LAWYERS AGAINST MONOPOLY

AND POVERTY (LAMP),

represented by its Chairman
and counsel, CEFERINO PADUA,
Members, ALBERTO ABELEDA,
JR., ELEAZAR ANGELES,
GREGELYFULTON ACOSTA,
VICTOR AVECILLA, GALILEO
BRION, ANATALIA
BUENAVENTURA, EFREN
CARAG, PEDRO CASTILLO,
NAPOLEON CORONADO,
ROMEO ECHAUZ, ALFREDO
DE GUZMAN, ROGELIO
KARAGDAG, JR., MARIA LUZ
ARZAGA-MENDOZA, LEO LUIS
MENDOZA, ANTONIO P.
PAREDES, AQUILINO PIMENTEL
III, MARIO REYES, EMMANUEL
SANTOS, TERESITA SANTOS,
RUDEGELIO TACORDA,
SECRETARY GEN. ROLANDO
ARZAGA, Board of Consultants,
JUSTICE ABRAHAM
SARMIENTO, SEN. AQUILINO

G.R. No. 164987

Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,

PIMENTEL, JR., and

BARTOLOME FERNANDEZ, JR.,
Petitioners,

MENDOZA,
SERENO,
REYES,
PERLAS-BERNABE, JJ.

- versus

THE SECRETARY OF BUDGET

AND MANAGEMENT, THE
TREASURER OF THE
PHILIPPINES, THE COMMISSION
ON AUDIT, and THE PRESIDENT
OF THE SENATE and the
SPEAKER OF THE HOUSE OF
REPRESENTATIVES in

representation of the Members

of the Congress,
Respondents.

Promulgated:

April 24, 2012

x ---------------------------------------------------------------------------------------- x

DECISION

MENDOZA, J.:
For consideration of the Court is an original action for certiorari assailing the constitutionality and legality
of the implementation of the Priority Development Assistance Fund(PDAF) as provided for in Republic
Act (R.A.) 9206 or the General Appropriations Act for 2004 (GAA of 2004). Petitioner Lawyers Against Monopoly
and Poverty (LAMP), a group of lawyers who have banded together with a mission of dismantling all forms of
political, economic or social monopoly in the country,[1] also sought the issuance of a writ of preliminary injunction
or temporary restraining order to enjoin respondent Secretary of the Department of Budget and

Management (DBM) from making, and, thereafter, releasing budgetary allocations to individual members of
Congress as pork barrel funds out of PDAF. LAMP likewise aimed to stop the National Treasurer and the
Commission on Audit (COA) from enforcing the questioned provision.
On September 14, 2004, the Court required respondents, including the President of the Senate and the Speaker of
the House of Representatives, to comment on the petition. On April 7, 2005, petitioner filed a Reply thereto.
[2]
On April 26, 2005, both parties were required to submit their respective memoranda.
The GAA of 2004 contains the following provision subject of this petition:
PRIORITY DEVELOPMENT ASSISTANCE FUND
For fund requirements of priority development
hereunder 8,327,000,000.00

programs

and

projects,

as

indicated

Xxxxx
Special Provision
1. Use and Release of the Fund. The amount herein appropriated shall be used to fund priority
programs and projects or to fund the required counterpart for foreign-assisted programs and projects:
PROVIDED, That such amount shall be released directly to the implementing agency or Local
Government Unit concerned: PROVIDED, FURTHER, That the allocations authorized herein may be
realigned to any expense class, if deemed necessary: PROVIDED FURTHERMORE, That a
maximum of ten percent (10%) of the authorized allocations by district may be used for procurement
of rice and other basic commodities which shall be purchased from the National Food Authority.
Petitioners Position

According to LAMP, the above provision is silent and, therefore, prohibits an automatic or direct allocation
of lump sums to individual senators and congressmen for the funding of projects. It does not empower individual
Members of Congress to propose, select and identify programs and projects to be funded out of PDAF. In previous
GAAs, said allocation and identification of projects were the main features of the pork barrel system
technically known as Countrywide Development Fund (CDF). Nothing of the sort is now seen in the present
law (R.A. No. 9206 of CY 2004).[3] In its memorandum, LAMP insists that [t]he silence in the law of direct or even
indirect participation by members of Congress betrays a deliberate intent on the part of the Executive and the
Congress to scrap and do away with the pork barrel system. [4] In other words, [t]he omission of the PDAF provision
to specify sums as allocations to individual Members of Congress is a casus omissus signifying an omission
intentionally made by Congress that this Court is forbidden to supply.[5] Hence, LAMP is of the conclusion that the
pork barrel has become legally defunct under the present state of GAA 2004.[6]
LAMP further decries the supposed flaws in the implementation of the provision, namely: 1) the DBM
illegally made and directly released budgetary allocations out of PDAF in favor of individual Members of
Congress; and 2) the latter do not possess the power to propose, select and identify which projects are to be
actually funded by PDAF.
For LAMP, this situation runs afoul against the principle of separation of powers because in receiving and,
thereafter, spending funds for their chosen projects, the Members of Congress in effect intrude into an executive
function. In other words, they cannot directly spend the funds, the appropriation for which was made by them. In
their individual capacities, the Members of Congress cannot virtually tell or dictate upon the Executive Department
how to spend taxpayers money.[7] Further, the authority to propose and select projects does not pertain to
legislation. It is, in fact, a non-legislative function devoid of constitutional sanction, [8] and, therefore,
impermissible and must be considered nothing less than malfeasance. The proposal and identification of the
projects do not involve the making of laws or the repeal and amendment thereof, which is the only function given
to the Congress by the Constitution. Verily, the power of appropriation granted to Congress as a collegial body,

does not include the power of the Members thereof to individually propose, select and identify which projects are
to be actually implemented and funded - a function which essentially and exclusively pertains to the Executive
Department.[9] By allowing the Members of Congress to receive direct allotment from the fund, to propose and
identify projects to be funded and to perform the actual spending of the fund, the implementation of the PDAF
provision becomes legally infirm and constitutionally repugnant.
Respondents Position
For their part, the respondents[10] contend that the petition miserably lacks legal and factual
grounds. Although they admit that PDAF traced its roots to CDF,[11] they argue that the former should not be
equated with pork barrel, which has gained a derogatory meaning referring to government projects affording
political opportunism.[12] In the petition, no proof of this was offered. It cannot be gainsaid then that the petition
cannot stand on inconclusive media reports, assumptions and conjectures alone. Without probative value, media
reports cited by the petitioner deserve scant consideration especially the accusation that corrupt legislators have
allegedly proposed cuts or slashes from their pork barrel. Hence, the Court should decline the petitioners plea to
take judicial notice of the supposed iniquity of PDAF because there is no concrete proof that PDAF, in the guise of
pork barrel, is a source of dirty money for unscrupulous lawmakers and other officials who tend to misuse their
allocations. These facts have no attributes of sufficient notoriety or general recognition accepted by the public
without qualification, to be subjected to judicial notice. This applies, a fortiori, to the claim that Members of
Congress are beneficiaries of commissions (kickbacks) taken out of the PDAF allocations and releases and
preferred by favored contractors representing from 20% to 50% of the approved budget for a particular
project. [13] Suffice it to say, the perceptions of LAMP on the implementation of PDAF must not be based on mere
speculations circulated in the news media preaching the evils of pork barrel. Failing to present even an iota of proof
that the DBM Secretary has been releasing lump sums from PDAF directly or indirectly to individual Members of
Congress, the petition falls short of its cause.

Likewise admitting that CDF and PDAF are appropriations for substantially similar, if not the same,
beneficial purposes, [14] the respondents invoke Philconsa v. Enriquez,[15]where CDF was described as an
imaginative and innovative process or mechanism of implementing priority programs/projects specified in the
law. In Philconsa, the Court upheld the authority of individual Members of Congress to propose and identify
priority projects because this was merely recommendatory in nature. In said case, it was also recognized that
individual members of Congress far more than the President and their congressional colleagues were likely to be
knowledgeable about the needs of their respective constituents and the priority to be given each project.
The Issues
The respondents urge the Court to dismiss the petition for its failure to establish factual and legal basis to
support its claims, thereby lacking an essential requisite of judicial review an actual case or controversy.
The Courts Ruling
To the Court, the case boils down to these issues: 1) whether or not the mandatory requisites for the exercise
of judicial review are met in this case; and 2) whether or not the implementation of PDAF by the Members of
Congress is unconstitutional and illegal.
Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations,
to wit: (1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person
challenging the act must have the standing to question the validity of the subject act or issuance; otherwise stated,
he must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury
as a result of its enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4)
the issue of constitutionality must be the very lis mota of the case.[16]

An aspect of the case-or-controversy requirement is the requisite of ripeness. In the United States, courts are
centrally concerned with whether a case involves uncertain contingent future events that may not occur as
anticipated, or indeed may not occur at all. Another concern is the evaluation of the twofold aspect of ripeness:
first, the fitness of the issues for judicial decision; and second, the hardship to the parties entailed by withholding
court consideration. In our jurisdiction, the issue of ripeness is generally treated in terms of actual injury to the
plaintiff. Hence, a question is ripe for adjudication when the act being challenged has had a direct adverse effect on
the individual challenging it.[17]
In this case, the petitioner contested the implementation of an alleged unconstitutional statute, as citizens and
taxpayers. According to LAMP, the practice of direct allocation and release of funds to the Members of Congress
and the authority given to them to propose and select projects is the core of the laws flawed execution resulting in a
serious constitutional transgression involving the expenditure of public funds. Undeniably, as taxpayers, LAMP
would somehow be adversely affected by this. A finding of unconstitutionality would necessarily be tantamount to
a misapplication of public funds which, in turn, cause injury or hardship to taxpayers. This affords ripeness to the
present controversy.
Further, the allegations in the petition do not aim to obtain sheer legal opinion in the nature of advice
concerning legislative or executive action. The possibility of constitutional violations in the implementation of
PDAF surely involves the interplay of legal rights susceptible of judicial resolution. For LAMP, this is the right
to recover public funds possibly misapplied by no less than the Members of Congress. Hence, without prejudice to
other recourse against erring public officials, allegations of illegal expenditure of public funds reflect a concrete
injury that may have been committed by other branches of government before the court intervenes. The possibility
that this injury was indeed committed cannot be discounted. The petition complains of illegal disbursement of
public funds derived from taxation and this is sufficient reason to say that there indeed exists a definite, concrete,
real or substantial controversy before the Court.

Anent locus standi, the rule is that the person who impugns the validity of a statute must have a personal and
substantial interest in the case such that he has sustained, or will sustained, direct injury as a result of its
enforcement.[18] The gist of the question of standing is whether a party alleges such a personal stake in the outcome
of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the
court so largely depends for illumination of difficult constitutional questions. [19] In public suits, the plaintiff,
representing the general public, asserts a public right in assailing an allegedly illegal official action. The plaintiff
may be a person who is affected no differently from any other person, and could be suing as a stranger, or as a
citizen or taxpayer.[20] Thus, taxpayers have been allowed to sue where there is a claim that public funds are
illegally disbursed or that public money is being deflected to any improper purpose, or that public funds are wasted
through the enforcement of an invalid or unconstitutional law.[21] Of greater import than the damage caused by the
illegal expenditure of public funds is the mortal wound inflicted upon the fundamental law by the enforcement of
an invalid statute.[22]
Here, the sufficient interest preventing the illegal expenditure of money raised by taxation required in
taxpayers suits is established. Thus, in the claim that PDAF funds have been illegally disbursed and wasted through
the enforcement of an invalid or unconstitutional law, LAMP should be allowed to sue. The case of Pascual v.
Secretary of Public Works[23] is authority in support of the petitioner:
In the determination of the degree of interest essential to give the requisite standing to attack the
constitutionality of a statute, the general rule is that not only persons individually affected, but
also taxpayers have sufficient interest in preventing the illegal expenditures of moneys raised by
taxation and may therefore question the constitutionality of statutes requiringexpenditure of
public moneys. [11 Am. Jur. 761, Emphasis supplied.]
Lastly, the Court is of the view that the petition poses issues impressed with paramount public interest. The
ramification of issues involving the unconstitutional spending of PDAF deserves the consideration of the Court,
warranting the assumption of jurisdiction over the petition.

Now, on the substantive issue.

The powers of government are generally divided into three branches: the Legislative, the Executive and the
Judiciary. Each branch is supreme within its own sphere being independent from one another and it is this
supremacy which enables the courts to determine whether a law is constitutional or unconstitutional. [24] The
Judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has
acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion
amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this
nature.[25]
With these long-established precepts in mind, the Court now goes to the crucial question: In allowing the
direct allocation and release of PDAF funds to the Members of Congress based on their own list of proposed
projects, did the implementation of the PDAF provision under the GAA of 2004 violate the Constitution or the
laws?
The Court rules in the negative.
In determining whether or not a statute is unconstitutional, the Court does not lose sight of the presumption
of validity accorded to statutory acts of Congress. In Farias v. The Executive Secretary,[26] the Court held that:
Every statute is presumed valid. The presumption is that the legislature intended to enact a
valid, sensible and just law and one which operates no further than may be necessary to effectuate the
specific purpose of the law. Every presumption should be indulged in favor of the
constitutionality and the burden of proof is on the party alleging that there is a clear and
unequivocal breach of the Constitution.

To justify the nullification of the law or its implementation, there must be a clear and unequivocal, not a
doubtful, breach of the Constitution. In case of doubt in the sufficiency of proof establishing unconstitutionality,
the Court must sustain legislation because to invalidate [a law] based on x x x baseless supposition is an affront to
the wisdom not only of the legislature that passed it but also of the executive which approved it. [27] This
presumption of constitutionality can be overcome only by the clearest showing that there was indeed an infraction
of the Constitution, and only when such a conclusion is reached by the required majority may the Court pronounce,
in the discharge of the duty it cannot escape, that the challenged act must be struck down.[28]
The petition is miserably wanting in this regard. LAMP would have the Court declare the unconstitutionality
of the PDAFs enforcement based on the absence of express provision in the GAA allocating PDAF funds to the
Members of Congress and the latters encroachment on executive power in proposing and selecting projects to be
funded by PDAF. Regrettably, these allegations lack substantiation. No convincing proof was presented showing
that, indeed, there were direct releases of funds to the Members of Congress, who actually spend them according to
their sole discretion. Not even a documentation of the disbursement of funds by the DBM in favor of the Members
of Congress was presented by the petitioner to convince the Court to probe into the truth of their claims. Devoid of
any pertinent evidentiary support that illegal misuse of PDAF in the form of kickbacks has become a common
exercise of unscrupulous Members of Congress, the Court cannot indulge the petitioners request for rejection of a
law which is outwardly legal and capable of lawful enforcement. In a case like this, the Courts hands are tied in
deference to the presumption of constitutionality lest the Court commits unpardonable judicial legislation. The
Court is not endowed with the power of clairvoyance to divine from scanty allegations in pleadings where justice
and truth lie.[29] Again, newspaper or electronic reports showing the appalling effects of PDAF cannot be
appreciated by the Court, not because of any issue as to their truth, accuracy, or impartiality, but for the simple
reason that facts must be established in accordance with the rules of evidence.[30]

Hence, absent a clear showing that an offense to the principle of separation of powers was committed, much
less tolerated by both the Legislative and Executive, the Court is constrained to hold that a lawful and regular
government budgeting and appropriation process ensued during the enactment and all throughout the
implementation of the GAA of 2004. The process was explained in this wise, in Guingona v. Carague:[31]
1. Budget preparation. The first step is essentially tasked upon the Executive Branch and covers
the estimation of government revenues, the determination of budgetary priorities and activities within
the constraints imposed by available revenues and by borrowing limits, and the translation of desired
priorities and activities into expenditure levels.
Budget preparation starts with the budget call issued by the Department of Budget and
Management. Each agency is required to submit agency budget estimates in line with the requirements
consistent with the general ceilings set by the Development Budget Coordinating Council (DBCC).
With regard to debt servicing, the DBCC staff, based on the macro-economic projections of
interest rates (e.g. LIBOR rate) and estimated sources of domestic and foreign financing, estimates
debt service levels. Upon issuance of budget call, the Bureau of Treasury computes for the interest and
principal payments for the year for all direct national government borrowings and other liabilities
assumed by the same.
2. Legislative authorization. At this stage, Congress enters the picture and deliberates or acts on
the budget proposals of the President, and Congress in the exercise of its own judgment and
wisdom formulates an appropriation act precisely following the process established by the
Constitution, which specifies that no money may be paid from the Treasury except in accordance with
an appropriation made by law.
xxx
3. Budget Execution. Tasked on the Executive, the third phase of the budget process covers the
various operational aspects of budgeting. The establishment of obligation authority ceilings, the
evaluation of work and financial plans for individual activities, the continuing review of government
fiscal position, the regulation of funds releases, the implementation of cash payment schedules, and
other related activities comprise this phase of the budget cycle.

4. Budget accountability. The fourth phase refers to the evaluation of actual performance and
initially approved work targets, obligations incurred, personnel hired and work accomplished are
compared with the targets set at the time the agency budgets were approved.
Under the Constitution, the power of appropriation is vested in the Legislature, subject to the requirement that
appropriation bills originate exclusively in the House of Representatives with the option of the Senate to propose or
concur with amendments.[32] While the budgetary process commences from the proposal submitted by the President
to Congress, it is the latter which concludes the exercise by crafting an appropriation act it may deem beneficial to
the nation, based on its own judgment, wisdom and purposes. Like any other piece of legislation, the appropriation
act may then be susceptible to objection from the branch tasked to implement it, by way of a Presidential
veto. Thereafter, budget execution comes under the domain of the Executive branch which deals with
the operational aspects of the cycle including the allocation and release of funds earmarked for various
projects. Simply put, from the regulation of fund releases, the implementation of payment schedules and up to the
actual spending of the funds specified in the law, the Executive takes the wheel. The DBM lays down the
guidelines for the disbursement of the fund. The Members of Congress are then requested by the President to
recommend projects and programs which may be funded from the PDAF. The list submitted by the Members of
Congress is endorsed by the Speaker of the House of Representatives to the DBM, which reviews and determines
whether such list of projects submitted are consistent with the guidelines and the priorities set by the Executive.
[33]
This demonstrates the power given to the President to execute appropriation laws and therefore, to exercise the
spending per se of the budget.
As applied to this case, the petition is seriously wanting in establishing that individual Members of Congress
receive and thereafter spend funds out of PDAF. Although the possibility of this unscrupulous practice cannot be
entirely discounted, surmises and conjectures are not sufficient bases for the Court to strike down the practice for
being offensive to the Constitution. Moreover, the authority granted the Members of Congress to propose and
select projects was already upheld in Philconsa. This remains as valid case law. The Court sees no need to review
or reverse the standing pronouncements in the said case. So long as there is no showing of a direct participation of

legislators in the actual spending of the budget, the constitutional boundaries between the Executive and the
Legislative in the budgetary process remain intact.
While the Court is not unaware of the yoke caused by graft and corruption, the evils propagated by a piece of
valid legislation cannot be used as a tool to overstep constitutional limits and arbitrarily annul acts of
Congress. Again, all presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work hardship does not
render it unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be
upheld, and the challenger must negate all possible bases; that the courts are not concerned with the wisdom,
justice, policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted.[34]
There can be no question as to the patriotism and good motive of the petitioner in filing this petition.
Unfortunately, the petition must fail based on the foregoing reasons. WHEREFORE, the petition
is DISMISSED without pronouncement as to costs.
SO ORDERED.

G.R. No. 208566

November 19, 2013

GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS JR. JOSE L. GONZALEZ REUBEN M.
ABANTE and QUINTIN PAREDES SAN DIEGO, Petitioners,
vs.
HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET AND
MANAGEMENT FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON SENATE
OF THE PHILIPPINES represented by FRANKLIN M. DRILON m his capacity as SENATE PRESIDENT
and HOUSE OF REPRESENTATIVES represented by FELICIANO S. BELMONTE, JR. in his capacity as
SPEAKER OF THE HOUSE, Respondents.
x-----------------------x
G.R. No. 208493
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S. ALCANTARA, Petitioner,
vs.
HONORABLE FRANKLIN M. DRILON in his capacity as SENATE PRESIDENT and HONORABLE
FELICIANO S. BELMONTE, JR., in his capacity as SPEAKER OF THE HOUSE OF
REPRESENTATIVES, Respondents.
x-----------------------x
G.R. No. 209251

PEDRITO M. NEPOMUCENO, Former Mayor-Boac, Marinduque Former Provincial Board Member

-Province of Marinduque, Petitioner,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD,
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
PERLAS-BERNABE, J.:
"Experience is the oracle of truth."1
-James Madison
Before the Court are consolidated petitions2 taken under Rule 65 of the Rules of Court, all of which assail the
constitutionality of the Pork Barrel System. Due to the complexity of the subject matter, the Court shall heretofore
discuss the systems conceptual underpinnings before detailing the particulars of the constitutional challenge.
The Facts
I. Pork Barrel: General Concept.
"Pork Barrel" is political parlance of American -English origin.3 Historically, its usage may be traced to the
degrading ritual of rolling out a barrel stuffed with pork to a multitude of black slaves who would cast their
famished bodies into the porcine feast to assuage their hunger with morsels coming from the generosity of
their well-fed master.4 This practice was later compared to the actions of American legislators in trying to
direct federal budgets in favor of their districts.5 While the advent of refrigeration has made the actual pork
barrel obsolete, it persists in reference to political bills that "bring home the bacon" to a legislators district
and constituents.6 In a more technical sense, "Pork Barrel" refers to an appropriation of government spending

meant for localized projects and secured solely or primarily to bring money to a representative's
district.7 Some scholars on the subject further use it to refer to legislative control of local appropriations.8
In the Philippines, "Pork Barrel" has been commonly referred to as lump-sum, discretionary funds of
Members of the Legislature,9 although, as will be later discussed, its usage would evolve in reference to
certain funds of the Executive.
II. History of Congressional Pork Barrel in the Philippines.
A. Pre-Martial Law Era (1922-1972).
Act 3044,10 or the Public Works Act of 1922, is considered11 as the earliest form of "Congressional
Pork Barrel" in the Philippines since the utilization of the funds appropriated therein were subjected to
post-enactment legislator approval. Particularly, in the area of fund release, Section 312 provides that
the sums appropriated for certain public works projects13"shall be distributed x x x subject to the
approval of a joint committee elected by the Senate and the House of Representatives. "The committee
from each House may also authorize one of its members to approve the distribution made by the
Secretary of Commerce and Communications."14 Also, in the area of fund realignment, the same
section provides that the said secretary, "with the approval of said joint committee, or of the
authorized members thereof, may, for the purposes of said distribution, transfer unexpended portions
of any item of appropriation under this Act to any other item hereunder."
In 1950, it has been documented15 that post-enactment legislator participation broadened from the
areas of fund release and realignment to the area of project identification. During that year, the
mechanics of the public works act was modified to the extent that the discretion of choosing projects
was transferred from the Secretary of Commerce and Communications to legislators. "For the first
time, the law carried a list of projects selected by Members of Congress, they being the
representatives of the people, either on their own account or by consultation with local officials or
civil leaders."16 During this period, the pork barrel process commenced with local government

councils, civil groups, and individuals appealing to Congressmen or Senators for projects. Petitions
that were accommodated formed part of a legislators allocation, and the amount each legislator would
eventually get is determined in a caucus convened by the majority. The amount was then integrated
into the administration bill prepared by the Department of Public Works and Communications.
Thereafter, the Senate and the House of Representatives added their own provisions to the bill until it
was signed into law by the President the Public Works Act.17 In the 1960s, however, pork barrel
legislation reportedly ceased in view of the stalemate between the House of Representatives and the
Senate.18
B. Martial Law Era (1972-1986).
While the previous" Congressional Pork Barrel" was apparently discontinued in 1972 after Martial
Law was declared, an era when "one man controlled the legislature,"19 the reprieve was only
temporary. By 1982, the Batasang Pambansa had already introduced a new item in the General
Appropriations Act (GAA) called the" Support for Local Development Projects" (SLDP) under the
article on "National Aid to Local Government Units". Based on reports,20 it was under the SLDP that
the practice of giving lump-sum allocations to individual legislators began, with each assemblyman
receiving P500,000.00. Thereafter, assemblymen would communicate their project preferences to the
Ministry of Budget and Management for approval. Then, the said ministry would release the
allocation papers to the Ministry of Local Governments, which would, in turn, issue the checks to the
city or municipal treasurers in the assemblymans locality. It has been further reported that
"Congressional Pork Barrel" projects under the SLDP also began to cover not only public works
projects, or so- called "hard projects", but also "soft projects",21 or non-public works projects such as
those which would fall under the categories of, among others, education, health and livelihood.22
C. Post-Martial Law Era:
Corazon Cojuangco Aquino Administration (1986-1992).

After the EDSA People Power Revolution in 1986 and the restoration of Philippine democracy,
"Congressional Pork Barrel" was revived in the form of the "Mindanao Development Fund" and the
"Visayas Development Fund" which were created with lump-sum appropriations of P480 Million
and P240 Million, respectively, for the funding of development projects in the Mindanao and Visayas
areas in 1989. It has been documented23 that the clamor raised by the Senators and the Luzon
legislators for a similar funding, prompted the creation of the "Countrywide Development Fund"
(CDF) which was integrated into the 1990 GAA24 with an initial funding ofP2.3 Billion to cover
"small local infrastructure and other priority community projects."
Under the GAAs for the years 1991 and 1992,25 CDF funds were, with the approval of the President,
to be released directly to the implementing agencies but "subject to the submission of the required list
of projects and activities."Although the GAAs from 1990 to 1992 were silent as to the amounts of
allocations of the individual legislators, as well as their participation in the identification of projects, it
has been reported26 that by 1992, Representatives were receivingP12.5 Million each in CDF funds,
while Senators were receiving P18 Million each, without any limitation or qualification, and that they
could identify any kind of project, from hard or infrastructure projects such as roads, bridges, and
buildings to "soft projects" such as textbooks, medicines, and scholarships.27
D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).
The following year, or in 1993,28 the GAA explicitly stated that the release of CDF funds was to be
made upon the submission of the list of projects and activities identified by, among others, individual
legislators. For the first time, the 1993 CDF Article included an allocation for the Vice-President.29 As
such, Representatives were allocated P12.5 Million each in CDF funds, Senators, P18 Million each,
and the Vice-President, P20 Million.
In 1994,30 1995,31 and 1996,32 the GAAs contained the same provisions on project identification and
fund release as found in the 1993 CDF Article. In addition, however, the Department of Budget and

Management (DBM) was directed to submit reports to the Senate Committee on Finance and the
House Committee on Appropriations on the releases made from the funds.33
Under the 199734 CDF Article, Members of Congress and the Vice-President, in consultation with the
implementing agency concerned, were directed to submit to the DBM the list of 50% of projects to be
funded from their respective CDF allocations which shall be duly endorsed by (a) the Senate President
and the Chairman of the Committee on Finance, in the case of the Senate, and (b) the Speaker of the
House of Representatives and the Chairman of the Committee on Appropriations, in the case of the
House of Representatives; while the list for the remaining 50% was to be submitted within six (6)
months thereafter. The same article also stated that the project list, which would be published by the
DBM,35 "shall be the basis for the release of funds" and that "no funds appropriated herein shall be
disbursed for projects not included in the list herein required."
The following year, or in 1998,36 the foregoing provisions regarding the required lists and
endorsements were reproduced, except that the publication of the project list was no longer required as
the list itself sufficed for the release of CDF Funds.
The CDF was not, however, the lone form of "Congressional Pork Barrel" at that time. Other forms of
"Congressional Pork Barrel" were reportedly fashioned and inserted into the GAA (called
"Congressional Insertions" or "CIs") in order to perpetuate the ad ministrations political agenda.37 It
has been articulated that since CIs "formed part and parcel of the budgets of executive departments,
they were not easily identifiable and were thus harder to monitor." Nonetheless, the lawmakers
themselves as well as the finance and budget officials of the implementing agencies, as well as the
DBM, purportedly knew about the insertions.38Examples of these CIs are the Department of Education
(DepEd) School Building Fund, the Congressional Initiative Allocations, the Public Works Fund, the
El Nio Fund, and the Poverty Alleviation Fund.39 The allocations for the School Building Fund,
particularly, shall be made upon prior consultation with the representative of the legislative district
concerned.40 Similarly, the legislators had the power to direct how, where and when these
appropriations were to be spent.41

E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001).

In 1999,42 the CDF was removed in the GAA and replaced by three (3) separate forms of CIs, namely,
the "Food Security Program Fund,"43 the "Lingap Para Sa Mahihirap Program Fund,"44and the
"Rural/Urban Development Infrastructure Program Fund,"45 all of which contained a special provision
requiring "prior consultation" with the Member s of Congress for the release of the funds.
It was in the year 200046 that the "Priority Development Assistance Fund" (PDAF) appeared in the
GAA. The requirement of "prior consultation with the respective Representative of the District" before
PDAF funds were directly released to the implementing agency concerned was explicitly stated in the
2000 PDAF Article. Moreover, realignment of funds to any expense category was expressly allowed,
with the sole condition that no amount shall be used to fund personal services and other personnel
benefits.47 The succeeding PDAF provisions remained the same in view of the re-enactment48 of the
2000 GAA for the year 2001.
F. Gloria Macapagal-Arroyo (Arroyo) Administration (2001-2010).
The 200249 PDAF Article was brief and straightforward as it merely contained a single special
provision ordering the release of the funds directly to the implementing agency or local government
unit concerned, without further qualifications. The following year, 2003,50 the same single provision
was present, with simply an expansion of purpose and express authority to realign. Nevertheless, the
provisions in the 2003 budgets of the Department of Public Works and Highways51 (DPWH) and the
DepEd52 required prior consultation with Members of Congress on the aspects of implementation
delegation and project list submission, respectively. In 2004, the 2003 GAA was re-enacted.53
In 2005,54 the PDAF Article provided that the PDAF shall be used "to fund priority programs and
projects under the ten point agenda of the national government and shall be released directly to the
implementing agencies." It also introduced the program menu concept,55 which is essentially a list of
general programs and implementing agencies from which a particular PDAF project may be

subsequently chosen by the identifying authority. The 2005 GAA was re-enacted56 in 2006 and hence,
operated on the same bases. In similar regard, the program menu concept was consistently integrated
into the 2007,57 2008,58 2009,59 and 201060 GAAs.
Textually, the PDAF Articles from 2002 to 2010 were silent with respect to the specific amounts
allocated for the individual legislators, as well as their participation in the proposal and identification
of PDAF projects to be funded. In contrast to the PDAF Articles, however, the provisions under the
DepEd School Building Program and the DPWH budget, similar to its predecessors, explicitly
required prior consultation with the concerned Member of Congress61anent certain aspects of project
implementation.
Significantly, it was during this era that provisions which allowed formal participation of nongovernmental organizations (NGO) in the implementation of government projects were introduced. In
the Supplemental Budget for 2006, with respect to the appropriation for school buildings, NGOs were,
by law, encouraged to participate. For such purpose, the law stated that "the amount of at least P250
Million of the P500 Million allotted for the construction and completion of school buildings shall be
made available to NGOs including the Federation of Filipino-Chinese Chambers of Commerce and
Industry, Inc. for its "Operation Barrio School" program, with capability and proven track records in
the construction of public school buildings x x x."62 The same allocation was made available to NGOs
in the 2007 and 2009 GAAs under the DepEd Budget.63 Also, it was in 2007 that the Government
Procurement Policy Board64(GPPB) issued Resolution No. 12-2007 dated June 29, 2007 (GPPB
Resolution 12-2007), amending the implementing rules and regulations65 of RA 9184,66 the
Government Procurement Reform Act, to include, as a form of negotiated procurement,67 the
procedure whereby the Procuring Entity68 (the implementing agency) may enter into a memorandum
of agreement with an NGO, provided that "an appropriation law or ordinance earmarks an amount to
be specifically contracted out to NGOs."69
G. Present Administration (2010-Present).

Differing from previous PDAF Articles but similar to the CDF Articles, the 201170 PDAF Article
included an express statement on lump-sum amounts allocated for individual legislators and the VicePresident: Representatives were given P70 Million each, broken down into P40 Million for "hard
projects" and P30 Million for "soft projects"; while P200 Million was given to each Senator as well as
the Vice-President, with a P100 Million allocation each for "hard" and "soft projects." Likewise, a
provision on realignment of funds was included, but with the qualification that it may be allowed only
once. The same provision also allowed the Secretaries of Education, Health, Social Welfare and
Development, Interior and Local Government, Environment and Natural Resources, Energy, and
Public Works and Highways to realign PDAF Funds, with the further conditions that: (a) realignment
is within the same implementing unit and same project category as the original project, for
infrastructure projects; (b) allotment released has not yet been obligated for the original scope of
work, and (c) the request for realignment is with the concurrence of the legislator concerned.71
In the 201272 and 201373 PDAF Articles, it is stated that the "identification of projects and/or
designation of beneficiaries shall conform to the priority list, standard or design prepared by each
implementing agency (priority list requirement) x x x." However, as practiced, it would still be the
individual legislator who would choose and identify the project from the said priority list.74
Provisions on legislator allocations75 as well as fund realignment76 were included in the 2012 and 2013
PDAF Articles; but the allocation for the Vice-President, which was pegged at P200 Million in the
2011 GAA, had been deleted. In addition, the 2013 PDAF Article now allowed LGUs to be identified
as implementing agencies if they have the technical capability to implement the projects.77 Legislators
were also allowed to identify programs/projects, except for assistance to indigent patients and
scholarships, outside of his legislative district provided that he secures the written concurrence of the
legislator of the intended outside-district, endorsed by the Speaker of the House.78 Finally, any
realignment of PDAF funds, modification and revision of project identification, as well as requests for
release of funds, were all required to be favorably endorsed by the House Committee on
Appropriations and the Senate Committee on Finance, as the case may be.79

III. History of Presidential Pork Barrel in the Philippines.

While the term "Pork Barrel" has been typically associated with lump-sum, discretionary funds of Members
of Congress, the present cases and the recent controversies on the matter have, however, shown that the
terms usage has expanded to include certain funds of the President such as the Malampaya Funds and the
Presidential Social Fund.
On the one hand, the Malampaya Funds was created as a special fund under Section 880 of Presidential
Decree No. (PD) 910,81 issued by then President Ferdinand E. Marcos (Marcos) on March 22, 1976. In
enacting the said law, Marcos recognized the need to set up a special fund to help intensify, strengthen, and
consolidate government efforts relating to the exploration, exploitation, and development of indigenous
energy resources vital to economic growth.82 Due to the energy-related activities of the government in the
Malampaya natural gas field in Palawan, or the "Malampaya Deep Water Gas-to-Power Project",83 the
special fund created under PD 910 has been currently labeled as Malampaya Funds.
On the other hand the Presidential Social Fund was created under Section 12, Title IV84 of PD 1869,85 or the
Charter of the Philippine Amusement and Gaming Corporation (PAGCOR). PD 1869 was similarly issued by
Marcos on July 11, 1983. More than two (2) years after, he amended PD 1869 and accordingly issued PD
1993 on October 31, 1985,86 amending Section 1287 of the former law. As it stands, the Presidential Social
Fund has been described as a special funding facility managed and administered by the Presidential
Management Staff through which the President provides direct assistance to priority programs and projects
not funded under the regular budget. It is sourced from the share of the government in the aggregate gross
earnings of PAGCOR.88
IV. Controversies in the Philippines.
Over the decades, "pork" funds in the Philippines have increased tremendously,89 owing in no small part to
previous Presidents who reportedly used the "Pork Barrel" in order to gain congressional support.90 It was in
1996 when the first controversy surrounding the "Pork Barrel" erupted. Former Marikina City

Representative Romeo Candazo (Candazo), then an anonymous source, "blew the lid on the huge sums of
government money that regularly went into the pockets of legislators in the form of kickbacks."91 He said
that "the kickbacks were SOP (standard operating procedure) among legislators and ranged from a low 19
percent to a high 52 percent of the cost of each project, which could be anything from dredging, rip rapping,
sphalting, concreting, and construction of school buildings."92 "Other sources of kickbacks that Candazo
identified were public funds intended for medicines and textbooks. A few days later, the tale of the money
trail became the banner story of the Philippine Daily Inquirer issue of August 13, 1996, accompanied by an
illustration of a roasted pig."93 "The publication of the stories, including those about congressional initiative
allocations of certain lawmakers, including P3.6 Billion for a Congressman, sparked public outrage."94
Thereafter, or in 2004, several concerned citizens sought the nullification of the PDAF as enacted in the
2004 GAA for being unconstitutional. Unfortunately, for lack of "any pertinent evidentiary support that
illegal misuse of PDAF in the form of kickbacks has become a common exercise of unscrupulous Members
of Congress," the petition was dismissed.95
Recently, or in July of the present year, the National Bureau of Investigation (NBI) began its probe into
allegations that "the government has been defrauded of some P10 Billion over the past 10 years by a
syndicate using funds from the pork barrel of lawmakers and various government agencies for scores of
ghost projects."96 The investigation was spawned by sworn affidavits of six (6) whistle-blowers who
declared that JLN Corporation "JLN" standing for Janet Lim Napoles (Napoles) had swindled billions of
pesos from the public coffers for "ghost projects" using no fewer than 20 dummy NGOs for an entire decade.
While the NGOs were supposedly the ultimate recipients of PDAF funds, the whistle-blowers declared that
the money was diverted into Napoles private accounts.97 Thus, after its investigation on the Napoles
controversy, criminal complaints were filed before the Office of the Ombudsman, charging five (5)
lawmakers for Plunder, and three (3) other lawmakers for Malversation, Direct Bribery, and Violation of the
Anti-Graft and Corrupt Practices Act. Also recommended to be charged in the complaints are some of the
lawmakers chiefs -of-staff or representatives, the heads and other officials of three (3) implementing
agencies, and the several presidents of the NGOs set up by Napoles.98

On August 16, 2013, the Commission on Audit (CoA) released the results of a three-year audit
investigation99 covering the use of legislators' PDAF from 2007 to 2009, or during the last three (3) years of
the Arroyo administration. The purpose of the audit was to determine the propriety of releases of funds under
PDAF and the Various Infrastructures including Local Projects (VILP)100 by the DBM, the application of
these funds and the implementation of projects by the appropriate implementing agencies and several
government-owned-and-controlled corporations (GOCCs).101 The total releases covered by the audit
amounted to P8.374 Billion in PDAF and P32.664 Billion in VILP, representing 58% and 32%, respectively,
of the total PDAF and VILP releases that were found to have been made nationwide during the audit
period.102 Accordingly, the Co As findings contained in its Report No. 2012-03 (CoA Report), entitled
"Priority Development Assistance Fund (PDAF) and Various Infrastructures including Local Projects
(VILP)," were made public, the highlights of which are as follows:103
Amounts released for projects identified by a considerable number of legislators significantly
exceeded their respective allocations.
Amounts were released for projects outside of legislative districts of sponsoring members of the
Lower House.
Total VILP releases for the period exceeded the total amount appropriated under the 2007 to 2009
GAAs.
Infrastructure projects were constructed on private lots without these having been turned over to the
government.
Significant amounts were released to implementing agencies without the latters endorsement and
without considering their mandated functions, administrative and technical capabilities to implement
projects.

 Implementation of most livelihood projects was not undertaken by the implementing agencies
themselves but by NGOs endorsed by the proponent legislators to which the Funds were transferred.
The funds were transferred to the NGOs in spite of the absence of any appropriation law or
ordinance.
Selection of the NGOs were not compliant with law and regulations.
Eighty-Two (82) NGOs entrusted with implementation of seven hundred seventy two (772) projects
amount to P6.156 Billion were either found questionable, or submitted questionable/spurious
documents, or failed to liquidate in whole or in part their utilization of the Funds.
Procurement by the NGOs, as well as some implementing agencies, of goods and services
reportedly used in the projects were not compliant with law.
As for the "Presidential Pork Barrel", whistle-blowers alleged that" at least P900 Million from royalties in
the operation of the Malampaya gas project off Palawan province intended for agrarian reform beneficiaries
has gone into a dummy NGO."104 According to incumbent CoA Chairperson Maria Gracia Pulido Tan (CoA
Chairperson), the CoA is, as of this writing, in the process of preparing "one consolidated report" on the
Malampaya Funds.105
V. The Procedural Antecedents.
Spurred in large part by the findings contained in the CoA Report and the Napoles controversy, several
petitions were lodged before the Court similarly seeking that the "Pork Barrel System" be declared
unconstitutional. To recount, the relevant procedural antecedents in these cases are as follows:
On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President of the Social Justice Society, filed a
Petition for Prohibition of even date under Rule 65 of the Rules of Court (Alcantara Petition), seeking that the
"Pork Barrel System" be declared unconstitutional, and a writ of prohibition be issued permanently restraining

respondents Franklin M. Drilon and Feliciano S. Belmonte, Jr., in their respective capacities as the incumbent
Senate President and Speaker of the House of Representatives, from further taking any steps to enact legislation
appropriating funds for the "Pork Barrel System," in whatever form and by whatever name it may be called, and
from approving further releases pursuant thereto.106 The Alcantara Petition was docketed as G.R. No. 208493.
On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose L. Gonzalez, Reuben M. Abante,
Quintin Paredes San Diego (Belgica, et al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent Petition For
Certiorari and Prohibition With Prayer For The Immediate Issuance of Temporary Restraining Order (TRO) and/or
Writ of Preliminary Injunction dated August 27, 2013 under Rule 65 of the Rules of Court (Belgica Petition),
seeking that the annual "Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which
provided for the 2013 PDAF, and the Executives lump-sum, discretionary funds, such as the Malampaya Funds
and the Presidential Social Fund,107 be declared unconstitutional and null and void for being acts constituting grave
abuse of discretion. Also, they pray that the Court issue a TRO against respondents Paquito N. Ochoa, Jr.,
Florencio B. Abad (Secretary Abad) and Rosalia V. De Leon, in their respective capacities as the incumbent
Executive Secretary, Secretary of the Department of Budget and Management (DBM), and National Treasurer, or
their agents, for them to immediately cease any expenditure under the aforesaid funds. Further, they pray that the
Court order the foregoing respondents to release to the CoA and to the public: (a) "the complete schedule/list of
legislators who have availed of their PDAF and VILP from the years 2003 to 2013, specifying the use of the funds,
the project or activity and the recipient entities or individuals, and all pertinent data thereto"; and (b) "the use of the
Executives lump-sum, discretionary funds, including the proceeds from the x x x Malampaya Funds and
remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the recipient
entities or individuals, and all pertinent data thereto."108 Also, they pray for the "inclusion in budgetary
deliberations with the Congress of all presently off-budget, lump-sum, discretionary funds including, but not
limited to, proceeds from the Malampaya Funds and remittances from the PAGCOR."109 The Belgica Petition was
docketed as G.R. No. 208566.110
Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno (Nepomuceno), filed a Petition dated August 23,
2012 (Nepomuceno Petition), seeking that the PDAF be declared unconstitutional, and a cease and desist order be
issued restraining President Benigno Simeon S. Aquino III (President Aquino) and Secretary Abad from releasing

such funds to Members of Congress and, instead, allow their release to fund priority projects identified and
approved by the Local Development Councils in consultation with the executive departments, such as the DPWH,
the Department of Tourism, the Department of Health, the Department of Transportation, and Communication and
the National Economic Development Authority.111 The Nepomuceno Petition was docketed as UDK-14951.112
On September 10, 2013, the Court issued a Resolution of even date (a) consolidating all cases; (b) requiring public
respondents to comment on the consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO) enjoining the
DBM, National Treasurer, the Executive Secretary, or any of the persons acting under their authority from releasing
(1) the remaining PDAF allocated to Members of Congress under the GAA of 2013, and (2) Malampaya Funds
under the phrase "for such other purposes as may be hereafter directed by the President" pursuant to Section 8 of
PD 910 but not for the purpose of "financing energy resource development and exploitation programs and projects
of the government under the same provision; and (d) setting the consolidated cases for Oral Arguments on October
8, 2013.
On September 23, 2013, the Office of the Solicitor General (OSG) filed a Consolidated Comment (Comment) of
even date before the Court, seeking the lifting, or in the alternative, the partial lifting with respect to educational
and medical assistance purposes, of the Courts September 10, 2013 TRO, and that the consolidated petitions be
dismissed for lack of merit.113
On September 24, 2013, the Court issued a Resolution of even date directing petitioners to reply to the Comment.
Petitioners, with the exception of Nepomuceno, filed their respective replies to the Comment: (a) on September 30,
2013, Villegas filed a separate Reply dated September 27, 2013 (Villegas Reply); (b) on October 1, 2013, Belgica,
et al. filed a Reply dated September 30, 2013 (Belgica Reply); and (c) on October 2, 2013, Alcantara filed a Reply
dated October 1, 2013.
On October 1, 2013, the Court issued an Advisory providing for the guidelines to be observed by the parties for the
Oral Arguments scheduled on October 8, 2013. In view of the technicality of the issues material to the present
cases, incumbent Solicitor General Francis H. Jardeleza (Solicitor General) was directed to bring with him during

the Oral Arguments representative/s from the DBM and Congress who would be able to competently and
completely answer questions related to, among others, the budgeting process and its implementation. Further, the
CoA Chairperson was appointed as amicus curiae and thereby requested to appear before the Court during the Oral
Arguments.
On October 8 and 10, 2013, the Oral Arguments were conducted. Thereafter, the Court directed the parties to
submit their respective memoranda within a period of seven (7) days, or until October 17, 2013, which the parties
subsequently did.
The Issues Before the Court
Based on the pleadings, and as refined during the Oral Arguments, the following are the main issues for the Courts
resolution:
I. Procedural Issues.
Whether or not (a) the issues raised in the consolidated petitions involve an actual and justiciable controversy; (b)
the issues raised in the consolidated petitions are matters of policy not subject to judicial review; (c) petitioners
have legal standing to sue; and (d) the Courts Decision dated August 19, 1994 in G.R. Nos. 113105, 113174,
113766, and 113888, entitled "Philippine Constitution Association v. Enriquez"114 (Philconsa) and Decision dated
April 24, 2012 in G.R. No. 164987, entitled "Lawyers Against Monopoly and Poverty v. Secretary of Budget and
Management"115 (LAMP) bar the re-litigatio n of the issue of constitutionality of the "Pork Barrel System" under
the principles of res judicata and stare decisis.
II. Substantive Issues on the "Congressional Pork Barrel."
Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel Laws similar thereto are
unconstitutional considering that they violate the principles of/constitutional provisions on (a) separation of

powers; (b) non-delegability of legislative power; (c) checks and balances; (d) accountability; (e) political
dynasties; and (f) local autonomy.
III. Substantive Issues on the "Presidential Pork Barrel."
Whether or not the phrases (a) "and for such other purposes as may be hereafter directed by the President" under
Section 8 of PD 910,116 relating to the Malampaya Funds, and (b) "to finance the priority infrastructure
development projects and to finance the restoration of damaged or destroyed facilities due to calamities, as may be
directed and authorized by the Office of the President of the Philippines" under Section 12 of PD 1869, as amended
by PD 1993, relating to the Presidential Social Fund, are unconstitutional insofar as they constitute undue
delegations of legislative power.
These main issues shall be resolved in the order that they have been stated. In addition, the Court shall also tackle
certain ancillary issues as prompted by the present cases.
The Courts Ruling
The petitions are partly granted.
I. Procedural Issues.
The prevailing rule in constitutional litigation is that no question involving the constitutionality or validity of a law
or governmental act may be heard and decided by the Court unless there is compliance with the legal requisites for
judicial inquiry,117 namely: (a) there must be an actual case or controversy calling for the exercise of judicial power;
(b) the person challenging the act must have the standing to question the validity of the subject act or issuance; (c)
the question of constitutionality must be raised at the earliest opportunity ; and (d) the issue of constitutionality
must be the very lis mota of the case.118 Of these requisites, case law states that the first two are the most
important119 and, therefore, shall be discussed forthwith.
A. Existence of an Actual Case or Controversy.

By constitutional fiat, judicial power operates only when there is an actual case or controversy.120 This is embodied
in Section 1, Article VIII of the 1987 Constitution which pertinently states that "judicial power includes the duty of
the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable x
x x." Jurisprudence provides that an actual case or controversy is one which "involves a conflict of legal rights, an
assertion of opposite legal claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract
difference or dispute.121 In other words, "there must be a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudence."122 Related to the requirement of an actual case or
controversy is the requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. "A question is ripe for adjudication when the act being challenged has had a direct
adverse effect on the individual challenging it. It is a prerequisite that something had then been accomplished or
performed by either branch before a court may come into the picture, and the petitioner must allege the existence of
an immediate or threatened injury to itself as a result of the challenged action."123 "Withal, courts will decline to
pass upon constitutional issues through advisory opinions, bereft as they are of authority to resolve hypothetical or
moot questions."124
Based on these principles, the Court finds that there exists an actual and justiciable controversy in these cases.
The requirement of contrariety of legal rights is clearly satisfied by the antagonistic positions of the parties on the
constitutionality of the "Pork Barrel System." Also, the questions in these consolidated cases are ripe for
adjudication since the challenged funds and the provisions allowing for their utilization such as the 2013 GAA
for the PDAF, PD 910 for the Malampaya Funds and PD 1869, as amended by PD 1993, for the Presidential Social
Fund are currently existing and operational; hence, there exists an immediate or threatened injury to petitioners as
a result of the unconstitutional use of these public funds.
As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered moot and
academic by the reforms undertaken by respondents. A case becomes moot when there is no more actual
controversy between the parties or no useful purpose can be served in passing upon the merits.125 Differing from
this description, the Court observes that respondents proposed line-item budgeting scheme would not terminate
the controversy nor diminish the useful purpose for its resolution since said reform is geared towards the 2014

budget, and not the 2013 PDAF Article which, being a distinct subject matter, remains legally effective and
existing. Neither will the Presidents declaration that he had already "abolished the PDAF" render the issues on
PDAF moot precisely because the Executive branch of government has no constitutional authority to nullify or
annul its legal existence. By constitutional design, the annulment or nullification of a law may be done either by
Congress, through the passage of a repealing law, or by the Court, through a declaration of unconstitutionality.
Instructive on this point is the following exchange between Associate Justice Antonio T. Carpio (Justice Carpio)
and the Solicitor General during the Oral Arguments:126
Justice Carpio: The President has taken an oath to faithfully execute the law,127 correct? Solicitor General Jardeleza:
Yes, Your Honor.
Justice Carpio: And so the President cannot refuse to implement the General Appropriations Act, correct?
Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the case, for example of the PDAF, the
President has a duty to execute the laws but in the face of the outrage over PDAF, the President was saying, "I am
not sure that I will continue the release of the soft projects," and that started, Your Honor. Now, whether or not that
(interrupted)
Justice Carpio: Yeah. I will grant the President if there are anomalies in the project, he has the power to stop the
releases in the meantime, to investigate, and that is Section 38 of Chapter 5 of Book 6 of the Revised
Administrative Code128 x x x. So at most the President can suspend, now if the President believes that the PDAF is
unconstitutional, can he just refuse to implement it?
Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the specific case of the PDAF because of
the CoA Report, because of the reported irregularities and this Court can take judicial notice, even outside, outside
of the COA Report, you have the report of the whistle-blowers, the President was just exercising precisely the duty
.
xxxx

Justice Carpio: Yes, and that is correct. Youve seen the CoA Report, there are anomalies, you stop and investigate,
and prosecute, he has done that. But, does that mean that PDAF has been repealed?
Solicitor General Jardeleza: No, Your Honor x x x.
xxxx
Justice Carpio: So that PDAF can be legally abolished only in two (2) cases. Congress passes a law to repeal it, or
this Court declares it unconstitutional, correct?
Solictor General Jardeleza: Yes, Your Honor.
Justice Carpio: The President has no power to legally abolish PDAF. (Emphases supplied)
Even on the assumption of mootness, jurisprudence, nevertheless, dictates that "the moot and academic principle
is not a magical formula that can automatically dissuade the Court in resolving a case." The Court will decide
cases, otherwise moot, if: first, there is a grave violation of the Constitution; second, the exceptional character of
the situation and the paramount public interest is involved; third, when the constitutional issue raised requires
formulation of controlling principles to guide the bench, the bar, and the public; and fourth, the case is capable of
repetition yet evading review.129
The applicability of the first exception is clear from the fundamental posture of petitioners they essentially allege
grave violations of the Constitution with respect to, inter alia, the principles of separation of powers, nondelegability of legislative power, checks and balances, accountability and local autonomy.
The applicability of the second exception is also apparent from the nature of the interests involved
the constitutionality of the very system within which significant amounts of public funds have been and continue
to be utilized and expended undoubtedly presents a situation of exceptional character as well as a matter of
paramount public interest. The present petitions, in fact, have been lodged at a time when the systems flaws have

never before been magnified. To the Courts mind, the coalescence of the CoA Report, the accounts of numerous
whistle-blowers, and the governments own recognition that reforms are needed "to address the reported abuses of
the PDAF"130 demonstrates a prima facie pattern of abuse which only underscores the importance of the matter. It is
also by this finding that the Court finds petitioners claims as not merely theorized, speculative or hypothetical. Of
note is the weight accorded by the Court to the findings made by the CoA which is the constitutionally-mandated
audit arm of the government. In Delos Santos v. CoA,131 a recent case wherein the Court upheld the CoAs
disallowance of irregularly disbursed PDAF funds, it was emphasized that:
The COA is endowed with enough latitude to determine, prevent, and disallow irregular, unnecessary, excessive,
extravagant or unconscionable expenditures of government funds. It is tasked to be vigilant and conscientious in
safeguarding the proper use of the government's, and ultimately the people's, property. The exercise of its general
audit power is among the constitutional mechanisms that gives life to the check and balance system inherent in our
form of government.
It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is
constitutionally-created, such as the CoA, not only on the basis of the doctrine of separation of powers but also for
their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded
not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that
would amount to grave abuse of discretion. It is only when the CoA has acted without or in excess of jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition
questioning its rulings. x x x. (Emphases supplied)
Thus, if only for the purpose of validating the existence of an actual and justiciable controversy in these cases, the
Court deems the findings under the CoA Report to be sufficient.
The Court also finds the third exception to be applicable largely due to the practical need for a definitive ruling on
the systems constitutionality. As disclosed during the Oral Arguments, the CoA Chairperson estimates that
thousands of notices of disallowances will be issued by her office in connection with the findings made in the CoA
Report. In this relation, Associate Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed out that all of

these would eventually find their way to the courts.132 Accordingly, there is a compelling need to formulate
controlling principles relative to the issues raised herein in order to guide the bench, the bar, and the public, not just
for the expeditious resolution of the anticipated disallowance cases, but more importantly, so that the government
may be guided on how public funds should be utilized in accordance with constitutional principles.
Finally, the application of the fourth exception is called for by the recognition that the preparation and passage of
the national budget is, by constitutional imprimatur, an affair of annual occurrence.133 The relevance of the issues
before the Court does not cease with the passage of a "PDAF -free budget for 2014."134 The evolution of the "Pork
Barrel System," by its multifarious iterations throughout the course of history, lends a semblance of truth to
petitioners claim that "the same dog will just resurface wearing a different collar."135 In Sanlakas v. Executive
Secretary,136 the government had already backtracked on a previous course of action yet the Court used the
"capable of repetition but evading review" exception in order "to prevent similar questions from reemerging."137The situation similarly holds true to these cases. Indeed, the myriad of issues underlying the manner
in which certain public funds are spent, if not resolved at this most opportune time, are capable of repetition and
hence, must not evade judicial review.
B. Matters of Policy: the Political Question Doctrine.
The "limitation on the power of judicial review to actual cases and controversies carries the assurance that "the
courts will not intrude into areas committed to the other branches of government."138 Essentially, the foregoing
limitation is a restatement of the political question doctrine which, under the classic formulation of Baker v.
Carr,139applies when there is found, among others, "a textually demonstrable constitutional commitment of the
issue to a coordinate political department," "a lack of judicially discoverable and manageable standards for
resolving it" or "the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion." Cast against this light, respondents submit that the "the political branches are in the best
position not only to perform budget-related reforms but also to do them in response to the specific demands of their
constituents" and, as such, "urge the Court not to impose a solution at this stage."140
The Court must deny respondents submission.

Suffice it to state that the issues raised before the Court do not present political but legal questions which are within
its province to resolve. A political question refers to "those questions which, under the Constitution, are to be
decided by the people in their sovereign capacity, or in regard to which full discretionary authority has been
delegated to the Legislature or executive branch of the Government. It is concerned with issues dependent upon the
wisdom, not legality, of a particular measure."141 The intrinsic constitutionality of the "Pork Barrel System" is not
an issue dependent upon the wisdom of the political branches of government but rather a legal one which the
Constitution itself has commanded the Court to act upon. Scrutinizing the contours of the system along
constitutional lines is a task that the political branches of government are incapable of rendering precisely because
it is an exercise of judicial power. More importantly, the present Constitution has not only vested the Judiciary the
right to exercise judicial power but essentially makes it a duty to proceed therewith. Section 1, Article VIII of the
1987 Constitution cannot be any clearer: "The judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law. It includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government." In Estrada v. Desierto,142 the expanded concept of judicial power under the 1987 Constitution and
its effect on the political question doctrine was explained as follows:143
To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine when it expanded
the power of judicial review of this court not only to settle actual controversies involving rights which are legally
demandable and enforceable but also to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of government. Heretofore,
the judiciary has focused on the "thou shalt not's" of the Constitution directed against the exercise of its
jurisdiction. With the new provision, however, courts are given a greater prerogative to determine what it can do to
prevent grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government. Clearly, the new provision did not just grant the Court power of doing nothing. x x
x (Emphases supplied)
It must also be borne in mind that when the judiciary mediates to allocate constitutional boundaries, it does not
assert any superiority over the other departments; does not in reality nullify or invalidate an act of the legislature or

the executive, but only asserts the solemn and sacred obligation assigned to it by the Constitution."144 To a great
extent, the Court is laudably cognizant of the reforms undertaken by its co-equal branches of government. But it is
by constitutional force that the Court must faithfully perform its duty. Ultimately, it is the Courts avowed intention
that a resolution of these cases would not arrest or in any manner impede the endeavors of the two other branches
but, in fact, help ensure that the pillars of change are erected on firm constitutional grounds. After all, it is in the
best interest of the people that each great branch of government, within its own sphere, contributes its share
towards achieving a holistic and genuine solution to the problems of society. For all these reasons, the Court cannot
heed respondents plea for judicial restraint.
C. Locus Standi.
"The gist of the question of standing is whether a party alleges such personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions. Unless a person is injuriously affected in any of his
constitutional rights by the operation of statute or ordinance, he has no standing."145
Petitioners have come before the Court in their respective capacities as citizen-taxpayers and accordingly, assert
that they "dutifully contribute to the coffers of the National Treasury."146 Clearly, as taxpayers, they possess the
requisite standing to question the validity of the existing "Pork Barrel System" under which the taxes they pay have
been and continue to be utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer from the
unconstitutional usage of public funds, if the Court so rules. Invariably, taxpayers have been allowed to sue where
there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper
purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law,147 as in
these cases.
Moreover, as citizens, petitioners have equally fulfilled the standing requirement given that the issues they have
raised may be classified as matters "of transcendental importance, of overreaching significance to society, or of
paramount public interest."148 The CoA Chairpersons statement during the Oral Arguments that the present
controversy involves "not merely a systems failure" but a "complete breakdown of controls"149 amplifies, in

addition to the matters above-discussed, the seriousness of the issues involved herein. Indeed, of greater import
than the damage caused by the illegal expenditure of public funds is the mortal wound inflicted upon the
fundamental law by the enforcement of an invalid statute.150 All told, petitioners have sufficient locus standi to file
the instant cases.
D. Res Judicata and Stare Decisis.
Res judicata (which means a "matter adjudged") and stare decisis non quieta et movere (or simply, stare decisis
which means "follow past precedents and do not disturb what has been settled") are general procedural law
principles which both deal with the effects of previous but factually similar dispositions to subsequent cases. For
the cases at bar, the Court examines the applicability of these principles in relation to its prior rulings in Philconsa
and LAMP.
The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a previous case
rendered by a court of competent jurisdiction would bind a subsequent case if, between the first and second actions,
there exists an identity of parties, of subject matter, and of causes of action.151 This required identity is not,
however, attendant hereto since Philconsa and LAMP, respectively involved constitutional challenges against the
1994 CDF Article and 2004 PDAF Article, whereas the cases at bar call for a broader constitutional scrutiny of the
entire "Pork Barrel System." Also, the ruling in LAMP is essentially a dismissal based on a procedural technicality
and, thus, hardly a judgment on the merits in that petitioners therein failed to present any "convincing proof x x
x showing that, indeed, there were direct releases of funds to the Members of Congress, who actually spend them
according to their sole discretion" or "pertinent evidentiary support to demonstrate the illegal misuse of PDAF in
the form of kickbacks and has become a common exercise of unscrupulous Members of Congress." As such, the
Court up held, in view of the presumption of constitutionality accorded to every law, the 2004 PDAF Article, and
saw "no need to review or reverse the standing pronouncements in the said case." Hence, for the foregoing reasons,
the res judicata principle, insofar as the Philconsa and LAMP cases are concerned, cannot apply.
On the other hand, the focal point of stare decisis is the doctrine created. The principle, entrenched under Article
8152 of the Civil Code, evokes the general rule that, for the sake of certainty, a conclusion reached in one case

should be doctrinally applied to those that follow if the facts are substantially the same, even though the parties
may be different. It proceeds from the first principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the same questions relating to the same event
have been put forward by the parties similarly situated as in a previous case litigated and decided by a competent
court, the rule of stare decisis is a bar to any attempt to re-litigate the same issue.153
Philconsa was the first case where a constitutional challenge against a Pork Barrel provision, i.e., the 1994 CDF
Article, was resolved by the Court. To properly understand its context, petitioners posturing was that "the power
given to the Members of Congress to propose and identify projects and activities to be funded by the CDF is an
encroachment by the legislature on executive power, since said power in an appropriation act is in implementation
of the law" and that "the proposal and identification of the projects do not involve the making of laws or the repeal
and amendment thereof, the only function given to the Congress by the Constitution."154 In deference to the
foregoing submissions, the Court reached the following main conclusions: one, under the Constitution, the power
of appropriation, or the "power of the purse," belongs to Congress; two, the power of appropriation carries with it
the power to specify the project or activity to be funded under the appropriation law and it can be detailed and as
broad as Congress wants it to be; and, three, the proposals and identifications made by Members of Congress are
merely recommendatory. At once, it is apparent that the Philconsa resolution was a limited response to a separation
of powers problem, specifically on the propriety of conferring post-enactment identification authority to Members
of Congress. On the contrary, the present cases call for a more holistic examination of (a) the inter-relation between
the CDF and PDAF Articles with each other, formative as they are of the entire "Pork Barrel System" as well as (b)
the intra-relation of post-enactment measures contained within a particular CDF or PDAF Article, including not
only those related to the area of project identification but also to the areas of fund release and realignment. The
complexity of the issues and the broader legal analyses herein warranted may be, therefore, considered as a
powerful countervailing reason against a wholesale application of the stare decisis principle.
In addition, the Court observes that the Philconsa ruling was actually riddled with inherent constitutional
inconsistencies which similarly countervail against a full resort to stare decisis. As may be deduced from the main
conclusions of the case, Philconsas fundamental premise in allowing Members of Congress to propose and
identify of projects would be that the said identification authority is but an aspect of the power of appropriation

which has been constitutionally lodged in Congress. From this premise, the contradictions may be easily seen. If
the authority to identify projects is an aspect of appropriation and the power of appropriation is a form of
legislative power thereby lodged in Congress, then it follows that: (a) it is Congress which should exercise such
authority, and not its individual Members; (b) such authority must be exercised within the prescribed procedure of
law passage and, hence, should not be exercised after the GAA has already been passed; and (c) such authority, as
embodied in the GAA, has the force of law and, hence, cannot be merely recommendatory. Justice Vitugs
Concurring Opinion in the same case sums up the Philconsa quandary in this wise: "Neither would it be
objectionable for Congress, by law, to appropriate funds for such specific projects as it may be minded; to give that
authority, however, to the individual members of Congress in whatever guise, I am afraid, would be
constitutionally impermissible." As the Court now largely benefits from hindsight and current findings on the
matter, among others, the CoA Report, the Court must partially abandon its previous ruling in Philconsa insofar as
it validated the post-enactment identification authority of Members of Congress on the guise that the same was
merely recommendatory. This postulate raises serious constitutional inconsistencies which cannot be simply
excused on the ground that such mechanism is "imaginative as it is innovative." Moreover, it must be pointed out
that the recent case of Abakada Guro Party List v. Purisima155 (Abakada) has effectively overturned Philconsas
allowance of post-enactment legislator participation in view of the separation of powers principle. These
constitutional inconsistencies and the Abakada rule will be discussed in greater detail in the ensuing section of this
Decision.
As for LAMP, suffice it to restate that the said case was dismissed on a procedural technicality and, hence, has not
set any controlling doctrine susceptible of current application to the substantive issues in these cases. In fine, stare
decisis would not apply.
II. Substantive Issues.
A. Definition of Terms.

Before the Court proceeds to resolve the substantive issues of these cases, it must first define the terms "Pork
Barrel System," "Congressional Pork Barrel," and "Presidential Pork Barrel" as they are essential to the ensuing
discourse.
Petitioners define the term "Pork Barrel System" as the "collusion between the Legislative and Executive branches
of government to accumulate lump-sum public funds in their offices with unchecked discretionary powers to
determine its distribution as political largesse."156 They assert that the following elements make up the Pork Barrel
System: (a) lump-sum funds are allocated through the appropriations process to an individual officer; (b) the
officer is given sole and broad discretion in determining how the funds will be used or expended; (c) the guidelines
on how to spend or use the funds in the appropriation are either vague, overbroad or inexistent; and (d) projects
funded are intended to benefit a definite constituency in a particular part of the country and to help the political
careers of the disbursing official by yielding rich patronage benefits.157 They further state that the Pork Barrel
System is comprised of two (2) kinds of discretionary public funds: first, the Congressional (or Legislative) Pork
Barrel, currently known as the PDAF;158 and, second, the Presidential (or Executive) Pork Barrel, specifically, the
Malampaya Funds under PD 910 and the Presidential Social Fund under PD 1869, as amended by PD 1993.159
Considering petitioners submission and in reference to its local concept and legal history, the Court defines the
Pork Barrel System as the collective body of rules and practices that govern the manner by which lump-sum,
discretionary funds, primarily intended for local projects, are utilized through the respective participations of the
Legislative and Executive branches of government, including its members. The Pork Barrel System involves two
(2) kinds of lump-sum discretionary funds:
First, there is the Congressional Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
wherein legislators, either individually or collectively organized into committees, are able to effectively control
certain aspects of the funds utilization through various post-enactment measures and/or practices. In particular,
petitioners consider the PDAF, as it appears under the 2013 GAA, as Congressional Pork Barrel since it is, inter
alia, a post-enactment measure that allows individual legislators to wield a collective power;160 and

Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum, discretionary fund
which allows the President to determine the manner of its utilization. For reasons earlier stated,161 the Court shall
delimit the use of such term to refer only to the Malampaya Funds and the Presidential Social Fund.
With these definitions in mind, the Court shall now proceed to discuss the substantive issues of these cases.
B. Substantive Issues on the Congressional Pork Barrel.
1. Separation of Powers.
a. Statement of Principle.
The principle of separation of powers refers to the constitutional demarcation of the three fundamental powers of
government. In the celebrated words of Justice Laurel in Angara v. Electoral Commission,162 it means that the
"Constitution has blocked out with deft strokes and in bold lines, allotment of power to the executive, the
legislative and the judicial departments of the government."163 To the legislative branch of government, through
Congress,164 belongs the power to make laws; to the executive branch of government, through the
President,165belongs the power to enforce laws; and to the judicial branch of government, through the
Court,166 belongs the power to interpret laws. Because the three great powers have been, by constitutional design,
ordained in this respect, "each department of the government has exclusive cognizance of matters within its
jurisdiction, and is supreme within its own sphere."167 Thus, "the legislature has no authority to execute or construe
the law, the executive has no authority to make or construe the law, and the judiciary has no power to make or
execute the law."168 The principle of separation of powers and its concepts of autonomy and independence stem
from the notion that the powers of government must be divided to avoid concentration of these powers in any one
branch; the division, it is hoped, would avoid any single branch from lording its power over the other branches or
the citizenry.169 To achieve this purpose, the divided power must be wielded by co-equal branches of government
that are equally capable of independent action in exercising their respective mandates. Lack of independence would
result in the inability of one branch of government to check the arbitrary or self-interest assertions of another or
others.170

Broadly speaking, there is a violation of the separation of powers principle when one branch of government unduly
encroaches on the domain of another. US Supreme Court decisions instruct that the principle of separation of
powers may be violated in two (2) ways: firstly, "one branch may interfere impermissibly with the others
performance of its constitutionally assigned function";171 and "alternatively, the doctrine may be violated when one
branch assumes a function that more properly is entrusted to another."172 In other words, there is a violation of the
principle when there is impermissible (a) interference with and/or (b) assumption of another departments
functions.
The enforcement of the national budget, as primarily contained in the GAA, is indisputably a function both
constitutionally assigned and properly entrusted to the Executive branch of government. In Guingona, Jr. v. Hon.
Carague173 (Guingona, Jr.), the Court explained that the phase of budget execution "covers the various operational
aspects of budgeting" and accordingly includes "the evaluation of work and financial plans for individual
activities," the "regulation and release of funds" as well as all "other related activities" that comprise the budget
execution cycle.174 This is rooted in the principle that the allocation of power in the three principal branches of
government is a grant of all powers inherent in them.175 Thus, unless the Constitution provides otherwise, the
Executive department should exclusively exercise all roles and prerogatives which go into the implementation of
the national budget as provided under the GAA as well as any other appropriation law.
In view of the foregoing, the Legislative branch of government, much more any of its members, should not cross
over the field of implementing the national budget since, as earlier stated, the same is properly the domain of the
Executive. Again, in Guingona, Jr., the Court stated that "Congress enters the picture when it deliberates or acts on
the budget proposals of the President. Thereafter, Congress, "in the exercise of its own judgment and wisdom,
formulates an appropriation act precisely following the process established by the Constitution, which specifies
that no money may be paid from the Treasury except in accordance with an appropriation made by law." Upon
approval and passage of the GAA, Congress law -making role necessarily comes to an end and from there the
Executives role of implementing the national budget begins. So as not to blur the constitutional boundaries
between them, Congress must "not concern it self with details for implementation by the Executive."176

The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that "from the
moment the law becomes effective, any provision of law that empowers Congress or any of its members to play
any role in the implementation or enforcement of the law violates the principle of separation of powers and is thus
unconstitutional."177 It must be clarified, however, that since the restriction only pertains to "any role in the
implementation or enforcement of the law," Congress may still exercise its oversight function which is a
mechanism of checks and balances that the Constitution itself allows. But it must be made clear that Congress role
must be confined to mere oversight. Any post-enactment-measure allowing legislator participation beyond
oversight is bereft of any constitutional basis and hence, tantamount to impermissible interference and/or
assumption of executive functions. As the Court ruled in Abakada:178
Any post-enactment congressional measure x x x should be limited to scrutiny and investigation.1wphi1 In
particular, congressional oversight must be confined to the following:
(1) scrutiny based primarily on Congress power of appropriation and the budget hearings conducted in
connection with it, its power to ask heads of departments to appear before and be heard by either of its
Houses on any matter pertaining to their departments and its power of confirmation; and
(2) investigation and monitoring of the implementation of laws pursuant to the power of Congress to conduct
inquiries in aid of legislation.
Any action or step beyond that will undermine the separation of powers guaranteed by the Constitution. (Emphases
supplied)
b. Application.
In these cases, petitioners submit that the Congressional Pork Barrel among others, the 2013 PDAF Article
"wrecks the assignment of responsibilities between the political branches" as it is designed to allow individual
legislators to interfere "way past the time it should have ceased" or, particularly, "after the GAA is passed."179They
state that the findings and recommendations in the CoA Report provide "an illustration of how absolute and

definitive the power of legislators wield over project implementation in complete violation of the constitutional
principle of separation of powers."180 Further, they point out that the Court in the Philconsa case only allowed the
CDF to exist on the condition that individual legislators limited their role to recommending projects and not if they
actually dictate their implementation.181
For their part, respondents counter that the separations of powers principle has not been violated since the President
maintains "ultimate authority to control the execution of the GAA and that he "retains the final discretion to reject"
the legislators proposals.182 They maintain that the Court, in Philconsa, "upheld the constitutionality of the power
of members of Congress to propose and identify projects so long as such proposal and identification are
recommendatory."183 As such, they claim that "everything in the Special Provisions [of the 2013 PDAF Article
follows the Philconsa framework, and hence, remains constitutional."184
The Court rules in favor of petitioners.
As may be observed from its legal history, the defining feature of all forms of Congressional Pork Barrel would be
the authority of legislators to participate in the post-enactment phases of project implementation.
At its core, legislators may it be through project lists,185 prior consultations186 or program menus187 have been
consistently accorded post-enactment authority to identify the projects they desire to be funded through various
Congressional Pork Barrel allocations. Under the 2013 PDAF Article, the statutory authority of legislators to
identify projects post-GAA may be construed from the import of Special Provisions 1 to 3 as well as the second
paragraph of Special Provision 4. To elucidate, Special Provision 1 embodies the program menu feature which, as
evinced from past PDAF Articles, allows individual legislators to identify PDAF projects for as long as the
identified project falls under a general program listed in the said menu. Relatedly, Special Provision 2 provides that
the implementing agencies shall, within 90 days from the GAA is passed, submit to Congress a more detailed
priority list, standard or design prepared and submitted by implementing agencies from which the legislator may
make his choice. The same provision further authorizes legislators to identify PDAF projects outside his district for
as long as the representative of the district concerned concurs in writing. Meanwhile, Special Provision 3 clarifies
that PDAF projects refer to "projects to be identified by legislators"188 and thereunder provides the allocation limit

for the total amount of projects identified by each legislator. Finally, paragraph 2 of Special Provision 4 requires
that any modification and revision of the project identification "shall be submitted to the House Committee on
Appropriations and the Senate Committee on Finance for favorable endorsement to the DBM or the implementing
agency, as the case may be." From the foregoing special provisions, it cannot be seriously doubted that legislators
have been accorded post-enactment authority to identify PDAF projects.
Aside from the area of project identification, legislators have also been accorded post-enactment authority in the
areas of fund release and realignment. Under the 2013 PDAF Article, the statutory authority of legislators to
participate in the area of fund release through congressional committees is contained in Special Provision 5 which
explicitly states that "all request for release of funds shall be supported by the documents prescribed under Special
Provision No. 1 and favorably endorsed by House Committee on Appropriations and the Senate Committee on
Finance, as the case may be"; while their statutory authority to participate in the area of fund realignment is
contained in: first , paragraph 2, Special Provision 4189 which explicitly state s, among others, that "any realignment
of funds shall be submitted to the House Committee on Appropriations and the Senate Committee on Finance for
favorable endorsement to the DBM or the implementing agency, as the case may be ; and, second , paragraph 1,
also of Special Provision 4 which authorizes the "Secretaries of Agriculture, Education, Energy, Interior and Local
Government, Labor and Employment, Public Works and Highways, Social Welfare and Development and Trade
and Industry190 x x x to approve realignment from one project/scope to another within the allotment received from
this Fund, subject to among others (iii) the request is with the concurrence of the legislator concerned."
Clearly, these post-enactment measures which govern the areas of project identification, fund release and fund
realignment are not related to functions of congressional oversight and, hence, allow legislators to intervene and/or
assume duties that properly belong to the sphere of budget execution. Indeed, by virtue of the foregoing, legislators
have been, in one form or another, authorized to participate in as Guingona, Jr. puts it "the various operational
aspects of budgeting," including "the evaluation of work and financial plans for individual activities" and the
"regulation and release of funds" in violation of the separation of powers principle. The fundamental rule, as
categorically articulated in Abakada, cannot be overstated from the moment the law becomes effective, any
provision of law that empowers Congress or any of its members to play any role in the implementation or
enforcement of the law violates the principle of separation of powers and is thus unconstitutional.191 That the said

authority is treated as merely recommendatory in nature does not alter its unconstitutional tenor since the
prohibition, to repeat, covers any role in the implementation or enforcement of the law. Towards this end, the Court
must therefore abandon its ruling in Philconsa which sanctioned the conduct of legislator identification on the guise
that the same is merely recommendatory and, as such, respondents reliance on the same falters altogether.
Besides, it must be pointed out that respondents have nonetheless failed to substantiate their position that the
identification authority of legislators is only of recommendatory import. Quite the contrary, respondents through
the statements of the Solicitor General during the Oral Arguments have admitted that the identification of the
legislator constitutes a mandatory requirement before his PDAF can be tapped as a funding source, thereby
highlighting the indispensability of the said act to the entire budget execution process:192
Justice Bernabe: Now, without the individual legislators identification of the project, can the PDAF of the
legislator be utilized?
Solicitor General Jardeleza: No, Your Honor.
Justice Bernabe: It cannot?
Solicitor General Jardeleza: It cannot (interrupted)
Justice Bernabe: So meaning you should have the identification of the project by the individual legislator?
Solicitor General Jardeleza: Yes, Your Honor.
xxxx
Justice Bernabe: In short, the act of identification is mandatory?
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is not done and then there is no identification.

xxxx
Justice Bernabe: Now, would you know of specific instances when a project was implemented without the
identification by the individual legislator?
Solicitor General Jardeleza: I do not know, Your Honor; I do not think so but I have no specific examples. I would
doubt very much, Your Honor, because to implement, there is a need for a SARO and the NCA. And the SARO and
the NCA are triggered by an identification from the legislator.
xxxx
Solictor General Jardeleza: What we mean by mandatory, Your Honor, is we were replying to a question, "How can
a legislator make sure that he is able to get PDAF Funds?" It is mandatory in the sense that he must identify, in that
sense, Your Honor. Otherwise, if he does not identify, he cannot avail of the PDAF Funds and his district would not
be able to have PDAF Funds, only in that sense, Your Honor. (Emphases supplied)
Thus, for all the foregoing reasons, the Court hereby declares the 2013 PDAF Article as well as all other provisions
of law which similarly allow legislators to wield any form of post-enactment authority in the implementation or
enforcement of the budget, unrelated to congressional oversight, as violative of the separation of powers principle
and thus unconstitutional. Corollary thereto, informal practices, through which legislators have effectively intruded
into the proper phases of budget execution, must be deemed as acts of grave abuse of discretion amounting to lack
or excess of jurisdiction and, hence, accorded the same unconstitutional treatment. That such informal practices do
exist and have, in fact, been constantly observed throughout the years has not been substantially disputed here. As
pointed out by Chief Justice Maria Lourdes P.A. Sereno (Chief Justice Sereno) during the Oral Arguments of these
cases:193
Chief Justice Sereno:
Now, from the responses of the representative of both, the DBM and two (2) Houses of Congress, if we enforces
the initial thought that I have, after I had seen the extent of this research made by my staff, that neither the

Executive nor Congress frontally faced the question of constitutional compatibility of how they were engineering
the budget process. In fact, the words you have been using, as the three lawyers of the DBM, and both Houses of
Congress has also been using is surprise; surprised that all of these things are now surfacing. In fact, I thought that
what the 2013 PDAF provisions did was to codify in one section all the past practice that had been done since
1991. In a certain sense, we should be thankful that they are all now in the PDAF Special Provisions. x x x
(Emphasis and underscoring supplied)
Ultimately, legislators cannot exercise powers which they do not have, whether through formal measures written
into the law or informal practices institutionalized in government agencies, else the Executive department be
deprived of what the Constitution has vested as its own.
2. Non-delegability of Legislative Power.
a. Statement of Principle.
As an adjunct to the separation of powers principle,194 legislative power shall be exclusively exercised by the body
to which the Constitution has conferred the same. In particular, Section 1, Article VI of the 1987 Constitution states
that such power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of
Representatives, except to the extent reserved to the people by the provision on initiative and referendum.195 Based
on this provision, it is clear that only Congress, acting as a bicameral body, and the people, through the process of
initiative and referendum, may constitutionally wield legislative power and no other. This premise embodies the
principle of non-delegability of legislative power, and the only recognized exceptions thereto would be: (a)
delegated legislative power to local governments which, by immemorial practice, are allowed to legislate on purely
local matters;196 and (b) constitutionally-grafted exceptions such as the authority of the President to, by law,
exercise powers necessary and proper to carry out a declared national policy in times of war or other national
emergency,197 or fix within specified limits, and subject to such limitations and restrictions as Congress may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the Government.198

Notably, the principle of non-delegability should not be confused as a restriction to delegate rule-making authority
to implementing agencies for the limited purpose of either filling up the details of the law for its enforcement
(supplementary rule-making) or ascertaining facts to bring the law into actual operation (contingent rulemaking).199 The conceptual treatment and limitations of delegated rule-making were explained in the case of People
v. Maceren200 as follows:
The grant of the rule-making power to administrative agencies is a relaxation of the principle of separation of
powers and is an exception to the nondelegation of legislative powers. Administrative regulations or "subordinate
legislation" calculated to promote the public interest are necessary because of "the growing complexity of modern
life, the multiplication of the subjects of governmental regulations, and the increased difficulty of administering the
law."
xxxx
Nevertheless, it must be emphasized that the rule-making power must be confined to details for regulating the
mode or proceeding to carry into effect the law as it has been enacted. The power cannot be extended to amending
or expanding the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the
statute cannot be sanctioned. (Emphases supplied)
b. Application.
In the cases at bar, the Court observes that the 2013 PDAF Article, insofar as it confers post-enactment
identification authority to individual legislators, violates the principle of non-delegability since said legislators are
effectively allowed to individually exercise the power of appropriation, which as settled in Philconsa is lodged
in Congress.201 That the power to appropriate must be exercised only through legislation is clear from Section
29(1), Article VI of the 1987 Constitution which states that: "No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." To understand what constitutes an act of appropriation, the Court, in
Bengzon v. Secretary of Justice and Insular Auditor202 (Bengzon), held that the power of appropriation involves (a)
the setting apart by law of a certain sum from the public revenue for (b) a specified purpose. Essentially, under the

2013 PDAF Article, individual legislators are given a personal lump-sum fund from which they are able to dictate
(a) how much from such fund would go to (b) a specific project or beneficiary that they themselves also determine.
As these two (2) acts comprise the exercise of the power of appropriation as described in Bengzon, and given that
the 2013 PDAF Article authorizes individual legislators to perform the same, undoubtedly, said legislators have
been conferred the power to legislate which the Constitution does not, however, allow. Thus, keeping with the
principle of non-delegability of legislative power, the Court hereby declares the 2013 PDAF Article, as well as all
other forms of Congressional Pork Barrel which contain the similar legislative identification feature as herein
discussed, as unconstitutional.
3. Checks and Balances.
a. Statement of Principle; Item-Veto Power.
The fact that the three great powers of government are intended to be kept separate and distinct does not mean that
they are absolutely unrestrained and independent of each other. The Constitution has also provided for an elaborate
system of checks and balances to secure coordination in the workings of the various departments of the
government.203
A prime example of a constitutional check and balance would be the Presidents power to veto an item written into
an appropriation, revenue or tariff bill submitted to him by Congress for approval through a process known as "bill
presentment." The Presidents item-veto power is found in Section 27(2), Article VI of the 1987 Constitution which
reads as follows:
Sec. 27. x x x.
xxxx
(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff
bill, but the veto shall not affect the item or items to which he does not object.

