of the law-making power. His disapproval of a bill, commonly known as a veto, is essentially a legislative act. The necessitates the further determination of both the actual amount to be expended and the actual purpose of the
questions presented to the mind of the Chief Executive are precisely the same as those the legislature must appropriation which must still be chosen from the multiple purposes stated in the law, it cannot be said that the
determine in passing a bill, except that his will be a broader point of view. 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
The Constitution is a limitation upon the power of the legislative department of the government, but in this either vetoing the entire appropriation if he finds some of its purposes wasteful or undesirable, or approving the
respect it is a grant of power to the executive department. The Legislature has the affirmative power to enact entire appropriation so as not to hinder some of its legitimate purposes. Finally, it may not be amiss to state that
laws; the Chief Executive has the negative power by the constitutional exercise of which he may defeat the will of such arrangement also raises non-delegability issues considering that the implementing authority would still have
the Legislature. It follows that the Chief Executive must find his authority in the Constitution. But in exercising to determine, again, both the actual amount to be expended and the actual purpose of the appropriation. Since
that authority he may not be confined to rules of strict construction or hampered by the unwise interference of the foregoing determinations constitute the integral aspects of the power to appropriate, the implementing
the judiciary. The courts will indulge every intendment in favor of the constitutionality of a veto in the same authority would, in effect, be exercising legislative prerogatives in violation of the principle of non-delegability.
manner as they will presume the constitutionality of an act as originally passed by the Legislature. (Emphases
supplied) b. Application.

The justification for the President‘s item-veto power rests on a variety of policy goals such as to prevent log- In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum appropriation,
rolling legislation,207 impose fiscal restrictions on the legislature, as well as to fortify the executive branch‘s role in the legislator‘s identification of the projects after the passage of the GAA denies the President the chance to veto
the budgetary process.208 In Immigration and Naturalization Service v. Chadha, the US Supreme Court that item later on."212 Accordingly, they submit that the "item veto power of the President mandates that
characterized the President‘s item-power as "a salutary check upon the legislative body, calculated to guard the appropriations bills adopt line-item budgeting" and that "Congress cannot choose a mode of budgeting which
community against the effects of factions, precipitancy, or of any impulse unfriendly to the public good, which effectively renders the constitutionally-given power of the President useless." 213
On the other hand, respondents maintain that the text of the Constitution envisions a process which is intended Among others, an accountability mechanism with which the proper expenditure of public funds may be checked
to meet the demands of a modernizing economy and, as such, lump-sum appropriations are essential to is the power of congressional oversight. As mentioned in Abakada, 222 congressional oversight may be performed
financially address situations which are barely foreseen when a GAA is enacted. They argue that the decision of either through: (a) scrutiny based primarily on Congress‘ power of appropriation and the budget hearings
the Congress to create some lump-sum appropriations is constitutionally allowed and textually-grounded. 214 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;223 or (b) investigation
The Court agrees with petitioners. and monitoring of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of
legislation.224
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 The Court agrees with petitioners that certain features embedded in some forms of Congressional Pork Barrel,
allocations and could, after the GAA is passed, effectively appropriate PDAF funds based on their own discretion. among others the 2013 PDAF Article, has an effect on congressional oversight. The fact that individual legislators
As these intermediate appropriations are made by legislators only after the GAA is passed and hence, outside of are given post-enactment roles in the implementation of the budget makes it difficult for them to become
the law, it necessarily means that the actual items of PDAF appropriation would not have been written into the disinterested "observers" when scrutinizing, investigating or monitoring the implementation of the appropriation
General Appropriations Bill and thus effectuated without veto consideration. This kind of lump-sum/post- law. To a certain extent, the conduct of oversight would be tainted as said legislators, who are vested with post-
enactment legislative identification budgeting system fosters the creation of a budget within a budget" which enactment authority, would, in effect, be checking on activities in which they themselves participate. Also, it
subverts the prescribed procedure of presentment and consequently impairs the President‘s power of item veto. must be pointed out that this very same concept of post-enactment authorization runs afoul of Section 14,
As petitioners aptly point out, the above-described system forces the President to decide between (a) accepting Article VI of the 1987 Constitution which provides that:
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 Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel before any
legislators with legitimate projects.215 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
Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF Article would remain granted by the Government, or any subdivision, agency, or instrumentality thereof, including any government-
constitutionally flawed since it would then operate as a prohibited form of lump-sum appropriation above- owned or controlled corporation, or its subsidiary, during his term of office. He shall not intervene in any matter
characterized. In particular, the lump-sum amount of P24.79 Billion would be treated as a mere funding source before any office of the Government for his pecuniary benefit or where he may be called upon to act on account
allotted for multiple purposes of spending, i.e., scholarships, medical missions, assistance to indigents, of his office. (Emphasis supplied)
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, Clearly, allowing legislators to intervene in the various phases of project implementation – a matter before
therefore, does not readily indicate a discernible item which may be subject to the President‘s power of item another office of government – renders them susceptible to taking undue advantage of their own office.
veto.
The Court, however, cannot completely agree that the same post-enactment authority and/or the individual
In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA Chairperson relays, legislator‘s control of his PDAF per se would allow him to perpetuate himself in office. Indeed, while the
"limited state auditors from obtaining relevant data and information that would aid in more stringently auditing Congressional Pork Barrel and a legislator‘s use thereof may be linked to this area of interest, the use of his PDAF
the utilization of said Funds."216 Accordingly, she recommends the adoption of a "line by line budget or amount for re-election purposes is a matter which must be analyzed based on particular facts and on a case-to-case basis.
per proposed program, activity or project, and per implementing agency." 217
Finally, while the Court accounts for the possibility that the close operational proximity between legislators and
Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as all Congressional the Executive department, through the former‘s post-enactment participation, may affect the process of
Pork Barrel Laws of similar operation, to be unconstitutional. That such budgeting system provides for a greater impeachment, this matter largely borders on the domain of politics and does not strictly concern the Pork Barrel
degree of flexibility to account for future contingencies cannot be an excuse to defeat what the Constitution System‘s intrinsic constitutionality. As such, it is an improper subject of judicial assessment.
requires. Clearly, the first and essential truth of the matter is that unconstitutional means do not justify even
commendable ends.218 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
c. Accountability. Congressional Pork Barrel of similar nature are deemed as unconstitutional.

Petitioners further relate that the system under which various forms of Congressional Pork Barrel operate defies 4. Political Dynasties.
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 One of the petitioners submits that the Pork Barrel System enables politicians who are members of political
passing of the yearly budget" which turns them "from fiscalizers" into "financially-interested partners." 219 They dynasties to accumulate funds to perpetuate themselves in power, in contravention of Section 26, Article II of the
also claim that the system has an effect on re- election as "the PDAF excels in self-perpetuation of elective 1987 Constitution225 which states that:
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.‘"220 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)
The Court agrees in part.
At the outset, suffice it to state that the foregoing provision is considered as not self-executing due to the
The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that "public office is a qualifying phrase "as may be defined by law." In this respect, said provision does not, by and of itself, provide a
public trust," is an overarching reminder that every instrumentality of government should exercise their official judicially enforceable constitutional right but merely specifies guideline for legislative or executive
functions only in accordance with the principles of the Constitution which embodies the parameters of the action.226 Therefore, since there appears to be no standing law which crystallizes the policy on political dynasties
people‘s trust. The notion of a public trust connotes accountability, 221 hence, the various mechanisms in the for enforcement, the Court must defer from ruling on this issue.
Constitution which are designed to exact accountability from public officers.
In any event, the Court finds the above-stated argument on this score to be largely speculative since it has not In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the constitutional
been properly demonstrated how the Pork Barrel System would be able to propagate political dynasties. principles on local autonomy since it allows district representatives, who are national officers, to substitute their
judgments in utilizing public funds for local development.230 The Court agrees with petitioners.
5. Local Autonomy.
Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is also a recognition
The State‘s policy on local autonomy is principally stated in Section 25, Article II and Sections 2 and 3, Article X of that individual members of Congress, far more than the President and their congressional colleagues, are likely to
the 1987 Constitution which read as follows: be knowledgeable about the needs of their respective constituents and the priority to be given each
project."231 Drawing strength from this pronouncement, previous legislators justified its existence by stating that
ARTICLE II "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
Sec. 25. The State shall ensure the autonomy of local governments. central agencies which are preoccupied with mega-projects. 232 Similarly, in his August 23, 2013 speech on the
"abolition" of PDAF and budgetary reforms, President Aquino mentioned that the Congressional Pork Barrel was
ARTICLE X originally established for a worthy goal, which is to enable the representatives to identify projects for
communities that the LGU concerned cannot afford.233
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Notwithstanding these declarations, the Court, however, finds an inherent defect in the system which actually
Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and belies the avowed intention of "making equal the unequal." In particular, the Court observes that the gauge of
accountable local government structure instituted through a system of decentralization with effective PDAF and CDF allocation/division is based solely on the fact of office, without taking into account the specific
mechanisms of recall, initiative, and referendum, allocate among the different local government units their interests and peculiarities of the district the legislator represents. In this regard, the allocation/division limits are
powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, clearly not based on genuine parameters of equality, wherein economic or geographic indicators have been
term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization taken into consideration. As a result, a district representative of a highly-urbanized metropolis gets the same
and operation of the local units. 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-
Pursuant thereto, Congress enacted RA 7160,227 otherwise known as the "Local Government Code of 1991" (LGC), List Representatives – and in some years, even the Vice-President – who do not represent any locality, receive
wherein the policy on local autonomy had been more specifically explicated as follows: funding from the Congressional Pork Barrel as well. These certainly are anathema to the Congressional Pork
Barrel‘s original intent which is "to make equal the unequal." Ultimately, the PDAF and CDF had become personal
Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the State that the territorial and political funds under the effective control of each legislator and given unto them on the sole account of their office.
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 The Court also observes that this concept of legislator control underlying the CDF and PDAF conflicts with the
goals. Toward this end, the State shall provide for a more responsive and accountable local government structure functions of the various Local Development Councils (LDCs) which are already legally mandated to "assist the
instituted through a system of decentralization whereby local government units shall be given more powers, corresponding sanggunian in setting the direction of economic and social development, and coordinating
authority, responsibilities, and resources. The process of decentralization shall proceed from the National development efforts within its territorial jurisdiction." 234 Considering that LDCs are instrumentalities whose
Government to the local government units. functions are essentially geared towards managing local affairs, 235 their programs, policies and resolutions should
not be overridden nor duplicated by individual legislators, who are national officers that have no law-making
xxxx 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: 236
(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 people‘s organizations, and other With PDAF, a Congressman can simply bypass the local development council and initiate projects on his own, and
concerned sectors of the community before any project or program is implemented in their respective even take sole credit for its execution. Indeed, this type of personality-driven project identification has not only
jurisdictions. (Emphases and underscoring supplied) contributed little to the overall development of the district, but has even contributed to "further weakening
infrastructure planning and coordination efforts of the government."
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 Thus, insofar as individual legislators are authorized to intervene in purely local matters and thereby subvert
national economy. As explained by the Court in Philippine Gamefowl Commission v. Intermediate Appellate genuine local autonomy, the 2013 PDAF Article as well as all other similar forms of Congressional Pork Barrel is
Court:228 deemed unconstitutional.

