DAP Motion For Reconsideration

REPUBLIC OF THE PHILIPPINES
SUPREME COURT
MANILA
EN BANC
MARIA CAROLINA P.
ARAULLO, et al.,
Petitioners,
-versus-
BENIGNO SIMEON C. AQUINO
III, et al.,
Respondents.
x------------------------------------------x
G.R. No. 209287
1
MOTION FOR RECONSIDERATION
"Great cases like hard cases make bad law. For great cases are called great not by reason of
their real importance in shaping the law of the future but because of some accident of
immediate interest which appeals to the feelings and diStorts the judgment. These immediate
interests exercise a kind of i?Jdraulic pressure which makes what previous!J was clear seem
d o u i f u ~ and before which even well settled principles of law will bend '
12
Oliver Wendell Holmes, Jr.
1
Consolidated with Augusto L Syjuco, Jr. v. Florencio B. Abad, et al. (G.R. No. 209135),
Manuelito R Luna v. Secretary Florencio B. Abad, et al. (G.R. No. 209136), Jose Ma/var Villegas, .fr.
v. The Honorable Executive Secretary Paquito N . Ochoa, ft: , et al. (G. R. No. 209155), Philippine
Constitution Association (PHILCONSA), et al. v. The Department of Budget and Managemenl a11d/ or
Hon. Florencio B. Abad (G.R. No. 209164), Integmted Bar of the Philippines (IBP) 1;. Secretal)'
Florencio B. Abad of the Department of Budget and Management (DBM) (G.R. No. 209260), Greco
Antonious Beda B. Belgica, et al. v. President Benigno Simeon C. Aquino III, et al. (G.R. No. 209442),
Confederation for Uni()', Recognition and Advancement of Government Emplqyees (COURAGE), et al. v.
His Excellenry Benigno Simeon C. Aquino III, et al. (G.R. No. 209517), Volunteers Againsl Crime
and Corruption (V ACC) v. Hon. Paquito N Ochoa, Jr., et al. (G.R. No. 209569).
2
Northern Securities Co. v. United States, 193 U.S. 197, 400 (1904).
MOTION FOR RECONSIDER.-\ TION
Arau/lo, et aL v. Aquino, et aL
Page 2 of 52
In a democratic system of government, it is an imperative that the great
departments recognize their proper place in the scheme of things, conscious of
the need to respect constitutional boundaries and institutional prerogatives.
Respondents respectfully move for a reconsideration of the Honorable
Court's Decision so that it may apply fundamental norms of constitutional
litigation and basic fairness-the presumption of constitutionality and good faith, the
recognition of institutional competence and the value of bureaucratic practices,
the understanding of the constitutional role of the Executive in managing the
economy, the acknowledgment of the constitutional authority of Congress to
define savings, the shared role of the political departments in preparing the
budget, and the constitutionally-designed minimal role of the Supreme Court
on these matters.
Respondents seek reconsideration as a testament to their commitment to
the rule of law. We therefore ask this Honorable Court to take a second look
and reflect deeply on the strength of our arguments for a reversal.
The President and his alter egos, in implementing a decidedly successful
program, deserve to be afforded the traditional constitutional presumptions
that apply to most other forms of public actions, especiaf/y the presumption of good
faith.
Respondents, by counsel, respectfully state:
1. On 04 July 2014, the Office of the Solicitor General received this
Honorable Court's Decision dated 01 July 2014, the dispositive portion of
which reads:
WHEREFORE, the Court PARTIALLY GRANTS the petitions
for certiorari and prohibition; and DECLARES the following acts and
practices under the Disbursement Acceleration Program, National Budget
Circular No. 541 and related executive issuances UNCONSTITUTIONAL
for being in violation of Section 25(5), Article VI of the 1987 Constitution
and the doctrine of separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing
agencies, and the declaration of the withdrawn unobligated allotments and
unreleased appropriations as savings prior to the end of the fiscal year and
without complying with the statutory definition of savings contained in the
General Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive; and
Page 3 of 52
(c) The funding of projects, activities and programs that were not
covered by any appropriation in the General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed
funds despite the absence of certification by the National Treasurer that the
revenue collections exceeded the revenue targets for non-compliance with
the conditions provided in the relevant General Appropriations Acts.
SO ORDERED.
2. This reconsideration seeks a reversal of the majority decision of
this Honorable Court with a view to (1) highlighting certain contextual matters
in the consideration of the issues and (2) presenting errors that led to
inaccurate conclusions.
SUMMARY OF ARGUMENTS
I. PRELIMINARY CONSIDERATIONS
A. THE ISSUES WERE MISCHARACTERIZED AND
UNNCESSARILY CONSTITUTIONALIZED.
B. THE DBM DID NOT ENGAGE IN A POLICY OF
ACCUMULATING SAVINGS SO THAT THE PRESIDENT
MAY HAVE FUNDS FOR AUGMENTATION.
C. THE BUDGET IS A COMPROMISE BETWEE THE
POLITICAL DEPARTMENTS THAT IS REVISITED
ANNUALLY.
II. SUBSTANTIVE ARGUMENTS
A. THE EXECUTIVE DEPARTMENT PROPERLY
INTERPRETED "SAVINGS" UNDER THE RELEVANT
PROVISIONS OF THE GAA.
1. WITHDRAWN UNOBLIGATED ALLOTMENTS ARE
SAVINGS.
2. UNRELEASED APPROPRIATIO S UNDER O,\P
ARE SA VIN GS.
A raullo, et al. v. Aquino, et al.
Page 4 of 52
3. SAVINGS FROM WITHDRAWN UNOBLIGATED
.ALLOTMENTS AND UNRELEASED
APPROPRIATIONS MAY BE USED FOR
AUGMENTATION.
B. ALL DAP APPLICATIONS HAVE APPROPRIATION
COVER.
C. THE PRESIDENT HAS AUTHORITY TO TRANSFER
SAVINGS TO OTHER DEPARTMENTS PURSUANT TO
HIS CONSTITUTIONAL POWERS.
D. THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT
REVENUE COLLECTIONS FROM EACH SOURCE OF
REVENUE ENUMERATED IN THE BUDGET PROPOSAL
MUST EXCEED THE CORRESPONDING REVE UE
TARGET.
E. THE OPERATIVE FACT DOCRINE WAS WRONGLY
APPLIED.
III. PROCEDURAL ARGUMENTS
A. WITHOUT AN ACTUAL CASE OR CONTROVERSY,
ALLEGATIONS OF GRAVE ABUSE OF DISCRETION ON
THE PART OF ANY INSTRUMENTALITY OF THE
GOVERNMENT CANNOT CONFER ON THIS
HONORABLE COURT THE POWER TO DETERMINE
THE CONSTITUTIONALITY OF THE DAP AND NBC NO.
541.
B. PETITIONERS' ACTIONS DO NOT FRESE T J\
ACTUAL CASE OR CONTROVERSY AND THEREFORE
THIS HONORABLE COURT DID NOT ACQUIRE
JURISDICTION.
C. PETITIONERS HAVE NEITHER BEEN INJURED NOR
THREATENED WITH INJURY AS A RESULT OF THE
OPERATION OF THE DAP AND THEREFORE SHOULD
HA VE BEEN HELD TO HA VE NO STANDING TO BRING
THESE SUITS FOR CERTIORARI AND PROHIBITION.
MOTION FOR RECONSIDER.-\ TION
Arau/lo, et al. v. Aquino, et aL
Page 5 of 52
D. NOR CAN PETITIONERS' STANDING BE SUSTAINED
ON THE GROUND THAT THEY ARE BRINGING THESE
SUITS AS CITIZENS AND AS TAXPAYERS.
E. THE DECISION OF THIS HONORABLE COURT IS NOT
BASED ON A CONSIDERATION OF THE ACTUAL
APPLICATIONS OF THE DAP IN 116 CASES BUT SOLELY
ON AN ABSTRACT CONSIDERATION OF NBC NO. 541.
I.
PRELIMINARY CONSIDERATIONS
A.
THE ISSUES WERE MISCHARACTERIZED AND UNNECESSARILY
CONSTITUTIONALIZED.
The question of interpretation of the CAA is
a statutory, not a constitutional issue.
3. The undeniable fundamental question with respect to the issue of
savings is whether the government violated the parameters set by the relevant
GAA preparatory to the President's exercise of his constitutional authority to
augment. This question is clearly not a constitutional matter-it is an ordinary
species of statutory interpretation involving the proper reading of Congress'
definition of savings in the GAA.
3
4. First. Article VJ, Section 25(5) of the Constitution provides, "No
law shall be passed authorizing any transfer of appropriations; however, the
President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any item in
the general appropriations law for their respective offices from savings in other
items of their respective appropriations."
5. While "savings" is a consti.tutional term, its meaning is entire/y legislative/y
determined. The Honorable Court itself held: "Section 25(5), supra, not being a
self-executing provision of the Constitution must have an implementing law for
it to be operative. That law, generally, is the GAA of a given fiscal year."
4
This
is a correct statement. The Constitution textually commits to Congress the
3
Respondents had previously raised this problem of characterization in their Memorandum.
See par. 54, pp. 21-22.
4
Decision, p. 56.
------------ - -------------- -------------------------
MOTION FOR RECONSIDER.A TION
Arau/lo, et al. v. Aquino, et al.
Page 6 of 52
authority to define the term "savings." Respondents fully agree that 1\rticle VI,
Section 25(5) is not a self-executing provision, and that it must have an
implementing law for it to be operative. This is, in fact, consistent with the
government's position in its Memorandum, where it was contended that
questions of interpretation of the "implementing law" are problems of
statutory interpretation, not constitutional law.
5
6. Except for the so-called cross-border transfers, the issues
presented in these cases have nothing to do with the Constitution's definition
of savings-because there is none-but with the Congress' definition as it
appears in the various GAAs. This is evident in the majority opinion of this
Honorable Court which, quite understandably, focused entirely on the
provisions of the various GAAs concerned as they relate to the definition of
savings as "portions or balances of any programmed appropriation ... free from
any obligation or encumbrance ... . "
7. Given this clarification of concepts, the relevant discussion on
whether the Executive properly accumulated savings is a matter of statutory
interpretation involving the question of administrative compliance with the
parameters set by the GAA, not by the Constitution.
6
8. The Court's interpretation of savings is not a statement of a constitutional rule
but mere!J an (unnecessary) interpretation of an act of Congress. If at all, any
administrative non-compliance with the Congress' definition of savings cannot
trigger a declaration of unconstitutionality. To this extent, the dispositive
portion of the Decision relative to "(a)" is, with all due respect, erroneous.
Respondents' acts pursuant to their interpretation of a statute cannot be
declared unconstitutional.
5
"The fact is that Congress has not expressed disagreement with the way the Executive has
complied with the definition of savings found in the General Provisions of the GAr\. From
2010 to 2013, the legislature has used the same set of definitions. In the absence of such
disagreement between the Executive and Congress, this Honorable Court has no occasion to
exercise its powers 'to allocate constitutional boundaries.' Any dispute regarding the
definition of savings is merely a statutory and not a constitutional issue. We should not
unnecessarily constitutionalize questions that are patently consigned by the Constitution to
the judgment of our political branches." Respondents' Memorandum, par. 54, pp. 21-22.
6
"Article VI, Section 25(5) of the Constitution textually commits to Congress the authority
to define the term 'savings.' It left no 'judicially discoverable and manageable standards' for
constraining this authority of Congress. Pursuant to this constitutional authority, Congress
has defined 'savings' in every relevant GAA. Congress, not this Honorable Court, is the
institution constitutionally-empowered to check whether the President's accumulation of
savings is consistent with the definition in the GAA. If Congress disagrees with the way the
President accumulates savings, this can be remedied through the political process: it can
express that disagreement by conducting legislative inquiries in the exercise of its oversight
function or redefining the term 'savings' in the exercise of its law-making powers. The
remedy, therefore, lies with Congress, not before the Supreme Court." Respondents'
Memorandum, par. 53, p. 21.
Page 7 of 52
The DBM's intepretation of the CAA zs
entitled to a heary presumption of validity.
9. The DBM is the agency institutionally competent to determine
compliance with the GAA, as it correctly did in this case, given that it is the
agency that prepares the National Expenditure Program (NEP) and actually
works with Congress to prepare the GAA. It is the DBM, based on its expertise
and institutional competence, that has the undeniable administrative know-how
to interpret the GAA because of its role in the drafting of the NEP. A'!)'
question on the intepretation of non-constitutional terms in the CAA, especial!J in the
absence of disagreement with Congress, should natural!J be resolved in favor of recognizjng the
intepretive competence of those who not on!J helped write the document but also implement
such document.
The Court's intepretation of savings is not a
constitutional rule, and can be overturned by
legislation.
10. The Honorable Court's current interpretation of savings cannot
create a permanent, constitutional rule. The Honorable Court's interpretation
of savings does not involve an articulation of a constitutional principle, but is
only an interpretation of the GAA that may legitimately be overturned through
the legislative process. This point is easy to demonstrate.
11. Suppose the Congress, pursuant to its authority under Article VI,
Section 25(5) of the Constitution, decided to redefine savings in any of the
following ways-
a) Any allotment for any work, activity, or purpose for which
the appropriation is authorized, which has not been
obligated notwithstanding the lapse of 6 months; and
b) Any appropriations balances arising from unfilled positions
shall not constitute savings and revert to the National
Treasury; provided, that 25% of such appropriations
balances may be treated as savings.