The presentment of appropriation, revenue or tariff bills to the President, wherein he may exercise his power of
item-veto, forms part of the "single, finely wrought and exhaustively considered, procedures" for law-passage as
specified under the Constitution.204 As stated in Abakada, the final step in the law-making process is the
"submission of the bill to the President for approval. Once approved, it takes effect as law after the required
publication."205
Elaborating on the Presidents item-veto power and its relevance as a check on the legislature, the Court, in
Bengzon, explained that:206
The former Organic Act and the present Constitution of the Philippines make the Chief Executive an integral part
of the law-making power. His disapproval of a bill, commonly known as a veto, is essentially a legislative act. The
questions presented to the mind of the Chief Executive are precisely the same as those the legislature must
determine in passing a bill, except that his will be a broader point of view.
The Constitution is a limitation upon the power of the legislative department of the government, but in this respect
it is a grant of power to the executive department. The Legislature has the affirmative power to enact laws; the
Chief Executive has the negative power by the constitutional exercise of which he may defeat the will of the
Legislature. It follows that the Chief Executive must find his authority in the Constitution. But in exercising that
authority he may not be confined to rules of strict construction or hampered by the unwise interference of the
judiciary. The courts will indulge every intendment in favor of the constitutionality of a veto in the same manner as
they will presume the constitutionality of an act as originally passed by the Legislature. (Emphases supplied)
The justification for the Presidents item-veto power rests on a variety of policy goals such as to prevent log-rolling
legislation,207 impose fiscal restrictions on the legislature, as well as to fortify the executive branchs role in the
budgetary process.208 In Immigration and Naturalization Service v. Chadha, the US Supreme Court characterized
the Presidents item-power as "a salutary check upon the legislative body, calculated to guard the community
against the effects of factions, precipitancy, or of any impulse unfriendly to the public good, which may happen to
influence a majority of that body"; phrased differently, it is meant to "increase the chances in favor of the
community against the passing of bad laws, through haste, inadvertence, or design."209

For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which may
be the object of the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the details,
the distinct and severable parts of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of
the Philippine Islands,210 the US Supreme Court characterized an item of appropriation as follows:
An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of money, not
some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)
On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to exercise
his power of item veto, must contain "specific appropriations of money" and not only "general provisions" which
provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be an item characterized by singular
correspondence meaning an allocation of a specified singular amount for a specified singular purpose, otherwise
known as a "line-item."211 This treatment not only allows the item to be consistent with its definition as a "specific
appropriation of money" but also ensures that the President may discernibly veto the same. Based on the foregoing
formulation, the existing Calamity Fund, Contingent Fund and the Intelligence Fund, being appropriations which
state a specified amount for a specific purpose, would then be considered as "line- item" appropriations which are
rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly apportioned into
component percentages or values; however, it is crucial that each percentage or value must be allocated for its own
corresponding purpose for such component to be considered as a proper line-item. Moreover, as Justice Carpio
correctly pointed out, a valid appropriation may even have several related purposes that are by accounting and
budgeting practice considered as one purpose, e.g., MOOE (maintenance and other operating expenses), in which
case the related purposes shall be deemed sufficiently specific for the exercise of the Presidents item veto power.
Finally, special purpose funds and discretionary funds would equally square with the constitutional mechanism of
item-veto for as long as they follow the rule on singular correspondence as herein discussed. Anent special purpose
funds, it must be added that Section 25(4), Article VI of the 1987 Constitution requires that the "special
appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually
available as certified by the National Treasurer, or t o be raised by a corresponding revenue proposal therein."

Meanwhile, with respect to discretionary funds, Section 2 5(6), Article VI of the 1987 Constitution requires that
said funds "shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law."
In contrast, what beckons constitutional infirmity are appropriations which merely provide for a singular lump-sum
amount to be tapped as a source of funding for multiple purposes. Since such appropriation type necessitates the
further determination of both the actual amount to be expended and the actual purpose of the appropriation which
must still be chosen from the multiple purposes stated in the law, it cannot be said that the appropriation law
already indicates a "specific appropriation of money and hence, without a proper line-item which the President
may veto. As a practical result, the President would then be faced with the predicament of either vetoing the entire
appropriation if he finds some of its purposes wasteful or undesirable, or approving the entire appropriation so as
not to hinder some of its legitimate purposes. Finally, it may not be amiss to state that such arrangement also raises
non-delegability issues considering that the implementing authority would still have to determine, again, both the
actual amount to be expended and the actual purpose of the appropriation. Since the foregoing determinations
constitute the integral aspects of the power to appropriate, the implementing authority would, in effect, be
exercising legislative prerogatives in violation of the principle of non-delegability.
b. Application.
In these cases, petitioners claim that "in the current x x x system where the PDAF is a lump-sum appropriation, the
legislators identification of the projects after the passage of the GAA denies the President the chance to veto that
item later on."212 Accordingly, they submit that the "item veto power of the President mandates that appropriations
bills adopt line-item budgeting" and that "Congress cannot choose a mode of budgeting which effectively renders
the constitutionally-given power of the President useless."213
On the other hand, respondents maintain that the text of the Constitution envisions a process which is intended to
meet the demands of a modernizing economy and, as such, lump-sum appropriations are essential to financially
address situations which are barely foreseen when a GAA is enacted. They argue that the decision of the Congress
to create some lump-sum appropriations is constitutionally allowed and textually-grounded.214

The Court agrees with petitioners.

Under the 2013 PDAF Article, the amount of P24.79 Billion only appears as a collective allocation limit since the
said amount would be further divided among individual legislators who would then receive personal lump-sum
allocations and could, after the GAA is passed, effectively appropriate PDAF funds based on their own discretion.
As these intermediate appropriations are made by legislators only after the GAA is passed and hence, outside of the
law, it necessarily means that the actual items of PDAF appropriation would not have been written into the General
Appropriations Bill and thus effectuated without veto consideration. This kind of lump-sum/post-enactment
legislative identification budgeting system fosters the creation of a budget within a budget" which subverts the
prescribed procedure of presentment and consequently impairs the Presidents power of item veto. As petitioners
aptly point out, the above-described system forces the President to decide between (a) accepting the entire P24.79
Billion PDAF allocation without knowing the specific projects of the legislators, which may or may not be
consistent with his national agenda and (b) rejecting the whole PDAF to the detriment of all other legislators with
legitimate projects.215
Moreover, even without its post-enactment legislative identification feature, the 2013 PDAF Article would remain
constitutionally flawed since it would then operate as a prohibited form of lump-sum appropriation abovecharacterized. In particular, the lump-sum amount of P24.79 Billion would be treated as a mere funding source
allotted for multiple purposes of spending, i.e., scholarships, medical missions, assistance to indigents, preservation
of historical materials, construction of roads, flood control, etc. This setup connotes that the appropriation law
leaves the actual amounts and purposes of the appropriation for further determination and, therefore, does not
readily indicate a discernible item which may be subject to the Presidents power of item veto.
In fact, on the accountability side, the same lump-sum budgeting scheme has, as the CoA Chairperson relays,
"limited state auditors from obtaining relevant data and information that would aid in more stringently auditing the
utilization of said Funds."216 Accordingly, she recommends the adoption of a "line by line budget or amount per
proposed program, activity or project, and per implementing agency."217

Hence, in view of the reasons above-stated, the Court finds the 2013 PDAF Article, as well as all Congressional
Pork Barrel Laws of similar operation, to be unconstitutional. That such budgeting system provides for a greater
degree of flexibility to account for future contingencies cannot be an excuse to defeat what the Constitution
requires. Clearly, the first and essential truth of the matter is that unconstitutional means do not justify even
commendable ends.218
c. Accountability.
Petitioners further relate that the system under which various forms of Congressional Pork Barrel operate defies
public accountability as it renders Congress incapable of checking itself or its Members. In particular, they point
out that the Congressional Pork Barrel "gives each legislator a direct, financial interest in the smooth, speedy
passing of the yearly budget" which turns them "from fiscalizers" into "financially-interested partners."219 They
also claim that the system has an effect on re- election as "the PDAF excels in self-perpetuation of elective
officials." Finally, they add that the "PDAF impairs the power of impeachment" as such "funds are indeed quite
useful, to well, accelerate the decisions of senators."220
The Court agrees in part.
The aphorism forged under Section 1, Article XI of the 1987 Constitution, which states that "public office is a
public trust," is an overarching reminder that every instrumentality of government should exercise their official
functions only in accordance with the principles of the Constitution which embodies the parameters of the peoples
trust. The notion of a public trust connotes accountability,221 hence, the various mechanisms in the Constitution
which are designed to exact accountability from public officers.
Among others, an accountability mechanism with which the proper expenditure of public funds may be checked is
the power of congressional oversight. As mentioned in Abakada,222 congressional oversight may be performed
either through: (a) scrutiny based primarily on Congress power of appropriation and the budget hearings
conducted in connection with it, its power to ask heads of departments to appear before and be heard by either of
its Houses on any matter pertaining to their departments and its power of confirmation;223 or (b) investigation and

monitoring of the implementation of laws pursuant to the power of Congress to conduct inquiries in aid of
legislation.224
The Court agrees with petitioners that certain features embedded in some forms of Congressional Pork Barrel,
among others the 2013 PDAF Article, has an effect on congressional oversight. The fact that individual legislators
are given post-enactment roles in the implementation of the budget makes it difficult for them to become
disinterested "observers" when scrutinizing, investigating or monitoring the implementation of the appropriation
law. To a certain extent, the conduct of oversight would be tainted as said legislators, who are vested with postenactment authority, would, in effect, be checking on activities in which they themselves participate. Also, it must
be pointed out that this very same concept of post-enactment authorization runs afoul of Section 14, Article VI of
the 1987 Constitution which provides that:
Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel before any court
of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he,
directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted
by the Government, or any subdivision, agency, or instrumentality thereof, including any government-owned or
controlled corporation, or its subsidiary, during his term of office. He shall not intervene in any matter before any
office of the Government for his pecuniary benefit or where he may be called upon to act on account of his office.
(Emphasis supplied)
Clearly, allowing legislators to intervene in the various phases of project implementation a matter before another
office of government renders them susceptible to taking undue advantage of their own office.
The Court, however, cannot completely agree that the same post-enactment authority and/or the individual
legislators control of his PDAF per se would allow him to perpetuate himself in office. Indeed, while the
Congressional Pork Barrel and a legislators use thereof may be linked to this area of interest, the use of his PDAF
for re-election purposes is a matter which must be analyzed based on particular facts and on a case-to-case basis.

Finally, while the Court accounts for the possibility that the close operational proximity between legislators and the
Executive department, through the formers post-enactment participation, may affect the process of impeachment,
this matter largely borders on the domain of politics and does not strictly concern the Pork Barrel Systems
intrinsic constitutionality. As such, it is an improper subject of judicial assessment.
In sum, insofar as its post-enactment features dilute congressional oversight and violate Section 14, Article VI of
the 1987 Constitution, thus impairing public accountability, the 2013 PDAF Article and other forms of
Congressional Pork Barrel of similar nature are deemed as unconstitutional.
4. Political Dynasties.
One of the petitioners submits that the Pork Barrel System enables politicians who are members of political
dynasties to accumulate funds to perpetuate themselves in power, in contravention of Section 26, Article II of the
1987 Constitution225 which states that:
Sec. 26. The State shall guarantee equal access to opportunities for public service, and prohibit political dynasties
as may be defined by law. (Emphasis and underscoring supplied)
At the outset, suffice it to state that the foregoing provision is considered as not self-executing due to the qualifying
phrase "as may be defined by law." In this respect, said provision does not, by and of itself, provide a judicially
enforceable constitutional right but merely specifies guideline for legislative or executive action.226Therefore, since
there appears to be no standing law which crystallizes the policy on political dynasties for enforcement, the Court
must defer from ruling on this issue.
In any event, the Court finds the above-stated argument on this score to be largely speculative since it has not been
properly demonstrated how the Pork Barrel System would be able to propagate political dynasties.
5. Local Autonomy.

The States policy on local autonomy is principally stated in Section 25, Article II and Sections 2 and 3, Article X
of the 1987 Constitution which read as follows:
ARTICLE II
Sec. 25. The State shall ensure the autonomy of local governments.
ARTICLE X
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and
accountable local government structure instituted through a system of decentralization with effective mechanisms
of recall, initiative, and referendum, allocate among the different local government units their powers,
responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term,
salaries, powers and functions and duties of local officials, and all other matters relating to the organization and
operation of the local units.
Pursuant thereto, Congress enacted RA 7160,227 otherwise known as the "Local Government Code of 1991" (LGC),
wherein the policy on local autonomy had been more specifically explicated as follows:
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and accountable local government structure
instituted through a system of decentralization whereby local government units shall be given more powers,
authority, responsibilities, and resources. The process of decentralization shall proceed from the National
Government to the local government units.
xxxx

(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic consultations
with appropriate local government units, nongovernmental and peoples organizations, and other concerned sectors
of the community before any project or program is implemented in their respective jurisdictions. (Emphases and
underscoring supplied)
The above-quoted provisions of the Constitution and the LGC reveal the policy of the State to empower local
government units (LGUs) to develop and ultimately, become self-sustaining and effective contributors to the
national economy. As explained by the Court in Philippine Gamefowl Commission v. Intermediate Appellate
Court:228
This is as good an occasion as any to stress the commitment of the Constitution to the policy of local autonomy
which is intended to provide the needed impetus and encouragement to the development of our local political
subdivisions as "self - reliant communities." In the words of Jefferson, "Municipal corporations are the small
republics from which the great one derives its strength." The vitalization of local governments will enable their
inhabitants to fully exploit their resources and more important, imbue them with a deepened sense of involvement
in public affairs as members of the body politic. This objective could be blunted by undue interference by the
national government in purely local affairs which are best resolved by the officials and inhabitants of such political
units. The decision we reach today conforms not only to the letter of the pertinent laws but also to the spirit of the
Constitution.229 (Emphases and underscoring supplied)
In the cases at bar, petitioners contend that the Congressional Pork Barrel goes against the constitutional principles
on local autonomy since it allows district representatives, who are national officers, to substitute their judgments in
utilizing public funds for local development.230 The Court agrees with petitioners.
Philconsa described the 1994 CDF as an attempt "to make equal the unequal" and that "it is also a recognition that
individual members of Congress, far more than the President and their congressional colleagues, are likely to be
knowledgeable about the needs of their respective constituents and the priority to be given each project."231Drawing
strength from this pronouncement, previous legislators justified its existence by stating that "the relatively small
projects implemented under the Congressional Pork Barrel complement and link the national development goals to

the countryside and grassroots as well as to depressed areas which are overlooked by central agencies which are
preoccupied with mega-projects.232 Similarly, in his August 23, 2013 speech on the "abolition" of PDAF and
budgetary reforms, President Aquino mentioned that the Congressional Pork Barrel was originally established for a
worthy goal, which is to enable the representatives to identify projects for communities that the LGU concerned
cannot afford.233
Notwithstanding these declarations, the Court, however, finds an inherent defect in the system which actually
belies the avowed intention of "making equal the unequal." In particular, the Court observes that the gauge of
PDAF and CDF allocation/division is based solely on the fact of office, without taking into account the specific
interests and peculiarities of the district the legislator represents. In this regard, the allocation/division limits are
clearly not based on genuine parameters of equality, wherein economic or geographic indicators have been taken
into consideration. As a result, a district representative of a highly-urbanized metropolis gets the same amount of
funding as a district representative of a far-flung rural province which would be relatively "underdeveloped"
compared to the former. To add, what rouses graver scrutiny is that even Senators and Party-List Representatives
and in some years, even the Vice-President who do not represent any locality, receive funding from the
Congressional Pork Barrel as well. These certainly are anathema to the Congressional Pork Barrels original intent
which is "to make equal the unequal." Ultimately, the PDAF and CDF had become personal funds under the
effective control of each legislator and given unto them on the sole account of their office.
The Court also observes that this concept of legislator control underlying the CDF and PDAF conflicts with the
functions of the various Local Development Councils (LDCs) which are already legally mandated to "assist the
corresponding sanggunian in setting the direction of economic and social development, and coordinating
development efforts within its territorial jurisdiction."234 Considering that LDCs are instrumentalities whose
functions are essentially geared towards managing local affairs,235 their programs, policies and resolutions should
not be overridden nor duplicated by individual legislators, who are national officers that have no law-making
authority except only when acting as a body. The undermining effect on local autonomy caused by the postenactment authority conferred to the latter was succinctly put by petitioners in the following wise:236

With PDAF, a Congressman can simply bypass the local development council and initiate projects on his own, and
even take sole credit for its execution. Indeed, this type of personality-driven project identification has not only
contributed little to the overall development of the district, but has even contributed to "further weakening
infrastructure planning and coordination efforts of the government."
Thus, insofar as individual legislators are authorized to intervene in purely local matters and thereby subvert
genuine local autonomy, the 2013 PDAF Article as well as all other similar forms of Congressional Pork Barrel is
deemed unconstitutional.
With this final issue on the Congressional Pork Barrel resolved, the Court now turns to the substantive issues
involving the Presidential Pork Barrel.
C. Substantive Issues on the Presidential Pork Barrel.
1. Validity of Appropriation.
Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of PD1869 (now, amended by PD 1993), which
respectively provide for the Malampaya Funds and the Presidential Social Fund, as invalid appropriations laws
since they do not have the "primary and specific" purpose of authorizing the release of public funds from the
National Treasury. Petitioners submit that Section 8 of PD 910 is not an appropriation law since the "primary and
specific purpose of PD 910 is the creation of an Energy Development Board and Section 8 thereof only created a
Special Fund incidental thereto.237 In similar regard, petitioners argue that Section 12 of PD 1869 is neither a valid
appropriations law since the allocation of the Presidential Social Fund is merely incidental to the "primary and
specific" purpose of PD 1869 which is the amendment of the Franchise and Powers of PAGCOR.238 In view of the
foregoing, petitioners suppose that such funds are being used without any valid law allowing for their proper
appropriation in violation of Section 29(1), Article VI of the 1987 Constitution which states that: "No money shall
be paid out of the Treasury except in pursuance of an appropriation made by law."239
The Court disagrees.

"An appropriation made by law under the contemplation of Section 29(1), Article VI of the 1987 Constitution
exists when a provision of law (a) sets apart a determinate or determinable240 amount of money and (b) allocates the
same for a particular public purpose. These two minimum designations of amount and purpose stem from the very
definition of the word "appropriation," which means "to allot, assign, set apart or apply to a particular use or
purpose," and hence, if written into the law, demonstrate that the legislative intent to appropriate exists. As the
Constitution "does not provide or prescribe any particular form of words or religious recitals in which an
authorization or appropriation by Congress shall be made, except that it be made by law," an appropriation law
may according to Philconsa be "detailed and as broad as Congress wants it to be" for as long as the intent to
appropriate may be gleaned from the same. As held in the case of Guingona, Jr.:241
There is no provision in our Constitution that provides or prescribes any particular form of words or religious
recitals in which an authorization or appropriation by Congress shall be made, except that it be "made by law,"
such as precisely the authorization or appropriation under the questioned presidential decrees. In other words, in
terms of time horizons, an appropriation may be made impliedly (as by past but subsisting legislations) as well as
expressly for the current fiscal year (as by enactment of laws by the present Congress), just as said appropriation
may be made in general as well as in specific terms. The Congressional authorization may be embodied in annual
laws, such as a general appropriations act or in special provisions of laws of general or special application which
appropriate public funds for specific public purposes, such as the questioned decrees. An appropriation measure is
sufficient if the legislative intention clearly and certainly appears from the language employed (In re Continuing
Appropriations, 32 P. 272), whether in the past or in the present. (Emphases and underscoring supplied)
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave:242
To constitute an appropriation there must be money placed in a fund applicable to the designated purpose. The
word appropriate means to allot, assign, set apart or apply to a particular use or purpose. An appropriation in the
sense of the constitution means the setting apart a portion of the public funds for a public purpose. No particular
form of words is necessary for the purpose, if the intention to appropriate is plainly manifested. (Emphases
supplied)

Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must be the "primary
and specific" purpose of the law in order for a valid appropriation law to exist. To reiterate, if a legal provision
designates a determinate or determinable amount of money and allocates the same for a particular public purpose,
then the legislative intent to appropriate becomes apparent and, hence, already sufficient to satisfy the requirement
of an "appropriation made by law" under contemplation of the Constitution.
Section 8 of PD 910 pertinently provides:
Section 8. Appropriations. x x x
All fees, revenues and receipts of the Board from any and all sources including receipts from service contracts and
agreements such as application and processing fees, signature bonus, discovery bonus, production bonus; all
money collected from concessionaires, representing unspent work obligations, fines and penalties under the
Petroleum Act of 1949; as well as the government share representing royalties, rentals, production share on service
contracts and similar payments on the exploration, development and exploitation of energy resources, shall form
part of a Special Fund to be used to finance energy resource development and exploitation programs and projects
of the government and for such other purposes as may be hereafter directed by the President. (Emphases supplied)
Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
Sec. 12. Special Condition of Franchise. After deducting five (5%) percent as Franchise Tax, the Fifty (50%)
percent share of the Government in the aggregate gross earnings of the Corporation from this Franchise, or 60% if
the aggregate gross earnings be less than P150,000,000.00 shall be set aside and shall accrue to the General Fund to
finance the priority infrastructure development projects and to finance the restoration of damaged or destroyed
facilities due to calamities, as may be directed and authorized by the Office of the President of the Philippines.
(Emphases supplied)
Analyzing the legal text vis--vis the above-mentioned principles, it may then be concluded that (a) Section 8 of
PD 910, which creates a Special Fund comprised of "all fees, revenues, and receipts of the Energy Development

Board from any and all sources" (a determinable amount) "to be used to finance energy resource development and
exploitation programs and projects of the government and for such other purposes as may be hereafter directed by
the President" (a specified public purpose), and (b) Section 12 of PD 1869, as amended by PD 1993, which
similarly sets aside, "after deducting five (5%) percent as Franchise Tax, the Fifty (50%) percent share of the
Government in the aggregate gross earnings of PAGCOR, or 60%, if the aggregate gross earnings be less
than P150,000,000.00" (also a determinable amount) "to finance the priority infrastructure development projects
and x x x the restoration of damaged or destroyed facilities due to calamities, as may be directed and authorized by
the Office of the President of the Philippines" (also a specified public purpose), are legal appropriations under
Section 29(1), Article VI of the 1987 Constitution.
In this relation, it is apropos to note that the 2013 PDAF Article cannot be properly deemed as a legal appropriation
under the said constitutional provision precisely because, as earlier stated, it contains post-enactment measures
which effectively create a system of intermediate appropriations. These intermediate appropriations are the actual
appropriations meant for enforcement and since they are made by individual legislators after the GAA is passed,
they occur outside the law. As such, the Court observes that the real appropriation made under the 2013 PDAF
Article is not the P24.79 Billion allocated for the entire PDAF, but rather the post-enactment determinations made
by the individual legislators which are, to repeat, occurrences outside of the law. Irrefragably, the 2013 PDAF
Article does not constitute an "appropriation made by law" since it, in its truest sense, only authorizes individual
legislators to appropriate in violation of the non-delegability principle as afore-discussed.
2. Undue Delegation.
On a related matter, petitioners contend that Section 8 of PD 910 constitutes an undue delegation of legislative
power since the phrase "and for such other purposes as may be hereafter directed by the President" gives the
President "unbridled discretion to determine for what purpose the funds will be used."243 Respondents, on the other
hand, urged the Court to apply the principle of ejusdem generis to the same section and thus, construe the phrase
"and for such other purposes as may be hereafter directed by the President" to refer only to other purposes related
"to energy resource development and exploitation programs and projects of the government."244

The Court agrees with petitioners submissions.

While the designation of a determinate or determinable amount for a particular public purpose is sufficient for a
legal appropriation to exist, the appropriation law must contain adequate legislative guidelines if the same law
delegates rule-making authority to the Executive245 either for the purpose of (a) filling up the details of the law for
its enforcement, known as supplementary rule-making, or (b) ascertaining facts to bring the law into actual
operation, referred to as contingent rule-making.246 There are two (2) fundamental tests to ensure that the legislative
guidelines for delegated rule-making are indeed adequate. The first test is called the "completeness test." Case law
states that a law is complete when it sets forth therein the policy to be executed, carried out, or implemented by the
delegate. On the other hand, the second test is called the "sufficient standard test." Jurisprudence holds that a law
lays down a sufficient standard when it provides adequate guidelines or limitations in the law to map out the
boundaries of the delegates authority and prevent the delegation from running riot.247To be sufficient, the standard
must specify the limits of the delegates authority, announce the legislative policy, and identify the conditions
under which it is to be implemented.248
In view of the foregoing, the Court agrees with petitioners that the phrase "and for such other purposes as may be
hereafter directed by the President" under Section 8 of PD 910 constitutes an undue delegation of legislative power
insofar as it does not lay down a sufficient standard to adequately determine the limits of the Presidents authority
with respect to the purpose for which the Malampaya Funds may be used. As it reads, the said phrase gives the
President wide latitude to use the Malampaya Funds for any other purpose he may direct and, in effect, allows him
to unilaterally appropriate public funds beyond the purview of the law. That the subject phrase may be confined
only to "energy resource development and exploitation programs and projects of the government" under the
principle of ejusdem generis, meaning that the general word or phrase is to be construed to include or be
restricted to things akin to, resembling, or of the same kind or class as those specifically mentioned,249 is belied
by three (3) reasons: first, the phrase "energy resource development and exploitation programs and projects of the
government" states a singular and general class and hence, cannot be treated as a statutory reference of specific
things from which the general phrase "for such other purposes" may be limited; second, the said phrase also
exhausts the class it represents, namely energy development programs of the government;250 and, third, the
Executive department has, in fact, used the Malampaya Funds for non-energy related purposes under the subject

phrase, thereby contradicting respondents own position that it is limited only to "energy resource development and
exploitation programs and projects of the government."251 Thus, while Section 8 of PD 910 may have passed the
completeness test since the policy of energy development is clearly deducible from its text, the phrase "and for
such other purposes as may be hereafter directed by the President" under the same provision of law should
nonetheless be stricken down as unconstitutional as it lies independently unfettered by any sufficient standard of
the delegating law. This notwithstanding, it must be underscored that the rest of Section 8, insofar as it allows for
the use of the Malampaya Funds "to finance energy resource development and exploitation programs and projects
of the government," remains legally effective and subsisting. Truth be told, the declared unconstitutionality of the
aforementioned phrase is but an assurance that the Malampaya Funds would be used as it should be used only
in accordance with the avowed purpose and intention of PD 910.
As for the Presidential Social Fund, the Court takes judicial notice of the fact that Section 12 of PD 1869 has
already been amended by PD 1993 which thus moots the parties submissions on the same.252 Nevertheless, since
the amendatory provision may be readily examined under the current parameters of discussion, the Court proceeds
to resolve its constitutionality.
Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that the Presidential Social Fund may be used
"to first, finance the priority infrastructure development projects and second, to finance the restoration of damaged
or destroyed facilities due to calamities, as may be directed and authorized by the Office of the President of the
Philippines." The Court finds that while the second indicated purpose adequately curtails the authority of the
President to spend the Presidential Social Fund only for restoration purposes which arise from calamities, the first
indicated purpose, however, gives him carte blanche authority to use the same fund for any infrastructure project he
may so determine as a "priority". Verily, the law does not supply a definition of "priority in frastructure
development projects" and hence, leaves the President without any guideline to construe the same. To note, the
delimitation of a project as one of "infrastructure" is too broad of a classification since the said term could pertain
to any kind of facility. This may be deduced from its lexicographic definition as follows: "the underlying
framework of a system, especially public services and facilities (such as highways, schools, bridges, sewers, and
water-systems) needed to support commerce as well as economic and residential development."253In fine, the
phrase "to finance the priority infrastructure development projects" must be stricken down as unconstitutional since

 similar to the above-assailed provision under Section 8 of PD 910 it lies independently unfettered by any
sufficient standard of the delegating law. As they are severable, all other provisions of Section 12 of PD 1869, as
amended by PD 1993, remains legally effective and subsisting.
D. Ancillary Prayers. 1.
Petitioners Prayer to be Furnished Lists and Detailed Reports.
Aside from seeking the Court to declare the Pork Barrel System unconstitutional as the Court did so in the
context of its pronouncements made in this Decision petitioners equally pray that the Executive Secretary and/or
the DBM be ordered to release to the CoA and to the public: (a) "the complete schedule/list of legislators who have
availed of their PDAF and VILP from the years 2003 to 2013, specifying the use of the funds, the project or
activity and the recipient entities or individuals, and all pertinent data thereto" (PDAF Use Schedule/List);254 and
(b) "the use of the Executives lump-sum, discretionary funds, including the proceeds from the x x x Malampaya
Funds and remittances from the PAGCOR x x x from 2003 to 2013, specifying the x x x project or activity and the
recipient entities or individuals, and all pertinent data thereto"255 (Presidential Pork Use Report). Petitioners prayer
is grounded on Section 28, Article II and Section 7, Article III of the 1987 Constitution which read as follows:
ARTICLE II
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
ARTICLE III Sec. 7.
The right of the people to information on matters of public concern shall be recognized. Access to official records,
and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may
be provided by law.

The Court denies petitioners submission.

Case law instructs that the proper remedy to invoke the right to information is to file a petition for mandamus. As
explained in the case of Legaspi v. Civil Service Commission:256
While the manner of examining public records may be subject to reasonable regulation by the government agency
in custody thereof, the duty to disclose the information of public concern, and to afford access to public records
cannot be discretionary on the part of said agencies. Certainly, its performance cannot be made contingent upon the
discretion of such agencies. Otherwise, the enjoyment of the constitutional right may be rendered nugatory by any
whimsical exercise of agency discretion. The constitutional duty, not being discretionary, its performance may be
compelled by a writ of mandamus in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us, the public right to be enforced and the
concomitant duty of the State are unequivocably set forth in the Constitution.
The decisive question on the propriety of the issuance of the writ of mandamus in this case is, whether the
information sought by the petitioner is within the ambit of the constitutional guarantee. (Emphases supplied)
Corollarily, in the case of Valmonte v. Belmonte Jr.257 (Valmonte), it has been clarified that the right to information
does not include the right to compel the preparation of "lists, abstracts, summaries and the like." In the same case,
it was stressed that it is essential that the "applicant has a well -defined, clear and certain legal right to the thing
demanded and that it is the imperative duty of defendant to perform the act required." Hence, without the foregoing
substantiations, the Court cannot grant a particular request for information. The pertinent portions of Valmonte are
hereunder quoted:258
Although citizens are afforded the right to information and, pursuant thereto, are entitled to "access to official
records," the Constitution does not accord them a right to compel custodians of official records to prepare lists,
abstracts, summaries and the like in their desire to acquire information on matters of public concern.

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

In fine, petitioners are entitled to access to the documents evidencing loans granted by the GSIS, subject to
reasonable regulations that the latter may promulgate relating to the manner and hours of examination, to the end
that damage to or loss of the records may be avoided, that undue interference with the duties of the custodian of the
records may be prevented and that the right of other persons entitled to inspect the records may be insured Legaspi
v. Civil Service Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil. 383, 387. The petition, as to the
second and third alternative acts sought to be done by petitioners, is meritorious.
However, the same cannot be said with regard to the first act sought by petitioners, i.e.,
"to furnish petitioners the list of the names of the Batasang Pambansa members belonging to the UNIDO and PDPLaban who were able to secure clean loans immediately before the February 7 election thru the
intercession/marginal note of the then First Lady Imelda Marcos."
The Court, therefore, applies the same treatment here.
2. Petitioners Prayer to Include Matters in Congressional Deliberations.
Petitioners further seek that the Court "order the inclusion in budgetary deliberations with the Congress of all
presently, off-budget, lump sum, discretionary funds including but not limited to, proceeds from the x x x
Malampaya Fund, remittances from the PAGCOR and the PCSO or the Executives Social Funds." 260
Suffice it to state that the above-stated relief sought by petitioners covers a matter which is generally left to the
prerogative of the political branches of government. Hence, lest the Court itself overreach, it must equally deny
their prayer on this score.
3. Respondents Prayer to Lift TRO; Consequential Effects of Decision.
The final issue to be resolved stems from the interpretation accorded by the DBM to the concept of released funds.
In response to the Courts September 10, 2013 TRO that enjoined the release of the remaining PDAF allocated for

the year 2013, the DBM issued Circular Letter No. 2013-8 dated September 27, 2013 (DBM Circular 2013-8)
which pertinently reads as follows:
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a Special Allotment Release Order
(SARO) has been issued by the DBM and such SARO has been obligated by the implementing agencies prior to
the issuance of the TRO, may continually be implemented and disbursements thereto effected by the agencies
concerned.
Based on the text of the foregoing, the DBM authorized the continued implementation and disbursement of PDAF
funds as long as they are: first, covered by a SARO; and, second, that said SARO had been obligated by the
implementing agency concerned prior to the issuance of the Courts September 10, 2013 TRO.
Petitioners take issue with the foregoing circular, arguing that "the issuance of the SARO does not yet involve the
release of funds under the PDAF, as release is only triggered by the issuance of a Notice of Cash Allocation
[(NCA)]."261 As such, PDAF disbursements, even if covered by an obligated SARO, should remain enjoined.
For their part, respondents espouse that the subject TRO only covers "unreleased and unobligated allotments."
They explain that once a SARO has been issued and obligated by the implementing agency concerned, the PDAF
funds covered by the same are already "beyond the reach of the TRO because they cannot be considered as
remaining PDAF." They conclude that this is a reasonable interpretation of the TRO by the DBM.262
The Court agrees with petitioners in part.
At the outset, it must be observed that the issue of whether or not the Courts September 10, 2013 TRO should be
lifted is a matter rendered moot by the present Decision. The unconstitutionality of the 2013 PDAF Article as
declared herein has the consequential effect of converting the temporary injunction into a permanent one. Hence,
from the promulgation of this Decision, the release of the remaining PDAF funds for 2013, among others, is now
permanently enjoined.

The propriety of the DBMs interpretation of the concept of "release" must, nevertheless, be resolved as it has a
practical impact on the execution of the current Decision. In particular, the Court must resolve the issue of whether
or not PDAF funds covered by obligated SAROs, at the time this Decision is promulgated, may still be disbursed
following the DBMs interpretation in DBM Circular 2013-8.
On this score, the Court agrees with petitioners posturing for the fundamental reason that funds covered by an
obligated SARO are yet to be "released" under legal contemplation. A SARO, as defined by the DBM itself in its
website, is "aspecific authority issued to identified agencies to incur obligations not exceeding a given amount
during a specified period for the purpose indicated. It shall cover expenditures the release of which is subject to
compliance with specific laws or regulations, or is subject to separate approval or clearance by competent
authority."263
Based on this definition, it may be gleaned that a SARO only evinces the existence of an obligation and not the
directive to pay. Practically speaking, the SARO does not have the direct and immediate effect of placing public
funds beyond the control of the disbursing authority. In fact, a SARO may even be withdrawn under certain
circumstances which will prevent the actual release of funds. On the other hand, the actual release of funds is
brought about by the issuance of the NCA,264 which is subsequent to the issuance of a SARO. As may be
determined from the statements of the DBM representative during the Oral Arguments:265
Justice Bernabe: Is the notice of allocation issued simultaneously with the SARO?
xxxx
Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal for the agencies to obligate or to enter into
commitments. The NCA, Your Honor, is already the go signal to the treasury for us to be able to pay or to liquidate
the amounts obligated in the SARO; so it comes after. x x x The NCA, Your Honor, is the go signal for the MDS
for the authorized government-disbursing banks to, therefore, pay the payees depending on the projects or projects
covered by the SARO and the NCA.

Justice Bernabe: Are there instances that SAROs are cancelled or revoked?
Atty. Ruiz: Your Honor, I would like to instead submit that there are instances that the SAROs issued are
withdrawn by the DBM.
Justice Bernabe: They are withdrawn?
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)
Thus, unless an NCA has been issued, public funds should not be treated as funds which have been "released." In
this respect, therefore, the disbursement of 2013 PDAF funds which are only covered by obligated SAROs, and
without any corresponding NCAs issued, must, at the time of this Decisions promulgation, be enjoined and
consequently reverted to the unappropriated surplus of the general fund. Verily, in view of the declared
unconstitutionality of the 2013 PDAF Article, the funds appropriated pursuant thereto cannot be disbursed even
though already obligated, else the Court sanctions the dealing of funds coming from an unconstitutional source.
This same pronouncement must be equally applied to (a) the Malampaya Funds which have been obligated but not
released meaning, those merely covered by a SARO under the phrase "and for such other purposes as may be
hereafter directed by the President" pursuant to Section 8 of PD 910; and (b) funds sourced from the Presidential
Social Fund under the phrase "to finance the priority infrastructure development projects" pursuant to Section 12 of
PD 1869, as amended by PD 1993, which were altogether declared by the Court as unconstitutional. However,
these funds should not be reverted to the general fund as afore-stated but instead, respectively remain under the
Malampaya Funds and the Presidential Social Fund to be utilized for their corresponding special purposes not
otherwise declared as unconstitutional.
E. Consequential Effects of Decision.
As a final point, it must be stressed that the Courts pronouncement anent the unconstitutionality of (a) the 2013
PDAF Article and its Special Provisions, (b) all other Congressional Pork Barrel provisions similar thereto, and (c)

the phrases (1) "and for such other purposes as may be hereafter directed by the President" under Section 8 of PD
910, and (2) "to finance the priority infrastructure development projects" under Section 12 of PD 1869, as amended
by PD 1993, must only be treated as prospective in effect in view of the operative fact doctrine.
To explain, the operative fact doctrine exhorts the recognition that until the judiciary, in an appropriate case,
declares the invalidity of a certain legislative or executive act, such act is presumed constitutional and thus, entitled
to obedience and respect and should be properly enforced and complied with. As explained in the recent case of
Commissioner of Internal Revenue v. San Roque Power Corporation,266 the doctrine merely "reflects awareness
that precisely because the judiciary is the governmental organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication."267 "In the language of an
American Supreme Court decision: The actual existence of a statute, prior to such a determination of
unconstitutionality, is an operative fact and may have consequences which cannot justly be ignored."268
For these reasons, this Decision should be heretofore applied prospectively.
Conclusion
The Court renders this Decision to rectify an error which has persisted in the chronicles of our history. In the final
analysis, the Court must strike down the Pork Barrel System as unconstitutional in view of the inherent defects in
the rules within which it operates. To recount, insofar as it has allowed legislators to wield, in varying gradations,
non-oversight, post-enactment authority in vital areas of budget execution, the system has violated the principle of
separation of powers; insofar as it has conferred unto legislators the power of appropriation by giving them
personal, discretionary funds from which they are able to fund specific projects which they themselves determine,
it has similarly violated the principle of non-delegability of legislative power ; insofar as it has created a system of
budgeting wherein items are not textualized into the appropriations bill, it has flouted the prescribed procedure of
presentment and, in the process, denied the President the power to veto items ; insofar as it has diluted the
effectiveness of congressional oversight by giving legislators a stake in the affairs of budget execution, an aspect of

governance which they may be called to monitor and scrutinize, the system has equally impaired public
accountability ; insofar as it has authorized legislators, who are national officers, to intervene in affairs of purely
local nature, despite the existence of capable local institutions, it has likewise subverted genuine local autonomy ;
and again, insofar as it has conferred to the President the power to appropriate funds intended by law for energyrelated purposes only to other purposes he may deem fit as well as other public funds under the broad classification
of "priority infrastructure development projects," it has once more transgressed the principle of non-delegability.
For as long as this nation adheres to the rule of law, any of the multifarious unconstitutional methods and
mechanisms the Court has herein pointed out should never again be adopted in any system of governance, by any
name or form, by any semblance or similarity, by any influence or effect. Disconcerting as it is to think that a
system so constitutionally unsound has monumentally endured, the Court urges the people and its co-stewards in
government to look forward with the optimism of change and the awareness of the past. At a time of great civic
unrest and vociferous public debate, the Court fervently hopes that its Decision today, while it may not purge all
the wrongs of society nor bring back what has been lost, guides this nation to the path forged by the Constitution so
that no one may heretofore detract from its cause nor stray from its course. After all, this is the Courts bounden
duty and no others.
WHEREFORE, the petitions are PARTLY GRANTED. In view of the constitutional violations discussed in this
Decision, the Court hereby declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b) all legal
provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and
the various Congressional Insertions, which authorize/d legislators whether individually or collectively organized
into committees to intervene, assume or participate in any of the various post-enactment stages of the budget
execution, such as but not limited to the areas of project identification, modification and revision of project
identification, fund release and/or fund realignment, unrelated to the power of congressional oversight; (c) all legal
provisions of past and present Congressional Pork Barrel Laws, such as the previous PDAF and CDF Articles and
the various Congressional Insertions, which confer/red personal, lump-sum allocations to legislators from which
they are able to fund specific projects which they themselves determine; (d) all informal practices of similar import
and effect, which the Court similarly deems to be acts of grave abuse of discretion amounting to lack or excess of
jurisdiction; and (e) the phrases (1) "and for such other purposes as may be hereafter directed by the President"

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

Finally, the Court hereby DIRECTS all prosecutorial organs of the government to, within the bounds of reasonable
dispatch, investigate and accordingly prosecute all government officials and/or private individuals for possible
criminal offenses related to the irregular, improper and/or unlawful disbursement/utilization of all funds under the
Pork Barrel System.
This Decision is immediately executory but prospective in effect.
SO ORDERED.

G.R. No. 209287

July 1, 2014

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

TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON,
PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN,
GABRIELA WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAY AN
MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY GENERAL OF

BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E.

CRISOSTOMO, CHAIRPERSON, ANAKBAYAN; VICTOR VILLANUEVA, CONVENOR, YOUTH ACT
NOW, Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF
THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209135
AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,
vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET
AND MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A CITY AS THE
SENATE PRESIDENT OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. No. 209136
MANUELITO R. LUNA, Petitioner,
vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT
OF BUDGET AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS
OFFICIAL CAPACITY AS ALTER EGO OF THE PRESIDENT, Respondents.
x-----------------------x

G.R. No. 209155

ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner,
vs.
THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY
OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, Respondents.
x-----------------------x
G.R. No. 209164
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN
M. BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B.
ABAD, Respondents.
x-----------------------x
G.R. No. 209260
INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,
vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT
(DBM),Respondent.
x-----------------------x
G.R. No. 209442

GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L.
GONZALEZ,Petitioners,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES,
REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF
REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO BELMONTE, JR.; THE
EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.;
THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY SECRETARY
FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY CESAR V.
PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE
LEON, Respondents.
x-----------------------x
G.R. No. 209517
CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT
EMPLOYEES (COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO
DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT OF
THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING AUTHORITY (CUENHA);
MANUEL BACLAGON, FOR HIMSELF AND AS PRESIDENT OF THE SOCIAL WELFARE
EMPLOYEES ASSOCIATION OF THE PHILIPPINES, DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO); ANTONIA PASCUAL, FOR HERSELF
AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF AGRARIAN REFORM EMPLOYEES
ASSOCIATION (DAREA); ALBERT MAGALANG, FOR HIMSELF AND AS PRESIDENT OF THE
ENVIRONMENT AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL
ARABA, FOR HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG
MGA KAW ANI NG MMDA (KKKMMDA), Petitioners,
vs.

BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;

PAQUITO OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY
OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209569
VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE L.
JIMENEZ,Petitioner,
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
BERSAMIN, J.:
For resolution are the consolidated petitions assailing the constitutionality of the Disbursement Acceleration
Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of the Department of Budget and
Management (DBM) implementing the DAP.
At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision of the
fundamental law that firmly ordains that "[n]o money shall be paid out of the Treasury except in pursuance of an
appropriation made by law." The tenor and context of the challenges posed by the petitioners against the DAP
indicate that the DAP contravened this provision by allowing the Executive to allocate public money pooled from
programmed and unprogrammed funds of its various agencies in the guise of the President exercising his
constitutional authority under Section 25(5) of the 1987 Constitution to transfer funds out of savings to augment

the appropriations of offices within the Executive Branch of the Government. But the challenges are further
complicated by the interjection of allegations of transfer of funds to agencies or offices outside of the Executive.
Antecedents
What has precipitated the controversy?
On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the Philippines
to reveal that some Senators, including himself, had been allotted an additional P50 Million each as "incentive" for
voting in favor of the impeachment of Chief Justice Renato C. Corona.
Responding to Sen. Estradas revelation, Secretary Florencio Abad of the DBM issued a public statement entitled
Abad: Releases to Senators Part of Spending Acceleration Program,1 explaining that the funds released to the
Senators had been part of the DAP, a program designed by the DBM to ramp up spending to accelerate economic
expansion. He clarified that the funds had been released to the Senators based on their letters of request for
funding; and that it was not the first time that releases from the DAP had been made because the DAP had already
been instituted in 2011 to ramp up spending after sluggish disbursements had caused the growth of the gross
domestic product (GDP) to slow down. He explained that the funds under the DAP were usually taken from (1)
unreleased appropriations under Personnel Services;2 (2) unprogrammed funds; (3) carry-over appropriations
unreleased from the previous year; and (4) budgets for slow-moving items or projects that had been realigned to
support faster-disbursing projects.
The DBM soon came out to claim in its website3 that the DAP releases had been sourced from savings generated
by the Government, and from unprogrammed funds; and that the savings had been derived from (1) the pooling of
unreleased appropriations, like unreleased Personnel Services4 appropriations that would lapse at the end of the
year, unreleased appropriations of slow-moving projects and discontinued projects per zero based budgeting
findings;5 and (2) the withdrawal of unobligated allotments also for slow-moving programs and projects that had
been earlier released to the agencies of the National Government.

The DBM listed the following as the legal bases for the DAPs use of savings,6 namely: (1) Section 25(5), Article
VI of the 1987 Constitution, which granted to the President the authority to augment an item for his office in the
general appropriations law; (2) Section 49 (Authority to Use Savings for Certain Purposes) and Section 38
(Suspension of Expenditure Appropriations), Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative
Code of 1987); and (3) the General Appropriations Acts (GAAs) of 2011, 2012 and 2013, particularly their
provisions on the (a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of
savings.
As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special provisions on
unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.
The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to the consciousness
of the Nation for the first time, and made this present controversy inevitable. That the issues against the DAP came
at a time when the Nation was still seething in anger over Congressional pork barrel "an appropriation of
government spending meant for localized projects and secured solely or primarily to bring money to a
representatives district"7 excited the Nation as heatedly as the pork barrel controversy.
Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP were filed within
days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013; G.R. No. 209136 (Luna), on
October 7, 2013; G.R. No. 209155 (Villegas),8 on October 16, 2013; G.R. No. 209164 (PHILCONSA), on October
8, 2013; G.R. No. 209260 (IBP), on October 16, 2013; G.R. No. 209287 (Araullo), on October 17, 2013; G.R. No.
209442 (Belgica), on October 29, 2013; G.R. No. 209517 (COURAGE), on November6, 2013; and G.R. No.
209569 (VACC), on November 8, 2013.
In G.R. No. 209287 (Araullo), the petitioners brought to the Courts attention NBC No. 541 (Adoption of
Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of June 30, 2012), alleging
that NBC No. 541, which was issued to implement the DAP, directed the withdrawal of unobligated allotments as
of June 30, 2012 of government agencies and offices with low levels of obligations, both for continuing and current
allotments.

In due time, the respondents filed their Consolidated Comment through the Office of the Solicitor General (OSG).
The Court directed the holding of oral arguments on the significant issues raised and joined.
Issues
Under the Advisory issued on November 14, 2013, the presentations of the parties during the oral arguments were
limited to the following, to wit:
Procedural Issue:
A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the constitutionality and
validity of the Disbursement Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and all other
executive issuances allegedly implementing the DAP. Subsumed in this issue are whether there is a controversy
ripe for judicial determination, and the standing of petitioners.
Substantive Issues:
B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides: "No money shall be
paid out of the Treasury except in pursuance of an appropriation made by law."
C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP
violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:
(a)They treat the unreleased appropriations and unobligated allotments withdrawn from government
agencies as "savings" as the term is used in Sec. 25(5), in relation to the provisions of the GAAs of
2011, 2012 and 2013;
(b)They authorize the disbursement of funds for projects or programs not provided in the GAAs for
the Executive Department; and

(c)They "augment" discretionary lump sum appropriations in the GAAs.

D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and balances, and
(3) the principle of public accountability enshrined in the 1987 Constitution considering that it authorizes the
release of funds upon the request of legislators.
E. Whether or not factual and legal justification exists to issue a temporary restraining order to restrain the
implementation of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP.
In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to support its argument
regarding the Presidents power to spend. During the oral arguments, the propriety of releasing unprogrammed
funds to support projects under the DAP was considerably discussed. The petitioners in G.R. No. 209287 (Araullo)
and G.R. No. 209442 (Belgica) dwelled on unprogrammed funds in their respective memoranda. Hence, an
additional issue for the oral arguments is stated as follows:
F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.
During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to submit a list of savings
brought under the DAP that had been sourced from (a) completed programs; (b) discontinued or abandoned
programs; (c) unpaid appropriations for compensation; (d) a certified copy of the Presidents directive dated June
27, 2012 referred to in NBC No. 541; and (e) all circulars or orders issued in relation to the DAP.9
In compliance, the OSG submitted several documents, as follows:
(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment);10
(2) Circulars and orders, which the respondents identified as related to the DAP, namely:
a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);

b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY 2012);
c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure Withdrawal of
Agencies Unobligated Allotments as of June 30, 2012);
d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);
e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of
Commitments/Obligations of the National Government);
f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the Submission
of Quarterly Accountability Reports on Appropriations, Allotments, Obligations and Disbursements);
g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in the
Government).
(3) A breakdown of the sources of savings, including savings from discontinued projects and unpaid
appropriations for compensation from 2011 to 2013
On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014 directing the
respondents to submit the documents not yet submitted in compliance with the directives of the Court or its
Members, submitted several evidence packets to aid the Court in understanding the factual bases of the DAP, to
wit:
(1) First Evidence Packet11 containing seven memoranda issued by the DBM through Sec. Abad, inclusive
of annexes, listing in detail the 116 DAP identified projects approved and duly signed by the President, as
follows:
a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed Disbursement
Acceleration Program (Projects and Sources of Funds);

b. Memorandum for the President dated December 12, 2011 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and its Realignment);
c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment);
d. Memorandum for the President dated September 4, 2012 (Release of funds for other priority
projects and expenditures of the Government);
e. Memorandum for the President dated December 19, 2012 (Proposed Priority Projects and
Expenditures of the Government);
f. Memorandum for the President dated May 20, 2013 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment to Fund the Quarterly Disbursement Acceleration
Program); and
g. Memorandum for the President dated September 25, 2013 (Funding for the Task Force Pablo
Rehabilitation Plan).
(2) Second Evidence Packet12 consisting of 15 applications of the DAP, with their corresponding Special
Allotment Release Orders (SAROs) and appropriation covers;
(3) Third Evidence Packet13 containing a list and descriptions of 12 projects under the DAP;
(4) Fourth Evidence Packet14 identifying the DAP-related portions of the Annual Financial Report (AFR)
of the Commission on Audit for 2011 and 2012;
(5) Fifth Evidence Packet15 containing a letter of Department of Transportation and
Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the withdrawal of funds
from his agency, inclusive of annexes; and

(6) Sixth Evidence Packet16 a print-out of the Solicitor Generals visual presentation for the January 28,
2014 oral arguments.
On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet,18 which listed the sources of funds
brought under the DAP, the uses of such funds per project or activity pursuant to DAP, and the legal bases thereof.
On February 14, 2014, the OSG submitted another set of documents in further compliance with the Resolution
dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the revenue collections
exceeded the original revenue targets for the years 2011, 2012 and 2013, including collections arising from sources
not considered in the original revenue targets, which certifications were required for the release of the
unprogrammed funds as provided in Special Provision No. 1 of Article XLV, Article XVI, and Article XLV of the
2011, 2012 and 2013 GAAs; and (2) A report on releases of savings of the Executive Department for the use of the
Constitutional Commissions and other branches of the Government, as well as the fund releases to the Senate and
the Commission on Elections (COMELEC).
RULING
I.
Procedural Issue:
a) The petitions under Rule 65 are proper remedies
All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the issuance of writs of
preliminary prohibitory injunction or temporary restraining orders. More specifically, the nature of the petitions is
individually set forth hereunder, to wit:

G.R. No. 209135 (Syjuco)

Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna)

Certiorariand Prohibition

G.R. No. 209155 (Villegas)

Certiorariand Prohibition

G.R. No. 209164 (PHILCONSA)

Certiorariand Prohibition

G.R. No. 209260 (IBP)

Prohibition

G.R. No. 209287 (Araullo)

Certiorariand Prohibition

G.R. No. 209442 (Belgica)

Certiorari

G.R. No. 209517 (COURAGE)

Certiorari and Prohibition

G.R. No. 209569 (VACC)

Certiorari and Prohibition

The respondents submit that there is no actual controversy that is ripe for adjudication in the absence of adverse
claims between the parties;19 that the petitioners lacked legal standing to sue because no allegations were made to
the effect that they had suffered any injury as a result of the adoption of the DAP and issuance of NBC No. 541;
that their being taxpayers did not immediately confer upon the petitioners the legal standing to sue considering that
the adoption and implementation of the DAP and the issuance of NBC No. 541 were not in the exercise of the
taxing or spending power of Congress;20 and that even if the petitioners had suffered injury, there were plain,
speedy and adequate remedies in the ordinary course of law available to them, like assailing the regularity of the
DAP and related issuances before the Commission on Audit (COA) or in the trial courts.21
The respondents aver that the special civil actions of certiorari and prohibition are not proper actions for directly
assailing the constitutionality and validity of the DAP, NBC No. 541, and the other executive issuances
implementing the DAP.22
In their memorandum, the respondents further contend that there is no authorized proceeding under the
Constitution and the Rules of Court for questioning the validity of any law unless there is an actual case or

controversy the resolution of which requires the determination of the constitutional question; that the jurisdiction of
the Court is largely appellate; that for a court of law to pass upon the constitutionality of a law or any act of the
Government when there is no case or controversy is for that court to set itself up as a reviewer of the acts of
Congress and of the President in violation of the principle of separation of powers; and that, in the absence of a
pending case or controversy involving the DAP and NBC No. 541, any decision herein could amount to a mere
advisory opinion that no court can validly render.23
The respondents argue that it is the application of the DAP to actual situations that the petitioners can question
either in the trial courts or in the COA; that if the petitioners are dissatisfied with the ruling either of the trial courts
or of the COA, they can appeal the decision of the trial courts by petition for review on certiorari, or assail the
decision or final order of the COA by special civil action for certiorari under Rule 64 of the Rules of Court.24
The respondents arguments and submissions on the procedural issue are bereft of merit.
Section 1, Article VIII of the 1987 Constitution expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established
by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.
Thus, the Constitution vests judicial power in the Court and in such lower courts as may be established by law. In
creating a lower court, Congress concomitantly determines the jurisdiction of that court, and that court, upon its
creation, becomes by operation of the Constitution one of the repositories of judicial power.25 However, only the
Court is a constitutionally created court, the rest being created by Congress in its exercise of the legislative power.

The Constitution states that judicial power includes the duty of the courts of justice not only "to settle actual
controversies involving rights which are legally demandable and enforceable" but also "to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government." It has thereby expanded the concept of judicial power, which up to then was
confined to its traditional ambit of settling actual controversies involving rights that were legally demandable and
enforceable.
The background and rationale of the expansion of judicial power under the 1987 Constitution were laid out during
the deliberations of the 1986 Constitutional Commission by Commissioner Roberto R. Concepcion (a former Chief
Justice of the Philippines) in his sponsorship of the proposed provisions on the Judiciary, where he said:
The Supreme Court, like all other courts, has one main function: to settle actual controversies involving conflicts of
rights which are demandable and enforceable. There are rights which are guaranteed by law but cannot be enforced
by a judicial party. In a decided case, a husband complained that his wife was unwilling to perform her duties as a
wife. The Court said: "We can tell your wife what her duties as such are and that she is bound to comply with them,
but we cannot force her physically to discharge her main marital duty to her husband. There are some rights
guaranteed by law, but they are so personal that to enforce them by actual compulsion would be highly derogatory
to human dignity." This is why the first part of the second paragraph of Section 1 provides that: Judicial power
includes the duty of courts to settle actual controversies involving rights which are legally demandable or
enforceable
The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a presidential system of
government, the Supreme Court has, also, another important function. The powers of government are generally
considered divided into three branches: the Legislative, the Executive and the Judiciary. Each one is supreme
within its own sphere and independent of the others. Because of that supremacy power to determine whether a
given law is valid or not is vested in courts of justice.
Briefly stated, courts of justice determine the limits of power of the agencies and offices of the government as well
as those of its officers. In other words, the judiciary is the final arbiter on the question whether or not a branch of

government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to
constitute an abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a
judicial power but a duty to pass judgmenton matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the duty to
settle matters of this nature, by claiming that such matters constitute a political question. (Bold emphasis
supplied)26
Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of judicial power in
the following manner:
MR. NOLLEDO. x x x
The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice to settle actual
controversies" The term "actual controversies" according to the Commissioner should refer to questions which
are political in nature and, therefore, the courts should not refuse to decide those political questions. But do I
understand it right that this is restrictive or only an example? I know there are cases which are not actual yet the
court can assume jurisdiction. An example is the petition for declaratory relief.
May I ask the Commissioners opinion about that?
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments.
MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested in the Supreme
Court alone but also in other lower courts as may be created by law.
MR. CONCEPCION. Yes.
MR. NOLLEDO. And so, is this only an example?

MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions with
jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a question as to
whether the government had authority or had abused its authority to the extent of lacking jurisdiction or excess of
jurisdiction, that is not a political question. Therefore, the court has the duty to decide.27
Our previous Constitutions equally recognized the extent of the power of judicial review and the great
responsibility of the Judiciary in maintaining the allocation of powers among the three great branches of
Government. Speaking for the Court in Angara v. Electoral Commission,28 Justice Jose P. Laurel intoned:
x x x In times of social disquietude or political excitement, the great landmarks of the Constitution are apt to be
forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial department is the only constitutional
organ which can be called upon to determine the proper allocation of powers between the several department and
among the integral or constituent units thereof.
xxxx
The Constitution is a definition of the powers of government. Who is to determine the nature, scope and extent of
such powers? The Constitution itself has provided for the instrumentality of the judiciary as the rational way. And
when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other
department; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and
sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and
guarantees to them. This is in truth all that is involved in what is termed "judicial supremacy" which properly is the
power of judicial review under the Constitution. x x x29

What are the remedies by which the grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government may be determined under the Constitution?
The present Rules of Court uses two special civil actions for determining and correcting grave abuse of discretion
amounting to lack or excess of jurisdiction. These are the special civil actions for certiorari and prohibition, and
both are governed by Rule 65. A similar remedy of certiorari exists under Rule 64, but the remedy is expressly
applicable only to the judgments and final orders or resolutions of the Commission on Elections and the
Commission on Audit.
The ordinary nature and function of the writ of certiorari in our present system are aptly explained in Delos Santos
v. Metropolitan Bank and Trust Company:30
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of Chancery,
or the Kings Bench, commanding agents or officers of the inferior courts to return the record of a cause pending
before them, so as to give the party more sure and speedy justice, for the writ would enable the superior court to
determine from an inspection of the record whether the inferior courts judgment was rendered without authority.
The errors were of such a nature that, if allowed to stand, they would result in a substantial injury to the petitioner
to whom no other remedy was available. If the inferior court acted without authority, the record was then revised
and corrected in matters of law. The writ of certiorari was limited to cases in which the inferior court was said to be
exceeding its jurisdiction or was not proceeding according to essential requirements of law and would lie only to
review judicial or quasi-judicial acts.
The concept of the remedy of certiorari in our judicial system remains much the same as it has been in the common
law. In this jurisdiction, however, the exercise of the power to issue the writ of certiorari is largely regulated by
laying down the instances or situations in the Rules of Court in which a superior court may issue the writ of
certiorari to an inferior court or officer. Section 1, Rule 65 of the Rules of Court compellingly provides the
requirements for that purpose, viz:
xxxx

The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the commission of
grave abuse of discretion amounting to lack of jurisdiction. In this regard, mere abuse of discretion is not enough to
warrant the issuance of the writ. The abuse of discretion must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by reason of passion or personal hostility, or
that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty
enjoined or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial or quasijudicial powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction.31
Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be distinguished
from prohibition by the fact that it is a corrective remedy used for the re-examination of some action of an inferior
tribunal, and is directed to the cause or proceeding in the lower court and not to the court itself, while prohibition is
a preventative remedy issuing to restrain future action, and is directed to the court itself.32 The Court expounded on
the nature and function of the writ of prohibition in Holy Spirit Homeowners Association, Inc. v. Defensor:33
A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a quasi-legislative
function. Prohibition is an extraordinary writ directed against any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, ordering said entity or person to desist from
further proceedings when said proceedings are without or in excess of said entitys or persons jurisdiction, or are
accompanied with grave abuse of discretion, and there is no appeal or any other plain, speedy and adequate remedy
in the ordinary course of law. Prohibition lies against judicial or ministerial functions, but not against legislative or
quasi-legislative functions. Generally, the purpose of a writ of prohibition is to keep a lower court within the limits
of its jurisdiction in order to maintain the administration of justice in orderly channels. Prohibition is the proper
remedy to afford relief against usurpation of jurisdiction or power by an inferior court, or when, in the exercise of
jurisdiction in handling matters clearly within its cognizance the inferior court transgresses the bounds prescribed
to it by the law, or where there is no adequate remedy available in the ordinary course of law by which such relief
can be obtained. Where the principal relief sought is to invalidate an IRR, petitioners remedy is an ordinary action
for its nullification, an action which properly falls under the jurisdiction of the Regional Trial Court. In any case,
petitioners allegation that "respondents are performing or threatening to perform functions without or in excess of

their jurisdiction" may appropriately be enjoined by the trial court through a writ of injunction or a temporary
restraining order.
With respect to the Court, however, the remedies of certiorari and prohibition are necessarily broader in scope and
reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not only by
a tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions but also to set
right, undo and restrain any act of grave abuse of discretion amounting to lack or excess of jurisdiction by any
branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or
ministerial functions. This application is expressly authorized by the text of the second paragraph of Section 1,
supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to review
and/or prohibit or nullify the acts of legislative and executive officials.34
Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of grave abuse of
discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, the
Court is not at all precluded from making the inquiry provided the challenge was properly brought by interested or
affected parties. The Court has been thereby entrusted expressly or by necessary implication with both the duty and
the obligation of determining, in appropriate cases, the validity of any assailed legislative or executive action. This
entrustment is consistent with the republican system of checks and balances.35
Following our recent dispositions concerning the congressional pork barrel, the Court has become more alert to
discharge its constitutional duty. We will not now refrain from exercising our expanded judicial power in order to
review and determine, with authority, the limitations on the Chief Executives spending power.
b) Requisites for the exercise of the
power of judicial review were
complied with

The requisites for the exercise of the power of judicial review are the following, namely: (1) there must bean actual
case or justiciable controversy before the Court; (2) the question before the Court must be ripe for adjudication; (3)
the person challenging the act must be a proper party; and (4) the issue of constitutionality must be raised at the
earliest opportunity and must be the very litis mota of the case.36
The first requisite demands that there be an actual case calling for the exercise of judicial power by the Court.37 An
actual case or controversy, in the words of Belgica v. Executive Secretary Ochoa:38
x x x is one which involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial
resolution as distinguished from a hypothetical or abstract difference or dispute. In other words, "[t]here must be a
contrariety of legal rights that can be interpreted and enforced on the basis of existing law and jurisprudence."
Related to the requirement of an actual case or controversy is the requirement of "ripeness," meaning that the
questions raised for constitutional scrutiny are already ripe for adjudication. "A question is ripe for adjudication
when the act being challenged has had a direct adverse effect on the individual challenging it. It is a prerequisite
that something had then been accomplished or performed by either branch before a court may come into the
picture, and the petitioner must allege the existence of an immediate or threatened injury to itself as a result of the
challenged action." "Withal, courts will decline to pass upon constitutional issues through advisory opinions, bereft
as they are of authority to resolve hypothetical or moot questions."
An actual and justiciable controversy exists in these consolidated cases. The incompatibility of the perspectives of
the parties on the constitutionality of the DAP and its relevant issuances satisfy the requirement for a conflict
between legal rights. The issues being raised herein meet the requisite ripeness considering that the challenged
executive acts were already being implemented by the DBM, and there are averments by the petitioners that such
implementation was repugnant to the letter and spirit of the Constitution. Moreover, the implementation of the
DAP entailed the allocation and expenditure of huge sums of public funds. The fact that public funds have been
allocated, disbursed or utilized by reason or on account of such challenged executive acts gave rise, therefore, to an
actual controversy that is ripe for adjudication by the Court.

It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the DAP as a program had
been meanwhile discontinued because it had fully served its purpose, saying: "In conclusion, Your Honors, may I
inform the Court that because the DAP has already fully served its purpose, the Administrations economic
managers have recommended its termination to the President. x x x."39
The Solicitor General then quickly confirmed the termination of the DAP as a program, and urged that its
termination had already mooted the challenges to the DAPs constitutionality, viz:
DAP as a program, no longer exists, thereby mooting these present cases brought to challenge its constitutionality.
Any constitutional challenge should no longer be at the level of the program, which is now extinct, but at the level
of its prior applications or the specific disbursements under the now defunct policy. We challenge the petitioners to
pick and choose which among the 116 DAP projects they wish to nullify, the full details we will have provided by
February 5. We urge this Court to be cautious in limiting the constitutional authority of the President and the
Legislature to respond to the dynamic needs of the country and the evolving demands of governance, lest we end
up straight jacketing our elected representatives in ways not consistent with our constitutional structure and
democratic principles.40
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so
that a declaration thereon would be of no practical use or value.41
The Court cannot agree that the termination of the DAP as a program was a supervening event that effectively
mooted these consolidated cases. Verily, the Court had in the past exercised its power of judicial review despite the
cases being rendered moot and academic by supervening events, like: (1) when there was a grave violation of the
Constitution; (2) when the case involved a situation of exceptional character and was of paramount public interest;
(3) when the constitutional issue raised required the formulation of controlling principles to guide the Bench, the
Bar and the public; and (4) when the case was capable of repetition yet evading review.42

Assuming that the petitioners several submissions against the DAP were ultimately sustained by the Court here,
these cases would definitely come under all the exceptions. Hence, the Court should not abstain from exercising its
power of judicial review.
Did the petitioners have the legal standing to sue?
Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance in a court of justice
on a given question."43 The concept of legal standing, or locus standi, was particularly discussed in De Castro v.
Judicial and Bar Council,44 where the Court said:
In public or constitutional litigations, the Court is often burdened with the determination of the locus standi of the
petitioners due to the ever-present need to regulate the invocation of the intervention of the Court to correct any
official action or policy in order to avoid obstructing the efficient functioning of public officials and offices
involved in public service. It is required, therefore, that the petitioner must have a personal stake in the outcome of
the controversy, for, as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court
so largely depends for illumination of difficult constitutional questions." Accordingly, it has been held that the
interest of a person assailing the constitutionality of a statute must be direct and personal. He must be able to show,
not only that the law or any government act is invalid, but also that he sustained or is in imminent danger of
sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be denied some right or privilege
to which he is lawfully entitled or that he is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for determining whether
a petitioner in a public action had locus standi. There, the Court held that the person who would assail the validity
of a statute must have "a personal and substantial interest in the case such that he has sustained, or will sustain

direct injury as a result." Vera was followed in Custodio v. President of the Senate, Manila Race Horse Trainers
Association v. De la Fuente, Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public
Works.
Yet, the Court has also held that the requirement of locus standi, being a mere procedural technicality, can be
waived by the Court in the exercise of its discretion. For instance, in 1949, in Araneta v. Dinglasan, the Court
liberalized the approach when the cases had "transcendental importance." Some notable controversies whose
petitioners did not pass the direct injury test were allowed to be treated in the same way as in Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues raised by the
petition due to their "far reaching implications," even if the petitioner had no personality to file the suit. The liberal
approach of Aquino v. Commission on Elections has been adopted in several notable cases, permitting ordinary
citizens, legislators, and civic organizations to bring their suits involving the constitutionality or validity of laws,
regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly illegal or unconstitutional
executive or legislative action rests on the theory that the petitioner represents the public in general. Although such
petitioner may not be as adversely affected by the action complained against as are others, it is enough that he
sufficiently demonstrates in his petition that he is entitled to protection or relief from the Court in the vindication of
a public right.
Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus standi. That is not
surprising, for even if the issue may appear to concern only the public in general, such capacities nonetheless equip
the petitioner with adequate interest to sue. In David v. Macapagal-Arroyo, the Court aptly explains why:
Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public actions. The distinction
was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a taxpayers suit is in a different
category from the plaintiff in a citizens suit. In the former, the plaintiff is affected by the expenditure of public
funds, while in the latter, he is but the mere instrument of the public concern. As held by the New York Supreme

Court in People ex rel Case v. Collins: "In matter of mere public right, howeverthe people are the real partiesIt
is at least the right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued
and punished, and that a public grievance be remedied." With respect to taxpayers suits, Terr v. Jordan held that
"the right of a citizen and a taxpayer to maintain an action in courts to restrain the unlawful use of public funds to
his injury cannot be denied."45
The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co., Inc.46 that "[s]tanding is
a peculiar concept in constitutional law because in some cases, suits are not brought by parties who have been
personally injured by the operation of a law or any other government act but by concerned citizens, taxpayers or
voters who actually sue in the public interest."
Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their capacities as
taxpayers who, by averring that the issuance and implementation of the DAP and its relevant issuances involved
the illegal disbursements of public funds, have an interest in preventing the further dissipation of public funds. The
petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert their right as citizens to sue for
the enforcement and observance of the constitutional limitations on the political branches of the Government.47
On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring cases upon
constitutional issues.48 Luna, the petitioner in G.R. No. 209136, cites his additional capacity as a lawyer. The IBP,
the petitioner in G.R. No. 209260, stands by "its avowed duty to work for the rule of law and of paramount
importance of the question in this action, not to mention its civic duty as the official association of all lawyers in
this country."49
Under their respective circumstances, each of the petitioners has established sufficient interest in the outcome of
the controversy as to confer locus standi on each of them.
In addition, considering that the issues center on the extent of the power of the Chief Executive to disburse and
allocate public funds, whether appropriated by Congress or not, these cases pose issues that are of transcendental
importance to the entire Nation, the petitioners included. As such, the determination of such important issues call

for the Courts exercise of its broad and wise discretion "to waive the requirement and so remove the impediment
to its addressing and resolving the serious constitutional questions raised."50
II.
Substantive Issues
1.
Overview of the Budget System
An understanding of the Budget System of the Philippines will aid the Court in properly appreciating and justly
resolving the substantive issues.
a) Origin of the Budget System
The term "budget" originated from the Middle English word bouget that had derived from the Latin word bulga
(which means bag or purse).51
In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined "budget" as the financial
program of the National Government for a designated fiscal year, consisting of the statements of estimated receipts
and expenditures for the fiscal year for which it was intended to be effective based on the results of operations
during the preceding fiscal years. The term was given a different meaning under Republic Act No. 992 (Revised
Budget Act) by describing the budget as the delineation of the services and products, or benefits that would accrue
to the public together with the estimated unit cost of each type of service, product or benefit.52 For a forthright
definition, budget should simply be identified as the financial plan of the Government,53 or "the master plan of
government."54
The concept of budgeting has not been the product of recent economies. In reality, financing public goals and
activities was an idea that existed from the creation of the State.55 To protect the people, the territory and
sovereignty of the State, its government must perform vital functions that required public expenditures. At the

beginning, enormous public expenditures were spent for war activities, preservation of peace and order, security,
administration of justice, religion, and supply of limited goods and services.56 In order to finance those
expenditures, the State raised revenues through taxes and impositions.57 Thus, budgeting became necessary to
allocate public revenues for specific government functions.58 The States budgeting mechanism eventually
developed through the years with the growing functions of its government and changes in its market economy.
The Philippine Budget System has been greatly influenced by western public financial institutions. This is because
of the countrys past as a colony successively of Spain and the United States for a long period of time. Many
aspects of the countrys public fiscal administration, including its Budget System, have been naturally patterned
after the practices and experiences of the western public financial institutions. At any rate, the Philippine Budget
System is presently guided by two principal objectives that are vital to the development of a progressive
democratic government, namely: (1) to carry on all government activities under a comprehensive fiscal plan
developed, authorized and executed in accordance with the Constitution, prevailing statutes and the principles of
sound public management; and (2) to provide for the periodic review and disclosure of the budgetary status of the
Government in such detail so that persons entrusted by law with the responsibility as well as the enlightened
citizenry can determine the adequacy of the budget actions taken, authorized or proposed, as well as the true
financial position of the Government.59
b) Evolution of the Philippine Budget System
The budget process in the Philippines evolved from the early years of the American Regime up to the passage of
the Jones Law in 1916. A Budget Office was created within the Department of Finance by the Jones Law to
discharge the budgeting function, and was given the responsibility to assist in the preparation of an executive
budget for submission to the Philippine Legislature.60
As early as under the 1935 Constitution, a budget policy and a budget procedure were established, and
subsequently strengthened through the enactment of laws and executive acts.61 EO No. 25, issued by President
Manuel L. Quezon on April 25, 1936, created the Budget Commission to serve as the agency that carried out the
Presidents responsibility of preparing the budget.62 CA No. 246, the first budget law, went into effect on January 1,

1938 and established the Philippine budget process. The law also provided a line-item budget as the framework of
the Governments budgeting system,63 with emphasis on the observance of a "balanced budget" to tie up proposed
expenditures with existing revenues.
CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act (RA) No. 992,whereby
Congress introduced performance-budgeting to give importance to functions, projects and activities in terms of
expected results.64 RA No. 992 also enhanced the role of the Budget Commission as the fiscal arm of the
Government.65
The 1973 Constitution and various presidential decrees directed a series of budgetary reforms that culminated in
the enactment of PD No. 1177 that President Marcos issued on July30, 1977, and of PD No. 1405, issued on June
11, 1978. The latter decree converted the Budget Commission into the Ministry of Budget, and gave its head the
rank of a Cabinet member.
The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under EO No. 711. The
OBM became the DBM pursuant to EO No. 292 effective on November 24, 1989.
c) The Philippine Budget Cycle66
Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget Legislation;
(3) Budget Execution; and (4) Accountability. Each phase is distinctly separate from the others but they overlap in
the implementation of the budget during the budget year.
c.1.Budget Preparation67
The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The Budget Call
contains budget parameters earlier set by the Development Budget Coordination Committee (DBCC) as well as
policy guidelines and procedures to aid government agencies in the preparation and submission of their budget
proposals. The Budget Call is of two kinds, namely: (1) a National Budget Call, which is addressed to all agencies,

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

Public or government expenditures are generally classified into two categories, specifically: (1) capital
expenditures or outlays; and (2) current operating expenditures. Capital expenditures are the expenses whose
usefulness lasts for more than one year, and which add to the assets of the Government, including investments in
the capital of government-owned or controlled corporations and their subsidiaries.69 Current operating expenditures
are the purchases of goods and services in current consumption the benefit of which does not extend beyond the
fiscal year.70 The two components of current expenditures are those for personal services (PS), and those for
maintenance and other operating expenses(MOOE).
Public expenditures are also broadly grouped according to their functions into: (1) economic development
expenditures (i.e., expenditures on agriculture and natural resources, transportation and communications,
commerce and industry, and other economic development efforts);71 (2) social services or social development
expenditures (i.e., government outlay on education, public health and medicare, labor and welfare and others);72(3)
general government or general public services expenditures (i.e., expenditures for the general government,
legislative services, the administration of justice, and for pensions and gratuities);73 (4) national defense
expenditures (i.e., sub-divided into national security expenditures and expenditures for the maintenance of peace
and order);74 and (5) public debt.75
Public expenditures may further be classified according to the nature of funds, i.e., general fund, special fund or
bond fund.76
On the other hand, public revenues complement public expenditures and cover all income or receipts of the
government treasury used to support government expenditures.77
Classical economist Adam Smith categorized public revenues based on two principal sources, stating: "The
revenue which must defraythe necessary expenses of government may be drawn either, first from some fund
which peculiarly belongs to the sovereign or commonwealth, and which is independent of the revenue of the
people, or, secondly, from the revenue of the people."78 Adam Smiths classification relied on the two aspects of the
nature of the State: first, the State as a juristic person with an artificial personality, and, second, the State as a
sovereign or entity possessing supreme power. Under the first aspect, the State could hold property and engage in

trade, thereby deriving what is called its quasi private income or revenues, and which "peculiarly belonged to the
sovereign." Under the second aspect, the State could collect by imposing charges on the revenues of its subjects in
the form of taxes.79
In the Philippines, public revenues are generally derived from the following sources, to wit: (1) tax revenues(i.e.,
compulsory contributions to finance government activities); 80 (2) capital revenues(i.e., proceeds from sales of
fixed capital assets or scrap thereof and public domain, and gains on such sales like sale of public lands, buildings
and other structures, equipment, and other properties recorded as fixed assets); 81 (3) grants(i.e., voluntary
contributions and aids given to the Government for its operation on specific purposes in the form of money and/or
materials, and do not require any monetary commitment on the part of the recipient);82 (4) extraordinary
income(i.e., repayment of loans and advances made by government corporations and local governments and the
receipts and shares in income of the Banko Sentral ng Pilipinas, and other receipts);83 and (5) public
borrowings(i.e., proceeds of repayable obligations generally with interest from domestic and foreign creditors of
the Government in general, including the National Government and its political subdivisions).84
More specifically, public revenues are classified as follows:85

1.
2.
3.
4.
5.

General Income
Subsidy Income from National
Government
Subsidy from Central Office
Subsidy from Regional
Office/Staff Bureaus
Income from Government
Services
Income from Government
Business Operations

1.
2.
3.
4.
5.
7.

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

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

Sales Revenue
Rent Income
Insurance Income
Dividend Income
Interest Income
Sale of Confiscated Goods and
Properties
Foreign Exchange (FOREX)
Gains
Miscellaneous Operating and
Service Income
Fines and Penalties-Government
Services and Business Operations
Income from Grants and
Donations

c.2. Budget Legislation86

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

examine the PAPs of the departments and agencies. Thereafter, the House of Representatives drafts the General
Appropriations Bill (GAB).87
The GABis sponsored, presented and defended by the House of Representatives Appropriations Committee and
Sub-Committees in plenary session. As with other laws, the GAB is approved on Third Reading before the House
of Representatives version is transmitted to the Senate.88
After transmission, the Senate conducts its own committee hearings on the GAB. To expedite proceedings, the
Senate may conduct its committee hearings simultaneously with the House of Representatives deliberations. The
Senates Finance Committee and its Sub-Committees may submit the proposed amendments to the GAB to the
plenary of the Senate only after the House of Representatives has formally transmitted its version to the Senate.
The Senate version of the GAB is likewise approved on Third Reading.89
The House of Representatives and the Senate then constitute a panel each to sit in the Bicameral Conference
Committee for the purpose of discussing and harmonizing the conflicting provisions of their versions of the GAB.
The "harmonized" version of the GAB is next presented to the President for approval.90 The President reviews the
GAB, and prepares the Veto Message where budget items are subjected to direct veto,91 or are identified for
conditional implementation.
If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the ensuing fiscal year, the
GAA for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the GAB is
passed by the Congress.92
c.3. Budget Execution93
With the GAA now in full force and effect, the next step is the implementation of the budget. The Budget
Execution Phase is primarily the function of the DBM, which is tasked to perform the following procedures,
namely: (1) to issue the programs and guidelines for the release of funds; (2) to prepare an Allotment and Cash
Release Program; (3) to release allotments; and (4) to issue disbursement authorities.