This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the substantive issues
which is intended to provide the needed impetus and encouragement to the development of our local political involving the Presidential Pork Barrel.
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 C. Substantive Issues on the Presidential Pork Barrel.
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 1. Validity of Appropriation.
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 Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended by PD 1993), which
laws but also to the spirit of the Constitution.229 (Emphases and underscoring supplied) 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 Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
Special Fund incidental thereto.237 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 Sec. 12. Special Condition of Franchise. — After deducting five (5%) percent as Franchise Tax, the Fifty (50%)
specific" purpose of PD 1869 which is the amendment of the Franchise and Powers of PAGCOR. 238 In view of the percent share of the Government in the aggregate gross earnings of the Corporation from this Franchise, or 60%
foregoing, petitioners suppose that such funds are being used without any valid law allowing for their proper if the aggregate gross earnings be less than P150,000,000.00 shall be set aside and shall accrue to the General
appropriation in violation of Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall Fund to finance the priority infrastructure development projects and to finance the restoration of damaged or
be paid out of the Treasury except in pursuance of an appropriation made by law." 239 destroyed facilities due to calamities, as may be directed and authorized by the Office of the President of the
Philippines. (Emphases supplied)
The Court disagrees.
Analyzing the legal text vis-à-vis the above-mentioned principles, it may then be concluded that (a) Section 8 of
"An appropriation made by law‖ under the contemplation of Section 29(1), Article VI of the 1987 Constitution PD 910, which creates a Special Fund comprised of "all fees, revenues, and receipts of the Energy Development
exists when a provision of law (a) sets apart a determinate or determinable 240 amount of money and (b) allocates Board from any and all sources" (a determinable amount) "to be used to finance energy resource development
the same for a particular public purpose. These two minimum designations of amount and purpose stem from and exploitation programs and projects of the government and for such other purposes as may be hereafter
the very definition of the word "appropriation," which means "to allot, assign, set apart or apply to a particular directed by the President" (a specified public purpose), and (b) Section 12 of PD 1869, as amended by PD 1993,
use or purpose," and hence, if written into the law, demonstrate that the legislative intent to appropriate exists. which similarly sets aside, "after deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent share of
As the Constitution "does not provide or prescribe any particular form of words or religious recitals in which an the Government in the aggregate gross earnings of PAGCOR, or 60%, if the aggregate gross earnings be less
authorization or appropriation by Congress shall be made, except that it be ‘made by law,‘" an appropriation law than P150,000,000.00" (also a determinable amount) "to finance the priority infrastructure development
may – according to Philconsa – be "detailed and as broad as Congress wants it to be" for as long as the intent to projects and x x x the restoration of damaged or destroyed facilities due to calamities, as may be directed and
appropriate may be gleaned from the same. As held in the case of Guingona, Jr.: 241 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.
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," In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a legal
such as precisely the authorization or appropriation under the questioned presidential decrees. In other words, in appropriation under the said constitutional provision precisely because, as earlier stated, it contains post-
terms of time horizons, an appropriation may be made impliedly (as by past but subsisting legislations) as well as enactment measures which effectively create a system of intermediate appropriations. These intermediate
expressly for the current fiscal year (as by enactment of laws by the present Congress), just as said appropriation appropriations are the actual appropriations meant for enforcement and since they are made by individual
may be made in general as well as in specific terms. The Congressional authorization may be embodied in annual legislators after the GAA is passed, they occur outside the law. As such, the Court observes that the real
laws, such as a general appropriations act or in special provisions of laws of general or special application which appropriation made under the 2013 PDAF Article is not the P24.79 Billion allocated for the entire PDAF, but
appropriate public funds for specific public purposes, such as the questioned decrees. An appropriation measure rather the post-enactment determinations made by the individual legislators which are, to repeat, occurrences
is sufficient if the legislative intention clearly and certainly appears from the language employed (In re Continuing outside of the law. Irrefragably, the 2013 PDAF Article does not constitute an "appropriation made by law" since
Appropriations, 32 P. 272), whether in the past or in the present. (Emphases and underscoring supplied) it, in its truest sense, only authorizes individual legislators to appropriate in violation of the non-delegability
principle as afore-discussed.
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave: 242
2. Undue Delegation.
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 On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue delegation of legislative
sense of the constitution means the setting apart a portion of the public funds for a public purpose. No particular power since the phrase "and for such other purposes as may be hereafter directed by the President" gives the
form of words is necessary for the purpose, if the intention to appropriate is plainly manifested. (Emphases President "unbridled discretion to determine for what purpose the funds will be used."243 Respondents, on the
supplied) 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
Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must be the purposes related "to energy resource development and exploitation programs and projects of the
"primary and specific" purpose of the law in order for a valid appropriation law to exist. To reiterate, if a legal government."244
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 The Court agrees with petitioners‘ submissions.
satisfy the requirement of an "appropriation made by law" under contemplation of the Constitution.
While the designation of a determinate or determinable amount for a particular public purpose is sufficient for a
Section 8 of PD 910 pertinently provides: legal appropriation to exist, the appropriation law must contain adequate legislative guidelines if the same law
delegates rule-making authority to the Executive245 either for the purpose of (a) filling up the details of the law
Section 8. Appropriations. x x x 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. 246 There are two (2) fundamental tests to ensure that the
All fees, revenues and receipts of the Board from any and all sources including receipts from service contracts legislative guidelines for delegated rule-making are indeed adequate. The first test is called the "completeness
and agreements such as application and processing fees, signature bonus, discovery bonus, production bonus; all test." Case law states that a law is complete when it sets forth therein the policy to be executed, carried out, or
money collected from concessionaires, representing unspent work obligations, fines and penalties under the implemented by the delegate. On the other hand, the second test is called the "sufficient standard test."
Petroleum Act of 1949; as well as the government share representing royalties, rentals, production share on Jurisprudence holds that a law lays down a sufficient standard when it provides adequate guidelines or
service contracts and similar payments on the exploration, development and exploitation of energy resources, limitations in the law to map out the boundaries of the delegate‘s authority and prevent the delegation from
shall form part of a Special Fund to be used to finance energy resource development and exploitation programs running riot.247 To be sufficient, the standard must specify the limits of the delegate‘s authority, announce the
and projects of the government and for such other purposes as may be hereafter directed by the President. legislative policy, and identify the conditions under which it is to be implemented.248
(Emphases supplied)
In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other purposes as may the x x x Malampaya Funds and remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x
be hereafter directed by the President" under Section 8 of PD 910 constitutes an undue delegation of legislative project or activity and the recipient entities or individuals, and all pertinent data thereto"255 (Presidential Pork
power insofar as it does not lay down a sufficient standard to adequately determine the limits of the President‘s Use Report). Petitioners‘ prayer is grounded on Section 28, Article II and Section 7, Article III of the 1987
authority with respect to the purpose for which the Malampaya Funds may be used. As it reads, the said phrase Constitution which read as follows:
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 ARTICLE II
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 – Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full
or be restricted to – things akin to, resembling, or of the same kind or class as those specifically mentioned, 249 is public disclosure of all its transactions involving public interest.
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 ARTICLE III Sec. 7.
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 The right of the people to information on matters of public concern shall be recognized. Access to official records,
government;250 and, third, the Executive department has, in fact, used the Malampaya Funds for non-energy and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government
related purposes under the subject phrase, thereby contradicting respondents‘ own position that it is limited research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as
only to "energy resource development and exploitation programs and projects of the government." 251 Thus, while may be provided by law.
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" The Court denies petitioners‘ submission.
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 Case law instructs that the proper remedy to invoke the right to information is to file a petition for mandamus. As
the rest of Section 8, insofar as it allows for the use of the Malampaya Funds "to finance energy resource explained in the case of Legaspi v. Civil Service Commission: 256
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 While the manner of examining public records may be subject to reasonable regulation by the government
the Malampaya Funds would be used – as it should be used – only in accordance with the avowed purpose and agency in custody thereof, the duty to disclose the information of public concern, and to afford access to public
intention of PD 910. 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
As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of PD 1869 has rendered nugatory by any whimsical exercise of agency discretion. The constitutional duty, not being
already been amended by PD 1993 which thus moots the parties‘ submissions on the same. 252 Nevertheless, since discretionary, its performance may be compelled by a writ of mandamus in a proper case.
the amendatory provision may be readily examined under the current parameters of discussion, the Court
proceeds to resolve its constitutionality. 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.
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 The decisive question on the propriety of the issuance of the writ of mandamus in this case is, whether the
damaged or destroyed facilities due to calamities, as may be directed and authorized by the Office of the information sought by the petitioner is within the ambit of the constitutional guarantee. (Emphases supplied)
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 Corollarily, in the case of Valmonte v. Belmonte Jr.257 (Valmonte), it has been clarified that the right to
calamities, the first indicated purpose, however, gives him carte blanche authority to use the same fund for any information does not include the right to compel the preparation of "lists, abstracts, summaries and the like." In
infrastructure project he may so determine as a "priority". Verily, the law does not supply a definition of "priority the same case, it was stressed that it is essential that the "applicant has a well -defined, clear and certain legal
in frastructure development projects" and hence, leaves the President without any guideline to construe the right to the thing demanded and that it is the imperative duty of defendant to perform the act required." Hence,
same. To note, the delimitation of a project as one of "infrastructure" is too broad of a classification since the without the foregoing substantiations, the Court cannot grant a particular request for information. The pertinent
said term could pertain to any kind of facility. This may be deduced from its lexicographic definition as follows: portions of Valmonte are hereunder quoted:258
"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 Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official
development."253 In fine, the phrase "to finance the priority infrastructure development projects" must be records," the Constitution does not accord them a right to compel custodians of official records to prepare lists,
stricken down as unconstitutional since – similar to the above-assailed provision under Section 8 of PD 910 – it abstracts, summaries and the like in their desire to acquire information on matters of public concern.
lies independently unfettered by any sufficient standard 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. 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
D. Ancillary Prayers. 1. 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,
Petitioners’ Prayer to be Furnished Lists and Detailed Reports. 1976, 72 SCRA 443.