12. Hypothetical situation (a) entirely wipes out the Honorable
Court's analysis in the present cases, as it eliminates the concept of savings
from "completion or final discontinuance or abandonment of the work .... "
On the other hand, hypothetical situation (b) redefines the concept of
unreleased appropriations and overturns the practice of accumulating savings
MOTION FOR RECONSIDER.-\TION
Arau/lo, et al. v. Aquino, el al.
Page 8 of 52
even of the Honorable Court, as held in Sanchez v. Commission on A1-1dit7 which
allows the Chief Justice to accumulate savings from unfilled positions in the
judiciary.
8
Congress, under Article VI, Section 25(5), can even completely do
away with the concept of savings by simply withdrawing the authorization to
use savings in the GAA, thereby rendering academic all debate about what
constitutes savings.
13. In sum, and properly characterized, the important questions in
these cases are-
(1) Whether the government properly interpreted the relevant
portions of the GAA involving the legislative parameters for
accumulating savings;
(2) Whether the President properly augmented items with
appropriation covers;
(3) Whether the President can transfer savings to the other
departments, upon the latter's request; and
(4) Whether releases from the Unprogrammed Fund are valid.
Issues (1) and ( 4) are questions of statutory interpretation. Issue (2) is
essentially a factual question involving a scrutiny of the 116 DAP projects.
Issue (3) is a constitutional question to which respondents have an answer
based on the text, history, structure of the Constitution, and the demonstrated
practice of the Honorable Court.
B.
THE DBM DID NOT ENGAGE IN A POLICY OF ACCUMULATING SAVINGS SO
THAT THE PRESIDENT MAY HAVE FUNDS FOR AUGMENTATION.
14. Much of the efforts of petitioners and the discussions of this
Honorable Court focus on the subjective question of whether there was an
overarching intent on the part of the government, through the DBM, to
generate savings that the President can use for augmentation. This context
appears to be an important point of contact among the various legal
conclusions with respect to the GAA's definition of savings and the meaning of
certain crucial clauses in NBC 541. This is an important question for which
there is a clear, objective answer susceptible of being tested by the crucible of
facts and context, both of which demonstrate that the DBM and the President
7
G.R. No. 127545, 23 April 2008.
8
Id. "As a case in point, the Chief Justice himself transfers funds only when there are
actual savings, e.g., from unfilled positions in the Judiciary." Emphasis in the original.
Page 9 of 52
not only acted in good faith but also did what was right, consistent with the
traditional prerogatives of their offices.
15. First. Re-enacted budgets and automatic accumulation of savings. All that an
administration bent on accumulating savings has to do is to not pass the budget
on time and let the previous budget get automatically re-enacted pursuant to
Article VI, Section 25(7) of the Constitution. This is because under a re-enacted
budget, all items representing appropriations for a completed work or activity
(for example, a PS billion airport and a Pl 0 billion expressway) are
automatically converted into savings and are immediately available for use by
the President on the first dqy of the year. Thus, by the sheer fact of doing nothing, a
President immediately generates savings to the tune of the total amount of all
appropriations for the funded projects and activities of the previous GAA.
16. This strategy of generating savings through re-enactment is a
factual, not a theoretical, claim. The primary exemplar for this scheme is the
previous administration, which had either a partially or fully re-enacted budget
for the entire duration of its term. And just for purposes of comparison, the
overall savings of the Arroyo administration during the last three years of its
term amounted to Pll 7.5 billion in 2007, Pl 78.7 billion in 2008, and P268.3
billion in 2009, while the Aquino administration's overall savings amounted ro
P46.6 billion in 2010, P67.5 billion in 2011, P65.6 billion in 2012, and a
preliminary figure of P 5 7. 8 billion in 2013.
17. Second The timely passage of the budget is an important fact that
attests to the demonstrated intent of the President and Secretary Florencio B.
Abad to engage in disciplined spending, that is, according to a program
embedded in the GAA and therefore consistent with the wishes of Congress.
Considering the advantages afforded to a President by a re-enacted budget and
the limited flexibility afforded by a programmed expenditure under a timely
enacted budget, not to mention the great effort required of the entire
government machinery to complete the NEP, one wonders why a President
would even pass a budget on time, if at all. And yet, the Aquino
administration, through Secretary Abad, has never failed to pass the budget on
time. This is not only a mark of good faith; it is, more important, also an
unmistakable sign of full and diligent compliance with the Constitution. r\
judgment constrained by this important context will find it difficult to assign
malice to the current practice of passing budgets on time that has in fact
substantially reduced the flexibility of the President and his economic
managers.
18. Third. DAP was a response to a fiscal emergency-under-
utilization of public funds. This is another uncontested fact. It was a plan to
Page 10 of 52
remedy a glut in public funds languishing in agencies with low levels of
obligation. The President and Secretary Abad did not invent this scenario.
9
As
stated in respondents' Comment:
1. In the first three quarters of 2011, the .Aquino administration
was faced with inefficiencies and other systemic issues that hampered the
capacity of some government institutions to spend their budgets and
implement programs and projects. The national government's disbursement
level shrank, falling significantly below target by 16.1 percent. This problem
was expressed at the macroeconomic level in terms of a reduction in the
Gross Domestic Product (GDP).
2. Apart from the usual transition glitches brought about by a
change in leadership, the Aquino administration's underspending can also be
traced to the cancellation of some of the programs, activities and projects
initiated by the previous administration, which were found to be anomalous
or fraught with irregularities.
19. When President Aquino came into office in 2010, the budget he
had to implement was that of the previous administration. His administration
saw "the prevalence of questionable and poorly designed programs and
projects" and "also found huge agency lump-sum funds which were susceptible
to abuse and which created implementation bottlenecks through zero-based
budgeting and other tools." They "weeded out these questionable programs
and projects ... and pursued the elimination of agency lump-sum funds by
fleshing budgets out into greater detail." The administration's "early efforts to
plug leakages had the effect of slowing down spending which hampered
domestic economic growth."
10
20. Even the World Bank acknowledged that the "slowdown in
disbursements in the first three quarters is partly attributable to measures to
improve transparency and accountability in national government agencies."
11
It
cited, as an example, "a thorough review of the bidding process ... conducted by
the Department of Public Works and Highways to improve cost-efficiency and
transparency of procurement and budget execution."
12
This review
9
See http:/Iwww.rapplcr.com/b usincss/779-p 7?-b-srjmulus- fund-i n-?() I 1-<l isbu rscd,-
budger-chic f-sa ys.
10
Transcript of Stenographic Notes oj'Ora/ Arguments dated 28 January 2014, p. 11.
11
Philippines Quarterly Update: From Stability to Prosperity for All, p. 43, available at
http: //\\.W\\' -
wds. world bank.o rg / e::xrernal / default /WDSConrcn rScn""er /WDSP /I B /2012 /06/12/000333
037 201206120117-1--t/Rcndered/ PDF/698330\VPOP 12740ch020 I 20FI N:\ l ,00510 I ?.pd f.
12 Id.
Page 11 of 52
"inadvertently led to the slowdown in public infrastructure spending as the
review uncovered significant procedural and governance issues."
13
21. Tasked with implementing a budget he did not propose and
spending on projects his department heads were not comfortable with because
of numerous irregularities, the President decided that the prudent course of
action was to stop expenditures on certain projects until he was confident that
the reforms he introduced ensured the proper use of funds.
22. If government projects were proceeding as planned, there would
have been no need for a program such as DAP as expenditure levels would
have been normal and not a cause for concern at the macro-economic level.
This is a demonstrated fact.
14
23. Fourth. There was a diminishing use of the DAP, starting with the
downward shift in 2012 and 2013, and a total disuse by the last quarter of 2013.
This belies the claim that there was intent to accumulate savings so that the
President may use them for discretionary spending. Even before the various
present petitions were filed, DAP had already become operationally dead. We
invite the Honorable members of the Court to look at the numbers: from
P75.1 billion in2011, P53.2 billion in 2012, to P16 billion in 2013.
24. Fifth. The mechanisms used to realize savings under the DAP
have existed in one form or another throughout all administrations under the
1987 Constitution. In the absence of any specific constitutional prohibition, it
is the essence of sound management to stop the flow of scarce resources from
projects that are failing and not moving and to reallocate them into projects
that have higher chances of success. This is the fundamental idea behind the
President's power to augment under Article VI, Section 25(5) of the
Constitution.
13 Id.
14
Id. "1. Weak government spending pulled down growth in 2011. Public construction
contracted by almost 30 percent in 2011 despite efforts to revive infrastructure spending in
the fourth quarter (Q4). The decline was most pronounced in Q2 2011 with a 51 percent
drop in spending compared to the same period in 2010. Current expenditures (i.e., personnel
services, maintenance and other operating expenditures) contracted by eight percent in Ql
2011 but slowly recovered in the next three quarters, growing by five percent for full year
2011.
2. Compared to programmed expenditures, disbursement was lower by nine
percent in 2011. Total disbursement at PHP 1.558 trillion was only 91 percent of
programmed expenditure for the year and 82 percent of total available appropriaoons
(Figure 4.1). The deterioration in spending performance was most pronounced in
infrastructure and other capital expenditures where only 66 percent of the full-year
programmed expenditure was disbursed as of December." Emphasis in the original.
A rau/lo, et al. v. Aquino, et al.
Page 12 of 52
25. No malice could be attributed to these mechanisms, which
represent the Executive's contemporaneous interpretation of the budget which
it helped prepare with Congress. This interpretation was validated repeatedly,
year after year, through budget deliberations before Congress.
Where a statute has received a contemporaneous and practical
interpretation and the statute as interpreted is re-enacted, the practical
interpretation is accorded greater weight than it ordinarily receives, and is
regarded as presumptively the correct interpretation of the law. The rule here
is based upon the theory that the legislature is acquainted with the
contemporaneous interpretation of a statute, especially when made by an
administrative body or executive officers charged with the duty of
administering or enforcing the law, and therefore impliedly adopts the
. . 15
lnterpretatlon upon re-enactment.
26. Respondents strongly object to any suggestion that bad faith
attended the formulation of the DAP, made years before the Court's
unprecedented decision in these cases. With all due respect, the Honorable
Court's decision redefines existing administrative practice and potentially
assigns malice post facto. Prior to this decision, respondents had the right to rely
on the contemporaneous administrative interpretation of the law, deemed
adopted in subsequent enactments of the GAA.
27. To be sure, the particular mechanisms used by the Aquino
administration-the withdrawal of unobligated allotments and use of
appropriations balances-are much more benign than the practice of previous
administrations of imposing reserves on government agencies including, in
some instances, members of the Constitutional Fiscal Autonomy Group
(CFAG) , through a Reserve Control Account at the beginning of the year. Such
a practice results in the automatic reduction of appropriations of the agency
concerned, regardless of any proof of inability to use their allotments or the
presence of an appropriations balance.
28. Theories linking DAP to pork-barrel type discretionary spending
do not account for the bureaucratic hurdles, the frequent review exercises
conducted in order to identify projects for realignment and augmentation. The
determination of slow-moving projects, the identification of high-impact
alternatives, the laying down of a process and timeline for withdrawal of
allotments are at odds with the notion that the DAP was a scheme to generate
savings. This evaluation is especiaf!J true considering another, easier method is avai/ab/e-
the repeated re-enactment of the budget.
15
Laxamana v. Baltazar, G.R. No. L-5955, 19 September 1952.
MOTIO FOR RECONSIDERA TIO l
Arau/lo, et al v. Aquino, et al.
Page 13 of 52
29. The Court held: "Contrary to the respondents' insistence, the
withdrawals were upon the initiative of the DBM itself."
16
This conclusion is
mistaken. The reality is, as was pleaded by respondents in their Comment, the
withdrawal actually occurs upon the instance of the head of agency, as was the
case of Secretary Abaya.
17
Another fact is undeniable: if the department
secretary declares that his unobligated allotments can be used or obligated, then
the DBM cannot and will not withdraw the uno bligated allotment. This is
because, as is obvious from context, the problem of the President and DBM
was low levels of spending borne by inability of the agencies to obligate their
allotment, which affected the expenditure program of the government to the
detriment of the economy. This is why the determinative slogan was "Use it or
lose it." A reasonable mind would consider these facts as important to support
the conclusion that money unspent in one place should be treated as savings so
it may be spent somewhere else.
30. The Constitution does not prevent the pooling of savings. The Honorable
Court seems to have reservations with the idea of pooling savings. This fear is
ungrounded. The Constitution does not require a one-to-one correspondence
between savings from one item and augmentation in another. In addition, the
pooling of savings is simply a virtual tally or accounting of the total savings on
any given time so the Executive (or even the Supreme Court for that matter)
may determine how much savings are available for augmentation purposes.
Because all savings may be used for augmentation purposes, it necessarily
follows that all savings may be pooled.
c.
THE BUDGET IS A COMPROMISE BETWEEN THE POLITICAL DEPARTMENTS
THAT IS REVISITED.ANNUALLY.
31. The augmentation provision of the Constitution and the laws implementing
such constitutional authoriry are meant to respond to the realiry that budgets are prepared a
year in advance of their implementation. There are therefore a lot of occurrences
during implementation year that may not have been anticipated by the
Executive when it prepared the NEP, and by the Congress, when it passed the
GAA. Under the Constitution, the flexibility of the President in the form of his
power to augment responds to this gap between planned expenditure and the
necessities of the moment.
32. Any argument justifying Court intervention based on the need to
protect Congressional control over the budget, without more, is misplaced. In
the first place, Congress, as the real party in interest, has never objected to the
16
D . . 64
eczszon, p. .