The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this, the various
departments and agencies are required to submit Budget Execution Documents(BED) to outline their plans and
performance targets by laying down the physical and financial plan, the monthly cash program, the estimate of
monthly income, and the list of obligations that are not yet due and demandable.
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release Program (CRP).The ARP
sets a limit for allotments issued in general and to a specific agency. The CRP fixes the monthly, quarterly and
annual disbursement levels.
Allotments, which authorize an agency to enter into obligations, are issued by the DBM. Allotments are lesser in
scope than appropriations, in that the latter embrace the general legislative authority to spend. Allotments may be
released in two forms through a comprehensive Agency Budget Matrix (ABM),94 or, individually, by SARO.95
Armed with either the ABM or the SARO, agencies become authorized to incur obligations96 on behalf of the
Government in order to implement their PAPs. Obligations may be incurred in various ways, like hiring of
personnel, entering into contracts for the supply of goods and services, and using utilities.
In order to settle the obligations incurred by the agencies, the DBM issues a disbursement authority so that cash
may be allocated in payment of the obligations. A cash or disbursement authority that is periodically issued is
referred to as a Notice of Cash Allocation (NCA),97 which issuance is based upon an agencys submission of its
Monthly Cash Program and other required documents. The NCA specifies the maximum amount of cash that can
be withdrawn from a government servicing bank for the period indicated. Apart from the NCA, the DBM may
issue a Non-Cash Availment Authority(NCAA) to authorize non-cash disbursements, or a Cash Disbursement
Ceiling(CDC) for departments with overseas operations to allow the use of income collected by their foreign posts
for their operating requirements.
Actual disbursement or spending of government funds terminates the Budget Execution Phase and is usually
accomplished through the Modified Disbursement Scheme under which disbursements chargeable against the
National Treasury are coursed through the government servicing banks.

c.4. Accountability98
Accountability is a significant phase of the budget cycle because it ensures that the government funds have been
effectively and efficiently utilized to achieve the States socio-economic goals. It also allows the DBM to assess the
performance of agencies during the fiscal year for the purpose of implementing reforms and establishing new
policies.
An agencys accountability may be examined and evaluated through (1) performance targets and outcomes; (2)
budget accountability reports; (3) review of agency performance; and (4) audit conducted by the Commission on
Audit(COA).
2.
Nature of the DAP as a fiscal plan
a. DAP was a program designed to
promote economic growth
Policy is always a part of every budget and fiscal decision of any Administration.99 The national budget the
Executive prepares and presents to Congress represents the Administrations "blueprint for public policy" and
reflects the Governments goals and strategies.100 As such, the national budget becomes a tangible representation of
the programs of the Government in monetary terms, specifying therein the PAPs and services for which specific
amounts of public funds are proposed and allocated.101 Embodied in every national budget is government
spending.102
When he assumed office in the middle of 2010, President Aquino made efficiency and transparency in government
spending a significant focus of his Administration. Yet, although such focus resulted in an improved fiscal deficit of
0.5% in the gross domestic product (GDP) from January to July of 2011, it also unfortunately decelerated
government project implementation and payment schedules.103 The World Bank observed that the Philippines

economic growth could be reduced, and potential growth could be weakened should the Government continue with
its underspending and fail to address the large deficiencies in infrastructure.104 The economic situation prevailing in
the middle of 2011 thus paved the way for the development and implementation of the DAP as a stimulus package
intended to fast-track public spending and to push economic growth by investing on high-impact budgetary PAPs
to be funded from the "savings" generated during the year as well as from unprogrammed funds.105 In that respect,
the DAP was the product of "plain executive policy-making" to stimulate the economy by way of accelerated
spending.106 The Administration would thereby accelerate government spending by: (1) streamlining the
implementation process through the clustering of infrastructure projects of the Department of Public Works and
Highways (DPWH) and the Department of Education (DepEd),and (2) front loading PPP-related projects107 due for
implementation in the following year.108
Did the stimulus package work?
The March 2012 report of the World Bank,109 released after the initial implementation of the DAP, revealed that the
DAP was partially successful. The disbursements under the DAP contributed 1.3 percentage points to GDP growth
by the fourth quarter of 2011.110 The continued implementation of the DAP strengthened growth by 11.8% year on
year while infrastructure spending rebounded from a 29% contraction to a 34% growth as of September 2013.111
The DAP thus proved to be a demonstration that expenditure was a policy instrument that the Government could
use to direct the economies towards growth and development.112 The Government, by spending on public
infrastructure, would signify its commitment of ensuring profitability for prospective investors.113 The PAPs funded
under the DAP were chosen for this reason based on their: (1) multiplier impact on the economy and infrastructure
development; (2) beneficial effect on the poor; and (3) translation into disbursements.114
b. History of the implementation of
the DAP, and sources of funds
under the DAP

How the Administrations economic managers conceptualized and developed the DAP, and finally presented it to
the President remains unknown because the relevant documents appear to be scarce.
The earliest available document relating to the genesis of the DAP was the memorandum of October 12,2011 from
Sec. Abad seeking the approval of the President to implement the proposed DAP. The memorandum, which
contained a list of the funding sources for P72.11 billion and of the proposed priority projects to be
funded,115 reads:
MEMORANDUM FOR THE PRESIDENT
xxxx
SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS AND
SOURCES OF FUNDS)
DATE: OCTOBER 12, 2011
Mr. President, this is to formally confirm your approval of the Disbursement Acceleration Program totaling P72.11
billion. We are already working with all the agencies concerned for the immediate execution of the projects therein.
A. Fund Sources for the Acceleration Program

Fund Sources

FY 2011
Unreleased

Amount
(In
million
Php)
30,000

Description

Unreleased Personnel
Services (PS)

Action
Requested
Declare as
savings and

Personal
Services (PS)
Appropriations

appropriations which
will lapse at the end of
FY 2011 but may be
pooled as savings and
realigned for priority
programs that require
immediate funding

approve/
authorize its
use
for the 2011
Disbursement
Acceleration
Program

FY 2011
Unreleased
Appropriations

482

Unreleased
appropriations (slow
moving projects and
programs for
discontinuance)

FY 2010
Unprogrammed
Fund

12,336

Supported by the GFI

Dividends

Approve and
authorize its
use
for the 2011
Disbursement
Acceleration
Program

FY 2010
Carryover
Appropriation

21,544

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

With prior
approval from
the President in
November
2010
to declare as

FY 2011
Budget
items for
realignment

7,748

TOTAL

72.110

Budgeting
Initiative

savings and
with
authority to use
for priority
projects

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

For
information

B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)
GOCCs and GFIs
Agency/Project
(SARO and NCA Release)

Allotment
(in Million
Php)

1. LRTA: Rehabilitation of LRT 1 and 2

2. NHA:
a. Resettlement of North Triangle residents to
Camarin A7
b. Housing for BFP/BJMP
c. On-site development for families living
along dangerous
d. Relocation sites for informal settlers
along Iloilo River and its tributaries
3. PHIL. HEART CENTER: Upgrading of
ageing physical plant and medical equipment
4. CREDIT INFO CORP: Establishment of
centralized credit information system

5. PIDS: purchase of land to relocate the PIDS

office and building construction

6. HGC: Equity infusion for credit insurance

and mortgage guaranty operations of HGC
7. PHIC: Obligations incurred (premium

1,868
11,050
450
500
10,000
100
357
75

100

400

1,496

subsidy for indigent families) in January-June

2010, booked for payment in Jul[y] Dec
2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
pay the full amount.
8. Philpost: Purchase of foreclosed property.
Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege
9. BSP: First equity infusion out of Php 40B
capitalization under the BSP Law

10. PCMC: Capital and Equipment Renovation

11. LCOP:
a. Pediatric Pulmonary Program
b. Bio-regenerative Technology Program
(Stem-Cell Research subject to legal
review and presentation)
12. TIDCORP: NG Equity infusion
TOTAL

644

10,000

280

105
35
70
570

26,945

NGAs/LGUs
Agency/Project

Allotment
(SARO)
Cash
(In
Requirement
Million
(NCA)
Php)

13. DOF-BIR: NPSTAR

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

758

758

14. COA: IT infrastructure

program and hiring of
additional litigational experts

144

144

15. DND-PAF: On Base Housing

Facilities and Communication
Equipment

30

30

2,959

2,223

1,629

1,629

16. DA:
a. Irrigation, FMRs and
Integrated Community Based MultiSpecies
Hatchery and Aquasilvi
Farming

b. Mindanao Rural
Development Project

919

183

411

411

1,293

1,293

1,293

132
5,432

18. DBM: Conduct of National

Survey of
Farmers/Fisherfolks/Ips

625

625

19. DOJ: Operating requirements

of 50 investigation agents and
15 state attorneys

11

11

20. DOT: Preservation of the Cine

Corregidor Complex

25

25

1,819

1,819

425

425

c. NIA Agno River Integrated

Irrigation Project
17. DAR:
a. Agrarian Reform
Communities Project 2
b. Landowners Compensation

21. OPAPP: Activities for Peace

Process (PAMANA- Project
details: budget breakdown,
implementation plan, and
conditions on fund release
attached as Annex B)
22. DOST

a. Establishment of National
Meterological and Climate
Center
b. Enhancement of Doppler
Radar Network for National
Weather Watch, Accurate
Forecasting and Flood Early
Warning

275

275

190

190

2,800

2,800

24. OEO-FDCP: Establishment of

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

20

20

25. DPWH: Various infrastructure

projects

5,500

5,500

26. DepEd/ERDT/DOST: Thin

Client Cloud Computing
Project

270

270

27. DOH: Hiring of nurses and

midwives

294

294

23. DOF-BOC: To settle the

principal obligations with
PDIC consistent with the
agreement with the CISS and
SGS

28. TESDA: Training Program in

partnership with BPO industry
and other sectors

1,100

1,100

29. DILG: Performance Challenge

Fund (People Empowered
Community Driven
Development with DSWD and
NAPC)

250

50

30. ARMM: Comprehensive Peace

and Development Intervention

8,592

8,592

31. DOTC-MRT: Purchase of

additional MRT cars

4,500

32. LGU Support Fund

6,500

6,500

33. Various Other Local Projects

6,500

6,500

750

750

45,165

44,000

34. Development Assistance to the

Province of Quezon
TOTAL
C. Summary
Fund Sources
Identified for
Approval

Allotments
for Release

Cash
Requirements for

(In Million
Php)
Total

72,110

Release in FY
2011
72,110

70,895

GOCCs

26,895

26,895

NGAs/LGUs

45,165

44,000

For His Excellencys Consideration

(Sgd.) FLORENCIO B. ABAD
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
OCT 12, 2011
The memorandum of October 12, 2011 was followed by another memorandum for the President dated December
12, 2011116 requesting omnibus authority to consolidate the savings and unutilized balances for fiscal year 2011.
Pertinent portions of the memorandum of December 12, 2011 read:
MEMORANDUM FOR THE PRESIDENT
xxxx
SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment

DATE: December 12, 2011

This is to respectfully request for the grant of Omnibus Authority to consolidate savings/unutilized balances in FY
2011 corresponding to completed or discontinued projects which may be pooled to fund additional projects or
expenditures.
In addition, Mr. President, this measure will allow us to undertake projects even if their implementation carries
over to 2012 without necessarily impacting on our budget deficit cap next year.
BACKGROUND
1.0 The DBM, during the course of performance reviews conducted on the agencies operations,
particularly on the implementation of their projects/activities, including expenses incurred in
undertaking the same, have identified savings out of the 2011 General Appropriations Act. Said
savings correspond to completed or discontinued projects under certain departments/agencies which
may be pooled, for the following:
1.1 to provide for new activities which have not been anticipated during preparation of the
budget;
1.2 to augment additional requirements of on-going priority projects; and
1.3 to provide for deficiencies under the Special Purpose Funds, e.g., PDAF, Calamity Fund,
Contingent Fund
1.4 to cover for the modifications of the original allotment class allocation as a result of ongoing priority projects and implementation of new activities
2.0 x x x x

2.1 x x x
2.2 x x x
ON THE UTILIZATION OF POOLED SAVINGS
3.0 It may be recalled that the President approved our request for omnibus authority to pool
savings/unutilized balances in FY 2010 last November 25, 2010.
4.0 It is understood that in the utilization of the pooled savings, the DBM shall secure the
corresponding approval/confirmation of the President. Furthermore, it is assured that the proposed
realignments shall be within the authorized Expenditure level.
5.0 Relative thereto, we have identified some expenditure items that may be sourced from the said
pooled appropriations in FY 2010 that will expire on December 31, 2011 and appropriations in FY
2011 that may be declared as savings to fund additional expenditures.
5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to be spent for the
projects that we have identified to be immediate actual disbursements considering that this same
fund source will expire on December 31, 2011.
5.2 With respect to the proposed expenditure items to be funded from the FY 2011 Unreleased
Appropriations, most of these are the same projects for which the DBM is directed by the Office
of the President, thru the Executive Secretary, to source funds.
6.0 Among others, the following are such proposed additional projects that have been chosen given
their multiplier impact on economy and infrastructure development, their beneficial effect on the poor,
and their translation into disbursements. Please note that we have classified the list of proposed
projects as follows:

7.0 x x x
FOR THE PRESIDENTS APPROVAL
8.0 Foregoing considered, may we respectfully request for the Presidents approval for the following:
8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized balances and its
realignment; and
8.2 The proposed additional projects identified for funding.
For His Excellencys consideration and approval.
(Sgd.)
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
DEC 21, 2011
Substantially identical requests for authority to pool savings and to fund proposed projects were contained in
various other memoranda from Sec. Abad dated June 25, 2012,117 September 4, 2012,118 December 19, 2012,119May
20, 2013,120 and September 25, 2013.121 The President apparently approved all the requests, withholding approval
only of the proposed projects contained in the June 25, 2012 memorandum, as borne out by his marginal note
therein to the effect that the proposed projects should still be "subject to further discussions."122

In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541 (Adoption of Operational
Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of June 30, 2012),123 reproduced herein
as follows:
NATIONAL BUDGET CIRCULAR No. 541
July 18, 2012
TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the National
Government, Budget and Planning Officers; Heads of Accounting Units and All Others Concerned
SUBJECT : Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of
June 30, 2012
1.0 Rationale
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987), periodically reviews
and evaluates the departments/agencies efficiency and effectiveness in utilizing budgeted funds for the delivery of
services and production of goods, consistent with the government priorities.
In the event that a measure is necessary to further improve the operational efficiency of the government, the
President is authorized to suspend or stop further use of funds allotted for any agency or expenditure authorized in
the General Appropriations Act. Withdrawal and pooling of unutilized allotment releases can be effected by DBM
based on authority of the President, as mandated under Sections 38 and 39, Chapter 5, Book VI of EO 292.
For the first five months of 2012, the National Government has not met its spending targets. In order to accelerate
spending and sustain the fiscal targets during the year, expenditure measures have to be implemented to optimize
the utilization of available resources.

Departments/agencies have registered low spending levels, in terms of obligations and disbursements per initial
review of their 2012 performance. To enhance agencies performance, the DBM conducts continuous consultation
meetings and/or send call-up letters, requesting them to identify slow-moving programs/projects and the
factors/issues affecting their performance (both pertaining to internal systems and those which are outside the
agencies spheres of control). Also, they are asked to formulate strategies and improvement plans for the rest of
2012.
Notwithstanding these initiatives, some departments/agencies have continued to post low obligation levels as of
end of first semester, thus resulting to substantial unobligated allotments.
In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of unobligated
allotments of agencies with low levels of obligations as of June 30, 2012, both for continuing and current
allotments. This measure will allow the maximum utilization of available allotments to fund and undertake other
priority expenditures of the national government.
2.0 Purpose
2.1 To provide the conditions and parameters on the withdrawal of unobligated allotments of agencies
as of June 30, 2012 to fund priority and/or fast-moving programs/projects of the national government;
2.2 To prescribe the reports and documents to be used as bases on the withdrawal of said unobligated
allotments; and
2.3 To provide guidelines in the utilization or reallocation of the withdrawn allotments.
3.0 Coverage
3.1 These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 of all
national government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A.
No.10147) and FY 2012 Current Appropriation (R.A. No. 10155), pertaining to:

3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of
programs and projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by the
agencies concerned based on their updated/validated list of pensioners.
3.2 The withdrawal of unobligated allotments may cover the identified programs, projects and
activities of the departments/agencies reflected in the DBM list shown as Annex A or specific
programs and projects as may be identified by the agencies.
4.0 Exemption
These guidelines shall not apply to the following:
4.1 NGAs
4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal autonomy under the
Philippine Constitution; and
4.1.2 State Universities and Colleges, adopting the Normative Funding allocation scheme i.e.,
distribution of a predetermined budget ceiling.
4.2 Fund Sources
4.2.1 Personal Services other than pension benefits;
4.2.2 MOOE items earmarked for specific purposes or subject to realignment conditions per
General Provisions of the GAA:

 Confidential and Intelligence Fund;

Savings from Traveling, Communication, Transportation and Delivery, Repair and
Maintenance, Supplies and Materials and Utility which shall be used for the grant of
Collective Negotiation Agreement incentive benefit;
Savings from mandatory expenditures which can be realigned only in the last quarter
after taking into consideration the agencys full year requirements, i.e., Petroleum, Oil
and Lubricants, Water, Illumination, Power Services, Telephone, other Communication
Services and Rent.
4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);
4.2.4 Special Purpose Funds such as: E-Government Fund, International Commitments Fund,
PAMANA, Priority Development Assistance Fund, Calamity Fund, Budgetary Support to
GOCCs and Allocation to LGUs, among others;
4.2.5 Quick Response Funds; and
4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium and Special Accounts
in the General Fund.
5.0 Guidelines
5.1 National government agencies shall continue to undertake procurement activities notwithstanding
the implementation of the policy of withdrawal of unobligated allotments until the end of the third
quarter, FY 2012. Even without the allotments, the agency shall proceed in undertaking the
procurement processes (i.e., procurement planning up to the conduct of bidding but short of awarding
of contract) pursuant to GPPB Circular Nos. 02-2008 and 01-2009 and DBM Circular Letter No.
2010-9.

5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all
departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the
following budget accountability reports as of June 30, 2012;
Statement of Allotments, Obligations and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agencys latest
report available shall be used by DBM as basis for withdrawal of allotment. The DBM shall
compute/approximate the agencys obligation level as of June 30 to derive its unobligated allotments
as of same period. Example: If the March 31 SAOB or FRO reflects actual obligations of P 800M then
the June 30 obligation level shall approximate to P1,600 M (i.e., P800 M x 2 quarters).
5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained unobligated
as of June 30, 2012 shall be immediately considered for withdrawal. This policy is based on the
following considerations:
5.4.1 The departments/agencies approved priority programs and projects are assumed to be
implementation-ready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may imply that the agency has
a slower-than-programmed implementation capacity or agency tends to implement projects
within a two-year timeframe.
5.5. Consistent with the Presidents directive, the DBM shall, based on evaluation of the reports cited
above and results of consultations with the departments/agencies, withdraw the unobligated allotments
as of June 30, 2012 through issuance of negative Special Allotment Release Orders (SAROs).

5.6 DBM shall prepare and submit to the President, a report on the magnitude of withdrawn
allotments. The report shall highlight the agencies which failed to submit the June 30 reports required
under this Circular.
5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned, from
which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs and projects of the
agency/OU; or
5.7.3 Used to augment existing programs and projects of any agency and to fund priority
programs and projects not considered in the 2012 budget but expected to be started or
implemented during the current year.
5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit to DBM a Special Budget
Request (SBR), supported with the following:
5.8.1 Physical and Financial Plan (PFP);
5.8.2 Monthly Cash Program (MCP); and
5.8.3 Proof that the project/activity has started the procurement processes i.e., Proof of Posting
and/or Advertisement of the Invitation to Bid.
5.9 The deadline for submission of request/s pertaining to these categories shall be until the end of the
third quarter i.e., September 30, 2012. After said cut-off date, the withdrawn allotments shall be
pooled and form part of the overall savings of the national government.

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

implemented in 2012. Financing the other priority PAPs was made subject to the approval of the President. Note
here that NBC No. 541 used terminologies like "realignment" and "augmentation" in the application of the
withdrawn unobligated allotments.
Taken together, all the issuances showed how the DAP was to be implemented and funded, that is (1) by
declaring "savings" coming from the various departments and agencies derived from pooling unobligated
allotments and withdrawing unreleased appropriations; (2) releasing unprogrammed funds; and (3) applying the
"savings" and unprogrammed funds to augment existing PAPs or to support other priority PAPs.
c. DAP was not an appropriation
measure; hence, no appropriation
law was required to adopt or to
implement it
Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a law to establish the DAP,
or to authorize the disbursement and release of public funds to implement the DAP. Villegas, PHILCONSA, IBP,
Araullo, and COURAGE observe that the appropriations funded under the DAP were not included in the 2011,
2012 and 2013 GAAs. To petitioners IBP, Araullo, and COURAGE, the DAP, being actually an appropriation that
set aside public funds for public use, should require an enabling law for its validity. VACC maintains that the DAP,
because it involved huge allocations that were separate and distinct from the GAAs, circumvented and duplicated
the GAAs without congressional authorization and control.
The petitioners contend in unison that based on how it was developed and implemented the DAP violated the
mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money shall be paid out of the Treasury
except in pursuance of an appropriation made by law."
The OSG posits, however, that no law was necessary for the adoption and implementation of the DAP because of
its being neither a fund nor an appropriation, but a program or an administrative system of prioritizing spending;

and that the adoption of the DAP was by virtue of the authority of the President as the Chief Executive to ensure
that laws were faithfully executed.
We agree with the OSGs position.
The DAP was a government policy or strategy designed to stimulate the economy through accelerated spending. In
the context of the DAPs adoption and implementation being a function pertaining to the Executive as the main
actor during the Budget Execution Stage under its constitutional mandate to faithfully execute the laws, including
the GAAs, Congress did not need to legislate to adopt or to implement the DAP. Congress could appropriate but
would have nothing more to do during the Budget Execution Stage. Indeed, appropriation was the act by which
Congress "designates a particular fund, or sets apart a specified portion of the public revenue or of the money in the
public treasury, to be applied to some general object of governmental expenditure, or to some individual purchase
or expense."124 As pointed out in Gonzales v. Raquiza:125 "In a strict sense, appropriation has been defined as
nothing more than the legislative authorization prescribed by the Constitution that money may be paid out of the
Treasury, while appropriation made by law refers to the act of the legislature setting apart or assigning to a
particular use a certain sum to be used in the payment of debt or dues from the State to its creditors."126
On the other hand, the President, in keeping with his duty to faithfully execute the laws, had sufficient discretion
during the execution of the budget to adapt the budget to changes in the countrys economic situation.127 He could
adopt a plan like the DAP for the purpose. He could pool the savings and identify the PAPs to be funded under the
DAP. The pooling of savings pursuant to the DAP, and the identification of the PAPs to be funded under the DAP
did not involve appropriation in the strict sense because the money had been already set apart from the public
treasury by Congress through the GAAs. In such actions, the Executive did not usurp the power vested in Congress
under Section 29(1), Article VI of the Constitution.
3.
Unreleased appropriations and withdrawn
unobligated allotments under the DAP
were not savings, and the use of such

appropriations contravened Section 25(5),

Article VI of the 1987 Constitution.
Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the Executive to ramp up
spending to accelerate economic growth, the challenges posed by the petitioners constrain us to dissect the
mechanics of the actual execution of the DAP. The management and utilization of the public wealth inevitably
demands a most careful scrutiny of whether the Executives implementation of the DAP was consistent with the
Constitution, the relevant GAAs and other existing laws.
a. Although executive discretion
and flexibility are necessary in
the execution of the budget, any
transfer of appropriated funds
should conform to Section 25(5),
Article VI of the Constitution
We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that may come into play
once the budget reaches its execution stage. Executive discretion is necessary at that stage to achieve a sound fiscal
administration and assure effective budget implementation. The heads of offices, particularly the President, require
flexibility in their operations under performance budgeting to enable them to make whatever adjustments are
needed to meet established work goals under changing conditions.128 In particular, the power to transfer funds can
give the President the flexibility to meet unforeseen events that may otherwise impede the efficient implementation
of the PAPs set by Congress in the GAA.
Congress has traditionally allowed much flexibility to the President in allocating funds pursuant to the
GAAs,129particularly when the funds are grouped to form lump sum accounts.130 It is assumed that the agencies of
the Government enjoy more flexibility when the GAAs provide broader appropriation items.131 This flexibility
comes in the form of policies that the Executive may adopt during the budget execution phase. The DAP as a

strategy to improve the countrys economic position was one policy that the President decided to carry out in
order to fulfill his mandate under the GAAs.
Denying to the Executive flexibility in the expenditure process would be counterproductive. In Presidential
Spending Power,132 Prof. Louis Fisher, an American constitutional scholar whose specialties have included budget
policy, has justified extending discretionary authority to the Executive thusly:
[T]he impulse to deny discretionary authority altogether should be resisted. There are many number of reasons why
obligations and outlays by administrators may have to differ from appropriations by legislators. Appropriations are
made many months, and sometimes years, in advance of expenditures. Congress acts with imperfect knowledge in
trying to legislate in fields that are highly technical and constantly undergoing change. New circumstances will
develop to make obsolete and mistaken the decisions reached by Congress at the appropriation stage. It is not
practicable for Congress to adjust to each new development by passing separate supplemental appropriation bills.
Were Congress to control expenditures by confining administrators to narrow statutory details, it would perhaps
protect its power of the purse but it would not protect the purse itself. The realities and complexities of public
policy require executive discretion for the sound management of public funds.
xxxx
x x x The expenditure process, by its very nature, requires substantial discretion for administrators. They need to
exercise judgment and take responsibility for their actions, but those actions ought to be directed toward executing
congressional, not administrative policy. Let there be discretion, but channel it and use it to satisfy the programs
and priorities established by Congress.
In contrast, by allowing to the heads of offices some power to transfer funds within their respective offices, the
Constitution itself ensures the fiscal autonomy of their offices, and at the same time maintains the separation of
powers among the three main branches of the Government. The Court has recognized this, and emphasized so in
Bengzon v. Drilon,133 viz:

The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility
needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner
the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to
fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the
Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional
system is based.
In the case of the President, the power to transfer funds from one item to another within the Executive has not been
the mere offshoot of established usage, but has emanated from law itself. It has existed since the time of the
American Governors-General.134 Act No. 1902 (An Act authorizing the Governor-General to direct any
unexpended balances of appropriations be returned to the general fund of the Insular Treasury and to transfer from
the general fund moneys which have been returned thereto), passed on May 18, 1909 by the First Philippine
Legislature,135was the first enabling law that granted statutory authority to the President to transfer funds. The
authority was without any limitation, for the Act explicitly empowered the Governor-General to transfer any
unexpended balance of appropriations for any bureau or office to another, and to spend such balance as if it had
originally been appropriated for that bureau or office.
From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be transferred, thereby
limiting the power to transfer funds. Only 10% of the amounts appropriated for contingent or miscellaneous
expenses could be transferred to a bureau or office, and the transferred funds were to be used to cover deficiencies
in the appropriations also for miscellaneous expenses of said bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous expenses to any
other item of a certain bureau or office was removed.
During the Commonwealth period, the power of the President to transfer funds continued to be governed by the
GAAs despite the enactment of the Constitution in 1935. It is notable that the 1935 Constitution did not include a
provision on the power to transfer funds. At any rate, a shift in the extent of the Presidents power to transfer funds
was again experienced during this era, with the President being given more flexibility in implementing the budget.

The GAAs provided that the power to transfer all or portions of the appropriations in the Executive Department
could be made in the "interest of the public, as the President may determine."136
In its time, the 1971 Constitutional Convention wanted to curtail the Presidents seemingly unbounded discretion in
transferring funds.137 Its Committee on the Budget and Appropriation proposed to prohibit the transfer of funds
among the separate branches of the Government and the independent constitutional bodies, but to allow instead
their respective heads to augment items of appropriations from savings in their respective budgets under certain
limitations.138 The clear intention of the Convention was to further restrict, not to liberalize, the power to transfer
appropriations.139 Thus, the Committee on the Budget and Appropriation initially considered setting stringent
limitations on the power to augment, and suggested that the augmentation of an item of appropriation could be
made "by not more than ten percent if the original item of appropriation to be augmented does not exceed one
million pesos, or by not more than five percent if the original item of appropriation to be augmented exceeds one
million pesos."140 But two members of the Committee objected to the P1,000,000.00 threshold, saying that the
amount was arbitrary and might not be reasonable in the future. The Committee agreed to eliminate
theP1,000,000.00 threshold, and settled on the ten percent limitation.141
In the end, the ten percent limitation was discarded during the plenary of the Convention, which adopted the
following final version under Section 16, Article VIII of the 1973 Constitution, to wit:
(5) No law shall be passed authorizing any transfer of appropriations; however, the President, the Prime Minister,
the Speaker, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may by law be
authorized to augment any item in the general appropriations law for their respective offices from savings in other
items of their respective appropriations.
The 1973 Constitution explicitly and categorically prohibited the transfer of funds from one item to another, unless
Congress enacted a law authorizing the President, the Prime Minister, the Speaker, the Chief Justice of the
Supreme Court, and the heads of the Constitutional omissions to transfer funds for the purpose of augmenting any
item from savings in another item in the GAA of their respective offices. The leeway was limited to augmentation

only, and was further constricted by the condition that the funds to be transferred should come from savings from
another item in the appropriation of the office.142
On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:
Section 44. Authority to Approve Fund Transfers. The President shall have the authority to transfer any fund
appropriated for the different departments, bureaus, offices and agencies of the Executive Department which are
included in the General Appropriations Act, to any program, project, or activity of any department, bureau or office
included in the General Appropriations Act or approved after its enactment.
The President shall, likewise, have the authority to augment any appropriation of the Executive Department in the
General Appropriations Act, from savings in the appropriations of another department, bureau, office or agency
within the Executive Branch, pursuant to the provisions of Article VIII, Section 16 (5) of the Constitution.
In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for contravening Section
16(5)of the 1973 Constitution, ruling:
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under said Section 16. It
empowers the President to indiscriminately transfer funds from one department, bureau, office or agency of the
Executive Department to any program, project or activity of any department, bureau or office included in the
General Appropriations Act or approved after its enactment, without regard as to whether or not the funds to be
transferred are actually savings in the item from which the same are to be taken, or whether or not the transfer is
for the purpose of augmenting the item to which said transfer is to be made. It does not only completely disregard
the standards set in the fundamental law, thereby amounting to an undue delegation of legislative powers, but
likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the provision in question null
and void.143
It is significant that Demetria was promulgated 25 days after the ratification by the people of the 1987 Constitution,
whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of the 1973 Constitution, to wit:

Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the
Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for
their respective offices from savings in other items of their respective appropriations.
xxxx
The foregoing history makes it evident that the Constitutional Commission included Section 25(5), supra, to keep a
tight rein on the exercise of the power to transfer funds appropriated by Congress by the President and the other
high officials of the Government named therein. The Court stated in Nazareth v. Villar:144
In the funding of current activities, projects, and programs, the general rule should still be that the budgetary
amount contained in the appropriations bill is the extent Congress will determine as sufficient for the budgetary
allocation for the proponent agency. The only exception is found in Section 25 (5), Article VI of the Constitution,
by which the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice
of the Supreme Court, and the heads of Constitutional Commissions are authorized to transfer appropriations to
augmentany item in the GAA for their respective offices from the savings in other items of their respective
appropriations. The plain language of the constitutional restriction leaves no room for the petitioners posture,
which we should now dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article VI of the
Constitution limiting the authority to transfer savings only to augment another item in the GAA is strictly but
reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v. Commission on Elections:

When the statute itself enumerates the exceptions to the application of the general rule, the exceptions are strictly
but reasonably construed. The exceptions extend only as far as their language fairly warrants, and all doubts should
be resolved in favor of the general provision rather than the exceptions. Where the general rule is established by a
statute with exceptions, none but the enacting authority can curtail the former. Not even the courts may add to the
latter by implication, and it is a rule that an express exception excludes all others, although it is always proper in
determining the applicability of the rule to inquire whether, in a particular case, it accords with reason and justice.
The appropriate and natural office of the exception is to exempt something from the scope of the general words of
a statute, which is otherwise within the scope and meaning of such general words. Consequently, the existence of
an exception in a statute clarifies the intent that the statute shall apply to all cases not excepted. Exceptions are
subject to the rule of strict construction; hence, any doubt will be resolved in favor of the general provision and
against the exception. Indeed, the liberal construction of a statute will seem to require in many circumstances that
the exception, by which the operation of the statute is limited or abridged, should receive a restricted construction.
Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the Presidents discretion
over the appropriations during the Budget Execution Phase.
b. Requisites for the valid transfer of
appropriated funds under Section
25(5), Article VI of the 1987
Constitution
The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a concurrence of the
following requisites, namely:
(1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to
transfer funds within their respective offices;

(2) The funds to be transferred are savings generated from the appropriations for their respective offices; and
(3) The purpose of the transfer is to augment an item in the general appropriations law for their respective
offices.
b.1. First RequisiteGAAs of 2011 and
2012 lacked valid provisions to
authorize transfers of funds under
the DAP; hence, transfers under the
DAP were unconstitutional
Section 25(5), supra, not being a self-executing provision of the Constitution, must have an implementing law for it
to be operative. That law, generally, is the GAA of a given fiscal year. To comply with the first requisite, the GAAs
should expressly authorize the transfer of funds.
Did the GAAs expressly authorize the transfer of funds?
In the 2011 GAA, the provision that gave the President and the other high officials the authority to transfer funds
was Section 59, as follows:
Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal
autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other items
of their respective appropriations.
In the 2012 GAA, the empowering provision was Section 53, to wit:
Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal

autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other items
of their respective appropriations.
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as justification for the use of
savings under the DAP.145
A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were textually unfaithful
to the Constitution for not carrying the phrase "for their respective offices" contained in Section 25(5), supra. The
impact of the phrase "for their respective offices" was to authorize only transfers of funds within their offices (i.e.,
in the case of the President, the transfer was to an item of appropriation within the Executive). The provisions
carried a different phrase ("to augment any item in this Act"), and the effect was that the 2011 and 2012 GAAs
thereby literally allowed the transfer of funds from savings to augment any item in the GAAs even if the item
belonged to an office outside the Executive. To that extent did the 2011 and 2012 GAAs contravene the
Constitution. At the very least, the aforequoted provisions cannot be used to claim authority to transfer
appropriations from the Executive to another branch, or to a constitutional commission.
Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart provision in the 2013
GAA, to wit:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal
autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to augment
actual deficiencies incurred for the current year in any item of their respective appropriations.
Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed, there still remained
two other requisites to be met, namely: that the source of funds to be transferred were savings from appropriations
within the respective offices; and that the transfer must be for the purpose of augmenting an item of appropriation
within the respective offices.

b.2. Second Requisite There were

no savings from which funds
could be sourced for the DAP
Were the funds used in the DAP actually savings?
The petitioners claim that the funds used in the DAP the unreleased appropriations and withdrawn unobligated
allotments were not actual savings within the context of Section 25(5), supra, and the relevant provisions of the
GAAs. Belgica argues that "savings" should be understood to refer to the excess money after the items that needed
to be funded have been funded, or those that needed to be paid have been paid pursuant to the budget.146 The
petitioners posit that there could be savings only when the PAPs for which the funds had been appropriated were
actually implemented and completed, or finally discontinued or abandoned. They insist that savings could not be
realized with certainty in the middle of the fiscal year; and that the funds for "slow-moving" PAPs could not be
considered as savings because such PAPs had not actually been abandoned or discontinued yet.147 They stress that
NBC No. 541, by allowing the withdrawn funds to be reissued to the "original program or project from which it
was withdrawn," conceded that the PAPs from which the supposed savings were taken had not been completed,
abandoned or discontinued.148
The OSG represents that "savings" were "appropriations balances," being the difference between the appropriation
authorized by Congress and the actual amount allotted for the appropriation; that the definition of "savings" in the
GAAs set only the parameters for determining when savings occurred; that it was still the President (as well as the
other officers vested by the Constitution with the authority to augment) who ultimately determined when savings
actually existed because savings could be determined only during the stage of budget execution; that the President
must be given a wide discretion to accomplish his tasks; and that the withdrawn unobligated allotments were
savings inasmuch as they were clearly "portions or balances of any programmed appropriationfree from any
obligation or encumbrances which are (i) still available after the completion or final discontinuance or
abandonment of the work, activity or purpose for which the appropriation is authorized"
We partially find for the petitioners.

In ascertaining the meaning of savings, certain principles should be borne in mind. The first principle is that
Congress wields the power of the purse. Congress decides how the budget will be spent; what PAPs to fund; and
the amounts of money to be spent for each PAP. The second principle is that the Executive, as the department of the
Government tasked to enforce the laws, is expected to faithfully execute the GAA and to spend the budget in
accordance with the provisions of the GAA.149 The Executive is expected to faithfully implement the PAPs for
which Congress allocated funds, and to limit the expenditures within the allocations, unless exigencies result to
deficiencies for which augmentation is authorized, subject to the conditions provided by law. The third principle is
that in making the Presidents power to augment operative under the GAA, Congress recognizes the need for
flexibility in budget execution. In so doing, Congress diminishes its own power of the purse, for it delegates a
fraction of its power to the Executive. But Congress does not thereby allow the Executive to override its authority
over the purse as to let the Executive exceed its delegated authority. And the fourth principle is that savings should
be actual. "Actual" denotes something that is real or substantial, or something that exists presently in fact, as
opposed to something that is merely theoretical, possible, potential or hypothetical.150
The foregoing principles caution us to construe savings strictly against expanding the scope of the power to
augment. It is then indubitable that the power to augment was to be used only when the purpose for which the
funds had been allocated were already satisfied, or the need for such funds had ceased to exist, for only then could
savings be properly realized. This interpretation prevents the Executive from unduly transgressing Congress power
of the purse.
The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this interpretation and
made it operational, viz:
Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation or
encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the work,
activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from unpaid
compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (iii) from
appropriations balances realized from the implementation of measures resulting in improved systems and

efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and services
approved in this Act at a lesser cost.
The three instances listed in the GAAs aforequoted definition were a sure indication that savings could be
generated only upon the purpose of the appropriation being fulfilled, or upon the need for the appropriation being
no longer existent.
The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs conveyed the
notion that the appropriation was at that stage when the appropriation was already obligated and the appropriation
was already released. This interpretation was reinforced by the enumeration of the three instances for savings to
arise, which showed that the appropriation referred to had reached the agency level. It could not be otherwise,
considering that only when the appropriation had reached the agency level could it be determined whether (a) the
PAP for which the appropriation had been authorized was completed, finally discontinued, or abandoned; or (b)
there were vacant positions and leaves of absence without pay; or (c) the required or planned targets, programs and
services were realized at a lesser cost because of the implementation of measures resulting in improved systems
and efficiencies.
The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the year,
unreleased appropriations of slow moving projects and discontinued projects per Zero-Based Budgeting findings."
The declaration of the DBM by itself does not state the clear legal basis for the treatment of unreleased or unalloted
appropriations as savings.
The fact alone that the appropriations are unreleased or unalloted is a mere description of the status of the items as
unalloted or unreleased. They have not yet ripened into categories of items from which savings can be generated.
Appropriations have been considered "released" if there has already been an allotment or authorization to incur
obligations and disbursement authority. This means that the DBM has issued either an ABM (for those not needing
clearance), or a SARO (for those needing clearance), and consequently an NCA, NCAA or CDC, as the case may

be. Appropriations remain unreleased, for instance, because of noncompliance with documentary requirements
(like the Special Budget Request), or simply because of the unavailability of funds. But the appropriations do not
actually reach the agencies to which they were allocated under the GAAs, and have remained with the DBM
technically speaking. Ergo, unreleased appropriations refer to appropriations with allotments but without
disbursement authority.
For us to consider unreleased appropriations as savings, unless these met the statutory definition of savings, would
seriously undercut the congressional power of the purse, because such appropriations had not even reached and
been used by the agency concerned vis--vis the PAPs for which Congress had allocated them. However, if an
agency has unfilled positions in its plantilla and did not receive an allotment and NCA for such vacancies,
appropriations for such positions, although unreleased, may already constitute savings for that agency under the
second instance.
Unobligated allotments, on the other hand, were encompassed by the first part of the definition of "savings" in the
GAA, that is, as "portions or balances of any programmed appropriation in this Act free from any obligation or
encumbrance." But the first part of the definition was further qualified by the three enumerated instances of when
savings would be realized. As such, unobligated allotments could not be indiscriminately declared as savings
without first determining whether any of the three instances existed. This signified that the DBMs withdrawal of
unobligated allotments had disregarded the definition of savings under the GAAs.
Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE appropriations are deemed
divided into twelve monthly allocations within the fiscal year; hence, savings could be generated monthly from the
excess or unused MOOE appropriations other than the Mandatory Expenditures and Expenditures for Businesstype Activities because of the physical impossibility to obligate and spend such funds as MOOE for a period that
already lapsed. Following this observation, MOOE for future months are not savings and cannot be transferred.
The DBMs Memorandum for the President dated June 25, 2012 (which became the basis of NBC No. 541) stated:
ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS

5.0 The DBM, during the course of performance reviews conducted on the agencies operations, particularly
on the implementation of their projects/activities, including expenses incurred in undertaking the same, have
been continuously calling the attention of all National Government agencies (NGAs) with low levels of
obligations as of end of the first quarter to speedup the implementation of their programs and projects in the
second quarter.
6.0 Said reminders were made in a series of consultation meetings with the concerned agencies and with
call-up letters sent.
7.0 Despite said reminders and the availability of funds at the departments disposal, the level of financial
performance of some departments registered below program, with the targeted obligations/disbursements for
the first semester still not being met.
8.0 In order to maximize the use of the available allotment, all unobligated balances as of June 30, 2012,
both for continuing and current allotments shall be withdrawn and pooled to fund fast moving
programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving
projects to be identified by the agencies and their catch up plans to be evaluated by the DBM.
It is apparent from the foregoing text that the withdrawal of unobligated allotments would be based on whether the
allotments pertained to slow-moving projects, or not. However, NBC No. 541 did not set in clear terms the criteria
for the withdrawal of unobligated allotments, viz:
3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 ofall national
government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A. No. 10147) and FY
2012 Current Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of programs
and projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by the
agencies concerned based on their undated/validated list of pensioners.
A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of unobligated allotments of
agencies with low levels of obligations"151 "to fund priority and/or fast-moving programs/projects."152 But the fact
that the withdrawn allotments could be "[r]eissued for the original programs and projects of the agencies/OUs
concerned, from which the allotments were withdrawn"153 supported the conclusion that the PAPs had not yet been
finally discontinued or abandoned. Thus, the purpose for which the withdrawn funds had been appropriated was
not yet fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings impossible.
Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011 charged against the
2011 GAA that had remained unobligated based on the following considerations, to wit:
5.4.1 The departments/agencies approved priority programs and projects are assumed to be implementationready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may imply that the agency has a slowerthan-programmed implementation capacity or agency tends to implement projects within a two-year
timeframe.
Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated allotments for continuing
and current appropriations as of June 30, 2012, disregarded the 2-year period of availability of the appropriations
for MOOE and capital outlay extended under Section 65, General Provisions of the 2011 GAA, viz:
Section 65. Availability of Appropriations. Appropriations for MOOE and capital outlays authorized in this Act
shall be available for release and obligation for the purpose specified, and under the same special provisions

applicable thereto, for a period extending to one fiscal year after the end of the year in which such items were
appropriated: PROVIDED, That appropriations for MOOE and capital outlays under R.A. No. 9970 shall be made
available up to the end of FY 2011: PROVIDED, FURTHER, That a report on these releases and obligations shall
be submitted to the Senate Committee on Finance and the House Committee on Appropriations.
and Section 63 General Provisions of the 2012 GAA, viz:
Section 63. Availability of Appropriations. Appropriations for MOOE and capital outlays authorized in this Act
shall be available for release and obligation for the purpose specified, and under the same special provisions
applicable thereto, for a period extending to one fiscal year after the end of the year in which such items were
appropriated: PROVIDED, That a report on these releases and obligations shall be submitted to the Senate
Committee on Finance and the House Committee on Appropriations, either in printed form or by way of electronic
document.154
Thus, another alleged area of constitutional infirmity was that the DAP and its relevant issuances shortened the
period of availability of the appropriations for MOOE and capital outlays.
Congress provided a one-year period of availability of the funds for all allotment classes in the 2013 GAA (R.A.
No. 10352), to wit:
Section 63. Availability of Appropriations. All appropriations authorized in this Act shall be available for release
and obligation for the purposes specified, and under the same special provisions applicable thereto, until the end of
FY 2013: PROVIDED, That a report on these releases and obligations shall be submitted to the Senate Committee
on Finance and House Committee on Appropriations, either in printed form or by way of electronic document.
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus authority to consolidate
savings and unutilized balances to fund the DAP on a quarterly basis, viz:

7.0 If the level of financial performance of some department will register below program, even with the
availability of funds at their disposal, the targeted obligations/disbursements for each quarter will not be met.
It is important to note that these funds will lapse at the end of the fiscal year if these remain unobligated.
8.0 To maximize the use of the available allotment, all unobligated balances at the end of every quarter, both
for continuing and current allotments shall be withdrawn and pooled to fund fast moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow moving
projects to be identified by the agencies and their catch up plans to be evaluated by the DBM.
The validity period of the affected appropriations, already given the brief Lifes pan of one year, was further
shortened to only a quarter of a year under the DBMs memorandum dated May 20, 2013.
The petitioners accuse the respondents of forcing the generation of savings in order to have a larger fund available
for discretionary spending. They aver that the respondents, by withdrawing unobligated allotments in the middle of
the fiscal year, in effect deprived funding for PAPs with existing appropriations under the GAAs.155
The respondents belie the accusation, insisting that the unobligated allotments were being withdrawn upon the
instance of the implementing agencies based on their own assessment that they could not obligate those allotments
pursuant to the Presidents directive for them to spend their appropriations as quickly as they could in order to
ramp up the economy.156
We agree with the petitioners.
Contrary to the respondents insistence, the withdrawals were upon the initiative of the DBM itself. The text of
NBC No. 541 bears this out, to wit:
5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn, all
departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the following
budget accountability reports as of June 30, 2012;

 Statement of Allotments, Obligation and Balances (SAOB);

Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agencys latest report
available shall be used by DBM as basis for withdrawal of allotment. The DBM shall compute/approximate the
agencys obligation level as of June 30 to derive its unobligated allotments as of same period. Example: If the
March 31 SAOB or FRO reflects actual obligations of P 800M then the June 30 obligation level shall approximate
toP1,600 M (i.e., P800 M x 2 quarters).
The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments and the
pooling of unreleased appropriations; and that the unbridled withdrawal of unobligated allotments and the retention
of appropriated funds were akin to the impoundment of appropriations that could be allowed only in case of
"unmanageable national government budget deficit" under the GAAs,157 thus violating the provisions of the GAAs
of 2011, 2012 and 2013 prohibiting the retention or deduction of allotments.158
In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a last-ditch
effort of the Executive to push agencies into actually spending their appropriations; that such policy did not amount
to an impoundment scheme, because impoundment referred to the decision of the Executive to refuse to spend
funds for political or ideological reasons; and that the withdrawal of allotments under NBC No. 541 was made
pursuant to Section 38, Chapter 5, Book VI of the Administrative Code, by which the President was granted the
authority to suspend or otherwise stop further expenditure of funds allotted to any agency whenever in his
judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and the pooling
of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such withdrawal of
unobligated allotments and the retention of appropriated funds cannot be considered as impoundment.

According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers to a refusal by the President,
for whatever reason, to spend funds made available by Congress. It is the failure to spend or obligate budget
authority of any type." Impoundment under the GAA is understood to mean the retention or deduction of
appropriations. The 2011 GAA authorized impoundment only in case of unmanageable National Government
budget deficit, to wit:
Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act shall
be impounded through retention or deduction, unless in accordance with the rules and regulations to be issued by
the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities
authorized under this Act, except those covered under the Unprogrammed Fund, shall be released pursuant to
Section 33 (3), Chapter 5, Book VI of E.O. No. 292.
Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations
authorized in this Act shall be effected only in cases where there is an unmanageable national government budget
deficit.
Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the
actual national government budget deficit has exceeded the quarterly budget deficit targets consistent with the fullyear target deficit as indicated in the FY 2011 Budget of
Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section
22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such
condition, as determined by the Development Budget Coordinating Committee and approved by the President.
The 2012 and 2013 GAAs contained similar provisions.
The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment because it
entailed only the transfer of funds, not the retention or deduction of appropriations.

Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs) be applicable.
They uniformly stated:
Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from appropriations provided in
this Act shall be transmitted intact or in full to the office or agency concerned. No retention or deduction as
reserves or overhead shall be made, except as authorized by law, or upon direction of the President of the
Philippines. The COA shall ensure compliance with this provision to the extent that sub-allotments by agencies to
their subordinate offices are in conformity with the release documents issued by the DBM.
The provision obviously pertained to the retention or deduction of allotments upon their release from the DBM,
which was a different matter altogether. The Court should not expand the meaning of the provision by applying it
to the withdrawal of allotments.
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the
withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of further
expenditures, not the withdrawal of unobligated allotments, to wit:
Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the General
Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the
head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any
agency, or any other expenditure authorized in the General Appropriations Act, except for personal services
appropriations used for permanent officials and employees.
Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but instead
transferred the funds to other PAPs.
It is relevant to remind at this juncture that the balances of appropriations that remained unexpended at the end of
the fiscal year were to be reverted to the General Fund.1wphi1 This was the mandate of Section 28, Chapter IV,
Book VI of the Administrative Code, to wit:

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.- Unexpended

balances of appropriations authorized in the General Appropriation Act shall revert to the unappropriated surplus of
the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except by
subsequent legislative enactment: Provided, that appropriations for capital outlays shall remain valid until fully
spent or reverted: provided, further, that continuing appropriations for current operating expenditures may be
specifically recommended and approved as such in support of projects whose effective implementation calls for
multi-year expenditure commitments: provided, finally, that the President may authorize the use of savings realized
by an agency during given year to meet non-recurring expenditures in a subsequent year.
The balances of continuing appropriations shall be reviewed as part of the annual budget preparation process and
the preparation process and the President may approve upon recommendation of the Secretary, the reversion of
funds no longer needed in connection with the activities funded by said continuing appropriations.
The Executive could not circumvent this provision by declaring unreleased appropriations and unobligated
allotments as savings prior to the end of the fiscal year.
b.3. Third Requisite No funds from
savings could be transferred under
the DAP to augment deficient items
not provided in the GAA
The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to augment an item in
the general appropriations law for the respective offices." The term "augment" means to enlarge or increase in size,
amount, or degree.160
The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for the PAP item to
be augmented must be deficient, to wit:

x x x Augmentation implies the existence in this Act of a program, activity, or project with an appropriation, which
upon implementation, or subsequent evaluation of needed resources, is determined to be deficient. In no case shall
a non-existent program, activity, or project, be funded by augmentation from savings or by the use of
appropriations otherwise authorized in this Act.
In other words, an appropriation for any PAP must first be determined to be deficient before it could be augmented
from savings. Note is taken of the fact that the 2013 GAA already made this quite clear, thus:
Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal
autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to augment
actual deficiencies incurred for the current year in any item of their respective appropriations.
As of 2013, a total of P144.4 billion worth of PAPs were implemented through the DAP.161
Of this amount P82.5 billion were released in 2011 and P54.8 billion in 2012.162 Sec. Abad has reported that 9% of
the total DAP releases were applied to the PAPs identified by the legislators.163
The petitioners disagree, however, and insist that the DAP supported the following PAPs that had not been covered
with appropriations in the respective GAAs, namely:
(i) P1.5 billion for the Cordillera Peoples Liberation Army;
(ii) P1.8 billion for the Moro National Liberation Front;
(iii) P700 million for assistance to Quezon Province;164
(iv) P50 million to P100 (million) each to certain senators;165

(v) P10 billion for the relocation of families living along dangerous zones under the National Housing
Authority;
(vi) P10 billion and P20 billion equity infusion under the Bangko Sentral;
(vii) P5.4 billion landowners compensation under the Department of Agrarian Reform;
(viii) P8.6 billion for the ARMM comprehensive peace and development program;
(ix) P6.5 billion augmentation of LGU internal revenue allotments
(x) P5 billion for crucial projects like tourism road construction under the Department of Tourism and the
Department of Public Works and Highways;
(xi) P1.8 billion for the DAR-DPWH Tulay ng Pangulo;
(xii) P1.96 billion for the DOH-DPWH rehabilitation of regional health units; and
(xiii) P4 billion for the DepEd-PPP school infrastructure projects.166
In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented, had appropriation covers,
and could properly be accounted for because the funds were released following and pursuant to the standard
practices adopted by the DBM.167 In support of its argument, the OSG has submitted seven evidence packets
containing memoranda, SAROs, and other pertinent documents relative to the implementation and fund transfers
under the DAP.168
Upon careful review of the documents contained in the seven evidence packets, we conclude that the "savings"
pooled under the DAP were allocated to PAPs that were not covered by any appropriations in the pertinent GAAs.

For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk, Exposure, Assessment
and Mitigation (DREAM) project under the Department of Science and Technology (DOST) covered the amount
ofP1.6 Billion,169 broken down as follows:
APPROPRIATION
CODE

PARTICULARS

A.03.a.01.a

Generation of new knowledge and

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

AMOUNT
AUTHORIZED

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

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

III.

Maintenance
and Other
Operating
Expenditures

Capital
Outlays

TOTAL

Operations
a. Funding Assistance to Science
and Technology Activities
1. Central Office

177,406,000

1,887,365,000
1,554,238,000

49,090,000

2,113,861,000
1,554,238,000

a. Generation of new
knowledge and
technologies and research
capability building in
priority areas identified as
strategic to National
Development

537,910,000

537,910,000

Aside from this transfer under the DAP to the DREAM project exceeding by almost 300% the appropriation by
Congress for the program Generation of new knowledge and technologies and research capability building in
priority areas identified as strategic to National Development, the Executive allotted funds for personnel services
and capital outlays. The Executive thereby substituted its will to that of Congress. Worse, the Executive had not
earlier proposed any amount for personnel services and capital outlays in the NEP that became the basis of the
2011 GAA.170
It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for an expense
category sufficiently indicated that Congress purposely did not see fit to fund, much less implement, the PAP
concerned. This indication becomes clearer when even the President himself did not recommend in the NEP to
fund the PAP. The consequence was that any PAP requiring expenditure that did not receive any appropriation
under the GAAs could only be a new PAP, any funding for which would go beyond the authority laid down by
Congress in enacting the GAAs. That happened in some instances under the DAP.
In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy and Emerging
Technology Research and Development (DOST-PCIEETRD)171 for Establishment of the Advanced Failure Analysis
Laboratory, which reads:
APPROPRIATION
CODE

PARTICULARS

AMOUNT
AUTHORIZED

A.02.a

Development, integration and

coordination of the National Research
System for Industry, Energy and
Emerging Technology and Related
Fields
Capital Outlays

P 300,000,000

the appropriation code and the particulars appearing in the SARO did not correspond to the program specified in
the GAA, whose particulars were Research and Management Services(inclusive of the following activities: (1)
Technological and Economic Assessment for Industry, Energy and Utilities; (2) Dissemination of Science and
Technology Information; and (3) Management of PCIERD Information System for Industry, Energy and Utilities.
Even assuming that Development, integration and coordination of the National Research System for Industry,
Energy and Emerging Technology and Related Fields the particulars stated in the SARO could fall under the
broad program description of Research and Management Services as appearing in the SARO, it would
nonetheless remain a new activity by reason of its not being specifically stated in the GAA. As such, the DBM,
sans legislative authorization, could not validly fund and implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the Executive enjoyed sound discretion in
implementing the budget given the generality in the language and the broad policy objectives identified under the
GAAs;172 and that the President enjoyed unlimited authority to spend the initial appropriations under his authority
to declare and utilize savings,173 and in keeping with his duty to faithfully execute the laws.
Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate to faithfully
execute the laws (which included the GAAs), such authority did not translate to unfettered discretion that allowed
the President to substitute his own will for that of Congress. He was still required to remain faithful to the
provisions of the GAAs, given that his power to spend pursuant to the GAAs was but a delegation to him from
Congress. Verily, the power to spend the public wealth resided in Congress, not in the Executive.174 Moreover,

leaving the spending power of the Executive unrestricted would threaten to undo the principle of separation of
powers.175
Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse whenever it
deliberates and acts on the budget proposal submitted by the Executive.176 Its power of the purse is touted as the
very foundation of its institutional strength,177 and underpins "all other legislative decisions and regulating the
balance of influence between the legislative and executive branches of government."178 Such enormous power
encompasses the capacity to generate money for the Government, to appropriate public funds, and to spend the
money.179 Pertinently, when it exercises its power of the purse, Congress wields control by specifying the PAPs for
which public money should be spent.
It is the President who proposes the budget but it is Congress that has the final say on matters of
appropriations.180For this purpose, appropriation involves two governing principles, namely: (1) "a Principle of the
Public Fisc, asserting that all monies received from whatever source by any part of the government are public
funds;" and (2) "a Principle of Appropriations Control, prohibiting expenditure of any public money without
legislative authorization."181To conform with the governing principles, the Executive cannot circumvent the
prohibition by Congress of an expenditure for a PAP by resorting to either public or private funds.182 Nor could the
Executive transfer appropriated funds resulting in an increase in the budget for one PAP, for by so doing the
appropriation for another PAP is necessarily decreased. The terms of both appropriations will thereby be violated.
b.4 Third Requisite Cross-border
augmentations from savings were
prohibited by the Constitution
By providing that the President, the President of the Senate, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, and the Heads of the Constitutional Commissions may be authorized to augment any
item in the GAA "for their respective offices," Section 25(5), supra, has delineated borders between their offices,
such that funds appropriated for one office are prohibited from crossing over to another office even in the guise of

augmentation of a deficient item or items. Thus, we call such transfers of funds cross-border transfers or crossborder augmentations.
To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire Executive, with respect
to the President; the Senate, with respect to the Senate President; the House of Representatives, with respect to the
Speaker; the Judiciary, with respect to the Chief Justice; the Constitutional Commissions, with respect to their
respective Chairpersons.
Did any cross-border transfers or augmentations transpire?
During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border augmentations, to
wit:
JUSTICE BERSAMIN:
Alright, the whole time that you have been Secretary of Department of Budget and Management, did the Executive
Department ever redirect any part of savings of the National Government under your control cross border to
another department?
SECRETARY ABAD:
Well, in the Memos that we submitted to you, such an instance, Your Honor
JUSTICE BERSAMIN:
Can you tell me two instances? I dont recall having read your material.
SECRETARY ABAD:

Well, the first instance had to do with a request from the House of Representatives. They started building their elibrary in 2010 and they had a budget for about 207 Million but they lack about 43 Million to complete its 250
Million requirements. Prior to that, the COA, in an audit observation informed the Speaker that they had to
continue with that construction otherwise the whole building, as well as the equipments therein may suffer from
serious deterioration. And at that time, since the budget of the House of Representatives was not enough to
complete 250 Million, they wrote to the President requesting for an augmentation of that particular item, which
was granted, Your Honor. The second instance in the Memos is a request from the Commission on Audit. At the
time they were pushing very strongly the good governance programs of the government and therefore, part of that
is a requirement to conduct audits as well as review financial reports of many agencies. And in the performance of
that function, the Commission on Audit needed information technology equipment as well as hire consultants and
litigators to help them with their audit work and for that they requested funds from the Executive and the President
saw that it was important for the Commission to be provided with those IT equipments and litigators and
consultants and the request was granted, Your Honor.
JUSTICE BERSAMIN:
These cross border examples, cross border augmentations were not supported by appropriations
SECRETARY ABAD:
They were, we were augmenting existing items within their (interrupted)
JUSTICE BERSAMIN:
No, appropriations before you augmented because this is a cross border and the tenor or text of the Constitution is
quite clear as far as I am concerned. It says here, "The power to augment may only be made to increase any item in
the General Appropriations Law for their respective offices." Did you not feel constricted by this provision?
SECRETARY ABAD:

Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations, Your Honor. What
we thought we did was to transfer savings which was needed by the Commission to address deficiency in an
existing item in both the Commission as well as in the House of Representatives; thats how we saw(interrupted)
JUSTICE BERSAMIN:
So your position as Secretary of Budget is that you could do that?
SECRETARY ABAD:
In an extreme instances because(interrupted)
JUSTICE BERSAMIN:
No, no, in all instances, extreme or not extreme, you could do that, thats your feeling.
SECRETARY ABAD:
Well, in that particular situation when the request was made by the Commission and the House of Representatives,
we felt that we needed to respond because we felt(interrupted).183
The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00 were transferred under
the DAP respectively to the COA184 and the House of Representatives.185 Those transfers of funds, which
constituted cross-border augmentations for being from the Executive to the COA and the House of Representatives,
are graphed as follows:186
OFFICE

PURPOSE

DATE
RELEASED

AMOUNT
(In thousand pesos)

Reserve
Imposed
Commission on IT Infrastructure
Audit
Program and hiring of
additional litigation
experts

11/11/11

Congress
House of
Representative
s

07/23/12

Completion of the
construction of the
Legislative Library and
Archives
Building/Congressiona
l e-library

Releases
143,700

207,034
(Savings of
HOR)

250,000

The respondents further stated in their memorandum that the President "made available" to the "Commission on
Elections the savings of his department upon [its] request for funds"187 This was another instance of a crossborder augmentation.
The respondents justified all the cross-border transfers thusly:
99. The Constitution does not prevent the President from transferring savings of his department to another
department upon the latters request, provided it is the recipient department that uses such funds to augment its own
appropriation. In such a case, the President merely gives the other department access to public funds but he cannot
dictate how they shall be applied by that department whose fiscal autonomy is guaranteed by the Constitution.188
In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza, representing Congress, announced a
different characterization of the cross-border transfers of funds as in the nature of "aid" instead of "augmentation,"
viz:

HONORABLE MENDOZA:
The cross-border transfers, if Your Honors please, is not an application of the DAP. What were these cross-border
transfers? They are transfers of savings as defined in the various General Appropriations Act. So, that makes it
similar to the DAP, the use of savings. There was a cross-border which appears to be in violation of Section 25,
paragraph 5 of Article VI, in the sense that the border was crossed. But never has it been claimed that the purpose
was to augment a deficient item in another department of the government or agency of the government. The crossborder transfers, if Your Honors please, were in the nature of [aid] rather than augmentations. Here is a government
entity separate and independent from the Executive Department solely in need of public funds. The President is
there 24 hours a day, 7 days a week. Hes in charge of the whole operation although six or seven heads of
government offices are given the power to augment. Only the President stationed there and in effect in-charge and
has the responsibility for the failure of any part of the government. You have election, for one reason or another,
the money is not enough to hold election. There would be chaos if no money is given as an aid, not to augment, but
as an aid to a department like COA. The President is responsible in a way that the other heads, given the power to
augment, are not. So, he cannot very well allow this, if Your Honor please.189
JUSTICE LEONEN:
May I move to another point, maybe just briefly. I am curious that the position now, I think, of government is that
some transfers of savings is now considered to be, if Im not mistaken, aid not augmentation. Am I correct in my
hearing of your argument?
HONORABLE MENDOZA:
Thats our submission, if Your Honor, please.
JUSTICE LEONEN:

May I know, Justice, where can we situate this in the text of the Constitution? Where do we actually derive the
concepts that transfers of appropriation from one branch to the other or what happened in DAP can be considered a
said? What particular text in the Constitution can we situate this?
HONORABLE MENDOZA:
There is no particular provision or statutory provision for that matter, if Your Honor please. It is drawn from the
fact that the Executive is the executive in-charge of the success of the government.
JUSTICE LEONEN:
So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of the government?
HONORABLE MENDOZA:
Yes, if Your Honor, please.
JUSTICE LEONEN:
A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That there are opportunities
and there have been opportunities of the President to actually go to Congress and ask for supplemental budgets?
HONORABLE MENDOZA:
If there is time to do that, I would say yes.
JUSTICE LEONEN:
So, the theory of aid rather than augmentation applies in extra-ordinary situation?

HONORABLE MENDOZA:
Very extra-ordinary situations.
JUSTICE LEONEN:
But Counsel, this would be new doctrine, in case?
HONORABLE MENDOZA:
Yes, if Your Honor please.190
Regardless of the variant characterizations of the cross-border transfers of funds, the plain text of Section 25(5),
supra, disallowing cross border transfers was disobeyed. Cross-border transfers, whether as augmentation, or as
aid, were prohibited under Section 25(5), supra.
4.
Sourcing the DAP from unprogrammed
funds despite the original revenue targets
not having been exceeded was invalid
Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for 2011, 2012,and
2013. The respondents stress, however, that the unprogrammed funds were not brought under the DAP as savings,
but as separate sources of funds; and that, consequently, the release and use of unprogrammed funds were not
subject to the restrictions under Section 25(5), supra.
The documents contained in the Evidence Packets by the OSG have confirmed that the unprogrammed funds were
treated as separate sources of funds. Even so, the release and use of the unprogrammed funds were still subject to
restrictions, for, to start with, the GAAs precisely specified the instances when the unprogrammed funds could be
released and the purposes for which they could be used.

The petitioners point out that a condition for the release of the unprogrammed funds was that the revenue
collections must exceed revenue targets; and that the release of the unprogrammed funds was illegal because such
condition was not met.191
The respondents disagree, holding that the release and use of the unprogrammed funds under the DAP were in
accordance with the pertinent provisions of the GAAs. In particular, the DBM avers that the unprogrammed funds
could be availed of when any of the following three instances occur, to wit: (1) the revenue collections exceeded
the original revenue targets proposed in the BESFs submitted by the President to Congress; (2) new revenues were
collected or realized from sources not originally considered in the BESFs; or(3) newly-approved loans for foreign
assisted projects were secured, or when conditions were triggered for other sources of funds, such as perfected loan
agreements for foreign-assisted projects.192 This view of the DBM was adopted by all the respondents in their
Consolidated Comment.193
The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as appropriations that
provided standby authority to incur additional agency obligations for priority PAPs when revenue collections
exceeded targets, and when additional foreign funds are generated.194 Contrary to the DBMs averment that there
were three instances when unprogrammed funds could be released, the BESFs envisioned only two instances. The
third mentioned by the DBM the collection of new revenues from sources not originally considered in the BESFs
was not included. This meant that the collection of additional revenues from new sources did not warrant the
release of the unprogrammed funds. Hence, even if the revenues not considered in the BESFs were collected or
generated, the basic condition that the revenue collections should exceed the revenue targets must still be complied
with in order to justify the release of the unprogrammed funds.
The view that there were only two instances when the unprogrammed funds could be released was bolstered by the
following texts of the Special Provisions of the 2011 and 2012 GAAs, to wit:
2011 GAA

1. Release of Fund. The amounts authorized herein shall be released only when the revenue collections exceed the
original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article
VII of the Constitution, including savings generated from programmed appropriations for the year: PROVIDED,
That collections arising from sources not considered in the aforesaid original revenue targets may be used to cover
releases from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for
foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for
the issuance of a SARO covering the loan proceeds: PROVIDED, FURTHERMORE, That if there are savings
generated from the programmed appropriations for the first two quarters of the year, the DBM may, subject to the
approval of the President, release the pertinent appropriations under the Unprogrammed Fund corresponding to
only fifty percent (50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That the release of
the balance of the total savings from programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed
the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22,
Article VII of the Constitution: PROVIDED, That collections arising from sources not considered in the aforesaid
original revenue targets may be used to cover releases from appropriations in this Fund: PROVIDED, FURTHER,
That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for
the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.
As can be noted, the provisos in both provisions to the effect that "collections arising from sources not considered
in the aforesaid original revenue targets may be used to cover releases from appropriations in this Fund" gave the
authority to use such additional revenues for appropriations funded from the unprogrammed funds. They did not at
all waive compliance with the basic requirement that revenue collections must still exceed the original revenue
targets.

In contrast, the texts of the provisos with regard to additional revenues generated from newly-approved foreign
loans were clear to the effect that the perfected loan agreement would be in itself "sufficient basis" for the issuance
of a SARO to release the funds but only to the extent of the amount of the loan. In such instance, the revenue
collections need not exceed the revenue targets to warrant the release of the loan proceeds, and the mere perfection
of the loan agreement would suffice.
It can be inferred from the foregoing that under these provisions of the GAAs the additional revenues from sources
not considered in the BESFs must be taken into account in determining if the revenue collections exceeded the
revenue targets. The text of the relevant provision of the 2013 GAA, which was substantially similar to those of the
GAAs for 2011 and 2012, already made this explicit, thus:
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed
the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22,
Article VII of the Constitution, including collections arising from sources not considered in the aforesaid original
revenue target, as certified by the BTr: PROVIDED, That in case of newly approved loans for foreign-assisted
projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a
SARO covering the loan proceeds.
Consequently, that there were additional revenues from sources not considered in the revenue target would not be
enough. The total revenue collections must still exceed the original revenue targets to justify the release of the
unprogrammed funds (other than those from newly-approved foreign loans).
The present controversy on the unprogrammed funds was rooted in the correct interpretation of the phrase "revenue
collections should exceed the original revenue targets." The petitioners take the phrase to mean that the total
revenue collections must exceed the total revenue target stated in the BESF, but the respondents understand the
phrase to refer only to the collections for each source of revenue as enumerated in the BESF, with the condition
being deemed complied with once the revenue collections from a particular source already exceeded the stated
target.

The BESF provided for the following sources of revenue, with the corresponding revenue target stated for each
source of revenue, to wit:
TAX REVENUES
Taxes on Net Income and Profits
Taxes on Property
Taxes on Domestic Goods and Services
General Sales, Turnover or VAT
Selected Excises on Goods
Selected Taxes on Services
Taxes on the Use of Goods or Property or Permission to Perform Activities
Other Taxes
Taxes on International Trade and Transactions
NON-TAX REVENUES
Fees and Charges
BTR Income
Government Services
Interest on NG Deposits
Interest on Advances to Government Corporations
Income from Investments
Interest on Bond Holdings

Guarantee Fee
Gain on Foreign Exchange
NG Income Collected by BTr
Dividends on Stocks
NG Share from Airport Terminal Fee
NG Share from PAGCOR Income
NG Share from MIAA Profit
Privatization
Foreign Grants
Thus, when the Court required the respondents to submit a certification from the Bureau of Treasury (BTr) to the
effect that the revenue collections had exceeded the original revenue targets,195 they complied by submitting
certifications from the BTr and Department of Finance (DOF) pertaining to only one identified source of revenue
the dividends from the shares of stock held by the Government in government-owned and controlled corporations.
To justify the release of the unprogrammed funds for 2011, the OSG presented the certification dated March 4,
2011 issued by DOF Undersecretary Gil S. Beltran, as follows:
This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the programmed
income from dividends from shares of stock in government-owned and controlled corporations is 5.5 billion.
This is to certify further that based on the records of the Bureau of Treasury, the National Government has recorded
dividend income amounting to P23.8 billion as of 31 January 2011.196
For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer Roberto B. Tan,
viz:

This is to certify that the actual dividend collections remitted to the National Government for the period January to
March 2012 amounted to P19.419 billion compared to the full year program of P5.5 billion for 2012.197
And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National Treasurer Rosalia
V. De Leon, to wit:
This is to certify that the actual dividend collections remitted to the National Government for the period January to
May 2013 amounted to P12.438 billion compared to the full year program of P10.0198 billion for 2013.
Moreover, the National Government accounted for the sale of the right to build and operate the NAIA expressway
amounting to P11.0 billion in June 2013.199
The certifications reflected that by collecting dividends amounting to P23.8 billion in 2011, P19.419 billion in
2012, and P12.438 billion in 2013 the BTr had exceeded only the P5.5 billion in target revenues in the form of
dividends from stocks in each of 2011 and 2012, and only the P10 billion in target revenues in the form of
dividends from stocks in 2013.
However, the requirement that revenue collections exceed the original revenue targets was to be construed in light
of the purpose for which the unprogrammed funds were incorporated in the GAAs as standby appropriations to
support additional expenditures for certain priority PAPs should the revenue collections exceed the resource targets
assumed in the budget or when additional foreign project loan proceeds were realized. The unprogrammed funds
were included in the GAAs to provide ready cover so as not to delay the implementation of the PAPs should new or
additional revenue sources be realized during the year.200 Given the tenor of the certifications, the unprogrammed
funds were thus not yet supported by the corresponding resources.201
The revenue targets stated in the BESF were intended to address the funding requirements of the proposed
programmed appropriations. In contrast, the unprogrammed funds, as standby appropriations, were to be released
only when there were revenues in excess of what the programmed appropriations required. As such, the revenue
targets should be considered as a whole, not individually; otherwise, we would be dealing with artificial revenue

surpluses. The requirement that revenue collections must exceed revenue target should be understood to mean that
the revenue collections must exceed the total of the revenue targets stated in the BESF. Moreover, to release the
unprogrammed funds simply because there was an excess revenue as to one source of revenue would be an
unsound fiscal management measure because it would disregard the budget plan and foster budget deficits, in
contravention of the Governments surplus budget policy.202
We cannot, therefore, subscribe to the respondents view.
5.
Equal protection, checks and balances,
and public accountability challenges
The DAP is further challenged as violative of the Equal Protection Clause, the system of checks and balances, and
the principle of public accountability.
With respect to the challenge against the DAP under the Equal Protection Clause,203 Luna argues that the
implementation of the DAP was "unfair as it [was] selective" because the funds released under the DAP was not
made available to all the legislators, with some of them refusing to avail themselves of the DAP funds, and others
being unaware of the availability of such funds. Thus, the DAP practised "undue favoritism" in favor of select
legislators in contravention of the Equal Protection Clause.
Similarly, COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable
classification was used in distributing the funds under the DAP; and that the Senators who supposedly availed
themselves of said funds were differently treated as to the amounts they respectively received.
Anent the petitioners theory that the DAP violated the system of checks and balances, Luna submits that the grant
of the funds under the DAP to some legislators forced their silence about the issues and anomalies surrounding the
DAP. Meanwhile, Belgica stresses that the DAP, by allowing the legislators to identify PAPs, authorized them to
take part in the implementation and execution of the GAAs, a function that exclusively belonged to the Executive;

that such situation constituted undue and unjustified legislative encroachment in the functions of the Executive;
and that the President arrogated unto himself the power of appropriation vested in Congress because NBC No. 541
authorized the use of the funds under the DAP for PAPs not considered in the 2012 budget.
Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability enshrined in the
Constitution,204 because the legislators relinquished the power of appropriation to the Executive, and exhibited a
reluctance to inquire into the legality of the DAP.
The OSG counters the challenges, stating that the supposed discrimination in the release of funds under the DAP
could be raised only by the affected Members of Congress themselves, and if the challenge based on the violation
of the Equal Protection Clause was really against the constitutionality of the DAP, the arguments of the petitioners
should be directed to the entitlement of the legislators to the funds, not to the proposition that all of the legislators
should have been given such entitlement.
The challenge based on the contravention of the Equal Protection Clause, which focuses on the release of funds
under the DAP to legislators, lacks factual and legal basis. The allegations about Senators and Congressmen being
unaware of the existence and implementation of the DAP, and about some of them having refused to accept such
funds were unsupported with relevant data. Also, the claim that the Executive discriminated against some
legislators on the ground alone of their receiving less than the others could not of itself warrant a finding of
contravention of the Equal Protection Clause. The denial of equal protection of any law should be an issue to be
raised only by parties who supposedly suffer it, and, in these cases, such parties would be the few legislators
claimed to have been discriminated against in the releases of funds under the DAP. The reason for the requirement
is that only such affected legislators could properly and fully bring to the fore when and how the denial of equal
protection occurred, and explain why there was a denial in their situation. The requirement was not met here.
Consequently, the Court was not put in the position to determine if there was a denial of equal protection. To have
the Court do so despite the inadequacy of the showing of factual and legal support would be to compel it to
speculate, and the outcome would not do justice to those for whose supposed benefit the claim of denial of equal
protection has been made.

The argument that the release of funds under the DAP effectively stayed the hands of the legislators from
conducting congressional inquiries into the legality and propriety of the DAP is speculative. That deficiency
eliminated any need to consider and resolve the argument, for it is fundamental that speculation would not support
any proper judicial determination of an issue simply because nothing concrete can thereby be gained. In order to
sustain their constitutional challenges against official acts of the Government, the petitioners must discharge the
basic burden of proving that the constitutional infirmities actually existed.205 Simply put, guesswork and
speculation cannot overcome the presumption of the constitutionality of the assailed executive act.
We do not need to discuss whether or not the DAP and its implementation through the various circulars and
memoranda of the DBM transgressed the system of checks and balances in place in our constitutional system. Our
earlier expositions on the DAP and its implementing issuances infringing the doctrine of separation of powers
effectively addressed this particular concern.
Anent the principle of public accountability being transgressed because the adoption and implementation of the
DAP constituted an assumption by the Executive of Congress power of appropriation, we have already held that
the DAP and its implementing issuances were policies and acts that the Executive could properly adopt and do in
the execution of the GAAs to the extent that they sought to implement strategies to ramp up or accelerate the
economy of the country.
6.
Doctrine of operative fact was applicable
After declaring the DAP and its implementing issuances constitutionally infirm, we must now deal with the
consequences of the declaration.
Article 7 of the Civil Code provides:
Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused
by disuse, or custom or practice to the contrary.

When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall
govern.
Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws
or the Constitution.
A legislative or executive act that is declared void for being unconstitutional cannot give rise to any right or
obligation.206 However, the generality of the rule makes us ponder whether rigidly applying the rule may at times
be impracticable or wasteful. Should we not recognize the need to except from the rigid application of the rule the
instances in which the void law or executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has been
exhaustively explained in De Agbayani v. Philippine National Bank:207
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive
order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or
duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially
declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: When
the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall
govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to
the laws of the Constitution. It is understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic.
It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must
have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed
their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done
while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted

as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not
a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with respect to particular relations, individual and
corporate, and particular conduct, private and official."
The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of its
unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or
disregarded. In short, it nullifies the void law or executive act but sustains its effects. It provides an exception to the
general rule that a void or unconstitutional law produces no effect.208 But its use must be subjected to great scrutiny
and circumspection, and it cannot be invoked to validate an unconstitutional law or executive act, but is resorted to
only as a matter of equity and fair play.209 It applies only to cases where extraordinary circumstances exist, and only
when the extraordinary circumstances have met the stringent conditions that will permit its application.
We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its application to
the DAP proceeds from equity and fair play. The consequences resulting from the DAP and its related issuances
could not be ignored or could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The term executive
act is broad enough to include any and all acts of the Executive, including those that are quasi legislative and quasijudicial in nature. The Court held so in Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council:210

Nonetheless, the minority is of the persistent view that the applicability of the operative fact doctrine should be
limited to statutes and rules and regulations issued by the executive department that are accorded the same status as
that of a statute or those which are quasi-legislative in nature. Thus, the minority concludes that the phrase
executive act used in the case of De Agbayani v. Philippine National Bank refers only to acts, orders, and rules
and regulations that have the force and effect of law. The minority also made mention of the Concurring Opinion of
Justice Enrique Fernando in Municipality of Malabang v. Benito, where it was supposedly made explicit that the
operative fact doctrine applies to executive acts, which are ultimately quasi-legislative in nature.
We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang case elaborates what
executive act mean. Moreover, while orders, rules and regulations issued by the President or the executive branch
have fixed definitions and meaning in the Administrative Code and jurisprudence, the phrase executive act does
not have such specific definition under existing laws. It should be noted that in the cases cited by the minority,
nowhere can it be found that the term executive act is confined to the foregoing. Contrarily, the term executive
act is broad enough to encompass decisions of administrative bodies and agencies under the executive department
which are subsequently revoked by the agency in question or nullified by the Court.
A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the Presidential
Commission on Good Government (PCGG) and as Chief Presidential Legal Counsel (CPLC) which was declared
unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In said case, this Court ruled that the
concurrent appointment of Elma to these offices is in violation of Section 7, par. 2, Article IX-B of the 1987
Constitution, since these are incompatible offices. Notably, the appointment of Elma as Chairman of the PCGG and
as CPLC is, without a question, an executive act. Prior to the declaration of unconstitutionality of the said
executive act, certain acts or transactions were made in good faith and in reliance of the appointment of Elma
which cannot just be set aside or invalidated by its subsequent invalidation.
In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the invalidity of the
jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to have existed so as
not to trample upon the rights of the accused therein. Relevant thereto, in Olaguer v. Military Commission No. 34,
it was ruled that military tribunals pertain to the Executive Department of the Government and are simply

instrumentalities of the executive power, provided by the legislature for the President as Commander-in-Chief to
aid him in properly commanding the army and navy and enforcing discipline therein, and utilized under his orders
or those of his authorized military representatives.
Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by the executive
department that are accorded the same status as that of a statute or those which are quasi-legislative in nature.
Even assuming that De Agbayani initially applied the operative fact doctrine only to executive issuances like orders
and rules and regulations, said principle can nonetheless be applied, by analogy, to decisions made by the President
or the agencies under the executive department. This doctrine, in the interest of justice and equity, can be applied
liberally and in a broad sense to encompass said decisions of the executive branch. In keeping with the demands of
equity, the Court can apply the operative fact doctrine to acts and consequences that resulted from the reliance not
only on a law or executive act which is quasi-legislative in nature but also on decisions or orders of the executive
branch which were later nullified. This Court is not unmindful that such acts and consequences must be recognized
in the higher interest of justice, equity and fairness.
Significantly, a decision made by the President or the administrative agencies has to be complied with because it
has the force and effect of law, springing from the powers of the President under the Constitution and existing laws.
Prior to the nullification or recall of said decision, it may have produced acts and consequences in conformity to
and in reliance of said decision, which must be respected. It is on this score that the operative fact doctrine should
be applied to acts and consequences that resulted from the implementation of the PARC Resolution approving the
SDP of HLI. (Bold underscoring supplied for emphasis)
In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court likewise declared that "for the
operative fact doctrine to apply, there must be a legislative or executive measure, meaning a law or executive
issuance." Thus, the Court opined there that the operative fact doctrine did not apply to a mere administrative
practice of the Bureau of Internal Revenue, viz:

Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or
ruling is issued up to its reversal by the Commissioner or this Court. The reversal is not given retroactive effect.
This, in essence, is the doctrine of operative fact. There must, however, be a rule or ruling issued by the
Commissioner that is relied upon by the taxpayer in good faith. A mere administrative practice, not formalized into
a rule or ruling, will not suffice because such a mere administrative practice may not be uniformly and consistently
applied. An administrative practice, if not formalized as a rule or ruling, will not be known to the general public
and can be availed of only by those with informal contacts with the government agency.
It is clear from the foregoing that the adoption and the implementation of the DAP and its related issuances were
executive acts.1avvphi1 The DAP itself, as a policy, transcended a merely administrative practice especially after
the Executive, through the DBM, implemented it by issuing various memoranda and circulars. The pooling of
savings pursuant to the DAP from the allotments made available to the different agencies and departments was
consistently applied throughout the entire Executive. With the Executive, through the DBM, being in charge of the
third phase of the budget cycle the budget execution phase, the President could legitimately adopt a policy like
the DAP by virtue of his primary responsibility as the Chief Executive of directing the national economy towards
growth and development. This is simply because savings could and should be determined only during the budget
execution phase.
As already mentioned, the implementation of the DAP resulted into the use of savings pooled by the Executive to
finance the PAPs that were not covered in the GAA, or that did not have proper appropriation covers, as well as to
augment items pertaining to other departments of the Government in clear violation of the Constitution. To declare
the implementation of the DAP unconstitutional without recognizing that its prior implementation constituted an
operative fact that produced consequences in the real as well as juristic worlds of the Government and the Nation is
to be impractical and unfair. Unless the doctrine is held to apply, the Executive as the disburser and the offices
under it and elsewhere as the recipients could be required to undo everything that they had implemented in good
faith under the DAP. That scenario would be enormously burdensome for the Government. Equity alleviates such
burden.

The other side of the coin is that it has been adequately shown as to be beyond debate that the implementation of
the DAP yielded undeniably positive results that enhanced the economic welfare of the country. To count the
positive results may be impossible, but the visible ones, like public infrastructure, could easily include roads,
bridges, homes for the homeless, hospitals, classrooms and the like. Not to apply the doctrine of operative fact to
the DAP could literally cause the physical undoing of such worthy results by destruction, and would result in most
undesirable wastefulness.
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not
always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be invoked
only in situations where the nullification of the effects of what used to be a valid law would result in inequity and
injustice;212 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 PAPs that can no
longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the
authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by
the proper tribunals determining their criminal, civil, administrative and other liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES the
following acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541 and
related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the 1987
Constitution and the doctrine of separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the
withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year
and without complying with the statutory definition of savings contained in the General Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other offices
outside the Executive; and

(c) The funding of projects, activities and programs that were not covered by any appropriation in the
General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the
National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
SO ORDERED.

G.R. No. 209287

February 3, 2015

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

TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON,
PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN,
GABRIELA WOMEN'S PARTY REPRESENTATIVE; REP. TERRY L. RIDON, KABATAAN
PARTYLIST REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAYAN MUNA PARTY-LIST
REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY GENERAL OF BAYAN; MANUEL K.