Aside from seeking the Court to declare the Pork Barrel System unconstitutional – as the Court did so in the The request of the petitioners fails to meet this standard, there being no duty on the part of respondent to
context of its pronouncements made in this Decision – petitioners equally pray that the Executive Secretary prepare the list requested. (Emphases supplied)
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 In these cases, aside from the fact that none of the petitions are in the nature of mandamus actions, the Court
or activity and the recipient entities or individuals, and all pertinent data thereto" (PDAF Use finds that petitioners have failed to establish a "a well-defined, clear and certain legal right" to be furnished by
Schedule/List);254 and (b) "the use of the Executive‘s lump-sum, discretionary funds, including the proceeds from
the Executive Secretary and/or the DBM of their requested PDAF Use Schedule/List and Presidential Pork Use Based on the text of the foregoing, the DBM authorized the continued implementation and disbursement of
Report. Neither did petitioners assert any law or administrative issuance which would form the bases of the PDAF funds as long as they are: first, covered by a SARO; and, second, that said SARO had been obligated by the
latter‘s duty to furnish them with the documents requested. While petitioners pray that said information be implementing agency concerned prior to the issuance of the Court‘s September 10, 2013 TRO.
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 Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does not yet involve the
document relevant to the conduct of its audit investigations. While the Court recognizes that the information release of funds under the PDAF, as release is only triggered by the issuance of a Notice of Cash Allocation
requested is a matter of significant public concern, however, if only to ensure that the parameters of disclosure [(NCA)]."261 As such, PDAF disbursements, even if covered by an obligated SARO, should remain enjoined.
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, For their part, respondents espouse that the subject TRO only covers "unreleased and unobligated allotments."
or even the CoA, may choose to pursue through a separate petition. 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
It bears clarification that the Court‘s denial herein should only cover petitioners‘ plea to be furnished with such ‘remaining PDAF.‘" They conclude that this is a reasonable interpretation of the TRO by the DBM. 262
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 The Court agrees with petitioners in part.
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 At the outset, it must be observed that the issue of whether or not the Court‘s September 10, 2013 TRO should
allowed access to the documents sought for by the latter, subject, however, to the custodian‘s reasonable be lifted is a matter rendered moot by the present Decision. The unconstitutionality of the 2013 PDAF Article as
regulations,viz.:259 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,
In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to is now permanently enjoined.
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 The propriety of the DBM‘s interpretation of the concept of "release" must, nevertheless, be resolved as it has a
custodian of the records may be prevented and that the right of other persons entitled to inspect the records practical impact on the execution of the current Decision. In particular, the Court must resolve the issue of
may be insured Legaspi v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. whether or not PDAF funds covered by obligated SAROs, at the time this Decision is promulgated, may still be
The petition, as to the second and third alternative acts sought to be done by petitioners, is meritorious. disbursed following the DBM‘s interpretation in DBM Circular 2013-8.

However, the same cannot be said with regard to the first act sought by petitioners, i.e., 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
"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and website, is "aspecific authority issued to identified agencies to incur obligations not exceeding a given amount
PDP-Laban who were able to secure clean loans immediately before the February 7 election thru the during a specified period for the purpose indicated. It shall cover expenditures the release of which is subject to
intercession/marginal note of the then First Lady Imelda Marcos." compliance with specific laws or regulations, or is subject to separate approval or clearance by competent
authority."263
The Court, therefore, applies the same treatment here.
Based on this definition, it may be gleaned that a SARO only evinces the existence of an obligation and not the
2. Petitioners’ Prayer to Include Matters in Congressional Deliberations. 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
Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the Congress of all circumstances which will prevent the actual release of funds. On the other hand, the actual release of funds is
presently, off-budget, lump sum, discretionary funds including but not limited to, proceeds from the x x x brought about by the issuance of the NCA,264 which is subsequent to the issuance of a SARO. As may be
Malampaya Fund, remittances from the PAGCOR and the PCSO or the Executive‘s Social Funds." 260 determined from the statements of the DBM representative during the Oral Arguments: 265

Suffice it to state that the above-stated relief sought by petitioners covers a matter which is generally left to the Justice Bernabe: Is the notice of allocation issued simultaneously with the SARO?
prerogative of the political branches of government. Hence, lest the Court itself overreach, it must equally deny
their prayer on this score. xxxx