17
See Comment, pars. 52 and 55, pp. 21-22.
Page 14 of 52
Executive's interpretation of the GAA and has not seen it fit to invoke the
Court's boundary-setting function. Second, citing Congress' "power of the
purse" does not take into account that the President is not a mere spectator in
budget legislation. By constitutional design, the enactment of the national
budget differs from ordinary legislation in that (1) it is initiated through a
proposal from the President instead of any member of Congress; (2) it is only
effective for one year; and (3) it is subject to the President's line-item veto.
33. We strongly object to the notion that the President colluded with
Congress, or that he undermined the Congress' power of the purse and that
Congress allowed its prerogatives to be undermined. The constitutional
requirement of an annual exercise between the two political branches simply
reflects the fact that the political departments, not the judiciary, are those in
charge of running the government and managing the economy.
34. Each annual budget represents a compromise on varied and
conflicting priorities. If Congress disagrees with the way the Executive
implemented the GAA's savings requirement, then it can always impose a more
restrictive language in the next budget cycle, hold public hearings and make
executive officials explain. If an agency erred in releasing or accepting
allotments, Congress may respond directly against the agency's appropriation.
Far from Congress colluding with the Executive, its inaction or silence in such
instances effectively amounts to a positive ratification of executive action.
Neither can we ascribe ignorance on the part of Congress which regularly
receives information on how public funds are spent through the NEP. The
lengthy process that precedes the passage of the GAA is proof of the active
interchange between the Executive and the Legislature with respect to how
public funds should be spent and accounted for.
II.
SUBSTANTIVE ARGUMENTS
A.
THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED
"SAVINGS" UNDER THE RELEVANT PROVISIONS OF THE GAA.
1.
WITHDRAWN UNOBLIGATED .ALLOTMENTS ARE SAVINGS.
35. The Honorable Court held that withdrawn unobligated allotments
under the OAP are not savings because though they are "free from any
obligation or encumbrance," the withdrawal of the unobligated allotments was
predicated on whether "the allotments pertained to slow-moving projects or
MOTION FOR RECONSIDER,-\TION
Page 15 of 52
not"
18
-thus disregarding the "three enumerated instances of when savings
would be realized."
19
Moreover, the quarterly withdrawal of unobligated
allotments under the Memorandum for the President dated 20 May 2013
violated the period of availability of appropriations in the GAA.
36. With due respect, this is not correct. Withdrawn unobligated
allotments are savings because they are already "portions or balances of [ ]
programmed appropriations free from any obligation or encumbrance which
are ... still available after the . .. final discontinuance or abandonment of the
work, activity or purpose for which the appropriation is authorized." Under
Book VI, Chapter 5, Section 38 of the Administrative Code,
20
the President has
the authority to "stop the further expenditure of funds allotted" for slow-
moving projects to uphold the public interest of maximizing limited public
funds. As this country cannot afford to waste money, it is commonsensical to
use limited funds for fast-moving projects which are better able to absorb
them.
37. Book VI, Chapter 5, Section 38 of the Administrative Code is an
express legislative authorization for the President to permanently stop further
expenditures from allotments given to agencies based on the President's
judgment that the "public interest so requires." This is (1) a reasonable reading
of the Administrative Code in relation to the GAA; (2) consistent with the role
of the President as chief economic manager; and (3) consistent with what an
ordinary citizen understand as savings-the money that remains if the original
purpose is fulfilled or defeated. If Congress wanted to grant the President the
power to stop funding items in the GAA based on a broad public interest
standard, this Honorable Court cannot withhold or limit that power? The
President faithfully executes the laws under Article VII, Section 17 of the
Constitution, and such power necessarily includes the ability to interpret the
power granted to him by Congress in a manner that is both reasonable and
practical.
38. The net effect of the President's exercise of his authori.!J under Book 1/1,
Chapter 5, Section 38 of the Administrative Code is the final discontz'nuance or
18
D . . 61
eczszon, p. .
19
Id., at 60.
20
Section 38. Suspension of Expenditure of Appropriations. Except as otherwise provided in the
General Appropriations Act and whenever in his judgment the public interest so requires,
the President, upon notice to the head of office concerned, is authorized to suspend or
otherwise stop further expenditure of funds allotted for any agency, or any other expenditure
authorized in the General Appropriations Act, except for personal services appropriations
used for permanent officials and employees.
21
Congress does not intend to repeal, but in fact affirms Book VI, Chapter 5, Section 38 of
the Administrative Code which was issued by President Corazon Aquino in the exercise of
her legislative powers.
Page 16 of 52
abandonment of a pr<!J"ecf which results in unobligated portions or balances of appropriations.
Thus, withdrawn unobligated allotments are savings under the GAA. These arc
funds that remain unspent and unobligated because the project has been
discontinued or abandoned. These are also funds that are unused and free from
any obligation or encumbrance. As such, the President can either use them to
augment items in the GAA under Article VI, Section 25(5) of the Constitution
and Book VI, Chapter 5, Section 39 of the Administrative Code or retain them
so that they may be reverted to the National Treasury (following Book VI,
Chapter 4, Section 28 of the Administrative Code) at the end of the year or the
end of validity of the appropriation, i.e, one, two, or three years. For the
Honorable Court to declare that they should only go to the National Treasury
would be to violate the authorization given by Congress to the President to use
such savings if he deems proper.
39. To require that savings may only be incurred at or near the end of
the year (or the validity of the appropriation) and then mandate that all year-
end savings must go to the National Treasury is to operationally defeat the
President's power to augment. If savings can only be declared near the end of
any given year, such as November, this would mean that the President will have
to allow public funds to be idle and languish for months while some projects
are not moving and then hurriedly augment from November to December,
after which time what is left is reverted to the National Treasury. The concept
behind having an Administrative Code is to provide legislative sanction for the
exercise of administrative discretion so as to empower executive officials with
authority to act effectively given their knowledge of what happens on the
ground.
40. There is no requirement that the Executive should generate
savings only so that they may be reverted to the General Fund at the end of the
fiscal year. Book VI, Chapter 4, Section 28 of the Administrative Code provides
no such requirement and does not incorporate such a policy. For the
Honorable Court to declare that they should only go to the National Treasury
would be to violate the authorization given by Congress to the President to use
such savings as he deems proper. Such declaration would also intrude into the
President's prerogative to decide, as the economic manager of this country,
whether to adopt fiscal austerity or stimulus measures.
41. The lifespan of an appropriation (one, two or three years) simply
represents the maximum period for using the authorization of Congress to
spend for such work, activity or project. It is logically independent of the
authorization to the Executive under Book VI, Chapter 5, Section 38 of the
Administrative Code to suspend or stop further expenditure if the public
interest so requires. The lifespan of an appropriation does not convert the
Executive into an automaton, blindly implementing projects that cannot be
Ara111/o, et aL v. Aquino, et aL
Page 17 of 52
completed. The function of Book VI, Chapter 5, Section 38 of the
Administrative Code is to allow the Executive to exercise managerial
prerogatives because those in the Executive are the ones familiar with the
terrain of implementing projects and activities authorized by Congress. This is
also the point of Justice Del Castillo when he said that "[i]t does not follow that
the [lifespan of the appropriation] prevents the President from finally
discontinuing or abandoning such work, activity or purpose, through the
exercise of the power to permanently stop further expenditure, if the public
interest so requires, under the second phrase of Section 38 of the
Administrative Code."
22
2.
UNRELEASED APPROPRIATIONS UNDER DAP ARE SAVINGS.
42. The Honorable Court held that unreleased appropriations under
the DAP are not savings because for savings to accrue, the appropriations must
first be "released" or allotted to an agency. However, the Court also said that
"if an agency has unfilled positions in its plantilla and did not receive an
allotment and NCA for such vacancies, appropriations for such positions,
although unreleased, may already constitute savings for that agency under the
second instance"
23
(i.e. savings from appropriation balances arising from unpaid
compensation and related costs pertaining to vacant positions and leaves of
absence without pay) . This is a misunderstanding of fact and incompatible with
the Honorable Court's own practice.
43. Appropriations need not be released to the agencies before they
can be considered savings precisely because Personal Services appropriations
for unfilled positions are not released to the agencies until and unless these
positions are filled for the proper and optimal use of public funds and a request
by the department is submitted to the DBM. As per express definition in the
GAA, these are already savings. As an exception, unfilled positions for CF AG
are "released" simply because of their fiscally autonomous status.
44. Thus, whether in the Executive or the CFAG, (which includes the
Honorable Court), it is not the status of appropriations as released or unreleased that makes
them available for use as savings, but the fact that the allocations for positions under Personal
Services are vacant or urifilled and therefore unspent. We reiterate the basic concept
"money unspent is savings" is what animates the entire augmentation
framework of the Executive and Congress. The explanation is simple, if you
did not hire anyone for three months, the salary of that unhircd employee is
22
Concurring and Dissenting Opinion, Associate Justice Del Castillo, p. 21.
23
Decision, p. 60.
Arau/lo, et a/. v. Aquino, et a/.
Page 18 of 52
savings whether the appropriation is with the DBM or another agency, or the
Honorable Court.
45. Under the DAP, unreleased appropnatlons mostly pertain to
appropriations for personnel services arising from unfilled positions from the
plantif/a of government offices. To reiterate, under the Honorable Court's own
ruling in this case and in Sanchez v. Commission on Audit,
24
the unreleased
appropriations under the DAP are savings because they pertain to
"appropriation balances arising from unpaid compensation and related costs
pertaining to vacant positions and leaves of absence without pay."
46. It is incorrect to generalize and rule that appropriations must first
be "released" before there can be savings. Nowhere in the Constitution, the
GAA or in any other law is the "release" of appropriations a precondition for
the generation of savings. This Honorable Court itself has held that
appropriation balances from unfilled positions and leaves of absence without
pay are savings "although unreleased." To hold, on one hand, that "release" of
appropriations is a prerequisite for the generation of savings, and on the other,
that appropriation balances from unfilled positions and leaves of absence
without pay are savings "although unreleased"-is contradictory.
3.
SAVINGS FROM WITHDRAWN UNOBLIGATED ALLOTMENTS AND
UNRELEASED APPROPRIATIONS MAY BE USED FOR AUGMENTATION.
Sections 38 and 39 of the Administrative
Code and the CAA are the operative
augmentation clauses.
47. Since the withdrawn unobligated allotments and unreleased
appropriations under the DAP are savings, the President is authorized under
the GAA to use such savings to augment an appropriation, with "a program,
activity or project ... which upon implementation or subsequent evaluation of
needed resources, is determined to be deficient." The GAA, in relation to
Article VI, Section 25(5) of the Constitution, authorizes the President to fund
his priority or fast-moving projects in the GAA by augmenting deficient
appropriations.
24
In Sanchez v. COA, supra note 7, the Honorable Court expressly recognized the use of
appropriations for personnel services for incurring savings when it declared that "the Chief
Justice himself transfers funds only when there are actual savings, e.g., from unfilled
positions in the Judiciary."
Arau/lo, et a/. v. Aquino, et al.
Page 19 of 52
48. Book VI, Chapter 5, Section 39 of the Administrative Code
authorizes the President to approve the use of savings "to cover any deficit in
any other item of the regular appropriations." It reads:
Section 39. Authon!J to Use Savings in Appropriations to Cover Deficits. - Except as
otherwise provided in the General Appropriations Act, any savings in the
regular appropriations authorized in the General Appropriations Act for
programs and projects of any department, office or agency, may, with the
approval of the President, be used to cover a deficit in any other item of the
regular appropriations: provided, that the creation of new positions or
increase of salaries shall not be allowed to be funded from budgetary savings
except when specifically authorized by law: provided, further, that whenever
authorized positions are transferred from one program or project to another
within the same department, office or agency, the corresponding amounts
appropriated for personal services are also deemed transferred, without,
however increasing the total outlay for personal services of the department,
office or agency concerned.
49. Book VI, Chapter 5, Section 39 of the Administrative Code is the
standing authority issued by Congress to the President to augment deficient
items. This is supplemented by the relevant provisions of the GAA which,
apart from providing the authority to augment, also defines savings.
50. The President's exercise of his authority to stop the further
expenditure of funds for slow-moving projects is anchored on his reasonable
determination of "public interest." This broad standard is an ordinary form of
delegation by Congress to the Executive, found in many statutes,
25
which is
usually indicative of an understandable recognition by Congress of the need to
provide the Executive as much leeway as possible in making judgments based
on facts on the ground.
51. Article VI, Section 25 (5) of the Constitution, and Book VI, Chapter 5,
Sections 38 and 39 of the Administrative Code constitute a coherent whole providing a
f ramework for which the economic managers of the nation mqy pull various levers in the form
of authorization from Congress to ejficient!J steer the economy towards the specific and general
purposes of the CAA. With respect, the Decision of this Honorable Court impairs
this coherent framework.
25
R.A No. 7875, as amended by R.A. 10606; R.A. No. 10173; R.A. No. 10071.
Page 20 of 52
B.
ALL DAP APPLICATIONS HAVE APPROPRIATION COVER.
The Court overlooked the basic distinction
between an item and an allotment class.
52. The Honorable Court generalized: '"savings' pooled under the
DAP were allocated to P APs [Program, Activity and Project] that were not
covered by any appropriations in the pertinent GAA."
26
It cited the DREAM
project and the Establishment of the Advanced Failure Analysis Laboratory as
examples of augmentation without proper appropriation cover. In support of
this conclusion, it held that "the failure of the GAAs to set aside any amounts
for an expense category sufficiently indicated that Congress purposely did not see
fit to fund, much less implement, the PAP concerned."