DAYRIT, CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO,

CHAIRPERSON, ANAKBAYAN; VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF
THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209135
AUGUSTO L. SYJUCO JR., Ph.D., Petitioner,
vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET
AND MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAPACITY AS THE
SENATE PRESIDENT OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. No. 209136
MANUELITO R. LUNA, Petitioner,
vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT
OF BUDGET AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS
OFFICIAL CAPACITY AS ALTER EGO OF THE PRESIDENT, Respondents.

x-----------------------x
G.R. No. 209155
ATTY. JOSE MALVAR VILLEGAS, JR. Petitioner
vs.
THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY
OF BUDGET AND MANAGEMENT FLORENCIO B. ABAD, Respondents.
x-----------------------x
G.R. No. 209164
PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN
M. BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,
vs.
DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B.
ABAD, Respondents.
x-----------------------x
G.R. No. 209260
INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,
vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT
(DBM),Respondent.

x-----------------------x
G.R. No. 209442
GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN M. ABANTE AND REV. JOSE L.
GONZALEZ,Petitioners,
vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES,
REPRESENTED BY SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF
REPRESENTATIVES, REPRESENTED BY SPEAKER FELICIANO BELMONTE, JR.; THE
EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.;
THE DEPARTMENT OF BUDGET AND MANAGEMENT, REPRESENTED BY SECRETARY
FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY SECRETARY CESAR V.
PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE
LEON, Respondents.
x-----------------------x
G.R. No. 209517
CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT
EMPLOYEES (COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO
DASMARINAS, JR.; ROSALINDA NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT OF
THE CONSOLIDATED UNION OF EMPLOYEES NATIONAL HOUSING AUTHORITY (CUE-NHA);
MANUEL BACLAGON, FOR HIMSELF AND AS PRESIDENT OF THE SOCIAL WELFARE
EMPLOYEES ASSOCIATION OF THE PHILIPPINES, DEPARTMENT OF SOCIAL WELFARE AND

DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO); ANTONIA PASCUAL, FOR HERSELF

AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF AGRARIAN REFORM EMPLOYEES
ASSOCIATION (DAREA); ALBERT MAGALANG, FOR HIMSELF AND AS PRESIDENT OF THE
ENVIRONMENT AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND MARCIAL
ARABA, FOR HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG
MGA KAW ANI NG MMDA (KKK-MMDA), Petitioners,
vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES;
PAQUITO OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY
OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
x-----------------------x
G.R. No. 209569
VOLUNTEERS AGAINST CRIME AND CORRUPTION (V ACC), REPRESENTED BY DANTE L.
JIMENEZ,Petitioner,
vs.
PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
RESOLUTION
BERSAMIN, J.:

The Constitution must ever remain supreme. All must bow to the mandate of this law. Expediency must not be
allowed to sap its strength nor greed for power debase its rectitude.1
Before the Court are the Motion for Reconsideration2 filed by the respondents, and the Motion for Partial
Reconsideration3 filed by the petitioners in G.R. No. 209442.
In their Motion for Reconsideration, the respondents assail the decision4 promulgated on July 1 2014 upon the
following procedural and substantive errors, viz:
PROCEDURAL
I
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
II
PETITIONERS ACTIONS DO NOT PRESENT AN ACTUAL CASE OR CONTROVERSY AND THEREFORE
THIS HONORABLE COURT DID NOT ACQUIRE JURISDICTION
III

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
IV
NOR CAN PETITIONERS STANDING BE SUSTAINED ON THE GROUND THAT THEY ARE BRINGING
THESE SUITS AS CITIZENS AND AS TAXPAYERS
V
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. 5415
SUBSTANTIVE
I
THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED "SAVINGS" UNDER THE RELEVANT
PROVISIONS OF THE GAA
II
ALL DAP APPLICATIONS HAVE APPROPRIATION COVER
III

THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS TO OTHER DEPARTMENTS PURSUANT

TO HIS CONSTITUTIONAL POWERS
IV
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
V
THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED6
The respondents maintain that the issues in these consolidated cases were mischaracterized and unnecessarily
constitutionalized; that the Courts interpretation of savings can be overturned by legislation considering that
savings is defined in the General Appropriations Act (GAA), hence making savings a statutory issue;7 that the
withdrawn unobligated allotments and unreleased appropriations constitute savings and may be used for
augmentation;8 and that the Court should apply legally recognized norms and principles, most especially the
presumption of good faith, in resolving their motion.9
On their part, the petitioners in G.R. No. 209442 pray for the partial reconsideration of the decision on the ground
that the Court thereby:
FAILED TO DECLARE AS UNCONSTITUTIONAL AND ILLEGAL ALL MONEYS UNDER THE
DISBURSEMENT ACCELERATION PROGRAM (DAP) USED FOR ALLEGED AUGMENTATION OF
APPROPRIATION ITEMS THAT DID NOT HAVE ACTUAL DEFICIENCIES10

They submit that augmentation of items beyond the maximum amounts recommended by the President for the
programs, activities and projects (PAPs) contained in the budget submitted to Congress should be declared
unconstitutional.
Ruling of the Court
We deny the motion for reconsideration of the petitioners in G.R. No. 209442, and partially grant the motion for
reconsideration of the respondents.
The procedural challenges raised by the respondents, being a mere rehash of their earlier arguments herein, are
dismissed for being already passed upon in the assailed decision.
As to the substantive challenges, the Court discerns that the grounds are also reiterations of the arguments that were
already thoroughly discussed and passed upon in the assailed decision. However, certain declarations in our July 1,
2014 Decision are modified in order to clarify certain matters and dispel further uncertainty.
1.
The Courts power of judicial review
The respondents argue that the Executive has not violated the GAA because savings as a conceptis an ordinary
species of interpretation that calls for legislative, instead of judicial, determination.11
This argument cannot stand.
The consolidated petitions distinctly raised the question of the constitutionality of the acts and practices under the
DAP, particularly their non-conformity with Section 25(5), Article VI of the Constitution and the principles of

separation of power and equal protection. Hence, the matter is still entirely within the Courts competence, and its
determination does not pertain to Congress to the exclusion of the Court. Indeed, the interpretation of the GAA and
its definition of savings is a foremost judicial function. This is because the power of judicial review vested in the
Court is exclusive. As clarified in Endencia and Jugo v. David:12
Under our system of constitutional government, the Legislative department is assigned the power to make and
enact laws. The Executive department is charged with the execution of carrying out of the provisions of said laws.
But the interpretation and application of said laws belong exclusively to the Judicial department. And this authority
to interpret and apply the laws extends to the Constitution. Before the courts can determine whether a law is
constitutional or not, it will have to interpret and ascertain the meaning not only of said law, but also of the
pertinent portion of the Constitution in order to decide whether there is a conflict between the two, because if there
is, then the law will have to give way and has to be declared invalid and unconstitutional.
xxxx
We have already said that the Legislature under our form of government is assigned the task and the power to make
and enact laws, but not to interpret them. This is more true with regard to the interpretation of the basic law, the
Constitution, which is not within the sphere of the Legislative department. If the Legislature may declare what a
law means, or what a specific portion of the Constitution means, especially after the courts have in actual case
ascertain its meaning by interpretation and applied it in a decision, this would surely cause confusion and
instability in judicial processes and court decisions. Under such a system, a final court determination of a case
based on a judicial interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the Legislative department. That would
be neither wise nor desirable, besides being clearly violative of the fundamental, principles of our constitutional
system of government, particularly those governing the separation of powers.13

The respondents cannot also ignore the glaring fact that the petitions primarily and significantly alleged grave
abuse of discretion on the part of the Executive in the implementation of the DAP. The resolution of the petitions
thus demanded the exercise by the Court of its aforedescribed power of judicial review as mandated by the
Constitution.
2.
Strict construction on the accumulation and utilization of savings
The decision of the Court has underscored that the exercise of the power to augment shall be strictly construed by
virtue of its being an exception to the general rule that the funding of PAPs shall be limited to the amount fixed by
Congress for the purpose.14 Necessarily, savings, their utilization and their management will also be strictly
construed against expanding the scope of the power to augment.15 Such a strict interpretation is essential in order to
keep the Executive and other budget implementors within the limits of their prerogatives during budget execution,
and to prevent them from unduly transgressing Congress power of the purse.16 Hence, regardless of the perceived
beneficial purposes of the DAP, and regardless of whether the DAP is viewed as an effective tool of stimulating the
national economy, the acts and practices under the DAP and the relevant provisions of NBC No. 541 cited in the
Decision should remain illegal and unconstitutional as long as the funds used to finance the projects mentioned
therein are sourced from savings that deviated from the relevant provisions of the GAA, as well as the limitation on
the power to augment under Section 25(5), Article VI of the Constitution. In a society governed by laws, even the
best intentions must come within the parameters defined and set by the Constitution and the law. Laudable
purposes must be carried out through legal methods.17
Respondents contend, however, that withdrawn unobligated allotments and unreleased appropriations under the
DAP are savings that may be used for augmentation, and that the withdrawal of unobligated allotments were made
pursuant to Section 38 Chapter 5, Book VI of the Administrative Code;18 that Section 38 and Section 39, Chapter 5,

Book VI of the Administrative Code are consistent with Section 25(5), Article VI of the Constitution, which, taken
together, constitute "a framework for which economic managers of the nation may pull various levers in the form
of authorization from Congress to efficiently steer the economy towards the specific and general purposes of the
GAA;"19 and that the Presidents augmentation of deficient items is in accordance with the standing authority
issued by Congress through Section 39.
Section 25(5), Article VI of the Constitution states:
Section 25. x x x x x x x
5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the
Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for
their respective offices from savings in other items of their respective appropriations.
xxxx
Section 38 and Section 39, Chapter 5, Book VI of the Administrative Code provide:
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.
Section 39. Authority 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. (Bold underscoring supplied for emphasis)
In the Decision, we said that:
Unobligated allotments, on the other hand, were encompassed by the first part of the definition of "savings" in the
GAA, that is, as "portions or balances of any programmed appropriation in this Act free from any obligation or
encumbrance." But the first part of the definition was further qualified by the three enumerated instances of when
savings would be realized. As such, unobligated allotments could not be indiscriminately declared as savings
without first determining whether any of the three instances existed. This signified that the DBMs withdrawal of
unobligated allotments had disregarded the definition of savings under the GAAs.
xxxx
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the
withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of further
expenditures, not the withdrawal of unobligated allotments, to wit:
xxxx

Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but instead
transferred the funds to other PAPs.20
We now clarify.
Section 38 refers to the authority of the President "to suspend or otherwise stop further expenditure of funds
allotted for any agency, or any other expenditure authorized in the General Appropriations Act." When the
President suspends or stops expenditure of funds, savings are not automatically generated until it has been
established that such funds or appropriations are free from any obligation or encumbrance, and that the work,
activity or purpose for which the appropriation is authorized has been completed, discontinued or abandoned.
It is necessary to reiterate that under Section 5.7 of NBC No. 541, the withdrawn unobligated allotments may be:
5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned, from which the allotments
were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs and projects of the agency/OU; or
5.7.3 Used to augment existing programs and projects of any agency and to fund priority programs and projects not
considered in the 2012 budget but expected to be started or implemented during the current year.
Although the withdrawal of unobligated allotments may have effectively resulted in the suspension or stoppage of
expenditures through the issuance of negative Special Allotment Release Orders (SARO), the reissuance of
withdrawn allotments to the original programs and projects is a clear indication that the program or project from
which the allotments were withdrawn has not been discontinued or abandoned. Consequently, as we have pointed
out in the Decision, "the purpose for which the withdrawn funds had been appropriated was not yet fulfilled, or did
not yet cease to exist, rendering the declaration of the funds as savings impossible."21 In this regard, the withdrawal

and transfer of unobligated allotments remain unconstitutional. But then, whether the withdrawn allotments have
actually been reissued to their original programs or projects is a factual matter determinable by the proper tribunal.
Also, withdrawals of unobligated allotments pursuant to NBC No. 541 which shortened the availability of
appropriations for MOOE and capital outlays, and those which were transferred to PAPs that were not determined
to be deficient, are still constitutionally infirm and invalid.
At this point, it is likewise important to underscore that the reversion to the General Fund of unexpended balances
of appropriations savings included pursuant to Section 28 Chapter IV, Book VI of the Administrative
Code22does not apply to the Constitutional Fiscal Autonomy Group (CFAG), which include the Judiciary, Civil
Service Commission, Commission on Audit, Commission on Elections, Commission on Human Rights, and the
Office of the Ombudsman. The reason for this is that the fiscal autonomy enjoyed by the CFAG
x x x contemplates a guarantee of full flexibility to allocate and utilize their resources with the wisdom and
dispatch that their needs require. It recognizes the power and authority to levy, assess and collect fees, fix rates of
compensation not exceeding the highest rates authorized by law for compensation and pay plans of the government
and allocate and disburse such sums as may be provided by law or prescribed by them in the course of the
discharge of their functions.
Fiscal autonomy means freedom from outside control. If the Supreme Court says it needs 100 typewriters but DBM
rules we need only 10 typewriters and sends its recommendations to Congress without even informing us, the
autonomy given by the Constitution becomes an empty and illusory platitude.
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the independence and flexibility
needed in the discharge of their constitutional duties. The imposition of restrictions and constraints on the manner
the independent constitutional offices allocate and utilize the funds appropriated for their operations is anathema to

fiscal autonomy and violative not only of the express mandate of the Constitution but especially as regards the
Supreme Court, of the independence and separation of powers upon which the entire fabric of our constitutional
system is based. x x x23
On the other hand, Section 39 is evidently in conflict with the plain text of Section 25(5), Article VI of the
Constitution because it allows the President to approve the use of any savings in the regular appropriations
authorized in the GAA for programs and projects of any department, office or agency to cover a deficit in any other
item of the regular appropriations. As such, Section 39 violates the mandate of Section 25(5) because the latter
expressly limits the authority of the President to augment an item in the GAA to only those in his own Department
out of the savings in other items of his own Departments appropriations. Accordingly, Section 39 cannot serve as a
valid authority to justify cross-border transfers under the DAP. Augmentations under the DAP which are made by
the Executive within its department shall, however, remain valid so long as the requisites under Section 25(5) are
complied with.
In this connection, the respondents must always be reminded that the Constitution is the basic law to which all laws
must conform. No act that conflicts with the Constitution can be valid.24 In Mutuc v. Commission on
Elections,25 therefore, we have emphasized the importance of recognizing and bowing to the supremacy of the
Constitution:
x x x The concept of the Constitution as the fundamental law, setting forth the criterion for the validity of any
public act whether proceeding from the highest official or the lowest functionary, is a postulate of our system of
government. That is to manifest fealty to the rule of law, with priority accorded to that which occupies the topmost
rung in the legal hierarchy. The three departments of government in the discharge of the functions with which it is
[sic] entrusted have no choice but to yield obedience to its commands. Whatever limits it imposes must be
observed. Congress in the enactment of statutes must ever be on guard lest the restrictions on its authority, whether
substantive or formal, be transcended. The Presidency in the execution of the laws cannot ignore or disregard what

it ordains. In its task of applying the law to the facts as found in deciding cases, the judiciary is called upon to
maintain inviolate what is decreed by the fundamental law. Even its power of judicial review to pass upon the
validity of the acts of the coordinate branches in the course of adjudication is a logical corollary of this basic
principle that the Constitution is paramount. It overrides any governmental measure that fails to live up to its
mandates. Thereby there is a recognition of its being the supreme law.
Also, in Biraogo v. Philippine Truth Commission of 2010,26 we have reminded that: The role of the Constitution
cannot be overlooked. It is through the Constitution that the fundamental powers of government are established,
limited and defined, and by which these powers are distributed among the several departments. The Constitution is
the basic and paramount law to which all other laws must conform and to which all persons, including the highest
officials of the land, must defer. Constitutional doctrines must remain steadfast no matter what may be the tides of
time. It cannot be simply made to sway and accommodate the call of situations and much more tailor itself to the
whims and caprices of government and the people who run it.27
3.
The power to augment cannot be used to fund non-existent provisions in the GAA
The respondents posit that the Court has erroneously invalidated all the DAP-funded projects by overlooking the
difference between an item and an allotment class, and by concluding that they do not have appropriation cover;
and that such error may induce Congress and the Executive (through the DBM) to ensure that all items should have
at least P1 funding in order to allow augmentation by the President.28
At the outset, we allay the respondents apprehension regarding the validity of the DAP funded projects. It is to be
emphatically indicated that the Decision did not declare the en masse invalidation of the 116 DAP-funded projects.
To be sure, the Court recognized the encouraging effects of the DAP on the countrys economy,29 and

acknowledged its laudable purposes, most especially those directed towards infrastructure development and
efficient delivery of basic social services.30 It bears repeating that the DAP is a policy instrument that the
Executive, by its own prerogative, may utilize to spur economic growth and development.
Nonetheless, the Decision did find doubtful those projects that appeared to have no appropriation cover under the
relevant GAAs on the basis that: (1) the DAP funded projects that originally did not contain any appropriation for
some of the expense categories (personnel, MOOE and capital outlay); and (2) the appropriation code and the
particulars appearing in the SARO did not correspond with the program specified in the GAA. The respondents
assert, however, that there is no constitutional requirement for Congress to create allotment classes within an item.
What is required is for Congress to create items to comply with the line-item veto of the President.31
After a careful reexamination of existing laws and jurisprudence, we find merit in the respondents argument.
Indeed, Section 25(5) of the 1987 Constitution mentions of the term item that may be the object of augmentation
by the President, the Senate President, the Speaker of the House, the Chief Justice, and the heads of the
Constitutional Commissions. In Belgica v. Ochoa,32 we said that an item that is the distinct and several part of the
appropriation bill, in line with the item-veto power of the President, must contain "specific appropriations of
money" and not be only general provisions, thus:
For the President to exercise his item-veto power, it necessarily follows that there exists a proper "item" which may
be the object of the veto. An item, as defined in the field of appropriations, pertains to "the particulars, the details,
the distinct and severable parts of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of
the Philippine Islands, the US Supreme Court characterized an item of appropriation as follows:
An item of an appropriation bill obviously means an item which, in itself, is a specific appropriation of money, not
some general provision of law which happens to be put into an appropriation bill. (Emphases supplied)

On this premise, it may be concluded that an appropriation bill, to ensure that the President may be able to exercise
his power of item veto, must contain "specific appropriations of money" and notonly "general provisions" which
provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be an item characterized by singular
correspondence meaning an allocation of a specified singular amount for a specified singular purpose, otherwise
known as a "line-item." This treatment not only allows the item to be consistent with its definition as a "specific
appropriation of money" but also ensures that the President may discernibly veto the same. Based on the foregoing
formulation, the existing Calamity Fund, Contingent Fund and the Intelligence Fund, being appropriations which
state a specified amount for a specific purpose, would then be considered as "line-item" appropriations which are
rightfully subject to item veto. Likewise, it must be observed that an appropriation may be validly apportioned into
component percentages or values; however, it is crucial that each percentage or value must be allocated for its own
corresponding purpose for such component to be considered as a proper line-item. Moreover, as Justice Carpio
correctly pointed out, a valid appropriation may even have several related purposes that are by accounting and
budgeting practice considered as one purpose, e.g., MOOE (maintenance and other operating expenses), in which
case the related purposes shall be deemed sufficiently specific for the exercise of the Presidents item veto power.
Finally, special purpose funds and discretionary funds would equally square with the constitutional mechanism of
item-veto for as long as they follow the rule on singular correspondence as herein discussed. x x x (Emphasis
supplied)33
Accordingly, the item referred to by Section 25(5) of the Constitution is the last and indivisible purpose of a
program in the appropriation law, which is distinct from the expense category or allotment class. There is no
specificity, indeed, either in the Constitution or in the relevant GAAs that the object of augmentation should be the
expense category or allotment class. In the same vein, the President cannot exercise his veto power over an expense
category; he may only veto the item to which that expense category belongs to.

Further, in Nazareth v. Villar,34 we clarified that there must be an existing item, project or activity, purpose or object
of expenditure with an appropriation to which savings may be transferred for the purpose of augmentation.
Accordingly, so long as there is an item in the GAA for which Congress had set aside a specified amount of public
fund, savings may be transferred thereto for augmentation purposes. This interpretation is consistent not only with
the Constitution and the GAAs, but also with the degree of flexibility allowed to the Executive during budget
execution in responding to unforeseeable contingencies.
Nonetheless, this modified interpretation does not take away the cave at that only DAP projects found in the
appropriate GAAs may be the subject of augmentation by legally accumulated savings. Whether or not the 116
DAP-funded projects had appropriation cover and were validly augmented require factual determination that is not
within the scope of the present consolidated petitions under Rule 65.
4.
Cross-border transfers are constitutionally impermissible
The respondents assail the pronouncement of unconstitutionality of cross-border transfers made by the President.
They submit that Section 25(5), Article VI of the Constitution prohibits only the transfer of appropriation, not
savings. They relate that cross-border transfers have been the practice in the past, being consistent with the
Presidents role as the Chief Executive.35
In view of the clarity of the text of Section 25(5), however, the Court stands by its pronouncement, and will not
brook any strained interpretations.
5.
Unprogrammed funds may only be released upon proof that the total revenues exceeded the target

Based on the 2011, 2012 and 2013 GAAs, the respondents contend that each source of revenue in the budget
proposal must exceed the respective target to authorize release of unprogrammed funds. Accordingly, the Courts
ruling thereon nullified the intention of the authors of the unprogrammed fund, and renders useless the special
provisions in the relevant GAAs.36
The respondents contentions are without merit.
To recall, the respondents justified the use of unprogrammed funds by submitting certifications from the Bureau of
Treasury and the Department of Finance (DOF) regarding the dividends derived from the shares of stock held by
the Government in government-owned and controlled corporations.37 In the decision, the Court has held that the
requirement under the relevant GAAs should be construed in light of the purpose for which the unprogrammed
funds were denominated as "standby appropriations." Hence, revenue targets should be considered as a whole, not
individually; otherwise, we would be dealing with artificial revenue surpluses. We have even cautioned that the
release of unprogrammed funds based on the respondents position could be unsound fiscal management for
disregarding the budget plan and fostering budget deficits, contrary to the Governments surplus budget policy.38
While we maintain the position that aggregate revenue collection must first exceed aggregate revenue target as a
pre-requisite to the use of unprogrammed funds, we clarify the respondents notion that the release of
unprogrammed funds may only occur at the end of the fiscal year.
There must be consistent monitoring as a component of the budget accountability phase of every agencys
performance in terms of the agencys budget utilization as provided in Book VI, Chapter 6, Section 51 and Section
52 of the Administrative Code of 1987,which state:

SECTION 51. Evaluation of Agency Performance.The President, through the Secretary shall evaluate on a
continuing basis the quantitative and qualitative measures of agency performance as reflected in the units of work
measurement and other indicators of agency performance, including the standard and actual costs per unit of work.
SECTION 52. Budget Monitoring and Information System.The Secretary of Budget shall determine accounting
and other items of information, financial or otherwise, needed to monitor budget performance and to assess
effectiveness of agencies operations and shall prescribe the forms, schedule of submission, and other components
of reporting systems, including the maintenance of subsidiary and other records which will enable agencies to
accomplish and submit said information requirements: Provided, that the Commission on Audit shall, in
coordination with the Secretary of Budget, issue rules and regulations that may be applicable when the reporting
requirements affect accounting functions of agencies: Provided, further, that the applicable rules and regulations
shall be issued by the Commission on Audit within a period of thirty (30) days after the Department of Budget and
Management prescribes the reporting requirements.
Pursuant to the foregoing, the Department of Budget and Management (DBM) and the Commission on Audit
(COA) require agencies under various joint circulars to submit budget and financial accountability reports (BFAR)
on a regular basis,39 one of which is the Quarterly Report of Income or Quarterly Report of Revenue and Other
Receipts.40 On the other hand, as Justice Carpio points out in his Separate Opinion, the Development Budget
Coordination Committee (DBCC) sets quarterly revenue targets for aspecific fiscal year.41 Since information on
both actual revenue collections and targets are made available every quarter, or at such time as the DBM may
prescribe, actual revenue surplus may be determined accordingly and eleases from the unprogrammed fund may
take place even prior to the end of the fiscal year.42
In fact, the eleventh special provision for unprogrammed funds in the 2011 GAA requires the DBM to submit
quarterly reports stating the details of the use and releases from the unprogrammed funds, viz:

11. Reportorial Requirement. The DBM shall submit to the House Committee on Appropriations and the Senate
Committee on Finance separate quarterly reports stating the releases from the Unprogrammed Fund, the amounts
released and purposes thereof, and the recipient departments, bureaus, agencies or offices, GOCCs and GFIs,
including the authority under which the funds are released under Special Provision No. 1 of the Unprogrammed
Fund.
Similar provisions are contained in the 2012 and 2013 GAAs.43
However, the Courts construction of the provision on unprogrammed funds is a statutory, not a constitutional,
interpretation of an ambiguous phrase. Thus, the construction should be given prospective effect.44
6.
The presumption of good faith stands despite the obiter pronouncement
The remaining concern involves the application of the operative fact doctrine.
The respondents decry the misapplication of the operative fact doctrine, stating:
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 are still deemed valid on the theory that judicial nullification is a
contingent or unforeseen event.
111. The cases before us are about the statutory and constitutional interpretations 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, violates the constitutional presumption of innocence,
and is inconsistent with the Honorable Courts recognition that "the implementation of the DAP yielded undeniably
positive results that enhanced the economic welfare of the country."
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.45 (Emphasis supplied)
In the speech he delivered on July 14, 2014, President Aquino III also expressed the view that in applying the
doctrine of operative fact, the Court has already presumed the absence of good faith on the part of the authors,
proponents and implementors of the DAP, so that they would have to prove good faith during trial.46
Hence, in their Motion for Reconsideration, the respondents now urge that the Court should extend the
presumption of good faith in favor of the President and his officials who co-authored, proposed or implemented the
DAP.47
The paragraphs 3 and 4 of page 90 of the Decision alluded to by the respondents read:
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not
always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be invoked
only in situations where the nullification of the effects of what used to be a valid law would result in inequity and

injustice; but where no such result would ensue, the general rule that an unconstitutional law is totally ineffective
should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can no
longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the
authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by
the proper tribunals determining their criminal, civil, administrative and other liabilities. 48 (Bold underscoring is
supplied)
The quoted text of paragraphs 3 and 4 shows that the Court has neither thrown out the presumption of good faith
nor imputed bad faith to the authors, proponents and implementors of the DAP. The contrary is true, because the
Court has still presumed their good faith by pointing out that "the doctrine of operative fact xxx 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." Note that the proper
tribunals can make "concrete findings of good faith in their favor" only after a full hearing of all the parties in any
given case, and such a hearing can begin to proceed only after according all the presumptions, particularly that of
good faith, by initially requiring the complainants, plaintiffs or accusers to first establish their complaints or
charges before the respondent authors, proponents and implementors of the DAP.
It is equally important to stress that the ascertainment of good faith, or the lack of it, and the determination of
whether or not due diligence and prudence were exercised, are questions of fact.49 The want of good faith is thus
better determined by tribunals other than this Court, which is not a trier of facts.50
For sure, the Court cannot jettison the presumption of good faith in this or in any other case.1wphi1 The
presumption is a matter of law. It has had a long history. Indeed, good faith has long been established as a legal

principle even in the heydays of the Roman Empire.51In Soriano v. Marcelo,52 citing Collantes v. Marcelo,53 the
Court emphasizes the necessity of the presumption of good faith, thus:
Well-settled is the rule that good faith is always presumed and the Chapter on Human Relations of the Civil Code
directs every person, inter alia, to observe good faith which springs from the fountain of good conscience.
Specifically, a public officer is presumed to have acted in good faith in the performance of his duties. Mistakes
committed by a public officer are not actionable absent any clear showing that they were motivated by malice or
gross negligence amounting to bad faith. "Bad faith" does not simply connote bad moral judgment or negligence.
There must be some dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a
sworn duty through some motive or intent or ill will. It partakes of the nature of fraud. It contemplates a state of
mind affirmatively operating with furtive design or some motive of self-interest or ill will for ulterior purposes.
The law also requires that the public officers action caused undue injury to any party, including the government, or
gave any private party unwarranted benefits, advantage or preference in the discharge of his functions. x x x
The Court has further explained in Philippine Agila Satellite, Inc. v. Trinidad-Lichauco: 54
We do not doubt the existence of the presumptions of "good faith" or "regular performance of official duty", yet
these presumptions are disputable and may be contradicted and overcome by other evidence. Many civil actions are
oriented towards overcoming any number of these presumptions, and a cause of action can certainly be geared
towards such effect. The very purpose of trial is to allow a party to present evidence to overcome the disputable
presumptions involved. Otherwise, if trial is deemed irrelevant or unnecessary, owing to the perceived
indisputability of the presumptions, the judicial exercise would be relegated to a mere ascertainment of what
presumptions apply in a given case, nothing more. Consequently, the entire Rules of Court is rendered as excess
verbiage, save perhaps for the provisions laying down the legal presumptions.

Relevantly, the authors, proponents and implementors of the DAP, being public officers, further enjoy the
presumption of regularity in the performance of their functions. This presumption is necessary because they are
clothed with some part of the sovereignty of the State, and because they act in the interest of the public as required
by law.55 However, the presumption may be disputed.56
At any rate, the Court has agreed during its deliberations to extend to the proponents and implementors of the DAP
the benefit of the doctrine of operative fact. This is because they had nothing to do at all with the adoption of the
invalid acts and practices.
7.
The PAPs under the DAP remain effective under the operative fact doctrine
As a general rule, the nullification of an unconstitutional law or act carries with it the illegality of its effects.
However, in cases where nullification of the effects will result in inequity and injustice, the operative fact doctrine
may apply.57 In so ruling, the Court has essentially recognized the impact on the beneficiaries and the country as a
whole if its ruling would pave the way for the nullification of the P144.378 Billions58 worth of infrastructure
projects, social and economic services funded through the DAP. Bearing in mind the disastrous impact of nullifying
these projects by virtue alone of the invalidation of certain acts and practices under the DAP, the Court has upheld
the efficacy of such DAP-funded projects by applying the operative fact doctrine. For this reason, we cannot
sustain the Motion for Partial Reconsideration of the petitioners in G.R. No. 209442.
IN VIEW OF THE FOREGOING, and SUBJECT TO THE FOREGOING CLARIFICATIONS, the Court
PARTIALLY GRANTS the Motion for Reconsideration filed by the respondents, and DENIES the Motion for
Partial Reconsideration filed by the petitioners in G.R. No. 209442 for lack of merit.

ACCORDINGLY, the dispositive portion of the Decision promulgated on July 1, 2014 is hereby MODIFIED as
follows:
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
without complying with the statutory definition of savings contained in the General Appropriations Acts; and
(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other offices
outside the Executive.
The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the
National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
SO ORDERED.

G.R. No. 71977 February 27, 1987

DEMETRIO G. DEMETRIA, M.P., AUGUSTO S. SANCHEZ, M.P., ORLANDO S. MERCADO, M.P.,
HONORATO Y. AQUINO, M.P., ZAFIRO L. RESPICIO, M.P., DOUGLAS R. CAGAS, M.P., OSCAR F.
SANTOS, M.P., ALBERTO G. ROMULO, M.P., CIRIACO R. ALFELOR, M.P., ISIDORO E. REAL, M.P.,
EMIGDIO L. LINGAD, M.P., ROLANDO C. MARCIAL, M.P., PEDRO M. MARCELLANA, M.P.,
VICTOR S. ZIGA, M.P., and ROGELIO V. GARCIA. M.P., petitioners,
vs.
HON. MANUEL ALBA in his capacity as the MINISTER OF THE BUDGET and VICTOR
MACALINGCAG in his capacity as the TREASURER OF THE PHILIPPINES, respondents.

FERNAN, J.:
Assailed in this petition for prohibition with prayer for a writ of preliminary injunction is the constitutionality of
the first paragraph of Section 44 of Presidential Decree No. 1177, otherwise known as the "Budget Reform Decree
of 1977."
Petitioners, who filed the instant petition as concerned citizens of this country, as members of the National
Assembly/Batasan Pambansa representing their millions of constituents, as parties with general interest common to
all the people of the Philippines, and as taxpayers whose vital interests may be affected by the outcome of the
reliefs prayed for" 1 listed the grounds relied upon in this petition as follows:

A. SECTION 44 OF THE 'BUDGET REFORM DECREE OF 1977' INFRINGES UPON THE

FUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER OF PUBLIC MONEYS.
B. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO THE
CONSTITUTION AS IT FAILS TO SPECIFY THE OBJECTIVES AND PURPOSES FOR WHICH
THE PROPOSED TRANSFER OF FUNDS ARE TO BE MADE.
C. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE PRESIDENT TO
OVERRIDE THE SAFEGUARDS, FORM AND PROCEDURE PRESCRIBED BY THE
CONSTITUTION IN APPROVING APPROPRIATIONS.
D. SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE DELEGATION OF
LEGISLATIVE POWERS TO THE EXECUTIVE.
E. THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE PRESIDENT AND
THE IMPLEMENTATION THEREOF BY THE BUDGET MINISTER AND THE TREASURER OF
THE PHILIPPINES ARE WITHOUT OR IN EXCESS OF THEIR AUTHORITY AND
JURISDICTION. 2
Commenting on the petition in compliance with the Court resolution dated September 19, 1985, the Solicitor
General, for the public respondents, questioned the legal standing of petitioners, who were allegedly merely
begging an advisory opinion from the Court, there being no justiciable controversy fit for resolution or
determination. He further contended that the provision under consideration was enacted pursuant to Section 16[5],
Article VIII of the 1973 Constitution; and that at any rate, prohibition will not lie from one branch of the
government to a coordinate branch to enjoin the performance of duties within the latter's sphere of responsibility.

On February 27, 1986, the Court required the petitioners to file a Reply to the Comment. This, they did, stating,
among others, that as a result of the change in the administration, there is a need to hold the resolution of the
present case in abeyance "until developments arise to enable the parties to concretize their respective stands." 3
Thereafter, We required public respondents to file a rejoinder. The Solicitor General filed a rejoinder with a motion
to dismiss, setting forth as grounds therefor the abrogation of Section 16[5], Article VIII of the 1973 Constitution
by the Freedom Constitution of March 25, 1986, which has allegedly rendered the instant petition moot and
academic. He likewise cited the "seven pillars" enunciated by Justice Brandeis in Ashwander v. TVA, 297 U.S. 288
(1936) 4 as basis for the petition's dismissal.
In the case of Evelio B. Javier v. The Commission on Elections and Arturo F. Pacificador, G.R. Nos. 68379-81,
September 22, 1986, We stated that:
The abolition of the Batasang Pambansa and the disappearance of the office in dispute between the
petitioner and the private respondents both of whom have gone their separate ways could be a
convenient justification for dismissing the case. But there are larger issues involved that must be
resolved now, once and for all, not only to dispel the legal ambiguities here raised. The more
important purpose is to manifest in the clearest possible terms that this Court will not disregard and in
effect condone wrong on the simplistic and tolerant pretext that the case has become moot and
academic.
The Supreme Court is not only the highest arbiter of legal questions but also the conscience of the
government. The citizen comes to us in quest of law but we must also give him justice. The two are
not always the same. There are times when we cannot grant the latter because the issue has been
settled and decision is no longer possible according to the law. But there are also times when although
the dispute has disappeared, as in this case, it nevertheless cries out to be resolved. Justice demands

that we act then, not only for the vindication of the outraged right, though gone, but also for the
guidance of and as a restraint upon the future.
It is in the discharge of our role in society, as above-quoted, as well as to avoid great disservice to national interest
that We take cognizance of this petition and thus deny public respondents' motion to dismiss. Likewise noteworthy
is the fact that the new Constitution, ratified by the Filipino people in the plebiscite held on February 2, 1987,
carries verbatim section 16[5], Article VIII of the 1973 Constitution under Section 24[5], Article VI. And while
Congress has not officially reconvened, We see no cogent reason for further delaying the resolution of the case at
bar.
The exception taken to petitioners' legal standing deserves scant consideration. The case of Pascual v. Secretary of
Public Works, et al., 110 Phil. 331, is authority in support of petitioners' locus standi. Thus:
Again, it is well-settled that the validity of a statute may be contested only by one who will sustain a
direct injury in consequence of its enforcement. Yet, there are many decisions nullifying at the
instance of taxpayers, laws providing for the disbursement of public funds, upon the theory that the
expenditure of public funds by an officer of the state for the purpose of administering
anunconstitutional act constitutes a misapplication of such funds which may be enjoined at the request
of a taxpayer. Although there are some decisions to the contrary, the prevailing view in the United
States is stated in the American Jurisprudence as follows:
In the determination of the degree of interest essential to give the requisite standing to
attack the constitutionality of a statute, the general rule is that not only persons
individually affected, but also taxpayers have sufficient interest in preventing the illegal
expenditures of moneys raised by taxation and may therefore question the

constitutionality of statutes requiring expenditure of public moneys. [ 11 Am. Jur. 761,

Emphasis supplied. ]
Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, We said that as regards
taxpayers' suits, this Court enjoys that open discretion to entertain the same or not.
The conflict between paragraph 1 of Section 44 of Presidential Decree No. 1177 and Section 16[5], Article VIII of
the 1973 Constitution is readily perceivable from a mere cursory reading thereof. Said paragraph 1 of Section 44
provides:
The President shall have the authority to transfer any fund, appropriated for the different departments,
bureaus, offices and agencies of the Executive Department, which are included in the General
Appropriations Act, to any program, project or activity of any department, bureau, or office included
in the General Appropriations Act or approved after its enactment.
On the other hand, the constitutional provision under consideration reads as follows:
Sec. 16[5]. No law shall be passed authorizing any transfer of appropriations, however, the President,
the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of
constitutional commis ions may by law be authorized to augment any item in the general
appropriations law for their respective offices from savings in other items of their respective
appropriations.
The prohibition to transfer an appropriation for one item to another was explicit and categorical under the 1973
Constitution. However, to afford the heads of the different branches of the government and those of the
constitutional commissions considerable flexibility in the use of public funds and resources, the constitution

allowed the enactment of a law authorizing the transfer of funds for the purpose of augmenting an item from
savings in another item in the appropriation of the government branch or constitutional body concerned. The
leeway granted was thus limited. The purpose and conditions for which funds may be transferred were specified,
i.e. transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if there are
savings from another item in the appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under said Section 16[5]. It
empowers the President to indiscriminately transfer funds from one department, bureau, office or agency of the
Executive Department to any program, project or activity of any department, bureau or office included in the
General Appropriations Act or approved after its enactment, without regard as to whether or not the funds to be
transferred are actually savings in the item from which the same are to be taken, or whether or not the transfer is
for the purpose of augmenting the item to which said transfer is to be made. It does not only completely disregard
the standards set in the fundamental law, thereby amounting to an undue delegation of legislative powers, but
likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the provision in question null
and void.
"For the love of money is the root of all evil: ..." and money belonging to no one in particular, i.e. public funds,
provide an even greater temptation for misappropriation and embezzlement. This, evidently, was foremost in the
minds of the framers of the constitution in meticulously prescribing the rules regarding the appropriation and
disposition of public funds as embodied in Sections 16 and 18 of Article VIII of the 1973 Constitution. Hence, the
conditions on the release of money from the treasury [Sec. 18(1)]; the restrictions on the use of public funds for
public purpose [Sec. 18(2)]; the prohibition to transfer an appropriation for an item to another [See. 16(5) and the
requirement of specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the
expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as correctly
observed by petitioners, in view of the unlimited authority bestowed upon the President, "... Pres. Decree No. 1177

opens the floodgates for the enactment of unfunded appropriations, results in uncontrolled executive expenditures,
diffuses accountability for budgetary performance and entrenches the pork barrel system as the ruling party may
well expand [sic] public money not on the basis of development priorities but on political and personal
expediency." 5 The contention of public respondents that paragraph 1 of Section 44 of P.D. 1177 was enacted
pursuant to Section 16(5) of Article VIII of the 1973 Constitution must perforce fall flat on its face.
Another theory advanced by public respondents is that prohibition will not lie from one branch of the government
against a coordinate branch to enjoin the performance of duties within the latter's sphere of responsibility.
Thomas M. Cooley in his "A Treatise on the Constitutional Limitations," Vol. 1, Eight Edition, Little, Brown and
Company, Boston, explained:
... The legislative and judicial are coordinate departments of the government, of equal dignity; each is
alike supreme in the exercise of its proper functions, and cannot directly or indirectly, while acting
within the limits of its authority, be subjected to the control or supervision of the other, without an
unwarrantable assumption by that other of power which, by the Constitution, is not conferred upon it.
The Constitution apportions the powers of government, but it does not make any one of the three
departments subordinate to another, when exercising the trust committed to it. The courts may declare
legislative enactments unconstitutional and void in some cases, but not because the judicial power is
superior in degree or dignity to the legislative. Being required to declare what the law is in the cases
which come before them, they must enforce the Constitution, as the paramount law, whenever a
legislative enactment comes in conflict with it. But the courts sit, not to review or revise the legislative
action, but to enforce the legislative will, and it is only where they find that the legislature has failed to
keep within its constitutional limits, that they are at liberty to disregard its action; and in doing so,
they only do what every private citizen may do in respect to the mandates of the courts when the
judges assumed to act and to render judgments or decrees without jurisdiction. "In exercising this high

authority, the judges claim no judicial supremacy; they are only the administrators of the public will.
If an act of the legislature is held void, it is not because the judges have any control over the
legislative power, but because the act is forbidden by the Constitution, and because the will of the
people, which is therein declared, is paramount to that of their representatives expressed in any law."
[Lindsay v. Commissioners, & c., 2 Bay, 38, 61; People v. Rucker, 5 Col. 5; Russ v. Com., 210 Pa. St.
544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am. St. Rep. 825] (pp. 332-334).
Indeed, where the legislature or the executive branch is acting within the limits of its authority, the judiciary cannot
and ought not to interfere with the former. But where the legislature or the executive acts beyond the scope of its
constitutional powers, it becomes the duty of the judiciary to declare what the other branches of the government
had assumed to do as void. This is the essence of judicial power conferred by the Constitution "in one Supreme
Court and in such lower courts as may be established by law" [Art. VIII, Section 1 of the 1935 Constitution; Art. X,
Section 1 of the 1973 Constitution and which was adopted as part of the Freedom Constitution, and Art. VIII,
Section 1 of the 1987 Constitution] and which power this Court has exercised in many instances. *
Public respondents are being enjoined from acting under a provision of law which We have earlier mentioned to be
constitutionally infirm. The general principle relied upon cannot therefore accord them the protection sought as
they are not acting within their "sphere of responsibility" but without it.
The nation has not recovered from the shock, and worst, the economic destitution brought about by the plundering
of the Treasury by the deposed dictator and his cohorts. A provision which allows even the slightest possibility of a
repetition of this sad experience cannot remain written in our statute books.
WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of Presidential Decree No. 1177 is hereby
declared null and void for being unconstitutional.

SO ORDER RED.

G.R. No. 94571

April 22, 1991

TEOFISTO T. GUINGONA, JR. and AQUILINO Q. PIMENTEL, JR., petitioners,

vs.
HON. GUILLERMO CARAGUE, in his capacity as Secretary, Budget & Management, HON. ROZALINA
S. CAJUCOM in her capacity as National Treasurer and COMMISSION ON AUDIT, respondents.
Ramon A. Gonzales for petitioners.

GANCAYCO, J.:
This is a case of first impression whereby petitioners question the constitutionality of the automatic appropriation
for debt service in the 1990 budget.
As alleged in the petition, the facts are as follows:
The 1990 budget consists of P98.4 Billion in automatic appropriation (with P86.8 Billion for debt service) and
P155.3 Billion appropriated under Republic Act No. 6831, otherwise known as the General Appropriations Act, or

a total of P233.5 Billion,1 while the appropriations for the Department of Education, Culture and Sports amount to
P27,017,813,000.00.2
The said automatic appropriation for debt service is authorized by P.D. No. 81, entitled "Amending Certain
Provisions of Republic Act Numbered Four Thousand Eight Hundred Sixty, as Amended (Re: Foreign Borrowing
Act)," by P.D. No. 1177, entitled "Revising the Budget Process in Order to Institutionalize the Budgetary
Innovations of the New Society," and by P.D. No. 1967, entitled "An Act Strenghthening the Guarantee and
Payment Positions of the Republic of the Philippines on Its Contingent Liabilities Arising out of Relent and
Guaranteed Loan by Appropriating Funds For The Purpose.
There can be no question that petitioners as Senators of the Republic of the Philippines may bring this suit where a
constitutional issue is raised.3 Indeed, even a taxpayer has personality to restrain unlawful expenditure of public
funds.
The petitioner seek the declaration of the unconstitutionality of P.D. No. 81, Sections 31 of P.D. 1177, and P.D. No.
1967. The petition also seeks to restrain the disbursement for debt service under the 1990 budget pursuant to said
decrees.
Respondents contend that the petition involves a pure political question which is the repeal or amendment of said
laws addressed to the judgment, wisdom and patriotism of the legislative body and not this Court.
In Gonzales,5 the main issue was the unconstitutionality of the presidential veto of certain provision particularly
Section 16 of the General Appropriations Act of 1990, R.A. No. 6831. This Court, in disposing of the issue, stated

The political question doctrine neither interposes an obstacle to judicial determination of the rival claims.
The jurisdiction to delimit constitutional boundaries has been given to this Court. It cannot abdicate that
obligation mandated by the 1987 Constitution, although said provision by no means does away with the
applicability of the principle in appropriate cases.

Sec. 1. The judicial power shad 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.
With the Senate maintaining that the President's veto is unconstitutional and that charge being controverted,
there is an actual case or justiciable controversy between the Upper House of Congress and the executive
department that may be taken cognizance of by this Court.
The questions raised in the instant petition are
I. IS THE APPROPRIATION OF P86 BILLION IN THE P233 BILLION 1990 BUDGET VIOLATIVE OF
SECTION 5, ARTICLE XIV OF THE CONSTITUTION?
II. ARE PD No. 81, PD No. 1177 AND PD No. 1967 STILL OPERATIVE UNDER THE CONSTITUTION?
III. ARE THEY VIOLATIVE OF SECTION 29(l), ARTICLE VI OF THE CONSTITUTION? 6
There is thus a justiciable controversy raised in the petition which this Court may properly take cognizance of On
the first issue, the petitioners aver
According to Sec. 5, Art. XIV of the Constitution:
(5) The State shall assign the highest budgetary priority to education and ensure that teaching will
attract and retain its rightful share of the best available talents through adequate remuneration and
other means of job satisfaction and fulfillment.

The reason behind the said provision is stated, thus:

In explaining his proposed amendment, Mr. Ople stated that all the great and sincere piety professed
by every President and every Congress of the Philippines since the end of World War II for the
economic welfare of the public schoolteachers always ended up in failure and this failure, he stated,
had caused mass defection of the best and brightest teachers to other careers, including menial jobs in
overseas employment and concerted actions by them to project their grievances, mainly over low pay
and abject working conditions.
He pointed to the high expectations generated by the February Revolution, especially keen among
public schoolteachers, which at present exacerbate these long frustrated hopes.
Mr. Ople stated that despite the sincerity of all administrations that tried vainly to respond to the needs
of the teachers, the central problem that always defeated their pious intentions was really the one
budgetary priority in the sense that any proposed increase for public schoolteachers had to be
multiplied many times by the number of government employees in general and their equitable claims
to any pay standardization such that the pay rate of teachers is hopelessly pegged to the rate of
government workers in general. This, he stated, foredoomed the prospect of a significant pay increase
for teachers.
Mr. Ople pointed out that the recognition by the Constitution of the highest priority for public
schoolteachers, and by implication, for all teachers, would ensure that the President and Congress
would be strongly urged by a constitutional mandate to grant to them such a level of remuneration
and other incentives that would make teaching competitive again and attractive to the best available
talents in the nation.
Finally, Mr. Ople recalled that before World War II, teaching competed most successfully against all
other career choices for the best and the brightest of the younger generation. It is for this reason, he
stated, that his proposed amendment if approved, would ensure that teaching would be restored to its

lost glory as the career of choice for the most talented and most public-spirited of the younger
generation in the sense that it would become the countervailing measure against the continued decline
of teaching and the wholesale desertion of this noble profession presently taking place. He further
stated that this would ensure that the future and the quality of the population would be asserted as a
top priority against many clamorous and importunate but less important claims of the present.
(Journal of the Constitutional Commission, Vol. II, p. 1172)
However, as against this constitutional intention, P86 Billion is appropriated for debt service while only P27
Billion is appropriated for the Department of Education in the 1990 budget. It plain, therefore, that the said
appropriation for debt services is inconsistent with the Constitution, hence, viod (Art. 7, New Civil Code).7
While it is true that under Section 5(5), Article XIV of the Constitution Congress is mandated to "assign the highest
budgetary priority to education" in order to "insure that teaching will attract and retain its rightful share of the best
available talents through adequate remuneration and other means of job satisfaction and fulfillment," it does not
thereby follow that the hands of Congress are so hamstrung as to deprive it the power to respond to the imperatives
of the national interest and for the attainment of other state policies or objectives.
As aptly observed by respondents, since 1985, the budget for education has tripled to upgrade and improve the
facility of the public school system. The compensation of teachers has been doubled. The amount of
P29,740,611,000.008 set aside for the Department of Education, Culture and Sports under the General
Appropriations Act (R.A. No. 6831), is the highest budgetary allocation among all department budgets. This is a
clear compliance with the aforesaid constitutional mandate according highest priority to education.
Having faithfully complied therewith, Congress is certainly not without any power, guided only by its good
judgment, to provide an appropriation, that can reasonably service our enormous debt, the greater portion of which
was inherited from the previous administration. It is not only a matter of honor and to protect the credit standing of
the country. More especially, the very survival of our economy is at stake. Thus, if in the process Congress
appropriated an amount for debt service bigger than the share allocated to education, the Court finds and so holds
that said appropriation cannot be thereby assailed as unconstitutional.

Now to the second issue. The petitioners made the following observations:
To begin with, Rep. Act 4860 entitled "AN ACT AUTHORIZING THE PRESIDENT OF THE
PHILIPPINES TO OBTAIN SUCH FOREIGN LOANS AND CREDITS, OR TO INCUR SUCH FOREIGN
INDEBTEDNESS, AS MAY BE NECESSARY TO FINANCE APPROVED ECONOMIC
DEVELOPMENT PURPOSES OR PROJECTS, AND TO GUARANTEE, IN BEHALF OF THE
REPUBLIC OF THE PHILIPPINES, FOREIGN LOANS OBTAINED OR BONDS ISSUED BY
CORPORATIONS OWNED OR CONTROLLED BY THE GOVERNMENT OF THE PHILIPPINES FOR
ECONOMIC DEVELOPMENT PURPOSES INCLUDING THOSE INCURRED FOR PURPOSES OF
RELENDING TO THE PRIVATE SECTOR, APPROPRIATING THE NECESSARY FUNDS
THEREFOR, AND FOR OTHER PURPOSES, provides:
Sec. 2. The total amount of loans, credits and indebtedness, excluding interests, which the President of
the Philippines is authorized to incur under this Act shall not exceed one billion United States
dollars or its equivalent in other foreign currencies at the exchange rate prevailing at the time the
loans, credits and indebtedness are incurred: Provided, however, That the total loans, credits and
indebtedness incurred under this Act shall not exceed two hundred fifty million in the fiscal year of the
approval of this Act, and two hundred fifty million every fiscal year thereafter, all in United States
dollars or its equivalent in other currencies.
Sec. 5. It shall be the duty of the President, within thirty days after the opening of every regular
session, to report to the Congress the amount of loans, credits and indebtedness contracted, as well as
the guarantees extended, and the purposes and projects for which the loans, credits and indebtedness
were incurred, and the guarantees extended, as well as such loans which may be reloaned to Filipino
owned or controlled corporations and similar purposes.
Sec. 6. The Congress shall appropriate the necessary amount out of any funds in the National
Treasury not otherwise appropriated, to cover the payment of the principal and interest on such loans,
credits or indebtedness as and when they shall become due.

However, after the declaration of martial law, President Marcos issued PD 81 amending Section 6, thus:
Sec. 7. Section six of the same Act is hereby further amended to read as follows:
Sec. 6. Any provision of law to the contrary notwithstanding, and in order to enable the Republic of
the Philippines to pay the principal, interest, taxes and other normal banking charges on the loans,
credits or indebtedness, or on the bonds, debentures, securities or other evidences of indebtedness
sold in international markets incurred under the authority of this Act, the proceeds of which are
deemed appropriated for the projects, all the revenue realized from the projects financed by such
loans, credits or indebtedness, or on the bonds, debentures, securities or other evidences of
indebtedness, shall be turned over in full, after deducting actual and necessary expenses for the
operation and maintenance of said projects, to the National Treasury by the government office, agency
or instrumentality, or government-owned or controlled corporation concerned, which is hereby
appropriated for the purpose as and when they shall become due. In case the revenue realized is
insufficient to cover the principal, interest and other charges, such portion of the budgetary savings as
may be necessary to cover the balance or deficiency shall be set aside exclusively for the purpose by
the government office, agency or instrumentality, or government-owned or controlled corporation
concerned: Provided, That, if there still remains a deficiency, such amount necessary to cover the
payment of the principal and interest on such loans, credit or indebtedness as and when they shall
become due is hereby appropriated out of any funds in the national treasury not otherwise
appropriated: . . .
President Marcos also issued PD 1177, which provides:
Sec. 31. Automatic appropriations. All expenditures for (a) personnel retirement premiums,
government service insurance, and other similar fixed expenditures, (b) principal and interest on
public debt, (c) national government guarantees of obligations which are drawn upon, are
automatically appropriated; Provided, that no obligations shall be incurred or payments made from
funds thus automatically appropriated except as issued in the form of regular budgetary allotments.

and PD 1967, which provides:

Sec. 1. There is hereby appropriated, out of any funds in the National Treasury not otherwise
appropriated, such amounts as may be necessary to effect payments on foreign or domestic loans,or
foreign or domestic loans whereon creditors make a call on the direct and indirect guarantee of the
Republic of the Philippines, obtained by:
a. The Republic of the Philippines the proceeds of which were relent to government-owned or
controlled corporations and/or government financial institutions;
b. government-owned or controlled corporations and/or government financial institutions the
proceeds of which were relent to public or private institutions;
c. government-owned or controlled corporations and/or financial institutions and guaranteed by
the Republic of the Philippines;
d. other public or private institutions and guaranteed by government-owned or controlled
corporations and/or government financial institutions.
Sec. 2. All repayments made by borrower institutions on the loans for whose account advances were
made by the National Treasury will revert to the General Fund.
Sec. 3. In the event that any borrower institution is unable to settle the advances made out of the
appropriation provided therein, the Treasurer of the Philippines shall make the proper
recommendation to the Minister of Finance on whether such advances shall be treated as equity or
subsidy of the National Government to the institution concerned, which shall be considered in the
budgetary program of the Government.
In the "Budget of Expenditures and Sources of Financing Fiscal Year 1990," which accompanied her
budget message to Congress, the President of the Philippines, Corazon C. Aquino, stated:

Sources Appropriation
The P233.5 billion budget proposed for fiscal year 1990 will require P132.1 billion of new programmed
appropriations out of a total P155.3 billion in new legislative authorization from Congress. The rest of the
budget, totalling P101.4 billion, will be sourced from existing appropriations: P98.4 billion from Automatic
Appropriations and P3.0 billion from Continuing Appropriations (Fig. 4).
And according to Figure 4, . . ., P86.8 billion out of the P98.4 Billion are programmed for debt service. In other
words, the President had, on her own, determined and set aside the said amount of P98.4 Billion with the rest of the
appropriations of P155.3 Billion to be determined and fixed by Congress, which is now Rep. Act 6831.9
Petitioners argue that the said automatic appropriations under the aforesaid decrees of then President Marcos
became functus oficio when he was ousted in February, 1986; that upon the expiration of the one-man legislature in
the person of President Marcos, the legislative power was restored to Congress on February 2, 1987 when the
Constitution was ratified by the people; that there is a need for a new legislation by Congress providing for
automatic appropriation, but Congress, up to the present, has not approved any such law; and thus the said P86.8
Billion automatic appropriation in the 1990 budget is an administrative act that rests on no law, and thus, it cannot
be enforced.
Moreover, petitioners contend that assuming arguendo that P.D. No. 81, P.D. No. 1177 and P.D. No. 1967 did not
expire with the ouster of President Marcos, after the adoption of the 1987 Constitution, the said decrees are
inoperative under Section 3, Article XVIII which provides
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other executive
issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked."
(Emphasis supplied.)
They then point out that since the said decrees are inconsistent with Section 24, Article VI of the Constitution, i.e.,

Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments. (Emphasis supplied.)
whereby bills have to be approved by the President,10 then a law must be passed by Congress to authorize said
automatic appropriation. Further, petitioners state said decrees violate Section 29(l) of Article VI of the
Constitution which provides as follows
Sec. 29(l). No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.
They assert that there must be definiteness, certainty and exactness in an appropriation,11 otherwise it is an undue
delegation of legislative power to the President who determines in advance the amount appropriated for the debt
service.12
The Court is not persuaded.
Section 3, Article XVIII of the Constitution recognizes that "All existing laws, decrees, executive orders,
proclamations, letters of instructions and other executive issuances not inconsistent with the Constitution shall
remain operative until amended, repealed or revoked."
This transitory provision of the Constitution has precisely been adopted by its framers to preserve the social order
so that legislation by the then President Marcos may be recognized. Such laws are to remain in force and effect
unless they are inconsistent with the Constitution or, are otherwise amended, repealed or revoked.
An examination of the aforecited presidential decrees show the clear intent that the amounts needed to cover the
payment of the principal and interest on all foreign loans, including those guaranteed by the national government,
should be made available when they shall become due precisely without the necessity of periodic enactments of
separate laws appropriating funds therefor, since both the periods and necessities are incapable of determination in
advance.

The automatic appropriation provides the flexibility for the effective execution of debt management policies. Its
political wisdom has been convincingly discussed by the Solicitor General as he argues
. . . First, for example, it enables the Government to take advantage of a favorable turn of market conditions
by redeeming high-interest securities and borrowing at lower rates, or to shift from short-term to long-term
instruments, or to enter into arrangements that could lighten our outstanding debt burden debt-to-equity, debt
to asset, debt-to-debt or other such schemes. Second, the automatic appropriation obviates the serious
difficulties in debt servicing arising from any deviation from what has been previously programmed. The
annual debt service estimates, which are usually made one year in advance, are based on a mathematical set
or matrix or, in layman's parlance, "basket" of foreign exchange and interest rateassumptions which may
significantly differ from actual rates not even in proportion to changes on the basis of the assumptions.
Absent an automatic appropriation clause, the Philippine Government has to await and depend upon
Congressional action, which by the time this comes, may no longer be responsive to the intended conditions
which in the meantime may have already drastically changed. In the meantime, also, delayed payments and
arrearages may have supervened, only to worsen our debt service-to-total expenditure ratio in the budget due
to penalties and/or demand for immediate payment even before due dates.
Clearly, the claim that payment of the loans and indebtedness is conditioned upon the continuance of the
person of President Marcos and his legislative power goes against the intent and purpose of the law. The
purpose is foreseen to subsist with or without the person of Marcos.13
The argument of petitioners that the said presidential decrees did not meet the requirement and are therefore
inconsistent with Sections 24 and 27 of Article VI of the Constitution which requires, among others, that "all
appropriations, . . . bills authorizing increase of public debt" must be passed by Congress and approved by the
President is untenable. Certainly, the framers of the Constitution did not contemplate that existing laws in the
statute books including existing presidential decrees appropriating public money are reduced to mere "bills" that
must again go through the legislative million The only reasonable interpretation of said provisions of the
Constitution which refer to "bills" is that they mean appropriation measures still to be passed by Congress. If the

intention of the framers thereof were otherwise they should have expressed their decision in a more direct or
express manner.
Well-known is the rule that repeal or amendment by implication is frowned upon. Equally fundamental is the
principle that construction of the Constitution and law is generally applied prospectively and not retrospectively
unless it is so clearly stated.
On the third issue that there is undue delegation of legislative power, in Edu vs. Ericta,14 this Court had this to say

What cannot be delegated is the authority under the Constitution to make laws and to alter and repeal
them; the test is the completeness of the statute in all its terms and provisions when it leaves the hands of the
legislature. To determine whether or not there is an undue delegation of legislative power, the inequity must
be directed to the scope and definiteness of the measure enacted. The legislature does not abdicate its
function when it describes what job must be done, who is to do it, and what is the scope of his authority. For
a complex economy, that may indeed be the only way in which legislative process can go forward . . .
To avoid the taint of unlawful delegation there must be a standard, which implies at the very least that the
legislature itself determines matters of principle and lays down fundamental policy . . .
The standard may be either express or implied . . . from the policy and purpose of the act considered as
whole . . .
In People vs. Vera,15 this Court said "the true distinction is between the delegation of power to make the law, which
necessarily involves discretion as to what the law shall be, and conferring authority or discretion as to its execution,
to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be
made."

Ideally, the law must be complete in all its essential terms and conditions when it leaves the legislature so that there
will be nothing left for the delegate to do when it reaches him except enforce it. If there are gaps in the law that
will prevent its enforcement unless they are first filled, the delegate will then have been given the opportunity to
step in the shoes of the legislature and exercise a discretion essentially legislative in order to repair the omissions.
This is invalid delegation.16
The Court finds that in this case the questioned laws are complete in all their essential terms and conditions and
sufficient standards are indicated therein.
The legislative intention in R.A. No. 4860, as amended, Section 31 of P.D. No. 1177 and P.D. No. 1967 is that the
amount needed should be automatically set aside in order to enable the Republic of the Philippines to pay the
principal, interest, taxes and other normal banking charges on the loans, credits or indebtedness incurred as
guaranteed by it when they shall become due without the need to enact a separate law appropriating funds therefor
as the need arises. The purpose of these laws is to enable the government to make prompt payment and/or advances
for all loans to protect and maintain the credit standing of the country.
Although the subject presidential decrees do not state specific amounts to be paid, necessitated by the very nature
of the problem being addressed, the amounts nevertheless are made certain by the legislative parameters provided
in the decrees. The Executive is not of unlimited discretion as to the amounts to be disbursed for debt servicing.
The mandate is to pay only the principal, interest, taxes and other normal banking charges on the loans, credits or
indebtedness, or on the bonds, debentures or security or other evidences of indebtedness sold in international
markets incurred by virtue of the law, as and when they shall become due. No uncertainty arises in executive
implementation as the limit will be the exact amounts as shown by the books of the Treasury.
The Government budgetary process has been graphically described to consist of four major phases as aptly
discussed by the Solicitor General:
The Government budgeting process consists of four major phases:

1. Budget preparation. The first step is essentially tasked upon the Executive Branch and covers the
estimation of government revenues, the determination of budgetary priorities and activities within the
constraints imposed by available revenues and by borrowing limits, and the translation of desired priorities
and activities into expenditure levels.
Budget preparation starts with the budget call issued by the Department of Budget and Management. Each
agency is required to submit agency budget estimates in line with the requirements consistent with the
general ceilings set by the Development Budget Coordinating Council (DBCC).
With regard to debt servicing, the DBCC staff, based on the macro-economic projections of interest rates
(e.g. LIBOR rate) and estimated sources of domestic and foreign financing, estimates debt service levels.
Upon issuance of budget call, the Bureau of Treasury computes for the interest and principal payments for
the year for all direct national government borrowings and other liabilities assumed by the same.
2. Legislative authorization. At this stage, Congress enters the picture and deliberates or acts on the
budget proposals of the President, and Congress in the exercise of its own judgment and
wisdomformulates an appropriation act precisely following the process established by the Constitution,
which specifies that no money may be paid from the Treasury except in accordance with an appropriation
made by law.
Debt service is not included in the General Appropriation Act, since authorization therefor already exists
under RA No. 4860 and 245, as amended and PD 1967. Precisely in the fight of this subsisting authorization
as embodied in said Republic Acts and PD for debt service, Congress does not concern itself with details for
implementation by the Executive, but largely with annual levels and approval thereof upon due deliberations
as part of the whole obligation program for the year. Upon such approval, Congress has spoken and cannot
be said to have delegated its wisdom to the Executive, on whose part lies theimplementation or execution of
the legislative wisdom.

3. Budget Execution. Tasked on the Executive, the third phase of the budget process covers the
variousoperational aspects of budgeting. The establishment of obligation authority ceilings, the evaluation of
work and financial plans for individual activities, the continuing review of government fiscal position, the
regulation of funds releases, the implementation of cash payment schedules, and other related activities
comprise this phase of the budget cycle.
Release from the debt service fired is triggered by a request of the Bureau of the Treasury for allotments
from the Department of Budget and Management, one quarter in advance of payment schedule, to ensure
prompt payments. The Bureau of Treasury, upon receiving official billings from the creditors, remits
payments to creditors through the Central Bank or to the Sinking Fund established for government security
issues (Annex F).
4. Budget accountability. The fourth phase refers to the evaluation of actual performance and initially
approved work targets, obligations incurred, personnel hired and work accomplished are compared with the
targets set at the time the agency budgets were approved.
There being no undue delegation of legislative power as clearly above shown, petitioners insist nevertheless
that subject presidential decrees constitute undue delegation of legislative power to the executive on the
alleged ground that the appropriations therein are not exact, certain or definite, invoking in support therefor
the Constitution of Nebraska, the constitution under which the case of State v. Moore, 69 NW 974, cited by
petitioners, was decided. Unlike the Constitution of Nebraska, however, our Constitution does not require
a definite, certain, exact or "specific appropriation made by law." Section 29, Article VI of our 1987
Constitution omits any of these words and simply states:
Section 29(l). No money shall be paid out of the treasury except in pursuance of an appropriation
made by law.
More significantly, there is no provision in our Constitution that provides or prescribes any particular form
of words or religious recitals in which an authorization or appropriation by Congress shall be made, except

that it be "made by law," such as precisely the authorization or appropriation under the questioned
presidential decrees. In other words, in terms of time horizons, an appropriation may be made impliedly (as
by past but subsisting legislations) as well as expressly for the current fiscal year (as by enactment of laws
by the present Congress), just as said appropriation may be made in general as well as in specific terms. The
Congressional authorization may be embodied in annual laws, such as a general appropriations act or in
special provisions of laws of general or special application which appropriate public funds for specific public
purposes, such as the questioned decrees. An appropriation measure is sufficient if the legislative intention
clearly and certainly appears from the language employed (In re Continuing Appropriations, 32 P. 272),
whether in the past or in the present.17
Thus, in accordance with Section 22, Article VII of the 1987 Constitution, President Corazon C. Aquino submitted
to Congress the Budget of Expenditures and Sources of Financing for the Fiscal Year 1990. The proposed 1990
expenditure program covering the estimated obligation that will be incurred by the national government during the
fiscal year amounts to P233.5 Billion. Of the proposed budget, P86.8 is set aside for debt servicing as follows:
1wphi1
National Government Debt
Service Expenditures, 1990
(in million pesos)
Domestic
RA 245, as
amended
Interest
Payments
Principal
Amortization

Foreign
RA 4860
as amended,
PD 1967

Total

P36,861

P18,570

P55,431

16,310

15,077

31,387

Total

P53,171
========

P33,647
========

P86,818
========

18

as authorized under P.D. 1967 and R.A. 4860 and 245, as amended.
The Court, therefor, finds that R.A. No. 4860, as amended by P.D. No. 81, Section 31 of P.D. 1177 and P.D. No.
1967 constitute lawful authorizations or appropriations, unless they are repealed or otherwise amended by
Congress. The Executive was thus merely complying with the duty to implement the same.
There can be no question as to the patriotism and good motive of petitioners in filing this petition. Unfortunately,
the petition must fail on the constitutional and legal issues raised. As to whether or not the country should honor its
international debt, more especially the enormous amount that had been incurred by the past administration, which
appears to be the ultimate objective of the petition, is not an issue that is presented or proposed to be addressed by
the Court. Indeed, it is more of a political decision for Congress and the Executive to determine in the exercise of
their wisdom and sound discretion.
WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.
SO ORDERED.

G.R. No. 147062-64

December 14, 2001

REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT (PCGG), petitioner,
vs.
COCOFED, ET AL. and BALLARES, ET AL.,1 EDUARDO M. COJUANGCO JR. and the
SANDIGANBAYAN (First Division) respondents.
PANGANIBAN, J.:
The right to vote sequestered shares of stock registered in the names of private individuals or entitles and alleged to
have been acquired with ill-gotten wealth shall, as a rule, be exercised by the registered owner. The PCGG may,

however, be granted such voting right provided in can (1) show prima facie evidence that the wealth and/or the
shares are indeed ill-gotten; and (2) demonstrate imminent danger of dissipation of the assets, thus necessitating
their continued sequestration and voting by the government until a decision, ruling with finality on their ownership,
is promulgated by the proper court.1wphi1.nt
However, the foregoing "two-tiered" test does not apply when the sequestered stocks are acquired with funds that
are prima facie public in character or, at least, are affected with public interest. Inasmuch as the subject UCPB
shares in the present case were undisputably acquired with coco levy funds which are public in character, then the
right to vote them shall be exercised by the PCGG. In sum, the "public character" test, not the "two-tiered" one,
applies in the instant controversy.
The Case
Before us is a Petition for Certiorari with a prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction under Rule 65 of the Rules of Court, seeking to set aside the February 28, 2001 Order2 of
the First Division of the Sandiganbayan3 in Civil Case Nos. 0033-A, 0033-B and 0033-F. The pertinent portions of
the assailed Order read as follows:
"In view hereof, the movants COCOFED, et al. and Ballares, et al. as well as Eduardo Cojuangco, et al., who
were acknowledged to be registered stockholders of the UCPB are authorized, as are all other registered
stockholders of the United Coconut Planters Bank, until further orders from this Court, to exercise their
rights to vote their shares of stock and themselves to be voted upon in the United Coconut Planters Bank
(UCPB) at the scheduled Stockholders' Meeting on March 6, 2001 or on any subsequent continuation or
resetting thereof, and to perform such acts as will normally follow in the exercise of these rights as registered
stockholders.

"Since by way of form, the pleadings herein had been labeled as praying for an injunction, the right of the
movants to exercise their right as abovementioned will be subject to the posting of a nominal bond in the
amount of FIFTY THOUSAND PESOS (P50,000.00) jointly for the defendants COCOFED, et al. and
Ballares, et al., as well as all other registered stockholders of sequestered shares in that bank, and FIFTY
THOUSAND PESOS (P50,000.00) for Eduardo Cojuangco, Jr., et al., to answer for any undue damage or
injury to the United Coconut Planters Bank as may be attributed to their exercise of their rights as registered
stockholders."4
The Antecedents
The very roots of this case are anchored on the historic events that transpired during the change of government in
1986. Immediately after the 1986 EDSA Revolution, then President Corazon C. Aquino issued Executive Order
(EO) Nos. 1,5 26 and 14.7
"On the explicit premise that 'vast resources of the government have been amassed by former President Ferdinand
E. Marcos, his immediate family, relatives, and close associates both here and abroad,' the Presidential Commission
on Good Government (PCGG) was created by Executive Order No. 1 to assist the President in the recovery of the
ill-gotten wealth thus accumulated whether located in the Philippines or abroad."8
Executive Order No. 2 states that the ill-gotten assets and properties are in the form of bank accounts, deposits,
trust accounts, shares of stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and
other kinds of real and personal properties in the Philippines and in various countries of the world.9
Executive Order No. 14, on the other hand, empowered the PCGG, with the assistance of the Office of the Solicitor
General and other government agencies, inter alia, to file and prosecute all cases investigated by it under EO Nos.
1 and 2.

Pursuant to these laws, the PCGG issued and implemented numerous sequestrations, freeze orders and provisional
takeovers of allegedly ill-gotten companies, assets and properties, real or personal.10
Among the properties sequestered by the Commission were shares of stock in the United Coconut Planters Bank
(UCPB) registered in the names of the alleged "one million coconut farmers," the so-called Coconut Industry
Investment Fund companies (CIIF companies) and Private Respondent Eduardo Cojuangco Jr. (hereinafter
"Cojuangco").
In connection with the sequestration of the said UCPB shares, the PCGG, on July 31, 1987, instituted an action for
reconveyance, reversion, accounting, restitution and damages docketed as Case No. 0033 in the Sandiganbayan.
On November 15, 1990, upon Motion11 of Private Respondent COCOFED, the Sandiganbayan issued a
Resolution12 lifting the sequestration of the subject UCPB shares on the ground that herein private respondents in
particular, COCOFED and the so-called CIIF companies had not been impleaded by the PCGG as partiesdefendants in its July 31, 1987 Complaint for reconveyance, reversion, accounting, restitution and damages. The
Sandiganbayan ruled that the Writ of Sequestration issued by the Commission was automatically lifted for PCGG's
failure to commence the corresponding judicial action within the six-month period ending on August 2, 1987
provided under Section 26, Article XVIII of the 1987 Constitution. The anti-graft court noted that though these
entities were listed in an annex appended to the Complaint, they had not been named as parties-respondents.
This Sandiganbayan Resolution was challenged by the PCGG in a Petition for Certiorari docketed as GR No.
96073 in this Court. Meanwhile, upon motion of Cojuangco, the anti-graft court ordered the holding of elections
for the Board of Directors of UCPB. However, the PCGG applied for and was granted by this Court a Restraining
Order enjoining the holding of the election. Subsequently, the Court lifted the Restraining Order and ordered the
UCPB to proceed with the election of its board of directors. Furthermore, it allowed the sequestered shares to be
voted by their registered owners.

The victory of the registered shareholders was fleeting because the Court, acting on the solicitor general's Motion
for Clarification/Manifestation, issued a Resolution on February 16, 1993, declaring that "the right of petitioners
[herein private respondents] to vote stock in their names at the meetings of the UCPB cannot be conceded at this
time. That right still has to be established by them before the Sandiganbayan. Until that is done, they cannot be
deemed legitimate owners of UCPB stock and cannot be accorded the right to vote them."13 The dispositive portion
of the said Resolution reads as follows:
"IN VIEW OF THE FOREGOING, the Court recalls and sets aside the Resolution dated March 3, 1992 and,
pending resolution on the merits of the action at bar, and until further orders, suspends the effectivity of the
lifting of the sequestration decreed by the Sandiganbayan on November 15, 1990, and directs the restoration
of the status quo ante, so as to allow the PCGG to continue voting the shares of stock under sequestration at
the meetings of the United Coconut Planters Bank."14
On January 23, 1995, the Court rendered its final Decision in GR No. 96073, nullifying and setting aside the
November 15, 1990 Resolution of the Sandiganbayan which, as earlier stated, lifted the sequestration of the subject
UCPB shares. The express impleading of herein Respondents COCOFED et al. was deemed unnecessary because
"the judgment may simply be directed against the shares of stock shown to have been issued in consideration of illgotten wealth."15 Furthermore, the companies "are simply the res in the actions for the recovery of illegally
acquires wealth, and there is, in principle, no cause of action against them and no ground to implead them as
defendants in said case."16
A month thereafter, the PCGG pursuant to an Order of the Sandiganbayan subdivided Case No. 0033 into eight
Complaints and docketed them as Case Nos. 0033-A to 0033-H.
Six years later, on February 13, 2001, the Board of Directors of UCPB received from the ACCRA Law Office a
letter written on behalf of the COCOFED and the alleged nameless one million coconut farmers, demanding the

holding of a stockholders' meeting for the purpose of, among others, electing the board of directors. In response,
the board approved a Resolution calling for a stockholders' meeting on March 6, 2001 at three o'clock in the
afternoon.
On February 23, 2001, "COCOFED, et al. and Ballares, et al." filed the "Class Action Omnibus Motion"17 referred
to earlier in Sandiganbayan Civil Case Nos. 0033-A, 0033-B and 0033-F, asking the court a quo:
"1. To enjoin the PCGG from voting the UCPB shares of stock registered in the respective names of the
more than one million coconut farmers; and
"2. To enjoin the PCGG from voting the SMC shares registered in the names of the 14 CIIF holding
companies including those registered in the name of the PCGG."18
On February 28, 2001, respondent court, after hearing the parties on oral argument, issued the assailed Order.
Hence, this Petition by the Republic of the Philippines represented by the PCGG.19
The case had initially been raffled to this Court's Third Division which, by a vote of 3-2,20 issued a
Resolution21requiring the parties to maintain the status quo existing before the issuance of the questioned
Sandiganbayan Order dated February 28, 2001. On March 7, 2001, Respondent COCOFED et al. moved that the
instant Petition be heard by the Court en banc.22 The Motion was unanimously granted by the Third Division.
On March 13, 2001, the Court en banc resolved to accept the Third Division's referral.23 It heard the case on Oral
Argument in Baguio City on April 17, 2001. During the hearing, it admitted the intervention of a group of coconut
farmers and farm worker organizations, the Pambansang Koalisyon ng mga Samahang Magsasaka at
Manggagawa ng Niyugan (PKSMMN). The coalition claims that its members have been excluded from the

benefits of the coconut levy fund. Inter alia, it joined petitioner in praying for the exclusion of private respondents
in voting the sequestered shares.
Issues
Petitioner submits the following issues for our consideration:24
"A.
Despite the fact that the subject sequestered shares were purchased with coconut levy funds (which were
declared public in character) and the continuing effectivity of Resolution dated February 16, 1993 in G.R.
No. 96073 which allows the PCGG to vote said sequestered shares, Respondent Sandiganbayan, with grave
abuse of discretion, issued its Order dated February 20, 2001 enjoining PCGG from voting the sequestered
shares of stock in UCPB.
"B.
The Respondent Sandiganbayan violated petitioner's right to due process by taking cognizance of the Class
Action Omnibus Motion dated 23 February 2001 despite gross lack of sufficient notice and by issuing the
writ of preliminary injunction despite the obvious fact that there was no actual pressing necessity or urgency
to do so."
In its Resolution dated April 17, 2001, the Court defined the issue to be resolved in the instant case simply as
follows:
This Court's Ruling

The Petition is impressed with merit.

Main Issue:
Who May Vote the Sequestered Shares of Stock?
Simply stated, the gut substantive issue to be resolved in the present Petition is: "Who may vote the sequestered
UCPB shares while the main case for their reversion to the State is pending in the Sandiganbayan?"
This Court holds that the government should be allowed to continue voting those shares inasmuch as they were
purchased with coconut levy funds that are prima facie public in character or, at the very least, are "clearly
affected with public interest."
General Rule: Sequestered Shares
Are Voted by the Registered Holder
At the outset, it is necessary to restate the general rule that the registered owner of the shares of a corporation
exercises the right and the privilege of voting.25 This principle applies even to shares that are sequestered by the
government, over which the PCGG as a mere conservator cannot, as a general rule, exercise acts of dominion.26On
the other hand, it is authorized to vote these sequestered shares registered in the names of private persons and
acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered test devised by the Court
inCojuangco v. Calpo27 and PCGG v. Cojuangco Jr.,28 as follows:
(1) Is there prima facie evidence showing that the said shares are ill-gotten and thus belong to the State?

(2) Is there an imminent danger of dissipation, thus necessitating their continued sequestration and voting by
the PCGG, while the main issue is pending with the Sandiganbayan?
Sequestered Shares Acquired with Public Funds are an Exception
From the foregoing general principle, the Court in Baseco v. PCGG29 (hereinafter "Baseco") and Cojuangco Jr. v.
Roxas30 ("Cojuangco-Roxas") has provided two clear "public character" exceptions under which the government is
granted the authority to vote the shares:
(1) Where government shares are taken over by private persons or entities who/which registered them in
their own names, and
(2) Where the capitalization or shares that were acquired with public funds somehow landed in private
hands.
The exceptions are based on the common-sense principle that legal fiction must yield to truth; that public property
registered in the names of non-owners is affected with trust relations; and that the prima facie beneficial owner
should be given the privilege of enjoying the rights flowing from the prima facie fact of ownership.
In Baseco, a private corporation known as the Bataan Shipyard and Engineering Co. was placed under
sequestration by the PCGG. Explained the Court:
"The facts show that the corporation known as BASECO was owned and controlled by President Marcos
'during his administration, through nominees, by taking undue advantage of his public office and/or using his
powers, authority, or influence,' and that it was by and through the same means, that BASECO had taken
over the business and/or assets of the National Shipyard and Engineering Co., Inc., and other governmentowned or controlled entities."31

Given this factual background, the Court discussed PCGG's right over BASECO in the following manner:
"Now, in the special instance of a business enterprise shown by evidence to have been 'taken over by the
government of the Marcos Administration or by entities or persons close to former President Marcos,' the
PCGG is given power and authority, as already adverted to, to 'provisionally take (it) over in the public
interest or to prevent * * (its) disposal or dissipation;' and since the term is obviously employed in reference
to going concerns, or business enterprises in operation, something more than mere physical custody is
connoted; the PCGG may in this case exercise some measure of control in the operation, running, or
management of the business itself."32
Citing an earlier Resolution, it ruled further:
"Petitioner has failed to make out a case of grave abuse or excess of jurisdiction in respondents' calling and
holding of a stockholders' meeting for the election of directors as authorized by the Memorandum of the
President * * (to the PCGG) dated June 26, 1986, particularly, where as in this case, the government can,
through its designated directors, properly exercise control and management over what appear to be
properties and assets owned and belonging to the government itself and over which the persons who appear
in this case on behalf of BASECO have failed to show any right or even any shareholding in said
corporation."33 (Italics supplied)
The Court granted PCGG the right to vote the sequestered shares because they appeared to be "assets belonging to
the government itself." The Concurring Opinion of Justice Ameurfina A. Melencio-Herrera, in which she was
joined by Justice Florentino P. Feliciano, explained this principle as follows:
"I have no objection to according the right to vote sequestered stock in case of a take-over of business
actually belonging to the government or whose capitalization comes from public funds but which, somehow,

landed in the hands of private persons, as in the case of BASECO. To my mind, however, caution and
prudence should be exercised in the case of sequestered shares of an on-going private business enterprise,
specially the sensitive ones, since the true and real ownership of said shares is yet to be determined and
proven more conclusively by the Courts."34 (Italics supplied)
The exception was cited again by the Court in Cojuangco-Roxas35 in this wise:
"The rule in this jurisdiction is, therefore, clear. The PCGG cannot perform acts of strict ownership of
sequestered property. It is a mere conservator. It may not vote the shares in a corporation and elect the
members of the board of directors. The only conceivable exception is in a case of a takeover of a business
belonging to the government or whose capitalization comes from public funds, but which landed in private
hands as in BASECO."36 (Italics supplied)
The "public character" test was reiterated in many subsequent cases; most recently, in Antiporda v.
Sandiganbayan.37 Expressly citing Conjuangco-Roxas,38 this Court said that in determining the issue of whether the
PCGG should be allowed to vote sequestered shares, it was crucial to find out first whether these were
purchased with public funds, as follows:
"It is thus important to determine first if the sequestered corporate shares came from public funds that landed
in private hands."39
In short, when sequestered shares registered in the names of private individuals or entities are alleged to have been
acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequestered shares in the
name of private individuals or entities are shown, prima facie, to have been (1) originally government shares, or (2)
purchased with public funds or those affected with public interest, then the two-tiered test does not apply. Rather,

the public character exceptions in Baseco v. PCGG and Cojuangco Jr. v. Roxas prevail; that is, the government
shall vote the shares.
UCPB Shares Were Acquired With Coconut Levy Funds
In the present case before the Court, it is not disputed that the money used to purchase the sequestered UCPB
shares came from the Coconut Consumer Stabilization Fund (CCSF), otherwise known as the coconut levy funds.
This fact was plainly admitted by private respondent's counsel, Atty. Teresita J. Herbosa, during the Oral
Arguments held on April 17, 2001 in Baguio City, as follows:
"Justice Panganiban:
"In regard to the theory of the Solicitor General that the funds used to purchase [both] the original 28 million
and the subsequent 80 million came from the CCSF, Coconut Consumers Stabilization Fund, do you agree
with that?
"Atty. Herbosa:
"Yes, Your Honor.
xxx

xxx

xxx

"Justice Panganiban:
"So it seems that the parties [have] agreed up to that point that the funds used to purchase 72% of the former
First United Bank came from the Coconut Consumer Stabilization Fund?

"Atty. Herbosa:
"Yes, Your Honor."40
Indeed in Cocofed v. PCGG,41 this Court categorically declared that the UCPB was acquired "with the use of
the Coconut Consumers Stabilization Fund in virtue of Presidential Decree No. 755, promulgated on July 29,
1975."
Coconut Levy Funds Are Affected With Public Interest
Having conclusively shown that the sequestered UCPB shares were purchased with coconut levies, we hold that
these funds and shares are, at the very least, "affected with public interest."
The Resolution issued by the Court on February 16, 1993 in Republic v. Sandiganbayan42 stated that coconut levy
funds were "clearly affected with public interest"; thus, herein private respondents even if they are the registered
shareholders cannot be accorded the right to vote them. We quote the said Resolution in part, as follows:
"The coconut levy funds being 'clearly affected with public interest, it follows that the corporations formed
and organized from those funds, and all assets acquired therefrom should also be regarded as 'clearly
affected with public interest.'"43
xxx

xxx

xxx

"Assuming, however, for purposes of argument merely, the lifting of sequestration to be correct, may it also
be assumed that the lifting of sequestration removed the character of the coconut levy companies of being
affected with public interest, so that they and their stock and assets may now be considered to be of private
ownership? May it be assumed that the lifting of sequestration operated to relieve the holders of stock in the

coconut levy companies affected with public interest of the obligation of proving how that stock had
been legitimately transferred to private ownership, or that those stockholders who had had some part in the
collection, administration, or disposition of the coconut levy funds are now deemed qualified to acquire said
stock, and freed from any doubt or suspicion that they had taken advantage of their special or fiduciary
relation with the agencies in charge of the coconut levies and the funds thereby accumulated? The obvious
answer to each of the questions is a negative one. It seems plain that the lifting of sequestration has no
relevance to the nature of the coconut levy companies or their stock or property, or to the legality of the
acquisition by private persons of their interest therein, or to the latter's capacity or disqualification to acquire
stock in the companies or any property acquired from coconut levy funds.
"This being so, the right of the [petitioners] to vote stock in their names at the meetings of the UCPB cannot
be conceded at this time. That right still has to be established by them before the Sandiganbayan. Until that
is done, they cannot be deemed legitimate owners of UCPB stock and cannot be accorded the right to vote
them."44 (Italics supplied)
It is however contended by respondents that this Resolution was in the nature of a temporary restraining order. As
such, it was supposedly interlocutory in character and became functus oficio when this Court decided GR No.
96073 on January 23, 1995.
This argument is aptly answered by petitioner in its Memorandum, which we quote:
"The ruling made in the Resolution dated 16 February 1993 confirming the public nature of the coconut levy
funds and denying claimants their purported right to vote is an affirmation of doctrines laid down in the
cases of COCOFED v. PCGG supra, Baseco v. PCGG, supra, and Cojuangco v. Roxas, supra. Therefore it
is of no moment that the Resolution dated 16 February 1993 has not been ratified. Its jurisprudential based
remain."45 (Italics supplied)

To repeat, the foregoing juridical situation has not changed. It is still the truth today: "the coconut levy funds are
clearly affected with public interest." Private respondents have not "demonstrated satisfactorily that they have
legitimately become private funds."
If private respondents really and sincerely believed that the final Decision of the Court in Republic v.
Sandiganbayan (GR No. 96073, promulgated on January 23, 1995) granted them the right to vote, why did they
wait for the lapse of six long years before definitively asserting it (1) through their letter dated February 13, 2001,
addressed to the UCPB Board of Directors, demanding the holding of a shareholders' meeting on March 6, 2001;
and (2) through their Omnibus Motion dated February 23, 2001 filed in the court a quo, seeking to enjoin PCGG
from voting the subject sequestered shares during the said stockholders' meeting? Certainly, if they even half
believed their submission now that they already had such right in 1995 why are they suddenly and imperiously
claiming it only now?
It should be stressed at this point that the assailed Sandiganbayan Order dated February 28, 2001 allowing private
respondents to vote the sequestered shares is not based on any finding that the coconut levies and the shares have
"legitimately become private funds." Neither is it based on the alleged lifting of the TRO issued by this Court on
February 16, 1993. Rather, it is anchored on the grossly mistaken application of the two-tiered test mentioned
earlier in this Decision.
To stress, the two-tiered test is applied only when the sequestered asset in the hands of a private person is alleged to
have been acquired with ill-gotten wealth. Hence, in PCGG v. Cojuangco,47 we allowed Eduardo Cojuangco Jr. to
vote the sequestered shares of the San Miguel Corporation (SMC) registered in his name but alleged to have been
acquired with ill-gotten wealth. We did so on his representation that he had acquired them with borrowed
funds and upon failure of the PCGG to satisfy the "two-tiered" test. This test was, however, not applied to
sequestered SMC shares that were purchased with coco levy funds.