3. Respondents’ Prayer to Lift TRO; Consequential Effects of Decision. 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
The final issue to be resolved stems from the interpretation accorded by the DBM to the concept of released liquidate the amounts obligated in the SARO; so it comes after. x x x The NCA, Your Honor, is the go signal for the
funds. In response to the Court‘s September 10, 2013 TRO that enjoined the release of the remaining PDAF MDS for the authorized government-disbursing banks to, therefore, pay the payees depending on the projects or
allocated for the year 2013, the DBM issued Circular Letter No. 2013-8 dated September 27, 2013 (DBM Circular projects covered by the SARO and the NCA.
2013-8) which pertinently reads as follows:
Justice Bernabe: Are there instances that SAROs are cancelled or revoked?
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 Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs issued are
issuance of the TRO, may continually be implemented and disbursements thereto effected by the agencies withdrawn by the DBM.
concerned.
Justice Bernabe: They are withdrawn?
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied) broad classification of "priority infrastructure development projects," it has once more transgressed the principle
of non-delegability.
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 For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods and
without any corresponding NCAs issued, must, at the time of this Decision’s promulgation, be enjoined and mechanisms the Court has herein pointed out should never again be adopted in any system of governance, by
consequently reverted to the unappropriated surplus of the general fund. Verily, in view of the declared any name or form, by any semblance or similarity, by any influence or effect. Disconcerting as it is to think that a
unconstitutionality of the 2013 PDAF Article, the funds appropriated pursuant thereto cannot be disbursed even system so constitutionally unsound has monumentally endured, the Court urges the people and its co-stewards
though already obligated, else the Court sanctions the dealing of funds coming from an unconstitutional source. 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
This same pronouncement must be equally applied to (a) the Malampaya Funds which have been obligated but purge all the wrongs of society nor bring back what has been lost, guides this nation to the path forged by the
not released – meaning, those merely covered by a SARO – under the phrase "and for such other purposes as Constitution so that no one may heretofore detract from its cause nor stray from its course. After all, this is the
may be hereafter directed by the President" pursuant to Section 8 of PD 910; and (b) funds sourced from the Court‘s bounden duty and no other‘s.
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 WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations discussed in this
unconstitutional. However, these funds should not be reverted to the general fund as afore-stated but instead, Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) all legal
respectively remain under the Malampaya Funds and the Presidential Social Fund to be utilized for their provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and
corresponding special purposes not otherwise declared as unconstitutional. 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
E. Consequential Effects of Decision. 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;
As a final point, it must be stressed that the Court‘s pronouncement anent the unconstitutionality of (a) the 2013 (c) all legal provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF
PDAF Article and its Special Provisions, (b) all other Congressional Pork Barrel provisions similar thereto, and (c) Articles and the various Congressional Insertions, which confer/red personal, lump-sum allocations to legislators
the phrases (1) "and for such other purposes as may be hereafter directed by the President" under Section 8 of from which they are able to fund specific projects which they themselves determine; (d) all informal practices of
PD 910, and (2) "to finance the priority infrastructure development projects" under Section 12 of PD 1869, as similar import and effect, which the Court similarly deems to be acts of grave abuse of discretion amounting to
amended by PD 1993, must only be treated as prospective in effect in view of the operative fact doctrine. 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
To explain, the operative fact doctrine exhorts the recognition that until the judiciary, in an appropriate case, development projects" under Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No.
declares the invalidity of a certain legislative or executive act, such act is presumed constitutional and thus, 1993, for both failing the sufficient standard test in violation of the principle of non-delegability of legislative
entitled to obedience and respect and should be properly enforced and complied with. As explained in the recent power.
case of Commissioner of Internal Revenue v. San Roque Power Corporation,266 the doctrine merely "reflects
awareness that precisely because the judiciary is the governmental organ which has the final say on whether or Accordingly, the Court‘s temporary injunction dated September 10, 2013 is hereby declared to be PERMANENT.
not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the Thus, the disbursement/release of the remaining PDAF funds allocated for the year 2013, as well as for all
power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of previous years, and the funds sourced from (1) the Malampaya Funds under the phrase "and for such other
fairness and justice then, if there be no recognition of what had transpired prior to such adjudication." 267 "In the purposes as may be hereafter directed by the President" pursuant to Section 8 of Presidential Decree No. 910,
language of an American Supreme Court decision: ‘The actual existence of a statute, prior to such a and (2) the Presidential Social Fund under the phrase "to finance the priority infrastructure development
determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be projects" pursuant to Section 12 of Presidential Decree No. 1869, as amended by Presidential Decree No. 1993,
ignored.‘"268 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
For these reasons, this Decision should be heretofore applied prospectively. 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
Conclusion Social Fund shall remain therein to be utilized for their respective special purposes not otherwise declared as
unconstitutional.
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 On the other hand, due to improper recourse and lack of proper substantiation, the Court hereby DENIES
the rules within which it operates. To recount, insofar as it has allowed legislators to wield, in varying gradations, petitioners‘ prayer seeking that the Executive Secretary and/or the Department of Budget and Management be
non-oversight, post-enactment authority in vital areas of budget execution, the system has violated the principle ordered to provide the public and the Commission on Audit complete lists/schedules or detailed reports related
of separation of powers; insofar as it has conferred unto legislators the power of appropriation by giving them to the availments and utilization of the funds subject of these cases. Petitioners‘ access to official documents
personal, discretionary funds from which they are able to fund specific projects which they themselves already available and of public record which are related to these funds must, however, not be prohibited but
determine, it has similarly violated the principle of non-delegability of legislative power ; insofar as it has created merely subjected to the custodian‘s reasonable regulations or any valid statutory prohibition on the same. This
a system of budgeting wherein items are not textualized into the appropriations bill, it has flouted the prescribed denial is without prejudice to a proper mandamus case which they or the Commission on Audit may choose to
procedure of presentment and, in the process, denied the President the power to veto items ; insofar as it has pursue through a separate petition.
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 The Court also DENIES petitioners prayer to order the inclusion of the funds subject of these cases in the
public accountability ; insofar as it has authorized legislators, who are national officers, to intervene in affairs of budgetary deliberations of Congress as the same is a matter left to the prerogative of the political branches of
purely local nature, despite the existence of capable local institutions, it has likewise subverted genuine local government.
autonomy ; and again, insofar as it has conferred to the President the power to appropriate funds intended by
law for energy-related purposes only to other purposes he may deem fit as well as other public funds under the 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 it has shown the municipality by granting it gratuitously some lands belonging to it situated in San Juan del
the Pork Barrel System. Monte that were necessary for the waterworks, it was resolved to give free of charge all the water of the
Carriedo waterworks that may be consumed in the aforesaid convent of Sto. Domingo, of this city.
This Decision is immediately executory but prospective in effect.
Admitting the validity of the gratuitous concession of water made by the old government of the City of Manila to
SO ORDERED. the plaintiff entity, the court below, however, holds that as no time was fixed for the free use of water in the
convent of Sto. Domingo, the successors of the old government of the City of Manila and the defendant herein,
LA SAGRADA ORDEN DE PREDICADORES DE LA PROVINCIA DEL SANTISIMO ROSARIO DE FILIPINAS, plaintiff- the Metropolitan Water District, are not under obligation to respect said concession. Following is the line of
appellant,  reasoning of his Honor, the trial judge:
vs.
THE METROPOLITAN WATER DISTRICT, defendant-appellee. It will be noted that in the aforesaid resolution nothing is said as to the time or duration of said concession or
donation, it was simply resolved to grant gratuitously the water of the Carriedo waterworks that might be used
Perfecto Gabriel for appellant. in the convent of Sto. Domingo, and since it was not resolved nor stated that the concession of the said use of
Attorney-General Villa-Real for appellee. water was to be for the whole time of the existence of the said convent of Sto. Domingo, it cannot be reasonably
said that the aforementioned donation was perpetual or permanent, from which it follows logically that the
VILLAMOR, J.: successors of the old government of the City of Manila and the herein defendant, the Metropolitan Water
District, are not under obligation to respect the aforesaid donation, nor to continue furnishing gratuitously the
This is an appeal from a judgment of the Court of First Instance of Manila whereby the defendant was absolved water that may be needed and consumed in the convent of Sto. Domingo.
from the complaint and the plaintiff was ordered to pay the defendant the sum of P1,404.44, the amount of
defendant's counterclaim, with interest and costs. Whether or not the old city council of Manila had any authority to make the remuneratory concession here in
question is not discussed in the decision of the court below. And as a matter of fact the Attorney-General
It appears that upon the construction of the Carriedo water supply for the City of Manila, the plaintiff, "Sagrada confines himself in his brief to maintaining the proposition that the judgment appealed from is correct in all
Orden de Predicadores," donated to the municipality of Manila certain lands of its ownership situated in San Juan respects. So that defendant's counsel, who was not appealed from the judgment of the court below, cannot now
del Monte that were required for bringing the water to the city. In return for this act of liberality and generosity raised this question in this instance, under Rule 20 of the Rules of this court.
of the Dominican Fathers of the Province of the Holy Rosary, that is, the plaintiff corporation, the old city council
of Manila, by a resolution dated October 20, 1886, decided to furnish, free of charge, the necessary water from However, in the discussion of this case among the members of this court, the question was raised as to the lack
the Carriedo waterworks for the use of the convent of Sto. Domingo, of this city. From the year 1886 the convent of authority on the part of the old city council of Manila to make the plaintiff the concession upon which the
of Sto Domingo has been enjoying the free use of the Carriedo waters until the first of July, 1920, when the complaint is based.
defendant, in its capacity as administrator and trustee of the present water supply system in the City of Manila,
required the plaintiff to pay for the water consumed during the months of July to September, 1920. The plaintiff In studying the proceedings of the city council of Manila in connection with the establishment of the water
paid the amount of P52.24 under protest, and this action followed. supply system, we need not look to any regarding the organization and powers of the city council, but must
determine rather the capacity of a trustee, for the following reasons:
Relying on the aforesaid resolution Exhibit B, of the old city council of Manila, the plaintiff prays that the
defendant be ordered to fulfill its obligation to furnish free water consumption which plaintiff has been enjoying (a) The funds, as well as the charitable idea of constructing a water supply system to furnish water to the
long since, to refrain from collecting any charges for the water consumed in its convent and to refund the inhabitants of Manila, came from a legacy provided in clause 15 of the testament of General Francisco Carriedo y
amounts paid by the plaintiff. The defendant in its answer sets up several special defenses, which we shall Peredo who had appointed Marquis de Montecastro y Llanahermosa as testamentary executor.
consider later on, and, as a counterclaim, asks that plaintiff be sentenced to pay the sum of P1,404.44, with
interest thereon, for water consumed from September 1, 1916, up to the third quarter of 1920. (b) As appears in "Obra Pía" No. 43 inserted in the book entitled "Obras Pias Sus Fundadores" kept in the division
of archives of Manila, on March 28, 1748, the aforesaid Marquis de Montecastro, as executor of General De
From the judgment aforementioned of the lower court, an appeal was duly and properly taken, and after the Carriedo, assigned to the board of "Obra Pia" known as "Mesa de Sta. Misericordia" the sum of $8,000 Spanish
motion for new trial was overruled the case was brought to this court by bill of exceptions. dollars, stating that he was doing it in compliance with clause 15 of the testament executed by the said General
shortly before his death, which amount was to be increased to 36,000 dollars, the total amount adjudicated to it,
The errors assigned by the appellant in its brief are: (a) The finding that the right of the convent of Sto. Domingo in order that with the part of such amount invested in business, the testamentary provision concerning this
to the free consumption of water has prescribed by reason of the fact that no time had been specified in the enterprise might be carried into effect, requesting the purveyors and members of the "Mesa" to receive it and
concession; (b) the finding that the obligation of the defendant to grant the convent of Sto. Domingo the keep it in their treasury. This request met with their approval with the only condition that 5 per cent of the profit
gratuitous use of water has been extinguished by the Jones Law; (c) the finding that the right of the plaintiff that might be obtained should inure to the treasury.
entity has been extinguished by the fact the water supplied to the convent of Sto. Domingo comes from the new
water system; and (d) the fact of sentencing the plaintiff entity to pay the sum claimed in the counterclaim. (c) The powers of the board known as "Mesa de la Sta. Misericordia" with respect to the said funds passed to the
city council of Manila, which assumed the administration thereof not as administrator of municipal funds but as
The resolution of the old city council of Manila of October 20, 1886, from which the plaintiff derives its right, is trustee of the Carriedo charitable funds; hence it was then entitled in its various proceedings "Fideicomisaria de
contained in Exhibit B, which reads as follows: las Obras de Carriedo" (Trustee of the Carriedo Works).