27
53. These are incorrect statements. The Honorable Court mixed two
important and entirely distinct concepts: item and allotment class. In Gonzales v.
Macaraig,
28
the Honorable Court defined an "item" as referring to (1) "the
particulars, the details, the distinct and severable parts ... of the bill ;" (2) "an
indivisible sum of money dedicated to a stated purpose;" and (3) "a specific
appropriation of money." An allotment class, on the other hand, refers to the
expense category of the item, such as Personal Services, Maintenance and
Other Operating Expenses, and Capital Outlay.
54. What Article VI, Section 25(5) of the Constitution requires is that
the augmentation by the President and other constitutional officers shall be for
"any item in the general appropriations law for their respective offices."
29
What
is actually augmented is the item, and not an allotment class or expense
category. Thus, the litmus test for whether or not an augmentation has an
appropriation cover is the presence or absence of an item in the GAA. This is
because it is the item, not the allotment class, that has the description of the
P APs which the President then augments. As long as there is a certain sum of
money set apart for an item, the specified program, activity or project can be
augmented, regardless of its allotment class. In the case of the DREAM
project, that item is the "Generation of new knowledge and technologies and
research capability building in priority areas identified as strategic to ational
Development."
26
D . . 69
eczszon, p. .
27
Id., at 70. Italics supplied.
28
G.R. No. 87636, 19 November 1990.
29
Italics supplied.
MOTIO FOR REC01' SIDER..-\TION
Page 21of52
55. That Congress did not set any amount for a specific allotment
class within an item does not amount to a lack of intent on the part of
Congress to fund the PAP concerned. This is because there is no constitutional
requirement for Congress to create allotment classes within an item in the first
place, and Congress could very well remove allotment classes altogether
without impairing the Constitution so long as the item is retained. What is
required in the GAA is for Congress to create items (in broad or particular
terms) to comply with the line-item veto of the President. Again, this is basic
constitutional law.
56. In fact, just to demonstrate how the Honorable Court did not
distinguish between an item and an allotment class, and how easil y the
Congress may again overturn the Honorable Court's ruling on this point, all
that Congress and the DBM need to do in the next budget cycle is to ensure
that every allotment class within an item will have at least Pl funding in order
that the President may augment every allotment class in the GAA.
57. The Constitution does not limit the amount of augmentation fry the President.
The Honorable Court also makes salient the fact that some augmentations
under the DAP exceeded many times over the item's original appropriations, as
some augmentations proved considerable. Sheer magnitude of augmentation
alone, however, is not a ground to declare the DAP or any other augmentation
unconstitutional.
30
There is nothing in the Constitution or in the law that limits
the power to augment in terms of percentage or amount, save for the condition
that it shall come " from savings in other items of their respective
appropriations."
31
The deliberations in the Constitutional Commission arc
clear:
MR. SARMIENTO. I have one last question. Section 25, paragraph (5)
authorizes the Chief Justice of the Supreme Court, the Speaker of the House
of Representatives, the President, the President of the Senate to augment any
item in the General Appropriations Law. Do we have a limit in terms of percentage
as to how much they should augment a"!Y item in the General Appropriations Law?
MR. AZ CUNA. The limit is not in percentage but 'Jrom savings. "So it is onjy to the
extent of their savings.
32
58. It is, in fact, possible that a Pl appropriation for a particular item
may be augmented with Pl Billion, so long as the Pl Billion is part of the
savings from their respective appropriations. This Honorable Court has no
3
Concurring and Dissenting Opinion of Associate J ustice Del Castillo, p. 37.
31
CONST., Article VI, Section 25(5).
32
II RECORD OF THE CONSTITUTIOr AL COMMISSION, p. 111, 22 July 1986. Italics suppljcd.
See also Concurring and Dissenting Opinion of Associate Justice Del Castillo, p. 37.
Page 22 of 52
constitutional authority to set a limit on how much the President can augment
an item.
59. The nullification of all 116 augmentation exercises on the basis of supposed
errors in two SAROs is a sweeping generalz"zation which is factual!J ungrounded. The
Honorable Court found that: "[a]side from this transfer under the OAP to the
DREAM project exceeding by almost 300% the appropriation by Congress for
the program Generation of new knowledge and technologies and research capability building
in priority areas identified as strategic to National Development, the Executive allotted
funds for personnel services and capital outlays. The Executive thereby
substituted its will to that of Congress."
33
It cited SARO No. E-11-02253 dated
22 December 2011
34
which allotted P43,504,024 for personnel services,
Pl,164,517,589 for maintenance and other operating expenses, and
P391,978,387 for capital outlays. The Court found this to be in conflict with
the 2011 GAA which appropriated an amount only for maintenance and other
operating expenses, but nothing for personnel services and capital outlay.
60. The Honorable Court's finding is based on an incorrect factual
basis. The SARO it cited is no longer valid as there was a modification under a
subsequent SARO. Under SARO No. E-11-02386 dated 29 December 2011,
35
issued only seven days after the issuance of SARO o. E-11-02253, personnel
services in the amount of P43,504,024 and capital outlays in the amount of
P391,978,387, or a total amount of P435,482,411, were realigned to
maintenance and other operating expenses. Thus, the augmentations under the
allotment classes personnel services and capital outlays were actually allotted to
maintenance and other operating expenses.
61. A simple cross-reference with respondents' Evidence Packet 7
would have avoided the Honorable Court's misappreciation of facts. Page 66 of
this evidence packet clearly shows that the amounts previously allotted to
personnel services and capital outlays for the DREAM project under SARO
No. E-11-02253 were transferred to maintenance and other operating expenses
under SARO No. E-11-02386.
62. The Honorable Court also found that the "Establishment of the
Advanced Failure Analysis Laboratory" project of the Philippine Council for
Industry, Energy and Emerging Technology Research and Development
(PCIEETRD) did not have an appropriation cover because "the appropriation
code and the particulars appearing in the said SARO did not correspond to the
program specified in the GAA."
36
It cited SARO No. E-11-02254 dated 22
33
D . . 70
ecmon, p. .
34
Attached as Annex "A."
35
Attached as Annex "B."
36
D . . 71
eczszon, p. .
MOTION FOR RECONSIDER..-\TION
Page 23 of 52
December 2011 where the particulars for the project were indicated as
"Development, integration and coordination of the National Research System
for Industry, Energy and Emerging Technology and Related Fields." However,
the program specified in the 2011 GAA corresponding to the appropriation
code in the SARO ("A.02.a") is "Research and Management Activities."
63. This invalidation is unwarranted. What the President did was to
augment an item "Research and Management Services" by allotting P300
million for the "Establishment of the Advanced Failure Analysis Laboratory."
This is a correct augmentation exercise because the project ("Establishment of
the Advanced Failure Analysis Laboratory") clearly and reasonably falls under
the item "Research and Management Services."
64. The fact remains that a PAP with an appropriation cover has
legislative authorization. Any mistake in the wording of the SARO cannot
negate this. The validity of a certain appropriation neither depends on nor
affected by mistakes in the SARO, the same being merely a budget document
created for the purpose of efficiency. We also cannot impute any malice or
corrupt motive to the error, which benefits no one. What matters is that there
is an item ("Research and Management Services") which can be augmented
with a project ("Establishment of the Advanced Failure Analysis Laboratory")
that is reasonably connected to it.
65. Moreover, the discrepancy in the particulars in the SARO and the
program specified in the GAA can be fully explained. In the middle of 2011 , in
the implementation of their rationalization plan, the Philippine Council for
Industry and Energy Research and Development (PCIERD) and the Philippine
Council for Advanced Science and Technology Research and Development
(PCASTRD), were consolidated to form the Philippine Council for Industry,
Energy and Emerging Technology Research and Development (PCIEETRD),
pursuant to E.O. No. 366, s. 2004. Thus, PCIERD and PCASTRD still had
separate budgets in the 2011 GAA where the item "Research and
Management" can be found under PCIERD. When the SARO was issued on
22 December 2011, PCIERD and PCASTRD were already merged into
PCIEETRD. Thus, the particulars appearing in the SARO as "Development,
integration and coordination of the National Research System for Industry,
Energy and Emerging Technology and Related Fields" referred to the
consolidated functions of both agencies as reflected in the 2012 NEP which
already mentions PCIEETRD. This is another error that could have been
clarified had the Honorable Court granted respondents' plea to subject the 116
augmentations to a full trial instead of deciding their validity en masse with
insufficient facts.
Page 24 of 52
66. The Court's ruling that the savings pooled under the DAP were
allocated to P APs that were not covered by any appropriations in pertinent
GAAs, therefore, with the foregoing clarifications, cannot hold. On the
contrary, a careful perusal of the documentary evidence presented by the
government will sufficiently show the existence of appropriation covers for all
DAP-augmented projects. This is likewise clearly reiterated in the government's
Memorandum:
67. A big part of petitioners' presentation hinges on the claim
that the Executive Department invented non-existent appropriations. This
claim is irresponsible. It is refuted by respondents' submissions consisting of:
(a) a list of fifteen (15) DAP applications, with corresponding SAROs and
appropriation covers, composed of projects identified in respondents'
Consolidated Comment and those questioned by the petitioners in their
pleadings or during the oral arguments; and (b) a list of all DAP applications
per department/ agency, with corresponding SARO numbers and
appropriation covers.
68. As shown by respondents' submissions, it is the standard
practice of the DBM to itemize the details of each and every allotment thus:
a) The particular office of the government concerned;
b) The PAP code or the "programs, activities or projects" code
under the relevant GAA;
c) The SARO number of the document;
d) The date of issuance of the SARO;
e) The original amount of the appropriation under the relevant
GAA;
f) The amount of augmentation involved; and
g) The specific page of the GAA where the item may be found.
69. This unfailing adherence to particularity has a two-fold
function: (1) to ensure proper record-keeping and easy access to the history
of every specific allocation and release of funds; and (2) to provide detailed
compliance with the constitutional requirements with respect to
augmentations. The built-in PAP code, for instance, corresponds to an item
of appropriation in the GAA and ensures that all disbursements have
appropriation covers.
67. Given that respondents have clearly shown that the two
augmentation exercises used by this Honorable Court to declare all the 116
projects under DAP as augmentations without appropriation cover arc in fact
correct augmentation exercises, this Honorable Court can make the proper
clarifications.
Arauilo, et aL v. Aquino, et aL
Page 25 of 52
c.
THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS
TO OTHER DEPARTMENTS PURSUANT TO HIS
CONSTITUTIONAL POWERS.
68. The Honorable Court stated that the "plain text of Section 25(5)
disallowing cross-border transfers was disobeyed. Cross-border transfers,
whether as augmentation, or as aid, were prohibited under Section 25(5)."
37
This is not consistent with a reasonable reading of the text, history, and
structure of the Constitution. A reasonable reading of the constitutional
provision leads to an alternative interpretations that justifies the transfer of
savings to other departments under limited conditions.
69. The Executive's reading of Article VI, Section 25(5) of the
Constitution justifies the transfer of savings to other departments. It is
grounded on the text of the Constitution, the practice of past presidents, and
consistent with the role of a Chief Executive.
70. Article VI, Section 25(5) of the Constitution provides:
No law shall be passed authorizing any transfer of appropriations;
however, the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the
heads of Constitutional Commissions may, by law, be authorized to augment
any item in the general appropriations law for their respective offices from
savings in other items of their respective appropriations.
71. The first clause prohibits the transfer of "appropriations." As an
exception, the second clause allows constitutional officers to use "savings" ro
augment items in their respective appropriations. This authority was put in
place to give these officers some flexibility in executing their own budgets to
enable them to respond to various circumstances.
72. "Appropriations" and ''savings" are two different, independent constitutional
concepts. An appropriation is defined as "an authorization made by law or other
legislative enactment, directing payment out of government funds under
specified conditions or for specified purposes."
38
Appropriations usually come
in the form of items in the budget particularized in the form of P APs. They
exist from the time of the passage of the GAA, and remain valid for the period
provided for by law. Savings, on the other hand, are "appropriations balances,"
as defined by Congress pursuant to its authority under Article VI, Section
37
Id., at 77.
38
ADMINISTRATIVE CODE, Book VI, Chapter 1, Section 2(1).
MOTION FOR R.ECONSIDER.r\ TION
Page 26 of 52
25(5). They therefore exist only when the requirements under the general
provisions of the GAA are met. The moment an appropriation incurs a balance, its
constitutional character mqy be qualitative!J altered into savings-funds that can be used far
purposes other than the original appropriation.
73. While Article VI, Section 25(5) prohibits the transfer of
"appropriations," it does not prohibit the transfer of "savings." At the same
time, while the second clause allows unilateral, intra-departmental
augmentations, it prohibits unilateral, inter-departmental augmentations. Thus,
the President may use savings to unilaterally augment items in the Executive
department, but he cannot, on his own, ascertain the existence of a deficiency
in an item of appropriation in another department, and augment that
deficiency.
74. The Constitution does not prevent the President from
transferring savings of his department to another department upon the latter's
request, provided it is the recipient department that uses such funds to augment
its own appropriation. In such a case, the President merely gives the other
department access to public funds but he cannot dictate how they shall be
applied by that department whose fiscal autonomy is guaranteed by the
Constitution.
75. We submit that this is an instance of a benign and necessary
interaction between interdependent departments, grounded rn our
constitutional tradition. In fact, Presidents under the 1987 Constitution have,
from time to time, assisted other departments of government with the use of
savings from the Executive department. Respondents have previously attached
as part of their Evidence Packets, evidence of such cross-border transfers over
the years, including those to the judiciary.