In the present case, the sequestered UCPB shares are confirmed to have been acquired with coco levies, not with
alleged ill-gotten wealth. Hence, by parity of reasoning, the right to vote them is not subject to the "two-tiered test"
but to the public character of their acquisition, which per Antiporda v. Sandiganbayan cited earlier, must first be
determined.
Coconut Levy Funds Are Prima Facie Public Funds
To avoid misunderstanding and confusion, this Court will even be more categorical and positive than its earlier
pronouncements: the coconut levy funds are not only affected with public interest; they are, in fact, prima
facie public funds.
Public funds are those moneys belonging to the State or to any political subdivision of the State; more specifically,
taxes, customs duties and moneys raised by operation of law for the support of the government or for the discharge
of its obligations.48 Undeniably, coconut levy funds satisfy this general definition of public funds, because of the
following reasons:
1. Coconut levy funds are raised with the use of the police and taxing powers of the State.
2. They are levies imposed by the State for the benefit of the coconut industry and its farmers.
3. Respondents have judicially admitted that the sequestered shares were purchased with public funds.
4. The Commission on Audit (COA) reviews the use of coconut levy funds.
5. The Bureau of Internal Revenue (BIR), with the acquiescence of private respondents, has treated them as
public funds.

6. The very laws governing coconut levies recognize their public character.
We shall now discuss each of the foregoing reasons, any one of which is enough to show their public character.
1. Coconut Levy Funds Are Raised Through the State's Police and Taxing Powers.
Indeed, coconut levy funds partake of the nature of taxes which, in general, are enforced proportional contributions
from persons and properties, exacted by the State by virtue of its sovereignty for the support of government and for
all public needs.49
Based on this definition, a tax has three elements, namely: a) it is an enforced proportional contribution from
persons and properties; b) it is imposed by the State by virtue of its sovereignty; and c) it is levied for the support
of the government. The coconut levy funds fall squarely into these elements for the following reasons:
(a) They were generated by virtue of statutory enactments imposed on the coconut farmers requiring the
payment of prescribed amounts. Thus, PD No. 276, which created the Coconut Consumer Stabilization Fund
(CCSF), mandated the following:
"a. A levy, initially, of P15.00 per 100 kilograms of copra resecada or its equivalent in other coconut
products, shall be imposed on every first sale, in accordance with the mechanics established under RA 6260,
effective at the start of business hours on August 10, 1973.
"The proceeds from the levy shall be deposited with the Philippine National Bank or any other government
bank to the account of the Coconut Consumers Stabilization Fund, as a separate trust fund which shall not
form part of the general fund of the government."50

The coco levies were further clarified in amendatory laws, specifically PD No. 96151 and PD No. 146852 in
this wise:
"The Authority (Philippine Coconut Authority) is hereby empowered to impose and collect a levy, to be
known as the Coconut Consumers Stabilization Fund Levy, on every one hundred kilos of copra resecada, or
its equivalent in other coconut products delivered to, and/or purchased by, copra exporters, oil millers,
desiccators and other end-users of copra or its equivalent in other coconut products. The levy shall be paid
by such copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other
coconut products under such rules and regulations as the Authority may prescribe. Until otherwise prescribed
by the Authority, the current levy being collected shall be continued."53
Like other tax measures, they were not voluntary payments or donations by the people. They were enforced
contributions exacted on pain of penal sanctions, as provided under PD No. 276:
"3. Any person or firm who violates any provision of this Decree or the rules and regulations promulgated
thereunder, shall, in addition to penalties already prescribed under existing administrative and special law,
pay a fine of not less than P2,500 or more than P10,000, or suffer cancellation of licenses to operate, or both,
at the discretion of the Court."54
Such penalties were later amended thus:
"Whenever any person or entity willfully and deliberately violates any of the provisions of this Act, or any
rule or regulation legally promulgated hereunder by the Authority, the person or persons responsible for such
violation shall be punished by a fine of not more than P20,000.00 and by imprisonment of not more than five
years. If the offender be a corporation, partnership or a juridical person, the penalty shall be imposed on the
officer or officers authorizing, permitting or tolerating the violation. Aliens found guilty of any offenses

shall, after having served his sentence, be immediately deported and, in the case of a naturalized citizen, his
certificate of naturalization shall be cancelled."55
(b) The coconut levies were imposed pursuant to the laws enacted by the proper legislative authorities of the
State. Indeed, the CCSF was collected under PD No. 276, issued by former President Ferdinand E. Marcos
who was then exercising legislative powers.56
(c) They were clearly imposed for a public purpose. There is absolutely no question that they were collected
to advance the government's avowed policy of protecting the coconut industry. This Court takes judicial
notice of the fact that the coconut industry is one of the great economic pillars of our nation, and coconuts
and their byproducts occupy a leading position among the country's export products; that it gives
employment to thousands of Filipinos; that it is a great source of the state's wealth; and that it is one of the
important sources of foreign exchange needed by our country and, thus, pivotal in the plans of a government
committed to a policy of currency stability.
Taxation is done not merely to raise revenues to support the government, but also to provide means for the
rehabilitation and the stabilization of a threatened industry, which is so affected with public interest as to be within
the police power of the State, as held in Caltex Philippines v. COA57 and Osmea v. Orbos.58
Even if the money is allocated for a special purpose and raised by special means, it is still public in character. In the
case before us, the funds were even used to organize and finance State offices. In Cocofed v. PCGG,59 the Court
observed that certain agencies or enterprises "were organized and financed with revenues derived from coconut
levies imposed under a succession of laws of the late dictatorship x x x with deposed Ferdinand Marcos and his
cronies as the suspected authors and chief beneficiaries of the resulting coconut industry monopoly."60The Court
continued: "x x x. It cannot be denied that the coconut industry is one of the major industries supporting the
national economy. It is, therefore, the State's concern to make it a strong and secure source not only of the

livelihood of a significant segment of the population, but also of export earnings the sustained growth of which is
one of the imperatives of economic stability. x x x."61
2. Coconut Funds Are Levied for the Benefit of the Coconut Industry and Its Farmers.
Just like the sugar levy funds, the coconut levy funds constitute state funds even though they may be held for a
special public purpose.
In fact, Executive Order No. 481 dated May 1, 1998 specifically likens the coconut levy funds to the sugar levy
funds, both being special public funds acquired through the taxing and police powers of the State. The sugar
levy funds, which are strikingly similar to the coconut levies in their imposition and purpose, were declared public
funds by this Court in Gaston v. Republic Planters Bank,62 from which we quote:
"The stabilization fees collected are in the nature of a tax which is within the power of the state to impose for
the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b],
P.D. No. 388). The collections made accrue to a 'Special Fund,' a 'Development and Stabilization Fund,'
almost identical to the 'Sugar Adjustment and Stabilization Fund' created under Section 6 of Commonwealth
Act 567. The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory
purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the exercise of
the police power of the State. (Lutz vs. Araneta, supra.)."63
The Court further explained:64
"The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a
special purpose that of 'financing the growth and development of the sugar industry and all its components,
stabilization of the domestic market including the foreign market.' The fact that the State has taken

possession of moneys pursuant to law is sufficient to constitute them as state funds, even though they are
held for a special purpose (Lawrence v. American Surety Co., 263 Mich 586. 294 ALR 535, cited in 42 Am.
Jur., Sec. 2., p. 718). Having been levied for a special purpose, the revenues collected are to be treated as a
special fund, to be, in the language of the statute, 'administered in trust' for the purpose intended. Once the
purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds of the
Government. That is the essence of the trust intended (see 1987 Constitution, Art. VI, Sec. 29[3], lifted from
the 1935 Constitution, Article VI, Sec. 23[1]. (Italics supplied)
"The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are
deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be
paid out only in pursuance of an appropriation made by law (1987 Constitution, Article VI, Sec. 29[1], 1973
Constitution, Article VIII, Sec. 18[1]).
"That the fees were collected from sugar producers, planters and millers, and that the funds were channeled
to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fund for their
benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be
collected from them since it is also they who are to be benefited from the expenditure of the funds derived
from it. The investment in shares of respondent Bank is not alien to the purpose intended because of the
Bank's character as a commodity bank for sugar conceived for the industry's growth and development.
Furthermore, of note is the fact that one-half (1/2) or P0.50 per picul, of the amount levied under P.D. No.
388 is to be utilized for the 'payment of salaries and wages of personnel, fringe benefits and allowances of
officers and employees of PHILSUCOM' thereby immediately negating the claim that the entire amount
levied is in trust for sugar, producers, planters and millers.
"To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot
be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is

to be utilized for the benefit of the entire sugar industry, 'and all its components, stabilization of the domestic
market including the foreign market,' the industry being of vital importance to the country's economy and to
national interest."
In the same manner, this Court has also ruled that the oil stabilization funds were public in character and subject to
audit by COA. It ruled in this wise:
"Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in the
exercise of the police power of the State. Moreover, that the OPSF is a special fund is plain from the special
treatment given it by E.O. 137. It is segregated from the general fund; and while it is placed in what the law
refers to as a 'trust liability account,' the fund nonetheless remains subject to the scrutiny and review of the
COA. The Court is satisfied that these measures comply with the constitutional description of a 'special
fund.' Indeed, the practice is not without precedent."65
In his Concurring Opinion in Kilosbayan v. Guingona,66 Justice Florentino P. Feliciano explained that the funds
raised by the On-line Lottery System were also public in nature. In his words:
"x x x. In the case presently before the Court, the funds involved are clearly public in nature. The funds to be
generated by the proposed lottery are to be raised from the population at large. Should the proposed
operation be as successful as its proponents project, those funds will come from well-nigh every town and
barrio of Luzon. The funds here involved are public in another very real sense: they will belong to the
PCSO, a government owned or controlled corporation and an instrumentality of the government and are
destined for utilization in social development projects which, at least in principle, are designed to benefit the
general public. x x x. The interest of a private citizen in seeing to it that public funds, from whatever source
they may have been derived, go only to the uses directed and permitted by law is as real and personal and
substantial as the interest of a private taxpayer in seeing to it that tax monies are not intercepted on their way

to the public treasury or otherwise diverted from uses prescribed or allowed by law. It is also pertinent to
note that the more successful the government is in raising revenues by non-traditional methods such as
PAGCOR operations and privatization measures, the lesser will be the pressure upon the traditional sources
of public revenues, i.e., the pocket books of individual taxpayers and importers."67
Thus, the coconut levy funds like the sugar levy and the oil stabilization funds, as well as the monies generated
by the On-line Lottery System are funds exacted by the State. Being enforced contributions, the are prima
faciepublic funds.
3. Respondents Judicially Admit That the Levies Are Government Funds.
Equally important as the fact that the coconut levy funds were raised through the taxing and police powers of the
State is respondents' effective judicial admission that these levies are government funds. As shown by the
attachments to their pleadings,68 respondents concede that the Coconut Consumers Stabilization Fund (CCSF) and
the Coconut Investment Development Fund "constitute government funds x x x for the benefit of coconut farmers."
"Collections on both levies constitute government funds. However, unlike other taxes that the Government
levies and collects such as income tax, tariff and customs duties, etc., the collections on the CCSF and CIDF
are, by express provision of the laws imposing them, for a definite purpose, not just for any governmental
purpose. As stated above part of the collections on the CCSF levy should be spent for the benefit of the
coconut farmers. And in respect of the collections on the CIDF levy, P.D. 582 mandatorily requires that the
same should be spent exclusively for the establishment, operation and maintenance of a hybrid coconut seed
garden and the distribution, for free, to the coconut farmers of the hybrid coconut seednuts produced from
that seed garden.

"On the other hand, the laws which impose special levies on specific industries, for example on the mining
industry, sugar industry, timber industry, etc., do not, by their terms, expressly require that the collections on
those levies be spent exclusively for the benefit of the industry concerned. And if the enabling law thus so
provide, the fact remains that the governmental agency entrusted with the duty of implementing the purpose
for which the levy is imposed is vested with the discretionary power to determine when and how the
collections should be appropriated."69
4. The COA Audit Shows the Public Nature of the Funds.
Under COA Office Order No. 86-9470 dated April 15, 1986,70 the COA reviewed the expenditure and use of the
coconut levies allocated for the acquisition of the UCPB. The audit was aimed at ascertaining whether these were
utilized for the purpose for which they had been intended.71 Under the 1987 Constitution, the powers of the COA
are as follows:
"The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or
held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities x
x x."72
Because these funds have been subjected to COA audit, there can be no other conclusion than that are prima
facie public in character.
5. The BIR Has Pronounced That the Coconut Levy Funds Are Taxes.
In response to a query posed by the administrator of the Philippine Coconut Authority regarding the character of
the coconut levy funds, the Bureau of Internal Revenue has affirmed that these funds are public in character. It held

as follows: "[T]he coconut levy is not a public trust fund for the benefit of the coconut farmers, but is in the nature
of a tax and, therefore, x x x public funds that are subject to government administration and disposition."73
Furthermore, the executive branch treats the coconut levies as public funds. Thus, Executive Order No. 277, issued
on September 24, 1995, directed the mode of treatment, utilization, administration and management of the coconut
levy funds. It provided as follows:
'(a) The coconut levy funds, which include all income, interests, proceeds or profits derived therefrom, as
well as all assets, properties and shares of stocks procured or obtained with the use of such funds, shall be
treated, utilized, administered and managed as public funds consistent with the uses and purposes under the
laws which constituted them and the development priorities of the government, including the government's
coconut productivity, rehabilitation, research extension, farmers organizations, and market promotions
programs, which are designed to advance the development of the coconut industry and the welfare of the
coconut farmers."74 (Italics supplied)
Doctrinally, acts of the executive branch are prima facie valid and binding, unless declared unconstitutional or
contrary to law.
6. Laws Governing Coconut Levies Recognize Their Public Nature.
Finally and tellingly, the very laws governing the coconut levies recognize their public character. Thus, the
thirdWhereas clause of PD No. 276 treats them as special funds for a specific public purpose. Furthermore, PD No.
711 transferred to the general funds of the State all existing special and fiduciary funds including the CCSF. On the
other hand, PD No. 1234 specifically declared the CCSF as a special fund for a special purpose, which should be
treated as a special account in the National Treasury.

Moreover, even President Marcos himself, as the sole legislative/executive authority during the martial law years,
struck off the phrase which is a private fund of the coconut farmers from the original copy of Executive Order No.
504 dated May 31, 1978, and we quote:
"WHEREAS, by means of the Coconut Consumers Stabilization Fund ('CCSF'), which is the private fund
of the coconut farmers (deleted), essential coconut-based products are made available to household
consumers at socialized prices." (Emphasis supplied)
The phrase in bold face -- which is the private fund of the coconut farmers was crossed out and duly initialed by
its author, former, President Marcos. This deletion, clearly visible in "Attachment C" of petitioner's
Memorandum,75 was a categorical legislative intent to regard the CCSF as public, not private, funds.
Having Been Acquired With Public Funds, UCPB Shares Belong, Prima Facie, to the Government
Having shown that the coconut levy funds are not only affected with public interest, but are in fact prima
faciepublic funds, this Court believes that the government should be allowed to vote the questioned shares, because
they belong to it as the prima facie beneficial and true owner.
As stated at the beginning, voting is an act of dominion that should be exercised by the share owner. One of the
recognized rights of an owner is the right to vote at meetings of the corporation. The right to vote is classified as
the right to control.76 Voting rights may be for the purpose of, among others, electing or removing directors,
amending a charter, or making or amending by laws.77 Because the subject UCPB shares were acquired with
government funds, the government becomes their prima facie beneficial and true owner.
Ownership includes the right to enjoy, dispose of, exclude and recover a thing without limitations other than those
established by law or by the owner.78 Ownership has been aptly described as the most comprehensive of all real

rights.79 And the right to vote shares is a mere incident of ownership. In the present case, the government has been
shown to be the prima facie owner of the funds used to purchase the shares. Hence, it should be allowed the rights
and privileges flowing from such fact.
And paraphrasing Cocofed v. PCGG, already cited earlier, the Republic should continue to vote those shares until
and unless private respondents are able to demonstrate, in the main cases pending before the Sandiganbayan, that
"they [the sequestered UCPB shares] have legitimately become private."
Procedural and Incidental Issues:
Grave Abuse of Discretion, Improper Arguments and Intervenors' Relief
Procedurally, respondents argue that petitioner has failed to demonstrate that the Sandiganbayan committed grave
abuse of discretion, a demonstration required in every petition under Rule 65.80
We disagree. We hold that the Sandiganbayan gravely abused its discretion when it contravened the rulings of this
Court in Baseco and Cojuangco-Roxas thereby unlawfully, capriciously and arbitrarily depriving the government
of its right to vote sequestered shares purchased with coconut levy funds which are prima faciepublic funds.
Indeed, grave abuse of discretion may arise when a lower court or tribunal violates or contravenes the Constitution,
the law or existing jurisprudence. In one case,81 this Court ruled that the lower court's resolution was "tantamount
to overruling a judicial pronouncement of the highest Court x x x and unmistakably a very grave abuse of
discretion."82
The Public Character of Shares Is a Valid Issue

Private respondents also contend that the public nature of the coconut levy funds was not raised as an issue before
the Sandiganbayan. Hence, it could not be taken up before this Court.
Again we disagree. By ruling that the two-tiered test should be applied in evaluating private respondents' claim of
exercising voting rights over the sequestered shares, the Sandiganbayan effectively held that the subject assets were
private in character. Thus, to meet this issue, the Office of the Solicitor General countered that the shares were not
private in character, and that quite the contrary, they were and are public in nature because they were acquired with
coco levy funds which are public in character. In short, the main issue of who may vote the shares cannot be
determined without passing upon the question of the public/private character of the shares and the funds used to
acquire them. The latter issue, although not specifically raised in the Court a quo, should still be resolved in order
to fully adjudicate the main issue.
Indeed, this Court has "the authority to waive the lack of proper assignment of errors if the unassigned errors
closely relate to errors properly pinpointed out or if the unassigned errors refer to matters upon which the
determination of the questions raised by the errors properly assigned depend."83
Therefore, "where the issues already raised also rest on other issues not specifically presented as long as the latter
issues bear relevance and close relation to the former and as long as they arise from matters on record, the Court
has the authority to include them in its discussion of the controversy as well as to pass upon them."84
No Positive Relief For Intervenors
Intervenors anchor their interest in this case on an alleged right that they are trying to enforce in another
Sandiganbayan case docketed as SB Case No. 0187.85 In that case, they seek the recovery of the subject UCPB
shares from herein private respondents and the corporations controlled by them. Therefore, the rights sought to be

protected and the reliefs prayed for by intervenors are still being litigated in the said case. The purported rights they
are invoking are mere expectancies wholly dependent on the outcome of that case in the Sandiganbayan.
Clearly, we cannot rule on intervenors' alleged right to vote at this time and in this case. That right is dependent
upon the Sandiganbayan's resolution of their action for the recovery of said sequestered shares. Given the patent
fact that intervenors are not registered stockholders of UCPB as of the moment, their asserted rights cannot be
ruled upon in the present proceedings. Hence, no positive relief can be given them now, except insofar as they join
petitioner in barring private respondents from voting the subject shares.
Epilogue
In sum, we hold that the Sandiganbayan committed grave abuse of discretion in grossly contradicting and
effectively reversing existing jurisprudence, and in depriving the government of its right to vote the sequestered
UCPB shares which are prima facie public in character.
In making this ruling, we are in no way preempting the proceedings the Sandiganbayan may conduct or the final
judgment it may promulgate in Civil Case Nos. 0033-A, 0033-B and 0033-F. Our determination here is
merelyprima facie, and should not bar the anti-graft court from making a final ruling, after proper trial and hearing,
on the issues and prayers in the said civil cases, particularly in reference to the ownership of the subject shares.
We also lay down the caveat that, in declaring the coco levy funds to be prima facie public in character, we are not
ruling in any final manner on their classification whether they are general or trust or special funds since such
classification is not at issue here. Suffice it to say that the public nature of the coco levy funds is decreed by the
Court only for the purpose of determining the right to vote the shares, pending the final outcome of the said civil
cases.

Neither are we resolving in the present case the question of whether the shares held by Respondent Cojuangco are,
as he claims, the result of private enterprise. This factual matter should also be taken up in the final decision in the
cited cases that are pending in the court a quo. Again suffice it to say that the only issue settled here is the right of
PCGG to vote the sequestered shares, pending the final outcome of said cases.
This matter involving the coconut levy funds and the sequestered UCPB shares has been straddling the courts for
about 15 years. What we are discussing in the present Petition, we stress, is just an incident of the main cases
which are pending in the anti-graft court the cases for the reconveyance, reversion and restitution to the State of
these UCPB shares.
The resolution of the main cases has indeed been long overdue. Every effort, both by the parties and the
Sandiganbayan, should be exerted to finally settle this controversy.
WHEREFORE, the Petition is hereby GRANTED and the assailed Order SET ASIDE. The PCGG shall continue
voting the sequestered shares until Sandiganbayan Civil Case Nos. 0033-A, 0033-B and 0033-F are finally and
completely resolved. Furthermore, the Sandiganbayan is ORDERED to decide with finality the aforesaid civil
cases within a period of six (6) months from notice. It shall report to this Court on the progress of the said cases
every three (3) months, on pain of contempt. The Petition in Intervention is DISMISSED inasmuch as the reliefs
prayed for are not covered by the main issues in this case. No costs.
SO ORDERED.

G.R. No. L-42571-72 July 25, 1983

VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO CORPUZ, TERESITA
CALOT, ROSALIA FERNANDEZ, ELIZABETH VELASCO, NANETTE VILLANUEVA, HONORATO
BUENAVENTURA, RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO
ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA
ATRACTIVO, NAPOLEON MENDOZA, PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA
DURAN, SOCORRO BERNARDEZ, and PEDRO GABRIEL,petitioners,
vs.

THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal Mayor, MARIO
MENDOZA as the Municipal Vice-Mayor, and THE MUNICIPAL COUNCIL OF BOCAUE,
BULACAN, respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.

FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a municipal corporation, Bocaue,
Bulacan, represented by respondents, 1 can, prohibit the exercise of a lawful trade, the operation of night clubs, and
the pursuit of a lawful occupation, such clubs employing hostesses. It is contended that the ordinance assailed as
invalid is tainted with nullity, the municipality being devoid of power to prohibit a lawful business, occupation or
calling, petitioners at the same time alleging that their rights to due process and equal protection of the laws were
violated as the licenses previously given to them was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1. Title of Ordinance. This Ordinance shall be known
and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2. Definitions of
Terms (a) 'Night Club' shall include any place or establishment selling to the public food or drinks where
customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place or establishment where
dancing is permitted to the public and where professional hostesses or hospitality girls and professional dancers are
employed. (c) 'Professional hostesses' or 'hospitality girls' shall include any woman employed by any of the
establishments herein defined to entertain guests and customers at their table or to dance with them. (d)

'Professional dancer' shall include any woman who dances at any of the establishments herein defined for a fee or
remuneration paid directly or indirectly by the operator or by the persons she dances with. (e) 'Operator' shall
include the owner, manager, administrator or any person who operates and is responsible for the operation of any
night club, cabaret or dance hall. Section 3. Prohibition in the Issuance and Renewal of Licenses, Permits.
Being the principal cause in the decadence of morality and because of their other adverse effects on this
community as explained above, no operator of night clubs, cabarets or dance halls shall henceforth be issued
permits/licenses to operate within the jurisdiction of the municipality and no license/permit shall be issued to any
professional hostess, hospitality girls and professional dancer for employment in any of the aforementioned
establishments. The prohibition in the issuance of licenses/permits to said persons and operators of said
establishments shall include prohibition in the renewal thereof. Section 4. Revocation of Permits and Licenses.
The licenses and permits issued to operators of night clubs, cabarets or dance halls which are now in operation
including permits issued to professional hostesses, hospitality girls and professional dancers are hereby revoked
upon the expiration of the thirty-day period given them as provided in Section 8 hereof and thenceforth, the
operation of these establishments within the jurisdiction of the municipality shall be illegal. Section 5. Penalty in
case of violation. Violation of any of the provisions of this Ordinance shall be punishable by imprisonment not
exceeding three (3) months or a fine not exceeding P200.00 or both at the discretion of the Court. If the offense is
committed by a juridical entity, the person charged with the management and/or operation thereof shall be liable
for the penalty provided herein. Section 6. Separability Clause. If, for any reason, any section or provision of
this Ordinance is held unconstitutional or invalid, no other section or provision hereof shall be affected thereby.
Section 7.Repealing Clause. All ordinance, resolutions, circulars, memoranda or parts thereof that are
inconsistent with the provisions of this Ordinance are hereby repealed. Section 8. Effectivity. This Ordinance
shall take effect immediately upon its approval; provided, however, that operators of night clubs, cabarets and
dance halls now in operation including professional hostesses, hospitality girls and professional dancers are given a
period of thirty days from the approval hereof within which to wind up their businesses and comply with the
provisions of this Ordinance." 4

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court of First
Instance of Bulacan. 5 The grounds alleged follow:
1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business, occupation or
calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the law, as the
license previously given to petitioners was in effect withdrawn without judicial hearing. 3. That under Presidential
Decree No. 189, as amended, by Presidential Decree No. 259, the power to license and regulate tourist-oriented
businesses including night clubs, has been transferred to the Department of Tourism." 6 The cases were assigned to
respondent Judge, now Associate Justice Paras of the Intermediate Appellate Court, who issued a restraining order
on November 7, 1975. The answers were thereafter filed. It was therein alleged: " 1. That the Municipal Council is
authorized by law not only to regulate but to prohibit the establishment, maintenance and operation of night clubs
invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is
not violative of petitioners' right to due process and the equal protection of the law, since property rights are
subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not deprive Municipal
Councils of their jurisdiction to regulate or prohibit night clubs." 7There was the admission of the following facts as
having been established: "l. That petitioners Vicente de la Cruz, et al. in Civil Case No. 4755-M had been
previously issued licenses by the Municipal Mayor of Bocaue-petitioner Jose Torres III, since 1958; petitioner
Vicente de la Cruz, since 1960; petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since 1972; 2.
That petitioners had invested large sums of money in their businesses; 3. That the night clubs are well-lighted and
have no partitions, the tables being near each other; 4. That the petitioners owners/operators of these clubs do not
allow the hospitality girls therein to engage in immoral acts and to go out with customers; 5. That these hospitality
girls are made to go through periodic medical check-ups and not one of them is suffering from any venereal disease
and that those who fail to submit to a medical check-up or those who are found to be infected with venereal disease

are not allowed to work; 6. That the crime rate there is better than in other parts of Bocaue or in other towns of
Bulacan." 8 Then came on January 15, 1976 the decision upholding the constitutionality and validity of Ordinance
No. 84 and dismissing the cases. Hence this petition for certiorari by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is set forth in the
opening paragraph thus: "Those who lust cannot last. This in essence is why the Municipality of Bocaue, Province
of Bulacan, stigmatized as it has been by innuendos of sexual titillation and fearful of what the awesome future
holds for it, had no alternative except to order thru its legislative machinery, and even at the risk of partial
economic dislocation, the closure of its night clubs and/or cabarets. This in essence is also why this Court, obedient
to the mandates of good government, and cognizant of the categorical imperatives of the current legal and social
revolution, hereby [upholds] in the name of police power the validity and constitutionality of Ordinance No. 84,
Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining orders heretofore issued in these two
cases are therefore hereby rifted, effective the first day of February, 1976, the purpose of the grace period being to
enable the petitioners herein to apply to the proper appellate tribunals for any contemplated redress." 9 This Court
is, however, unable to agree with such a conclusion and for reasons herein set forth, holds that reliance on the
police power is insufficient to justify the enactment of the assailed ordinance. It must be declared null and void.
1. Police power is granted to municipal corporations in general terms as follows: "General power of council to
enact ordinances and make regulations. - The municipal council shall enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties
conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety, promote
the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and the
inhabitants thereof, and for the protection of property therein." 10 It is practically a reproduction of the former
Section 39 of Municipal Code. 11 An ordinance enacted by virtue thereof, according to Justice Moreland, speaking
for the Court in the leading case of United States v. Abendan 12 "is valid, unless it contravenes the fundamental law

of the Philippine Islands, or an Act of the Philippine Legislature, or unless it is against public policy, or is
unreasonable, oppressive, partial, discriminating, or in derogation of common right. Where the power to legislate
upon a given subject, and the mode of its exercise and the details of such legislation are not prescribed, the
ordinance passed pursuant thereto must be a reasonable exercise of the power, or it will be pronounced
invalid." 13 In another leading case, United States v. Salaveria, 14 the ponente this time being Justice Malcolm,
where the present Administrative Code provision was applied, it was stated by this Court: "The general welfare
clause has two branches: One branch attaches itself to the main trunk of municipal authority, and relates to such
ordinances and regulations as may be necessary to carry into effect and discharge the powers and duties conferred
upon the municipal council by law. With this class we are not here directly concerned. The second branch of the
clause is much more independent of the specific functions of the council which are enumerated by law. It
authorizes such ordinances as shall seem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and the
inhabitants thereof, and for the protection of property therein.' It is a general rule that ordinances passed by virtue
of the implied power found in the general welfare clause must be reasonable, consonant with the general
powersand purposes of the corporation, and not inconsistent with the laws or policy of the State." 15 If night clubs
were merely then regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In
the two leading cases above set forth, this Court had stressed reasonableness, consonant with the general powers
and purposes of municipal corporations, as well as consistency with the laws or policy of the State. It cannot be
said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term reasonable. The
objective of fostering public morals, a worthy and desirable end can be attained by a measure that does not
encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose sought
to be achieved could have been attained by reasonable restrictions rather than by an absolute prohibition. The
admonition in Salaveria should be heeded: "The Judiciary should not lightly set aside legislative action when there
is not a clear invasion of personal or property rights under the guise of police regulation." 16 It is clear that in the
guise of a police regulation, there was in this instance a clear invasion of personal or property rights, personal in

the case of those individuals desirous of patronizing those night clubs and property in terms of the investments
made and salaries to be earned by those therein employed.
2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally enacted on June
20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF CERTAIN
PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL JURISDICTIONS.' 18 Its first
section insofar as pertinent reads: "The municipal or city board or council of each chartered city shall have the
power to regulate by ordinance the establishment, maintenance and operation of night clubs, cabarets, dancing
schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement
within its territorial jurisdiction: ... " 19 Then on May 21, 1954, the first section was amended to include not merely
"the power to regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It is worded exactly as
Republic Act No. 938. It is to be admitted that as thus amended, if only the above portion of the Act were
considered, a municipal council may go as far as to prohibit the operation of night clubs. If that were all, then the
appealed decision is not devoid of support in law. That is not all, however. The title was not in any way altered. It
was not changed one whit. The exact wording was followed. The power granted remains that of regulation,
notprohibition. There is thus support for the view advanced by petitioners that to construe Republic Act No. 938 as
allowing the prohibition of the operation of night clubs would give rise to a constitutional question. The
Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the title thereof.
" 21 Since there is no dispute as the title limits the power to regulating, not prohibiting, it would result in the statute
being invalid if, as was done by the Municipality of Bocaue, the operation of a night club was prohibited. There is
a wide gap between the exercise of a regulatory power "to provide for the health and safety, promote the prosperity,
improve the morals, 22 in the language of the Administrative Code, such competence extending to all "the great
public needs, 23 to quote from Holmes, and to interdict any calling, occupation, or enterprise. In accordance with
the well-settled principle of constitutional construction that between two possible interpretations by one of which it

will be free from constitutional infirmity and by the other tainted by such grave defect, the former is to be
preferred. A construction that would save rather than one that would affix the seal of doom certainly commends
itself. We have done so before We do so again. 24
3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-enacted Local
Government Code. 25 The general welfare clause, a reiteration of the Administrative Code provision, is set forth in
the first paragraph of Section 149 defining the powers and duties of the sangguniang bayan. It read as follows: "(a)
Enact such ordinances and issue such regulations as may be necessary to carry out and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health, safety,
comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the protection of property therein; ..." 26 There
are in addition provisions that may have a bearing on the question now before this Court. Thus the sangguniang
bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses and lodging houses,
except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of
international standards which shall remain under the licensing and regulatory power of the Ministry of Tourism
which shall exercise such authority without infringing on the taxing or regulatory powers of the municipality; (ss)
Regulate public dancing schools, public dance halls, and sauna baths or massage parlors; (tt) Regulate the
establishment and operation of billiard pools, theatrical performances, circuses and other forms of
entertainment; ..." 27It is clear that municipal corporations cannot prohibit the operation of night clubs. They may be
regulated, but not prevented from carrying on their business. It would be, therefore, an exercise in futility if the
decision under review were sustained. All that petitioners would have to do is to apply once more for licenses to
operate night clubs. A refusal to grant licenses, because no such businesses could legally open, would be subject to
judicial correction. That is to comply with the legislative will to allow the operation and continued existence of
night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to close their establishments,
the necessary result of an affirmance, would amount to no more than a temporary termination of their business.

During such time, their employees would undergo a period of deprivation. Certainly, if such an undesirable
outcome can be avoided, it should be. The law should not be susceptible to the reproach that it displays less than
sympathetic concern for the plight of those who, under a mistaken appreciation of a municipal power, were thus
left without employment. Such a deplorable consequence is to be avoided. If it were not thus, then the element of
arbitrariness enters the picture. That is to pay less, very much less, than full deference to the due process clause
with its mandate of fairness and reasonableness.
4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute stand sustaining police
power legislation to promote public morals. The commitment to such an Ideal forbids such a backward step.
Legislation of that character is deserving of the fullest sympathy from the judiciary. Accordingly, the judiciary has
not been hesitant to lend the weight of its support to measures that can be characterized as falling within that aspect
of the police power. Reference is made by respondents to Ermita-Malate Hotel and Motel Operators Association,
Inc. v. City Mayor of Manila. 28 There is a misapprehension as to what was decided by this Court. That was a
regulatory measure. Necessarily, there was no valid objection on due process or equal protection grounds. It did not
prohibit motels. It merely regulated the mode in which it may conduct business in order precisely to put an end to
practices which could encourage vice and immorality. This is an entirely different case. What was involved is a
measure not embraced within the regulatory power but an exercise of an assumed power to prohibit. Moreover,
while it was pointed out in the aforesaid Ermita-Malate Hotel and Motel Operators Association, Inc. decision that
there must be a factual foundation of invalidity, it was likewise made clear that there is no need to satisfy such a
requirement if a statute were void on its face. That it certainly is if the power to enact such ordinance is at the most
dubious and under the present Local Government Code non-existent.
WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15, 1976
reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of Bocaue is declared void
and unconstitutional. The temporary restraining order issued by this Court is hereby made permanent. No costs.

G.R. No. L-75697 June 18, 1987

VALENTIN TIO doing business under the name and style of OMI ENTERPRISES, petitioner,
vs.
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA COMMISSION,
CITY MAYOR and CITY TREASURER OF MANILA, respondents.
Nelson Y. Ng for petitioner.
The City Legal Officer for respondents City Mayor and City Treasurer.

MELENCIO-HERRERA, J.:
This petition was filed on September 1, 1986 by petitioner on his own behalf and purportedly on behalf of other
videogram operators adversely affected. It assails the constitutionality of Presidential Decree No. 1987 entitled "An
Act Creating the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram
industry (hereinafter briefly referred to as the BOARD). The Decree was promulgated on October 5, 1985 and took
effect on April 10, 1986, fifteen (15) days after completion of its publication in the Official Gazette.
On November 5, 1985, a month after the promulgation of the abovementioned decree, Presidential Decree No.
1994 amended the National Internal Revenue Code providing, inter alia:
SEC. 134. Video Tapes. There shall be collected on each processed video-tape cassette, ready for
playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or
imported blank video tapes shall be subject to sales tax.
On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie Producers, Importers and
Distributors Association of the Philippines, and Philippine Motion Pictures Producers Association, hereinafter
collectively referred to as the Intervenors, were permitted by the Court to intervene in the case, over petitioner's
opposition, upon the allegations that intervention was necessary for the complete protection of their rights and that
their "survival and very existence is threatened by the unregulated proliferation of film piracy." The Intervenors
were thereafter allowed to file their Comment in Intervention.
The rationale behind the enactment of the DECREE, is set out in its preambular clauses as follows:

1. WHEREAS, the proliferation and unregulated circulation of videograms including, among others,
videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced
the operations of moviehouses and theaters, and have caused a sharp decline in theatrical attendance
by at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific,
amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually
in government revenues;
2. WHEREAS, videogram(s) establishments collectively earn around P600 Million per annum from
rentals, sales and disposition of videograms, and such earnings have not been subjected to tax, thereby
depriving the Government of approximately P180 Million in taxes each year;
3. WHEREAS, the unregulated activities of videogram establishments have also affected the viability
of the movie industry, particularly the more than 1,200 movie houses and theaters throughout the
country, and occasioned industry-wide displacement and unemployment due to the shutdown of
numerous moviehouses and theaters;
4. "WHEREAS, in order to ensure national economic recovery, it is imperative for the Government to
create an environment conducive to growth and development of all business industries, including the
movie industry which has an accumulated investment of about P3 Billion;
5. WHEREAS, proper taxation of the activities of videogram establishments will not only alleviate the
dire financial condition of the movie industry upon which more than 75,000 families and 500,000
workers depend for their livelihood, but also provide an additional source of revenue for the
Government, and at the same time rationalize the heretofore uncontrolled distribution of videograms;

6. WHEREAS, the rampant and unregulated showing of obscene videogram features constitutes a
clear and present danger to the moral and spiritual well-being of the youth, and impairs the mandate of
the Constitution for the State to support the rearing of the youth for civic efficiency and the
development of moral character and promote their physical, intellectual, and social well-being;
7. WHEREAS, civic-minded citizens and groups have called for remedial measures to curb these
blatant malpractices which have flaunted our censorship and copyright laws;
8. WHEREAS, in the face of these grave emergencies corroding the moral values of the people and
betraying the national economic recovery program, bold emergency measures must be adopted with
dispatch; ... (Numbering of paragraphs supplied).
Petitioner's attack on the constitutionality of the DECREE rests on the following grounds:
1. Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local
government is a RIDER and the same is not germane to the subject matter thereof;
2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation
of the due process clause of the Constitution;
3. There is no factual nor legal basis for the exercise by the President of the vast powers conferred
upon him by Amendment No. 6;
4. There is undue delegation of power and authority;
5. The Decree is an ex-post facto law; and

6. There is over regulation of the video industry as if it were a nuisance, which it is not.
We shall consider the foregoing objections in seriatim.
1. The Constitutional requirement that "every bill shall embrace only one subject which shall be expressed in the
title thereof" 1 is sufficiently complied with if the title be comprehensive enough to include the general purpose
which a statute seeks to achieve. It is not necessary that the title express each and every end that the statute wishes
to accomplish. The requirement is satisfied if all the parts of the statute are related, and are germane to the subject
matter expressed in the title, or as long as they are not inconsistent with or foreign to the general subject and
title.2 An act having a single general subject, indicated in the title, may contain any number of provisions, no matter
how diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and may be
considered in furtherance of such subject by providing for the method and means of carrying out the general
object." 3 The rule also is that the constitutional requirement as to the title of a bill should not be so narrowly
construed as to cripple or impede the power of legislation. 4 It should be given practical rather than technical
construction. 5
Tested by the foregoing criteria, petitioner's contention that the tax provision of the DECREE is a rider is without
merit. That section reads, inter alia:
Section 10. Tax on Sale, Lease or Disposition of Videograms. Notwithstanding any provision of
law to the contrary, the province shall collect a tax of thirty percent (30%) of the purchase price or
rental rate, as the case may be, for every sale, lease or disposition of a videogram containing a
reproduction of any motion picture or audiovisual program. Fifty percent (50%) of the proceeds of the
tax collected shall accrue to the province, and the other fifty percent (50%) shall acrrue to the
municipality where the tax is collected; PROVIDED, That in Metropolitan Manila, the tax shall be
shared equally by the City/Municipality and the Metropolitan Manila Commission.

xxx xxx xxx

The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of, the
general object of the DECREE, which is the regulation of the video industry through the Videogram Regulatory
Board as expressed in its title. The tax provision is not inconsistent with, nor foreign to that general subject and
title. As a tool for regulation 6 it is simply one of the regulatory and control mechanisms scattered throughout the
DECREE. The express purpose of the DECREE to include taxation of the video industry in order to regulate and
rationalize the heretofore uncontrolled distribution of videograms is evident from Preambles 2 and 5, supra. Those
preambles explain the motives of the lawmaker in presenting the measure. The title of the DECREE, which is the
creation of the Videogram Regulatory Board, is comprehensive enough to include the purposes expressed in its
Preamble and reasonably covers all its provisions. It is unnecessary to express all those objectives in the title or that
the latter be an index to the body of the DECREE. 7
2. Petitioner also submits that the thirty percent (30%) tax imposed is harsh and oppressive, confiscatory, and in
restraint of trade. However, it is beyond serious question that a tax does not cease to be valid merely because it
regulates, discourages, or even definitely deters the activities taxed. 8 The power to impose taxes is one so
unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any
restrictions whatever, except such as rest in the discretion of the authority which exercises it. 9 In imposing a tax,
the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive
taxation. 10
The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the realization
that earnings of videogram establishments of around P600 million per annum have not been subjected to tax,
thereby depriving the Government of an additional source of revenue. It is an end-user tax, imposed on retailers for
every videogram they make available for public viewing. It is similar to the 30% amusement tax imposed or borne
by the movie industry which the theater-owners pay to the government, but which is passed on to the entire cost of

the admission ticket, thus shifting the tax burden on the buying or the viewing public. It is a tax that is imposed
uniformly on all videogram operators.
The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the
video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights,
and the proliferation of pornographic video tapes. And while it was also an objective of the DECREE to protect the
movie industry, the tax remains a valid imposition.
The public purpose of a tax may legally exist even if the motive which impelled the legislature to
impose the tax was to favor one industry over another. 11
It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been
repeatedly held that "inequities which result from a singling out of one particular class for taxation or
exemption infringe no constitutional limitation". 12 Taxation has been made the implement of the
state's police power. 13
At bottom, the rate of tax is a matter better addressed to the taxing legislature.
3. Petitioner argues that there was no legal nor factual basis for the promulgation of the DECREE by the former
President under Amendment No. 6 of the 1973 Constitution providing that "whenever in the judgment of the
President ... , there exists a grave emergency or a threat or imminence thereof, or whenever the interim Batasang
Pambansa or the regular National Assembly fails or is unable to act adequately on any matter for any reason that in
his judgment requires immediate action, he may, in order to meet the exigency, issue the necessary decrees, orders,
or letters of instructions, which shall form part of the law of the land."

In refutation, the Intervenors and the Solicitor General's Office aver that the 8th "whereas" clause sufficiently
summarizes the justification in that grave emergencies corroding the moral values of the people and betraying the
national economic recovery program necessitated bold emergency measures to be adopted with dispatch. Whatever
the reasons "in the judgment" of the then President, considering that the issue of the validity of the exercise of
legislative power under the said Amendment still pends resolution in several other cases, we reserve resolution of
the question raised at the proper time.
4. Neither can it be successfully argued that the DECREE contains an undue delegation of legislative power. The
grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance of other agencies
and units of the government and deputize, for a fixed and limited period, the heads or personnel of such agencies
and units to perform enforcement functions for the Board" is not a delegation of the power to legislate but merely a
conferment of authority or discretion as to its execution, enforcement, and implementation. "The true distinction is
between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and
conferring authority or discretion as to its execution to be exercised under and in pursuance of the law. The first
cannot be done; to the latter, no valid objection can be made." 14 Besides, in the very language of the decree, the
authority of the BOARD to solicit such assistance is for a "fixed and limited period" with the deputized agencies
concerned being "subject to the direction and control of the BOARD." That the grant of such authority might be the
source of graft and corruption would not stigmatize the DECREE as unconstitutional. Should the eventuality occur,
the aggrieved parties will not be without adequate remedy in law.
5. The DECREE is not violative of the ex post facto principle. An ex post facto law is, among other categories, one
which "alters the legal rules of evidence, and authorizes conviction upon less or different testimony than the law
required at the time of the commission of the offense." It is petitioner's position that Section 15 of the DECREE in
providing that:

All videogram establishments in the Philippines are hereby given a period of forty-five (45) days after
the effectivity of this Decree within which to register with and secure a permit from the BOARD to
engage in the videogram business and to register with the BOARD all their inventories of videograms,
including videotapes, discs, cassettes or other technical improvements or variations thereof, before
they could be sold, leased, or otherwise disposed of. Thereafter any videogram found in the possession
of any person engaged in the videogram business without the required proof of registration by the
BOARD, shall be prima facie evidence of violation of the Decree, whether the possession of such
videogram be for private showing and/or public exhibition.
raises immediately a prima facie evidence of violation of the DECREE when the required proof of registration of
any videogram cannot be presented and thus partakes of the nature of an ex post facto law.
The argument is untenable. As this Court held in the recent case of Vallarta vs. Court of Appeals, et al. 15
... it is now well settled that "there is no constitutional objection to the passage of a law providing that
the presumption of innocence may be overcome by a contrary presumption founded upon the
experience of human conduct, and enacting what evidence shall be sufficient to overcome such
presumption of innocence" (People vs. Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A
TREATISE ON THE CONSTITUTIONAL LIMITATIONS, 639-641). And the "legislature may enact
that when certain facts have been proved that they shall be prima facie evidence of the existence of the
guilt of the accused and shift the burden of proof provided there be a rational connection between the
facts proved and the ultimate facts presumed so that the inference of the one from proof of the others
is not unreasonable and arbitrary because of lack of connection between the two in common
experience". 16

Applied to the challenged provision, there is no question that there is a rational connection between the fact proved,
which is non-registration, and the ultimate fact presumed which is violation of the DECREE, besides the fact that
the prima facie presumption of violation of the DECREE attaches only after a forty-five-day period counted from
its effectivity and is, therefore, neither retrospective in character.
6. We do not share petitioner's fears that the video industry is being over-regulated and being eased out of existence
as if it were a nuisance. Being a relatively new industry, the need for its regulation was apparent. While the
underlying objective of the DECREE is to protect the moribund movie industry, there is no question that public
welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy; the
erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewed
video tapes containing pornographic films and films with brutally violent sequences; and losses in government
revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video establishments
are virtually untaxed since mere payment of Mayor's permit and municipal license fees are required to engage in
business. 17
The enactment of the Decree since April 10, 1986 has not brought about the "demise" of the video industry. On the
contrary, video establishments are seen to have proliferated in many places notwithstanding the 30% tax imposed.
In the last analysis, what petitioner basically questions is the necessity, wisdom and expediency of the DECREE.
These considerations, however, are primarily and exclusively a matter of legislative concern.
Only congressional power or competence, not the wisdom of the action taken, may be the basis for
declaring a statute invalid. This is as it ought to be. The principle of separation of powers has in the
main wisely allocated the respective authority of each department and confined its jurisdiction to such
a sphere. There would then be intrusion not allowable under the Constitution if on a matter left to the
discretion of a coordinate branch, the judiciary would substitute its own. If there be adherence to the

rule of law, as there ought to be, the last offender should be courts of justice, to which rightly litigants
submit their controversy precisely to maintain unimpaired the supremacy of legal norms and
prescriptions. The attack on the validity of the challenged provision likewise insofar as there may be
objections, even if valid and cogent on its wisdom cannot be sustained. 18
In fine, petitioner has not overcome the presumption of validity which attaches to a challenged statute. We find no
clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as
unconstitutional and void.
WHEREFORE, the instant Petition is hereby dismissed.
No costs.
SO ORDERED.

G.R. No. L-114783 December 8, 1994

ROBERT V. TOBIAS, RAMON M. GUZMAN, TERRY T. LIM, GREGORIO D. GABRIEL, and

ROBERTO R. TOBIAS, JR. petitioners,
vs.
HON. CITY MAYOR BENJAMIN S. ABALOS, CITY TREASURER WILLIAM MARCELINO, and THE
SANGGUNIANG PANLUNGSOD, all of the City of Mandaluyong, Metro Manila, respondents.
Estrella, Bautista & Associates for petitioners.

BIDIN, J.:
Invoking their rights as taxpayers and as residents of Mandaluyong, herein petitioners assail the constitutionality of
Republic Act No. 7675, otherwise known as "An Act Converting the Municipality of Mandaluyong into a Highly
Urbanized City to be known as the City of Mandaluyong."
Prior to the enactment of the assailed statute, the municipalities of Mandaluyong and San Juan belonged to only
one legislative district. Hon. Ronaldo Zamora, the incumbent congressional representative of this legislative
district, sponsored the bill which eventually became R.A. No. 7675. President Ramos signed R.A. No. 7675 into
law on February 9, 1994.
Pursuant to the Local Government Code of 1991, a plebiscite was held on April 10, 1994. The people of
Mandaluyong were asked whether they approved of the conversion of the Municipality of Mandaluyong into a
highly urbanized city as provided under R.A. No. 7675. The turnout at the plebiscite was only 14.41% of the voting
population. Nevertheless, 18,621 voted "yes" whereas 7,911 voted "no." By virtue of these results, R.A. No. 7675
was deemed ratified and in effect.

Petitioners now come before this Court, contending that R.A. No. 7675, specifically Article VIII, Section 49
thereof, is unconstitutional for being violative of three specific provisions of the Constitution.
Article VIII, Section 49 of R.A. No. 7675 provides:
As a highly-urbanized city, the City of Mandaluyong shall have its own legislative district with the
first representative to be elected in the next national elections after the passage of this Act. The
remainder of the former legislative district of San Juan/Mandaluyong shall become the new legislative
district of San Juan with its first representative to be elected at the same election.
Petitioner's first objection to the aforequoted provision of R.A. No. 7675 is that it contravenes the "one subject-one
bill" rule, as enunciated in Article VI, Section 26(1) of the Constitution, to wit:
Sec. 26(1). Every bill passed by the Congress shall embrace only one subject which shall be expressed
in the title thereof.
Petitioners allege that the inclusion of the assailed Section 49 in the subject law resulted in the latter embracing two
principal subjects, namely: (1) the conversion of Mandaluyong into a highly urbanized city; and (2) the division of
the congressional district of San Juan/Mandaluyong into two separate districts.
Petitioners contend that the second aforestated subject is not germane to the subject matter of R.A. No. 7675 since
the said law treats of the conversion of Mandaluyong into a highly urbanized city, as expressed in the title of the
law. Therefore, since Section 49 treats of a subject distinct from that stated in the title of the law, the "one subjectone bill" rule has not been complied with.
Petitioners' second and third objections involve Article VI, Sections 5(1) and (4) of the Constitution, which
provide, to wit:

Sec. 5(1). The House of Representatives shall be composed of not more than two hundred and fifty
members, unless otherwise fixed by law, who shall be elected from legislative districts apportioned
among the provinces, cities, and the Metropolitan Manila area in accordance with the number of their
respective inhabitants, and on the basis of a uniform and progressive ratio, and those who, as provided
by law, shall be elected through a party list system of registered national, regional and sectoral parties
or organizations.
Sec. 5(4). Within three years following the return of every census, the Congress shall make a
reapportionment of legislative districts based on the standard provided in this section.
Petitioners argue that the division of San Juan and Mandaluyong into separate congressional districts under Section
49 of the assailed law has resulted in an increase in the composition of the House of Representatives beyond that
provided in Article VI, Sec. 5(1) of the Constitution. Furthermore, petitioners contend that said division was not
made pursuant to any census showing that the subject municipalities have attained the minimum population
requirements. And finally, petitioners assert that Section 49 has the effect of preempting the right of Congress to
reapportion legislative districts pursuant to Sec. 5(4) as aforecited.
The contentions are devoid of merit.
Anent the first issue, we agree with the observation of the Solicitor General that the statutory conversion of
Mandaluyong into a highly urbanized city with a population of not less than two hundred fifty thousand
indubitably ordains compliance with the "one city-one representative" proviso in the Constitution:
. . . Each city with a population of at least two hundred fifty thousand, or each province, shall have at
least one representative" (Article VI, Section 5(3), Constitution).

Hence, it is in compliance with the aforestated constitutional mandate that the creation of a separate congressional
district for the City of Mandaluyong is decreed under Article VIII, Section 49 of R.A. No. 7675.
Contrary to petitioners' assertion, the creation of a separate congressional district for Mandaluyong is not a subject
separate and distinct from the subject of its conversion into a highly urbanized city but is a natural and logical
consequence of its conversion into a highly urbanized city. Verily, the title of R.A. No. 7675, "An Act Converting
the Municipality of Mandaluyong Into a Highly Urbanized City of Mandaluyong" necessarily includes and
contemplates the subject treated under Section 49 regarding the creation of a separate congressional district for
Mandaluyong.
Moreover, a liberal construction of the "one title-one subject" rule has been invariably adopted by this court so as
not to cripple or impede legislation. Thus, in Sumulong v. Comelec (73 Phil. 288 [1941]), we ruled that the
constitutional requirement as now expressed in Article VI, Section 26(1) "should be given a practical rather than a
technical construction. It should be sufficient compliance with such requirement if the title expresses the general
subject and all the provisions are germane to that general subject."
The liberal construction of the "one title-one subject" rule had been further elucidated in Lidasan v. Comelec (21
SCRA 496 [1967]), to wit:
Of course, the Constitution does not require Congress to employ in the title of an enactment, language
of such precision as to mirror, fully index or catalogue all the contents and the minute details therein.
It suffices if the title should serve the purpose of the constitutional demand that it inform the
legislators, the persons interested in the subject of the bill and the public, of the nature, scope
and consequences of the proposed law and its operation" (emphasis supplied).

Proceeding now to the other constitutional issues raised by petitioners to the effect that there is no mention in the
assailed law of any census to show that Mandaluyong and San Juan had each attained the minimum requirement of
250,000 inhabitants to justify their separation into two legislative districts, the same does not suffice to strike down
the validity of R.A. No. 7675. The said Act enjoys the presumption of having passed through the regular
congressional processes, including due consideration by the members of Congress of the minimum requirements
for the establishment of separate legislative districts. At any rate, it is not required that all laws emanating from the
legislature must contain all relevant data considered by Congress in the enactment of said laws.
As to the contention that the assailed law violates the present limit on the number of representatives as set forth in
the Constitution, a reading of the applicable provision, Article VI, Section 5(1), as aforequoted, shows that the
present limit of 250 members is not absolute. The Constitution clearly provides that the House of Representatives
shall be composed of not more than 250 members, "unless otherwise provided by law." The inescapable import of
the latter clause is that the present composition of Congress may be increased, if Congress itself so mandates
through a legislative enactment. Therefore, the increase in congressional representation mandated by R.A. No.
7675 is not unconstitutional.
Thus, in the absence of proof that Mandaluyong and San Juan do not qualify to have separate legislative districts,
the assailed Section 49 of R.A.
No. 7675 must be allowed to stand.
As to the contention that Section 49 of R.A. No. 7675 in effect preempts the right of Congress to reapportion
legislative districts, the said argument borders on the absurd since petitioners overlook the glaring fact that it was
Congress itself which drafted, deliberated upon and enacted the assailed law, including Section 49 thereof.
Congress cannot possibly preempt itself on a right which pertains to itself.

Aside from the constitutional objections to R.A. No. 7675, petitioners present further arguments against the
validity thereof.
Petitioners contend that the people of San Juan should have been made to participate in the plebiscite on R.A. No.
7675 as the same involved a change in their legislative district. The contention is bereft of merit since the principal
subject involved in the plebiscite was the conversion of Mandaluyong into a highly urbanized city. The matter of
separate district representation was only ancillary thereto. Thus, the inhabitants of San Juan were properly excluded
from the said plebiscite as they had nothing to do with the change of status of neighboring Mandaluyong.
Similarly, petitioners' additional argument that the subject law has resulted in "gerrymandering," which is the
practice of creating legislative districts to favor a particular candidate or party, is not worthy of credence. As
correctly observed by the Solicitor General, it should be noted that Rep. Ronaldo Zamora, the author of the assailed
law, is the incumbent representative of the former San Juan/Mandaluyong district, having consistently won in both
localities. By dividing San Juan/Mandaluyong, Rep. Zamora's constituency has in fact been diminished, which
development could hardly be considered as favorable to him.
WHEREFORE, the petition is hereby DISMISSED for lack of merit.
SO ORDERED.

G.R. No. 115455 October 30, 1995

ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115525 October 30, 1995
JUAN T. DAVID, petitioner,
vs.
TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary of
Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of Internal Revenue; and their AUTHORIZED
AGENTS OR REPRESENTATIVES, respondents.
G.R. No. 115543 October 30, 1995
RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE BUREAU
OF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHING
CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, petitioners,
vs.

HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO T.
GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his
capacity as Secretary of Finance, respondents.
G.R. No. 115754 October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 October 30, 1995
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C.
CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE,
CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE
CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR BROTHERHOOD,
INTEGRITY AND NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC.,
and PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAADA,petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF
INTERNAL REVENUE and THE COMMISSIONER OF CUSTOMS, respondents.
G.R. No. 115852 October 30, 1995

PHILIPPINE AIRLINES, INC., petitioner,

vs.
THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115873 October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, petitioner,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue, HON. TEOFISTO
T. GUINGONA, JR., in his capacity as Executive Secretary, and HON. ROBERTO B. DE OCAMPO, in his
capacity as Secretary of Finance, respondents.
G.R. No. 115931 October 30, 1995
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and ASSOCIATION OF
PHILIPPINE BOOK SELLERS, petitioners,
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as the
Commissioner of Internal Revenue; and HON. GUILLERMO PARAYNO, JR., in his capacity as the
Commissioner of Customs, respondents.
RESOLUTION

MENDOZA, J.:

These are motions seeking reconsideration of our decision dismissing the petitions filed in these cases for the
declaration of unconstitutionality of R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law. The
motions, of which there are 10 in all, have been filed by the several petitioners in these cases, with the exception of
the Philippine Educational Publishers Association, Inc. and the Association of Philippine Booksellers, petitioners in
G.R. No. 115931.
The Solicitor General, representing the respondents, filed a consolidated comment, to which the Philippine
Airlines, Inc., petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc., petitioner in G.R. No. 115544,
and Juan T. David, petitioner in G.R. No. 115525, each filed a reply. In turn the Solicitor General filed on June 1,
1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills. Some of the petitioners (Tolentino, Kilosbayan,
Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and Builders Association (CREBA)) reiterate
previous claims made by them that R.A. No. 7716 did not "originate exclusively" in the House of Representatives
as required by Art. VI, 24 of the Constitution. Although they admit that H. No. 11197 was filed in the House of
Representatives where it passed three readings and that afterward it was sent to the Senate where after first reading
it was referred to the Senate Ways and Means Committee, they complain that the Senate did not pass it on second
and third readings. Instead what the Senate did was to pass its own version (S. No. 1630) which it approved on
May 24, 1994. Petitioner Tolentino adds that what the Senate committee should have done was to amend H. No.
11197 by striking out the text of the bill and substituting it with the text of S. No. 1630. That way, it is said, "the
bill remains a House bill and the Senate version just becomes the text (only the text) of the House bill."
The contention has no merit.

The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment to a House
revenue bill by enacting its own version of a revenue bill. On at least two occasions during the Eighth Congress,
the Senate passed its own version of revenue bills, which, in consolidation with House bills earlier passed, became
the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY EXTENDING
FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX
CREDIT ON CAPITAL EQUIPMENT) which was approved by the President on April 10, 1992. This Act is
actually a consolidation of H. No. 34254, which was approved by the House on January 29, 1992, and S. No. 1920,
which was approved by the Senate on February 3, 1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO ANY
FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the President on
May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by the House of Representatives
on August 2, 1989, and S. No. 807, which was approved by the Senate on October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which were also the result of the consolidation of
House and Senate bills. These are the following, with indications of the dates on which the laws were approved by
the President and dates the separate bills of the two chambers of Congress were respectively passed:
1. R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR THIS
PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE
(December 28, 1992).

House Bill No. 2165, October 5, 1992

Senate Bill No. 32, December 7, 1992
2. R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THE
PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO ALLOW LOCAL
GOVERNMENT UNITS TO SHARE IN VAT REVENUE, AMENDING FOR THIS PURPOSE
CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3. R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE
THE PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS,
AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4. R.A. NO. 7649

AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS,

INSTRUMENTALITIES OR AGENCIES INCLUDING GOVERNMENT-OWNED OR
CONTROLLED CORPORATIONS (GOCCS) TO DEDUCT AND WITHHOLD THE VALUEADDED TAX DUE AT THE RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE
PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES
RENDERED BY CONTRACTORS (April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5. R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS TO
DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL
GOVERNMENT, AND FOR OTHER PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993
6. R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THE
DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR
SPECIFIC PROGRAMS, AND FOR OTHER PURPOSES (December 23, 1993)

House Bill No. 7789, May 31, 1993

Senate Bill No. 1330, November 18, 1993
7. R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK
LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL
PUBLIC OFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED, BY INSERTING A NEW SECTION AND REPEALING
CERTAIN SUBSECTIONS THEREOF (May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of its power to
propose amendments to bills required to originate in the House, passed its own version of a House revenue
measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners Tolentino and Roco, as members of
the Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino, concerns a mere matter
of form. Petitioner has not shown what substantial difference it would make if, as the Senate actually did in this
case, a separate bill like S. No. 1630 is instead enacted as a substitute measure, "taking into
Consideration . . . H.B. 11197."
Indeed, so far as pertinent, the Rules of the Senate only provide:

RULE XXIX
AMENDMENTS
xxx xxx xxx
68. Not more than one amendment to the original amendment shall be considered.
No amendment by substitution shall be entertained unless the text thereof is submitted in writing.
Any of said amendments may be withdrawn before a vote is taken thereon.
69. No amendment which seeks the inclusion of a legislative provision foreign to the subject matter
of a bill (rider) shall be entertained.
xxx xxx xxx
70-A. A bill or resolution shall not be amended by substituting it with another which covers a subject
distinct from that proposed in the original bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate possesses less
power than the U.S. Senate because of textual differences between constitutional provisions giving them the power
to propose or concur with amendments.
Art. I, 7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may
propose or concur with amendments as on other Bills.

Art. VI, 24 of our Constitution reads:

All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the phrase "as on
other Bills" in the American version, according to petitioners, shows the intention of the framers of our
Constitution to restrict the Senate's power to propose amendments to revenue bills. Petitioner Tolentino contends
that the word "exclusively" was inserted to modify "originate" and "the words 'as in any other bills' (sic) were
eliminated so as to show that these bills were not to be like other bills but must be treated as a special kind."
The history of this provision does not support this contention. The supposed indicia of constitutional intent are
nothing but the relics of an unsuccessful attempt to limit the power of the Senate. It will be recalled that the 1935
Constitution originally provided for a unicameral National Assembly. When it was decided in 1939 to change to a
bicameral legislature, it became necessary to provide for the procedure for lawmaking by the Senate and the House
of Representatives. The work of proposing amendments to the Constitution was done by the National Assembly,
acting as a constituent assembly, some of whose members, jealous of preserving the Assembly's lawmaking
powers, sought to curtail the powers of the proposed Senate. Accordingly they proposed the following provision:
All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills
shall originate exclusively in the Assembly, but the Senate may propose or concur with amendments.
In case of disapproval by the Senate of any such bills, the Assembly may repass the same by a twothirds vote of all its members, and thereupon, the bill so repassed shall be deemed enacted and may be
submitted to the President for corresponding action. In the event that the Senate should fail to finally
act on any such bills, the Assembly may, after thirty days from the opening of the next regular session

of the same legislative term, reapprove the same with a vote of two-thirds of all the members of the
Assembly. And upon such reapproval, the bill shall be deemed enacted and may be submitted to the
President for corresponding action.
The special committee on the revision of laws of the Second National Assembly vetoed the proposal. It deleted
everything after the first sentence. As rewritten, the proposal was approved by the National Assembly and
embodied in Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO, KNOW YOUR
CONSTITUTION 65-66 (1950)). The proposed amendment was submitted to the people and ratified by them in the
elections held on June 18, 1940.
This is the history of Art. VI, 18 (2) of the 1935 Constitution, from which Art. VI, 24 of the present Constitution
was derived. It explains why the word "exclusively" was added to the American text from which the framers of the
Philippine Constitution borrowed and why the phrase "as on other Bills" was not copied. Considering the defeat of
the proposal, the power of the Senate to propose amendments must be understood to be full, plenary and complete
"as on other Bills." Thus, because revenue bills are required to originate exclusively in the House of
Representatives, the Senate cannot enact revenue measures of its own without such bills. After a revenue bill is
passed and sent over to it by the House, however, the Senate certainly can pass its own version on the same subject
matter. This follows from the coequality of the two chambers of Congress.
That this is also the understanding of book authors of the scope of the Senate's power to concur is clear from the
following commentaries:
The power of the Senate to propose or concur with amendments is apparently without restriction. It
would seem that by virtue of this power, the Senate can practically re-write a bill required to come
from the House and leave only a trace of the original bill. For example, a general revenue bill passed
by the lower house of the United States Congress contained provisions for the imposition of an

inheritance tax . This was changed by the Senate into a corporation tax. The amending authority of the
Senate was declared by the United States Supreme Court to be sufficiently broad to enable it to make
the alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389].
(L. TAADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247 (1961))
The above-mentioned bills are supposed to be initiated by the House of Representatives because it is
more numerous in membership and therefore also more representative of the people. Moreover, its
members are presumed to be more familiar with the needs of the country in regard to the enactment of
the legislation involved.
The Senate is, however, allowed much leeway in the exercise of its power to propose or concur with
amendments to the bills initiated by the House of Representatives. Thus, in one case, a bill introduced
in the U.S. House of Representatives was changed by the Senate to make a proposed inheritance tax a
corporation tax. It is also accepted practice for the Senate to introduce what is known as an
amendment by substitution, which may entirely replace the bill initiated in the House of
Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills must "originate exclusively in the House of
Representatives," it also adds, "but the Senate may propose or concur with amendments." In the exercise of this
power, the Senate may propose an entirely new bill as a substitute measure. As petitioner Tolentino states in a high
school text, a committee to which a bill is referred may do any of the following:

(1) to endorse the bill without changes; (2) to make changes in the bill omitting or adding sections or
altering its language; (3) to make and endorse an entirely new bill as a substitute, in which case it will
be known as a committee bill; or (4) to make no report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))
To except from this procedure the amendment of bills which are required to originate in the House by prescribing
that the number of the House bill and its other parts up to the enacting clause must be preserved although the text
of the Senate amendment may be incorporated in place of the original body of the bill is to insist on a mere
technicality. At any rate there is no rule prescribing this form. S. No. 1630, as a substitute measure, is therefore as
much an amendment of H. No. 11197 as any which the Senate could have made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume that S. No. 1630 is
an independent and distinct bill. Hence their repeated references to its certification that it was passed by the Senate
"in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197," implying that
there is something substantially different between the reference to S. No. 1129 and the reference to H. No. 11197.
From this premise, they conclude that R.A. No. 7716 originated both in the House and in the Senate and that it is
the product of two "half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by both houses of
Congress."
In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere amendments of the
corresponding provisions of H. No. 11197. The very tabular comparison of the provisions of H. No. 11197 and S.
No. 1630 attached as Supplement A to the basic petition of petitioner Tolentino, while showing differences between
the two bills, at the same time indicates that the provisions of the Senate bill were precisely intended to be
amendments to the House bill.

Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was a mere
amendment of the House bill, H. No. 11197 in its original form did not have to pass the Senate on second and three
readings. It was enough that after it was passed on first reading it was referred to the Senate Committee on Ways
and Means. Neither was it required that S. No. 1630 be passed by the House of Representatives before the two bills
could be referred to the Conference Committee.
There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When the House bill
and Senate bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank deposits), were referred to a
conference committee, the question was raised whether the two bills could be the subject of such conference,
considering that the bill from one house had not been passed by the other and vice versa. As Congressman Duran
put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill is passed by the
House but not passed by the Senate, and a Senate bill of a similar nature is passed in the Senate but
never passed in the House, can the two bills be the subject of a conference, and can a law be enacted
from these two bills? I understand that the Senate bill in this particular instance does not refer to
investments in government securities, whereas the bill in the House, which was introduced by the
Speaker, covers two subject matters: not only investigation of deposits in banks but also investigation
of investments in government securities. Now, since the two bills differ in their subject matter, I
believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It is precisely in cases like this
where a conference should be had. If the House bill had been approved by the Senate, there would
have been no need of a conference; but precisely because the Senate passed another bill on the same

subject matter, the conference committee had to be created, and we are now considering the report of
that committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct and
unrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's) contention that because the President
separately certified to the need for the immediate enactment of these measures, his certification was ineffectual and
void. The certification had to be made of the version of the same revenue bill which at the momentwas being
considered. Otherwise, to follow petitioners' theory, it would be necessary for the President to certify as many bills
as are presented in a house of Congress even though the bills are merely versions of the bill he has already
certified. It is enough that he certifies the bill which, at the time he makes the certification, is under consideration.
Since on March 22, 1994 the Senate was considering S. No. 1630, it was that bill which had to be certified. For that
matter on June 1, 1993 the President had earlier certified H. No. 9210 for immediate enactment because it was the
one which at that time was being considered by the House. This bill was later substituted, together with other bills,
by H. No. 11197.
As to what Presidential certification can accomplish, we have already explained in the main decision that the
phrase "except when the President certifies to the necessity of its immediate enactment, etc." in Art. VI, 26 (2)
qualifies not only the requirement that "printed copies [of a bill] in its final form [must be] distributed to the
members three days before its passage" but also the requirement that before a bill can become a law it must have
passed "three readings on separate days." There is not only textual support for such construction but historical basis
as well.
Art. VI, 21 (2) of the 1935 Constitution originally provided:

(2) No bill shall be passed by either House unless it shall have been printed and copies thereof in its
final form furnished its Members at least three calendar days prior to its passage, except when the
President shall have certified to the necessity of its immediate enactment. Upon the last reading of a
bill, no amendment thereof shall be allowed and the question upon its passage shall be taken
immediately thereafter, and the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, 19 (2):
(2) No bill shall become a law unless it has passed three readings on separate days, and printed copies
thereof in its final form have been distributed to the Members three days before its passage, except
when the Prime Minister certifies to the necessity of its immediate enactment to meet a public
calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the
vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.
This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the present
Constitution, thus:
(2) No bill passed by either House shall become a law unless it has passed three readings on separate
days, and printed copies thereof in its final form have been distributed to its Members three days
before its passage, except when the President certifies to the necessity of its immediate enactment to
meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be
allowed, and the vote thereon shall be taken immediately thereafter, and the yeasand nays entered in
the Journal.

The exception is based on the prudential consideration that if in all cases three readings on separate days are
required and a bill has to be printed in final form before it can be passed, the need for a law may be rendered
academic by the occurrence of the very emergency or public calamity which it is meant to address.
Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a country like the
Philippines where budget deficit is a chronic condition. Even if this were the case, an enormous budget deficit does
not make the need for R.A. No. 7716 any less urgent or the situation calling for its enactment any less an
emergency.
Apparently, the members of the Senate (including some of the petitioners in these cases) believed that there was an
urgent need for consideration of S. No. 1630, because they responded to the call of the President by voting on the
bill on second and third readings on the same day. While the judicial department is not bound by the Senate's
acceptance of the President's certification, the respect due coequal departments of the government in matters
committed to them by the Constitution and the absence of a clear showing of grave abuse of discretion caution a
stay of the judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it was discussed
for six days. Only its distribution in advance in its final printed form was actually dispensed with by holding the
voting on second and third readings on the same day (March 24, 1994). Otherwise, sufficient time between the
submission of the bill on February 8, 1994 on second reading and its approval on March 24, 1994 elapsed before it
was finally voted on by the Senate on third reading.
The purpose for which three readings on separate days is required is said to be two-fold: (1) to inform the members
of Congress of what they must vote on and (2) to give them notice that a measure is progressing through the
enacting process, thus enabling them and others interested in the measure to prepare their positions with reference

to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION 10.04, p. 282 (1972)). These
purposes were substantially achieved in the case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the Movement of
Attorneys for Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of the constitutional policy
of full public disclosure and the people's right to know (Art. II, 28 and Art. III, 7) the Conference Committee met
for two days in executive session with only the conferees present.
As pointed out in our main decision, even in the United States it was customary to hold such sessions with only the
conferees and their staffs in attendance and it was only in 1975 when a new rule was adopted requiring open
sessions. Unlike its American counterpart, the Philippine Congress has not adopted a rule prescribing open
hearings for conference committees.
It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least staff members
were present. These were staff members of the Senators and Congressmen, however, who may be presumed to be
their confidential men, not stenographers as in this case who on the last two days of the conference were excluded.
There is no showing that the conferees themselves did not take notes of their proceedings so as to give petitioner
Kilosbayan basis for claiming that even in secret diplomatic negotiations involving state interests, conferees keep
notes of their meetings. Above all, the public's right to know was fully served because the Conference Committee
in this case submitted a report showing the changes made on the differing versions of the House and the Senate.
Petitioners cite the rules of both houses which provide that conference committee reports must contain "a detailed,
sufficiently explicit statement of the changes in or other amendments." These changes are shown in the bill
attached to the Conference Committee Report. The members of both houses could thus ascertain what changes had
been made in the original bills without the need of a statement detailing the changes.

The same question now presented was raised when the bill which became R.A. No. 1400 (Land Reform Act of
1955) was reported by the Conference Committee. Congressman Bengzon raised a point of order. He said:
MR. BENGZON. My point of order is that it is out of order to consider the report of the conference
committee regarding House Bill No. 2557 by reason of the provision of Section 11, Article XII, of the
Rules of this House which provides specifically that the conference report must be accompanied by a
detailed statement of the effects of the amendment on the bill of the House. This conference
committee report is not accompanied by that detailed statement, Mr. Speaker. Therefore it is out of
order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in connection with the point of
order raised by the gentleman from Pangasinan.
There is no question about the provision of the Rule cited by the gentleman from Pangasinan, butthis
provision applies to those cases where only portions of the bill have been amended. In this case before
us an entire bill is presented; therefore, it can be easily seen from the reading of the bill what the
provisions are. Besides, this procedure has been an established practice.
After some interruption, he continued:
MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into the reason for the provisions
of the Rules, and the reason for the requirement in the provision cited by the gentleman from
Pangasinan is when there are only certain words or phrases inserted in or deleted from the provisions
of the bill included in the conference report, and we cannot understand what those words and phrases

mean and their relation to the bill. In that case, it is necessary to make a detailed statement on how
those words and phrases will affect the bill as a whole; but when the entire bill itself is copied
verbatim in the conference report, that is not necessary. So when the reason for the Rule does not
exist, the Rule does not exist.
(2 CONG. REC. NO. 2, p. 4056. (emphasis added))
Congressman Tolentino was sustained by the chair. The record shows that when the ruling was appealed, it was
upheld by viva voce and when a division of the House was called, it was sustained by a vote of 48 to 5. (Id.,
p. 4058)
Nor is there any doubt about the power of a conference committee to insert new provisions as long as these are
germane to the subject of the conference. As this Court held in Philippine Judges Association v. Prado, 227 SCRA
703 (1993), in an opinion written by then Justice Cruz, the jurisdiction of the conference committee is not limited
to resolving differences between the Senate and the House. It may propose an entirely new provision. What is
important is that its report is subsequently approved by the respective houses of Congress. This Court ruled that it
would not entertain allegations that, because new provisions had been added by the conference committee, there
was thereby a violation of the constitutional injunction that "upon the last reading of a bill, no amendment thereto
shall be allowed."
Applying these principles, we shall decline to look into the petitioners' charges that an amendment
was made upon the last reading of the bill that eventually became R.A. No. 7354 and
that copiesthereof in its final form were not distributed among the members of each House. Both the
enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance
with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a
coordinate department of the government, to which we owe, at the very least, a becoming courtesy.

(Id. at 710. (emphasis added))

It is interesting to note the following description of conference committees in the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed. These committees may be given
instructions by their parent bodies or they may be left without instructions. Normally the conference
committees are without instructions, and this is why they are often critically referred to as "the little
legislatures." Once bills have been sent to them, the conferees have almost unlimited authority to
change the clauses of the bills and in fact sometimes introduce new measures that were not in the
original legislation. No minutes are kept, and members' activities on conference committees are
difficult to determine. One congressman known for his idealism put it this way: "I killed a bill on
export incentives for my interest group [copra] in the conference committee but I could not have done
so anywhere else." The conference committee submits a report to both houses, and usually it is
accepted. If the report is not accepted, then the committee is discharged and new members are
appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: A
COMPARATIVE ANALYSIS 163 (J. D. LEES AND M. SHAW, eds.)).
In citing this study, we pass no judgment on the methods of conference committees. We cite it only to say that
conference committees here are no different from their counterparts in the United States whose vast powers we
noted in Philippine Judges Association v. Prado, supra. At all events, under Art. VI, 16(3) each house has the
power "to determine the rules of its proceedings," including those of its committees. Any meaningful change in the
method and procedures of Congress or its committees must therefore be sought in that body itself.

V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI, 26 (1) of the
Constitution which provides that "Every bill passed by Congress shall embrace only one subject which shall be
expressed in the title thereof." PAL contends that the amendment of its franchise by the withdrawal of its
exemption from the VAT is not expressed in the title of the law.
Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all other taxes,
duties, royalties, registration, license and other fees and charges of any kind, nature, or description, imposed,
levied, established, assessed or collected by any municipal, city, provincial or national authority or government
agency, now or in the future."
PAL was exempted from the payment of the VAT along with other entities by 103 of the National Internal
Revenue Code, which provides as follows:
103. Exempt transactions. The following shall be exempt from the value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international agreements to which the
Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending 103, as
follows:
103. Exempt transactions. The following shall be exempt from the value-added tax:
xxx xxx xxx

(q) Transactions which are exempt under special laws, except those granted under Presidential Decree
Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of 103 is expressed in the title of R.A. No. 7716 which reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX
BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING
AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE
CODE, AS AMENDED, AND FOR OTHER PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT) SYSTEM [BY]
WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES," Congress thereby clearly expresses its
intention to amend any provision of the NIRC which stands in the way of accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific reference to P.D.
No. 1590. It is unnecessary to do this in order to comply with the constitutional requirement, since it is already
stated in the title that the law seeks to amend the pertinent provisions of the NIRC, among which is 103(q), in
order to widen the base of the VAT. Actually, it is the bill which becomes a law that is required to express in its title
the subject of legislation. The titles of H. No. 11197 and S. No. 1630 in fact specifically referred to 103 of the
NIRC as among the provisions sought to be amended. We are satisfied that sufficient notice had been given of the
pendency of these bills in Congress before they were enacted into what is now R.A.
No. 7716.

In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was rejected. R.A.
No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS
POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR REGULATION OF THE INDUSTRY
AND FOR OTHER PURPOSES CONNECTED THEREWITH. It contained a provision repealing all franking
privileges. It was contended that the withdrawal of franking privileges was not expressed in the title of the law. In
holding that there was sufficient description of the subject of the law in its title, including the repeal of franking
privileges, this Court held:
To require every end and means necessary for the accomplishment of the general objectives of the
statute to be expressed in its title would not only be unreasonable but would actually render legislation
impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been correctly explained:
The details of a legislative act need not be specifically stated in its title, but matter
germane to the subject as expressed in the title, and adopted to the accomplishment of the
object in view, may properly be included in the act. Thus, it is proper to create in the
same act the machinery by which the act is to be enforced, to prescribe the penalties for
its infraction, and to remove obstacles in the way of its execution. If such matters are
properly connected with the subject as expressed in the title, it is unnecessary that they
should also have special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that, as a general proposition, the press is not
exempt from the taxing power of the State and that what the constitutional guarantee of free press prohibits are
laws which single out the press or target a group belonging to the press for special treatment or which in any way
discriminate against the press on the basis of the content of the publication, and R.A. No. 7716 is none of these.

Now it is contended by the PPI that by removing the exemption of the press from the VAT while maintaining those
granted to others, the law discriminates against the press. At any rate, it is averred, "even nondiscriminatory
taxation of constitutionally guaranteed freedom is unconstitutional."
With respect to the first contention, it would suffice to say that since the law granted the press a privilege, the law
could take back the privilege anytime without offense to the Constitution. The reason is simple: by granting
exemptions, the State does not forever waive the exercise of its sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to which other
businesses have long ago been subject. It is thus different from the tax involved in the cases invoked by the PPI.
The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to be
discriminatory because it was laid on the gross advertising receipts only of newspapers whose weekly circulation
was over 20,000, with the result that the tax applied only to 13 out of 124 publishers in Louisiana. These large
papers were critical of Senator Huey Long who controlled the state legislature which enacted the license tax. The
censorial motivation for the law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 75 L. Ed.
2d 295 (1983), the tax was found to be discriminatory because although it could have been made liable for the sales
tax or, in lieu thereof, for the use tax on the privilege of using, storing or consuming tangible goods, the press was
not. Instead, the press was exempted from both taxes. It was, however, later made to pay a specialuse tax on the
cost of paper and ink which made these items "the only items subject to the use tax that were component of goods
to be sold at retail." The U.S. Supreme Court held that the differential treatment of the press "suggests that the goal
of regulation is not related to suppression of expression, and such goal is presumptively unconstitutional." It would
therefore appear that even a law that favors the press is constitutionally suspect. (See the dissent of Rehnquist, J. in
that case)

Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely and
unqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously granted to PAL,
petroleum concessionaires, enterprises registered with the Export Processing Zone Authority, and many more are
likewise totally withdrawn, in addition to exemptions which are partially withdrawn, in an effort to broaden the
base of the tax.
The PPI says that the discriminatory treatment of the press is highlighted by the fact that transactions, which are
profit oriented, continue to enjoy exemption under R.A. No. 7716. An enumeration of some of these transactions
will suffice to show that by and large this is not so and that the exemptions are granted for a purpose. As the
Solicitor General says, such exemptions are granted, in some cases, to encourage agricultural production and, in
other cases, for the personal benefit of the end-user rather than for profit. The exempt transactions are:
(a) Goods for consumption or use which are in their original state (agricultural, marine and forest
products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn, sugar
cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of citizens returning
to the Philippines) or for professional use, like professional instruments and implements, by persons
coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum
products subject to excise tax and services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under
employer-employee relationship.