Finally, the council having been informed by several councilors that it is not possible to carry out what was (d) In administering the funds as well as in carrying into effect the object of the testator to furnish water to the
resolved at the meeting of the 23 of July last, regarding the costs incident to the installation of the Carriedo inhabitants of Manila, the council was acting in compliance with the last will of the testator, Carriedo, in the
waterworks in the buildings belonging to the convent of Sto. Domingo, which are yet without this service, for the place and stead of the testamentary executor, Marquis de Montecastro y Llanahermosa, and not precisely by
reason that the said costs had already been defrayed by them, and the municipality desiring, however, to render virtue of any ordinance or municipal law.
the said convent a tribute of gratitude and a just return for the kind attention and generous act of liberality that
According to the ancient expounders of the Spanish law, in fideicommissary substitutions, that person is Philadelphia, 7 Wall., 1; 19 L. ed., 53; United States vs. Baltimore & O. R. Co., 17 Wall., 322; 21 L. ed., 597;
regarded as the fiduciary who is charged with the execution of the will of the testator, and fideicommissary the Tippecanoe County vs. Lucas, 93 U. S., 108, 115; 23 L. ed., 822, 824; Hunter vs. Pittsburgh, 207 U. S., 161, 179; 52
person to whom the inheritance is to be delivered as beneficiary. In this case the inhabitants of Manila are the L. ed., 151, 159; 28 Sup. Ct. Rep., 40; Philadelphia vs. Fox, 64 Pa., 182; People ex rel., Le Roy vs. Hurlbut, 24 Mich.,
fideicommissary and the council the fiduciary. The city council Manila as fiduciary charged with the carrying out 44; 9 Am. Rep., 108; McDonough vs. Murdoch, 15 How., 367; 14 L. ed., 732; New vs. Nicoll, 73 N. Y., 127; 29 Am.
and performance of the testamentary trust was authorized to use the necessary means to accomplish the object Rep., 111; Noyes vs. Blakeman, 6 N. Y., 580; Van Slyke vs. Bush, 123 N. Y., 47; 25 N. E., 196.)
contemplated by the testator.
Appellee urges that the cession of the water was made in return for another cession, that of the strip of land
In its capacity as fiduciary of the Carriedo charitable fund, the old city council of Manila had under the law all the made by appellant, and as the latter has revoked its donation, it cannot now claim fulfillment of that which, for
necessary powers to accomplish the bringing of the water to the city, with which it was charged. It had the power reprocity, was accorded it by the predecessors of the defendant appellee.
to appoint the necessary personnel to carry the project into effect and to buy not only the materials necessary
for such a great enterprise but also to buy or acquire by condemnation proceedings such lands as were needed It is true, as evidence by the record, that when the entire San Juan del Monte Estate was registered under Act
for the placing of the Carriedo water pipes. And it so appears in the resolution book of the city council from No. 496 in the name of the appellant, and also when it transferred the land to Mr. Orense and to the present
which Exhibit B was taken. It is not necessary to demonstrate that, under the sound principles of law, the owner, J. K. Pickering & Co., the strip of land donated to the old city council of Manila was included in the
authority to buy carries with it that to exchange, and this is what happened in the instant case. registration; however, the same records show that the plaintiff, upon noticing such inclusion, requested the
present owner, J. K. Pickering & Co., to exclude the said strip of land from its title, reducing thereby the price, to
In the testament of Carriedo we find, among others, the following provisions: which J. K. Pickering & Co. consented, as is shown by Exhibits D and E. The Attorney-General himself,
representing the defendant, admits in his motion, Exhibit C, filed with the court in the record G. L. R. O. 975, that
Also. That if the desired object of conducting the water to this city be accomplished, three or four public the Metropolitan Water District and J. L. Pickering & Co. had come to an agreement by which the present owner
fountains must be constructed within the same, and without, such number as may be deemed convenient, and at of the land binds itself and undertakes to transfer unto the said Metropolitan Water District, as the administrator
the expense of said funds water conduits must be laid to conduct the water to the convents of San Francisco, San of the Carriedo waterworks, unconditionally and without any limitation, the title and ownership of the whole
Juan de Dios, and Sta. Clara. strip of land within the limits of the Province of Rizal that had been given in 1886 by the Dominican Fathers for
laying the water pipes.
Also. That if any other convent, religious community or private house desires to enjoy this benefit, the same must
be granted with the condition that it must contribute to the expenses of conducting the water in a proportionate On the other hand, it does not appear that the defendant, nor the City of Manila, has ever been disturbed by the
amount then to be determined, and of the amount thus paid a prudential part must be used as an aid to the appellant or by the present owner, in their use and possession of the land occupied by the water pipes in San
undertaking, the residents and traders of the Noble City being at liberty to increase it so that with its interest and Juan del Monte.
profit the losses of the enterprise might be compensated, and the reasonable salaries of the persons in charge of
the maintenance, repair, and preservation of said work paid. The fact that the water supply of the City of Manila almost the whole year around comes from the Montalban
reservoir does not affect the rights and obligations growing out of the resolution above quoted of the old city
As can be seen, the testator making the legacy provided that if any convent desired to enjoy the benefit granted council of Manila, since it is an indisputable fact that the defendant, the Metropolitan Water District, remains in
the convent of San Francisco, San Juan de Dios, and Sta. Clara to have the water conduits laid at the expense of the possession of the same lands donated by the appellant, which was the basis for the grant of the free use of
the funds of the enterprise, it should be granted with the condition that said convent shall contribute to the water to the convent of Sto. Domingo by the former city government of Manila.
expenses of laying the conduits. In the present case, as appears in the aforesaid resolution of the city council, the
community of Sto. Domingo had defrayed the expenses of installing the waterworks in its convent, which In its decision, the lower court says that by virtue of section 3 of the Act of Congress of August 29, 1916, known
expenses the city council desired to defray in return for the donation that said convent had made of its land in as the Jones Law, the convent of the Dominican Fathers of the City of Manila cannot continue in the free
San Juan del Monte in favor of the city council for the construction of the Carriedo waterworks, and so the city enjoyment of the use of the water supplied by the City of Manila, for the reason that the said section strictly
council resolved to grant said community the free use of the water in the convent of Sto. Domingo. prohibits that any public property or fund be used or destined, without due compensation, for the use, benefit or
maintenance of any church, or religious institution or denomination. It should be observed, in the first place, that
If the city council of Manila was authorized to adopt the resolution under discussion, it seems to us the free supply of water granted by the old city council of Manila to the convent of Sto. Domingo was made, not
unquestionable that that resolution has produced its legal effects. In the old ordinances prescribing rules for the on account of any religious consideration, but in return for an act of liberality of the Dominican Fathers in
government of the City of Manila and the proceedings of the chapters approved by Royal Cedula on September donating part of their lands to the City of Manila for the laying of the water pipes of the Carriedo waterworks.
12, 1686, the following, among other things, is provided: Secondly, the donation was remuneratory; in other words, the free consumption of water is compensation by the
value of more that ten thousand square meters of land which the party plaintiff had donated. Supposing that the
Also. It is ordered and decreed that no resolution voted at one meeting shall be revoked at another; that should old city council of Manila could validly purchase the necessary lands for bringing the water to the city, there is no
this be necessary in any particular case and for just and urgent reasons, it so be done always as not to impair any logical reason why the said city government could not equally, instead of paying the price of the land, furnish
right of a third person arising from contract or quasi-contract, and that all the members of the Chapter be free of charge the water that might be used by the convent of Sto. Domingo, the donor. Considering the case at
present at the meeting held for that purpose . . . that whatever resolution might be adopted be carried into bar in the most favorable light for both parties, it is evident that these donations, made reciprocally by the
effect unless appeal is taken therefrom to any superior court. . . . (Pages 65-69, vol. 3, Legislacion Ultramarinaby plaintiff corporation and the old city council of Manila, the predecessor of the defendant, constitute in the final
Joaquin Rodriguez San Pedro.) analysis an exchange or barter whereby one gives its lands and the other the supply of water. It cannot be held,
therefore, that the free supply of water to convent of Sto. Domingo is made without compensation; wherefore
The said resolution has been in force ever since it was adopted and having created a definite state of things, it we are of the opinion that the court below erred in applying section 3 of the Act of Congress of August 29, 1916,
cannot now be revoked without injuring the right of the party plaintiff. to the present case.

In the case of Vasquez Villas vs. City of Manila (42 Phil., 953), the Supreme Court of the United States held that: The question as to whether or not the obligation contracted by the former municipal council of the City of Manila
was transmitted to the present municipal board of Manila upon the change of sovereignty, has already been
The City of Manila holds the Carriedo fund as a trustee and such fund is liable for obligations incurred in the decided in the affirmative by the Supreme Court of the United States in the case of Vasquez Vilas vs. City of
administration of the Carriedo waterworks. (Vidal vs. Philadelphia, 2 How., 127; 11 L. ed., 205; Girard vs. Manila (42 Phil., 953). That high tribunal, after an exhaustive review of the precedents and authorities upon the
point, among other enlightening doctrines contained in its wise decision, held that the present City of Manila,
chartered by the Philippine Commission, with almost the same municipal attributes, territorial extension and informed that the municipality gratuitously grants all such water of the Carriedo Canal as might be used in the
population that it had as the municipality of Manila under the Spanish regime, is liable for the municipal aforesaid convent of Sto. Domingo."
obligations contracted before the cession of the Philippine Islands to the United States by the Treaty of Paris of
December 10, 1898. IV. Upon the discontinue of the Spanish sovereignty, the municipal administration of Manila passed to the City of
Manila, a corporation of a public character created by Act No. 183, the whole control of the management and
Finally, Act No. 2832 of the Philippine Legislature, creating Metropolitan Water District, in its section 8 empowers administration having been transferred to said corporation from the Corregimiento of the City of Manila, which
and directs the governing body created by that law to receive and take charge, in the name of the Metropolitan at that time had been in charge of it.
Water District, of all the assets and obligation pertaining to the waterworks and sewerage system of the City of
Manila. Wherefore, it is our opinion, and so decide, that the Metropolitan Water District is in duty bound to V. Since March 6, 1919, the date of the enactment of Act No. 2832, the control over the sewer and water supply
respect the obligations contracted by its predecessor, the old city council of Manila, by supplying gratuitously systems, which at that time had been in the hands of the City of Manila, passed to defendant entity, and the City
water for the consumption in the convent of Sto. Domingo, which pertains to the plaintiff corporation. of Manila ceased to exercise further right to control over the same.

By virtue whereof the judgment appealed from is reversed and the defendant is sentenced to supply gratuitously VI. Since the aforesaid date, October 20, 1886, the convent of Sto. Domingo of Manila, which belongs to the
the water that may be consumed in the said convent of Sto. Domingo and to refund the amount of P52.24 paid plaintiff entity, had been enjoying the benefit granted it, consisting in the gratuitous use of the water which was
by the appellant, without special pronouncement as to cost. So ordered. used in said convent up to the third quarter of 1920, when the defendant refused to continue supplying the
water gratuitously, the plaintiff having been compelled to pay P54.24 for said quarter to avoid being deprived of
Araullo, C. J., Johnson, Avanceña, and Romualdez, JJ., concur. the use of the water.

Separate Opinions VII. The defendant in this way intends to revoke and did in fact revoke the remuneratory donation executed in
the year 1886 by the municipal corporation sanctioned by a prescription in favor of the plaintiff entity on account
STREET, J., concurring in part and dissenting in part: of there having elapsed more than thirty-four years.

I concur in so much of the opinion as holds that the plaintiff "La Sagrada Orden de Predicadores" cannot be made Wherefore, plaintiff prays the court that judgment be entered in its favor, sentencing the defendant to respect
to pay to the Metropolitan Water District the sum of P1,404.44, as the value of water used by the convent of the and comply with the donation of the gratuitous use of water which the plaintiff has been enjoying, to supply the
Dominican Fathers since September 1, 1916, and prior to the third quarter of 1920, because that water was convent of Sto. Domingo gratuitously the water which is used in said building to the same extent as was done
voluntarily supplied, and no obligation on the part of the plaintiff to pay for it has existed at any time. The before the transfer of the sewer and water supply systems to the defendant, to refrain from charging anything
provision cited from the Jones Law cannot, in my opinion, be considered as creating a civil liability on the part of for such use of water, and to return to the plaintiff all the amount unduly paid the said defendant, and the costs
the Order to pay for said water. of the action.

As to the effect of the so-called "act of cession," effected by the Ayuntamiento of the City of Manila in 1886, To which the following demurrer was filed:
authorizing the supply of water gratis to the Dominican convent, it is to be admitted that this grant was based on
a meritorious, though past, consideration. Nevertheless, I consider it somewhat in the light of an administrative Comes now the undersigned Acting Attorney-General in behalf of the defendant and respectful shows:
regulation, conferring a mere privilege, and authorizing the persons in charge of the water system to supply
water to the convent for nothing, until otherwise directed; and I can see nothing in it in the nature of a That he demurs to the complaint on the ground that the facts therein alleged do not constitute a cause of action.
permanent donation or irrevocable grant. The present administrator of the water system are therefore not
bound to continue to supply the water in conformity with that grant, if minded to revoke the privilege. In support of this demurrer, we submit the following:

JOHNS, J., dissenting: The plaintiff asks that a supposed donation made in its favor by the municipality of Manila in its capacity as
administration of the Carriedo Charitable Funds be respected and compiled with.
The pleadings are important. The complaint is as follows:
The donation if it had been really made is void because it was made by a person who was a mere administrator
Comes now the plaintiff entity and, as a cause of action against the defendant, alleges: and could not dispose of the property administered (art. 624, C. C.), and it being void cannot be enforced and
does not have any legal effect.
I. That the plaintiff is a religious entity duly incorporated in accordance with the laws now in force in these
Islands, having its place of office in this City of Manila, convent of Sto. Domingo of Manila. Wherefore, defendant prays that the complaint be dismissed, with the costs against the plaintiff.