76. It is in this manner that the so-called "cross-border transfers"
should be understood. In relation to the DAP, the President made available to
the Commission on Audit (COA) and House of Representatives, the savings of
his department upon their request for funds, but it was those institutions that applied
such savings to augment items in their respective appropriations. In any case, these
augmentations had the effect of even empowering institutions of government
that have oversight functions over the Executive.
77. This understanding of the Constitution is not exclusive to the
political branches of government. Documentary evidence exists to show that
the Supreme Court itself has (1) approved the allocation of amounts from its
savings to augment an item within the Executive and (2) sought funds from the
MOTIO FOR REco SIDERATION
Page 27 of 52
Executive for transfer to the Judiciary. These practices validate respondents'
theory of benign and necessary interdepartmental augmentations.
78. On 17 July 2012, when Justice Antonio T. Carpio was Acting
Chief Justice, the Supreme Court en bane issued a Resolution in A.M. No. 12-7-
14-SC,39 which reads:
The Court Resolved to APPROVE the allocation, from existing
savings of the Court, of the following amounts for the construction of
courthouses:
1.
2.
3.
Manila Hall of Justice (120 courts)
Cebu Court of Appeals Building
Cagayan de Oro Court of Appeals Building
TOTAL
lll,865,000,000.00
266,950,000.00
251,270,000.00
P2,383,220,000.00
The foregoing amounts are hereby set aside and earmarked for the
construction costs of the said buildings.
79. As can be gleaned from the above Resolution, the Supreme Court
earmarked its existing savings of Pl.865 billion to augment the PlOO million
budget for the Manila Hall of Justice, which is an item (B.I.d.-"Civil Works
and Construction Design for the Manila Hall of Justice")
40
in the 2012 budget
of the Department of Justice-Office of the Secretary, which is within the
Executive Department. This is an example of the benign and necessary
interaction between interdependent departments. Obviously, the Supreme
Court has an interest in the construction of Halls of Justice, and no one can say
that this cross-border augmentation was a means by which the judiciary tried to
co-opt the Executive.
80. Moreover, on 05 March 2013, the Supreme Court en bane issued a
Resolution in A.M. No. 13-1-4-SC,
41
the dispositive portion of which reads:
WHEREFORE, the Court hereby requests the Department of
Budget and Management to approve the transfer of the amount of One
Hundred Million Pesos 0P100,000,000.00) which was included in the DOJ-
JUSIP budget for Fiscal Year 2012 for the Manila Hall of Justice to the
budget of the Judiciary, subject to existing budgeting policies and procedures,
to be used for the construction of the Malabon Hall of Justice.
81. In the above Resolution, the Supreme Court requested the DBM
to transfer the PlOO million in the budget of the DOJ for the Manila Hall of
Justice to the Judiciary, which it intended to utilize to fund the construction of
39
Attached as "C."
40
2012 GAA, p. 610.
41
Attached as Annex "D."
Page 28 of 52
the Malabon Hall of Justice. This means that the Pl 00 million allocation will be
taken away from the Manila Hall of Justice, which has an item in the 2012
GAA under the Executive, and used instead to fund the construction of the
Malabon Hall of Justice, which has no item in the 2012 or the 2013 GAA.
82. When the petitions were filed and while they were being heard,
Chief Justice Sereno, in a letter dated 23 December 2013,
42
informed the DBM
that the Supreme Court was withdrawing its request to realign the P100 million
intended for the Manila Hall of Justice to the budget of the Judiciary. These
two instances show both cross-border transfers on the part of the Supreme
Court- (a) the augmentation of an item in the Executive from funds in the
Judiciary; and (b) the "transfer" of funds from the Executive to the Supreme
Court, whether or not for purposes of augmentation.
83. With all due respect, this is by no means a disapprobation of the
Honorable Court. But it does serve to highlight the fact that the Honorable
Court's practice was based on an understanding of the constitutional provision
that coincides with the government's.
84. To be sure, the changes to the 1987 Constitution were made to
prevent one department from co-opting the other departments by transferring
funds to them in exchange for concessions or political favors. In this case, the
fact that the transfers were few and far between and made only under the most
exigent of circumstances and upon the request of other departments shows that the
President has not committed the evil the Constitution seeks to eradicate and
that he has remained true to the policy of Article VI, Section 25(5) of the
Constitution.
85. This practice of cross-border transfers was not begun by
President Aquino, as in fact Presidents under the 1987 Constitution-Fidel V.
Ramos, Joseph E. Estrada, and Gloria Macapagal-Arroyo-have, from time to
time, transferred savings to the other departments. This history of transfers
forms part of Annex B of the government's Compliance dated 14 February
2014.
86. The President, informed by the long-standing practice of his predecessors, and
reinforced by his own reasonable reading of the constitutional provision, made the decision to
tranifer savings of the Executive Department to the other departments. These transfers were
not made haphazard!J and were on!J approved after careful consideration of the needs of the
government. Far from being a violation of the Constitution, much less a culpable violation of
the Constitution, this is a reasonable reading of the text of the Constitution, informed by
42
Attached as Annex "E."
MOTION FOR RECONSIDER.\ TION
Page 29 of 52
previous presidential, legislative and judicial exercises) and impelled ry the need to respond to
the requests of other departments.
D.
THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT
REVENUE COLLECTIONS FROM EACH SOURCE OF REVENUE
ENUMERATED IN THE BUDGET PROPOSAL MUST EXCEED
THE CORRESPONDING REVENUE TARGET.
87. The Honorable Court ruled that revenue collections must exceed
the total of the revenue targets stated in the Budget for Expenditures and
Sources of Financing (BESF) before expenditures under the Unprogrammed
Fund can be made.
43
This is incorrect not only because this is not what those
who wrote the item-the DBM-intended, which intention was ratified by
Congress over the years, but also because such interpretation defeats the
purpose of creating the Unprogrammed Fund.
88. This interpretation is incorrect, for a simple reason: everybody
knows that the government's total revenue collections have never exceeded the
total original revenue targets. Certainly, the government-the Executive and
the Legislature-would never have created the Unprogrammed Fund as a
revenue source if, apart from newly-approved loans for foreign-assisted project,
it would have never been available for use. The effect of the Honorable Court's
interpretation is to effectively nullify the Unprogrammed Fund for the years
2011 to 2013. Certain!J) the Executive would not have proposed billions of pesos
44
under
the Unprogrammed Fund in the NEP) and Congress would not have provided for said
appropriation in the CAA, with the intention that it can never be implemented.
89. Because we are not interpreting the Constitution with respect to
the meaning of the Unprogrammed Fund, with respect, it is incorrect for the
Honorable Court to reject the interpretation placed by those who actually
wrote the item for the U nprogrammed Fund. What is the purpose to be served
in nullifying the intention of the authors of the Unprogrammed Fund, which
intention was effectively ratified by Congress over the course of several years?
In the absence of a violation of the Constitution, this Honorable Court should
not reject the Executive department's reading of the provisions of the
Unprogrammed Fund which it co-authored with Congress.
90. The text is clear: excess revenue collections refer to the excess of
actual revenue collections over estimated revenue targets, not the difference
43
D . . 82
eczszon, p. .
44
P66,908,492,000 under the 2011 GAA; P152,821,845,000 under the 2012 GAA; and
P117,548,371,000 under the 2013 GAA.
MOTION FOR RECONSIDER,-\ TION
Arauiio, et al. v. Aquino, et al.
Page 30 of 52
between revenue collections and expenditures. The 2011, 2012 and 2013 GAAs
only require that revenue collections from each source of revenue enumerated in the
budget proposal must exceed the corresponding revenue target.
91. To illustrate, under the 2011 BESF, the estimated revenues to be
collected from dividends from shares of stock in government-owned and
controlled corporations is P5.5 billion. By 31 January 2011, the National
Government had already collected dividend income in the amount of P23.8
billion.
45
In such case, the difference between the revenues collected (P23.8
billion) and the revenue target (PS.5) becomes excess revenue which can be
used to fund the purposes under the Unprogrammed Fund.
92. The provisions of the Unprogrammed Fund under the relevant
GAAS provide-
2011 GAA
Special Provision(s)
1. Release of Fund. The amounts authorized herein shall be released
only when the revenue collections exceed the original revenue targets
submitted by the President of the Philippines to Congress pursuant to Section
22, Article VII of the Constitution, including savings generated from
programmed appropriations for the year: PROVIDED, That collections
arising from sources not considered in the aforesaid original revenue targets
may be used to cover releases from appropriations in this Fund: PROVIDED,
FURTHER, That in case of newly approved loans for foreign-assisted
projects, the existence of a perfected loan agreement for the purpose shall be
sufficient basis for the issuance of a SARO covering the loan proceeds:
PROVIDED, FURTHERMORE, That if there are savings generated from
the programmed appropriations for the first two quarters of the year, the
DBM may, subject to the approval of the President, release the pertinent
appropriations under the Unprogranuned Fund corresponding to only fifty
percent (50%) of the said savings net of revenue shortfall: PROVIDED,
FINALLY, That the release of the balance of the total savings from
programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released
22, Article VII of the Constitution: PROVIDED, That collections arising
from sources not considered in the aforesaid original revenue targets may be
45
See Certification dated 04 March 2011 signed by Department of Finance Undersecretary
Gil S. Beltran.
Arau/lo, et al. v. Aquino, et a/.
Page 31of52
used to cover releases from appropnatJ.ons in this Fund: PROVIDED,
FURTHER, That in case of newly approved loans for foreign-assisted
sufficient basis for the issuance of a SARO covering the loan proceeds.
2013 GAA
22, Article VII of the Constitution, including collections arising from sources
not considered in the aforesaid original revenue targets, as certified by the
BTr: PROVIDED, That in case of newly approved loans for foreign-assisted
sufficient basis for the issuance of a SARO covering the loan proceeds.
46
93. Apart from the fact that the Honorable Court's interpretation
would render much of the Unprogrammed Fund useless, the text of the special
provision referring to the Unprogrammed Fund supports the government's
intention and interpretation: (1) if the provision was meant to refer to aggregate
amounts, it would have used the word "total" or the phrase "only when the
revenue collection exceeds the original revenue target;" (2) the phrase "original
revenue targets" clearly indicates a plurality of revenue targets with which the
revenue collections must be matched.
94. The impracticaliry of the interpretation espoused qy the Honorable Court is
further highlighted qy the fact that the actual total revenue collections cannot be determined
before the close of the fiscal year. The Bureau of Treasury (BTr) has to reconcile first
its estimated revenue collections with the actual revenues collected by the Bureau
of Internal Revenue, Bureau of Customs, and other agencies, as of December
31. Thereafter, the BTr prepares a cash operations report, which is
subsequently audited by COA. Thus, the BTr cannot issue a certification that
the actual total revenue collections exceed the total of the revenue targets
before the cash operations report is approved by COA. This process, which
obviously cannot be started until after December 31, is usually completed
around March of the next fiscal year, in which case, even if by some miracle the
total revenue collections are found to exceed the total of the revenue targets,
the excess revenue collections can no longer be released as they are deemed
reverted to the unappropriated surplus of the General Fund and are no longer
available for expenditure except by subsequent legislative enactment.
46
Emphasis supplied.
MOTIO FOR RECONSIDER..-\ TION
Page 32 of 52
95. It is a general rule of statutory construction that a law should not
be so construed as to produce an absurd result.
47
An interpretation should, if
possible, be avoided under which a provision being construed is defeated,
nullified, destroyed, emasculated, repealed, or rendered insignificant,
meaningless, inoperative, or nugatory.
48
As recognized in the decision, the
Unprogrammed Fund functions as a "standby appropriation to support
additional expenditures for certain priority P APs."
49
It is included in the GAA
"to provide ready cover so as not to delay the implementation of the P APs
should new or additional revenue sources be realized during the year."
50
By
providing for the Unprogrammed Fund in the GAA, Congress has allowed the
Executive flexibility to use additional funds brought about by good fiscal
management or some contingent event, without need of returning to Congress
to obtain authorization to spend such funds. The GAA should therefore be
reasonably construed to give effect to such legislative intent and avoid an
absurd result. This is the DBM's intention when it proposed the language of
the Unprogrammed Fund. The Congress approved such language.
96. A revenue sup/us is not a condition precedent for the release of revenue
collections from sources not original!J considered in the budget proposaL In general,
expenditures under the Unprogrammed Fund are authorized if there are:
a) Revenue collections in excess of the original revenue targets
in the budget proposal submitted by the President to
Congress;
b) Revenue collections from sources not originally considered
in the budget proposal; and
c) Newly-approved loans for foreign-assisted projects that were
obtained.
97. The above items are independent of one another. Thus, a revenue
surplus is not a condition precedent for the release of "revenue collections
from sources not originally considered in the budget proposal." Likewise, these
"revenue collections from sources not originally considered in the budget
proposal" should not be taken into account in determining if the revenue
collections exceed the original revenue targets.
98. Under the 2011 and 2012 GAAs, the phrase "collections arising
from sources not considered in the aforesaid original revenue targets may be
47
Lim v. The Insular Collector of Customs, G.R. No. L-11759, 16 March 1917.
48
Civil Service Commission v. Department of Budget and Management, G.R. No. 158791, 22 July
2005.
49
D . . 82
eczszon, p. .
so Id.