(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
The PPI asserts that it does not really matter that the law does not discriminate against the press because "even
nondiscriminatory taxation on constitutionally guaranteed freedom is unconstitutional." PPI cites in support of this
assertion the following statement in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The protection afforded by the First
Amendment is not so restricted. A license tax certainly does not acquire constitutional validity because
it classifies the privileges protected by the First Amendment along with the wares and merchandise of
hucksters and peddlers and treats them all alike. Such equality in treatment does not save the
ordinance. Freedom of press, freedom of speech, freedom of religion are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for regulation. Its
imposition on the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence,
although its application to others, such those selling goods, is valid, its application to the press or to religious
groups, such as the Jehovah's Witnesses, in connection with the latter's sale of religious books and pamphlets, is
unconstitutional. As the U.S. Supreme Court put it, "it is one thing to impose a tax on income or property of a
preacher. It is quite another thing to exact a tax on him for delivering a sermon."

A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386 (1957) which
invalidated a city ordinance requiring a business license fee on those engaged in the sale of general merchandise. It
was held that the tax could not be imposed on the sale of bibles by the American Bible Society without restraining
the free exercise of its right to propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege, much less a
constitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or
exchange of services and the lease of properties purely for revenue purposes. To subject the press to its payment is
not to burden the exercise of its right any more than to make the press pay income tax or subject it to general
regulation is not to violate its freedom under the Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds derived from the
sales are used to subsidize the cost of printing copies which are given free to those who cannot afford to pay so that
to tax the sales would be to increase the price, while reducing the volume of sale. Granting that to be the case, the
resulting burden on the exercise of religious freedom is so incidental as to make it difficult to differentiate it from
any other economic imposition that might make the right to disseminate religious doctrines costly. Otherwise, to
follow the petitioner's argument, to increase the tax on the sale of vestments would be to lay an impermissible
burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by 107 of the NIRC, as amended by 7 of R.A. No.
7716, although fixed in amount, is really just to pay for the expenses of registration and enforcement of provisions
such as those relating to accounting in 108 of the NIRC. That the PBS distributes free bibles and therefore is not
liable to pay the VAT does not excuse it from the payment of this fee because it also sells some copies. At any rate
whether the PBS is liable for the VAT must be decided in concrete cases, in the event it is assessed this tax by the
Commissioner of Internal Revenue.

VII. Alleged violations of the due process, equal protection and contract clauses and the rule on taxation. CREBA
asserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies transactions as covered or exempt
without reasonable basis and (3) violates the rule that taxes should be uniform and equitable and that Congress
shall "evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application of the tax to existing contracts of the sale of
real property by installment or on deferred payment basis would result in substantial increases in the monthly
amortizations to be paid because of the 10% VAT. The additional amount, it is pointed out, is something that the
buyer did not anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case: "Authorities from numerous sources are
cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or an increased tax on an old one,
interferes with a contract or impairs its obligation, within the meaning of the Constitution. Even though such
taxation may affect particular contracts, as it may increase the debt of one person and lessen the security of another,
or may impose additional burdens upon one class and release the burdens of another, still the tax must be paid
unless prohibited by the Constitution, nor can it be said that it impairs the obligation of any existing contract in its
true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed not
only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read into contracts as a
postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147 (1968))
Contracts must be understood as having been made in reference to the possible exercise of the rightful authority of
the government and no obligation of contract can extend to the defeat of that authority. (Norman v. Baltimore and
Ohio R.R., 79 L. Ed. 885 (1935)).
It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions as the sale of agricultural products,
food items, petroleum, and medical and veterinary services, it grants no exemption on the sale of real property
which is equally essential. The sale of real property for socialized and low-cost housing is exempted from the tax,

but CREBA claims that real estate transactions of "the less poor," i.e., the middle class, who are equally homeless,
should likewise be exempted.
The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods and services was
already exempt under 103, pars. (b) (d) (1) of the NIRC before the enactment of R.A. No. 7716. Petitioner is in
error in claiming that R.A. No. 7716 granted exemption to these transactions, while subjecting those of petitioner
to the payment of the VAT. Moreover, there is a difference between the "homeless poor" and the "homeless less
poor" in the example given by petitioner, because the second group or middle class can afford to rent houses in the
meantime that they cannot yet buy their own homes. The two social classes are thus differently situated in life. "It
is inherent in the power to tax that the State be free to select the subjects of taxation, and it has been repeatedly
held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no
constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord, City of Baguio v. De Leon, 134 Phil.
912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984); Kapatiran ng mga Naglilingkod sa Pamahalaan ng
Pilipinas, Inc. v. Tan, 163 SCRA 371 (1988)).
Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1) which
provides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system
of taxation."
Equality and uniformity of taxation means that all taxable articles or kinds of property of the same class be taxed at
the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of
taxation. To satisfy this requirement it is enough that the statute or ordinance applies equally to all persons, forms
and corporations placed in similar situation. (City of Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A. No. 7716
merely expands the base of the tax. The validity of the original VAT Law was questioned in Kapatiran ng

Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on grounds similar to those made in
these cases, namely, that the law was "oppressive, discriminatory, unjust and regressive in violation of Art. VI,
28(1) of the Constitution." (At 382) Rejecting the challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform. . . .
The sales tax adopted in EO 273 is applied similarly on all goods and services sold to the public,
which are not exempt, at the constant rate of 0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons
engaged in business with an aggregate gross annual sales exceeding P200,000.00. Small corner sarisari stores are consequently exempt from its application. Likewise exempt from the tax are sales of
farm and marine products, so that the costs of basic food and other necessities, spared as they are from
the incidence of the VAT, are expected to be relatively lower and within the reach of the general
public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of the
Philippines, Inc. (CUP), while petitioner Juan T. David argues that the law contravenes the mandate of Congress to
provide for a progressive system of taxation because the law imposes a flat rate of 10% and thus places the tax
burden on all taxpayers without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. What
it simply provides is that Congress shall "evolve a progressive system of taxation." The constitutional provision has
been interpreted to mean simply that "direct taxes are . . . to be preferred [and] as much as possible, indirect taxes

should be minimized." (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)).
Indeed, the mandate to Congress is not to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes,
which perhaps are the oldest form of indirect taxes, would have been prohibited with the proclamation of Art. VIII,
17(1) of the 1973 Constitution from which the present Art. VI, 28(1) was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to
avoid them by imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the law
minimizes the regressive effects of this imposition by providing for zero rating of certain transactions (R.A. No.
7716, 3, amending 102 (b) of the NIRC), while granting exemptions to other transactions. (R.A. No. 7716, 4,
amending 103 of the NIRC).
Thus, the following transactions involving basic and essential goods and services are exempted from the VAT:
(a) Goods for consumption or use which are in their original state (agricultural, marine and forest
products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn sugar
cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of citizens returning
to the Philippines) and or professional use, like professional instruments and implements, by persons
coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum
products subject to excise tax and services subject to percentage tax.

(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under
employer-employee relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
On the other hand, the transactions which are subject to the VAT are those which involve goods and services which
are used or availed of mainly by higher income groups. These include real properties held primarily for sale to
customers or for lease in the ordinary course of trade or business, the right or privilege to use patent, copyright, and
other similar property or right, the right or privilege to use industrial, commercial or scientific equipment, motion
picture films, tapes and discs, radio, television, satellite transmission and cable television time, hotels, restaurants
and similar places, securities, lending investments, taxicabs, utility cars for rent, tourist buses, and other common
carriers, services of franchise grantees of telephone and telegraph.
The problem with CREBA's petition is that it presents broad claims of constitutional violations by tendering issues
not at retail but at wholesale and in the abstract. There is no fully developed record which can impart to
adjudication the impact of actuality. There is no factual foundation to show in the concrete the application of the
law to actual contracts and exemplify its effect on property rights. For the fact is that petitioner's members have
not even been assessed the VAT. Petitioner's case is not made concrete by a series of hypothetical questions asked
which are no different from those dealt with in advisory opinions.

The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as
here, does not suffice. There must be a factual foundation of such unconstitutional taint. Considering
that petitioner here would condemn such a provision as void on its face, he has not made out a case.
This is merely to adhere to the authoritative doctrine that where the due process and equal protection
clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need
for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the
presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a concrete case. It may be that postponement of
adjudication would result in a multiplicity of suits. This need not be the case, however. Enforcement of the law
may give rise to such a case. A test case, provided it is an actual case and not an abstract or hypothetical one, may
thus be presented.
Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues. Otherwise,
adjudication would be no different from the giving of advisory opinion that does not really settle legal issues.
We are told that it is our duty under Art. VIII, 1, 2 to decide whenever a claim is made that "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." This duty can only arise if an actual case or controversy is before us. Under Art . VIII, 5 our
jurisdiction is defined in terms of "cases" and all that Art. VIII, 1, 2 can plausibly mean is that in the exercise of
that jurisdiction we have the judicial power to determine questions of grave abuse of discretion by any branch or
instrumentality of the government.

Put in another way, what is granted in Art. VIII, 1, 2 is "judicial power," which is "the power of a court to hear
and decide cases pending between parties who have the right to sue and be sued in the courts of law and equity"
(Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from legislative and executive power. This power
cannot be directly appropriated until it is apportioned among several courts either by the Constitution, as in the
case of Art. VIII, 5, or by statute, as in the case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary
Reorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned constitutes the court's "jurisdiction,"
defined as "the power conferred by law upon a court or judge to take cognizance of a case, to the exclusion of all
others." (United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction, this Court
cannot inquire into any allegation of grave abuse of discretion by the other departments of the government.
VIII. Alleged violation of policy towards cooperatives. On the other hand, the Cooperative Union of the Philippines
(CUP), after briefly surveying the course of legislation, argues that it was to adopt a definite policy of granting tax
exemption to cooperatives that the present Constitution embodies provisions on cooperatives. To subject
cooperatives to the VAT would therefore be to infringe a constitutional policy. Petitioner claims that in 1973, P.D.
No. 175 was promulgated exempting cooperatives from the payment of income taxes and sales taxes but in 1984,
because of the crisis which menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that
in 1986, P.D. No. 2008 again granted cooperatives exemption from income and sales taxes until December 31,
1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987 the framers of the
Constitution "repudiated the previous actions of the government adverse to the interests of the cooperatives, that
is, the repeated revocation of the tax exemption to cooperatives and instead upheld the policy of strengthening the
cooperatives by way of the grant of tax exemptions," by providing the following in Art. XII:
1. The goals of the national economy are a more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit

of the people; and an expanding productivity as the key to raising the quality of life for all, especially
the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of human and
natural resources, and which are competitive in both domestic and foreign markets. However, the
State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given
optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar
collective organizations, shall be encouraged to broaden the base of their ownership.
15. The Congress shall create an agency to promote the viability and growth of cooperatives as
instruments for social justice and economic development.
Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out cooperatives by
withdrawing their exemption from income and sales taxes under P.D. No. 175, 5. What P.D. No. 1955, 1 did was
to withdraw the exemptions and preferential treatments theretofore granted to private business enterprises in
general, in view of the economic crisis which then beset the nation. It is true that after P.D. No. 2008, 2 had
restored the tax exemptions of cooperatives in 1986, the exemption was again repealed by E.O. No. 93, 1, but
then again cooperatives were not the only ones whose exemptions were withdrawn. The withdrawal of tax
incentives applied to all, including government and private entities. In the second place, the Constitution does not
really require that cooperatives be granted tax exemptions in order to promote their growth and viability. Hence,
there is no basis for petitioner's assertion that the government's policy toward cooperatives had been one of
vacillation, as far as the grant of tax privileges was concerned, and that it was to put an end to this indecision that
the constitutional provisions cited were adopted. Perhaps as a matter of policy cooperatives should be granted tax

exemptions, but that is left to the discretion of Congress. If Congress does not grant exemption and there is no
discrimination to cooperatives, no violation of any constitutional policy can be charged.
Indeed, petitioner's theory amounts to saying that under the Constitution cooperatives are exempt from taxation.
Such theory is contrary to the Constitution under which only the following are exempt from taxation: charitable
institutions, churches and parsonages, by reason of Art. VI, 28 (3), and non-stock, non-profit educational
institutions by reason of Art. XIV, 4 (3).
CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it denies cooperatives the equal
protection of the law because electric cooperatives are exempted from the VAT. The classification between electric
and other cooperatives (farmers cooperatives, producers cooperatives, marketing cooperatives, etc.) apparently
rests on a congressional determination that there is greater need to provide cheaper electric power to as many
people as possible, especially those living in the rural areas, than there is to provide them with other necessities in
life. We cannot say that such classification is unreasonable.
We have carefully read the various arguments raised against the constitutional validity of R.A. No. 7716. We have
in fact taken the extraordinary step of enjoining its enforcement pending resolution of these cases. We have now
come to the conclusion that the law suffers from none of the infirmities attributed to it by petitioners and that its
enactment by the other branches of the government does not constitute a grave abuse of discretion. Any question as
to its necessity, desirability or expediency must be addressed to Congress as the body which is electorally
responsible, remembering that, as Justice Holmes has said, "legislators are the ultimate guardians of the liberties
and welfare of the people in quite as great a degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May,
194 U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No. 115543 does in arguing that
we should enforce the public accountability of legislators, that those who took part in passing the law in question
by voting for it in Congress should later thrust to the courts the burden of reviewing measures in the flush of

enactment. This Court does not sit as a third branch of the legislature, much less exercise a veto power over
legislation.
WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining order
previously issued is hereby lifted.
SO ORDERED.

[G.R. No. 87636. November 19, 1990.]

NEPTALI A. GONZALES, ERNESTO M. MACEDA, ALBERTO G. ROMULO, HEHERSON T.
ALVAREZ, EDGARDO J. ANGARA, AGAPITO A. AQUINO, TEOFISTO T. GUINGONA, JR., ERNESTO
F. HERRERA, JOSE D. LINA, JR., JOHN OSMEA, VICENTE T. PATERNO, RENE A. SAGUISAG,
LETICIA RAMOS-SHAHANI, MAMINTAL ABDUL J. TAMANO, WIGBERTO E. TAADA, JOVITO R.
SALONGA, ORLANDO S. MERCADO, JUAN PONCE ENRILE, JOSEPH ESTRADA, SOTERO
LAUREL, AQUILINO PIMENTEL, JR., SANTANINA RASUL, VICTOR ZIGA, Petitioners, v. HON.
CATALINO MACARAIG, JR., HON. VICENTE JAYME, HON. CARLOS DOMINGUEZ, HON.
FULGENCIO FACTORAN, HON. FIORELLO ESTUAR, HON. LOURDES QUISUMBING, HON. RAUL
MANGLAPUS, HON. ALFREDO BENGSON, HON. JOSE CONCEPCION, HON. LUIS SANTOS, HON.
MITA PARDO DE TAVERA, HON. RAINERIO REYES, HON. GUILLERMO CARAGUE, HON.

ROSALINA CAJUCOM and HON. EUFEMIO C. DOMINGO, Respondents.

Gonzales, Batiller, Bilog & Associates for petitioners.
DECISION
MELENCIO-HERRERA, J.:
This constitutional controversy between the legislative and executive departments of government stemmed from
Senate Resolution No. 381, adopted on 2 February 1989,
"Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of the Philippines the
Proper Suit with the Supreme Court of the Philippines contesting the Constitutionality of the Veto by the President
of Special and General Provisions, particularly Section 55, of the General Appropriation Bill of 1989 (H.B. No.
19186) and For Other Purposes."cralaw virtua1aw library
Petitioners are thus before us as members and ex-officio members of the Committee on Finance of the Senate and
as "substantial taxpayers whose vital interests may be affected by this case."cralaw virtua1aw library
Respondents are members of the Cabinet tasked with the implementation of the General Appropriations Act of
1989 and 1990, some of them incumbents, while others have already been replaced, and include the National
Treasurer and the Commission on Audit Chairman, all of whom are being sued in their official
capacities.chanrobles.com:cralaw:red
The Background Facts

On 16 December 1988, Congress passed House Bill No. 19186, or the General Appropriations Bill for the Fiscal
Year 1989. As passed, it eliminated or decreased certain items included in the proposed budget submitted by the
President.
Pursuant to the constitutional provision on the passage of bills, Congress presented the said Bill to the President for
consideration and approval.
On 29 December 1988, the President signed the Bill into law, and declared the same to have become Rep. Act No.
6688. In the process, seven (7) Special Provisions and Section 55, a "General Provision," were vetoed.
On 2 February 1989, the Senate, in the same Resolution No. 381 mentioned at the outset, further
expressed:jgc:chanrobles.com.ph
"WHEREAS, Be it Resolved, as it is hereby Resolved, That the Senate express its sense that the veto by the
President of Section 55 of the GENERAL PROVISIONS of the General Appropriation Bill of 1989 (H.B. No.
19186) is unconstitutional and, therefore, void and without any force and effect; hence, the aforesaid Section 55
remains;
"x

x"

Thus it is that, on 11 April 1989, this Petition for Prohibition/ Mandamus was filed, with a prayer for the issuance
of a Writ of Preliminary Injunction and Restraining Order, assailing mainly the constitutionality or legality of the
Presidential veto of Section 55, and seeking to enjoin respondents from implementing Rep. Act No. 6688. No
Restraining Order was issued by the Court.
The Comment, submitted by the Solicitor General on 25 August 1989 (after several extensions granted), was
considered as the Answer to the Petition and, on 7 September 1989, the Court Resolved to give due course to the
Petition and to require the parties to submit their respective Memoranda. Petitioners filed their Memorandum on 12
December 1989. But, on 19 January 1990, they filed a Motion for Leave to File and to Admit Supplemental

Petition, which was granted, basically raising the same issue as in the original Petition, this time questioning the
Presidents veto of certain provisions, particularly Section 16, of House Bill 26934, or the General Appropriations
Bill for Fiscal Year 1990, which the President declared to have become Rep. Act No. 6831.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph
The Solicitor Generals Comment on the Supplemental Petition, on behalf of respondent public officials, was
submitted on 24 April 1990. On 15 May 1990, the Court required the parties to file simultaneously their
consolidated memoranda, to include the Supplemental Petition, within an inextendible period of thirty (30) days
from notice. However, because the original Resolution of 15 May 1990 merely required the filing of a
memorandum on the Supplemental Petition, a revised Resolution requiring consolidated memoranda, within thirty
(30) days from notice, was released on 28 June 1990.
The Consolidated Memoranda were respectively filed on 26 June 1990 by petitioners, and on 1 August 1990 by
respondents. On 14 August 1990, both Memoranda were Noted and the case was deemed submitted for
deliberation.
On 11 September 1990, the Court heard the case on oral argument and required the submittal of supplemental
Memoranda, the last of which was filed on 26 September 1990.
The Vetoed Provisions and Reasons Therefor
Section 55 of the Appropriations Act of 1989 (Section 55 [FY 89] hereinafter), which was vetoed by the President,
reads:jgc:chanrobles.com.ph
"SEC. 55. Prohibition Against the Restoration or Increase of Recommended Appropriations Disapproved and/or
Reduced by Congress: No item of appropriation recommended by the President in the Budget submitted to
Congress pursuant to Article VII, Section 22 of the Constitution which has been disapproved or reduced in this Act
shall be restored or increased by the use of appropriations authorized for other purposes by augmentation. An item
of appropriation for any purpose recommended by the President in the Budget shall be deemed to have been

disapproved by Congress if no corresponding appropriation for the specific purpose is provided in this Act."cralaw
virtua1aw library
We quote below the reason for the Presidential veto:jgc:chanrobles.com.ph
"The provision violates Section 25 (5) of Article VI of the Constitution. If allowed, this Section would nullify not
only the constitutional and statutory authority of the President, but also that of the President of the Senate, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and Heads of Constitutional
Commissions, to augment any item in the general appropriations law for their respective offices from savings in
other items of their respective appropriations. A careful review of the legislative action on the budget as submitted
shows that in almost all cases, the budgets of agencies as recommended by the President, as well as those of the
Senate, the House of Representatives, and the Constitutional Commissions, have been reduced. An unwanted
consequence of this provision is the inability of the President, the President of the Senate, Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions to augment
any item of appropriation of their respective offices from savings in other items of their respective appropriations
even in cases of calamity or in the event of urgent need to accelerate the implementation of essential public
services and infrastructure projects.
"Furthermore, this provision is inconsistent with Section 12 and other similar provisions of this General
Appropriations Act."cralaw virtua1aw library
A substantially similar provision as the vetoed Section 55 appears in the Appropriations Act of 1990, this time
crafted as follows:jgc:chanrobles.com.ph
"B. GENERAL PROVISIONS
"Sec. 16. Use of Savings. The President of the Philippines, the President of the Senate, the Speaker of the House
of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions under Article
IX of the Constitution and the Ombudsman are hereby authorized to augment any item in this Act for their

respective offices from savings in other items of their appropriations: PROVIDED, THAT NO ITEM OF
APPROPRIATION RECOMMENDED BY THE PRESIDENT IN THE BUDGET SUBMITTED TO CONGRESS
PURSUANT TO ARTICLE VII, SECTION 22 OF THE CONSTITUTION WHICH HAS BEEN DISAPPROVED
OR REDUCED BY CONGRESS SHALL BE RESTORED OR INCREASED BY THE USE OF
APPROPRIATIONS AUTHORIZED FOR OTHER PURPOSES IN THIS ACT BY AUGMENTATION. AN ITEM
OF APPROPRIATION FOR ANY PURPOSE RECOMMENDED BY THE PRESIDENT IN THE BUDGET
SHALL BE DEEMED TO HAVE BEEN DISAPPROVED BY CONGRESS IF NO CORRESPONDING
APPROPRIATION FOR THE SPECIFIC PURPOSE IS PROVIDED IN THIS ACT."cralaw virtua1aw library
It should be noted that in the 1989 Appropriations Act, the "Use of Savings" appears in Section 12, separate and
apart from Section 55; whereas in the 1990 Appropriations Act, the "Use of Savings" and the vetoed provision have
been commingled in Section 16 only, with the vetoed provision made to appear as a condition or restriction.
Essentially the same reason was given for the veto of Section 16 (FY 90), thus:jgc:chanrobles.com.ph
"I am vetoing this provision for the reason that it violates Section 25 (5) of Article VI of the Constitution in relation
to Sections 44 and 45 of P.D. No. 1177 as amended by R.A. No. 6670 which authorizes the President to use savings
to augment any item of appropriations in the Executive Branch of the Government.
"Parenthetically, there is a case pending in the Supreme Court relative to the validity of the Presidents veto on
Section 55 of the General Provisions of Republic Act No. 6688 upon which the amendment on this Section was
based. Inclusion, therefore, of the proviso in the last sentence of this section might prejudice the Executive
Branchs position in the case.
"Moreover, if allowed, this Section would nullify not only the constitutional and statutory authority of the
President, but also that of the officials enumerated under Section 25 (5) of Article VI of the Constitution, to
augment any item in the general appropriations law for their respective appropriations.
"An unwanted consequence of this provision would be the inability of the President, the President of the Senate,

Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and heads of Constitutional
Commissions to augment any item of appropriation of their respective offices from savings in other items of their
respective appropriations even in cases of national emergency or in the event of urgent need to accelerate the
implementation of essential public services and infrastructure projects."cralaw virtua1aw library
The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989 Appropriations
Bill (Section 55 FY 89), and subsequently of its counterpart Section 16 of the 1990 Appropriations Bill (Section
16 FY 90), is unconstitutional and without effect.chanrobles.com:cralaw:red
The Contending Views
In essence, petitioners cause is anchored on the following grounds: (1) the Presidents line-veto power as regards
appropriation bills is limited to item/s and does not cover provision/s; therefore, she exceeded her authority when
she vetoed Section 55 (FY 89) and Section 16 (FY 90) which are provisions; (2) when the President objects to a
provision of an appropriation bill, she cannot exercise the item-veto power but should veto the entire bill; (3) the
item-veto power does not carry with it the power to strike out conditions or restrictions for that would be
legislation, in violation of the doctrine of separation of powers; and (4) the power of augmentation in Article VI,
Section 25 [5] of the 1987 Constitution, has to be provided for by law and, therefore, Congress is also vested with
the prerogative to impose restrictions on the exercise of that power.
The Solicitor General, as counsel for public respondents, counters that the issue at bar is a political question
beyond the power of this Court to determine; that petitioners had a political remedy, which was to override the
veto; that Section 55 is a "rider" because it is extraneous to the Appropriations Act and, therefore, merits the
Presidents veto; that the power of the President to augment items in the appropriations for the executive branches
had already been provided for in the Budget Law, specifically Sections 44 and 45 of Pres. Decree No. 1177, as
amended by Rep. Act No. 6670 (4 August 1988); and that the President is empowered by the Constitution to veto
provisions or other "distinct and severable parts" of an Appropriations Bill.
Judicial Determination

With the Senate maintaining that the Presidents veto is unconstitutional, and that charge being controverted, there
is an actual case or justiciable controversy between the Upper House of Congress and the executive department
that may be taken cognizance of by this Court.
"Indeed, where the legislature or the executive branch is acting within the limits of its authority, the judiciary
cannot and ought not to interfere with the former. But where the legislature or the executive acts beyond the scope
of its constitutional powers, it becomes the duty of the judiciary to declare what the other branches of the
government had assumed to do as void. This is the essence of judicial power conferred by the Constitution in one
Supreme Court and in such lower courts as may be established by law [Art. VIII, Section 1 of the 1935
Constitution; Art. X, Section 1 of the 1973 Constitution and which was adopted as part of the Freedom
Constitution, and Art. VIII, Section 1 of the 1987 Constitution] and which power this Court has exercised in many
instances" (Demetria v. Alba, G.R. No. 71977, 27 February 1987, 148 SCRA 209).
We take note as well of what petitioners stress as the "imperative need for a definitive ruling by this Court as to the
exact parameters of the exercise of the item-veto power of the President as regards appropriation bills . . . in order
to obviate the recurrence of a similar problem whenever a general appropriations bill is passed by Congress."
Indeed, the contextual reiteration of Section 55 (FY 89) in Section 16 (FY 90) and again, its veto by the President,
underscore the need for judicial arbitrament. The Court does not thereby assert its superiority over or exhibit lack
of respect due the other co-ordinate departments but discharges a solemn and sacred duty to determine essentially
the scope of intersecting powers in regard which the Executive and the Senate are in dispute.chanrobles.com :
virtual law library
Petitioners have also brought this suit as taxpayers. As ruled in Sanidad v. COMELEC (No. L-44640, 12 October
1976, 73 SCRA 333), this Court enjoys the open discretion to entertain taxpayers suits or not. In Tolentino v.
COMELEC (No. L-34150, 16 October 1961, 41 SCRA 702), it was also held that a member of the Senate has the
requisite personality to bring a suit where a constitutional issue is raised.cralawnad
The political question doctrine neither interposes an obstacle to judicial determination of the rival claims. The

jurisdiction to delimit constitutional boundaries has been given to this Court. It cannot abdicate that obligation
mandated by the 1987 Constitution, although said provision by no means does away with the applicability of the
principle in appropriate cases.
"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."cralaw
virtua1aw library
Nor is this the first time that the constitutionality of a Presidential veto is raised to the Court. The two oft-cited
cases are Bengson v. Secretary of Justice (62 Phil. 912 [1936]), penned by Justice George A. Malcolm, which
upheld the veto questioned before it, but which decision was reversed by the U.S. Supreme Court in the same
entitled case in 292 U.S. 410, infra, essentially on the ground that an Appropriations Bill was not involved. The
second case is Bolinao Electronics v. Valencia (G.R. No. L-20740, 30 June 1964, 11 SCRA 486), infra, which
rejected the Presidents veto of a condition or restriction in an Appropriations Bill.
The Extent of the Presidents Item-veto Power
The focal issue for resolution is whether or not the President exceeded the item-veto power accorded by the
Constitution. Or differently put, has the President the power to veto "provisions" of an Appropriations Bill?
Petitioners contend that Section 55 (FY 89) and Section 16 (FY 90) are provisions and not items and are,
therefore, outside the scope of the item-veto power of the President.chanrobles lawlibrary : rednad
The veto power of the President is expressed in Article VI, Section 27 of the 1987 Constitution reading, in full, as
follows:jgc:chanrobles.com.ph

"Sec. 27. (1) Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he
approves the same, he shall sign it; otherwise, he shall veto it and return the same with his objections to the House
where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it. If, after such
reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together
with the objections, to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of
all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined
by yeas or nays, and the names of the Members voting for or against shall be entered in its Journal. The President
shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt
thereof; otherwise, it shall become a law as if he had signed it.
"(2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff
bill, but the veto shall not affect the item or items to which he does not object."cralaw virtua1aw library
Paragraph (1) refers to the general veto power of the President and if exercised would result in the veto of the
entire bill, as a general rule. Paragraph (2) is what is referred to as the item-veto power or the line-veto power. It
allows the exercise of the veto over a particular item or items in an appropriation, revenue, or tariff bill. As
specified, the President may not veto less than all of an item of an Appropriations Bill. In other words, the power
given the executive to disapprove any item or items in an Appropriations Bill does not grant the authority to veto a
part of an item and to approve the remaining portion of the same item.
Originally, item veto exclusively referred to veto of items of appropriation bills and first came into being in the
former Organic Act, the Act of Congress of 29 August 1916. This was followed by the 1935 Constitution, which
contained a similar provision in its Section 11(2), Article VI, except that the veto power was made more expansive
by the inclusion of this sentence:jgc:chanrobles.com.ph
". . . When a provision of an appropriation bill affects one or more items of the same, the President can not veto the
provision without at the same time vetoing the particular item or items to which it relates . . ."cralaw virtua1aw
library

The 1935 Constitution further broadened the Presidents veto power to include the veto of item or items of revenue
and tariff bills.
With the advent of the 1973 Constitution, the section took a more simple and compact form,
thus:jgc:chanrobles.com.ph
"Section 20 (2). The Prime Minister shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object."cralaw virtua1aw
library
It is to be noted that the counterpart provision in the 1987 Constitution (Article VI, Section 27 [2], supra), is a
verbatim reproduction except for the public official concerned. In other words, also eliminated has been any
reference to the veto of a provision. The vital question is: should this exclusion be interpreted to mean as a
disallowance of the power to veto a provision, as petitioners urge?
The terms item and provision in budgetary legislation and practice are concededly different. An item in a bill refers
to the particulars, the details, the distinct and severable parts . . . of the bill (Bengzon, supra, at 916). It is an
indivisible sum of money dedicated to a stated purpose (Commonwealth v. Dodson, 11 S.E., 2d 120, 124, 125, etc.,
176 Va. 281). The United States Supreme Court, in the case of Bengzon v. Secretary of Justice (299 U.S. 410, 414,
57 S.Ct 252, 81 L. Ed., 312) declared "that an item of an appropriation bill obviously means an item which in
itself is a specific appropriation of money, not some general provision of law, which happens to be put into an
appropriation bill."cralaw virtua1aw library
It is our considered opinion that, notwithstanding the elimination in Article VI, Section 27 (2) of the 1987
Constitution of any reference to the veto of a provision, the extent of the Presidents veto power as previously
defined by the 1935 Constitution has not changed. This is because the eliminated proviso merely pronounces the
basic principle that a distinct and severable part of a bill may be the subject of a separate veto (Bengzon v.
Secretary of Justice, 62 Phil., 912, 916 (1926); 2 BERNAS, Joaquin, S.J., The Constitution of the Republic of the

Philippines, 1st ed., 154-155, [1988]).

The restrictive interpretation urged by petitioners that the President may not veto a provision without vetoing the
entire bill not only disregards the basic principle that a distinct and severable part of a bill may be the subject of a
separate veto but also overlooks the Constitutional mandate that any provision in the general appropriations bill
shall relate specifically to some particular appropriation therein and that any such provision shall be limited in its
operation to the appropriation to which it relates (1987 Constitution, Article VI, Section 25 [2]). In other words, in
the true sense of the term, a provision in an Appropriations Bill is limited in its operation to some particular
appropriation to which it relates, and does not relate to the entire bill.chanrobles law library
Petitioners further submission that, since the exercise of the veto power by the President partakes of the nature of
legislative powers it should be strictly construed, is negative by the following dictum in Bengzon, supra,
reading:jgc:chanrobles.com.ph
"The Constitution is a limitation upon the power of the legislative department of the government, but in this respect
it is a grant of power to the executive department. The Legislature has the affirmative power to enact laws; the
Chief Executive has the negative power by the constitutional exercise of which he may defeat the will of the
Legislature. It follows that the Chief Executive must find his authority in the Constitution. But in exercising that
authority he may not be confined to rules of strict construction or hampered by the unwise interference of the
judiciary. The courts will indulge every intendment in favor of the constitutionality of a veto the same as they will
presume the constitutionality of an act as originally passed by the Legislature" (Commonwealth v. Barnett [1901],
199 Pa., 161; 55 L.R.A., 882; People v. Board of Councilmen [1892], 20 N.Y.S., 52; Fulmore v. Lane [1911], 104
Tex., 499; Texas Co. v. State [1927], 53 A.L.R., 258 [at 917]).
Inappropriateness of the so-called "Provisions"
But even assuming arguendo that provisions are beyond the executive power to veto, we are of the opinion that
Section 55 (FY 89) and Section 16 (FY 90) are not provisions in the budgetary sense of the term. Article VI,
Section 25 (2) of the 1987 Constitution provides:jgc:chanrobles.com.ph

"Sec. 25 (2) No provision or enactment shall be embraced in the general appropriations bill unless it relates
specifically to some particular appropriation therein. Any such provision or enactment shall be limited in its
operation to the appropriation to which it relates."cralaw virtua1aw library
Explicit is the requirement that a provision in the Appropriations Bill should relate specifically to some" particular
appropriation" therein. The challenged "provisions" fall short of this requirement. Firstly, the vetoed "provisions"
do not relate to any particular or distinctive appropriation. They apply generally to all items disapproved or reduced
by Congress in the Appropriations Bill. Secondly, the disapproved or reduced items are nowhere to be found on the
face of the Bill. To discover them, resort will have to be made to the original recommendations made by the
President and to the source indicated by petitioners themselves, i.e., the "Legislative Budget Research and
Monitoring Office" (Annex B-1 and B-2, Petition). Thirdly, the vetoed Sections are more of an expression of
Congressional policy in respect of augmentation from savings rather than a budgetary appropriation. Consequently,
Section 55 (FY 89) and Section 16 (FY 90) although labelled as "provisions," are actually inappropriate
provisions that should be treated as items for the purpose of the Presidents veto power. (Henry v. Edwards [1977]
346 S Rep. 2d, 157-158)
"Just as the President may not use his item-veto to usurp constitutional powers conferred on the legislature, neither
can the legislature deprive the Governor of the constitutional powers conferred on him as chief executive officer of
the state by including in a general appropriation bill matters more properly enacted in separate legislation. The
Governors constitutional power to veto bills of general legislation . . . cannot be abridged by the careful placement
of such measures in a general appropriation bill, thereby forcing the Governor to choose between approving
unacceptable substantive legislation or vetoing items of expenditure essential to the operation of government. The
legislature cannot by location of a bill give it immunity from executive veto. Nor can it circumvent the Governors
veto power over substantive legislation by artfully drafting general law measures so that they appear to be true
conditions or limitations on an item of appropriation. Otherwise, the legislature would be permitted to impair the
constitutional responsibilities and functions of a co-equal branch of government in contravention of the separation
of powers doctrine . . . We are no more willing to allow the legislature to use its appropriation power to infringe on
the Governors constitutional right to veto matters of substantive legislation than we are to allow the Governor to

encroach on the constitutional powers of the legislature. In order to avoid this result, we hold that, when the
legislature inserts inappropriate provisions in a general appropriation bill, such provisions must be treated as
items for purposes of the Governors item veto power over general appropriation bills.
x

". . . Legislative control cannot be exercised in such a manner as to encumber the general appropriation bill with
veto-proof logrolling measure, special interest provisions which could not succeed if separately enacted, or
riders, substantive pieces of legislation incorporated in a bill to insure passage without veto. . . ." (Emphasis
supplied)
Inappropriateness of the so-called "Conditions/Restrictions"
Petitioners maintain, however, that Congress is free to impose conditions in an Appropriations Bill and where
conditions are attached, the veto power does not carry with it the power to strike them out, citing Commonwealth v.
Dodson (11 SE, 2d 130, supra) and Bolinao Electronics Corporation v. Valencia (No. L-20740, June 30, 1964, 11
SCRA 486). In other words, their theory is that Section 55 (FY 89) and Section 16 (FY 90) are such
conditions/restrictions and thus beyond the veto power.chanrobles virtual lawlibrary
There can be no denying that inherent in the power of appropriation is the power to specify how money shall be
spent; and that in addition to distinct "items" of appropriation, the Legislature may include in Appropriation Bills
qualifications, conditions, limitations or restrictions on expenditure of funds. Settled also is the rule that the
Executive is not allowed to veto a condition or proviso of an appropriation while allowing the appropriation itself
to stand (Fairfield v. Foster, supra, at 320). That was also the ruling in Bolinao, supra, which held that the veto of a
condition in an Appropriations Bill which did not include a veto of the items to which the condition related was
deemed invalid and without effect whatsoever.
However, for the rule to apply, restrictions should be such in the real sense of the term, not some matters which are

more properly dealt with in a separate legislation (Henry v. Edwards, La, 346, So 2d 153). Restrictions or
conditions in an Appropriations Bill must exhibit a connection with money items in a budgetary sense in the
schedule of expenditures. Again, the test is appropriateness.
"It is not enough that a provision be related to the institution or agency to which funds are appropriated. Conditions
and limitations properly included in an appropriation bill must exhibit such a connexity with money items of
appropriation that they logically belong in a schedule of expenditures . . . the ultimate test is one of
appropriateness" (Henry v. Edwards, supra, at 158).
Tested by these criteria, Section 55 (FY 89) and Section 16 (FY 90) must also be held to be inappropriate
"conditions." While they, particularly, Section 16 (FY 90), have been "artfully drafted" to appear as true conditions
or limitations, they are actually general law measures more appropriate for substantive and, therefore, separate
legislation.
Further, neither of them shows the necessary connection with a schedule of expenditures. The reason, as explained
earlier, is that items reduced or disapproved by Congress would not appear on the face of the enrolled bill or
Appropriations Act itself. They can only be detected when compared with the original budgetary submittals of the
President. In fact, Sections 55 (FY 89) and 16 (FY 90) themselves provide that an item "shall be deemed to have
been disapproved by Congress if no corresponding appropriation for the specific purpose is provided in this
Act."cralaw virtua1aw library
Considering that the vetoed provisions are not, in the budgetary sense of the term, conditions or restrictions, the
case of Bolinao Electronics Corporation v. Valencia (supra), invoked by petitioners, becomes inapplicable. In that
case, a public works bill contained an item appropriating a certain sum for assistance to television stations, subject
to the condition that the amount would not be available to places where there were commercial television stations.
Then President Macapagal approved the appropriation but vetoed the condition. When challenged before this
Court, it was held that the veto was ineffectual and that the approval of the item carried with it the approval of the
condition attached to it. In contrast with the case at bar, there is no condition, in the budgetary sense of the term,
attached to an appropriation or item in the appropriation bill which was struck out. For obviously, Sections 55 (FY

89) and 16 (FY 90) partake more of a curtailment on the power to augment from savings; in other words, "a
general provision of law, which happens to be put in an appropriation bill" (Bengzon v. Secretary of Justice, supra).
The Power of Augmentation and The Validity of the Veto
The President promptly vetoed Section 55 (FY 89) and Section 16 (FY 90) because they nullify the authority of
the Chief Executive and heads of different branches of government to augment any item in the General
Appropriations Law for their respective offices from savings in other items of their respective appropriations, as
guaranteed by Article VI, Section 25 (5) of the Constitution. Said provision reads:jgc:chanrobles.com.ph
"Sec. 25. (5) No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and
the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general
appropriations law for their respective offices from savings in other items of their respective appropriations"
(Emphasis ours).
Noteworthy is the fact that the power to augment from savings lies dormant until authorized by law.
This Court upheld the validity of the power of augmentation from savings in Demetria v. Alba, which
ruled:jgc:chanrobles.com.ph
". . . to afford the heads of the different branches of the government and those of the constitutional commissions
considerable flexibility in the use of public funds and resources, the constitution allowed the enactment of a law
authorizing the transfer of funds for the purpose of augmenting an item from savings in another item in the
appropriation of the government branch or constitutional body concerned. The leeway granted was thus limited.
The purpose and conditions for which funds may be transferred were specified, i.e., transfer may be allowed for the
purpose of augmenting an item and such transfer may be made only if there are savings from another item in the
appropriation of the government branch or constitutional body" (G.R. No. 71977, 27 February 1987, 148 SCRA
214).

The 1973 Constitution contained an identical authority to augment from savings in its Article VIII, Section 16 (5),
except for mention of the Prime Minister among the officials vested with that power. 1
In 1977, the statutory authority of the President to augment any appropriation of the executive department in the
General Appropriations Act from savings was specifically provided for in Section 44 of Presidential Decree No.
1177, as amended (RA 6670, 4 August 1988), otherwise known as the "Budget Reform Decree of 1977." It
reads:jgc:chanrobles.com.ph
"Sec. 44. . . .
"The President shall, likewise, have the authority to augment any appropriation of the Executive Department in the
General Appropriations Act, from savings in the appropriations of another department, bureau, office or agency
within the Executive Branch, pursuant to the provisions of Art. VIII, Sec. 16 (5) of the Constitution (now Sec. 25
(5), Art. VI)" (Emphasis ours), (N.B.: The first paragraph declared void in Demetria v. Alba, supra, has been
deleted).
Similarly, the use by the President of savings to cover deficits is specifically authorized in the same Decree.
Thus:jgc:chanrobles.com.ph
"Sec. 45. Authority 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: ". . .
A more recent grant is found in Section 12 of the General Appropriations Act of 1989, the text of which is repeated
in the first paragraph of Section 16 (FY 90). Section 12 reads:chanrobles virtual lawlibrary
"Sec. 12. Use of Savings. The President, the President of the Senate, the Speaker of the House of

Representatives, the Chief Justice of the Supreme Court, the heads of the Constitutional Commissions, and the
Ombudsman are hereby authorized to augment any item in this Act for their respective offices from savings in
other items of their respective appropriations."cralaw virtua1aw library
There should be no question, therefore, that statutory authority has, in fact, been granted. And once given, the
heads of the different branches of the Government and those of the Constitutional Commissions are afforded
considerable flexibility in the use of public funds and resources (Demetria v. Alba, supra). The doctrine of
separation of powers is in no way endangered because the transfer is made within a department (or branch of
government) and not from one department (branch) to another (CRUZ, Isagani A., Philippine Political Law [1989]
p. 155).
When Sections 55 (FY 89) and 16 (FY 90), therefore, prohibit the restoration or increase by augmentation of
appropriations disapproved or reduced by Congress, they impair the constitutional and statutory authority of the
President and other key officials to augment any item or any appropriation from savings in the interest of
expediency and efficiency. The exercise of such authority in respect of disapproved or reduced items by no means
vests in the Executive the power to rewrite the entire budget, as petitioners contend, the leeway granted being
delimited to transfers within the department or branch concerned, the sourcing to come only from savings.
More importantly, it strikes us, too, that for such a special power as that of augmentation from savings, the same is
merely incorporated in the General Appropriations Bill. An Appropriations Bill is "one the primary and specific
aim of which is to make appropriation of money from the public treasury" (Bengzon v. Secretary of Justice, 292
U.S., 410, 57 S.Ct. 252). It is a legislative authorization of receipts and expenditures. The power of augmentation
from savings, on the other hand, can by no means be considered a specific appropriation of money. It is a nonappropriation item inserted in an appropriation measure.chanrobles law library : red
The same thing must be said of Section 55 (FY 89), taken in conjunction with Section 12, and Section 16 (FY
90), which prohibit the restoration or increase by augmentation of appropriations disapproved and/or reduced by
Congress. They are non-appropriation items, an appropriation being a setting apart by law of a certain sum from
the public revenue for a specific purpose (Bengzon v. Secretary of Justice, 62 Phil. 912, 916 [1936]). It bears

repeating that they are more of a substantive expression of a legislative objective to restrict the power of
augmentation granted to the President and other key officials. They are actually matters of general law and more
properly the subject of a separate legislation that will embody, define and delimit the scope of the special power of
augmentation from savings instead of being inappropriately incorporated annually in the Appropriation Act. To
sanction this practice would be to give the Legislature the freedom to grant or withhold the power from the
Executive and other officials, and thus put in yearly jeopardy the exercise of that power.
If, indeed, by the later enactments of Section 55 (FY 89) and Section 16 (FY 90), Congress, as petitioners argue,
intended to amend or repeal Pres. Decree No. 1177, with all the more reason should it have so provided in a
separate enactment, it being basic that implied repeals are not favored. For the same reason, we cannot subscribe to
petitioners allegation that Pres. Decree No. 1177 has been revoked by the 1987 Constitution. The 1987
Constitution itself provides for the continuance of laws, decrees, executive orders, proclamations, letters of
instructions, and other executive issuances not inconsistent with the Constitution until amended, repealed, or
revoked (1987 Constitution, Article XVIII, Section 3).
If, indeed, the legislature believed that the exercise of the veto powers by the executive were unconstitutional, the
remedy laid down by the Constitution is crystal clear. A Presidential veto may be overriden by the votes of twothirds of members of Congress (1987 Constitution, Article VI, Section 27[1], supra). But Congress made no
attempt to override the Presidential veto. Petitioners argument that the veto is ineffectual so that there is "nothing
to override" (citing Bolinao) has lost force and effect with the executive veto having been herein upheld.
As we see it, there need be no future conflict if the legislative and executive branches of government adhere to the
spirit of the Constitution, each exercising its respective powers with due deference to the constitutional
responsibilities and functions of the other. Thereby, the delicate equilibrium of governmental powers remains on
even keel.
WHEREFORE, the constitutionality of the assailed Presidential veto is UPHELD and this Petition is hereby
DISMISSED.

No costs.
SO ORDERED.

G.R. No. 113105 August 19, 1994

PHILIPPINE CONSTITUTION ASSOCIATION, EXEQUIEL B. GARCIA and A. GONZALES, petitioners,
vs.
HON. SALVADOR ENRIQUEZ, as Secretary of Budget and Management; HON. VICENTE T. TAN, as
National Treasurer and COMMISSION ON AUDIT, respondents.
G.R. No. 113174 August 19, 1994
RAUL S. ROCO, as Member of the Philippine Senate, NEPTALI A. GONZALES, Chairman of the
Committee on Finance of the Philippine Senate, and EDGARDO J. ANGARA, as President and Chief
Executive of the Philippine Senate, all of whom also sue as taxpayers, in their own behalf and in
representation of Senators HEHERSON ALVAREZ, AGAPITO A. AQUINO, RODOLFO G. BIAZON,
JOSE D. LINA, JR., ERNESTO F. HERRERA, BLAS F. OPLE, JOHN H. OSMENA, GLORIA
MACAPAGAL- ARROYO, VICENTE C. SOTTO III, ARTURO M. TOLENTINO, FRANCISCO S.
TATAD, WIGBERTO E. TAADA and FREDDIE N. WEBB, petitioners,
vs.
THE EXECUTIVE SECRETARY, THE DEPARTMENT OF BUDGET AND MANAGEMENT, and THE
NATIONAL TREASURER, THE COMMISSION ON AUDIT, impleaded herein as an unwilling
co-petitioner, respondents.
G.R. No. 113766 August 19, 1994

WIGBERTO E. TAADA and ALBERTO G. ROMULO, as Members of the Senate and as taxpayers, and
FREEDOM FROM DEBT COALITION, petitioners,
vs.
HON. TEOFISTO T. GUINGONA, JR. in his capacity as Executive Secretary, HON. SALVADOR
ENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management, HON.
CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION ON
AUDIT, respondents.
G.R. No. 113888 August 19, 1994
WIGBERTO E. TAADA and ALBERTO G. ROMULO, as Members of the Senate and as
taxpayers,petitioners,
vs.
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, HON. SALVADOR
ENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management, HON.
CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION ON
AUDIT, respondents.
Ramon R. Gonzales for petitioners in G.R. No. 113105.
Eddie Tamondong for petitioners in G.R. Nos. 113766 & 113888.
Roco, Buag, Kapunan, Migallos & Jardeleza for petitioners Raul S. Roco, Neptali A. Gonzales and Edgardo
Angara.
Ceferino Padua Law Office fro intervenor Lawyers Against Monopoly and Poverty (Lamp).

QUIASON, J.:
Once again this Court is called upon to rule on the conflicting claims of authority between the Legislative and the
Executive in the clash of the powers of the purse and the sword. Providing the focus for the contest between the
President and the Congress over control of the national budget are the four cases at bench. Judicial intervention is
being sought by a group of concerned taxpayers on the claim that Congress and the President have impermissibly
exceeded their respective authorities, and by several Senators on the claim that the President has committed grave
abuse of discretion or acted without jurisdiction in the exercise of his veto power.
I
House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed and approved by both
houses of Congress on December 17, 1993. As passed, it imposed conditions and limitations on certain items of
appropriations in the proposed budget previously submitted by the President. It also authorized members of
Congress to propose and identify projects in the "pork barrels" allotted to them and to realign their respective
operating budgets.
Pursuant to the procedure on the passage and enactment of bills as prescribed by the Constitution, Congress
presented the said bill to the President for consideration and approval.
On December 30, 1993, the President signed the bill into law, and declared the same to have become Republic Act
No. 7663, entitled "AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF
THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE, NINETEEN HUNDRED AND
NINETY-FOUR, AND FOR OTHER PURPOSES" (GAA of 1994). On the same day, the President delivered his

Presidential Veto Message, specifying the provisions of the bill he vetoed and on which he imposed certain
conditions.
No step was taken in either House of Congress to override the vetoes.
In G.R. No. 113105, the Philippine Constitution Association, Exequiel B. Garcia and Ramon A. Gonzales as
taxpayers, prayed for a writ of prohibition to declare as unconstitutional and void: (a) Article XLI on the
Countrywide Development Fund, the special provision in Article I entitled Realignment of Allocation for
Operational Expenses, and Article XLVIII on the Appropriation for Debt Service or the amount appropriated under
said Article XLVIII in excess of the P37.9 Billion allocated for the Department of Education, Culture and Sports;
and (b) the veto of the President of the Special Provision of
Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105)
In G.R. No. 113174, sixteen members of the Senate led by Senate President Edgardo J. Angara, Senator Neptali A.
Gonzales, the Chairman of the Committee on Finance, and Senator Raul S. Roco, sought the issuance of the writs
of certiorari, prohibition and mandamus against the Executive Secretary, the Secretary of the Department of Budget
and Management, and the National Treasurer.
Suing as members of the Senate and taxpayers, petitioners question: (1) the constitutionality of the conditions
imposed by the President in the items of the GAA of 1994: (a) for the Supreme Court, (b) Commission on Audit
(COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e) Citizen Armed Forces Geographical Units
(CAFGU'S) and (f) State Universities and Colleges (SUC's); and (2) the constitutionality of the veto of the special
provision in the appropriation for debt service.
In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Taada (a co-petitioner in G.R. No. 113174),
together with the Freedom from Debt Coalition, a non-stock domestic corporation, sought the issuance of the writs

of prohibition and mandamus against the Executive Secretary, the Secretary of the Department of Budget and
Management, the National Treasurer, and the COA.
Petitioners Taada and Romulo sued as members of the Philippine Senate and taxpayers, while petitioner Freedom
from Debt Coalition sued as a taxpayer. They challenge the constitutionality of the Presidential veto of the special
provision in the appropriations for debt service and the automatic appropriation of funds therefor.
In G.R. No. 11388, Senators Taada and Romulo sought the issuance of the writs of prohibition and mandamus
against the same respondents in G.R. No. 113766. In this petition, petitioners contest the constitutionality of: (1)
the veto on four special provision added to items in the GAA of 1994 for the Armed Forces of the Philippines
(AFP) and the Department of Public Works and Highways (DPWH); and (2) the conditions imposed by the
President in the implementation of certain appropriations for the CAFGU's, the DPWH, and the National Housing
Authority (NHA).
Petitioners also sought the issuance of temporary restraining orders to enjoin respondents Secretary of Budget and
Management, National Treasurer and COA from enforcing the questioned provisions of the GAA of 1994, but the
Court declined to grant said provisional reliefs on the time- honored principle of according the presumption of
validity to statutes and the presumption of regularity to official acts.
In view of the importance and novelty of most of the issues raised in the four petitions, the Court invited former
Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes to submit their respective memoranda
as Amicus curiae, which they graciously did.
II
Locus Standi

When issues of constitutionality are raised, the Court can exercise its power of judicial review only if the following
requisites are compresent: (1) the existence of an actual and appropriate case; (2) a personal and substantial interest
of the party raising the constitutional question; (3) the exercise of judicial review is pleaded at the earliest
opportunity; and (4) the constitutional question is the lis mota of the case (Luz Farms v. Secretary of the
Department of Agrarian Reform, 192 SCRA 51 [1990]; Dumlao v. Commission on Elections, 95 SCRA 392
[1980]; People v. Vera, 65 Phil. 56 [1937]).
While the Solicitor General did not question the locus standi of petitioners in G.R. No. 113105, he claimed that the
remedy of the Senators in the other petitions is political (i.e., to override the vetoes) in effect saying that they do
not have the requisite legal standing to bring the suits.
The legal standing of the Senate, as an institution, was recognized in Gonzales v. Macaraig, Jr., 191 SCRA 452
(1990). In said case, 23 Senators, comprising the entire membership of the Upper House of Congress, filed a
petition to nullify the presidential veto of Section 55 of the GAA of 1989. The filing of the suit was authorized by
Senate Resolution No. 381, adopted on February 2, 1989, and which reads as follows:
Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of the
Philippines the Proper Suit with the Supreme Court of the Philippines contesting the Constitutionality
of the Veto by the President of Special and General Provisions, particularly Section 55, of the General
Appropriation Bill of 1989 (H.B. No. 19186) and For Other Purposes.
In the United States, the legal standing of a House of Congress to sue has been recognized (United States v.
American Tel. & Tel. Co., 551 F. 2d 384, 391 [1976]; Notes: Congressional Access To The Federal Courts, 90
Harvard Law Review 1632 [1977]).

While the petition in G.R. No. 113174 was filed by 16 Senators, including the Senate President and the Chairman
of the Committee on Finance, the suit was not authorized by the Senate itself. Likewise, the petitions in
G.R. Nos. 113766 and 113888 were filed without an enabling resolution for the purpose.
Therefore, the question of the legal standing of petitioners in the three cases becomes a preliminary issue before
this Court can inquire into the validity of the presidential veto and the conditions for the implementation of some
items in the GAA of 1994.
We rule that a member of the Senate, and of the House of Representatives for that matter, has the legal standing to
question the validity of a presidential veto or a condition imposed on an item in an appropriation bill.
Where the veto is claimed to have been made without or in excess of the authority vested on the President by the
Constitution, the issue of an impermissible intrusion of the Executive into the domain of the Legislature arises
(Notes: Congressional Standing To Challenge Executive Action, 122 University of Pennsylvania Law Review 1366
[1974]).
To the extent the power of Congress are impaired, so is the power of each member thereof, since his office confers
a right to participate in the exercise of the powers of that institution (Coleman v. Miller, 307 U.S. 433 [1939];
Holtzman v. Schlesinger, 484 F. 2d 1307 [1973]).
An act of the Executive which injures the institution of Congress causes a derivative but nonetheless substantial
injury, which can be questioned by a member of Congress (Kennedy v. Jones, 412 F. Supp. 353 [1976]). In such a
case, any member of Congress can have a resort to the courts.
Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted:

This is, then, the clearest case of the Senate as a whole or individual Senators as such having a
substantial interest in the question at issue. It could likewise be said that there was the requisite injury
to their rights as Senators. It would then be futile to raise any locus standi issue. Any intrusion into the
domain appertaining to the Senate is to be resisted. Similarly, if the situation were reversed, and it is
the Executive Branch that could allege a transgression, its officials could likewise file the
corresponding action. What cannot be denied is that a Senator has standing to maintain inviolate the
prerogatives, powers and privileges vested by the Constitution in his office (Memorandum, p. 14).
It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]). Said remedy,
however, is available only when the presidential veto is based on policy or political considerations but not when the
veto is claimed to be ultra vires. In the latter case, it becomes the duty of the Court to draw the dividing line where
the exercise of executive power ends and the bounds of legislative jurisdiction begin.
III
G.R. No. 113105
1. Countrywide Development Fund
Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of P2,977,000,000.00 to "be used for
infrastructure, purchase of ambulances and computers and other priority projects and activities and credit facilities
to qualified beneficiaries." Said Article provides:
COUNTRYWIDE DEVELOPMENT FUND

For Fund requirements of countrywide

development projects P 2,977,000,000

New Appropriations, by Purpose

Current Operating Expenditures
A. PURPOSE
Personal Maintenance Capital Total
Services and Other Outlays
Operating
Expenses
1. For Countrywide
Developments Projects P250,000,000 P2,727,000,000 P2,977,000,000
TOTAL NEW
APPROPRIATIONS P250,000,000 P2,727,000,000 P2,977,000,000
Special Provisions
1. Use and Release of Funds. The amount herein appropriated shall be used for infrastructure,
purchase of ambulances and computers and other priority projects and activities, and credit facilities to
qualified beneficiaries as proposed and identified by officials concerned according to the following
allocations: Representatives, P12,500,000 each; Senators, P18,000,000 each; Vice-President,

P20,000,000; PROVIDED, That, the said credit facilities shall be constituted as a revolving fund to be
administered by a government financial institution (GFI) as a trust fund for lending operations. Prior
years releases to local government units and national government agencies for this purpose shall be
turned over to the government financial institution which shall be the sole administrator of credit
facilities released from this fund.
The fund shall be automatically released quarterly by way of Advice of Allotments and Notice of Cash
Allocation directly to the assigned implementing agency not later than five (5) days after the
beginning of each quarter upon submission of the list of projects and activities by the officials
concerned.
2. Submission of Quarterly Reports. The Department of Budget and Management shall submit within
thirty (30) days after the end of each quarter a report to the Senate Committee on Finance and the
House Committee on Appropriations on the releases made from this Fund. The report shall include the
listing of the projects, locations, implementing agencies and the endorsing officials (GAA of 1994, p.
1245).
Petitioners claim that the power given to the members of Congress to propose and identify the projects and
activities to be funded by the Countrywide Development Fund is an encroachment by the legislature on executive
power, since said power in an appropriation act in implementation of a law. They argue that the proposal and
identification of the projects do not involve the making of laws or the repeal and amendment thereof, the only
function given to the Congress by the Constitution (Rollo, pp. 78- 86).
Under the Constitution, the spending power called by James Madison as "the power of the purse," belongs to
Congress, subject only to the veto power of the President. The President may propose the budget, but still the final
say on the matter of appropriations is lodged in the Congress.

The power of appropriation carries with it the power to specify the project or activity to be funded under the
appropriation law. It can be as detailed and as broad as Congress wants it to be.
The Countrywide Development Fund is explicit that it shall be used "for infrastructure, purchase of ambulances
and computers and other priority projects and activities and credit facilities to qualified beneficiaries . . ." It was
Congress itself that determined the purposes for the appropriation.
Executive function under the Countrywide Development Fund involves implementation of the priority projects
specified in the law.
The authority given to the members of Congress is only to propose and identify projects to be implemented by the
President. Under Article XLI of the GAA of 1994, the President must perforce examine whether the proposals
submitted by the members of Congress fall within the specific items of expenditures for which the Fund was set up,
and if qualified, he next determines whether they are in line with other projects planned for the locality. Thereafter,
if the proposed projects qualify for funding under the Funds, it is the President who shall implement them. In short,
the proposals and identifications made by the members of Congress are merely recommendatory.
The procedure of proposing and identifying by members of Congress of particular projects or activities under
Article XLI of the GAA of 1994 is imaginative as it is innovative.
The Constitution is a framework of a workable government and its interpretation must take into account the
complexities, realities and politics attendant to the operation of the political branches of government. Prior to the
GAA of 1991, there was an uneven allocation of appropriations for the constituents of the members of Congress,
with the members close to the Congressional leadership or who hold cards for "horse-trading," getting more than
their less favored colleagues. The members of Congress also had to reckon with an unsympathetic President, who
could exercise his veto power to cancel from the appropriation bill a pet project of a Representative or Senator.

The Countrywide Development Fund attempts to make equal the unequal. It is also a recognition that individual
members of Congress, far more than the President and their congressional colleagues are likely to be
knowledgeable about the needs of their respective constituents and the priority to be given each project.
2. Realignment of Operating Expenses
Under the GAA of 1994, the appropriation for the Senate is P472,000,000.00 of which P464,447,000.00 is
appropriated for current operating expenditures, while the appropriation for the House of Representatives is
P1,171,924,000.00 of which P1,165,297,000.00 is appropriated for current operating expenditures (GAA of 1994,
pp. 2, 4, 9, 12).
The 1994 operating expenditures for the Senate are as follows:
Personal Services
Salaries, Permanent 153,347
Salaries/Wage, Contractual/Emergency 6,870

Total Salaries and Wages 160,217

=======
Other Compensation

Step Increments 1,073

Honoraria and Commutable Allowances 3,731

Compensation Insurance Premiums 1,579

Pag-I.B.I.G. Contributions 1,184
Medicare Premiums 888
Bonus and Cash Gift 14,791
Terminal Leave Benefits 2,000
Personnel Economic Relief Allowance 10,266
Additional Compensation of P500 under A.O. 53 11,130
Others 57,173

Total Other Compensation 103,815

01 Total Personal Services 264,032

=======
Maintenance and Other Operating Expenses
02 Traveling Expenses 32,841
03 Communication Services 7,666
04 Repair and Maintenance of Government Facilities 1,220
05 Repair and Maintenance of Government Vehicles 318
06 Transportation Services 128
07 Supplies and Materials 20,189
08 Rents 24,584
14 Water/Illumination and Power 6,561
15 Social Security Benefits and Other Claims 3,270

17 Training and Seminars Expenses 2,225

18 Extraordinary and Miscellaneous Expenses 9,360
23 Advertising and Publication
24 Fidelity Bonds and Insurance Premiums 1,325
29 Other Services 89,778

Total Maintenance and Other Operating Expenditures 200,415

Total Current Operating Expenditures 464,447

=======
(GAA of 1994, pp. 3-4)
The 1994 operating expenditures for the House of Representatives are as follows:
Personal Services
Salaries, Permanent 261,557
Salaries/Wages, Contractual/Emergency 143,643

Total Salaries and Wages 405,200

=======
Other Compensation

Step Increments 4,312

Honoraria and Commutable
Allowances 4,764
Compensation Insurance
Premiums 1,159
Pag-I.B.I.G. Contributions 5,231
Medicare Premiums 2,281
Bonus and Cash Gift 35,669
Terminal Leave Benefits 29
Personnel Economic Relief
Allowance 21,150
Additional Compensation of P500 under A.O. 53
Others 106,140

Total Other Compensation 202,863

01 Total Personal Services 608,063

=======
Maintenance and Other Operating Expenses
02 Traveling Expenses 139,611
03 Communication Services 22,514
04 Repair and Maintenance of Government Facilities 5,116

05 Repair and Maintenance of Government Vehicles 1,863

06 Transportation Services 178
07 Supplies and Materials 55,248
10 Grants/Subsidies/Contributions 940
14 Water/Illumination and Power 14,458
15 Social Security Benefits and Other Claims 325
17 Training and Seminars Expenses 7,236
18 Extraordinary and Miscellaneous Expenses 14,474
20 Anti-Insurgency/Contingency Emergency Expenses 9,400
23 Advertising and Publication 242
24 Fidelity Bonds and Insurance Premiums 1,420
29 Other Services 284,209

Total Maintenance and Other Operating Expenditures 557,234

Total Current Operating Expenditures 1,165,297

=======
(GAA of 1994, pp. 11-12)
The Special Provision Applicable to the Congress of the Philippines provides:
4. Realignment of Allocation for Operational Expenses. A member of Congress may realign his
allocation for operational expenses to any other expenses category provide the total of said allocation
is not exceeded. (GAA of 1994, p. 14).

The appropriation for operating expenditures for each House is further divided into expenditures for salaries,
personal services, other compensation benefits, maintenance expenses and other operating expenses. In turn, each
member of Congress is allotted for his own operating expenditure a proportionate share of the appropriation for the
House to which he belongs. If he does not spend for one items of expense, the provision in question allows him to
transfer his allocation in said item to another item of expense.
Petitioners assail the special provision allowing a member of Congress to realign his allocation for operational
expenses to any other expense category (Rollo, pp. 82-92), claiming that this practice is prohibited by Section
25(5), Article VI of the Constitution. Said section provides:
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.
The proviso of said Article of the Constitution grants the President of the Senate and the Speaker of the House of
Representatives the power to augment items in an appropriation act for their respective offices from savings in
other items of their appropriations, whenever there is a law authorizing such augmentation.
The special provision on realignment of the operating expenses of members of Congress is authorized by Section
16 of the General Provisions of the GAA of 1994, which provides:
Expenditure Components. Except by act of the Congress of the Philippines, no change or modification
shall be made in the expenditure items authorized in this Act and other appropriation laws unless in
cases

of augmentations from savings in appropriations as authorized under Section 25(5) of Article VI of the
Constitution (GAA of 1994, p. 1273).
Petitioners argue that the Senate President and the Speaker of the House of Representatives, but not the individual
members of Congress are the ones authorized to realign the savings as appropriated.
Under the Special Provisions applicable to the Congress of the Philippines, the members of Congress only
determine the necessity of the realignment of the savings in the allotments for their operating expenses. They are in
the best position to do so because they are the ones who know whether there are savings available in some items
and whether there are deficiencies in other items of their operating expenses that need augmentation. However, it is
the Senate President and the Speaker of the House of Representatives, as the case may be, who shall approve the
realignment. Before giving their stamp of approval, these two officials will have to see to it that:
(1) The funds to be realigned or transferred are actually savings in the items of expenditures from which the same
are to be taken; and
(2) The transfer or realignment is for the purposes of augmenting the items of expenditure to which said transfer or
realignment is to be made.
3. Highest Priority for Debt Service
While Congress appropriated P86,323,438,000.00 for debt service (Article XLVII of the GAA of 1994), it
appropriated only P37,780,450,000.00 for the Department of Education Culture and Sports. Petitioners urged that
Congress cannot give debt service the highest priority in the GAA of 1994 (Rollo, pp. 93-94) because under the
Constitution it should be education that is entitled to the highest funding. They invoke Section 5(5), Article XIV
thereof, which provides:

(5) The State shall assign the highest budgetary priority to education and ensure that teaching will
attract and retain its rightful share of the best available talents through adequate remuneration and
other means of job satisfaction and fulfillment.
This issue was raised in Guingona, Jr. v. Carague, 196 SCRA 221 (1991), where this Court held that Section 5(5),
Article XIV of the Constitution, is merely directory, thus:
While it is true that under Section 5(5), Article XIV of the Constitution, Congress is mandated to
"assign the highest budgetary priority to education" in order to "insure that teaching will attract and
retain its rightful share of the best available talents through adequate remuneration and other means of
job satisfaction and fulfillment," it does not thereby follow that the hands of Congress are so
hamstrung as to deprive it the power to respond to the imperatives of the national interest and for the
attainment of other state policies or objectives.
As aptly observed by respondents, since 1985, the budget for education has tripled to upgrade and
improve the facility of the public school system. The compensation of teachers has been doubled. The
amount of P29,740,611,000.00 set aside for the Department of Education, Culture and Sports under
the General Appropriations Act (R.A. No. 6381), is the highest budgetary allocation among all
department budgets. This is a clear compliance with the aforesaid constitutional mandate according
highest priority to education.
Having faithfully complied therewith, Congress is certainly not without any power, guided only by its
good judgment, to provide an appropriation, that can reasonably service our enormous debt, the
greater portion of which was inherited from the previous administration. It is not only a matter of
honor and to protect the credit standing of the country. More especially, the very survival of our
economy is at stake. Thus, if in the process Congress appropriated an amount for debt service bigger

than the share allocated to education, the Court finds and so holds that said appropriation cannot be
thereby assailed as unconstitutional.
G.R. No. 113105
G.R. No. 113174
Veto of Provision on Debt Ceiling
The Congress added a Special Provision to Article XLVIII (Appropriations for Debt Service) of the GAA of 1994
which provides:
Special Provisions
1. Use of the Fund. The appropriation authorized herein shall be used for payment of principal and
interest of foreign and domestic indebtedness; PROVIDED, That any payment in excess of the amount
herein appropriated shall be subject to the approval of the President of the Philippines with the
concurrence of the Congress of the Philippines; PROVIDED, FURTHER, That in no case shall this
fund be used to pay for the liabilities of the Central Bank Board of Liquidators.
2. Reporting Requirement. The Bangko Sentral ng Pilipinas and the Department of Finance shall
submit a quarterly report of actual foreign and domestic debt service payments to the House
Committee on Appropriations and Senate Finance Committee within one (1) month after each quarter
(GAA of 1944, pp. 1266).
The President vetoed the first Special Provision, without vetoing the P86,323,438,000.00 appropriation for debt
service in said Article. According to the President's Veto Message:

IV. APPROPRIATIONS FOR DEBT SERVICE

I would like to emphasize that I concur fully with the desire of Congress to reduce the debt burden by
decreasing the appropriation for debt service as well as the inclusion of the Special Provision quoted
below. Nevertheless, I believe that this debt reduction scheme cannot be validly done through the 1994
GAA. This must be addressed by revising our debt policy by way of innovative and comprehensive
debt reduction programs conceptualized within the ambit of the Medium-Term Philippine
Development Plan.
Appropriations for payment of public debt, whether foreign or domestic, are automatically
appropriated pursuant to the Foreign Borrowing Act and Section 31 of P.D. No. 1177 as reiterated
under Section 26, Chapter 4, Book VI of E.O. No. 292, the Administrative Code of 1987. I wish to
emphasize that the constitutionality of such automatic provisions on debt servicing has been upheld by
the Supreme Court in the case of "Teofisto T. Guingona, Jr., and Aquilino Q. Pimentel, Jr. v. Hon.
Guillermo N. Carague, in his capacity as Secretary of Budget and Management, et al.," G.R. No.
94571, dated April 22, 1991.
I am, therefore vetoing the following special provision for the reason that the GAA is not the
appropriate legislative measure to amend the provisions of the Foreign Borrowing Act, P.D. No. 1177
and E.O. No. 292:
Use of the Fund. The appropriation authorized herein shall be used for payment of
principal and interest of foreign and domestic indebtedness: PROVIDED, That any
payment in excess of the amount herein appropriated shall be subject to the approval of
the President of the Philippines with the concurrence of the Congress of the

Philippines:PROVIDED, FURTHER, That in no case shall this fund be used to pay for
the liabilities of the Central Bank Board of Liquidators (GAA of 1994, p. 1290).
Petitioners claim that the President cannot veto the Special Provision on the appropriation for debt service without
vetoing the entire amount of P86,323,438.00 for said purpose (Rollo, G.R. No. 113105, pp. 93-98; Rollo, G.R. No.
113174, pp. 16-18). The Solicitor General counterposed that the Special Provision did not relate to the item of
appropriation for debt service and could therefore be the subject of an item veto (Rollo, G.R. No. 113105, pp. 5460; Rollo, G.R. No. 113174, pp. 72-82).
This issue is a mere rehash of the one put to rest in Gonzales v. Macaraig, Jr., 191 SCRA 452 (1990). In that case,
the issue was stated by the Court, thus:
The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989
Appropriations Bill (Section 55
FY '89), and subsequently of its counterpart Section 16 of the 1990 Appropriations Bill (Section 16
FY '90), is unconstitutional and without effect.
The Court re-stated the issue, just so there would not be any misunderstanding about it, thus:
The focal issue for resolution is whether or not the President exceeded the item-veto power accorded
by the Constitution. Or differently put, has the President the power to veto "provisions" of an
Appropriations Bill?
The bases of the petition in Gonzales, which are similar to those invoked in the present case, are stated as follows:
In essence, petitioners' cause is anchored on the following grounds: (1) the President's line-veto power
as regards appropriation bills is limited to item/s and does not cover provision/s; therefore, she

exceeded her authority when she vetoed Section 55 (FY '89) and Section 16 (FY '90) which are
provisions; (2) when the President objects to a provision of an appropriation bill, she cannot exercise
the item-veto power but should veto the entire bill; (3) the item-veto power does not carry with it the
power to strike out conditions or restrictions for that would be legislation, in violation of the doctrine
of separation of powers; and (4) the power of augmentation in Article VI, Section 25 [5] of the 1987
Constitution, has to be provided for by law and, therefore, Congress is also vested with the prerogative
to impose restrictions on the exercise of that power.
The restrictive interpretation urged by petitioners that the President may not veto a provision without
vetoing the entire bill not only disregards the basic principle that a distinct and severable part of a bill
may be the subject of a separate veto but also overlooks the Constitutional mandate that any provision
in the general appropriations bill shall relate specifically to some particular appropriation therein and
that any such provision shall be limited in its operation to the appropriation to which it relates (1987
Constitution, Article VI, Section 25 [2]). In other words, in the true sense of the term, a provision in an
Appropriations Bill is limited in its operation to some particular appropriation to which it relates, and
does not relate to the entire bill.
The Court went one step further and ruled that even assuming arguendo that "provisions" are beyond the executive
power to veto, and Section 55
(FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary sense of the term, they are "inappropriate
provisions" that should be treated as "items" for the purpose of the President's veto power.
The Court, citing Henry v. Edwards, La., 346 So. 2d 153 (1977), said that Congress cannot include in a general
appropriations bill matters that should be more properly enacted in separate legislation, and if it does that, the
inappropriate provisions inserted by it must be treated as "item", which can be vetoed by the President in the
exercise of his item-veto power.

It is readily apparent that the Special Provision applicable to the appropriation for debt service insofar as it refers to
funds in excess of the amount appropriated in the bill, is an "inappropriate" provision referring to funds other than
the P86,323,438,000.00 appropriated in the General Appropriations Act of 1991.
Likewise the vetoed provision is clearly an attempt to repeal Section 31 of P.D. No. 1177 (Foreign Borrowing Act)
and E.O. No. 292, and to reverse the debt payment policy. As held by the Court in Gonzales, the repeal of these
laws should be done in a separate law, not in the appropriations law.
The Court will indulge every intendment in favor of the constitutionality of a veto, the same as it will presume the
constitutionality of an act of Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz, 485, 53 A.L.R. 258 [1927]).
The veto power, while exercisable by the President, is actually a part of the legislative process (Memorandum of
Justice Irene Cortes as Amicus Curiae, pp. 3-7). That is why it is found in Article VI on the Legislative Department
rather than in Article VII on the Executive Department in the Constitution. There is, therefore, sound basis to
indulge in the presumption of validity of a veto. The burden shifts on those questioning the validity thereof to show
that its use is a violation of the Constitution.
Under his general veto power, the President has to veto the entire bill, not merely parts thereof (1987 Constitution,
Art. VI, Sec. 27[1]). The exception to the general veto power is the power given to the President to veto any
particular item or items in a general appropriations bill (1987 Constitution, Art. VI,
Sec. 27[2]). In so doing, the President must veto the entire item.
A general appropriations bill is a special type of legislation, whose content is limited to specified sums of money
dedicated to a specific purpose or a separate fiscal unit (Beckman, The Item Veto Power of the Executive,
31 Temple Law Quarterly 27 [1957]).

The item veto was first introduced by the Organic Act of the Philippines passed by the U.S. Congress on August
29, 1916. The concept was adopted from some State Constitutions.
Cognizant of the legislative practice of inserting provisions, including conditions, restrictions and limitations, to
items in appropriations bills, the Constitutional Convention added the following sentence to Section 20(2), Article
VI of the 1935 Constitution:
. . . When a provision of an appropriation bill affect one or more items of the same, the President
cannot veto the provision without at the same time vetoing the particular item or items to which it
relates . . . .
In short, under the 1935 Constitution, the President was empowered to veto separately not only items in an
appropriations bill but also "provisions".
While the 1987 Constitution did not retain the aforementioned sentence added to Section 11(2) of Article VI of the
1935 Constitution, it included the following provision:
No provision or enactment shall be embraced in the general appropriations bill unless it relates
specifically to some particular appropriation therein. Any such provision or enactment shall be limited
in its operation to the appropriation to which it relates (Art. VI, Sec. 25[2]).
In Gonzales, we made it clear that the omission of that sentence of Section 16(2) of the 1935 Constitution in the
1987 Constitution should not be interpreted to mean the disallowance of the power of the President to veto a
"provision".
As the Constitution is explicit that the provision which Congress can include in an appropriations bill must "relate
specifically to some particular appropriation therein" and "be limited in its operation to the appropriation to which

it relates," it follows that any provision which does not relate to any particular item, or which extends in its
operation beyond an item of appropriation, is considered "an inappropriate provision" which can be vetoed
separately from an item. Also to be included in the category of "inappropriate provisions" are unconstitutional
provisions and provisions which are intended to amend other laws, because clearly these kind of laws have no
place in an appropriations bill. These are matters of general legislation more appropriately dealt with in separate
enactments. Former Justice Irene Cortes, as Amicus Curiae, commented that Congress cannot by law establish
conditions for and regulate the exercise of powers of the President given by the Constitution for that would be an
unconstitutional intrusion into executive prerogative.
The doctrine of "inappropriate provision" was well elucidated in Henry v. Edwards, supra., thus:
Just as the President may not use his item-veto to usurp constitutional powers conferred on the
legislature, neither can the legislature deprive the Governor of the constitutional powers conferred on
him as chief executive officer of the state by including in a general appropriation bill matters more
properly enacted in separate legislation. The Governor's constitutional power to veto bills of general
legislation . . . cannot be abridged by the careful placement of such measures in a general
appropriation bill, thereby forcing the Governor to choose between approving unacceptable
substantive legislation or vetoing "items" of expenditures essential to the operation of government.The
legislature cannot by location of a bill give it immunity from executive veto. Nor can it circumvent the
Governor's veto power over substantive legislation by artfully drafting general law measures so that
they appear to be true conditions or limitations on an item of appropriation. Otherwise, the legislature
would be permitted to impair the constitutional responsibilities and functions of a co-equal branch of
government in contravention of the separation of powers doctrine . . . We are no more willing to allow
the legislature to use its appropriation power to infringe on the Governor's constitutional right to veto
matters of substantive legislation than we are to allow the Governor to encroach on the Constitutional

powers of the legislature. In order to avoid this result, we hold that,when the legislature inserts
inappropriate provisions in a general appropriation bill, such provisions must be treated
as "items" for purposes of the Governor's item veto power over general appropriation bills.
xxx xxx xxx
. . . Legislative control cannot be exercised in such a manner as to encumber the general appropriation
bill with veto-proof "logrolling measures", special interest provisions which could not succeed if
separately enacted, or "riders", substantive pieces of legislation incorporated in a bill to insure passage
without veto . . . (Emphasis supplied).
Petitioners contend that granting arguendo that the veto of the Special Provision on the ceiling for debt payment is
valid, the President cannot automatically appropriate funds for debt payment without complying with the
conditions for automatic appropriation under the provisions of R.A. No. 4860 as amended by P.D. No. 81 and the
provisions of P.D. No. 1177 as amended by the Administrative Code of 1987 and P.D. No. 1967 (Rollo, G.R. No.
113766, pp. 9-15).
Petitioners cannot anticipate that the President will not faithfully execute the laws. The writ of prohibition will not
issue on the fear that official actions will be done in contravention of the laws.
The President vetoed the entire paragraph one of the Special Provision of the item on debt service, including the
provisions that the appropriation authorized in said item "shall be used for payment of the principal and interest of
foreign and domestic indebtedness" and that "in no case shall this fund be used to pay for the liabilities of the
Central Bank Board of Liquidators." These provisions are germane to and have a direct connection with the item
on debt service. Inherent in the power of appropriation is the power to specify how the money shall be spent

(Henry v. Edwards, LA, 346 So., 2d., 153). The said provisos, being appropriate provisions, cannot be vetoed
separately. Hence the item veto of said provisions is void.
We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of the Special Provision of
the item on debt service only with respect to the proviso therein requiring that "any payment in excess of the
amount herein, appropriated shall be subject to the approval of the President of the Philippines with the
concurrence of the Congress of the Philippines . . ."
G.R. NO. 113174
G.R. NO. 113766
G.R. NO. 11388
1. Veto of provisions for revolving funds of SUC's.
In the appropriation for State Universities and Colleges (SUC's), the President vetoed special provisions which
authorize the use of income and the creation, operation and maintenance of revolving funds. The Special
Provisions vetoed are the following:
(H. 7) West Visayas State University
Equal Sharing of Income. Income earned by the University subject to Section 13 of the special
provisions applicable to all State Universities and Colleges shall be equally shared by the University
and the University Hospital (GAA of 1994, p. 395).
xxx xxx xxx
(J. 3) Leyte State College

Revolving Fund for the Operation of LSC House and Human Resources Development Center
(HRDC). The income of Leyte State College derived from the operation of its LSC House and HRDC
shall be constituted into a Revolving Fund to be deposited in an authorized government depository
bank for the operational expenses of these projects/services. The net income of the Revolving Fund at
the end of the year shall be remitted to the National Treasury and shall accrue to the General Fund.
The implementing guidelines shall be issued by the Department of Budget and Management (GAA of
1994, p. 415).
The vetoed Special Provisions applicable to all SUC's are the following:
12. Use of Income from Extension Services. State Universities and Colleges are authorized to use their
income from their extension services. Subject to the approval of the Board of Regents and the
approval of a special budget pursuant to Sec. 35, Chapter 5, Book VI of E.O.
No. 292, such income shall be utilized solely for faculty development, instructional materials and
work study program (GAA of 1994, p. 490).
xxx xxx xxx
13. Income of State Universities and Colleges. The income of State Universities and Colleges derived
from tuition fees and other sources as may be imposed by governing boards other than those accruing
to revolving funds created under LOI Nos. 872 and 1026 and those authorized to be recorded as trust
receipts pursuant to Section 40, Chapter 5, Book VI of E.O. No. 292 shall be deposited with the
National Treasury and recorded as a Special Account in the General Fund pursuant to P.D. No. 1234
and P.D. No. 1437 for the use of the institution, subject to Section 35, Chapter 5, Book VI of E.O. No.
292L PROVIDED, That disbursements from the Special Account shall not exceed the amount actually
earned and deposited: PROVIDED, FURTHER, That a cash advance on such income may be allowed

State half of income actually realized during the preceding year and this cash advance shall be charged
against income actually earned during the budget year: AND PROVIDED, FINALLY, That in no case
shall such funds be used to create positions, nor for payment of salaries, wages or allowances, except
as may be specifically approved by the Department of Budge and Management for income-producing
activities, or to purchase equipment or books, without the prior approval of the President of the
Philippines pursuant to Letter of Implementation No. 29.
All collections of the State Universities and Colleges for fees, charges and receipts intended for
private recipient units, including private foundations affiliated with these institutions shall be duly
acknowledged with official receipts and deposited as a trust receipt before said income shall be subject
to Section 35, Chapter 5, Book VI of E.O. No. 292
(GAA of 1994, p. 490).
The President gave his reason for the veto thus:
Pursuant to Section 65 of the Government Auditing Code of the Philippines, Section 44, Chapter 5,
Book VI of E.O. No. 292, s. 1987 and Section 22, Article VII of the Constitution, all income earned by
all Government offices and agencies shall accrue to the General Fund of the Government in line with
the One Fund Policy enunciated by Section 29 (1), Article VI and Section 22, Article VII of the
Constitution. Likewise, the creation and establishment of revolving funds shall be authorized by
substantive law pursuant to Section 66 of the Government Auditing Code of the Philippines and
Section 45, Chapter 5, Book VI of E.O. No. 292.
Notwithstanding the aforementioned provisions of the Constitution and existing law, I have noted the
proliferation of special provisions authorizing the use of agency income as well as the creation,
operation and maintenance of revolving funds.