II. The defendant is a public corporation created by Act No. 2832, to take charge of the sewer and water supply The demurrer was overruled, and the defendant filed the following answer:
system, with capacity to sue and be used.
Comes now the defendant by the undersigned Acting Attorney-General and respectfully shows:
III. On October 20, 1886, in compensation for the benefit granted the municipality of Manila by the plaintiff
entity, the said municipality in its capacity as administrator of the Carriedo Charitable Funds executed in favor of That it admits paragraphs 1, 2, 4, and 5 of the complaint and denies generally and specifically the remaining
the convent of Sto. Domingo a donation of the gratuitous water service as follows: paragraphs of the same with the exception of the part of them which is explicity admitted in the following:

"Desiring, however, to give said convent a positive expression of its gratitude and a just return for the kind SPECIAL DEFENSE
attention and generous act of disinterestedness of said convent in ceding to the municipality gratuitously such
lands belonging to it situated in San Juan del Monte, and complying with the resolution adopted by the aforesaid
municipal corporation at the ordinary session held on the 20th instant, let the aforesaid religious order be
1st. That the defendant is as its predecessors, the City of Manila and the municipal commonwealth of Manila, made or cause to be made to the city any conveyance, right of way or easement to or over any land, for any
mere trustees of the water supply system constructed with the funds bequeathed by the deceased Carriedo, purpose whatever, or that it was the owner of any land, or that it ever, or for any purpose, parted with any right,
administering the same and taking the necessary measures for its maintenance and preservation. title or interest in any land to the city for any purpose. Neither is there any proof in the record that any
conveyance, right of way or easement was ever made by the plaintiff to the city at any time for any purpose.
2d. That as such trustees, neither the defendant nor its predecessors have made any "concession of gratuitous Neither is there any allegation or proof of the recitals, terms, conditions or covenants of any alleged conveyance,
water service" as is alleged in the complaint by the plaintiff religious entity. right of way or easement. Defendant made a general denial, and if there was a conveyance of any right of way or
easement by the plaintiff to the City of Manila, it devolved upon the plaintiff to prove that fact and to introduce
3d. That the most that the defendant should have granted the plaintiff was a privilege which was withdrawn, the record of such conveyance for the inspection of the court to show and prove the terms and conditions upon
firstly, by the fault of the plaintiff which, having obtained it in return for the simple concession made by it of a which the conveyance was made. In the absence of such allegations or proof, it is not only the legal right of this
strip of land in San Juan del Monte, which has been the object of condemnation proceedings to conduct the court to assume, but it must assume that no such a conveyance was ever made. But it is contended, and the
water coming from the reservoir constructed with the aforesaid funds, revoked said concession by inscribing in evidence tends to show, that the City of Manila constructed its pipe line over the lands of the plaintiff, and that
its name the aforesaid strip of land for which it obtained the corresponding certificate of title under the new ever since it has had the use and possession of the land over which it was constructed. Be that as it may, any
Registration Act and sold it to other persons, ignoring entirely the said concession, and, secondly, because the right of the City of Manila would then be founded on use and possession and use and possession only, and would
Jones Law which took effect on the 29th of August, 1916, prohibited in its article 3 that any fund or public not be founded upon a conveyance of any kind, or upon any covenants, terms or conditions. In other words, the
property be used, applied, donated or devoted either directly or indirectly for the use, benefit, or support of any city's easement and right to the use of the land for its pipe line would then be founded upon an irrevocable
sect or church of any kind or denomination or sectarian institution or religious system, priest, preacher, or license and an irrevocable license only, and would be in parol as distinguished from a written conveyance with
minister or any other religious teacher or dignitary in his capacity as such. covenants and conditions.

4th. That the water which is now supplied to plaintiff entity does not come from the old water supply system Assuming that the plaintiff did grant the city a parol license to construct its pipe line over the lands of the
constructed in Santolan with the Carriedo Funds, but from a new one which had been constructed in Montalban plaintiff, conditions were very different in 1886 than at the present time. For many and different reasons, it was
with funds obtained through the issues of bonds by the Government which has bound itself in order to pay them then important and necessary to the plaintiff and all other persons similarly situated to have running water in its
with the funds appropriated to the effect by Act No. 1323 to accomplish their redemption, and as buildings for its own use and consumption, and the right of way over its land was then but of little, if any,
commercial value. In other words, for its own interest and for its own use, the plaintiff could well afford to give a
COUNTERCLAIM right of way for a pipe line to insure it the right to have running water in and through its buildings, and it might
well be contended that such was the primary and only purpose of the plaintiff in permitting the city to lay its pipe
The defendant alleges: line over plaintiff's land. In the early days donations of right of way to promote some public enterprise were very
common here and in the United States, and thousands of them were made to encourage the construction of
That the plaintiff entity is indebted in the sum of P1,404.44 for the water which has been supplied to it from railroads and waterworks in particular.
September 1, 1916, to the third quarter of 1920, which sum has not been paid, and the plaintiff denies to pay
notwithstanding the repeated demands made to that effect. If it be a fact that the City of Manila constructed and has maintained its pipe line over the land of plaintiff under a
parol license, then it must follow that there are no covenants running with the land. There is a marked legal
Wherefore, the defendant prays the court — distinction between personal covenants and covenants running with the land. Personal covenants are confined
and limited to the immediate parties, and may be in parol. Covenants running with the land can only be created
(a) That the plaintiff be sentenced to pay the defendant the sum of P1,404.44 with legal interest thereon, and the by a written instrument under seal in which they are recited in, and made a part of, the instrument.
costs of the suit.
Words and Phrases, volume 2, page 1691, defining covenants running with the land, says:
(b) That the defendant be absolved from the complaint; and
It is an agreement in writing, under seal.
(c) That defendant be granted any other relief which may be deemed just and equitable.
It is a written agreement under seal, in the nature of a deed between two or more parties.
Upon such issues, judgment was rendered in favor of the defendant for P1,404.44, the full amount of its
counterclaim with interest and costs, from which the plaintiff appeals, claiming that the court erred in the It is a contract or agreement to do or suffer a particular thing, evidenced by a writing, under seal, sometimes
rendition of the money judgment in favor of the defendant, and in failing to render judgment for the plaintiff as defined as a "contract by deed."
prayed for in its complaint.
It is an "agreement or consent of two or more by deed in writing, sealed and delivered, whereby either one of
It will be noted that the answer admits paragraph 1, 2, 4, and 5 of the complaint, and specifically denies all other the parties doth promise to the other that something is done already or shall be done afterward."
allegations, and, as a special defense, it is further alleged in the answer that "neither the defendant not its
predecessors have made any `concession of gratuitous water service' as is alleged in the complaint by the It is an agreement between two or more parties, reduced to writing and executed by a sealing and delivered
plaintiff religious entity." Hence, it devolves upon the plaintiff to prove the allegations made in paragraphs 3, 6, thereof, whereby some of the parties named therein engaged, or one of them engages with the other or others,
and 7 of its complaint. or some of them therein also named, that some act hath or hath not already been done, or for the performance
or nonperformance of some specified duty.
Plaintiff's claim to the use of free water is founded solely upon the action of the City of Manila on October 20,
1886, more than thirty-six years ago. It is an agreement, convention, or promise of two or more parties, by deed in writing, signed and delivered, by
which either of the parties pledges himself to the other that something is either done or shall be done, or
We have quoted the complaint in full for the purpose of showing the ground upon which plaintiff's alleged right stipulates for the truth of certain facts.
is founded. It will be noted that plaintiff's alleged that any contract or agreement was ever made between it and
the city, or that the action of the council was founded upon any contract. Neither does it allege that plaintiff ever
In covenants running with the land, the grantee is bound by the recitals in any deed through which he deraigns Giving to the recital in the municipal record its full force and effect and a fair and liberal construction, it means
title. That is not true as to personal covenants between the immediate parties which may be in writing or in this: That to promote and insure the construction of a water system by the City of Manila the plaintiff gave to the
parol. city a right of way over its land. That the gift was voluntary and was made to promote the construction of a water
system for the City of Manila and was without any other consideration. After the plaintiff had given the city the
In the instant case the testimony is conclusive that no written instrument was ever executed by the plaintiff to right to construct the pipe line over its land and without any compensation, the then council of the City of Manila
the city giving it a right of way over plaintiff's land. In the first place, if such an instrument was ever executed, the adopted the minutes of October 20, 1886, above quoted. Relying upon what the plaintiff did, the city has at a
most natural thing for the city to have done would be to file it for record, and the instrument itself or some trace large expense constructed and ever since maintained the pipe line upon the land donated to it by the plaintiff. In
of it should be found in the archives of the city. Second, in the very nature of things plaintiff would have addition, the city has expended a large amount of money for the installation and development of its present
something among its files and records tending to show the execution of such an instrument. Again, an instrument water system. In other words, relying upon the donation of the right of way, the city has installed, developed and
containing covenants running with the land would be absolute and convincing proof of plaintiff's right to the free maintained its present water system, and such parol license for a right to way is now coupled with an interest,
use of water. Also the testimony of Perfecto Gabriel himself is conclusive that no such a written instrument was and is, therefore, irrevocable. On the other hand, as a result of what the city said in its minutes, the plaintiff has
ever executed. not changed its conditions or expended one centavo, which it would not have otherwise spent. Any action of the
city was purely voluntary on its part and did not arise from, or grow out of, any contract or agreement with the
If it be a fact that the plaintiff donated the right of way to the city under an agreement with the city that in plaintiff. In other words, there is no evidence which shows or tends to show that the plaintiff gave the city a right
consideration thereof it should have the free use of water perpetually, in the very nature of things, the contract of way in consideration of and on condition that in return it would have free water. The gift of the plaintiff was
would have been reduced to writing and officially signed by the city on the one hand and by the plaintiff on the made without any condition or reservation, and was complete within itself and was not founded on any contract
other, and, yet, there is no claim or pretense that any contract in writing was ever made or signed by either or agreement with the city. What the city did was done voluntarily and on its own motion, and without any
party. contract or agreement, and was done some time after the gift to the city was complete. In other words, after the
gift of the plaintiff to the city was complete, the then municipal council of the City of Manila, and in appreciation
It appears from the record that prompt and timely objections were made by the defendant to the introduction of of the gift, in effect, said to the plaintiff that, as evidence of our gratitude, we will give you free water. That is the
what is known in the record as Exhibit A, as tending to prove "the supposed donation for which there is no analysis of the whole transaction. Neither gift was dependent upon or connected with the other, and each was
written record thereof." Also, "to the admission of Exhibit B because it refers to donation which was not written." separate and distinct from the other, and the act of the council was a voluntary act upon its part. Hence, you
In the opinion of the writer of such exhibits were admissible for any purpose. Neither of them, standing alone, is have this situation — to insure and promote the construction of a water system by the city, the plaintiff
evidence of any contract or agreement either oral or written between the plaintiff and the city. voluntarily and without any other consideration gave the city a pipe line right of way over its land. Relying
thereon the city installed its present system and expended a large amount of money. The then city council,
Much importance is attached to the language found in the municipal record of the city of October 20, 1886, desiring to show its appreciation of gratitude to the plaintiff, voluntarily said to it that we will give you free water.
known as Exhibit B, which is incorporated in, and made a part of, the complaint. Through the courtesy of Mr. That was thirty-six years ago, and, through the acquiescence of subsequent city councils, the plaintiff has had
Justice Villamor, I have been furnished an English translation of that record made by the official translator, which free water.
reads as follows:
The plaintiff is a private corporation dealing with its own property. The City of Manila is a public corporation
Finally, the council having been informed by several councils that it is not possible to carry out what was resolved representing public interest and dealing with public property. No law has ever been cited and no decision of any
at the meeting of the 23d of July last, regarding the cost incident to the installation of the Carriedo waterworks in court will ever be found holding that a voluntary gift of public property made by a city council thirty-six years ago
the building belonging to the convent of Sto. Domingo, which are yet without this service, for the reason that the is a perpetual, continuous gift, binding upon all other city councils through time and eternity, yet, that is the legal
said cost had already been defrayed by them, and the municipality desiring, however, to render the said convent effect of the majority opinion. As a matter of fact, no law will ever be found which authorizes a city council to
a tribute of gratitude and a just return for the kind attention and generous act of liberality that it has shown the voluntarily give away public property to any one for any purpose. The whole transaction shows that the use of
municipality by granting it gratuitously some lands belonging to it situated in San Juan del Monte that were free water to the plaintiff was a voluntary gift. That the gifts from one to the other were not dependent on the
necessary for the waterworks, it was resolved to give free of charge all the water of the Carriedo waterworks that other, and that the action of the city council was not founded upon any covenant, contract or agreement with
may be consumed in the aforesaid convent of Sto. Domingo, of this city. the plaintiff, either oral or written.