Page 33 of 52
used to cover releases from appropnatlons in this Fund" is contained in a
proviso, making it a separate and distinct condition from the phrase "revenue
collections exceed the original revenue targets submitted by the President of
the Philippines to Congress." As correctly pointed out by Justice Del Castillo-
These provisos should be reasonably construed as exceptions to the general
rule that revenue collections should exceed the original revenue targets
because of the plain meaning of the word "provided" and the tenor of the
wording of these provisos. Further, in both the 2011 and 2012 GAA
provisions, the phrase "may be used to cover releases from appropriations in
this Fund" in the first proviso is essentially of the same meaning as the phrase
"shall be sufficient basis for the issuance of a SARO covering the loan
proceeds" in the second proviso because, precisely, the SARO is the authority
to incur obligations. In other words, both phrases pertain to the
authorization to release funds under the Unprogrammed Fund when the
conditions therein are met even if the revenue collections do not exceed the
original revenue targets.
51
The various provisions in the GAA confirm Justice Del Castillo's position that
the word "PROVIDED" operates to introduce an exception.
99. Under the 2013 GAA, the phrase "collections ans1ng from
sources not considered in the original revenue targets" is no longer contained
. .
ma proviso-
submitted by the President of the Philippines to Congress ... including
collections arising from sources not considered in the original revenue
52
targets ...
100. The Honorable Court finds this as an "explicit" mandate that "the
additional revenues from sources not considered in the BESFs must be taken
into account in determining if the revenue collections exceeded the original
revenue targets."
53
101. With due respect, the interpretation espoused by the Honorable
Court leads to the conclusion that the revenue targets should be considered as a
whole-a consequence, which, as previously discussed, could not have been
intended by the Executive and Congress.
51
Concurring and Dissenting Opinion of Associate Justice Del Castillo, p. 43.
52
Italics supplied.
53
D . . 80
ecwon, p. .
A rau/lo, et al. v. Aquino, et al.
Page 34 of 52
102. Although under the 2013 GAA the phrase "collections arising
from sources not considered in the original revenue targets" is no longer
contained in a proviso, it remains distinct from the phrase "revenue collections
exceed the original revenue targets submitted by the President of the
Philippines to Congress ... " This is because the word "including" pertains to
"the amounts authorized," such that the amounts authorized under the
Unprogrammed Fund include collections arising from sources not considered in
the original revenue targets. This is a reasonable construction that will
effectuate the intention of both the Executive and Congress and avoid an
absurd result.
103. Finally, if only to finally settle the issues (1) whether a revenue
surplus is a condition precedent for the release of revenues from sources not
originally considered, and (2) whether revenues from sources not originally
considered are an independent source of funding for the Unprogrammcd Pund,
we invite the Honorable Court's attention to the 2014 GAA-
1. Release of the Fund. The amounts authorized herein shall be
released only when the revenue collections exceed the original revenue
targets submitted by the President of the Philippines to Congress pursuant
to Section 22, Article VII of the Constitution, as certified by the BTr:
PROVIDED, That in case of newly approved loans for foreign-assisted
sufficient basis for the issuance of a SARO covering the loan proceeds:
PROVIDED, FURTHER, That the release of Unprogrammed Fund shall be
subject to Section 63 of the General Provisions of this Act.
Implementation of this provision shall be subject to guidelines to be
jointly issued by the DBM, DOF and BTr.
4. Reconstruction and Rehabilitation Program. The amount of Eighty
Billion Pesos (P80,000,000,000) appropriated herein for Reconstruction and
Rehabilitation Program shall be released in accordance with a rehabilitation
plan and shall be subject to Section 63 of the General Provisions of this Act:
PROVIDED, That collections arising from sources not considered in
the aforesaid original revenue targets, proceeds from grants, loans for the
repair and rehabilitation of calamity stricken areas, and subject to the
approval of the President, savings generated from the programmed
appropriations in this Act may be released to cover the appropriations herein
"d d 54
prov1 e .
104. Clearly, under the present GAA, "collections arising from sources
not considered in the aforesaid original revenue targets" are an independent
54
Emphasis supplied.
Page 35 of 52
source of funding for the release of the Unprogrammed Fund and do not
depend on the existence of a revenue surplus. If we are to follow the
Honorable Court's interpretation, this would effectively deprive millions of
Filipinos access to funds for reconstruction and rehabilitation.
E.
THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED.
105. Since the start of the controversy in late 2013, the DBM has been
releasing information to the public on the legal bases and policy justifications
for the DAP. During the proceedings before this Honorable Court,
respondents, which include the DBM and the Office of the President,
demonstrated the legal and constitutional bases of DAP through its
Consolidated Comment dated 07 November 2013, and have offered, at their
own instance, factual information on the application of DAP despite the
palpable insufficiency of the petitions.
106. The DBM and the Office of the President necessarily interpret
applicable laws in implementing the budget. They are government agencies
which have the institutional competence in interpreting these laws informed as
they are by the knowledge of implementing the budget. Even an incorrect legal
interpretation by these agencies does not warrant a penalty, because they are
presumed to have adopted the interpretation which best aids their
responsibility of executing the budget.
107. This Honorable Court itself stated in the decision that the
doctrine of operative fact "is resorted to only as a matter of equity and fair
play."
55
In Planters Products, Inc. v. Fertiphif Corporation,
56
this Court held that this
doctrine "nullifies the effects of an unconstitutional law by recognizing that the
existence of a statute prior to a determination of its unconstitutionality is an
operative fact and may have consequences which cannot always be ignored."
This is because "[i]t would deprive the law of its quality of fairness and
justice ... if there be no recognition of what had transpired prior
d
. d. . ,,57
to . . . a JU 1catlon.
108. Thus, the doctrine of operative fact only applies to questi ons
involving the problem of undoing acts done prior to a declaration of
55
D . . 87
ecmon, p. .
56
G.R. No. 166006, 14 March 2008. See The Municipaliry of Malabang, Lanao Del Sur v. Benito,
G.R. No. L-28113, 28 March 1969.
57
De Agbqyani v. Philippine N ational Bank, G.R. No. L-23127, 29 April 1971.
Arau/lo, el aL v. Aquino, el aL
Page 36 of 52
unconstitutionality of a law or executive act.
58
The doctrine is applied by
determining the retroactivity or prospectivity of the judicial declaration of
unconstitutionality. In other words, the doctrine of operative fact is about
determining when the judicial declaration of unconstitutionality becomes
effective, considering that prior to such declaration, a law or executive act is
presumed valid, and that people have relied on such validity. It would indeed
be unreasonable if people who were dutiful in following a law would be
deprived of certain rights and privileges by the subsequent invalidation of such
law. It speaks of nothing about the liability of so-called authors, proponents, or
implementors.
109. In De Agbqyani v. Philippine National Bank,
59
the Honorable Court
considered the effect of a debt moratorium law (which was declared
unconstitutional in Rutter v. Esteban)
60
in counting the prescriptive period for
foreclosing a mortgage. Even if the debt moratorium law was considered void
for being unconstitutional, the Court held in De Agbqyani that the creditor did
not lose the prescriptive period for foreclosing the mortgage because it has
relied on the validity of such law prior to the declaration of its
unconstitutionality. In the words of the Court, the existence of the debt
moratorium law is "a fact to be reckoned with."
61
Thus, even if the debt
moratorium law was declared unconstitutional, the Honorable Court in De
Agbqyani fixed the effectivity of such declaration of unconstitutionality from the
promulgation of Rutter v. Esteban to avoid injustice to people who relied on the
debt moratorium law. In other words, the Court made the declaration of
unconstitutionality of the debt moratorium law prospective from (or retroactive
to) the promulgation of Rutter v. Esteban.
110. The doctrine of operative fact has nothing to do with the
potential liability of persons who acted pursuant to a then-constitutional
statute, order, or practice. They are presumed to have acted in good faith and
the court cannot load the dice, so to speak, by disabling possible defenses in
potential suits against so-called "authors, proponents and implementors." The
mere nullification of an act has no bearing on individual liability precisely
because the doctrine primarily seeks to ensure that acts performed prior to
nullification are still deemed valid on the theory that judicial nullification is a
contingent or unforeseen event.
58
The doctrine of operative fact covers statutes and executive acts. The Court said in the
Decision that "(t]he doctrine of operative fact recognizes the existence of the law or
executive act that produced consequences that cannot always be erased, ignored or
disregarded, p. 87. See also Commissioner of Internal Revenue v. San Roque Power Corporation, G.R.
No. 187485, 08 October 2013; Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council, G.R.
No. 171101, 22 November 2011.
59
De Agbqyani, supra note 57.
60
G.R. No. L-3708, 18May1953.
61
De Agbqyani, supra note 57.
Page 37 of 52
111. The cases before us are about the statutory and constitutional
interpretation of so-called acts and practices under a government program,
DAP. These are not civil, administrative, or criminal actions against the public
officials responsible for DAP, and any statement about bad faith may be
unfairly and maliciously exploited for political ends. At the same time, any
negation of the presumption of good faith, which is the unfortunate
implication of paragraphs 3 and 4 of page 90 of the Decision,
62
violates the
constitutional presumption of innocence, and is inconsistent with the
Honorable Court's recognition that "the implementation of the DAP yielded
undeniably positive results that enhanced the economic welfare of the
country. "
63
112. The policy behind the operative fact doctrine is consistent with
the idea that regardless of the nullification of certain acts and practices under
the DAP and/or NBC No. 541, it does not operate to impute bad faith to
authors, proponents and implementors who continue to enjoy the presumption
of innocence and regularity in the performance of official functions and duties.
Good faith is presumed, whereas bad faith requires the existence of facts. To
hold otherwise would send a chilling effect to all public officers whether of
minimal or significant discretion, the result of which would be a dangerous
paralysis of bureaucratic activity.
III.
PROCEDURAL ARGUMENTS
113. Our substantive arguments simply bolster the need to strictly
comply with the procedural requirements for judicial review. The Honorable
Court's denigration of procedural requirements as mere technicalities to be set
aside whenever it finds the issues of transcendental importance cannot be
reconciled with the high estate given to them in Lozano v. Nograles.
64
62
"Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of
operative fact does not always apply, and is not always the consequence of every declaration
of constitutional validity. It can be invoked only in situations where the nullification of the
effects of what used to be a valid law would result in inequity and injustice; but where no
such result would ensue, the general rule that an unconstitutional law is totally ineffective
should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply
only to the P APs that can no longer be undone, and whose beneficiaries relied in good faith
on the validity of the DAP, but cannot apply to the authors, proponents and implementors
of the DAP, unless there are concrete findings of good faith in their favor by the proper
tribunals determining their criminal, civil, administrative and other liabilities."
63
D . . 90
ecmon, p. .
64
G.R. No. 187883, 16 June 2009.
MOTION FOR RECONSIDERATI01
Page 38 of 52
A.
WITHOUT AN ACTUAL CASE OR CONTROVERSY, ALLEGATIONS OF GRAVE
ABUSE OF DISCRETION ON THE PART OF ANY INSTRUMENTALITY OF THE
GOVERNMENT CANNOT CONFER ON THIS HONORABLE COURT THE
POWER TO DETERMINE THE CONSTITUTIONALITY OF THE DAP AND NBC
No. 541.
114. Article VIII of the Constitution provides:
Section 1. The judicial power shall be vested in one Supreme Court and in
such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
115. Referring to the second paragraph of Section 1 of Article VIII,
this Honorable Court says that "[fhe] Constitution 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."
65
116. Respondents do not dispute the fact that under the second
paragraph of Section1 above, courts can inquire into questions of grave abuse
of discretion on the part of the other departments of the government even in
cases involving political questions.
66
The question, however, is whether courts
65
D . . 15
eczszon, p. .
66
History of Art. VIII, Sec. 1, par. 2. For a long time, spanning a period 66 years, it was
established doctrine that the Executive's proclamation that the exigencies justifying the
suspension of the privilege of the writ of habeas corpus have arisen "is final and conclusive
upon this CTudicial] department of the Government and upon all persons.". The doctrine
was first announced in Barcelon v. Baker, 5 Phil. 87 (1905), when the privilege of the writ was
suspended by the Governor General and the Philippine Commission, because of uprising in
Cavite and Batangas). The rule was reiterated in Montenegro v. Castaneda, 91 Phil. 882 (1952),
when President Quirino suspended the privilege for the second time because of the Huk
rebellion of the 1950s. When President Marcos suspended the privilege a third time on
August 21, 1971 on account of the bombing of a political rally on Plaza Miranda in Quiapo,
Manila, by subversives and the government counsel raised the political question doctrine as a
defense to petitions for habeas corpus seeking the release of those arrested and detained
under the proclamation, the Court ordered a second round of arguments on whether the
President's determination of the exigencies giving rise to the suspension of the privilege of
the writ was a political question which courts could not review. In Lansang v. Garcia, 42
SCRA 448 (1971) the Supreme Court, tluough Chief Justice Concepcion, held that the
suspension of the privilege of the writ of habeas corpus is subject to limited review by the
courts, the role of courts being "merely to check - not to supplant - the Executive, or to
ascertain merely whether he has gone beyond the constitutional limits of his jurisdiction, nor
Page 39 of 52
can determine the constitutionality of the acts of any government agency on
allegations solely that the act in question constitutes a grave abuse of discretion
by the government agency when there is no actual case or controversy, .
117. It is submitted that courts cannot exercise the power of judicial
review unless there is an actual case or controversy. Courts are not fisca.lizcrs.
The purpose of the second paragraph of Section 1 is not to expand the
jurisdiction of courts but their judicial power by extending it to questions of
grave abuse of discretion. This is new, because, before the decision in Lansang v.