I would like to underscore the facts that such income were already considered as integral part of the
revenue and financing sources of the National Expenditure Program which I previously submitted to
Congress. Hence, the grant of new special provisions authorizing the use of agency income and the
establishment of revolving funds over and above the agency appropriations authorized in this Act shall
effectively reduce the financing sources of the 1994 GAA and, at the same time, increase the level of
expenditures of some agencies beyond the well-coordinated, rationalized levels for such agencies.
This corresponding increases the overall deficit of the National Government (Veto Message, p. 3).
Petitioners claim that the President acted with grave abuse of discretion when he disallowed by his veto the "use of
income" and the creation of "revolving fund" by the Western Visayas State University and Leyte State Colleges
when he allowed other government offices, like the National Stud Farm, to use their income for their operating
expenses (Rollo, G.R. No. 113174, pp. 15-16).
There was no undue discrimination when the President vetoed said special provisions while allowing similar
provisions in other government agencies. If some government agencies were allowed to use their income and
maintain a revolving fund for that purpose, it is because these agencies have been enjoying such privilege before
by virtue of the special laws authorizing such practices as exceptions to the "one-fund policy" (e.g., R.A. No. 4618
for the National Stud Farm, P.D. No. 902-A for the Securities and Exchange Commission; E.O. No. 359 for the
Department of Budget and Management's Procurement Service).
2. Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance.
In the appropriation for the Department of Public Works and Highways, the President vetoed the second paragraph
of Special Provision No. 2, specifying the 30% maximum ration of works to be contracted for the maintenance of
national roads and bridges. The said paragraph reads as follows:

2. Release and Use of Road Maintenance Funds. Funds allotted for the maintenance and repair of
roads which are provided in this Act for the Department of Public Works and Highways shall be
released to the respective Engineering District, subject to such rules and regulations as may be
prescribed by the Department of Budget and Management. Maintenance funds for roads and bridges
shall be exempt from budgetary reserve.
Of the amount herein appropriated for the maintenance of national roads and bridges, a maximum of
thirty percent (30%) shall be contracted out in accordance with guidelines to be issued by the
Department of Public Works and Highways. The balance shall be used for maintenance by force
account.
Five percent (5%) of the total road maintenance fund appropriated herein to be applied across the
board to the allocation of each region shall be set aside for the maintenance of roads which may be
converted to or taken over as national roads during the current year and the same shall be released to
the central office of the said department for eventual
sub-allotment to the concerned region and district: PROVIDED, That any balance of the said five
percent (5%) shall be restored to the regions on a pro-rata basis for the maintenance of existing
national roads.
No retention or deduction as reserves or overhead expenses shall be made, except as authorized by law
or upon direction of the President
(GAA of 1994, pp. 785-786; Emphasis supplied).
The President gave the following reason for the veto:

While I am cognizant of the well-intended desire of Congress to impose certain restrictions contained
in some special provisions, I am equally aware that many programs, projects and activities of agencies
would require some degree of flexibility to ensure their successful implementation and therefore risk
their completion. Furthermore, not only could these restrictions and limitations derail and impede
program implementation but they may also result in a breach of contractual obligations.
D.1.a. A study conducted by the Infrastructure Agencies show that for practical intent and purposes,
maintenance by contract could be undertaken to an optimum of seventy percent (70%) and the
remaining thirty percent (30%) by force account. Moreover, the policy of maximizing implementation
through contract maintenance is a covenant of the Road and Road Transport Program Loan from the
Asian Development Bank (ADB Loan No. 1047-PHI-1990) and Overseas Economic Cooperation
Fund (OECF Loan No. PH-C17-199). The same is a covenant under the World Bank (IBRD) Loan for
the Highway Management Project (IBRD Loan
No. PH-3430) obtained in 1992.
In the light of the foregoing and considering the policy of the government to encourage and maximize
private sector participation in the regular repair and maintenance of infrastructure facilities, I am
directly vetoing the underlined second paragraph of Special Provision No. 2 of the Department of
Public Works and Highways (Veto Message, p. 11).
The second paragraph of Special Provision No. 2 brings to fore the divergence in policy of Congress and the
President. While Congress expressly laid down the condition that only 30% of the total appropriation for road
maintenance should be contracted out, the President, on the basis of a comprehensive study, believed that
contracting out road maintenance projects at an option of 70% would be more efficient, economical and practical.

The Special Provision in question is not an inappropriate provision which can be the subject of a veto. It is not
alien to the appropriation for road maintenance, and on the other hand, it specified how the said item shall be
expended 70% by administrative and 30% by contract.
The 1987 Constitution allows the addition by Congress of special provisions, conditions to items in an expenditure
bill, which cannot be vetoed separately from the items to which they relate so long as they are "appropriate" in the
budgetary sense (Art. VII, Sec. 25[2]).
The Solicitor General was hard put in justifying the veto of this special provision. He merely argued that the
provision is a complete turnabout from an entrenched practice of the government to maximize contract
maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to veto a provision separate from the item
to which it refers.
The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is therefore
unconstitutional.
3. Veto of provision on purchase of medicines by AFP.
In the appropriation for the Armed Forces of the Philippines (AFP), the President vetoed the special provision on
the purchase by the AFP of medicines in compliance with the Generics Drugs Law (R.A. No. 6675). The vetoed
provision reads:
12. Purchase of Medicines. The purchase of medicines by all Armed Forces of the Philippines units,
hospitals and clinics shall strictly comply with the formulary embodied in the National Drug Policy of
the Department of Health (GAA of 1994, p. 748).

According to the President, while it is desirable to subject the purchase of medicines to a standard formulary, "it is
believed more prudent to provide for a transition period for its adoption and smooth implementation in the Armed
Forces of the Philippines" (Veto Message, p. 12).
The Special Provision which requires that all purchases of medicines by the AFP should strictly comply with the
formulary embodied in the National Drug Policy of the Department of Health is an "appropriate" provision. it is a
mere advertence by Congress to the fact that there is an existing law, the Generics Act of 1988, that requires "the
extensive use of drugs with generic names through a rational system of procurement and distribution." The
President believes that it is more prudent to provide for a transition period for the smooth implementation of the
law in the case of purchases by the Armed Forces of the Philippines, as implied by Section 11 (Education Drive) of
the law itself. This belief, however, cannot justify his veto of the provision on the purchase of medicines by the
AFP.
Being directly related to and inseparable from the appropriation item on purchases of medicines by the AFP, the
special provision cannot be vetoed by the President without also vetoing the said item (Bolinao Electronics
Corporation v. Valencia, 11 SCRA 486 [1964]).
4. Veto of provision on prior approval of Congress for purchase of military equipment.
In the appropriation for the modernization of the AFP, the President vetoed the underlined proviso of Special
Provision No. 2 on the "Use of Fund," which requires the prior approval of Congress for the release of the
corresponding modernization funds, as well as the entire Special Provisions
No. 3 on the "Specific Prohibition":
2. Use of the Fund. Of the amount herein appropriated, priority shall be given for the acquisition of
AFP assets necessary for protecting marine, mineral, forest and other resources within Philippine

territorial borders and its economic zone, detection, prevention or deterrence of air or surface
intrusions and to support diplomatic moves aimed at preserving national dignity, sovereignty and
patrimony: PROVIDED, That the said modernization fund shall not be released until a Table of
Organization and Equipment for FY 1994-2000 is submitted to and approved by Congress.
3. Specific Prohibition. The said Modernization Fund shall not be used for payment of six (6)
additional S-211 Trainer planes, 18 SF-260 Trainer planes and 150 armored personnel carriers (GAA
of 1994, p. 747).
As reason for the veto, the President stated that the said condition and prohibition violate the Constitutional
mandate of non-impairment of contractual obligations, and if allowed, "shall effectively alter the original intent of
the AFP Modernization Fund to cover all military equipment deemed necessary to modernize the Armed Forces of
the Philippines" (Veto Message, p. 12).
Petitioners claim that Special Provision No. 2 on the "Use of Fund" and Special Provision No. 3 are conditions or
limitations related to the item on the AFP modernization plan.
The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP modernization program that the
President must submit all purchases of military equipment to Congress for its approval, is an exercise of the
"congressional or legislative veto." By way of definition, a congressional veto is a means whereby the legislature
can block or modify administrative action taken under a statute. It is a form of legislative control in the
implementation of particular executive actions. The form may be either negative, that is requiring disapproval of
the executive action, or affirmative, requiring approval of the executive action. This device represents a significant
attempt by Congress to move from oversight of the executive to shared administration (Dixon, The Congressional
Veto and Separation of Powers: The Executive on a Leash,
56 North Carolina Law Review, 423 [1978]).

A congressional veto is subject to serious questions involving the principle of separation of powers.
However the case at bench is not the proper occasion to resolve the issues of the validity of the legislative veto as
provided in Special Provisions Nos. 2 and 3 because the issues at hand can be disposed of on other grounds. Any
provision blocking an administrative action in implementing a law or requiring legislative approval of executive
acts must be incorporated in a separate and substantive bill. Therefore, being "inappropriate" provisions, Special
Provisions Nos. 2 and 3 were properly vetoed.
As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: "What Congress cannot do directly
by law it cannot do indirectly by attaching conditions to the exercise of that power (of the President as
Commander-in-Chief) through provisions in the appropriation law."
Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Funds for payment of the trainer
planes and armored personnel carriers, which have been contracted for by the AFP, is violative of the
Constitutional prohibition on the passage of laws that impair the obligation of contracts (Art. III, Sec. 10), more so,
contracts entered into by the Government itself.
The veto of said special provision is therefore valid.
5. Veto of provision on use of savings to augment AFP pension funds.
In the appropriation for the AFP Pension and Gratuity Fund, the President vetoed the new provision authorizing the
Chief of Staff to use savings in the AFP to augment pension and gratuity funds. The vetoed provision reads:
2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the approval of the Secretary of
National Defense, to use savings in the appropriations provided herein to augment the pension fund
being managed by the AFP Retirement and Separation Benefits System as provided under Sections

2(a) and 3 of P.D. No. 361 (GAA of 1994,

p. 746).
According to the President, the grant of retirement and separation benefits should be covered by direct
appropriations specifically approved for the purpose pursuant to Section 29(1) of Article VI of the Constitution.
Moreover, he stated that the authority to use savings is lodged in the officials enumerated in Section 25(5) of
Article VI of the Constitution (Veto Message, pp. 7-8).
Petitioners claim that the Special Provision on AFP Pension and Gratuity Fund is a condition or limitation which is
so intertwined with the item of appropriation that it could not be separated therefrom.
The Special Provision, which allows the Chief of Staff to use savings to augment the pension fund for the AFP
being managed by the AFP Retirement and Separation Benefits System is violative of Sections 25(5) and 29(1) of
the Article VI of the Constitution.
Under Section 25(5), no law shall be passed authorizing any transfer of appropriations, and under Section 29(1), no
money shall be paid out of
the Treasury except in pursuance of an appropriation made by law. While Section 25(5) allows as an exception the
realignment of savings to augment items in the general appropriations law for the executive branch, such right must
and can be exercised only by the President pursuant to a specific law.
6. Condition on the deactivation of the CAFGU's.
Congress appropriated compensation for the CAFGU's, including the payment of separation benefits but it added
the following Special Provision:

1. CAFGU Compensation and Separation Benefit. The appropriation authorized herein shall be used
for the compensation of CAFGU's including the payment of their separation benefit not exceeding one
(1) year subsistence allowance for the 11,000 members who will be deactivated in 1994. The Chief of
Staff, AFP, shall, subject to the approval of the Secretary of National Defense, promulgate policies and
procedures for the payment of separation benefit (GAA of 1994, p. 740).
The President declared in his Veto Message that the implementation of this Special Provision to the item on the
CAFGU's shall be subject to prior Presidential approval pursuant to P.D. No. 1597 and R.A.. No. 6758. He gave the
following reasons for imposing the condition:
I am well cognizant of the laudable intention of Congress in proposing the amendment of Special
Provision No. 1 of the CAFGU. However, it is premature at this point in time of our peace process to
earmark and declare through special provision the actual number of CAFGU members to be
deactivated in CY 1994. I understand that the number to be deactivated would largely depend on the
result or degree of success of the on-going peace initiatives which are not yet precisely determinable
today. I have desisted, therefore, to directly veto said provisions because this would mean the loss of
the entire special provision to the prejudice of its beneficient provisions. I therefore declare that the
actual implementation of this special provision shall be subject to prior Presidential approval pursuant
to the provisions of P.D. No. 1597 and
R.A. No. 6758 (Veto Message, p. 13).
Petitioners claim that the Congress has required the deactivation of the CAFGU's when it appropriated the money
for payment of the separation pay of the members of thereof. The President, however, directed that the deactivation
should be done in accordance to his timetable, taking into consideration the peace and order situation in the
affected localities.

Petitioners complain that the directive of the President was tantamount to an administrative embargo of the
congressional will to implement the Constitution's command to dissolve the CAFGU's (Rollo, G.R. No. 113174,
p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President cannot impair or withhold expenditures
authorized and appropriated by Congress when neither the Appropriations Act nor other legislation authorize such
impounding (Rollo, G.R. No. 113888, pp. 15-16).
The Solicitor General contends that it is the President, as Commander-in-Chief of the Armed Forces of the
Philippines, who should determine when the services of the CAFGU's are no longer needed (Rollo, G.R. No.
113888,
pp. 92-95.).
This is the first case before this Court where the power of the President to impound is put in issue. Impoundment
refers to a refusal by the President, for whatever reason, to spend funds made available by Congress. It is the
failure to spend or obligate budget authority of any type (Notes: Impoundment of Funds, 86 Harvard Law Review
1505 [1973]).
Those who deny to the President the power to impound argue that once Congress has set aside the fund for a
specific purpose in an appropriations act, it becomes mandatory on the part of the President to implement the
project and to spend the money appropriated therefor. The President has no discretion on the matter, for the
Constitution imposes on him the duty to faithfully execute the laws.
In refusing or deferring the implementation of an appropriation item, the President in effect exercises a veto power
that is not expressly granted by the Constitution. As a matter of fact, the Constitution does not say anything about
impounding. The source of the Executive authority must be found elsewhere.

Proponents of impoundment have invoked at least three principal sources of the authority of the President.
Foremost is the authority to impound given to him either expressly or impliedly by Congress. Second is the
executive power drawn from the President's role as Commander-in-Chief. Third is the Faithful Execution Clause
which ironically is the same provision invoked by petitioners herein.
The proponents insist that a faithful execution of the laws requires that the President desist from implementing the
law if doing so would prejudice public interest. An example given is when through efficient and prudent
management of a project, substantial savings are made. In such a case, it is sheer folly to expect the President to
spend the entire amount budgeted in the law (Notes: Presidential Impoundment: Constitutional Theories and
Political Realities, 61 Georgetown Law Journal 1295 [1973]; Notes; Protecting the Fisc: Executive Impoundment
and Congressional Power, 82 Yale Law Journal 1686 [1973).
We do not find anything in the language used in the challenged Special Provision that would imply that Congress
intended to deny to the President the right to defer or reduce the spending, much less to deactivate 11,000 CAFGU
members all at once in 1994. But even if such is the intention, the appropriation law is not the proper vehicle for
such purpose. Such intention must be embodied and manifested in another law considering that it abrades the
powers of the Commander-in-Chief and there are existing laws on the creation of the CAFGU's to be amended.
Again we state: a provision in an appropriations act cannot
be used to repeal or amend other laws, in this case, P.D. No. 1597 and R.A. No. 6758.
7. Condition on the appropriation for the Supreme Court, etc.
(a) In the appropriations for the Supreme Court, Ombudsman, COA, and CHR, the Congress added the following
provisions:
The Judiciary

xxx xxx xxx

Special Provisions
1. Augmentation of any Item in the Court's Appropriations. Any savings in the appropriations for the
Supreme Court and the Lower Courts may be utilized by the Chief Justice of the Supreme Court to
augment any item of the Court's appropriations for (a) printing of decisions and publication of
"Philippine Reports"; (b) Commutable terminal leaves of Justices and other personnel of the Supreme
Court and payment of adjusted pension rates to retired Justices entitled thereto pursuant to
Administrative Matter No. 91-8-225-C.A.; (c) repair, maintenance, improvement and other operating
expenses of the courts' libraries, including purchase of books and periodicals; (d) purchase,
maintenance and improvement of printing equipment; (e) necessary expenses for the employment of
temporary employees, contractual and casual employees, for judicial administration; (f) maintenance
and improvement of the Court's Electronic Data
Processing System; (g) extraordinary expenses of the Chief Justice, attendance in international
conferences and conduct of training programs; (h) commutable transportation and representation
allowances and fringe benefits for Justices, Clerks of Court, Court Administrator, Chiefs of Offices
and other Court personnel in accordance with the rates prescribed by law; and (i) compensation of
attorney-de-officio: PROVIDED, That as mandated by LOI No. 489 any increase in salary and
allowances shall be subject to the usual procedures and policies as provided for under
P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis supplied).
xxx xxx xxx
Commission on Audit

xxx xxx xxx

5. Use of Savings. The Chairman of the Commission on Audit is hereby authorized, subject to
appropriate accounting and auditing rules and regulations, to use savings for the payment of fringe
benefits as may be authorized by law for officials and personnel of the Commission (GAA of 1994, p.
1161; Emphasis supplied).
xxx xxx xxx
Office of the Ombudsman
xxx xxx xxx
6. Augmentation of Items in the appropriation of the Office of the Ombudsman. The Ombudsman is
hereby authorized, subject to appropriate accounting and auditing rules and regulations to augment
items of appropriation in the Office of the Ombudsman from savings in other items of appropriation
actually released, for: (a) printing and/or publication of decisions, resolutions, training and
information materials; (b) repair, maintenance and improvement of OMB Central and Area/Sectoral
facilities; (c) purchase of books, journals, periodicals and equipment;
(d) payment of commutable representation and transportation allowances of officials and employees
who by reason of their positions are entitled thereto and fringe benefits as may be authorized
specifically by law for officials and personnel of OMB pursuant to Section 8 of Article IX-B of the
Constitution; and (e) for other official purposes subject to accounting and auditing rules and
regulations (GAA of 1994, p. 1174; Emphasis supplied).
xxx xxx xxx

Commission on Human Rights

xxx xxx xxx
1. Use of Savings. The Chairman of the Commission on Human Rights (CHR) is hereby authorized,
subject to appropriate accounting and auditing rules and regulations, to augment any item of
appropriation in the office of the CHR from savings in other items of appropriations actually released,
for: (a) printing and/or publication of decisions, resolutions, training materials and educational
publications; (b) repair, maintenance and improvement of Commission's central and regional facilities;
(c) purchase of books, journals, periodicals and equipment, (d) payment of commutable representation
and transportation allowances of officials and employees who by reason of their positions are entitled
thereto and fringe benefits, as may be authorized by law for officials and personnel of CHR, subject to
accounting and auditing rules and regulations (GAA of 1994, p. 1178; Emphasis supplied).
In his Veto Message, the President expressed his approval of the conditions included in the GAA of 1994. He noted
that:
The said condition is consistent with the Constitutional injunction prescribed under Section 8, Article
IX-B of the Constitution which states that "no elective or appointive public officer or employee shall
receive additional, double, or indirect compensation unless specifically authorized by law." I am,
therefore, confident that the heads of the said offices shall maintain fidelity to the law and faithfully
adhere to the well-established principle on compensation standardization (Veto Message, p. 10).
Petitioners claim that the conditions imposed by the President violated the independence and fiscal autonomy of
the Supreme Court, the Ombudsman, the COA and the CHR.

In the first place, the conditions questioned by petitioners were placed in the GAB by Congress itself, not by the
President. The Veto Message merely highlighted the Constitutional mandate that additional or indirect
compensation can only be given pursuant to law.
In the second place, such statements are mere reminders that the disbursements of appropriations must be made in
accordance with law. Such statements may, at worse, be treated as superfluities.
(b) In the appropriation for the COA, the President imposed the condition that the implementation of the budget of
the COA be subject to "the guidelines to be issued by the President."
The provisions subject to said condition reads:
xxx xxx xxx
3. Revolving Fund. The income of the Commission on Audit derived from sources authorized by the
Government Auditing Code of the Philippines (P.D. No. 1445) not exceeding Ten Million Pesos
(P10,000,000) shall be constituted into a revolving fund which shall be used for maintenance,
operating and other incidental expenses to enhance audit services and audit-related activities. The fund
shall be deposited in an authorized government depository ban, and withdrawals therefrom shall be
made in accordance with the procedure prescribed by law and implementing rules and
regulations: PROVIDED, That any interests earned on such deposit shall be remitted at the end of each
quarter to the national Treasury and shall accrue to the General Fund: PROVIDED FURTHER,That
the Commission on Audit shall submit to the Department of Budget and Management a quarterly
report of income and expenditures of said revolving fund (GAA of 1994, pp. 1160-1161).

The President cited the "imperative need to rationalize" the implementation, applicability and operation of use of
income and revolving funds. The Veto Message stated:
. . . I have observed that there are old and long existing special provisions authorizing the use of
income and the creation of revolving funds. As a rule, such authorizations should be discouraged.
However, I take it that these authorizations have legal/statutory basis aside from being already a
vested right to the agencies concerned which should not be jeopardized through the Veto Message.
There is, however, imperative need to rationalize their implementation, applicability and operation.
Thus, in order to substantiate the purpose and intention of said provisions, I hereby declare that the
operationalization of the following provisions during budget implementation shall be subject to
theguidelines to be issued by the President pursuant to Section 35, Chapter 5, Book VI of E.O. No.
292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General Provisions
of this Act (Veto Message, p. 6; Emphasis Supplied.)
(c) In the appropriation for the DPWH, the President imposed the condition that in the implementation of DPWH
projects, the administrative and engineering overhead of 5% and 3% "shall be subject to the necessary
administrative guidelines to be formulated by the Executive pursuant to existing laws." The condition was imposed
because the provision "needs further study" according to the President.
The following provision was made subject to said condition:
9. Engineering and Administrative Overhead. Not more than five percent (5%) of the amount for
infrastructure project released by the Department of Budget and Management shall be deducted by
DPWH for administrative overhead, detailed engineering and construction supervision, testing and
quality control, and the like, thus insuring that at least ninety-five percent (95%) of the released fund
is available for direct implementation of the project. PROVIDED, HOWEVER, That for school

buildings, health centers, day-care centers and barangay halls, the deductible amount shall not exceed
three percent (3%).
Violation of, or non-compliance with, this provision shall subject the government official or employee
concerned to administrative, civil and/or criminal sanction under Sections 43 and 80, Book VI of E.O.
No. 292 (GAA of 1994, p. 786).
(d) In the appropriation for the National Housing Authority (NHA), the President imposed the condition that
allocations for specific projects shall be released and disbursed "in accordance with the housing program of the
government, subject to prior Executive approval."
The provision subject to the said condition reads:
3. Allocations for Specified Projects. The following allocations for the specified projects shall be set
aside for corollary works and used exclusively for the repair, rehabilitation and construction of
buildings, roads, pathwalks, drainage, waterworks systems, facilities and amenities in the
area:PROVIDED, That any road to be constructed or rehabilitated shall conform with the
specifications and standards set by the Department of Public Works and Highways for such kind of
road:PROVIDED, FURTHER, That savings that may be available in the future shall be used for road
repair, rehabilitation and construction:
(1) Maharlika Village Road Not less than P5,000,000
(2) Tenement Housing Project (Taguig) Not less than P3,000,000
(3) Bagong Lipunan Condominium Project (Taguig) Not less than
P2,000,000

4. Allocation of Funds. Out of the amount appropriated for the implementation of various projects in
resettlement areas, Seven Million Five Hundred Thousand Pesos (P7,500,000) shall be allocated to the
Dasmarias Bagong Bayan resettlement area, Eighteen Million Pesos (P18,000,000) to the Carmona
Relocation Center Area (Gen. Mariano Alvarez) and Three Million Pesos (P3,000,000) to the Bulihan
Sites and Services, all of which will be for the cementing of roads in accordance with DPWH
standards.
5. Allocation for Sapang Palay. An allocation of Eight Million Pesos (P8,000,000) shall be set aside
for the asphalting of seven (7) kilometer main road of Sapang Palay, San Jose Del Monte, Bulacan
(GAA of 1994, p. 1216).
The President imposed the conditions: (a) that the "operationalization" of the special provision on revolving funds
of the COA "shall be subject to guidelines to be issued by the President pursuant to Section 35, Chapter 5,
Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General
Provisions of this Act" (Rollo, G.R.
No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision No. 9 of the DPWH on the mandatory
retention of 5% and 3% of the amounts released by said Department "be subject to the necessary administrative
guidelines to be formulated by the Executive pursuant to existing law" (Rollo, G.R. No. 113888; pp. 10, 14-16);
and (c) that the appropriations authorized for the NHA can be released only "in accordance with the housing
program of the government subject to prior Executive approval" (Rollo, G.R. No. 113888, pp. 10-11;
14-16).
The conditions objected to by petitioners are mere reminders that the implementation of the items on which the
said conditions were imposed, should be done in accordance with existing laws, regulations or policies. They did
not add anything to what was already in place at the time of the approval of the GAA of 1994.

There is less basis to complain when the President said that the expenditures shall be subject to guidelines he will
issue. Until the guidelines are issued, it cannot be determined whether they are proper or inappropriate. The
issuance of administrative guidelines on the use of public funds authorized by Congress is simply an exercise by
the President of his constitutional duty to see that the laws are faithfully executed (1987 Constitution, Art. VII, Sec.
17; Planas v. Gil 67 Phil. 62 [1939]). Under the Faithful Execution Clause, the President has the power to take
"necessary and proper steps" to carry into execution the law (Schwartz, On Constitutional Law, p. 147 [1977]).
These steps are the ones to be embodied in the guidelines.
IV
Petitioners chose to avail of the special civil actions but those remedies can be used only when respondents have
acted "without or in excess" of jurisdiction, or "with grave abuse of discretion," (Revised Rules of Court,
Rule 65, Section 2). How can we begrudge the President for vetoing the Special Provision on the appropriation for
debt payment when he merely followed our decision in Gonzales? How can we say that Congress has abused its
discretion when it appropriated a bigger sum for debt payment than the amount appropriated for education, when it
merely followed our dictum in Guingona?
Article 8 of the Civil Code of Philippines, provides:
Judicial decisions applying or interpreting the laws or the constitution shall from a part of the legal
system of the Philippines.
The Court's interpretation of the law is part of that law as of the date of its enactment since the court's interpretation
merely establishes the contemporary legislative intent that the construed law purports to carry into effect (People v.
Licera, 65 SCRA 270 [1975]). Decisions of the Supreme Court assume the same authority as statutes (Floresca v.
Philex Mining Corporation, 136 SCRA 141 [1985]).

Even if Guingona and Gonzales are considered hard cases that make bad laws and should be reversed, such
reversal cannot nullify prior acts done in reliance thereof.
WHEREFORE, the petitions are DISMISSED, except with respect to
(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the annulment of the veto of the special provision
on debt service specifying that the fund therein appropriated "shall be used for payment of the principal and
interest of foreign and domestic indebtedness" prohibiting the use of the said funds "to pay for the liabilities of the
Central Bank Board of Liquidators", and (2) G.R. No. 113888 only insofar as it prays for the annulment of the veto
of: (a) the second paragraph of Special Provision No. 2 of the item of appropriation for the Department of Public
Works and Highways (GAA of 1994, pp. 785-786); and (b) Special Provision No. 12 on the purchase of medicines
by the Armed Forces of the Philippines (GAA of 1994, p. 748), which is GRANTED.
SO ORDERED.

G.R. No. L-63915 April 24, 1985

LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS,
in his capacity as Deputy Executive Assistant to the President , MELQUIADES P. DE LA CRUZ, in his
capacity as Director, Malacaang Records Office, and FLORENDO S. PABLO, in his capacity as Director,
Bureau of Printing, respondents.

ESCOLIN, J.:

Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV
of the 1973 Philippine Constitution, 1 as well as the principle that laws to be valid and enforceable must be
published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to
compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various
presidential decrees, letters of instructions, general orders, proclamations, executive orders, letter of
implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298,
303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473,
486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644, 658, 661, 718, 731, 733, 793, 800,
802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246,
1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173,
180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248,
251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293, 297-299, 301-303, 309, 312-315, 325,
327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445, 473,
486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642,
665, 702, 712-713, 726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538,
1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-

1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744, 1746-1751, 1752, 1754, 1762, 17641787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 18311832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870,
1876-1889, 1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 20302044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522,
524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604,
609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107,
120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on the ground that
petitioners have no legal personality or standing to bring the instant petition. The view is submitted that in the
absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged nonpublication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to
institute this mandamus proceeding, they are not being "aggrieved parties" within the meaning of Section 3, Rule
65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an
office, trust, or station, or unlawfully excludes another from the use a rd enjoyment of a right or office
to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary

course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the
facts with certainty and praying that judgment be rendered commanding the defendant, immediately or
at some other specified time, to do the act required to be done to Protect the rights of the petitioner,
and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object
is to compel the performance of a public duty, they need not show any specific interest for their petition to be given
due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this
Court held that while the general rule is that "a writ of mandamus would be granted to a private individual only in
those cases where he has some private or particular interest to be subserved, or some particular right to be
protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively
to apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless,
"when the question is one of public right and the object of the mandamus is to procure the enforcement of a public
duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are
instituted need not show that he has any legal or special interest in the result, it being sufficient to show that he is a
citizen and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the
mandamus proceedings brought to compel the Governor General to call a special election for the position of
municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent
said:
We are therefore of the opinion that the weight of authority supports the proposition that the relator is
a proper party to proceedings of this character when a public right is sought to be enforced. If the

general rule in America were otherwise, we think that it would not be applicable to the case at bar for
the reason 'that it is always dangerous to apply a general rule to a particular case without keeping in
mind the reason for the rule, because, if under the particular circumstances the reason for the rule does
not exist, the rule itself is not applicable and reliance upon the rule may well lead to error'
No reason exists in the case at bar for applying the general rule insisted upon by counsel for the
respondent. The circumstances which surround this case are different from those in the United States,
inasmuch as if the relator is not a proper party to these proceedings no other person could be, as we
have seen that it is not the duty of the law officer of the Government to appear and represent the
people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply
squarely to the present petition. Clearly, the right sought to be enforced by petitioners herein is a public right
recognized by no less than the fundamental law of the land. If petitioners were not allowed to institute this
proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the
Solicitor General, the government officer generally empowered to represent the people, has entered his appearance
for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the
effectivity of laws where the laws themselves provide for their own effectivity dates. It is thus submitted that since
the presidential issuances in question contain special provisions as to the date they are to take effect, publication in
the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil
Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the
Official Gazette, unless it is otherwise provided, ...

The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of
decisions, 4 this Court has ruled that publication in the Official Gazette is necessary in those cases where the
legislation itself does not provide for its effectivity date-for then the date of publication is material for determining
its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for
the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact
of publication. Considered in the light of other statutes applicable to the issue at hand, the conclusion is easily
reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even if the law
itself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and
resolutions of a public nature of the, Congress of the Philippines; [2] all executive and administrative
orders and proclamations, except such as have no general applicability; [3] decisions or abstracts of
decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts of
sufficient importance to be so published; [4] such documents or classes of documents as may be
required so to be published by law; and [5] such documents or classes of documents as the President
of the Philippines shall determine from time to time to have general applicability and legal effect, or
which he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate notice of the various laws
which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no
basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish
or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a
constructive one.

Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital
significance that at this time when the people have bestowed upon the President a power heretofore enjoyed solely
by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in the
Batasan Pambansaand for the diligent ones, ready access to the legislative recordsno such publicity
accompanies the law-making process of the President. Thus, without publication, the people have no means of
knowing what presidential decrees have actually been promulgated, much less a definite way of informing
themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la
denominacion generica de leyes, se comprenden tambien los reglamentos, Reales decretos, Instrucciones,
Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official
Gazette ... ." The word "shall" used therein imposes upon respondent officials an imperative duty. That duty must
be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given
substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing,
to our mind, leaves respondents with no discretion whatsoever as to what must be included or excluded from such
publication.
The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law.
Obviously, presidential decrees that provide for fines, forfeitures or penalties for their violation or otherwise
impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential
issuances which apply only to particular persons or class of persons such as administrative and executive orders
need not be published on the assumption that they have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability"
is a requirement of due process. It is a rule of law that before a person may be bound by law, he must first be
officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7:

In a time of proliferating decrees, orders and letters of instructions which all form part of the law of
the land, the requirement of due process and the Rule of Law demand that the Official Gazette as the
official government repository promulgate and publish the texts of all such decrees, orders and
instructions so that the people may know where to obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have not been published,
shall have no force and effect. Some members of the Court, quite apprehensive about the possible unsettling effect
this decision might have on acts done in reliance of the validity of those presidential decrees which were published
only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity
apply to P.D.s which had been enforced or implemented prior to their publication. The answer is all too familiar. In
similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County
Drainage District vs. Baxter Bank 8 to wit:
The courts below have proceeded on the theory that the Act of Congress, having been found to be
unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties,
and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442;
Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad
statements as to the effect of a determination of unconstitutionality must be taken with qualifications.
The actual existence of a statute, prior to such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various
aspects-with respect to particular conduct, private and official. Questions of rights claimed to have
become vested, of status, of prior determinations deemed to have finality and acted upon accordingly,
of public policy in the light of the nature both of the statute and of its previous application, demand
examination. These questions are among the most difficult of those which have engaged the attention

of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement
of a principle of absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the
Moratorium Law, albeit said right had accrued in his favor before said law was declared unconstitutional by this
Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette
is "an operative fact which may have consequences which cannot be justly ignored. The past cannot always be
erased by a new judicial declaration ... that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by
petitioners to be published in the Official Gazette, only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278,
and 1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of these PDs
can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed
that none of these unpublished PDs has ever been implemented or enforced by the government. In Pesigan vs.
Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to apprise the public of
the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The
cogency of this holding is apparently recognized by respondent officials considering the manifestation in their
comment that "the government, as a matter of policy, refrains from prosecuting violations of criminal laws until the
same shall have been published in the Official Gazette or in some other publication, even though some criminal
laws provide that they shall take effect immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential
issuances which are of general application, and unless so published, they shall have no binding force and effect.

SO ORDERED.

G.R. No. 105364*

June 28, 2001

PHILIPPINE VETERANS BANK EMPLOYEES UNION-N.U.B.E. and PERFECTO V.

FERNANDEZ, petitioners,
vs.
HONORABLE BENJAMIN VEGA, Presiding Judge of Branch 39 of the REGIONAL TRIAL COURT of
Manila, the CENTRAL BANK OF THE PHILIPPINES and THE LIQUIDATOR OF THE PHILIPPINE
VETERANS BANK,respondents
KAPUNAN, J.:
May a liquidation court continue with liquidation proceedings of the Philippine Veterans Bank (PVB) when
Congress had mandated its rehabilitation and reopening?
This is the sole issue raised in the instant Petition for Prohibition with Petition for Preliminary Injunction and
application for Ex Parte Temporary Restraining Order.

The antecedent facts of the case are as follows:

Sometime in 1985, the Central Bank of the Philippines (Central Bank, for brevity) filed with Branch 39 of the
Regional Trial Court of Manila a Petition for Assistance in the Liquidation of the Philippine Veterans Bank, the
same docketed as Case No. SP-32311. Thereafter, the Philipppine Veterans Bank Employees Union-N.U.B.E.,
herein petitioner, represented by petitioner Perfecto V. Fernandez, filed claims for accrued and unpaid employee
wages and benefits with said court in SP-32311.1
After lengthy proceedings, partial payment of the sums due to the employees were made. However, due to the
piecemeal hearings on the benefits, many remain unpaid.2
On March 8, 1991, petitioners moved to disqualify the respondent judge from hearing the above case on grounds of
bias and hostility towards petitioners.3
On January 2, 1992, the Congress enacted Republic Act No. 7169 providing for the rehabilitation of the Philippine
Veterans Bank.4
Thereafter, petitioners filed with the labor tribunals their residual claims for benefits and for reinstatement upon
reopening of the bank.5
Sometime in May 1992, the Central Bank issued a certificate of authority allowing the PVB to reopen.6
Despite the legislative mandate for rehabilitation and reopening of PVB, respondent judge continued with the
liquidation proceedings of the bank. Moreover, petitioners learned that respondents were set to order the payment
and release of employee benefits upon motion of another lawyer, while petitioners claims have been frozen to their
prejudice.

Hence, the instant petition.

Petitioners argue that with the passage of R.A. 7169, the liquidation court became functus officio, and no longer
had the authority to continue with liquidation proceedings.
In a Resolution, dated June 8, 1992, the Supreme Court resolved to issue a Temporary Restraining Order enjoining
the trial court from further proceeding with the case.
On June 22, 1992, VOP Security & Detective Agency (VOPSDA) and its 162 security guards filed a Motion for
Intervention with prayer that they be excluded from the operation of the Temporary Restraining Order issued by the
Court. They alleged that they had filed a motion before Branch 39 of the RTC of Manila, in SP-No. 32311, praying
that said court order PVB to pay their backwages and salary differentials by authority of R.A. No 6727, Wage
Orders No. NCR-01 and NCR-01-Ad and Wage Orders No. NCR-02 and NCR-02-A; and, that said court, in an
Order dated June 5, 1992, approved therein movants case and directed the bank liquidator or PVB itself to pay the
backwages and differentials in accordance with the computation incorporated in the order. Said intervenors
likewise manifested that there was an error in the computation of the monetary benefits due them.
On August 18, 1992, petitioners, pursuant to the Resolution of this Court, dated July 6, 1992, filed their Comment
opposing the Motion for Leave to File Intervention and for exclusion from the operation of the T.R.O. on the
grounds that the movants have no legal interest in the subject matter of the pending action; that allowing
intervention would only cause delay in the proceedings; and that the motion to exclude the movants from the
T.R.O. is without legal basis and would render moot the relief sought in the petition.
On September 3, 1992, the PVB filed a Petition-In-Intervention praying for the issuance of the writs of certiorari
and prohibition under Rule 65 of the Rules of Court in connection with the issuance by respondent judge of several

orders involving acts of liquidation of PVB even after the effectivity of R.A. No. 7169. PVB further alleges that
respondent judge clearly acted in excess of or without jurisdiction when he issued the questioned orders.
We find for the petitioners.
Republic Act No. 7169 entitled "An Act To Rehabilitate The Philippine Veterans Bank Created Under Republic Act
No. 3518, Providing The Mechanisms Therefor, And For Other Purposes", which was signed into law by President
Corazon C. Aquino on January 2, 1992 and which was published in the Official Gazette on February 24, 1992,
provides in part for the reopening of the Philippine Veterans Bank together with all its branches within the period
of three (3) years from the date of the reopening of the head office.7 The law likewise provides for the creation of a
rehabilitation committee in order to facilitate the implementation of the provisions of the same. 8
Pursuant to said R.A. No. 7169, the Rehabilitation Committee submitted the proposed Rehabilitation Plan of the
PVB to the Monetary Board for its approval. Meanwhile, PVB filed a Motion to Terminate Liquidation of
Philippine Veterans Bank dated March 13, 1992 with the respondent judge praying that the liquidation proceedings
be immediately terminated in view of the passage of R.A. No. 7169.
On April 10, 1992, the Monetary Board issued Monetary Board Resolution No. 348 which approved the
Rehabilitation Plan submitted by the Rehabilitaion Committee.
Thereafter, the Monetary Board issued a Certificate of Authority allowing PVB to reopen.
On June 3, 1992, the liquidator filed A Motion for the Termination of the Liquidation Proceedings of the Philippine
Veterans Bank with the respondent judge.
As stated above, the Court, in a Resolution dated June 8, 1992, issued a temporary restraining order in the instant
case restraining respondent judge from further proceeding with the liquidation of PVB.

On August 3, 1992, the Philippine Veterans Bank opened its doors to the public and started regular banking
operations.
Clearly, the enactment of Republic Act No. 7169, as well as the subsequent developments has rendered the
liquidation court functus officio. Consequently, respondent judge has been stripped of the authority to issue orders
involving acts of liquidation.
Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors.9 It is the winding up
of a corporation so that assets are distributed to those entitled to receive them. It is the process of reducing assets to
cash, discharging liabilities and dividing surplus or loss.
On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization. Rehabilitation
contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its
former position of successful operation and solvency.10
It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of
rehabilitation, such that both cannot be undertaken at the same time. To allow the liquidation proceedings to
continue would seriously hinder the rehabilitation of the subject bank.
Anent the claim of respondents Central Bank and Liquidator of PVB that R.A. No. 7169 became effective only on
March 10, 1992 or fifteen (15) days after its publication in the Official Gazette; and, the contention of intervenors
VOP Security, et. al. that the effectivity of said law is conditioned on the approval of a rehabilitation plan by the
Monetary Board, among others, the Court is of the view that both contentions are bereft of merit.

While as a rule, laws take effect after fifteen (15) days following the completion of their publication in the Official
Gazette or in a newspaper of general circulation in the Philippines, the legislature has the authority to provide for
exceptions, as indicated in the clause "unless otherwise provided."
In the case at bar, Section 10 of R.A. No. 7169 provides:
Sec. 10. Effectivity. - This Act shall take effect upon its approval.
Hence, it is clear that the legislature intended to make the law effective immediately upon its approval. It is
undisputed that R.A. No. 7169 was signed into law by President Corazon C. Aquino on January 2, 1992. Therefore,
said law became effective on said date.
Assuming for the sake of argument that publication is necessary for the effectivity of R.A. No. 7169, then it
became legally effective on February 24, 1992, the date when the same was published in the Official Gazette, and
not on March 10, 1992, as erroneously claimed by respondents Central Bank and Liquidator.
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and GRANTED.
Respondent Judge is hereby PERMANENTLY ENJOINED from further proceeding with Civil Case No. SP32311.
SO ORDERED.

G.R. No. 169777*

April 20, 2006

SENATE OF THE PHILIPPINES, represented by FRANKLIN M. DRILON, in his capacity as Senate

President, JUAN M. FLAVIER, in his capacity as Senate President Pro Tempore, FRANCIS N.
PANGILINAN, in his capacity as Majority Leader, AQUILINO Q. PIMENTEL, JR., in his capacity as
Minority Leader, SENATORS RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY
EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE ENRILE, RICHARD J.
GORDON, PANFILO M. LACSON, ALFREDO S.LIM, M. A. MADRIGAL, SERGIO OSMENA III,
RALPH G. RECTO, and MAR ROXAS, Petitioners,
vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria
Macapagal-Arroyo, and anyone acting in his stead and in behalf of the President of the
Philippines,Respondents.
x-------------------------x

G.R. No. 169659

April 20, 2006

BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep. SATUR OCAMPO, Rep. CRISPIN
BELTRAN, Rep. RAFAEL MARIANO, Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL
VIRADOR, COURAGE represented by FERDINAND GAITE, and COUNSELS FOR THE DEFENSE OF
LIBERTIES (CODAL) represented by ATTY. REMEDIOS BALBIN, Petitioners,
vs.
EDUARDO ERMITA, in his capacity as Executive Secretary and alter-ego of President Gloria MacapagalArroyo, Respondent.
x-------------------------x
G.R. No. 169660

April 20, 2006

FRANCISCO I. CHAVEZ, Petitioner,

vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his capacity as
Secretary of Defense, and GENEROSO S. SENGA, in his capacity as AFP Chief of Staff, Respondents.
x-------------------------x
G.R. No. 169667

April 20, 2006

ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner,

vs.
HON. EDUARDO R. ERMITA, in his capacity as Executive Secretary, Respondent.

x-------------------------x
G.R. No. 169834

April 20, 2006

PDP- LABAN, Petitioner,

vs.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
x-------------------------x
G.R. No. 171246

April 20, 2006

JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R. RIVERA, JOSE AMOR

AMORANDO, ALICIA A. RISOS-VIDAL, FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B.
JOVY C. BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the INTEGRATED BAR
FOR THE PHILIPPINES,Petitioners,
vs.
HON. EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION
CARPIO MORALES, J.:
A transparent government is one of the hallmarks of a truly republican state. Even in the early history of republican
thought, however, it has been recognized that the head of government may keep certain information confidential in
pursuit of the public interest. Explaining the reason for vesting executive power in only one magistrate, a
distinguished delegate to the U.S. Constitutional Convention said: "Decision, activity, secrecy, and dispatch will

generally characterize the proceedings of one man, in a much more eminent degree than the proceedings of any
greater number; and in proportion as the number is increased, these qualities will be diminished."1
History has been witness, however, to the fact that the power to withhold information lends itself to abuse, hence,
the necessity to guard it zealously.
The present consolidated petitions for certiorari and prohibition proffer that the President has abused such power
by issuing Executive Order No. 464 (E.O. 464) last September 28, 2005. They thus pray for its declaration as null
and void for being unconstitutional.
In resolving the controversy, this Court shall proceed with the recognition that the issuance under review has come
from a co-equal branch of government, which thus entitles it to a strong presumption of constitutionality. Once the
challenged order is found to be indeed violative of the Constitution, it is duty-bound to declare it so. For the
Constitution, being the highest expression of the sovereign will of the Filipino people, must prevail over any
issuance of the government that contravenes its mandates.
In the exercise of its legislative power, the Senate of the Philippines, through its various Senate Committees,
conducts inquiries or investigations in aid of legislation which call for, inter alia, the attendance of officials and
employees of the executive department, bureaus, and offices including those employed in Government Owned and
Controlled Corporations, the Armed Forces of the Philippines (AFP), and the Philippine National Police (PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole issued invitations to various officials of the
Executive Department for them to appear on September 29, 2005 as resource speakers in a public hearing on the
railway project of the North Luzon Railways Corporation with the China National Machinery and Equipment
Group (hereinafter North Rail Project). The public hearing was sparked by a privilege speech of Senator Juan

Ponce Enrile urging the Senate to investigate the alleged overpricing and other unlawful provisions of the contract
covering the North Rail Project.
The Senate Committee on National Defense and Security likewise issued invitations2 dated September 22, 2005 to
the following officials of the AFP: the Commanding General of the Philippine Army, Lt. Gen. Hermogenes C.
Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga; Deputy Chief of Staff for Intelligence of
the AFP Rear Admiral Tirso R. Danga; Chief of the Intelligence Service of the AFP Brig. Gen. Marlu Q. Quevedo;
Assistant Superintendent of the Philippine Military Academy (PMA) Brig. Gen. Francisco V. Gudani; and Assistant
Commandant, Corps of Cadets of the PMA, Col. Alexander F. Balutan, for them to attend as resource persons in a
public hearing scheduled on September 28, 2005 on the following: (1) Privilege Speech of Senator Aquilino Q.
Pimentel Jr., delivered on June 6, 2005 entitled "Bunye has Provided Smoking Gun or has Opened a Can of Worms
that Show Massive Electoral Fraud in the Presidential Election of May 2005"; (2) Privilege Speech of Senator
Jinggoy E. Estrada delivered on July 26, 2005 entitled "The Philippines as the Wire-Tapping Capital of the World";
(3) Privilege Speech of Senator Rodolfo Biazon delivered on August 1, 2005 entitled "Clear and Present Danger";
(4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo Madrigal Resolution Directing the
Committee on National Defense and Security to Conduct an Inquiry, in Aid of Legislation, and in the National
Interest, on the Role of the Military in the So-called "Gloriagate Scandal"; and (5) Senate Resolution No. 295 filed
by Senator Biazon Resolution Directing the Committee on National Defense and Security to Conduct an Inquiry,
in Aid of Legislation, on the Wire-Tapping of the President of the Philippines.
Also invited to the above-said hearing scheduled on September 28 2005 was the AFP Chief of Staff, General
Generoso S. Senga who, by letter3 dated September 27, 2005, requested for its postponement "due to a pressing
operational situation that demands [his utmost personal attention" while "some of the invited AFP officers are
currently attending to other urgent operational matters."

On September 28, 2005, Senate President Franklin M. Drilon received from Executive Secretary Eduardo R.
Ermita a letter4 dated September 27, 2005 "respectfully request[ing] for the postponement of the hearing [regarding
the NorthRail project] to which various officials of the Executive Department have been invited" in order to "afford
said officials ample time and opportunity to study and prepare for the various issues so that they may better
enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5 Executive Secretary Ermita that the Senators "are unable to accede to [his
request]" as it "was sent belatedly" and "[a]ll preparations and arrangements as well as notices to all resource
persons were completed [the previous] week."
Senate President Drilon likewise received on September 28, 2005 a letter6 from the President of the North Luzon
Railways Corporation Jose L. Cortes, Jr. requesting that the hearing on the NorthRail project be postponed or
cancelled until a copy of the report of the UP Law Center on the contract agreements relative to the project had
been secured.
On September 28, 2005, the President issued E.O. 464, "Ensuring Observance of the Principle of Separation of
Powers, Adherence to the Rule on Executive Privilege and Respect for the Rights of Public Officials Appearing in
Legislative Inquiries in Aid of Legislation Under the Constitution, and For Other Purposes,"7 which, pursuant to
Section 6 thereof, took effect immediately. The salient provisions of the Order are as follows:
SECTION 1. Appearance by Heads of Departments Before Congress. In accordance with Article VI, Section 22
of the Constitution and to implement the Constitutional provisions on the separation of powers between co-equal
branches of the government, all heads of departments of the Executive Branch of the government shall secure the
consent of the President prior to appearing before either House of Congress.

When the security of the State or the public interest so requires and the President so states in writing, the
appearance shall only be conducted in executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege.
(a) Nature and Scope. - The rule of confidentiality based on executive privilege is fundamental to the operation of
government and rooted in the separation of powers under the Constitution (Almonte vs. Vasquez, G.R. No. 95367,
23 May 1995). Further, Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials
and Employees provides that Public Officials and Employees shall not use or divulge confidential or classified
information officially known to them by reason of their office and not made available to the public to prejudice the
public interest.
Executive privilege covers all confidential or classified information between the President and the public officers
covered by this executive order, including:
Conversations and correspondence between the President and the public official covered by this executive order
(Almonte vs. Vasquez G.R. No. 95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No. 133250, 9 July
2002);
Military, diplomatic and other national security matters which in the interest of national security should not be
divulged (Almonte vs. Vasquez, G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good
Government, G.R. No. 130716, 9 December 1998).
Information between inter-government agencies prior to the conclusion of treaties and executive agreements
(Chavez v. Presidential Commission on Good Government, G.R. No. 130716, 9 December 1998);

Discussion in close-door Cabinet meetings (Chavez v. Presidential Commission on Good Government, G.R. No.
130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public Estates Authority, G.R. No. 133250, 9 July
2002).
(b) Who are covered. The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the department heads are covered by the
executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such other officers who in the judgment of
the Chief of Staff are covered by the executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or higher and such other officers who
in the judgment of the Chief of the PNP are covered by the executive privilege;
Senior national security officials who in the judgment of the National Security Adviser are covered by the
executive privilege; and
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. All public officials enumerated in Section 2
(b) hereof shall secure prior consent of the President prior to appearing before either House of Congress to ensure
the observance of the principle of separation of powers, adherence to the rule on executive privilege and respect for
the rights of public officials appearing in inquiries in aid of legislation. (Emphasis and underscoring supplied)

Also on September 28, 2005, Senate President Drilon received from Executive Secretary Ermita a copy of E.O.
464, and another letter8 informing him "that officials of the Executive Department invited to appear at the meeting
[regarding the NorthRail project] will not be able to attend the same without the consent of the President, pursuant
to [E.O. 464]" and that "said officials have not secured the required consent from the President." On even date
which was also the scheduled date of the hearing on the alleged wiretapping, Gen. Senga sent a letter9 to Senator
Biazon, Chairperson of the Committee on National Defense and Security, informing him "that per instruction of
[President Arroyo], thru the Secretary of National Defense, no officer of the [AFP] is authorized to appear before
any Senate or Congressional hearings without seeking a written approval from the President" and "that no approval
has been granted by the President to any AFP officer to appear before the public hearing of the Senate Committee
on National Defense and Security scheduled [on] 28 September 2005."
Despite the communications received from Executive Secretary Ermita and Gen. Senga, the investigation
scheduled by the Committee on National Defense and Security pushed through, with only Col. Balutan and Brig.
Gen. Gudani among all the AFP officials invited attending.
For defying President Arroyos order barring military personnel from testifying before legislative inquiries without
her approval, Brig. Gen. Gudani and Col. Balutan were relieved from their military posts and were made to face
court martial proceedings.
As to the NorthRail project hearing scheduled on September 29, 2005, Executive Secretary Ermita, citing E.O. 464,
sent letter of regrets, in response to the invitations sent to the following government officials: Light Railway
Transit Authority Administrator Melquiades Robles, Metro Rail Transit Authority Administrator Roberto
Lastimoso, Department of Justice (DOJ) Chief State Counsel Ricardo V. Perez, then Presidential Legal Counsel
Merceditas Gutierrez, Department of Transportation and Communication (DOTC) Undersecretary Guiling
Mamonding, DOTC Secretary Leandro Mendoza, Philippine National Railways General Manager Jose Serase II,

Monetary Board Member Juanita Amatong, Bases Conversion Development Authority Chairperson Gen. Narciso
Abaya and Secretary Romulo L. Neri.10 NorthRail President Cortes sent personal regrets likewise citing E.O. 464.11
On October 3, 2005, three petitions, docketed as G.R. Nos. 169659, 169660, and 169667, for certiorari and
prohibition, were filed before this Court challenging the constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of Representatives Members Satur Ocampo, Crispin
Beltran, Rafael Mariano, Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of government
employees, and Counsels for the Defense of Liberties (CODAL), a group of lawyers dedicated to the promotion of
justice, democracy and peace, all claiming to have standing to file the suit because of the transcendental
importance of the issues they posed, pray, in their petition that E.O. 464 be declared null and void for being
unconstitutional; that respondent Executive Secretary Ermita, in his capacity as Executive Secretary and alter-ego
of President Arroyo, be prohibited from imposing, and threatening to impose sanctions on officials who appear
before Congress due to congressional summons. Additionally, petitioners claim that E.O. 464 infringes on their
rights and impedes them from fulfilling their respective obligations. Thus, Bayan Muna alleges that E.O. 464
infringes on its right as a political party entitled to participate in governance; Satur Ocampo, et al. allege that E.O.
464 infringes on their rights and duties as members of Congress to conduct investigation in aid of legislation and
conduct oversight functions in the implementation of laws; Courage alleges that the tenure of its members in public
office is predicated on, and threatened by, their submission to the requirements of E.O. 464 should they be
summoned by Congress; and CODAL alleges that its members have a sworn duty to uphold the rule of law, and
their rights to information and to transparent governance are threatened by the imposition of E.O. 464.
In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his constitutional rights as a citizen, taxpayer and
law practitioner, are affected by the enforcement of E.O. 464, prays in his petition that E.O. 464 be declared null
and void for being unconstitutional.

In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG), alleging that as a coalition of 17 legal
resource non-governmental organizations engaged in developmental lawyering and work with the poor and
marginalized sectors in different parts of the country, and as an organization of citizens of the Philippines and a part
of the general public, it has legal standing to institute the petition to enforce its constitutional right to information
on matters of public concern, a right which was denied to the public by E.O. 464,13 prays, that said order be
declared null and void for being unconstitutional and that respondent Executive Secretary Ermita be ordered to
cease from implementing it.
On October 11, 2005, Petitioner Senate of the Philippines, alleging that it has a vital interest in the resolution of the
issue of the validity of E.O. 464 for it stands to suffer imminent and material injury, as it has already sustained the
same with its continued enforcement since it directly interferes with and impedes the valid exercise of the Senates
powers and functions and conceals information of great public interest and concern, filed its petition for certiorari
and prohibition, docketed as G.R. No. 169777 and prays that E.O. 464 be declared unconstitutional.
On October 14, 2005, PDP-Laban, a registered political party with members duly elected into the Philippine Senate
and House of Representatives, filed a similar petition for certiorari and prohibition, docketed as G.R. No. 169834,
alleging that it is affected by the challenged E.O. 464 because it hampers its legislative agenda to be implemented
through its members in Congress, particularly in the conduct of inquiries in aid of legislation and transcendental
issues need to be resolved to avert a constitutional crisis between the executive and legislative branches of the
government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated his invitation to Gen. Senga for him and
other military officers to attend the hearing on the alleged wiretapping scheduled on February 10, 2005. Gen.
Senga replied, however, by letter15 dated February 8, 2006, that "[p]ursuant to Executive Order No. 464, th[e]
Headquarters requested for a clearance from the President to allow [them] to appear before the public hearing" and

that "they will attend once [their] request is approved by the President." As none of those invited appeared, the
hearing on February 10, 2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on Agriculture and Food and the Blue Ribbon
Committee on the alleged mismanagement and use of the fertilizer fund under the Ginintuang Masaganang Ani
program of the Department of Agriculture (DA), several Cabinet officials were invited to the hearings scheduled on
October 5 and 26, November 24 and December 12, 2005 but most of them failed to attend, DA Undersecretary
Belinda Gonzales, DA Assistant Secretary Felix Jose Montes, Fertilizer and Pesticide Authority Executive Director
Norlito R. Gicana,17 and those from the Department of Budget and Management18 having invoked E.O. 464.
In the budget hearings set by the Senate on February 8 and 13, 2006, Press Secretary and Presidential
Spokesperson Ignacio R. Bunye,19 DOJ Secretary Raul M. Gonzalez20 and Department of Interior and Local
Government Undersecretary Marius P. Corpus21 communicated their inability to attend due to lack of appropriate
clearance from the President pursuant to E.O. 464. During the February 13, 2005 budget hearing, however,
Secretary Bunye was allowed to attend by Executive Secretary Ermita.
On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members of the Board of Governors of the
Integrated Bar of the Philippines, as taxpayers, and the Integrated Bar of the Philippines as the official organization
of all Philippine lawyers, all invoking their constitutional right to be informed on matters of public interest, filed
their petition for certiorari and prohibition, docketed as G.R. No. 171246, and pray that E.O. 464 be declared null
and void.
All the petitions pray for the issuance of a Temporary Restraining Order enjoining respondents from implementing,
enforcing, and observing E.O. 464.

In the oral arguments on the petitions conducted on February 21, 2006, the following substantive issues were
ventilated: (1) whether respondents committed grave abuse of discretion in implementing E.O. 464 prior to its
publication in the Official Gazette or in a newspaper of general circulation; and (2) whether E.O. 464 violates the
following provisions of the Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec. 1, Art. VI,
Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16. The procedural issue of whether there is an actual
case or controversy that calls for judicial review was not taken up; instead, the parties were instructed to discuss it
in their respective memoranda.
After the conclusion of the oral arguments, the parties were directed to submit their respective memoranda, paying
particular attention to the following propositions: (1) that E.O. 464 is, on its face, unconstitutional; and (2)
assuming that it is not, it is unconstitutional as applied in four instances, namely: (a) the so called Fertilizer scam;
(b) the NorthRail investigation (c) the Wiretapping activity of the ISAFP; and (d) the investigation on the Venable
contract.22
Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their memoranda on March 7, 2006, while those in
G.R. No. 16966725 and G.R. No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in G.R. No.
171246 did not file any memorandum.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for extension to file memorandum27 was
granted, subsequently filed a manifestation28 dated March 14, 2006 that it would no longer file its memorandum in
the interest of having the issues resolved soonest, prompting this Court to issue a Resolution reprimanding them.29
Petitioners submit that E.O. 464 violates the following constitutional provisions:
Art. VI, Sec. 2130

Art. VI, Sec. 2231

Art. VI, Sec. 132
Art. XI, Sec. 133
Art. III, Sec. 734
Art. III, Sec. 435
Art. XIII, Sec. 16 36
Art. II, Sec. 2837
Respondents Executive Secretary Ermita et al., on the other hand, pray in their consolidated memorandum38 on
March 13, 2006 for the dismissal of the petitions for lack of merit.
The Court synthesizes the issues to be resolved as follows:
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;
2. Whether E.O. 464 violates the right of the people to information on matters of public concern; and
3. Whether respondents have committed grave abuse of discretion when they implemented E.O. 464 prior to
its publication in a newspaper of general circulation.
Essential requisites for judicial review

Before proceeding to resolve the issue of the constitutionality of E.O. 464, ascertainment of whether the requisites
for a valid exercise of the Courts power of judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial review is subject to limitations, to wit:
(1) there must be an actual case or controversy calling for the exercise of judicial power; (2) the person challenging
the act must have standing to challenge the validity of the subject act or issuance; otherwise stated, he must have a
personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its
enforcement; (3) the question of constitutionality must be raised at the earliest opportunity; and (4) the issue of
constitutionality must be the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual case or controversy where the
disagreement between the parties lies, discussion of the rest of the requisites shall be omitted.
Standing
Respondents, through the Solicitor General, assert that the allegations in G.R. Nos. 169659, 169660 and 169667
make it clear that they, adverting to the non-appearance of several officials of the executive department in the
investigations called by the different committees of the Senate, were brought to vindicate the constitutional duty of
the Senate or its different committees to conduct inquiry in aid of legislation or in the exercise of its oversight
functions. They maintain that Representatives Ocampo et al. have not shown any specific prerogative, power, and
privilege of the House of Representatives which had been effectively impaired by E.O. 464, there being no mention
of any investigation called by the House of Representatives or any of its committees which was aborted due to the
implementation of E.O. 464.
As for Bayan Munas alleged interest as a party-list representing the marginalized and underrepresented, and that of
the other petitioner groups and individuals who profess to have standing as advocates and defenders of the

Constitution, respondents contend that such interest falls short of that required to confer standing on them as parties
"injured-in-fact."40
Respecting petitioner Chavez, respondents contend that Chavez may not claim an interest as a taxpayer for the
implementation of E.O. 464 does not involve the exercise of taxing or spending power.41
With regard to the petition filed by the Senate, respondents argue that in the absence of a personal or direct injury
by reason of the issuance of E.O. 464, the Senate and its individual members are not the proper parties to assail the
constitutionality of E.O. 464.
Invoking this Courts ruling in National Economic Protectionism Association v. Ongpin42 and Valmonte v.
Philippine Charity Sweepstakes Office,43 respondents assert that to be considered a proper party, one must have a
personal and substantial interest in the case, such that he has sustained or will sustain direct injury due to the
enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not only for intelligent public decision-making
in a democratic system, but more especially for sound legislation45 is not disputed. E.O. 464, however, allegedly
stifles the ability of the members of Congress to access information that is crucial to law-making.46 Verily, the
Senate, including its individual members, has a substantial and direct interest over the outcome of the controversy
and is the proper party to assail the constitutionality of E.O. 464. Indeed, legislators have standing to maintain
inviolate the prerogative, powers and privileges vested by the Constitution in their office and are allowed to sue to
question the validity of any official action which they claim infringes their prerogatives as legislators.47
In the same vein, party-list representatives Satur Ocampo (Bayan Muna), Teodoro Casino (Bayan Muna), Joel
Virador (Bayan Muna), Crispin Beltran (Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are
allowed to sue to question the constitutionality of E.O. 464, the absence of any claim that an investigation called by

the House of Representatives or any of its committees was aborted due to the implementation of E.O. 464
notwithstanding, it being sufficient that a claim is made that E.O. 464 infringes on their constitutional rights and
duties as members of Congress to conduct investigation in aid of legislation and conduct oversight functions in the
implementation of laws.
The national political party, Bayan Muna, likewise meets the standing requirement as it obtained three seats in the
House of Representatives in the 2004 elections and is, therefore, entitled to participate in the legislative process
consonant with the declared policy underlying the party list system of affording citizens belonging to marginalized
and underrepresented sectors, organizations and parties who lack well-defined political constituencies to contribute
to the formulation and enactment of legislation that will benefit the nation.48
As Bayan Muna and Representatives Ocampo et al. have the standing to file their petitions, passing on the standing
of their co-petitioners Courage and Codal is rendered unnecessary.49
In filing their respective petitions, Chavez, the ALG which claims to be an organization of citizens, and the
incumbent members of the IBP Board of Governors and the IBP in behalf of its lawyer members,50 invoke their
constitutional right to information on matters of public concern, asserting that the right to information, curtailed
and violated by E.O. 464, is essential to the effective exercise of other constitutional rights51 and to the
maintenance of the balance of power among the three branches of the government through the principle of checks
and balances.52
It is well-settled that when suing as a citizen, the interest of the petitioner in assailing the constitutionality of laws,
presidential decrees, orders, and other regulations, must be direct and personal. In Franciso v. House of
Representatives,53 this Court held that when the proceeding involves the assertion of a public right, the mere fact
that he is a citizen satisfies the requirement of personal interest.

As for petitioner PDP-Laban, it asseverates that it is clothed with legal standing in view of the transcendental
issues raised in its petition which this Court needs to resolve in order to avert a constitutional crisis. For it to be
accorded standing on the ground of transcendental importance, however, it must establish (1) the character of the
funds (that it is public) or other assets involved in the case, (2) the presence of a clear case of disregard of a
constitutional or statutory prohibition by the public respondent agency or instrumentality of the government, and
(3) the lack of any party with a more direct and specific interest in raising the questions being raised.54 The first and
last determinants not being present as no public funds or assets are involved and petitioners in G.R. Nos. 169777
and 169659 have direct and specific interests in the resolution of the controversy, petitioner PDP-Laban is bereft of
standing to file its petition. Its allegation that E.O. 464 hampers its legislative agenda is vague and uncertain, and at
best is only a "generalized interest" which it shares with the rest of the political parties. Concrete injury, whether
actual or threatened, is that indispensable element of a dispute which serves in part to cast it in a form traditionally
capable of judicial resolution.55 In fine, PDP-Labans alleged interest as a political party does not suffice to clothe it
with legal standing.
Actual Case or Controversy
Petitioners assert that an actual case exists, they citing the absence of the executive officials invited by the Senate
to its hearings after the issuance of E.O. 464, particularly those on the NorthRail project and the wiretapping
controversy.
Respondents counter that there is no case or controversy, there being no showing that President Arroyo has actually
withheld her consent or prohibited the appearance of the invited officials.56 These officials, they claim, merely
communicated to the Senate that they have not yet secured the consent of the President, not that the President
prohibited their attendance.57 Specifically with regard to the AFP officers who did not attend the hearing on
September 28, 2005, respondents claim that the instruction not to attend without the Presidents consent was based
on its role as Commander-in-Chief of the Armed Forces, not on E.O. 464.

Respondents thus conclude that the petitions merely rest on an unfounded apprehension that the President will
abuse its power of preventing the appearance of officials before Congress, and that such apprehension is not
sufficient for challenging the validity of E.O. 464.
The Court finds respondents assertion that the President has not withheld her consent or prohibited the appearance
of the officials concerned immaterial in determining the existence of an actual case or controversy insofar as E.O.
464 is concerned. For E.O. 464 does not require either a deliberate withholding of consent or an express
prohibition issuing from the President in order to bar officials from appearing before Congress.
As the implementation of the challenged order has already resulted in the absence of officials invited to the
hearings of petitioner Senate of the Philippines, it would make no sense to wait for any further event before
considering the present case ripe for adjudication. Indeed, it would be sheer abandonment of duty if this Court
would now refrain from passing on the constitutionality of E.O. 464.
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials before Congress, deprives Congress of the
information in the possession of these officials. To resolve the question of whether such withholding of information
violates the Constitution, consideration of the general power of Congress to obtain information, otherwise known
as the power of inquiry, is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of Article VI of the Constitution which reads:

SECTION 21. The Senate or the House of Representatives or any of its respective committees may conduct
inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected. (Underscoring supplied)
This provision is worded exactly as Section 8 of Article VIII of the 1973 Constitution except that, in the latter, it
vests the power of inquiry in the unicameral legislature established therein the Batasang Pambansa and its
committees.
The 1935 Constitution did not contain a similar provision. Nonetheless, in Arnault v. Nazareno,58 a case decided in
1950 under that Constitution, the Court already recognized that the power of inquiry is inherent in the power to
legislate.
Arnault involved a Senate investigation of the reportedly anomalous purchase of the Buenavista and Tambobong
Estates by the Rural Progress Administration. Arnault, who was considered a leading witness in the controversy,
was called to testify thereon by the Senate. On account of his refusal to answer the questions of the senators on an
important point, he was, by resolution of the Senate, detained for contempt. Upholding the Senates power to
punish Arnault for contempt, this Court held:
Although there is no provision in the Constitution expressly investing either House of Congress with power to
make investigations and exact testimony to the end that it may exercise its legislative functions advisedly and
effectively, such power is so far incidental to the legislative function as to be implied. In other words, the power of
inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative function. A
legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which
the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite
information which is not infrequently true recourse must be had to others who do possess it. Experience has
shown that mere requests for such information are often unavailing, and also that information which is volunteered

is not always accurate or complete; so some means of compulsion is essential to obtain what is needed.59 . . .
(Emphasis and underscoring supplied)
That this power of inquiry is broad enough to cover officials of the executive branch may be deduced from the
same case. The power of inquiry, the Court therein ruled, is co-extensive with the power to legislate.60 The matters
which may be a proper subject of legislation and those which may be a proper subject of investigation are one. It
follows that the operation of government, being a legitimate subject for legislation, is a proper subject for
investigation.
Thus, the Court found that the Senate investigation of the government transaction involved in Arnault was a proper
exercise of the power of inquiry. Besides being related to the expenditure of public funds of which Congress is the
guardian, the transaction, the Court held, "also involved government agencies created by Congress and officers
whose positions it is within the power of Congress to regulate or even abolish."
Since Congress has authority to inquire into the operations of the executive branch, it would be incongruous to
hold that the power of inquiry does not extend to executive officials who are the most familiar with and informed
on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it," is grounded on the necessity of
information in the legislative process. If the information possessed by executive officials on the operation of their
offices is necessary for wise legislation on that subject, by parity of reasoning, Congress has the right to that
information and the power to compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy era," however, the right of Congress to
conduct inquiries in aid of legislation is, in theory, no less susceptible to abuse than executive or judicial power. It

may thus be subjected to judicial review pursuant to the Courts certiorari powers under Section 1, Article VIII of
the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the inquiry itself might not properly be in aid of
legislation, and thus beyond the constitutional power of Congress. Such inquiry could not usurp judicial functions.
Parenthetically, one possible way for Congress to avoid such a result as occurred in Bengzon is to indicate in its
invitations to the public officials concerned, or to any person for that matter, the possible needed statute which
prompted the need for the inquiry. Given such statement in its invitations, along with the usual indication of the
subject of inquiry and the questions relative to and in furtherance thereof, there would be less room for speculation
on the part of the person invited on whether the inquiry is in aid of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe the legislative power of inquiry. The
provision requires that the inquiry be done in accordance with the Senate or Houses duly published rules of
procedure, necessarily implying the constitutional infirmity of an inquiry conducted without duly published rules
of procedure. Section 21 also mandates that the rights of persons appearing in or affected by such inquiries be
respected, an imposition that obligates Congress to adhere to the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons affected, even if
they belong to the executive branch. Nonetheless, there may be exceptional circumstances, none appearing to
obtain at present, wherein a clear pattern of abuse of the legislative power of inquiry might be established, resulting
in palpable violations of the rights guaranteed to members of the executive department under the Bill of Rights. In
such instances, depending on the particulars of each case, attempts by the Executive Branch to forestall these
abuses may be accorded judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized exemptions to the power of inquiry, which
exemptions fall under the rubric of "executive privilege." Since this term figures prominently in the challenged

order, it being mentioned in its provisions, its preambular clauses,62 and in its very title, a discussion of executive
privilege is crucial for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the promulgation of
the 1986 Constitution.63 Being of American origin, it is best understood in light of how it has been defined and used
in the legal literature of the United States.
Schwartz defines executive privilege as "the power of the Government to withhold information from the public, the
courts, and the Congress."64 Similarly, Rozell defines it as "the right of the President and high-level executive
branch officers to withhold information from Congress, the courts, and ultimately the public."65
Executive privilege is, nonetheless, not a clear or unitary concept. 66 It has encompassed claims of varying
kinds.67 Tribe, in fact, comments that while it is customary to employ the phrase "executive privilege," it may be
more accurate to speak of executive privileges "since presidential refusals to furnish information may be actuated
by any of at least three distinct kinds of considerations, and may be asserted, with differing degrees of success, in
the context of either judicial or legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege invoked by U.S. Presidents, beginning
with Washington, on the ground that the information is of such nature that its disclosure would subvert crucial
military or diplomatic objectives. Another variety is the informers privilege, or the privilege of the Government
not to disclose the identity of persons who furnish information of violations of law to officers charged with the
enforcement of that law. Finally, a generic privilege for internal deliberations has been said to attach to
intragovernmental documents reflecting advisory opinions, recommendations and deliberations comprising part of
a process by which governmental decisions and policies are formulated. 68

Tribes comment is supported by the ruling in In re Sealed Case, thus:

Since the beginnings of our nation, executive officials have claimed a variety of privileges to resist disclosure of
information the confidentiality of which they felt was crucial to fulfillment of the unique role and responsibilities
of the executive branch of our government. Courts ruled early that the executive had a right to withhold documents
that might reveal military or state secrets. The courts have also granted the executive a right to withhold the
identity of government informers in some circumstances and a qualified right to withhold information related to
pending investigations. x x x"69 (Emphasis and underscoring supplied)
The entry in Blacks Law Dictionary on "executive privilege" is similarly instructive regarding the scope of the
doctrine.
This privilege, based on the constitutional doctrine of separation of powers, exempts the executive from disclosure
requirements applicable to the ordinary citizen or organization where such exemption is necessary to the discharge
of highly important executive responsibilities involved in maintaining governmental operations, and extends not
only to military and diplomatic secrets but also to documents integral to an appropriate exercise of the executive
domestic decisional and policy making functions, that is, those documents reflecting the frank expression necessary
in intra-governmental advisory and deliberative communications.70 (Emphasis and underscoring supplied)
That a type of information is recognized as privileged does not, however, necessarily mean that it would be
considered privileged in all instances. For in determining the validity of a claim of privilege, the question that must
be asked is not only whether the requested information falls within one of the traditional privileges, but also
whether that privilege should be honored in a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v. Nixon, 72 decided in 1974. In issue in that
case was the validity of President Nixons claim of executive privilege against a subpoena issued by a district court

requiring the production of certain tapes and documents relating to the Watergate investigations. The claim of
privilege was based on the Presidents general interest in the confidentiality of his conversations and
correspondence. The U.S. Court held that while there is no explicit reference to a privilege of confidentiality in the
U.S. Constitution, it is constitutionally based to the extent that it relates to the effective discharge of a Presidents
powers. The Court, nonetheless, rejected the Presidents claim of privilege, ruling that the privilege must be
balanced against the public interest in the fair administration of criminal justice. Notably, the Court was careful to
clarify that it was not there addressing the issue of claims of privilege in a civil litigation or against congressional
demands for information.
Cases in the U.S. which involve claims of executive privilege against Congress are rare.73 Despite frequent
assertion of the privilege to deny information to Congress, beginning with President Washingtons refusal to turn
over treaty negotiation records to the House of Representatives, the U.S. Supreme Court has never adjudicated the
issue.74 However, the U.S. Court of Appeals for the District of Columbia Circuit, in a case decided earlier in the
same year as Nixon, recognized the Presidents privilege over his conversations against a congressional
subpoena.75 Anticipating the balancing approach adopted by the U.S. Supreme Court in Nixon, the Court of
Appeals weighed the public interest protected by the claim of privilege against the interest that would be served by
disclosure to the Committee. Ruling that the balance favored the President, the Court declined to enforce the
subpoena. 76
In this jurisdiction, the doctrine of executive privilege was recognized by this Court in Almonte v.
Vasquez.77Almonte used the term in reference to the same privilege subject of Nixon. It quoted the following
portion of the Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and correspondences, like the claim of
confidentiality of judicial deliberations, for example, has all the values to which we accord deference for the
privacy of all citizens and, added to those values, is the necessity for protection of the public interest in candid,

objective, and even blunt or harsh opinions in Presidential decision-making. A President and those who assist him
must be free to explore alternatives in the process of shaping policies and making decisions and to do so in a way
many would be unwilling to express except privately. These are the considerations justifying a presumptive
privilege for Presidential communications. The privilege is fundamental to the operation of government and
inextricably rooted in the separation of powers under the Constitution x x x " (Emphasis and underscoring
supplied)
Almonte involved a subpoena duces tecum issued by the Ombudsman against the therein petitioners. It did not
involve, as expressly stated in the decision, the right of the people to information.78 Nonetheless, the Court
recognized that there are certain types of information which the government may withhold from the public, thus
acknowledging, in substance if not in name, that executive privilege may be claimed against citizens demands for
information.
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the common law holding that there is a
"governmental privilege against public disclosure with respect to state secrets regarding military, diplomatic and
other national security matters."80 The same case held that closed-door Cabinet meetings are also a recognized
limitation on the right to information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the right to information does not extend to
matters recognized as "privileged information under the separation of powers,"82 by which the Court meant
Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings. It also held that
information on military and diplomatic secrets and those affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused were exempted from
the right to information.

From the above discussion on the meaning and scope of executive privilege, both in the United States and in this
jurisdiction, a clear principle emerges. Executive privilege, whether asserted against Congress, the courts, or the
public, is recognized only in relation to certain types of information of a sensitive character. While executive
privilege is a constitutional concept, a claim thereof may be valid or not depending on the ground invoked to justify
it and the context in which it is made. Noticeably absent is any recognition that executive officials are exempt from
the duty to disclose information by the mere fact of being executive officials. Indeed, the extraordinary character of
the exemptions indicates that the presumption inclines heavily against executive secrecy and in favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by them to secure the consent of the
President prior to appearing before Congress. There are significant differences between the two provisions,
however, which constrain this Court to discuss the validity of these provisions separately.
Section 1 specifically applies to department heads. It does not, unlike Section 3, require a prior determination by
any official whether they are covered by E.O. 464. The President herself has, through the challenged order, made
the determination that they are. Further, unlike also Section 3, the coverage of department heads under Section 1 is
not made to depend on the department heads possession of any information which might be covered by executive
privilege. In fact, in marked contrast to Section 3 vis--vis Section 2, there is no reference to executive privilege at
all. Rather, the required prior consent under Section 1 is grounded on Article VI, Section 22 of the Constitution on
what has been referred to as the question hour.
SECTION 22. The heads of departments may upon their own initiative, with the consent of the President, or upon
the request of either House, as the rules of each House shall provide, appear before and be heard by such House on
any matter pertaining to their departments. Written questions shall be submitted to the President of the Senate or
the Speaker of the House of Representatives at least three days before their scheduled appearance. Interpellations

shall not be limited to written questions, but may cover matters related thereto. When the security of the State or
the public interest so requires and the President so states in writing, the appearance shall be conducted in executive
session.
Determining the validity of Section 1 thus requires an examination of the meaning of Section 22 of Article VI.
Section 22 which provides for the question hour must be interpreted vis--vis Section 21 which provides for the
power of either House of Congress to "conduct inquiries in aid of legislation." As the following excerpt of the
deliberations of the Constitutional Commission shows, the framers were aware that these two provisions involved
distinct functions of Congress.
MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on the Question Hour] yesterday, I
noticed that members of the Cabinet cannot be compelled anymore to appear before the House of Representatives
or before the Senate. I have a particular problem in this regard, Madam President, because in our experience in the
Regular Batasang Pambansa as the Gentleman himself has experienced in the interim Batasang Pambansa one
of the most competent inputs that we can put in our committee deliberations, either in aid of legislation or in
congressional investigations, is the testimonies of Cabinet ministers. We usually invite them, but if they do not
come and it is a congressional investigation, we usually issue subpoenas.
I want to be clarified on a statement made by Commissioner Suarez when he said that the fact that the Cabinet
ministers may refuse to come to the House of Representatives or the Senate [when requested under Section 22]
does not mean that they need not come when they are invited or subpoenaed by the committee of either House
when it comes to inquiries in aid of legislation or congressional investigation. According to Commissioner Suarez,
that is allowed and their presence can be had under Section 21. Does the gentleman confirm this, Madam
President?

MR. DAVIDE. We confirm that, Madam President, because Section 20 refers only to what was originally the
Question Hour, whereas, Section 21 would refer specifically to inquiries in aid of legislation, under which anybody
for that matter, may be summoned and if he refuses, he can be held in contempt of the House.83 (Emphasis and
underscoring supplied)
A distinction was thus made between inquiries in aid of legislation and the question hour. While attendance was
meant to be discretionary in the question hour, it was compulsory in inquiries in aid of legislation. The reference to
Commissioner Suarez bears noting, he being one of the proponents of the amendment to make the appearance of
department heads discretionary in the question hour.
So clearly was this distinction conveyed to the members of the Commission that the Committee on Style, precisely
in recognition of this distinction, later moved the provision on question hour from its original position as Section
20 in the original draft down to Section 31, far from the provision on inquiries in aid of legislation. This gave rise
to the following exchange during the deliberations:
MR. GUINGONA. [speaking in his capacity as Chairman of the Committee on Style] We now go, Mr. Presiding
Officer, to the Article on Legislative and may I request the chairperson of the Legislative Department,
Commissioner Davide, to give his reaction.
THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is recognized.|avvphi|.net
MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to the Question Hour. I propose that
instead of putting it as Section 31, it should follow Legislative Inquiries.
THE PRESIDING OFFICER. What does the committee say?
MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding Officer.