It will be noted that, among other things, it says: The original minutes in Spanish reads:

To render the said convent a tribute of gratitude and a just return for the kind attention and generous act of Hagase saber a la referida Comunidad que el Municipio cede gratuitamente toda el agua que del canal de
liberality that it has shown the municipality by granting it gratuitously some lands, etc. Carriedo se consuma en el Convento de Sto. Domingo.

This is an express recital that the lands were gratuitously ceded by the plaintiff to the city. In other words, that at According to the unabridged Spanish Dictionary, the word "cede" comes from the infinitive verb "ceder,"
some previous time the plaintiff had given the city a right of way for the pipe line over its land. That recital is meaning "to give, to transfer, to convey to another a thing, action, or right. To surrender, to submit to
conclusive proof that at some previous time the plaintiff gratuitously gave the right of way to the city. No plainer something," and "concession," the noun of the verb "ceder" means "the action or the effect of giving," and the
language could have been used. But the plaintiff relies upon the following language used in the same record: word "grant" means "concession, quality, gift, donation, permission, privilege."

That the municipality gratuitously grants all such water of the Carriedo canal as might be used in the aforesaid Words and Phrases, vol. 4, page 3151, says:
convent of Sto. Domingo.
* * * Grant is usually regarded as synonymous with give, confer, bestow, convey, transfer, admit, allow,
All of the language taken together cannot be construed as evidence of any contract or agreement between the concede . . . .
plaintiff and the city. Neither does it tend to show that the plaintiff conveyed a right of way to the city for its pipe
line pursuant to any contract, understanding or agreement with the city that the plaintiff should have the free Hence, in the instant case and from the municipal record in 1886, upon which the plaintiff relies to prove its case,
use of water. you have the council of the City of Manila voluntarily giving, conferring, and bestowing the use of free water to
the plaintiff, and because the city council in 1886 voluntarily gave the plaintiff the use of free water, it now claims
a perpetual right to such use. If it be a fact that the plaintiff donated the pipe line right of way to the city under a Q. Can you state with what money the Montalban was constructed? — A. With the eight-million peso loan made
contract or agreement with the city in substance and to the effect and in consideration thereof that the plaintiff by the Insular Government from the United States Government and with that borrowed money we constructed
should have the free use of water, and both parties in good faith acted and relied thereon, and such facts were this waterworks.
alleged and relied upon in the complaint and sustained by the evidence, as between it and the City and Manila,
plaintiff's position would then be tenable and sustained by the authorities, and that is the legal effect of all the Q. Was any amount of money from the Carriedo Funds used in the construction of the new waterworks? — A.
authorities cited in the majority opinion. That is not this case. There is no allegation in the complaint that any There was no money in the Carriedo Funds, it was always suffering a shortage of funds. The Government always
contract or agreement was ever made between the plaintiff and the City of Manila at any time for any purpose, had to come to the help of the Carriedo Funds.
and there is no evidence of any contract showing or tending to show that the plaintiff gave the city a right of way
for its pipe line with the understanding and agreement that the plaintiff should have the free use of water at all On cross-examination:
or for any length of time.
Q. You say that the Carriedo waterworks is different from the modern system constructed by the Metropolitan
In the absence of any such an allegation or proof of any kind, how and upon what theory or upon what legal Water District. — A. Yes, sir.
principal can any court say that the plaintiff has a perpetual right to the use of free water, and yet, that is what
the majority opinion does. Again, it will be noted "that the municipality gratuitously grants all such water of the Q. The Carriedo waterworks, where does it have its distributing center? — A. It has no connection whatever.
Carriedo canal as might be used in the aforesaid convent of Sto. Domingo." No time is specified as to how long
the plaintiff should have the use of free water for the very apparent reason that a voluntarily gift by one council Q. Now coming to the new waterworks, where does its water come from? — A. From a place known Uana.
could not bind another council, and for the further reason that no city council has the right to voluntarily give the
property of the city to any person for any purpose. Again, the gift is confined to the water of the Carriedo canal," Q. What municipality? — A. Montalban, it is about three kilometers from Montalban.
and the testimony is undisputed that under changed conditions, the only time water from the Carriedo canal is
used by the city for any purpose is from one to two weeks in the whole year, and that to all intents and purposes, Q. Are the old pipes there yet? — A. Yes, sir.
the city has long since ceased to use any of the original waters from or out of the Carriedo canal to which the
minutes of the city council of 1886 refer. Q. In the same land? — A. Yes, sir.

For a number of years the city's water source of supply has been and is now from Montalban the waters of which Q. And that Santolan deposit is it connected at all with the new deposit at Montalban? — A. No, sir.
are separate and distinct from the water of the Carriedo canal. In other words, it is only during a shortage of
water and for a few days in the year that water is ever used by the city through the Carriedo canal. This is the uncontradicted testimony of a man who knows what he is talking about, and we must accept it as true,
from which it appears that none of the waters through or out of the Carriedo canal are used by the city in the
A. Gideon, who has been water superintendent of the defendant for nearly seventeen years on direct present water system more than two weeks in the whole year. That for many years the two water systems have
examination, testified: been separate and distinct from each other, for the very simple reason that the waters from Montalban are
brought in under a gravity system, and that the waters for the Carriedo canal were furnished by a pumping
Q. Do you know the deposit of the Carriedo waters? — A. Yes, sir. system, which is far more expensive than the gravity system. Giving to the minutes of the city council of 1886 the
very broadest and most liberal construction, in any event, the free use of water to the plaintiff should be
Q. The water system? — A. All the waterworks performed since 1878. confined and limited to "the waters of the Carriedo canal," and for the period of time that waters are furnished
to the city through that canal, which is not to exceed two weeks in the whole year. Yet, founded upon a voluntary
Q. Does the Carriedo water system still continue? — A. No. gift to the plaintiff for the free use of waters of the Carriedo canal which canal for twelve years has not been used
by the city more than two weeks in the whole year, the plaintiff now claims a perpetual right to the use of waters
Q. When was it stopped? — A. Around the year 1910. the whole year from and out of the present gravity system which was constructed at a cost of more than
P8,000,000 to the Government. If it be a fact, as the majority opinion holds, that, because the plaintiff donated to
Q. And what water work system took its place to supply water to the City of Manila and adjacent towns? — A. the city the right of way for its pipe line in 1886 over lands which had, but little, commercial value, it now has
The Montalban waterworks, by gravity system. perpetual right to the free use of water from the present gravity system, and the property of the defendant will
be burdened through time and eternity for millions of pesos, which even now amounts to P216.96 a year, which
Q. This new waterworks, is it related in any way with the Carriedo waterworks? — A. I have to explain this is more than the value of the right of way at the time it was donated by the plaintiff to the city in 1886, and which
carefully to avoid mistakes. The Carriedo Water Works supplied the water by pumps in Santolan to the place for thirty-six years at the same annual rate would amount to P7,800. This simple statement of figures is
called the deposit and from there the water was distributed in the City of Manila by water tubes 26 inches conclusive evidence that plaintiff's claim is untenable and ought not to be sustained in any court.
diameter. In the new system the water comes from Montalban where it has its own deposit or dam and this
system is not at all connected with the old waterworks system, except only during one or two weeks of the year My conscience and oath of office compel me to vigorously dissent from the majority opinion.
during which, when there is not enough water in Montalban, we have to use the pumping station of the Carriedo
system to bring in water during that time. From the deposit to the San Juan Bridge the pipes are placed in the San The decision of the lower court as to the money judgment against the plaintiff should be reversed, and, in all
Juan Lands. These pipes are 42 inches and are placed alongside the 26-inch pipes. other respects, affirmed, without costs to either party.