Garcia,
67
the moment the political question doctrine is invoked, courts
automatically took a hands-off policy. Now, the mere allegation that the
question presented is political does not automatically bar courts from inquiring
into the question whether in deciding political questions there has been no
grave abuse of discretion. Put in another way, the second paragraph of Section
1 refers to the scope of judicial power, whereas the jurisdiction of the Supreme
Court is defined in Section 5 which provides as follows:
Section 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other
public ministers and consuls, and over petitions for certiorari, prohibition,
mandamus, quo warranto, and habeas corpus.
to exercise the power vested in him or to determine the wisdom of his act ... [I]t is urged is
urged by the Solicitor General ' .. . that judicial inquiry into the basis of the questioned
proclamation can go no further than to satisfy the Court not that the President's decision is
correct and that the public safety was endangered by the rebellion and justified the suspension
of the writ, but that in suspending the writ, the President did not act arbitrari!J.' No cogent
reason has been submitted to warrant the rejection of such test."
Chief Justice Concepcion subsequently became the Chairman of the Committee on
Judicial Department of the 1986 Constitutional Commission. The second paragraph of
Article VIII, Sec. 1 was his handiwork. The first sentence of this paragraph, which reads
"Judicial power includes the duty of courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable," is a restatement of his ponencia in
Roxas v. LopeZJ 71 SCRA 756 (1966) defining the term "judicial power" as "the authority to
settle justiciable controversies or disputes involving rights that are enforceable and
demandable before the courts of justice or the redress of wrongs for the violation of such
rights." On the other hand, the second sentence of the second paragraph which reads "to
determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government"
embodies the ruling in Lansang v. Garcia, 42 SCRA 448 (1971).
In his sponsorship speech, Chief Justice Concepcion noted that during the martial
law period, courts found it convenient to decline to rule on controversial questions on the
ground that they were political questions. He said that the second paragraph of Art. VIII,
Sec. 1 means that "courts cannot hereafter evade the duty to settle matters of this nature, by
claiming that such matters constitute political question." I RECORD OF THE
CONSTITUTIONAL COMMISSION, p. 436, 10 July 1986.
67
G.R. No. L-33964, 11 December 1971.
MOTION FOR RECONSIDER;\ TION
Page 40 of 52
(2) Review, revise, modify, or affirm on appeal or certiorari, as the law or the
Rules of Court may provide, final judgments and orders of lower courts
m:
(a) All cases m which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in
question.
(b) All cases involving the legality of any tax, impost, assessment, or toll,
or any penalty imposed in relation thereto.
( c) All cases in which the jurisdiction of any lower court is in issue.
(d) All criminal cases in which the penalty imposed is reclusion perpet11a or
higher.
(e) All cases in which only an error or question of law is involved.
118. Indeed the framers of the 1987 Constitution were not concerned
with the jurisdiction of courts but with the scope of the judicial power because
of the perception that upon invocation of the political question doctrine, the
courts refused to exercise the judicial power to scrutinize Presidential
proclamations of the suspension of the privilege of the writ of habeas corpus
or declarations of martial law for possible abuse. They therefore incorporated
the ruling in Lansang v. Garcia, asserting the power of courts to inquire into
questions of "'not that the President's decision is correct and that the public
safety was endangered by the rebellion and justified the suspension of the writ,
but that in suspending the writ, the President did not act arbitrari!J. ' " I\ s this
Honorable Court subsequently noted, Section 1, paragraph 2 of 1\rticlc VlIJ
"incorporates in the fundamental law the ruling in Lansang vs. Garcia (42 SCH...\
448, December 11, 1971)."
119. The Decision in these cases quotes the following from Angara v.
Electoral Commission:
68
The Constitution is a definition of the powers of Government. Who
is to determine the nature, scope, and extent of such powers? The
Constitution itself has provided for the instrumentality of the judiciary as the
rational way. And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; it
does not in reality nullify or invalidate an act of the legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the right which that
instrument secures and guarantees to them. This is in truth all that is
68
G.R. No. L-45081, 15 July 1936.
Page 41 of 52
involved in what is termed "judicial supremacy" which properly is the power
of judicial review, under the Constitution ....
It omits however the following portion of the Angara opinion in which the
Supreme Court emphasized that its great power can be invoked only where
there is an actual case or controversy, to wit:
Even then, this power of judicial review is limited to actual cases and
controversies to be exercised after full opportunity of argument by the
parties, and limited further to the constitutional question raised or the very /is
mota presented. Any attempt at abstraction could only lead to dialectics and
barren legal questions and to sterile conclusions unrelated to actualities.
B.
PETITIONERS' ACTIONS Do NOT PRESENT AN ACTUAL CASE OR
CONTROVERSY AND THEREFORE THIS HONORABLE COURT DID NOT
ACQUIRE JURISDICTION.
120. The Decision in these cases states:
An actual and justiciable controversy exists m these consolidated
cases. The incompatibility of the perspectives of the parties on the
constitutionality" of the PAP and its relevant issuances satisfy the
requirement a conflict between legal rights. The issues being raised herein
meet the requisite ripeness considering that the challenged executive acts
were already being implemented by the DBM, and there are averments by the
petitioners that such implementation of the PAP entailed the allocation and
expenditure of huge sums of public funds. The fact that public funds haye
been allocated disbursed or utilized by reason or on account of such
challenged executive acts gaye rise therefore to an actual controyersy that is
ripe for adjudication by the Court.
69
121. Just because people have "incompatible perspectives" on a
constitutional question does not mean they have a justiciable controversy that
any of them can ask the court to decide when, in such a case, all that is
necessary is to stage a public debate and ask the board of judges to decide. El
fa/lo de! juez es inapelable.
122. What then is meant by an actual case or controversy"? In Aetna
Llft Insurance Co. of Hartford Conn. v. Haworth,
70
it was held:
69
Decision, p. 21. Emphasis supplied.
70
300 U.S. 227, 57 S.Ct. 461, 81L.Ed617 (1937). Emphasis supplied.
MOTIOr FOR RECONSIDERA TIO
Page 42 of 52
A "controversy" must be one that is appropriate for judicial
determination. A justiciable controversy is thus distinguished from a
difference or dispute of a hypothetical or abstract character or from one that
is academic or moot. The controversy must be definite and concrete.
touching the legal relations of arties having adverse legal interests. It must be
real and substantial controversy admitting of specific relief through a decree
that is conclusive in character. as distinguished from an 012inion advising
what the law would be upon a hypothetical state of facts. Where there is such
a concrete case admitting of an immediate and definitive determination of
the legal rights of the parties in an adversary proceedings upon the facts
alleged, adjudication of the rights of the litigants may the award of process or
the payment of damages. And it is not essential to the exercise of judicial
power that an injunction be sought; allegations that irreparable injury is
threatened are not required.
123. In Muskrat v. United States7
1
it was stated:
By cases and controversies are intended the claims of litigants brought before
the courts for determination by such regular proceedings as are established by law or
custom for the protection or enforcement of rights, or the prevention, redress, or
punishment of wrongs. Whenever the claim of a party under the Constitution, laws
or treaties of the United States takes such a form that the judicial power is capable of
action upon it, then it has become a case. The term implies the existence of present
or possible adverse parties, whose contentions are submitted to the court for
adjudication.
124. This Honorable Court points out that the fact that public funds
had been allocated, disbursed or utilized by reason or on account of the
executive acts gave rise to an actual controversy that was ripe for adjudication,
72
but Courts do not exist to fiscalize the other branches of the government.
Their business is to decide cases and incidentally check the exercise of power
by the other departments of the government if the latter's act is complained of
as being violative of the rights of one of the parties. In Muskrat, the U.S.
Supreme Court declared the act of March 1, 1907 of the U.S. Congress
unconstitutional, permitting certain individuals representing Indian tribes to
secure a ruling on the validity of prior statutes which altered the terms of
allotments made of Indian lands. What the Court said in the Muskrat case, in
invalidating the act of March 1, 1907, applies fully to these suits:
The whole purpose of the law is to determine the constitutional
validity of this class of legislation, in a suit not arising between parties
concerning a property right necessarily involved in the decision in question,
but in a proceeding against the government in its sovereign capacity, and
concerning which the only judgment required is to settle the doubtful
character of the legislation in question. Such judgment will not conclude
71
219 U.S .. 346, 31 S.Ct. 250, 55 L.Ed. 246 (1911).
72
D . . 21
eczszon, p. .
MOTION FOR RECONSIDER..\ TION
Page 43 of 52
private parties, when actual litigation brings to the court the question of the
constitutionality of such legislation. In a legal sense the judgment could not
be executed, and amounts in fact to no more than an expression of opinion
upon the validity of the acts in question. Confining the jurisdiction of this
court within the limitations conferred by the Constitution, which the court
has hitherto been careful to observe, and whose boundaries it has refused to
transcend, we think the Congress, in the act of March 1, 1907, exceeded the
limitations of legislative authority, so far as it required of this court action not
judicial in its nature within the meaning of the Constitution ....
125. Indeed, here in the suits at bar, where is the violation of
petitioners' right as a result of which they have suffered injury so as to make
them more than mere request for advisory opinion on the validity of the DAP
and its related acts?
c.
PETITIONERS HAVE NEITHER BEEN INJURED NOR THREATENED WITH
INJURY AS A RESULT OF THE OPERATION OF THE DAP AND THEREFORE
SHOULD HAVE BEEN HELD TO HAVE No STANDING TO BRING THESE
SUITS FOR CERTIORARI AND PROHIBITION.
126. The Decision makes a bow to the traditional constitutional
requirements with the statement that "The requisites for the exercise of judicial
review are the following, namely: (1) there must be an actual case or justiciable
controversy before the Court; (2)the question before the Court must be ripe for
adjudication; (3) the person challenging the act must be a proper party; and ( 4)
the issue of constitutionality must be raised at the earliest opportunity and must
be the very /is mota of the case.
73
Then the Decision quotes from Belgica v.
Executive Secretary,
74
in which it was stated:
It is a prerequisite that something had 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 a threatened iujur:y to itself as a result of the challenged

127. The Decision cites further the case of De Castro v. Judicial and Bar
Counci/75 which, quoting Agan, Jr. v. PL4TC0
76
stated:
(:PetitionerJ must be able to show not only that the law or any
goyemment act is inyalid but also that he sustained or is in imminent danger
73
D . . 20
ecmon, p. .
74
G.R. No. 208566, 19 November 2013. Emphasis supplied.
75
G. R. No. 191002, 20 April 2010. Emphasis supplied.
76
G.R. No. 155001, 5 May 2003.
:tvf OTION FOR REC01 SIDER.A TIO
Page 44 of 52
of sustaining some direct injury as a result of its enforcement and not merely
that he suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to
which he is lawfully entitled or that he is about to be subjected to some
burden or penalties by reason of the statute or act complained of."
77
128. Applying these rules to the facts of these cases, this Honorable
Court should have held petitioners to have no standing since they have not
alleged any injury or threatened injury to them as a result of the application or
enforcement of the DAP or NBC No. 541.
129. This Court says that even if petitioners do not pass the test of
"direct injury" they may nevertheless be allowed to sue because these cases are
of "transcendental importance." The Court cited Araneta v. Dinglasan.
78
In
Araneta, petitioners, Senator Eulogio Rodriguez, Nacionalista Party party
president, and then NP legal counsel Antonio Barredo questioned the
disbursement of public funds by the government under President Elpidio
Quirino on the ground that after Congress had been able to meet in regular
session, the President could no longer exercise his emergency powers. The
standing of the petitioners was questioned by the respondents, as was the
propriety of use of prohibition by the second petitioner, J. Antonio Araneta, to
stop his prosecution for violation of the President's house rental law. The
Court said that instead of taking up these questions concerning standing and
the propriety of resorting to prohibition to stop criminal prosecution, it was
going to consider the third petition of Leon Ma. Guerrero, to compel the
Administrator of the Sugar Quota Office and the Commissioner of Customs to
permit the exportation of shoes by him. Both officials had refused to issue the
required export license on the ground that the exportation of shoes from the
Philippines is forbidden by Executive Order, and Guerrero's standing to bring
the suit was proper.
130. Those were the facts in Araneta. Mention of the "transcendental
importance" of the question presented was thrown in as additional reason for
bypassing the questions of standing and propriety of remedy. Thus, the
transcendental importance of a question alone cannot justify finding the
existence of standing or case or controversy where none exist. The relevant
portion of the decision in Araneta must be quoted to forestall misinterpretation
of the "transcendental importance" basis which for some seems to be a
talismanic phrase upon the mere invocation of which a court automatically
accepts a case for consideration:
77
Decision, pp. 22-23.
78
G.R. No. L-2044, 26 August 1949.
Page 45 of 52
Three of these cases were consolidated for argument and the other
two were argued separately on other dates. Inasmuch as all of them present
the same fundamental question which, in our view, is decisive, they will be
disposed of jointly. For the same reason we will pass up the objection to the
personality or sufficiency of interest of the petitioners in case G. R. No. L-
3054 and case G. R. No. L-3056 and the question whether prohibition lies in
cases Nos. L-2044 and L-2756. No practical benefit can be gained from a
discussion of the procedural matters since the decision in the cases wherein
the petitioners' cause of action or the propriety of the procedure followed is
not in dispute, will be controlling authority on the others. Above all, the
transcendental importance to the public of these cases demands that they be
settled promptly and definitely, brushing aside, if we must, technicalities of
procedure. (Avelino vs. Cuenco, G. R. No. L-2821.) The petitions challenge
the validity of executive orders of the President avowedly issued in virtue of
Commonwealth Act No. 671. Involved in cases Nos. L-2044 and L-2756 is
Executive Order No. 62, which regulates rentals for houses and lots for
residential buildings. The petitioner, J. Antonio Araneta, is under prosecution
in the Court of First Instance of Manila for violation of the provisions of this
Executive Order, and prays for the issuance of the writ of prohibition to the
judge and the city fiscal. Involved in case L-3055 is Executive Order No. 192,
which aims to control exports from the Philippines. In this case, Leon Ma.