Q. Excepting the use that you make during one or two weeks of the Carriedo system do you use that system at GREGORIO AGLIPAY, petitioner, 
any other time? — A. No. vs.
JUAN RUIZ, respondent.
Q. Why was the Carriedo waterworks abandoned? — A. Because it was not sufficient to supply the needs of the
city. It could only supply 4 or 5 million gallons whereas now we need 22 or 24 million. Vicente Sotto for petitioner.
Office of the Solicitor-General Tuason for respondent.
LAUREL, J.: constitutional guarantee of religious freedom, with its inherent limitations and recognized implications. It should
be stated that what is guaranteed by our Constitution is religious liberty, not mere religious toleration.
The petitioner, Mons. Gregorio Aglipay, Supreme Head of the Philippine Independent Church, seeks the issuance
from this court of a writ of prohibition to prevent the respondent Director of Posts from issuing and selling Religious freedom, however, as a constitutional mandate is not inhibition of profound reverence for religion and
postage stamps commemorative of the Thirty-third International Eucharistic Congress. is not denial of its influence in human affairs. Religion as a profession of faith to an active power that binds and
elevates man to his Creator is recognized. And, in so far as it instills into the minds the purest principles of
In May, 1936, the Director of Posts announced in the dailies of Manila that he would order the issues of postage morality, its influence is deeply felt and highly appreciated. When the Filipino people, in the preamble of their
stamps commemorating the celebration in the City of Manila of the Thirty-third international Eucharistic Constitution, implored "the aid of Divine Providence, in order to establish a government that shall embody their
Congress, organized by the Roman Catholic Church. The petitioner, in the fulfillment of what he considers to be a ideals, conserve and develop the patrimony of the nation, promote the general welfare, and secure to
civic duty, requested Vicente Sotto, Esq., member of the Philippine Bar, to denounce the matter to the President themselves and their posterity the blessings of independence under a regime of justice, liberty and democracy,"
of the Philippines. In spite of the protest of the petitioner's attorney, the respondent publicly announced having they thereby manifested reliance upon Him who guides the destinies of men and nations. The elevating influence
sent to the United States the designs of the postage stamps for printing as follows: of religion in human society is recognized here as elsewhere. In fact, certain general concessions are
indiscriminately accorded to religious sects and denominations. Our Constitution and laws exempt from taxation
"In the center is chalice, with grape vine and stalks of wheat as border design. The stamps are blue, green, properties devoted exclusively to religious purposes (sec. 14, subsec. 3, Art. VI, Constitution of the Philippines
brown, cardinal red, violet and orange, 1 inch by 1,094 inches. The denominations are for 2, 6, 16, 20, 36 and 50 and sec. 1, subsec. 4, Ordinance appended thereto; Assessment Law, sec. 344, par. [c]. Adm. Code). Sectarian aid
centavos." The said stamps were actually issued and sold though the greater part thereof, to this day, remains is not prohibited when a priest, preacher, minister or other religious teacher or dignitary as such is assigned to
unsold. The further sale of the stamps is sought to be prevented by the petitioner herein. the armed forces or to any penal institution, orphanage or leprosarium 9 sec. 13, subsec. 3, Art. VI, Constitution
of the Philippines). Optional religious instruction in the public schools is by constitutional mandate allowed (sec.
The Solicitor-General contends that the writ of prohibition is not the proper legal remedy in the instant case, 5, Art. XIII, Constitution of the Philippines, in relation to sec. 928, Adm. Code). Thursday and Friday of Holy Week,
although he admits that the writ may properly restrain ministerial functions. While, generally, prohibition as an Thanksgiving Day, Christmas Day, and Sundays and made legal holidays (sec. 29, Adm. Code) because of the
extraordinary legal writ will not issue to restrain or control the performance of other than judicial or quasi- secular idea that their observance is conclusive to beneficial moral results. The law allows divorce but punishes
judicial functions (50 C. J., 6580, its issuance and enforcement are regulated by statute and in this jurisdiction polygamy and bigamy; and certain crimes against religious worship are considered crimes against the
may issue to . . . inferior tribunals, corporations, boards, or persons, whether excercising functions judicial or fundamental laws of the state (see arts. 132 and 133, Revised Penal Code).
ministerial, which are without or in excess of the jurisdiction of such tribunal, corporation, board, or
person, . . . ." (Secs. 516 and 226, Code of Civil Procedure.) The terms "judicial" and "ministerial" used with In the case at bar, it appears that the respondent Director of Posts issued the postage stamps in question under
reference to "functions" in the statute are undoubtedly comprehensive and include the challenged act of the the provisions of Act No. 4052 of the Philippine Legislature. This Act is as follows:
respondent Director of Posts in the present case, which act because alleged to be violative of the Constitution
is a fortiorari "without or in excess of . . . jurisdiction." The statutory rule, therefore, in the jurisdiction is that the No. 4052. — AN ACT APPROPRIATING THE SUM OF SIXTY THOUSAND PESOS AND MAKING THE SAME AVAILABLE
writ of prohibition is not confined exclusively to courts or tribunals to keep them within the limits of their own OUT OF ANY FUNDS IN THE INSULAR TREASURY NOT OTHERWISE APPROPRIATED FOR THE COST OF PLATES AND
jurisdiction and to prevent them from encroaching upon the jurisdiction of other tribunals, but will issue, in PRINTING OF POSTAGE STAMPS WITH NEW DESIGNS, AND FOR OTHER PURPOSES.
appropriate cases, to an officer or person whose acts are without or in excess of his authority. Not infrequently,
"the writ is granted, where it is necessary for the orderly administration of justice, or to prevent the use of the Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the
strong arm of the law in an oppressive or vindictive manner, or a multiplicity of actions." (Dimayuga and Fajardo authority of the same:
vs. Fernandez [1923], 43 Phil., 304, 307.)
SECTION 1. The sum of sixty thousand pesos is hereby appropriated and made immediately available out of any
The more important question raised refers to the alleged violation of the Constitution by the respondent in funds in the Insular Treasury not otherwise appropriated, for the costs of plates and printing of postage stamps
issuing and selling postage stamps commemorative of the Thirty-third International Eucharistic Congress. It is with new designs, and other expenses incident thereto.
alleged that this action of the respondent is violative of the provisions of section 23, subsection 3, Article VI, of
the Constitution of the Philippines, which provides as follows: SEC. 2. The Director of Posts, with the approval of the Secretary of Public Works and Communications, is hereby
authorized to dispose of the whole or any portion of the amount herein appropriated in the manner indicated
No public money or property shall ever be appropriated, applied, or used, directly or indirectly, for the use, and as often as may be deemed advantageous to the Government.
benefit, or support of any sect, church, denomination, secretarian, institution, or system of religion, or for the
use, benefit, or support of any priest, preacher, minister, or other religious teacher or dignitary as such, except SEC. 3. This amount or any portion thereof not otherwise expended shall not revert to the Treasury.
when such priest, preacher, minister, or dignitary is assigned to the armed forces or to any penal institution,
orphanage, or leprosarium. SEC. 4. This act shall take effect on its approval.

The prohibition herein expressed is a direct corollary of the principle of separation of church and state. Without Approved, February 21, 1933.
the necessity of adverting to the historical background of this principle in our country, it is sufficient to say that
our history, not to speak of the history of mankind, has taught us that the union of church and state is prejudicial It will be seen that the Act appropriates the sum of sixty thousand pesos for the costs of plates and printing of
to both, for ocassions might arise when the estate will use the church, and the church the state, as a weapon in postage stamps with new designs and other expenses incident thereto, and authorizes the Director of Posts, with
the furtherance of their recognized this principle of separation of church and state in the early stages of our the approval of the Secretary of Public Works and Communications, to dispose of the amount appropriated in the
constitutional development; it was inserted in the Treaty of Paris between the United States and Spain of manner indicated and "as often as may be deemed advantageous to the Government". The printing and issuance
December 10, 1898, reiterated in President McKinley's Instructions of the Philippine Commission, reaffirmed in of the postage stamps in question appears to have been approved by authority of the President of the Philippines
the Philippine Bill of 1902 and in the autonomy Act of August 29, 1916, and finally embodied in the constitution in a letter dated September 1, 1936, made part of the respondent's memorandum as Exhibit A. The respondent
of the Philippines as the supreme expression of the Filipino people. It is almost trite to say now that in this alleges that the Government of the Philippines would suffer losses if the writ prayed for is granted. He estimates
country we enjoy both religious and civil freedom. All the officers of the Government, from the highest to the the revenue to be derived from the sale of the postage stamps in question at P1,618,17.10 and states that there
lowest, in taking their oath to support and defend the constitution, bind themselves to recognize and respect the still remain to be sold stamps worth P1,402,279.02.
Act No. 4052 contemplates no religious purpose in view. What it gives the Director of Posts is the discretionary
power to determine when the issuance of special postage stamps would be "advantageous to the Government."
Of course, the phrase "advantageous to the Government" does not authorize the violation of the Constitution. It
does not authorize the appropriation, use or application of public money or property for the use, benefit or
support of a particular sect or church. In the present case, however, the issuance of the postage stamps in
question by the Director of Posts and the Secretary of Public Works and Communications was not inspired by any
sectarian denomination. The stamps were not issue and sold for the benefit of the Roman Catholic Church. Nor
were money derived from the sale of the stamps given to that church. On the contrary, it appears from the latter
of the Director of Posts of June 5, 1936, incorporated on page 2 of the petitioner's complaint, that the only
purpose in issuing and selling the stamps was "to advertise the Philippines and attract more tourist to this
country." The officials concerned merely, took advantage of an event considered of international importance "to
give publicity to the Philippines and its people" (Letter of the Undersecretary of Public Works and
Communications to the President of the Philippines, June 9, 1936; p. 3, petitioner's complaint). It is significant to
note that the stamps as actually designed and printed (Exhibit 2), instead of showing a Catholic Church chalice as
originally planned, contains a map of the Philippines and the location of the City of Manila, and an inscription as
follows: "Seat XXXIII International Eucharistic Congress, Feb. 3-7,1937." What is emphasized is not the Eucharistic
Congress itself but Manila, the capital of the Philippines, as the seat of that congress. It is obvious that while the
issuance and sale of the stamps in question may be said to be inseparably linked with an event of a religious
character, the resulting propaganda, if any, received by the Roman Catholic Church, was not the aim and purpose
of the Government. We are of the opinion that the Government should not be embarassed in its activities simply
because of incidental results, more or less religious in character, if the purpose had in view is one which could
legitimately be undertaken by appropriate legislation. The main purpose should not be frustrated by its
subordinate to mere incidental results not contemplated. (Vide Bradfield vs. Roberts, 175 U. S., 295; 20 Sup. Ct.
Rep., 121; 44 Law. ed., 168.)

We are much impressed with the vehement appeal of counsel for the petitioner to maintain inviolate the
complete separation of church and state and curb any attempt to infringe by indirection a constitutional
inhibition. Indeed, in the Philippines, once the scene of religious intolerance and prescription, care should be
taken that at this stage of our political development nothing is done by the Government or its officials that may
lead to the belief that the Government is taking sides or favoring a particular religious sect or institution. But,
upon very serious reflection, examination of Act No. 4052, and scrutiny of the attending circumstances, we have
come to the conclusion that there has been no constitutional infraction in the case at bar, Act No. 4052 grants
the Director of Posts, with the approval of the Secretary of Public Works and Communications, discretion to
misuse postage stamps with new designs "as often as may be deemed advantageous to the Government." Even if
we were to assume that these officials made use of a poor judgment in issuing and selling the postage stamps in
question still, the case of the petitioner would fail to take in weight. Between the exercise of a poor judgment
and the unconstitutionality of the step taken, a gap exists which is yet to be filled to justify the court in setting
aside the official act assailed as coming within a constitutional inhibition.

The petition for a writ of prohibition is hereby denied, without pronouncement as to costs. So ordered.

Avanceña, C.J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.