Guerrero seeks a writ of mandamus to compel the Administrator of the Sugar
Quota Office and the Commissioner of Customs to permit the exportation
of shoes by tl1e petitioner. Both official refuse to issue the required export
license on tl1e ground that the exportation of shoes from the Philippines is
forbidden by this Executive Order. Case No. L-3054 relates to Executive
Order No. 225, which appropriates funds for the operation of the
Government of the Republic of the Philippines during the period from J uh
1, 1949 to June 30, 1950, and for other purposes. Tbe petitioner Eulogio
Rodriguez, Sr., as a tax-payer, an elector, and president of the acionalista
Party, applies for a writ of prohibition to restrain the Treasurer of the
Philippines from disbursing this Executive Order. Affected in case No. L-
3056 is Executive Order No. 226, which appropriates P6,000,000 to defray
the expenses in connection with, and incidental to, the hold lug of the
national elections to be held in November, 1949. The petitioner, Antonio
Barredo, as a citizen, tax-payer and voter, asks this Court to prevent "the
respondents from disbursing, spending or otherwise disposing of that
amount or any part of it."
D.
NOR CAN PETITIONERS' STANDING BE SUSTAINED ON THE GROUND THAT
THEY ARE BRINGING THESE SUITS AS CITIZENS AND AS TAXPAYERS.
131. First, the Honorable Court holds that citizens have a right to bring
public actions to vindicate public rights. What specific public right are
petitioners seeking to vindicate? In Tanada v. Tuvera
19
mandamus was granted
ordering the Executive Secretary to cause the publication of all presidential
decrees, orders, instructions, proclamations and other issuances, because these
79
G.R. No. L-63915, 25 April 1985.
MOTIO FOR RECONSIDERATION
Arau/lo, et al v. Aquino, et al
Page 46 of 52
are matters of public concern of which petitioners had a constitutional right to
be informed. In Severino v. Governor Genera!
0
mandamus was granted ordering
the Governor General to call a special election for municipal president of Silay,
Negros Occidental, because suffrage is a public right. There were thus
constitutional rights petitioners were enforcing as "public rights." But here
petitioners cannot point to any constitutional right to seek a determination of
an act of the government even where they have no case or controversy to
litigate.
132. The Honorable Court says that as taxpayers petitioners have a
right to prevent the illegal disbursement of public funds. That is correct if their
action is for injunction, but the suits at bar are not for injunction but for
certiorari and prohibition to determine the constitutionality of the DAP and
NBC No. 541. There is a difference between an injunctive suit, on the one
hand, and an action for certiorari and or prohibition, on the other. In an
injunctive suit it is the acts of officials of disbursing public funds which is
sought to be enjoined, whereas in a petition for certiorari and prohibition, it is
the execution or enforcement of the DAP and NBC No. 541 which is sought
to be enjoined.
81
Thus, Rule 64, Sec. 1 and Sec. 9 (on injunction) speak of
enjoining the "act or acts complained of," while Rule 65 (on certiorari and
prohibition) speaks of "annulling or modifying the proceedings" of the
tribunal, board or officer concerned.
133. Second, nor can petitioners' standing as taxpayers be sustained. The
DAP and NBC No. 541 are not exercises of the taxing power of the state or
spending power of Congress. In Pascual v. Secretary of Public Works,
82
which this
Court cites to support its ruling that petitioners have standing, it was held that
"taxpayers have sufficient interest in preventing the illegal expenditure of
public moneys raised by taxation and may therefore question
constitutionality of statutes requiring expenditure of public moneys."
Accordingly, in that case, petitioner's standing as a taxpayer was upheld because
the law (R.A. No. 920) he was challenging was an appropriation law,
appropriating a sum of money (P85,000) for the construction of roads inside a
private subdivision. Neither the DAP nor NBC No. 541 are legislative
enactments appropriating public funds.
134. Third, the Honorable Court states on page 23 of its Decision that
"even if the issue may appear to concern only in general, such capacities
nonetheless equip the petitioner with adequate interest to sue." This contradicts
80
G.R. No. L-6250, 03 August 1910.
81
Frothingham v. Mellon; Massachussetts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078
(1923)("If a case for preventive relief be presented the court enjoins, in effect, not the
execution of the statute, but the acts of the official, the statute notwithstanding.")
82
G.R. No. L-10405, 29 December 1960. Emphasis supplied.
MOTIOr FOR RECONSIDERATION
Page 47 of 52
what the Honorable Court said earlier on the same pages 22-23 of its decision
that, to have standing, a petitioner "must be able to show not only that the law
or any government act is invalid but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and not
merely that he suffers thereby in some indefinite way."
135. Nor is reliance on state court decisions in some American states
justified. To be sure those decisions are equivocal. They merely state that the
"case law in most jurisdiction now allows both 'citizen' and 'taxpayer' standing
in public actions."
83
136. A more accurate statement of the state of public actions in the
United States is given by the leading casebook on the subject, Harl and Wechsler,
The Federal Courts and the Federal System:
The Supreme Court has never embraced the public action model of
the judicial role or abandoned the dispute resolution model. Thus, for
example, the Court has held that a federal district court exceeded its Article
III jurisdiction when it considered a constitutional issue not raised by the
parties - even though it did so at the express direction of the court of
appeals. . . Moreover, . . . the Court has recurrently rejected litigation
avowedly aimed at generally policing official conduct rather than seeking
relief for the complaining party.
84
E.
THE DECISION OF THIS HONORABLE COURT IS NOT BASED ON A
CONSIDERATION OF THE ACTUAL APPLICATIONS OF THE DAP IN 116 CASES
BUT SOLELY ON AN ABSTRACT CONSIDERATION OF NBC No. 541.
137. NBC No. 541 should have been judged "as applied" to the facts
of actual cases rather than abstractly "on its face" as the Honorable Court did.
In addition to stating why certain amounts transferred were not "savings", why
there were no appropriation covers for some projects on which public funds
were spent, why in releasing funds for unprogrammed expenditures, the
Honorable Court should have used concrete examples by using any of the 116
applications of the DAP. For its failure to do so, its decision suffers from
abstraction and violates the constitutional principle that the validity of any
governmental act must be determined as applied to actual facts and not on its
83
D . . 23
eczszon, p. .
84
Bator, Meltzer, Mishkin, and Shapiro, Hart and Wechsler The Federal Courts and the Federal
System 82 (3d ed.) (1988).
Page 48 of 52
face in an abstract, hypothetical manner. The rule is well stated in S Olfthern
Hemisphere Engagement Network v. Anti-Terrorism Counci/:
85
In determining the constitutionality of a statute, therefore, its
provisions which are alleged to have been violated in a case must be
examined in the light of the conduct with which the defendant is charged.
The Court reiterated that there are "critical limitations by which a
criminal statute may be challenged" and "underscored that an 'on-its-face'
invalidation of penal statutes . . . may not be allowed."
[T]he rule established in our jurisdiction is, only statutes on free
speech, religious freedom, and other fundamental rights may be facially
challenged. Under no case may ordinary penal statutes be subjected to a facial
challenge.
PRAYER
WHEREFORE, it is respectfully prayed that:
1) This Honorable Court PARTIALLY RECONSIDER its
Decision dated 01 July 2014, and declare that:
a. Withdrawn unobligated allotments and unreleased
appropriations under the DAP are savings;
b. Cross-border transfers under the DAP are
constitutional;
c. The President augmented items with appropriation
cover under the DAP;
d. The use of the Unprogrammed Fund under the
DAP complied with the conditions provided in the
relevant G AAs; and
e. Regardless of the nullification of certain acts and
practices under the DAP and/ or NBC No. 541, the
operative fact doctrine does not operate to impute
bad faith to authors, proponents and implementors
who continue to enjoy the presumption of
innocence and regularity in the performance of
official functions and duties.
85
G.R. No. 178552, 05 October 2010.
Arau/lo, el aL v. Aquino, et aL
Page 49 of 52
2) The petitions be DISMISSED for LACK OF MERIT.
Respondents pray for such other reliefs as may be just and equitable.
Manila, 18 July 2014.

Solicitor General
Roll No. 25719
IBP Lifetime No. 00037
MCLE Exemption No. III-008523
(Officer-in-Charge, Lorenzo Taiiada
Division)
Roll No. 44957
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AIZ
Associate Solicitor
Roll No. 57351
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?('ft...:;
EMERSON s. BANEZ
Associate Solicitor
Roll No. 56723
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12-20-12

VICENTE V. MENDOZA
Collaborating Counsel
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Quezon City
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Quezon City
MCLEExempt
No. 3 Aster, West Fairview,
Quezon City
MOTION FOR RECONSIDER.\ TION
A rau/lo, et al v. Aquino, et al
Page 50 of 52
MARIAG
Ass date S oficitor
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Associate S oficitor
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PANDAN
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Page 51of52
OFFICE OF THE SOLICITOR
GENERAL
134 Amorsolo St., Legapi Village,
1229 Makati City
Tel No.: 8186301 to 09 (Trunkline)
Fax No.: 8176307
Website: www.osg.gov.ph
Email: docket@osg.gov.ph
Copy Furnished:
Augusto L. Syjuco, Jr.
Petitioner in G.R No. 209135
No. 4 Rodriguez St., Sta. Barbara
Iloilo City
Attys. Dante N. Garcia and Romeo C.
Laguardia
For Petitioner in G.R No. 209135
3 Flame Tree Road, Forbes Park
Makati City
Atty. Wanda M. Talosig
Talosig Saquing and Associates
Counsel for Petitioner in G.R No. 209136
No. 321 FEMI! Bldg., (Annex A)
A. Soriano, Jr., Ave., Intramuros
Manila
Atty. Manuelito R. Luna
Luna and Associates
Petitioner in G.R No. 209136
No. 412 FEMI! Bldg., (Annex A)
A. Soriano, Jr., Ave., Intramuros
Manila
Attys. Raymond Parsifal A. Fortun and
Maria Romina M. Dalagan
Counsel for Petitioner in G.R No 209155
137 CRM Avenue car. CRM Marina
BF Homes Almanza, Las Pill.as City
Atty. Manuel M. Lazaro
Counsel for Petitioners in G.R No. 209164
Chatham House Bldg.
Valero cor. Rufino Streets
Salcedo Village, Makati City
President Benigno Simeon C. Aquino III
Malacaiian, Manila
Executive Secretary Paquito N. Ochoa,
Jr.
Office of the President, Malacanan
Manila
Secretary Florencio B. Abad
Department of Budget and Management
General Solano St., San Miguel
Manila
Senate President Franklin M. Drilon
Senate of the P hiiippines
4'h Floor, Senate Building, Roxas Boulevard
Pasig City
Speaker Feliciano R. Belmonte, Jr.
House of Representatives
House of Representatives Complex
Constitution Hills, Quezon City
Secretary Cesar V. Purisima
Department oJFinance
DOF Building, BSP Complex
Roxas Boulevard, Manila
Page 52 of 52
Dean Froilan M. Bacungan,
Attys. Rita Linda V. Jimeno, Reynaldo Y.
Maulit and Romulo B. Lumauig
Counsel for Petitioners in G.R No. 209164
2dFloor, Philtrust Building
Remedios cor. M. H. Del Pilar Sts.
Malate, Manila
Dean Pacifico M. Agabin
Counsel fo1 Petitioner in C.R. No. 209260
26th Floor, Pacific Star Building
Gil Puyat Avenue cor. Maka ti Avenue
Makati City
Attys. J ovencio H. Evangelista, Vanessa
Quiambao Maguigad and Maria Cristina
P. Yambot
Counsel for Petitioners in C.R. No. 209287
No. 45 K-7'h St., Brgy. West Kamias
Quezon City
Attys. Remigio D. Saladero, Jr.
Noel V. N eri and Vicente Jaime M.
Topacio
Pro-Labor Legal Assistance Center
Counsel for Petitioners in G.R No. 209 517
No. 33-B E. Rodriguez Sr. Avenue
Quezon City
National Treasurer Rosalia V. De Leon
Burea11 rj'Treasury
Palacio Del Gobernador Building
Intramuros, Manila
Chairperson Maria Gracia M. Pulido Tan
Commission on Audit
Commonwealth A venue, Quezon City
Prof. Harry L. Roque, Jr.
Attys. Joel Ruiz Butuyan and Roger R.
Ray el
Roque and Butuyan Law Offices
Counsel for Petitioners in C.R. No. 209./42
Antel Corporate Center, Unit 1904, 19'" Fir.
121 Valero Street, Salcedo Village
Makati City
Atty. Manuel S. Obedoza, Jr.
Counsel far Petitioner in C.R. No. 209 569
108 Mendez Road, Project 8
Quezon City
EXPLANATION
(Pursuant to Sec. 11, Rule 13 of the
1997 Rules of Civil Procedure)
The foregoing Motion for Reconsideration is being served by registered mail due to lack of
sufficient personnel in the Office of the Solicitor General to effect personal service.

DAP Motion For Reconsideration

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REPUBLIC OF THE PHILIPPINES

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