MR. MAAMBONG. Actually, we considered that previously when we sequenced this but we reasoned that in
Section 21, which is Legislative Inquiry, it is actually a power of Congress in terms of its own lawmaking;
whereas, a Question Hour is not actually a power in terms of its own lawmaking power because in Legislative
Inquiry, it is in aid of legislation. And so we put Question Hour as Section 31. I hope Commissioner Davide will
consider this.
MR. DAVIDE. The Question Hour is closely related with the legislative power, and it is precisely as a complement
to or a supplement of the Legislative Inquiry. The appearance of the members of Cabinet would be very, very
essential not only in the application of check and balance but also, in effect, in aid of legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the suggestion of Commissioner
Davide. In other words, we are accepting that and so this Section 31 would now become Section 22. Would it be,
Commissioner Davide?
MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)
Consistent with their statements earlier in the deliberations, Commissioners Davide and Maambong proceeded
from the same assumption that these provisions pertained to two different functions of the legislature. Both
Commissioners understood that the power to conduct inquiries in aid of legislation is different from the power to
conduct inquiries during the question hour. Commissioner Davides only concern was that the two provisions on
these distinct powers be placed closely together, they being complementary to each other. Neither Commissioner
considered them as identical functions of Congress.
The foregoing opinion was not the two Commissioners alone. From the above-quoted exchange, Commissioner
Maambongs committee the Committee on Style shared the view that the two provisions reflected distinct

functions of Congress. Commissioner Davide, on the other hand, was speaking in his capacity as Chairman of the
Committee on the Legislative Department. His views may thus be presumed as representing that of his Committee.
In the context of a parliamentary system of government, the "question hour" has a definite meaning. It is a period
of confrontation initiated by Parliament to hold the Prime Minister and the other ministers accountable for their
acts and the operation of the government,85 corresponding to what is known in Britain as the question period. There
was a specific provision for a question hour in the 1973 Constitution86 which made the appearance of ministers
mandatory. The same perfectly conformed to the parliamentary system established by that Constitution, where the
ministers are also members of the legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the immediate accountability of the Prime
Minister and the Cabinet to the National Assembly. They shall be responsible to the National Assembly for the
program of government and shall determine the guidelines of national policy. Unlike in the presidential system
where the tenure of office of all elected officials cannot be terminated before their term expired, the Prime Minister
and the Cabinet remain in office only as long as they enjoy the confidence of the National Assembly. The moment
this confidence is lost the Prime Minister and the Cabinet may be changed.87
The framers of the 1987 Constitution removed the mandatory nature of such appearance during the question hour
in the present Constitution so as to conform more fully to a system of separation of powers.88 To that extent, the
question hour, as it is presently understood in this jurisdiction, departs from the question period of the
parliamentary system. That department heads may not be required to appear in a question hour does not, however,
mean that the legislature is rendered powerless to elicit information from them in all circumstances. In fact, in light
of the absence of a mandatory question period, the need to enforce Congress right to executive information in the
performance of its legislative function becomes more imperative. As Schwartz observes:

Indeed, if the separation of powers has anything to tell us on the subject under discussion, it is that the Congress
has the right to obtain information from any source even from officials of departments and agencies in the
executive branch. In the United States there is, unlike the situation which prevails in a parliamentary system such
as that in Britain, a clear separation between the legislative and executive branches. It is this very separation that
makes the congressional right to obtain information from the executive so essential, if the functions of the
Congress as the elected representatives of the people are adequately to be carried out. The absence of close rapport
between the legislative and executive branches in this country, comparable to those which exist under a
parliamentary system, and the nonexistence in the Congress of an institution such as the British question period
have perforce made reliance by the Congress upon its right to obtain information from the executive essential, if it
is intelligently to perform its legislative tasks. Unless the Congress possesses the right to obtain executive
information, its power of oversight of administration in a system such as ours becomes a power devoid of most of
its practical content, since it depends for its effectiveness solely upon information parceled out ex gratia by the
executive.89 (Emphasis and underscoring supplied)
Sections 21 and 22, therefore, while closely related and complementary to each other, should not be considered as
pertaining to the same power of Congress. One specifically relates to the power to conduct inquiries in aid of
legislation, the aim of which is to elicit information that may be used for legislation, while the other pertains to the
power to conduct a question hour, the objective of which is to obtain information in pursuit of Congress oversight
function.
When Congress merely seeks to be informed on how department heads are implementing the statutes which it has
issued, its right to such information is not as imperative as that of the President to whom, as Chief Executive, such
department heads must give a report of their performance as a matter of duty. In such instances, Section 22, in
keeping with the separation of powers, states that Congress may only request their appearance. Nonetheless, when

the inquiry in which Congress requires their appearance is "in aid of legislation" under Section 21, the appearance
is mandatory for the same reasons stated in Arnault.90
In fine, the oversight function of Congress may be facilitated by compulsory process only to the extent that it is
performed in pursuit of legislation. This is consistent with the intent discerned from the deliberations of the
Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive officials under Section 21 and the lack of
it under Section 22 find their basis in the principle of separation of powers. While the executive branch is a coequal branch of the legislature, it cannot frustrate the power of Congress to legislate by refusing to comply with its
demands for information.
When Congress exercises its power of inquiry, the only way for department heads to exempt themselves therefrom
is by a valid claim of privilege. They are not exempt by the mere fact that they are department heads. Only one
executive official may be exempted from this power the President on whom executive power is vested, hence,
beyond the reach of Congress except through the power of impeachment. It is based on her being the highest
official of the executive branch, and the due respect accorded to a co-equal branch of government which is
sanctioned by a long-standing custom.
By the same token, members of the Supreme Court are also exempt from this power of inquiry. Unlike the
Presidency, judicial power is vested in a collegial body; hence, each member thereof is exempt on the basis not
only of separation of powers but also on the fiscal autonomy and the constitutional independence of the judiciary.
This point is not in dispute, as even counsel for the Senate, Sen. Joker Arroyo, admitted it during the oral argument
upon interpellation of the Chief Justice.

Having established the proper interpretation of Section 22, Article VI of the Constitution, the Court now proceeds
to pass on the constitutionality of Section 1 of E.O. 464.
Section 1, in view of its specific reference to Section 22 of Article VI of the Constitution and the absence of any
reference to inquiries in aid of legislation, must be construed as limited in its application to appearances of
department heads in the question hour contemplated in the provision of said Section 22 of Article VI. The reading
is dictated by the basic rule of construction that issuances must be interpreted, as much as possible, in a way that
will render it constitutional.
The requirement then to secure presidential consent under Section 1, limited as it is only to appearances in the
question hour, is valid on its face. For under Section 22, Article VI of the Constitution, the appearance of
department heads in the question hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads in inquiries in aid of legislation.
Congress is not bound in such instances to respect the refusal of the department head to appear in such inquiry,
unless a valid claim of privilege is subsequently made, either by the President herself or by the Executive
Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section 2(b) to secure the consent of the
President prior to appearing before either house of Congress. The enumeration is broad. It covers all senior officials
of executive departments, all officers of the AFP and the PNP, and all senior national security officials who, in the
judgment of the heads of offices designated in the same section (i.e. department heads, Chief of Staff of the AFP,
Chief of the PNP, and the National Security Adviser), are "covered by the executive privilege."

The enumeration also includes such other officers as may be determined by the President. Given the title of Section
2 "Nature, Scope and Coverage of Executive Privilege" , it is evident that under the rule of ejusdem generis,
the determination by the President under this provision is intended to be based on a similar finding of coverage
under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states that executive privilege actually covers
persons. Such is a misuse of the doctrine. Executive privilege, as discussed above, is properly invoked in relation to
specific categories of information and not to categories of persons.
In light, however, of Sec 2(a) of E.O. 464 which deals with the nature, scope and coverage of executive privilege,
the reference to persons being "covered by the executive privilege" may be read as an abbreviated way of saying
that the person is in possession of information which is, in the judgment of the head of office concerned, privileged
as defined in Section 2(a). The Court shall thus proceed on the assumption that this is the intention of the
challenged order.
Upon a determination by the designated head of office or by the President that an official is "covered by the
executive privilege," such official is subjected to the requirement that he first secure the consent of the President
prior to appearing before Congress. This requirement effectively bars the appearance of the official concerned
unless the same is permitted by the President. The proviso allowing the President to give its consent means nothing
more than that the President may reverse a prohibition which already exists by virtue of E.O. 464.
Thus, underlying this requirement of prior consent is the determination by a head of office, authorized by the
President under E.O. 464, or by the President herself, that such official is in possession of information that is
covered by executive privilege. This determination then becomes the basis for the officials not showing up in the
legislative investigation.

In view thereof, whenever an official invokes E.O. 464 to justify his failure to be present, such invocation must be
construed as a declaration to Congress that the President, or a head of office authorized by the President, has
determined that the requested information is privileged, and that the President has not reversed such determination.
Such declaration, however, even without mentioning the term "executive privilege," amounts to an implied claim
that the information is being withheld by the executive branch, by authority of the President, on the basis of
executive privilege. Verily, there is an implied claim of privilege.
The letter dated September 28, 2005 of respondent Executive Secretary Ermita to Senate President Drilon
illustrates the implied nature of the claim of privilege authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the Whole regarding the Northrail Project of
the North Luzon Railways Corporation on 29 September 2005 at 10:00 a.m., please be informed that officials of
the Executive Department invited to appear at the meeting will not be able to attend the same without the consent
of the President, pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring Observance Of The Principle
Of Separation Of Powers, Adherence To The Rule On Executive Privilege And Respect For The Rights Of Public
Officials Appearing In Legislative Inquiries In Aid Of Legislation Under The Constitution, And For Other
Purposes". Said officials have not secured the required consent from the President. (Underscoring supplied)
The letter does not explicitly invoke executive privilege or that the matter on which these officials are being
requested to be resource persons falls under the recognized grounds of the privilege to justify their absence. Nor
does it expressly state that in view of the lack of consent from the President under E.O. 464, they cannot attend the
hearing.
Significant premises in this letter, however, are left unstated, deliberately or not. The letter assumes that the invited
officials are covered by E.O. 464. As explained earlier, however, to be covered by the order means that a
determination has been made, by the designated head of office or the President, that the invited official possesses

information that is covered by executive privilege. Thus, although it is not stated in the letter that such
determination has been made, the same must be deemed implied. Respecting the statement that the invited officials
have not secured the consent of the President, it only means that the President has not reversed the standing
prohibition against their appearance before Congress.
Inevitably, Executive Secretary Ermitas letter leads to the conclusion that the executive branch, either through the
President or the heads of offices authorized under E.O. 464, has made a determination that the information required
by the Senate is privileged, and that, at the time of writing, there has been no contrary pronouncement from the
President. In fine, an implied claim of privilege has been made by the executive.
While there is no Philippine case that directly addresses the issue of whether executive privilege may be invoked
against Congress, it is gathered from Chavez v. PEA that certain information in the possession of the executive may
validly be claimed as privileged even against Congress. Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the
separation of powers. The information does not cover Presidential conversations, correspondences, or discussions
during closed-door Cabinet meetings which, like internal-deliberations of the Supreme Court and other collegiate
courts, or executive sessions of either house of Congress, are recognized as confidential. This kind of information
cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments,
free from the glare of publicity and pressure by interested parties, is essential to protect the independence of
decision-making of those tasked to exercise Presidential, Legislative and Judicial power. This is not the situation in
the instant case.91 (Emphasis and underscoring supplied)
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by the mere fact that it sanctions claims of
executive privilege. This Court must look further and assess the claim of privilege authorized by the Order to
determine whether it is valid.

While the validity of claims of privilege must be assessed on a case to case basis, examining the ground invoked
therefor and the particular circumstances surrounding it, there is, in an implied claim of privilege, a defect that
renders it invalid per se. By its very nature, and as demonstrated by the letter of respondent Executive Secretary
quoted above, the implied claim authorized by Section 3 of E.O. 464 is not accompanied by any specific allegation
of the basis thereof (e.g., whether the information demanded involves military or diplomatic secrets, closed-door
Cabinet meetings, etc.). While Section 2(a) enumerates the types of information that are covered by the privilege
under the challenged order, Congress is left to speculate as to which among them is being referred to by the
executive. The enumeration is not even intended to be comprehensive, but a mere statement of what is included in
the phrase "confidential or classified information between the President and the public officers covered by this
executive order."
Certainly, Congress has the right to know why the executive considers the requested information privileged. It does
not suffice to merely declare that the President, or an authorized head of office, has determined that it is so, and
that the President has not overturned that determination. Such declaration leaves Congress in the dark on how the
requested information could be classified as privileged. That the message is couched in terms that, on first
impression, do not seem like a claim of privilege only makes it more pernicious. It threatens to make Congress
doubly blind to the question of why the executive branch is not providing it with the information that it has
requested.
A claim of privilege, being a claim of exemption from an obligation to disclose information, must, therefore, be
clearly asserted. As U.S. v. Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can neither be claimed nor waived by a
private party. It is not to be lightly invoked. There must be a formal claim of privilege, lodged by the head of the
department which has control over the matter, after actual personal consideration by that officer. The court itself

must determine whether the circumstances are appropriate for the claim of privilege, and yet do so without forcing
a disclosure of the very thing the privilege is designed to protect.92 (Underscoring supplied)
Absent then a statement of the specific basis of a claim of executive privilege, there is no way of determining
whether it falls under one of the traditional privileges, or whether, given the circumstances in which it is made, it
should be respected.93 These, in substance, were the same criteria in assessing the claim of privilege asserted
against the Ombudsman in Almonte v. Vasquez94 and, more in point, against a committee of the Senate in Senate
Select Committee on Presidential Campaign Activities v. Nixon.95
A.O. Smith v. Federal Trade Commission is enlightening:
[T]he lack of specificity renders an assessment of the potential harm resulting from disclosure impossible, thereby
preventing the Court from balancing such harm against plaintiffs needs to determine whether to override any
claims of privilege.96 (Underscoring supplied)
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform this balancing operation. In stating its
objection to claimants interrogatories, government asserts, and nothing more, that the disclosures sought by
claimant would inhibit the free expression of opinion that non-disclosure is designed to protect. The government
has not shown nor even alleged that those who evaluated claimants product were involved in internal
policymaking, generally, or in this particular instance. Privilege cannot be set up by an unsupported claim. The
facts upon which the privilege is based must be established. To find these interrogatories objectionable, this Court
would have to assume that the evaluation and classification of claimants products was a matter of internal policy
formulation, an assumption in which this Court is unwilling to indulge sua sponte.98 (Emphasis and underscoring
supplied)

Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an agency must provide precise and certain
reasons for preserving the confidentiality of requested information."
Black v. Sheraton Corp. of America100 amplifies, thus:
A formal and proper claim of executive privilege requires a specific designation and description of the documents
within its scope as well as precise and certain reasons for preserving their confidentiality. Without this specificity, it
is impossible for a court to analyze the claim short of disclosure of the very thing sought to be protected. As the
affidavit now stands, the Court has little more than its sua sponte speculation with which to weigh the applicability
of the claim. An improperly asserted claim of privilege is no claim of privilege. Therefore, despite the fact that a
claim was made by the proper executive as Reynolds requires, the Court can not recognize the claim in the instant
case because it is legally insufficient to allow the Court to make a just and reasonable determination as to its
applicability. To recognize such a broad claim in which the Defendant has given no precise or compelling reasons
to shield these documents from outside scrutiny, would make a farce of the whole procedure.101(Emphasis and
underscoring supplied)
Due respect for a co-equal branch of government, moreover, demands no less than a claim of privilege clearly
stating the grounds therefor. Apropos is the following ruling in McPhaul v. U.S:102
We think the Courts decision in United States v. Bryan, 339 U.S. 323, 70 S. Ct. 724, is highly relevant to these
questions. For it is as true here as it was there, that if (petitioner) had legitimate reasons for failing to produce the
records of the association, a decent respect for the House of Representatives, by whose authority the subpoenas
issued, would have required that (he) state (his) reasons for noncompliance upon the return of the writ. Such a
statement would have given the Subcommittee an opportunity to avoid the blocking of its inquiry by taking other
appropriate steps to obtain the records. To deny the Committee the opportunity to consider the objection or
remedy is in itself a contempt of its authority and an obstruction of its processes. His failure to make any such

statement was "a patent evasion of the duty of one summoned to produce papers before a congressional
committee[, and] cannot be condoned." (Emphasis and underscoring supplied; citations omitted)
Upon the other hand, Congress must not require the executive to state the reasons for the claim with such
particularity as to compel disclosure of the information which the privilege is meant to protect.103 A useful analogy
in determining the requisite degree of particularity would be the privilege against self-incrimination. Thus,
Hoffman v. U.S.104 declares:
The witness is not exonerated from answering merely because he declares that in so doing he would incriminate
himself his say-so does not of itself establish the hazard of incrimination. It is for the court to say whether his
silence is justified, and to require him to answer if it clearly appears to the court that he is mistaken. However, if
the witness, upon interposing his claim, were required to prove the hazard in the sense in which a claim is usually
required to be established in court, he would be compelled to surrender the very protection which the privilege is
designed to guarantee. To sustain the privilege, it need only be evident from the implications of the question, in the
setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered
might be dangerous because injurious disclosure could result." x x x (Emphasis and underscoring supplied)
The claim of privilege under Section 3 of E.O. 464 in relation to Section 2(b) is thus invalid per se. It is not
asserted. It is merely implied. Instead of providing precise and certain reasons for the claim, it merely invokes E.O.
464, coupled with an announcement that the President has not given her consent. It is woefully insufficient for
Congress to determine whether the withholding of information is justified under the circumstances of each case. It
severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.

No infirmity, however, can be imputed to Section 2(a) as it merely provides guidelines, binding only on the heads
of office mentioned in Section 2(b), on what is covered by executive privilege. It does not purport to be conclusive
on the other branches of government. It may thus be construed as a mere expression of opinion by the President
regarding the nature and scope of executive privilege.
Petitioners, however, assert as another ground for invalidating the challenged order the alleged unlawful delegation
of authority to the heads of offices in Section 2(b). Petitioner Senate of the Philippines, in particular, cites the case
of the United States where, so it claims, only the President can assert executive privilege to withhold information
from Congress.
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a certain
information is privileged, such determination is presumed to bear the Presidents authority and has the effect of
prohibiting the official from appearing before Congress, subject only to the express pronouncement of the
President that it is allowing the appearance of such official. These provisions thus allow the President to authorize
claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the privilege. Executive
privilege, as already discussed, is recognized with respect to information the confidential nature of which is crucial
to the fulfillment of the unique role and responsibilities of the executive branch,105 or in those instances where
exemption from disclosure is necessary to the discharge of highly important executive responsibilities.106 The
doctrine of executive privilege is thus premised on the fact that certain informations must, as a matter of necessity,
be kept confidential in pursuit of the public interest. The privilege being, by definition, an exemption from the
obligation to disclose information, in this case to Congress, the necessity must be of such high degree as to
outweigh the public interest in enforcing that obligation in a particular case.

In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the President the
power to invoke the privilege. She may of course authorize the Executive Secretary to invoke the privilege on her
behalf, in which case the Executive Secretary must state that the authority is "By order of the President," which
means that he personally consulted with her. The privilege being an extraordinary power, it must be wielded only
by the highest official in the executive hierarchy. In other words, the President may not authorize her subordinates
to exercise such power. There is even less reason to uphold such authorization in the instant case where the
authorization is not explicit but by mere silence. Section 3, in relation to Section 2(b), is further invalid on this
score.
It follows, therefore, that when an official is being summoned by Congress on a matter which, in his own
judgment, might be covered by executive privilege, he must be afforded reasonable time to inform the President or
the Executive Secretary of the possible need for invoking the privilege. This is necessary in order to provide the
President or the Executive Secretary with fair opportunity to consider whether the matter indeed calls for a claim of
executive privilege. If, after the lapse of that reasonable time, neither the President nor the Executive Secretary
invokes the privilege, Congress is no longer bound to respect the failure of the official to appear before Congress
and may then opt to avail of the necessary legal means to compel his appearance.
The Court notes that one of the expressed purposes for requiring officials to secure the consent of the President
under Section 3 of E.O. 464 is to ensure "respect for the rights of public officials appearing in inquiries in aid of
legislation." That such rights must indeed be respected by Congress is an echo from Article VI Section 21 of the
Constitution mandating that "[t]he rights of persons appearing in or affected by such inquiries shall be respected."
In light of the above discussion of Section 3, it is clear that it is essentially an authorization for implied claims of
executive privilege, for which reason it must be invalidated. That such authorization is partly motivated by the need
to ensure respect for such officials does not change the infirm nature of the authorization itself.

Right to Information
E.O 464 is concerned only with the demands of Congress for the appearance of executive officials in the hearings
conducted by it, and not with the demands of citizens for information pursuant to their right to information on
matters of public concern. Petitioners are not amiss in claiming, however, that what is involved in the present
controversy is not merely the legislative power of inquiry, but the right of the people to information.
There are, it bears noting, clear distinctions between the right of Congress to information which underlies the
power of inquiry and the right of the people to information on matters of public concern. For one, the demand of a
citizen for the production of documents pursuant to his right to information does not have the same obligatory force
as a subpoena duces tecum issued by Congress. Neither does the right to information grant a citizen the power to
exact testimony from government officials. These powers belong only to Congress and not to an individual citizen.
Thus, while Congress is composed of representatives elected by the people, it does not follow, except in a highly
qualified sense, that in every exercise of its power of inquiry, the people are exercising their right to information.
To the extent that investigations in aid of legislation are generally conducted in public, however, any executive
issuance tending to unduly limit disclosures of information in such investigations necessarily deprives the people
of information which, being presumed to be in aid of legislation, is presumed to be a matter of public concern. The
citizens are thereby denied access to information which they can use in formulating their own opinions on the
matter before Congress opinions which they can then communicate to their representatives and other
government officials through the various legal means allowed by their freedom of expression. Thus holds Valmonte
v. Belmonte:
It is in the interest of the State that the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the peoples will. Yet, this open dialogue can be effective only to

the extent that the citizenry is informed and thus able to formulate its will intelligently. Only when the participants
in the discussion are aware of the issues and have access to information relating thereto can such bear
fruit.107(Emphasis and underscoring supplied)
The impairment of the right of the people to information as a consequence of E.O. 464 is, therefore, in the sense
explained above, just as direct as its violation of the legislatures power of inquiry.
Implementation of E.O. 464 prior to its publication
While E.O. 464 applies only to officials of the executive branch, it does not follow that the same is exempt from
the need for publication. On the need for publishing even those statutes that do not directly apply to people in
general, Taada v. Tuvera states:
The term "laws" should refer to all laws and not only to those of general application, for strictly speaking all laws
relate to the people in general albeit there are some that do not apply to them directly. An example is a law granting
citizenship to a particular individual, like a relative of President Marcos who was decreed instant naturalization. It
surely cannot be said that such a law does not affect the public although it unquestionably does not apply directly
to all the people. The subject of such law is a matter of public interest which any member of the body politic may
question in the political forums or, if he is a proper party, even in courts of justice.108 (Emphasis and underscoring
supplied)
Although the above statement was made in reference to statutes, logic dictates that the challenged order must be
covered by the publication requirement. As explained above, E.O. 464 has a direct effect on the right of the people
to information on matters of public concern. It is, therefore, a matter of public interest which members of the body
politic may question before this Court. Due process thus requires that the people should have been apprised of this
issuance before it was implemented.

Conclusion
Congress undoubtedly has a right to information from the executive branch whenever it is sought in aid of
legislation. If the executive branch withholds such information on the ground that it is privileged, it must so assert
it and state the reason therefor and why it must be respected.
The infirm provisions of E.O. 464, however, allow the executive branch to evade congressional requests for
information without need of clearly asserting a right to do so and/or proffering its reasons therefor. By the mere
expedient of invoking said provisions, the power of Congress to conduct inquiries in aid of legislation is frustrated.
That is impermissible. For
[w]hat republican theory did accomplishwas to reverse the old presumption in favor of secrecy, based on the
divine right of kings and nobles, and replace it with a presumption in favor of publicity, based on the doctrine of
popular sovereignty. (Underscoring supplied)109
Resort to any means then by which officials of the executive branch could refuse to divulge information cannot be
presumed valid. Otherwise, we shall not have merely nullified the power of our legislature to inquire into the
operations of government, but we shall have given up something of much greater value our right as a people to
take part in government.
WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of Executive Order No. 464 (series of
2005), "Ensuring Observance of the Principle of Separation of Powers, Adherence to the Rule on Executive
Privilege and Respect for the Rights of Public Officials Appearing in Legislative Inquiries in Aid of Legislation
Under the Constitution, and For Other Purposes," are declared VOID. Sections 1 and 2(a) are, however, VALID.
SO ORDERED.

G.R. No. 89914 November 20, 1991

JOSE F.S. BENGZON JR., ABELARDO TERMULO, JOSE MANTECON, VICENTE MILLS JR.,
LEONARDO GAMBOA, KURT BACHMANN JR., JOSE V.E. JIMENEZ, ERNESTO CALUYA,
AGERICO UNGSON, SUSAN ROXAS, ELVIE CASTILLO, and CYNTHIA SABIDO LIMJAP, petitioners,
vs.
THE SENATE BLUE RIBBON COMMITTEE AND ITS MEMBERS, represented by and through the
CHAIRMAN, HON. WIGBERTO TAADA, respondents, JOSE S. SANDEJAS, intervenor.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioners.
Balgos & Perez for intervening petitioner.
Eddie Tamondong and Antonio T. Tagaro for respondents.

PADILLA, J.:p
This is a petition for prohibition with prayer for the issuance of a temporary restraining order and/or injuective
relief, to enjoin the respondent Senate Blue Ribbon committee from requiring the petitioners to testify and produce
evidence at its inquiry into the alleged sale of the equity of Benjamin "Kokoy" Romualdez to the Lopa Group in
thirty-six (36) or thirty-nine (39) corporations.

On 30 July 1987, the Republic of the Philippines, represented by the Presidential Commission on Good
Government (PCGG), assisted by the Solicitor General, filed with the Sandiganbayan Civil Case No. 0035 (PCGG
Case No. 35) entitled "Republic of the Philippines vs. Benjamin "Kokoy" Romualdez, et al.", for reconveyance,
reversion, accounting, restitution and damages.
The complaint was amended several times by impleading new defendants and/or amplifying the allegations therein.
Under the Second Amended Complaint, 1 the herein petitioners were impleaded as party defendants.
The complaint insofar as pertinent to herein petitioners, as defendants, alleges among others that:
14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez, acting by themselves
and/or in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking
undue advantage of their relationship, influence and connection with the latter Defendant spouses,
engaged in devices, schemes and strategems to unjuestly enrigh themselves at the expense of Plaintiff
and the Filipino people, among others:
(a) Obatained, with the active collaboration of Defendants Sene J. Gabaldon, Mario D.
Camacho, Mamerto Nepomuceno, Carlos J. Valdez, Cesar C. Zalamea and Francisco
Tantuico, Atty. Jose Bengzon, Jr. and his law partners, namely: Edilberto S. Narciso, Jr.,
Jose Vicente E. Jimenez, Amando V. Faustino, Jr., and Leonardo C. Cruz; Jose S.
Sandejas and his fellow senior managers of FMMC/PNI Holdings groups of companies
such as Leonardo Gamboa, Vicente T. Mills, Jr., Jose M. Mantecon, Abelardo S. Termulo,
Rex C. Drilon II and Kurt Bachmann, Jr., control of some of the biggest business
enterprises in the Philippines, such as the Manila Corporation (MERALCO), Benguet
Consolidated and the Philippine Commercial International Bank (PCI Bank) by
employing devious financial schemes and techniques calculated to require the massive

infusion and hemorrhage of government funds with minimum or negligible "cashout"

from Defendant Benjamin Romualdez...
xxx xxx xxx
(m) manipulated, with the support, assistance and collaboration of Philgurantee officials
led by chairman Cesar E.A. Virata and the Senior managers of FMMC/PNI Holdings,
Inc. led by Jose S. Sandejas, Jr., Jose M. Mantecom and Kurt S. Bachmann, Jr., among
others, the formation of Erectors Holdings, Inc. without infusing additional capital solely
for the purpose of Erectors Incorporated with Philguarantee in the amount of
P527,387,440.71 with insufficient securities/collaterals just to enable Erectors Inc, to
appear viable and to borrow more capitals, so much so that its obligation with
Philgurantee has reached a total of more than P2 Billion as of June 30, 1987.
(n) at the onset of the present Administration and/or within the week following the
February 1986 People's Revolution, in conspiracy with, supoort, assistance and
collaboration of the abovenamed lawyers of the Bengzon Law Offices, or specifically
Defendants Jose F.S. Bengzon, Jr., V.E. Jimenez, Amando V. Faustino, Jr., and Edilberto
S. Narciso, Jr., manipulated, shcemed, and/or executed a series of devices intended to
conceal and place, and/or for the purpose of concealing and placing, beyond the inquiry
and jurisdiction of the Presidential Commission on Good Government (PCGG) herein
Defendant's individual and collective funds, properties, and assets subject of and/or suited
int he instant Complaint.
(o) manuevered, with the technical know-how and legalitic talents of the FMMC senior
manager and some of the Bengzon law partners, such as Attys. Jose F.S. Bengzon, Jr.,

Edilberto S. Narciso, Jr., Amando V. Faustino, Jose Vicente E. Jimenez and Leonardo C.
Cruz, the purported sale of defendant Benjamin Romualdez's interests in the (i)
Professional Managers, (ii) A & E International Corporation (A & E), (iii) First Manila
Managerment Corporation (FMMC), (iv) Philippine World Travel Inc. (PWTI) and its
subsidiaries consisting of 36 corporations in all, to PNI Holdings, Inc. (wjose purported
incorporations are all members of Atty. Jose F.S. Bengzon's law firm) for only P5 million
on March 3, 1986 or three days after the creation of the Presidential Commission on
Good Government on February 28, 1986, for the sole purpose of deceiving and
preempting the Government, particularly the PCGG, and making it appear that defendant
Benjamin Romualdez had already divested himself of his ownership of the same when in
truth and in fact, his interests are well intact and being protected by Atty. Jose F.S.
Bengzon, Jr. and some of his law partners, together with the FMMC senior managers who
still control and run the affiars of said corporations, and in order to entice the PCGG to
approve the said fictitious sale, the above-named defendants offered P20 million as
"donation" to the Government;
(p) misused, with the connivance, support and technical assitance of the Bengzon law
firm represented by Atty. Jose F.S. Bengzon, Jr. as legal counsel, together with defendants
Cesar Zalamea, Antonio Ozaeta, Mario D. Camacho amd Senen J. Gabaldon as members
of the Board of Directors of the Philippine Commercial International bank (PCIB), the
Meralco Pension Fund (Fund, for short) in the amount of P25 million by cuasing it to be
invested in the PCIB and through the Bank's TSG, assigned to PCI Development and PCI
Equity at 50% each, the Fund's (a) 8,028.011 common shares in the Bank and (b)
"Deposit in Subscription" in the amount of P4,929.972.50 but of the agreed consideration
of P28 million for the said assignment, PCI Development and PCI Equity were able to

pay only P5,500.00 downpayment and the first amortization of P3,937,500.00 thus
prompting the Fund to rescind its assignment, and the consequent reversion of the
assigned brought the total shareholding of the Fund to 11,470,555 voting shares or 36.8%
of the voting stock of the PCIB, and this development (which the defendants themselves
orchestrated or allowed to happen) was used by them as an excuse for the unlawful
dismantling or cancellation of the Fund's 10 million shares for allegedly exceeding the
30-percent ceiling prescribed by Section 12-B of the General Banking Act, although they
know for a fact that what the law declares as unlawful and void ab initio are the
subscriptions in excess of the 30% ceiling "to the extent of the excess over any of the
ceilings prescribed ..." and not the whole or entire stockholding which they allowed to
stay for six years (from June 30, 1980 to March 24, 1986);
(q) cleverly hid behind the veil of corporate entity, through the use of the names and
managerial expertise of the FMMC senior manager and lawyers identified as Jose B.
Sandejas, Leonardo Gamboa, Vicente T. Mills, Abelardo S, Termulo, Edilberto S.
Narciso, Jr., Jose M. Mantecon, Rex C. Drilon II, Kurt Bachmann, Jr. together with the
legal talents of corporate lawyers, such as Attys. Jose F.S. Bengzon, Jr., Jose V.E.
Jimenez, Amando V. Faustino, Jr., and Leonardo C. Cruz, the ill-gotten wealth of
Benjamin T. Romualdez including, among others, the 6,229,177 shares in PCIB
registered in the names of Trans Middle East Phils. Equities, Inc. and Edilberto S.
Narciso, Jr. which they refused to surrender to PCGG despite their disclosure as they tried
and continue to exert efforts in getting hold of the same as well as the shares in Benguet
registered in the names of Palm Avenue Holdings and Palm Avenue Realty Development
Corp. purportedly to be applied as payment for the claim of P70 million of a "merger
company of the First Manila Managerment Corp. group" supposedly owned by them

although the truth is that all the said firms are still beneficially owned by defendants
Benjamin Romualdez.
xxx xxx xxx
On 28 September 1988, petitioner (as defendants) filed their respective answers. 2 Meanwhile, from 2 to 6 August
1988, conflicting reports on the disposition by the PCGG of the "Romualdez corporations" were carried in various
metropolitan newspapers. Thus, one newspaper reported that the Romuladez firms had not been sequestered
because of the opposition of certain PCGG officials who "had worked prviously as lawyers of the Marcos crony
firms." Another daily reported otherwise, while others declared that on 3 March 1986, or shortly after the EDSA
February 1986 revolution, the Romualdez companies" were sold for P5 million, without PCGG approval, to a
holding company controlled by Romualdez, and that Ricardo Lopa, the President's brother-in-law, had effectively
taken over the firms, even pending negotiations for the purchase of the corporations, for the same price of P5
million which was reportedly way below the fair value of their assets. 3
On 13 September 1988, the Senate Minority Floor Leader, Hon. Juan Ponce Enrile delivered a speech "on a matter
of personal privilege" before the Senate on the alleged "take-over personal privilege" before the Senate on the
alleged "take-over of SOLOIL Incorporated, the flaship of the First Manila Management of Companies (FMMC)
by Ricardo Lopa" and called upon "the Senate to look into the possible violation of the law in the case, particularly
with regard to Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act." 4
On motion of Senator Orlando Mercado, the matter was referred by the Senate to the Committee on Accountability
of Public Officers (Blue Ribbon Committee). 5 Thereafter, the Senate Blue Ribbon Committee started its
investigation on the matter. Petitioners and Ricardo Lopa were subpoenaed by the Committee to appear before it
and testify on "what they know" regarding the "sale of thirty-six (36) corporations belonging to Benjamin "Kokoy"
Romualdez."

At the hearing held on 23 May 1989, Ricardo Lopa declined to testify on the ground that his testimony may
"unduly prejudice" the defendants in Civil Case No. 0035 before the Sandiganbayan. Petitioner Jose F.S. Bengzon,
Jr. likewise refused to testify involing his constitutional right to due process, and averring that the publicity
generated by respondents Committee's inquiry could adversely affect his rights as well as those of the other
petitioners who are his co-defendants in Civil Case No. 0035 before the Sandiganbayan.
The Senate Blue Ribbon Committee, thereupon, suspended its inquiry and directed the petitioners to file their
memorandum on the constitutional issues raised, after which, it issued a resolution 6 dated 5 June 1989 rejecting
the petitioner's plea to be excused from testifying, and the Committee voted to pursue and continue its investigation
of the matter. Senator Neptali Gonzales dissented. 7
Claiming that the Senate Blue Ribbon Committee is poised to subpoena them and required their attendance and
testimony in proceedings before the Committee, in excess of its jurisdiction and legislative purpose, in clear and
blatant disregard of their constitutional rights, and to their grave and irreparable damager, prejudice and injury, and
that there is no appeal nor any other plain, speedy and adequate remedy in the ordinary course of law, the
petitioners filed the present petition for prohibition with a prayer for temporary restraning order and/or injunctive
relief.
Meanwhile, one of the defendants in Civil Case No. 0035 before the Sandiganbayan, Jose S. Sandejas, filed with
the Court of motion for intervention, 8 which the Court granted in the resolution 9 of 21 December 1989, and
required the respondent Senate Blue Ribbon Committee to comment on the petition in intervention. In compliance,
therewith, respondent Senate Blue Ribbon Committee filed its comment10 thereon.
Before discussing the issues raised by petitioner and intervenor, we will first tackle the jurisdictional question
raised by the respondent Committee.

In its comment, respondent Committee claims that this court cannot properly inquire into the motives of the
lawmakers in conducting legislative investigations, much less cna it enjoin the Congress or any its regular and
special commitees like what petitioners seek from making inquiries in aid of legislation, under the doctrine
of separation of powers, which obtaines in our present system of government.
The contention is untenable. In Angara vs. Electoral Commission, 11 the Court held:
The separation of powers is a fundamental principle in our system of government. It obtains not
hrough express provision but by actual division in our Constitution. Each department of the
government has exclusive cognizance of matters wihtin its jurisdiction, and is supreme within its own
sphere. But it does not follow from the fact that the three powers are to be kept separate and distinct
that the Constitution intended them to be absolutely unrestrained and independent of each other. The
Constitution has provided for an elaborate system of checks and balances to secure coordination in the
workings of the various departments of the government...
xxx xxx xxx
But in the main, the Constitution has blocked out with deft strokes and in bold lines, allotment of
power to the executive, the legislative and the judicial departments of the government. The ovelapping
and interlacing of funcstions and duties between the several deaprtments, however, sometimes makes
it hard to say just where the political excitement, the great landmarks of the Constitution are apt to be
forgotten or marred, if not entirely obliterated, in cases of conflict, the judicial departments is the only
constitutional organ which can be called upon to determine the proper allocation of powers between
the several departments and among the integral or constituent units thereof.
xxx xxx xxx

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 inr eality nullify or invalidate an act of
the legislature, but only asserts the solemn and sacred obligation assigned to it by tyhe Constitution to
determine conflicting claims of authority under the Constitution and to established for the parties in an
actual controversy the rights which that instrument secures and guarantess to them. This is in thruth all
that is involved in what is termed "judicial supremacy" which properly is the power of judicial review
under the Constitution. Even the, 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 lis mota presented. Any attempt at abstraction could only
lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities.
Narrowed as its function is in this manner, the judiciary does not pass upon questions of wisdom,
justice or expediency of legislation. More thatn that, courts accord the presumption of constitutionality
to legislative enactments, not only because the legislature is presumed to abide by the Constitution but
also becuase the judiciary in the determination of actual cases and controversies must reflect the
wisdom and justice of the people as expressed through their representatives in the executive and
legislative departments of the government.
The "allocation of constituional boundaries" is a task that this Court must perfomr under the Constitution.
Moreowever, as held in a recent case, 12 "(t)he political question doctrine neither interposes an obstacle to judicial
determination of the rival claims. The jurisdiction to delimit constitutional boundaries has been given to this Court.
It cannot abdicate that obligation mandated by the 1987 Constitution, although said provision by no means does
away with kthe applicability of the principle in appropriate cases." 13

The Court is thus of the considered view that it has jurisdiction over the present controversy for the purpose of
determining the scope and extent of the power of the Senate Blue Ribbon Committee to conduct inquiries into
private affirs in purported aid of legislation.
Coming to the specific issues raised in this case, petitioners contend that (1) the Senate Blue Ribbon Committee's
inquiry has no valid legislative purpose, i.e., it is not done in aid of legislation; (2) the sale or disposition of hte
Romualdez corporations is a "purely private transaction" which is beyond the power of the Senate Blue Ribbon
Committee to inquire into; and (3) the inquiry violates their right to due process.
The 1987 Constition expressly recognizes the power of both houses of Congress to conduct inquiries in aid of
legislation. 14 Thus, Section 21, Article VI thereof provides:
The Senate or the House of Representatives or any of its respective committee may conduct inquiries
in aid of legislation in accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected. 15
The power of both houses of Congress to conduct inquiries in aid of legislation is not, therefore, absolute or
unlimited. Its exercise is circumscribed by the afore-quoted provision of the Constitution. Thus, as provided
therein, the investigation must be "in aid of legislation in accordance with its duly published rules of procedure"
and that "the rights of persons appearing in or affected by such inquiries shall be respected." It follows then that the
rights of persons under the Bill of Rights must be respected, including the right to due process and the right not to
be compelled to testify against one's self.
The power to conduct formal inquiries or investigations in specifically provided for in Sec. 1 of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation. Such inquiries may refer to the implementation or re-

examination of any law or in connection with any proposed legislation or the formulation of future legislation.
They may also extend to any and all matters vested by the Constitution in Congress and/or in the Seante alone.
As held in Jean L. Arnault vs. Leon Nazareno, et al., 16 the inquiry, to be within the jurisdiction of the legislative
body making it, must be material or necessary to the exervise of a power in it vested by the Constitution, such as to
legislate or to expel a member.
Under Sec. 4 of the aforementioned Rules, the Senate may refer to any committee or committees any speech or
resolution filed by any Senator which in tis judgment requires an appropriate inquiry in aid of legislation. In order
therefore to ascertain the character or nature of an inquiry, resort must be had to the speech or resolution under
which such an inquiry is proposed to be made.
A perusal of the speech of Senator Enrile reveals that he (Senator Enrile) made a statement which was published in
various newspapers on 2 September 1988 accusing Mr. Ricardo "Baby" Lopa of "having taken over the FMMC
Group of Companies." As a consequence thereof, Mr. Lopa wrote a letter to Senator Enrile on 4 September 1988
categorically denying that he had "taken over " the FMMC Group of Companies; that former PCGG Chairman
Ramon Diaz himself categorically stated in a telecast interview by Mr. Luis Beltran on Channel 7 on 31 August
1988 that there has been no takeover by him (Lopa); and that theses repeated allegations of a "takeover" on his
(Lopa's) part of FMMC are baseless as they are malicious.
The Lopa reply prompted Senator Enrile, during the session of the Senate on 13 September 1988, to avail of the
privilege hour, 17 so that he could repond to the said Lopa letter, and also to vindicate his reputation as a Member
of the Senate of the Philippines, considering the claim of Mr. Lopa that his (Enrile's) charges that he (Lopa) had
taken over the FMMC Group of Companies are "baseless" and "malicious." Thus, in his speech, 18 Senator Enrile
said, among others, as follows:

Mr. President, I rise this afternnon on a matter of personal privilege; the privilege being that I
received, Mr. President, a letter dated September 4, 1988, signed by Mr. ricardo A. Lopa, a.k.a. or
Baby Lopa, wherein he denied categorically that he has taken over the First Manila Management
Group of Companies which includes SOLOIL Incorporated.
xxx xxxx xxx
In answer to Mr. Lopa, I will quote pertinent portions from an Official Memorandum to the
Presidential Commission of Good Government written and signed by former Governor, now
Congressman Jose Ramirez, in his capacity as head of the PCGG Task Force for Region VIII. In his
memorandum dated July 3, 1986, then Governor Ramirez stated that when he and the members of his
task force sought to serve a sequestration order on the management of SOLOIL in Tanauan, Leyte,
management officials assured him that relatives of the President of the Philippines were personally
discussing and representing SOLOIL so that the order of sequestration would be lifted and that the
new owner was Mr. Ricardo A. Lopa.
I will quote the pertinent portions in the Ramire's memorandum.
The first paragraph of the memorandum reads as follows and I quote, Mr. President:
"Our sequestration work of SOLOIL in Tanauan, Leyte was not heeded by management
because they said another representation was being made to this Commission for the
ventual lifting of our sequestrationorder. They even assured us that Mr. Ricardo Lopa and
Peping Cojunangco were personally discussing and representing SOLOIL, so the order of
sequestration will finally be lifted. While we attempted to carry on our order,
management refused to cooperate and vehemently turned down our request to make

available to us the records of the company. In fact it was obviously clear that they will
meet us with forcethe moment we insist on doing normally our assigned task. In view of
the impending threat, and to avoid any untoward incident we decided to temporarily
suspend our work until there is a more categorical stand of this Commission in view of
the seemingly influential represetation being made by SOLOIL for us not to continue our
work."
Another pertinent portion of the same memorandum is paragraph five, which reads as follows, and I
quote Mr. President:
"The President, Mr. Gamboa, this is, I understand, the President of SOLOIL, and the
Plant Superintendent, Mr. Jimenez including their chief counsel, Atty. Mandong
Mendiola are now saying that there have been divestment, and that the new owner is now
Mr. Ricardo Lopa who according to them, is the brother-in-law of the President. They
even went further by telling us that even Peping Cojuangco who we know is the brother
of her excellency is also interested in the ownership and management of SOLOIL. When
he demanded for supporting papers which will indicate aforesaid divestment, Messrs.
Gamboa, Jimenez and Mendiola refused vehemently to submit these papers to us, instead
they said it will be submitted directly to this Commission. To our mind their continuous
dropping of names is not good for this Commission and even to the President if our
dersire is to achieve respectability and stability of the government."
The contents of the memorandum of then Governor and now Congressman Jose Ramirez were
personally confirmed by him in a news interview last September 7, 1988.
xxx xxxx xxx

Also relevant to this case, Mr. President, is a letter of Mr. Ricardo Lopa himself in August 11, 1988
issue of the newspaper Malaya headlined "On Alleged Takeover of Romualdez Firms."
Mr. Lopa states in the last paragraph of the published letter and I quote him:
12. As of this writing, the sales agreement is under review by the PCGG solely to
determine the appropriate price. The sale of these companies and our prior rigtht to
requires them have never been at issue.
Perhaps I could not make it any clearer to Mr. Lopa that I was not really making baseless and
malicious statements.
Senator Enrile concluded his privilege speech in the following tenor:
Mr. President, it may be worthwhile for the Senate to look into the possible violation of the law in the
case particularly with regard to Republic Act No. 3019, the Anti-Graft and Corrupt Practices Act,
Section 5 of which reads as follows and I quote:
Sec. 5. Prohibition on certain relatives. It shall be unlawful for the spouse or for nay
relative, by consanguinity or affinity, within the third civil degree, of the President of the
Philippines, the Vice-President of the Philippines, the President of the Senate, or the
Speaker of the House of Representatives, to intervene directly or indirectly, in any
business, transaction, contract or application with the Government: Provided, that this
section shall not apply to any person who prior to the assumption of office of any of the
above officials to whom he is related, has been already dealing with the Government
along the same line of business, nor to any transaction, contract or application filed by

him for approval of which is not discretionary on the part of the officials concerned but
depends upon compliance with requisites provided by law, nor to any act lawfully
performed in an official capacity or in the exercise of a profession.
Mr. President, I have done duty to this Senate and to myself. I leave it to this august Body to make its
own conclusion.
Verily, the speech of Senator Enrile contained no suggestion of contemplated legislation; he merely called upon the
Senate to look into a possible violation of Sec. 5 of RA No. 3019, otherwise known as "The Anti-Graft and Corrupt
Practices Act." I other words, the purpose of the inquiry to be conducted by respondent Blue Ribbon commitee was
to find out whether or not the relatives of President Aquino, particularly Mr. ricardo Lopa, had violated the law in
connection with the alleged sale of the 36 or 39 corporations belonging to Benjamin "Kokoy" Romualdez to the
Lopaa Group. There appears to be, therefore, no intended legislation involved.
The Court is also not impressed with the respondent Committee's argument that the questioned inquiry is to be
conducted pursuant to Senate Resolution No. 212. The said resolution was introduced by Senator Jose D. Lina in
view of the representaions made by leaders of school youth, community groups and youth of non-governmental
organizations to the Senate Committee on Youth and Sports Development, to look into the charges against the
PCGG filed by three (3) stockholders of Oriental petroleum, i.e., that it has adopted a "get-rich-quick scheme" for
its nominee-directors in a sequestered oil exploration firm.The pertinent portion of Senate Resolution No. 212
reads as follows:
xxx xxx xxx
WHEREAS, recent developments have shown that no less than the Solicitor-General has stated that
the PCGG Chairman and at least three Commissioners should resign and that the agency should rid

itself of "ineptness, incompetence and corruption" and that the Sandiganbayan has reportedly ordered
the PCGG to answer charges filed by three stockholders of Oriental Petroleum that it has adopted a
"get-rich-quick scheme" for its nominee-directors in a sequestered oil exploration firm;
WHEREAS, leaders of school youth, community groups and youth of non-governmental organization
had made representations to the Senate Committee on Youth and Sports Development to look into the
charges against the PCGG since said agency is a symbol of the changes expected by the people when
the EDSA revolution took place and that the ill-gotten wealth to be recovered will fund priority
projects which will benefit our people such as CARP, free education in the elementary and secondary
levels reforestration, and employment generation for rural and urban workers;
WHEREAS, the government and the present leadeship must demonstrate in their public and private
lives integrity, honor and efficient management of government services lest our youth become
disillusioned and lose hope and return to an Idelogy and form of government which is repugnant to
true freedom, democratic participation and human rights: Now, therefore, be it.
Resolved by the Senate, That the activities of the Presidential Commission on Good Government be
investigated by the appropriate Committee in connection with the implementation of Section 26,
Article XVIII of the Constitution. 19
Thus, the inquiry under Senate Resolution No. 212 is to look into the charges against the PCGG filed by the three
(3) stockholders of Oriental Petroleum in connection with the implementation of Section 26, Article XVIII of the
Constitution.
It cannot, therefore, be said that the contemplated inquiry on the subject of the privilege speech of Senator Juan
Ponce Enrile, i.e., the alleged sale of the 36 (or 39) corporations belonging to Benjamin "Kokoy" Romualdez to the

Lopa Group is to be conducted pursuant to Senate Resolution No. 212 because, firstly, Senator Enrile did not indict
the PCGG, and, secondly, neither Mr. Ricardo Lopa nor the herein petitioners are connected with the government
but are private citizens.
It appeals, therefore, that the contemplated inquiry by respondent Committee is not really "in aid of legislation"
becuase it is not related to a purpose within the jurisdiction of Congress, since the aim of the investigation is to find
out whether or not the ralatives of the President or Mr. Ricardo Lopa had violated Section 5 RA No. 3019, the
"Anti-Graft and Corrupt Practices Act", a matter that appears more within the province of the courts rather than of
the legislature. Besides, the Court may take judicial notice that Mr. Ricardo Lopa died during the pendency of this
case. In John T. Watkins vs. United States, 20 it was held held:
... The power of congress to conduct investigations in inherent in the legislative process. That power is
broad. it encompasses inquiries concerning the administration of existing laws as well as proposed, or
possibly needed statutes. It includes surveys of defects in our social,economic, or political system for
the purpose of enabling Congress to remedy them. It comprehends probes into departments of the
Federal Government to expose corruption, inefficiency or waste. But broad asis this power ofinquiry,
it is not unlimited. There is no general authority to expose the private affairs ofindividuals without
justification in terms of the functions of congress. This was freely conceded by Solicitor General in his
argument in this case. Nor is the Congress a law enforcement or trial agency. These are functions of
the executive and judicial departments of government. No inquiry is an end in itself; it must be related
to and in furtherance of a legitimate task of Congress. Investigations conducted soly for the personal
aggrandizement of the investigators or to "punish" those investigated are indefensible. (emphasis
supplied)
It can not be overlooked that when respondent Committee decide to conduct its investigation of the petitioners, the
complaint in Civil No. 0035 had already been filed with the Sandiganbayan. A perusal of that complaint shows that

one of its principal causes of action against herein petitioners, as defendants therein, is the alleged sale of the 36 (or
39) corporations belonging to Benjamin "Kokoy" Romualdez. Since the issues in said complaint had long been
joined by the filing of petitioner's respective answers thereto, the issue sought to be investigated by the respondent
Commitee is one over which jurisdiction had been acquired by the Sandiganbayan. In short, the issue had been preempted by that court. To allow the respondent Committee to conduct its own investigation of an issue already
before the Sandiganbayan would not only pose the possibility of conflicting judgments betweena legislative
commitee and a judicial tribunal, but if the Committee's judgment were to be reached before that of the
Sandiganbayan, the possibility of its influence being made to bear on the ultimate judgment of the Sandiganbayan
can not be discounted.
In fine, for the rspondent Committee to probe and inquire into the same justiciable controversy already before the
Sandiganbayan, would be an encroachment into the exclusive domain of judicial jurisdiction that had much earlier
set in. In Baremblatt vs. United States, 21 it was held that:
Broad as it is, the power is not, howevern, without limitations. Since congress may only investigate
into those areas in which it may potentially legislate or appropriate, it cannot inquire into matters
which are within the exclusive province of one of the other branches of the government. Lacking the
judicial power given to the Judiciary, it cannot inquire into mattes that are exclusively the concern of
the Judiciary. Neither can it suplant the Executive in what exclusively belongs to the Executive. ...
Now to another matter. It has been held that "a congressional committee's right to inquire is 'subject to all relevant
limitations placed by the Constitution on governmental action,' including "'the relevant limitations of the Bill of
Rights'." 22
In another case

... the mere semblance of legislative purpose would not justify an inquiry in the face of the Bill of
Rights. The critical element is the exeistence of, and the weight to be ascribed to, the interest of the
Congress in demanding disclosures from an unwilling witness. We cannot simply assume, however,
that every congressional investigation is justified by a public need that over-balances any private
rights affected. To do so would be to abdicate the responsibility placed by the Constitution upon the
judiciary to insure that the Congress does not unjustifiably encroah upon an individual's right to
privacy nor abridge his liberty of speech, press, religion or assembly. 23
One of the basic rights guaranteed by the Constitution to an individual is the right against selfincrimination. 24 Thir right constured as the right to remain completely silent may be availed of by the accused in a
criminal case; but kit may be invoked by other witnesses only as questions are asked of them.
This distinction was enunciated by the Court in Romeo Chavez vs. The Honorable Court of Appeals, et al. 25 thus

Petitioner, as accused, occupies a different tier of protection from an ordinary witness. Whereas an
ordinary witness may be compelled to take the witness stand and claim the privilege as each question
requiring an incriminating answer is hot at him, an accused may altother refuse to take the witness
stand and refuse to answer any all questions.
Moreover, this right of the accused is extended to respondents in administrative investigations but only if they
partake of the nature of a criminal proceeding or analogous to a criminal proceeding. In Galman vs.
Pamaran, 26the Court reiterated the doctrine in Cabal vs. Kapuanan (6 SCRA 1059) to illustrate the right of
witnesses to invoke the right against self-incrimination not only in criminal proceedings but also in all other types
of suit

It was held that:

We did not therein state that since he is not an accused and the case is not a criminal case, Cabal
cannot refuse to take the witness stand and testify, and that he can invoke his right against selfincrimination only when a question which tends to elicit an answer that will incriminate him is
propounded to him. Clearly then, it is not the characeter of the suit involved but the nature of the
proceedings that controls. The privilege has consistenly been held to extend to all proceedings
sanctioned by law and to all cases in which punishment is sought to be visited upon a witness, whether
a party or not.
We do not here modify these doctrines. If we presently rule that petitioners may not be compelled by the
respondent Committee to appear, testify and produce evidenc before it, it is only becuase we hold that the
questioned inquiry is not in aid of legislation and, if pursued, would be violative of the principle of separation of
powers between the legislative and the judicial departments of government, ordained by the Constitution.
WHEREFORE, the petition is GRANTED. The Court holds that, under the facts, including the circumtance that
petitioners are presently impleaded as defendants in a case before the Sandiganbayan, which involves issues
intimately related to the subject of contemplated inquiry before the respondet Committee, the respondent Senate
Blue Ribbon Committee is hereby enjoined from compelling the petitioners and intervenor to testify before it and
produce evidence at the said inquiry.
SO ORDERED.

G.R. No. 167173

December 27, 2007

STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON MORRIS, SUNDARA RAMESH,
OWEN BELMAN, SANJAY AGGARWAL, RAJAMANI CHANDRASHEKAR, MARIVEL GONZALES,
MA. ELLEN VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS, RAMONA BERNAD,
MICHAELANGELO AGUILAR, and FERNAND TANSINGCO, Petitioners,
vs.
SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, as represented
by its Chairperson, HON. EDGARDO J. ANGARA, Respondent.
DECISION
NACHURA, J.:
Before us is a Petition for Prohibition (With Prayer for Issuance of Temporary Restraining Order and/or Injunction)
dated and filed on March 11, 2005 by petitioners against respondent Senate Committee on Banks, Financial
Institutions and Currencies, as represented by its Chairperson Edgardo J. Angara (respondent).
Petitioner Standard Chartered Bank (SCB)-Philippines is an institution incorporated in England with limited
liability and is licensed to engage in banking, trust, and other related operations in the Philippines. Petitioners Paul
Simon Morris, Sundara Ramesh, Owen Belman, Sanjay Aggarwal, Rajamani Chandrashekar, Marivel Gonzales,
Ma. Ellen Victor, Chona G. Reyes, Zenaida Iglesias, Ramona Bernad, Michaelangelo Aguilar, and Fernand
Tansingco are the Chief Executive Officer, Chief Operations Officer, Country Head of Consumer Banking, General
Manager for Credit Card and Personal Loans, Chief Financial Officer, Legal and Compliance Officer, former Trust

and Investment Services Head, Country Tax Officer, Head of Corporate Affairs, Head of Banking Services, Head
of Client Relationships, and the Head of Global Markets of SCB-Philippines, respectively. Respondent, on the
other hand, is one of the permanent committees of the Senate of the Philippines.
The petition seeks the issuance of a temporary restraining order (TRO) to enjoin respondent from (1) proceeding
with its inquiry pursuant to Philippine Senate (P.S.) Resolution No. 166; (2) compelling petitioners who are officers
of petitioner SCB-Philippines to attend and testify before any further hearing to be conducted by respondent,
particularly that set on March 15, 2005; and (3) enforcing any hold-departure order (HDO) and/or putting the
petitioners on the Watch List. It also prays that judgment be rendered (1) annulling the subpoenae ad testificandum
and duces tecum issued to petitioners, and (2) prohibiting the respondent from compelling petitioners to appear and
testify in the inquiry being conducted pursuant to P.S. Resolution No. 166.
The facts are as follows:
On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of respondent, delivered a privilege speech
entitled "Arrogance of Wealth"1 before the Senate based on a letter from Atty. Mark R. Bocobo denouncing SCBPhilippines for selling unregistered foreign securities in violation of the Securities Regulation Code (R.A. No.
8799) and urging the Senate to immediately conduct an inquiry, in aid of legislation, to prevent the occurrence of a
similar fraudulent activity in the future. Upon motion of Senator Francis Pangilinan, the speech was referred to
respondent. Prior to the privilege speech, Senator Enrile had introduced P.S. Resolution No. 166,2 to wit:
RESOLUTION
DIRECTING THE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, TO
CONDUCT AN INQUIRY, IN AID OF LEGISLATION, INTO THE ILLEGAL SALE OF

UNREGISTERED AND HIGH-RISK SECURITIES BY STANDARD CHARTERED BANK, WHICH

RESULTED IN BILLIONS OF PESOS OF LOSSES TO THE INVESTING PUBLIC
WHEREAS, Republic Act No. 7721, otherwise known as the "Law Liberalizing the Entry and Scope of Operations
of Foreign Banks in the Philippines," was approved on May 18, 1994 to promote greater participation of foreign
banks in the Philippine Banking Industry that will stimulate economic growth and serve as a channel for the flow
of funds into the economy;
WHEREAS, to promote greater competition in the Philippine Banking Industry, foreign banks were accorded the
same privileges, allowed to perform the same functions and subjected to the same limitations under relevant
banking laws imposed upon domestic banks;
WHEREAS, Standard Chartered Bank was among the foreign banks granted the privilege to do business in our
country under Republic Act No. 7721;
WHEREAS, there are complaints against Standard Chartered Bank whose actions have reportedly defrauded
hundreds of Filipino investors of billions of pesos through the sale of unregistered securities in the form of highrisk mutual funds falsely advertised and marketed as safe investment havens;
WHEREAS, there are reports that Standard Chartered Bank clearly knew that its actions were violative of
Philippine banking and securities laws but cleverly disguised its illegal acts through the use of pro-forma
agreements containing waivers of liability in favor of the bank;
WHEREAS, there are reports that in the early stages of conducting these questionable activities, the Bangko
Sentral ng Pilipinas warned and eventually fined Standard Chartered Bank a measly P30,000 for violating
Philippine banking laws;

WHEREAS, the particular operations of Standard Chartered Bank may constitute "conducting business in an
unsafe and unsound manner," punishable under Section 37 of Republic Act No. 7653 and should have drawn the
higher penalty of revocation of its quasi-banking license;
WHEREAS, Republic Act No. 8791 or the "General Banking Act of 2000" deems a particular act or omission as
conducting business in an unsafe and unsound manner as follows:
"Section 56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to the
institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public in general."
WHEREAS, the sale of unregistered securities is also a clear violation of Republic Act No. 8799 or "The Securities
Regulation Code of 2000" which states:
"Section 8.1 Securities shall not be sold or offered for sale or distribution within the Philippines, without a
registration statement duly filed with and approved by the Commission. Prior to such sale, information on the
securities, in such form and with such substance as the Commission may prescribe, shall be made available to each
prospective purchaser."
WHEREAS, the Securities and Exchange Commission (SEC) reportedly issued a Cease-and-Desist Order (CDO)
against Standard Chartered Bank for the sale of these unregistered securities but the case was reportedly settled
administratively and dismissed after Standard Chartered Bank paid a fine of P7 Million;
WHEREAS, the SEC reportedly made an official finding that Standard Chartered Bank actively engaged in
promoting and marketing the so-called "Global Third Party Mutual Funds" to the investing public and even set
revenue quotas for the sale of these funds;

WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the sale
of unregistered securities and in effectively enforcing the registration rules intended to protect the investing public
from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of
proportionate penalties to offending entities and their directors, officers and representatives among other additional
regulatory measures;
Now, therefore, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to direct the Committee on Banks,
Currencies, and Financial Institutions, to conduct an inquiry, in aid of legislation, into the reported sale of
unregistered and high-risk securities by Standard Chartered Bank which resulted in billions of losses to the
investing public.
Acting on the referral, respondent, through its Chairperson, Senator Edgardo J. Angara, set the initial hearing on
February 28, 2005 to investigate, in aid of legislation, the subject matter of the speech and resolution filed by
Senator Enrile.
Respondent invited petitioners, among others, to attend the hearing, requesting them to submit their written
position paper. Petitioners, through counsel, submitted to respondent a letter3 dated February 24, 2005 presenting
their position, particularly stressing that there were cases pending in court allegedly involving the same issues
subject of the legislative inquiry, thereby posing a challenge to the jurisdiction of respondent to continue with the
inquiry.

On February 28, 2005, respondent commenced the investigation. Senator Enrile inquired who among those invited
as resource persons were present and who were absent. Thereafter, Senator Enrile moved that subpoenae be issued
to those who did not attend the hearing and that the Senate request the Department of Justice, through the Bureau
of Immigration and Deportation, to issue an HDO against them and/or include them in the Bureaus Watch List.
Senator Juan Flavier seconded the motion and the motion was approved.
Respondent then proceeded with the investigation proper. Towards the end of the hearing, petitioners, through
counsel, made an Opening Statement4 that brought to the attention of respondent the lack of proper authorization
from affected clients for the bank to make disclosures of their accounts and the lack of copies of the accusing
documents mentioned in Senator Enrile's privilege speech, and reiterated that there were pending court cases
regarding the alleged sale in the Philippines by SCB-Philippines of unregistered foreign securities.
The February 28, 2005 hearing was adjourned without the setting of the next hearing date. However, petitioners
were later served by respondent with subpoenae ad testificandum and duces tecum to compel them to attend and
testify at the hearing set on March 15, 2005. Hence, this petition.
The grounds relied upon by petitioners are as follows:
I.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN CONDUCTING AN INVESTIGATION,
PURPORTEDLY IN AID OF LEGISLATION, BUT IN REALITY PROBING INTO THE ISSUE OF WHETHER
THE STANDARD CHARTERED BANK HAD SOLD UNREGISTERED FOREIGN SECURITIES IN THE
PHILIPPINES. SAID ISSUE HAS LONG BEEN THE SUBJECT OF CRIMINAL AND CIVIL ACTIONS NOW
PENDING BEFORE THE COURT OF APPEALS, REGIONAL TRIAL COURT OF PASIG CITY,

METROPOLITAN TRIAL COURT OF MAKATI CITY AND THE PROSECUTOR'S OFFICE OF MAKATI
CITY.
II.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION BY CONDUCTING AN INVESTIGATION, PURPORTEDLY "IN AID OF LEGISLATION,"
BUT IN REALITY IN "AID OF COLLECTION" BY A HANDFUL OF TWO (2) CLIENTS OF STANDARD
CHARTERED BANK OF LOSSES WHICH WERE FOR THEIR ACCOUNT AND RISK. AT ANY RATE, SUCH
COLLECTION IS WITHIN THE PROVINCE OF THE COURT RATHER THAN OF THE LEGISLATURE.
III.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN COMPELLING PETITIONERS, SOME OF
WHOM ARE RESPONDENTS IN THE PENDING CRIMINAL AND CIVIL ACTIONS BROUGHT BY SAID
CLIENTS, IN VIOLATION OF PETITIONERS RIGHT AGAINST SELF-INCRIMINATION AND RIGHT TO
PURSUE AND DEFEND THEIR CAUSE IN COURT RATHER THAN ENGAGE IN TRIAL BY PUBLICITY
A CLEAR VIOLATION OF DUE PROCESS, RIGHT TO PRIVACY AND TO TRAVEL.
IV.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION BY DISREGARDING ITS OWN RULES.5
Petitioners argue that respondent has no jurisdiction to conduct the inquiry because its subject matter is the very
same subject matter of the following cases, to wit:

(a) CA-G.R. SP No. 85078, entitled "Manuel V. Baviera vs. Hon. Esperanza P. Rosario, et al., pending
before the 9th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the
dismissal by the Department of Justice of his complaint against Standard Chartered Bank and its officers
accusing them of SELLING UNREGISTERED FOREIGN SECURITIES IN VIOLATION OF P.D.
NO. 1869 (SYNDICATED ESTAFA) AND ARTICLE 315 OF THE REVISED PENAL CODE.
(b) CA-G.R. SP No. 86200, entitled "Manuel V. Baviera vs. Hon. Rafael Buenaventura, et al.", pending
before the 15th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the
termination for lack of probable cause by the Anti-Money Laundering Council ("AMLC") of the
investigation of Standard Chartered Bank for money laundering activities BY SELLING
UNREGISTERED FOREIGN SECURITIES.
(c) CA-G.R. SP No. 87328, entitled "Manuel V. Baviera vs. Hon. Esperanza Paglinawan Rozario, et
al.,"pending before the 16th Division of the Court of Appeals. The petition seeks to annul and set aside the
dismissal by the Department of Justice of Mr. Baviera's complaint accusing SCB and its officers of violation
of the Securities Regulation Code by SELLING UNREGISTERED FOREIGN SECURITIES.
(d) Civil Case No. 70173, entitled "Mr. Noel G. Sanchez, et al. vs. Standard Chartered Bank," pending
before Branch 155 of the Regional Trial Court of Pasig City. Plaintiff seeks damages and recovery of their
investment accusing the bank of SELLING UNREGISTERED FOREIGN SECURITIES.
(e) Criminal Case No. 332034, entitled "People of the Philippines vs. Manuel V. Baviera," pending before
Branch 64 of the Metropolitan Trial Court of Makati City. Petitioner Morris is the private complainant in this
information for extortion or blackmail against Mr. Baviera for demanding the payment of US$2 Million with
the threat to EXPOSE THE BANK'S "LARGE SCALE SCAM" CONSISTING [OF] ILLEGAL
SELLING OF UNREGISTERED FOREIGN SECURITIES BY THE BANK, before various

government offices, such as the Department of Justice, the BIR, Bangko Sentral ng Pilipinas, Regional Trial
Courts, and both houses of Congress.
(f) Criminal Case No. 331395, entitled "People of the Philippines vs. Manuel V. Baviera," pending before
Branch 64 of the Metropolitan Trial Court of Makati City. Petitioners Victor and Chona Reyes are the private
complainants in this information for perjury committed by Mr. Baviera in securing a hold departure order
against the petitioners herein from the Department of Justice for their alleged involvement in syndicated
estafa and swindling BY SELLING UNREGISTERED FOREIGN SECURITIES.
(g) I.S. No. 2004-B-2279-80, entitled "Aurelio Litonjua III and Aurelio Litonjua, Jr. vs. Antonette de los
Reyes, et al.," pending before the Office of the Prosecutor, Makati City. This is a criminal complaint
accusing SCB and its officers of estafa for SELLING UNREGISTERED FOREIGN SECURITIES. 6
Citing Bengzon, Jr. v. Senate Blue Ribbon Committee,7 the petitioners claim that since the issue of whether or not
SCB-Philippines illegally sold unregistered foreign securities is already preempted by the courts that took
cognizance of the foregoing cases, the respondent, by this investigation, would encroach upon the judicial powers
vested solely in these courts.
The argument is misplaced. Bengzon does not apply squarely to petitioners case.
It is true that in Bengzon, the Court declared that the issue to be investigated was one over which jurisdiction had
already been acquired by the Sandiganbayan, and to allow the [Senate Blue Ribbon] Committee to investigate the
matter would create the possibility of conflicting judgments; and that the inquiry into the same justiciable
controversy would be an encroachment on the exclusive domain of judicial jurisdiction that had set in much earlier.

To the extent that, in the case at bench, there are a number of cases already pending in various courts and
administrative bodies involving the petitioners, relative to the alleged sale of unregistered foreign securities, there
is a resemblance between this case and Bengzon. However, the similarity ends there.
Central to the Courts ruling in Bengzon -- that the Senate Blue Ribbon Committee was without any constitutional
mooring to conduct the legislative investigation -- was the Courts determination that the intended inquiry was not
in aid of legislation. The Court found that the speech of Senator Enrile, which sought such investigation contained
no suggestion of any contemplated legislation; it merely called upon the Senate to look into possible violations of
Section 5, Republic Act No. 3019. Thus, the Court held that the requested probe failed to comply with a
fundamental requirement of Section 21, Article VI of the Constitution, which states:
The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of
legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected
by such inquiries shall be respected.
Accordingly, we stopped the Senate Blue Ribbon Committee from proceeding with the legislative investigation in
that case.
Unfortunately for the petitioners, this distinguishing factual milieu in Bengzon does not obtain in the instant case.
P.S. Resolution No. 166 is explicit on the subject and nature of the inquiry to be (and already being) conducted by
the respondent Committee, as found in the last three Whereas clauses thereof, viz.:
WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the sale
of unregistered securities and in effectively enforcing the registration rules intended to protect the investing public
from fraudulent practices;

WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the
conduct of proscribed activities in a manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of
proportionate penalties to offending entities and their directors, officers and representatives among other additional
regulatory measures; (emphasis supplied)
The unmistakable objective of the investigation, as set forth in the said resolution, exposes the error in petitioners
allegation that the inquiry, as initiated in a privilege speech by the very same Senator Enrile, was simply "to
denounce the illegal practice committed by a foreign bank in selling unregistered foreign securities x x x." This
fallacy is made more glaring when we consider that, at the conclusion of his privilege speech, Senator Enrile urged
the Senate "to immediately conduct an inquiry, in aid of legislation, so as to prevent the occurrence of a similar
fraudulent activity in the future."
Indeed, the mere filing of a criminal or an administrative complaint before a court or a quasi-judicial body should
not automatically bar the conduct of legislative investigation. Otherwise, it would be extremely easy to subvert any
intended inquiry by Congress through the convenient ploy of instituting a criminal or an administrative complaint.
Surely, the exercise of sovereign legislative authority, of which the power of legislative inquiry is an essential
component, cannot be made subordinate to a criminal or an administrative investigation.
As succinctly stated in the landmark case Arnault v. Nazareno8
[T]he power of inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative
function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the
conditions which the legislation is intended to affect or change; and where the legislative body does not itself
possess the requisite information which is not infrequently true recourse must be had to others who possess it.

Neither can the petitioners claim that they were singled out by the respondent Committee. The Court notes that
among those invited as resource persons were officials of the Securities and Exchange Commission (SEC) and the
Bangko Sentral ng Pilipinas (BSP). These officials were subjected to the same critical scrutiny by the respondent
relative to their separate findings on the illegal sale of unregistered foreign securities by SCB-Philippines. It is
obvious that the objective of the investigation was the quest for remedies, in terms of legislation, to prevent the
recurrence of the allegedly fraudulent activity.
Still, petitioners insist that the inquiry conducted by respondent was, in fact, "in aid of collection." They claim that
Atty. Bocobo and Manuel Baviera, the latter a party to the pending court cases cited by petitioners, were only
seeking a friendly forum so that they could recover their investments from SCB-Philippines; and that the
respondent has allowed itself to be used as the conveniently available vehicle to effect this purpose.
However, as correctly pointed out by respondent in its Comment on the petition, Atty. Bocobo did not file a
complaint before the Senate for the purpose of recovering his investment. On the contrary, and as confirmed during
the initial hearing on February 28, 2005, his letter-complaint humbly requested the Senate to conduct an inquiry
into the purportedly illegal activities of SCB-Philippines, with the end view of preventing the future occurrence of
any similar fraudulent activity by the banks in general.9 Baviera, on the other hand, was not a "complainant" but
merely a witness in the investigation, invited to testify on the alleged illegal sale of unregistered foreign securities
by SCB-Philippines, being one of the supposed victims thereof.
The Court further notes that when it denied petitioners prayer for the issuance of a TRO to restrain the hearing set
on March 15, 2005,10 respondent proceeded with the investigation. On the said date, outraged by petitioners
imputation that it was conducting the investigation "in aid of collection," respondent held petitioners, together with
their counsel, Atty. Reynaldo Geronimo, in contempt and ordered their detention for six hours.

Petitioners filed a Motion for Partial Reconsideration of this Courts Resolution dated March 14, 2005 only with
respect to the denial of the prayer for the issuance of a TRO and/or writ of preliminary injunction, alleging that
their being held in contempt was without legal basis, as the phrase "in aid of collection" partakes of an absolutely
privileged allegation in the petition.
We do not agree. The Court has already expounded on the essence of the contempt power of Congress and its
committees in this wise
The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is founded upon
reason and policy. Said power must be considered implied or incidental to the exercise of legislative power. How
could a legislative body obtain the knowledge and information on which to base intended legislation if it cannot
require and compel the disclosure of such knowledge and information, if it is impotent to punish a defiance of its
power and authority? When the framers of the Constitution adopted the principle of separation of powers, making
each branch supreme within the realm of its respective authority, it must have intended each departments authority
to be full and complete, independently of each others authority or power. And how could the authority and power
become complete if for every act of refusal, every act of defiance, every act of contumacy against it, the legislative
body must resort to the judicial department for the appropriate remedy, because it is impotent by itself to punish or
deal therewith, with affronts committed against its authority or dignity.11
The exercise by Congress or by any of its committees of the power to punish contempt is based on the principle of
self-preservation. As the branch of the government vested with the legislative power, independently of the judicial
branch, it can assert its authority and punish contumacious acts against it. Such power is sui generis, as it attaches
not to the discharge of legislative functions per se, but to the sovereign character of the legislature as one of the
three independent and coordinate branches of government.12

In this case, petitioners imputation that the investigation was "in aid of collection" is a direct challenge against the
authority of the Senate Committee, as it ascribes ill motive to the latter. In this light, we find the contempt citation
against the petitioners reasonable and justified.
Furthermore, it is axiomatic that the power of legislative investigation includes the power to compel the attendance
of witnesses. Corollary to the power to compel the attendance of witnesses is the power to ensure that said
witnesses would be available to testify in the legislative investigation. In the case at bench, considering that most of
the officers of SCB-Philippines are not Filipino nationals who may easily evade the compulsive character of
respondents summons by leaving the country, it was reasonable for the respondent to request the assistance of the
Bureau of Immigration and Deportation to prevent said witnesses from evading the inquiry and defeating its
purpose. In any event, no HDO was issued by a court. The BID instead included them only in the Watch List,
which had the effect of merely delaying petitioners intended travel abroad for five (5) days, provided no HDO is
issued against them.13
With respect to the right of privacy which petitioners claim respondent has violated, suffice it to state that privacy
is not an absolute right. While it is true that Section 21, Article VI of the Constitution, guarantees respect for the
rights of persons affected by the legislative investigation, not every invocation of the right to privacy should be
allowed to thwart a legitimate congressional inquiry. In Sabio v. Gordon,14 we have held that the right of the people
to access information on matters of public concern generally prevails over the right to privacy of ordinary financial
transactions. In that case, we declared that the right to privacy is not absolute where there is an overriding
compelling state interest. Employing the rational basis relationship test, as laid down in Morfe v. Mutuc,15 there is
no infringement of the individuals right to privacy as the requirement to disclosure information is for a valid
purpose, in this case, to ensure that the government agencies involved in regulating banking transactions
adequately protect the public who invest in foreign securities. Suffice it to state that this purpose constitutes a
reason compelling enough to proceed with the assailed legislative investigation.16

As regards the issue of self-incrimination, the petitioners, officers of SCB-Philippines, are not being indicted as
accused in a criminal proceeding. They were summoned by respondent merely as resource persons, or as witnesses,
in a legislative inquiry. As distinguished by this Court
[An] accused occupies a different tier of protection from an ordinary witness. Whereas an ordinary witness may be
compelled to take the witness stand and claim the privilege as each question requiring an incriminating answer is
shot at him, an accused may altogether refuse to take the witness stand and refuse to answer any and all questions.17
Concededly, this right of the accused against self-incrimination is extended to respondents in administrative
investigations that partake of the nature of or are analogous to criminal proceedings. The privilege has consistently
been held to extend to all proceedings sanctioned by law; and to all cases in which punishment is sought to be
visited upon a witness, whether a party or not.18
However, in this case, petitioners neither stand as accused in a criminal case nor will they be subjected by the
respondent to any penalty by reason of their testimonies. Hence, they cannot altogether decline appearing before
respondent, although they may invoke the privilege when a question calling for an incriminating answer is
propounded.19
Petitioners argument, that the investigation before respondent may result in a recommendation for their
prosecution by the appropriate government agencies, such as the Department of Justice or the Office of the
Ombudsman, does not persuade.
As held in Sinclair v. United States20 -It may be conceded that Congress is without authority to compel disclosures for the purpose of aiding the
prosecution of pending suits; but the authority of that body, directly or through its Committees, to require pertinent

disclosures in aid of its own constitutional power is not abridged because the information sought to be elicited may
also be of use in such suits. x x x It is plain that investigation of the matters involved in suits brought or to be
commenced under the Senate resolution directing the institution of suits for the cancellation of the leases might
directly aid in respect of legislative action.
The prosecution of offenders by the prosecutorial agencies and the trial before the courts is for the punishment of
persons who transgress the law. The intent of legislative inquiries, on the other hand, is to arrive at a policy
determination, which may or may not be enacted into law.
Except only when it exercises the power to punish for contempt, the respondent, as with the other Committees of
the Senate or of the House of Representatives, cannot penalize violators even if there is overwhelming evidence of
criminal culpability. Other than proposing or initiating amendatory or remedial legislation, respondent can only
recommend measures to address or remedy whatever irregularities may be unearthed during the investigation,
although it may include in its Report a recommendation for the criminal indictment of persons who may appear
liable. At best, the recommendation, along with the evidence, contained in such a Report would be persuasive, but
it is still up to the prosecutorial agencies and the courts to determine the liabilities of the offender.
Finally, petitioners sought anew, in their Manifestation and Motion21 dated June 21, 2006, the issuance by this
Court of a TRO and/or writ of preliminary injunction to prevent respondent from submitting its Committee Report
No. 75 to the Senate in plenary for approval. However, 16 days prior to the filing of the Manifestation and Motion,
or on June 5, 2006, respondent had already submitted the report to the Senate in plenary. While there is no showing
that the said report has been approved by the Senate, the subject of the Manifestation and Motion has inescapably
become moot and academic.
WHEREFORE, the Petition for Prohibition is DENIED for lack of merit. The Manifestation and Motion dated June
21, 2006 is, likewise, DENIED for being moot and academic.

SO ORDERED.

G.R. No. 72492 November 5, 1987

NEGROS ORIENTAL II ELECTRIC COOPERATIVE, INC., PATERIO TORRES and ARTURO
UMBAC,petitioners,
vs.
SANGGUNIANG PANLUNGSOD OF DUMAGUETE, THE AD HOC COMMITTEE OF THE
SANGGUNIANG PANLUNGSOD OF DUMAGUETE and ANTONIO S. RAMAS
UYPITCHING, respondents.

CORTES, J.:
An attempt by the respondent Ad Hoc Committee of the respondent Sangguniang Panlungsod of Dumaguete to
punish non-members for legislative contempt was halted by this special civil action of certiorari
and Prohibitionwith Preliminary Injunction and/or Restraining Order questioning the very existence of the power
in that local legislative body or in any of its committees. On November 7, 1985, this Court issued a Temporary
Restraining Order:
. . . enjoining respondents, their agents, representatives, and police and other peace officers acting in
their behalf, to refrain from compelling the attendance and testimony of Petitioners Paterio Torres and
Arturo Umbac at any and all future investigations to be conducted by aforesaid respondents, and from
issuing any contempt order if one has not been issued yet or from executing any such contempt order
if one has already been issued.

Assailed is the validity of a subpoena dated October 25, 1985 (Annex "A", Petition) sent by the respondent
Committee to the petitioners Paterio Torres and Arturo Umbac, Chairman of the Board of Directors and the
General Manager, respectively, of petitioner Negros Oriental II Electric Cooperative NORECO II), requiring their
attendance and testimony at the Committee's investigation on October 29, 1985. Similarly under fire is the Order
issued by the same Committee on the latter date, (Annex "D", Petition) directing said petitioners to show cause
why they should not be punished for legislative contempt due to their failure to appear at said investigation.
The investigation to be conducted by respondent Committee was "in connection with pending legislation related to
the operations of public utilities" (Id.) in the City of Dumaguete where petitioner NORECO II, an electric
cooperative, had its principal place of business. Specifically, the inquiry was to focus on the alleged installation and
use by the petitioner NORECO II of inefficient power lines in that city (Comment, Rollo, p. 50). Respondent
Antonio S. Ramas Uypitching, as Chairman of the Committee on Public Utilities and Franchises and Co-Chairman
of the respondent Ad Hoc Committee, signed both the subpoena and the Order complained of. Petitioners moved to
quash the subpoena on the following grounds:
a. The power to investigate, and to order the improvement of, alleged inefficient power lines to
conform to standards is lodged exclusively with the National Electrification Administration; and
b. Neither the Charter of the City of Dumaguete nor the Local Government Code grants (the
Sangguniang Panlungsod) any specific power to investigate alleged inefficient power lines of
NORECO II. (Annex "C", Petition)
The motion to quash was denied in the assailed Order of October 29, 1985 directing the petitioners Torres and
Umbac to show cause why they should not be punished for contempt. Hence this Petition for certiorari
andProhibition with Preliminary Injunction and/or Restraining Order.

Petitioners contend that the respondent Sangguniang Panlungsod of Dumaguete is bereft of the power to compel
the attendance and testimony of witnesses, nor the power to order the arrest of witnesses who fail to obey
itssubpoena. It is further argued that assuming the power to compel the attendance and testimony of witnesses to be
lodged in said body, it cannot be exercised in the investigation of matters affecting the terms and conditions of the
franchise granted to NORECO II which are beyond the jurisdiction of the Sangguniang Panlungsod (Rollo pp. 7-8).
Respondents, for their part, claim that inherent in the legislative functions performed by the
respondentSangguniang Panlungsod is the power to conduct investigations in aid of legislation and with it, the
power to punish for contempt in inquiries on matters within its jurisdiction (Rollo, p. 46). It is also the position of
the respondents that the contempt power, if not expressly granted, is necessarily implied from the powers granted
theSangguniang Panlungsod (Rollo, pp. 48-49). Furthermore, the respondents assert that an inquiry into the
installation or use of inefficient power lines and its effect on the power consumption cost on the part of Dumaguete
residents is well-within the jurisdiction of the Sangguniang Panlungsod and its committees.
1. A line should be drawn between the powers of Congress as the repository of the legislative power under the
Constitution, and those that may be exercised by the legislative bodies of local government unit, e.g.
theSangguniang Panlungsod of Dumaguete which, as mere creatures of law, possess delegated legislative
power.While the Constitution does not expressly vest Congress with the power to punish non-members for
legislative contempt, the power has nevertheless been invoked by the legislative body as a means of preserving its
authority and dignity (Arnault v. Nazareno, 87 Phil. 29 [1950]); Amault v. Balagtas, 97 Phil. 358 [1955]), in the
same way that courts wield an inherent power to "enforce their authority, preserve their integrity, maintain their
dignity, and ensure the effectiveness of the administration of justice." (Commissioner v. Cloribel, 127 Phil. 716,
723 [1967]; In re Kelly 35 Phil. 944 950 [1916], and other cases). The exercise by Congress of this awesome
power was questioned for the first time in the leading case of Arnault v. Nazareno, (87 Phil. 29 [1950]) where this
Court held that the legislative body indeed possessed the contempt power.

That case arose from the legislative inquiry into the acquisition by the Philippine Government of the Buenavista
and Tambobong estates sometime in 1949. Among the witnesses called and examined by the special committee
created by a Senate resolution was Jean L. Arnault, a lawyer who delivered a portion of the purchase price to a
representative of the vendor. During the Senate, investigation, Amault refused to reveal the Identity of said
representative, at the same time invoking his constitutional right against self-incrimination. The Senate adopted a
resolution committing Arnault to the custody of the Sergeant at Arms and imprisoned "until he shall have purged
the contempt by revealing to the Senate . . . the name of the person to whom he gave the P440,000, as wen as
answer other pertinent questions in connection therewith." (Arnault v. Nazareno, 87 Phil. 29, 43 [1950]). Arnault
petitioned for a writ of Habeas Corpus.
In upholding the power of Congress to punish Arnault for contumacy the Court began with a discussion of the
distribution of the three powers of government under the 1935 Constitution. Cognizant of the fact that the
Philippines system of government under the 1935 Constitution was patterned after the American system, the Court
proceeded to resolve the issue presented, partly by drawing from American precedents, and partly by
acknowledging the broader legislative power of the Philippine Congress as compared to the U.S. Federal Congress
which shares legislative power with the legislatures of the different states of the American union (Id., pp. 44-45).
The Court held:
xxx xxx xxx
... (T)he power of inquiry-with process to enforce it-is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively in the absence of
information respecting the conditions which the legislation is intended to affect or change; and where
the legislative body does not itself possess the requisite information which is not infrequently true
recourse must be had to others who possess it. Experience has shown that mere requests for such
information are often unavailing, and also that information which is volunteered is not always accurate

or complete; so some means of compulsion is essential to obtain what is needed. (McGrain vs.
Daugherty 273 U.S., 135; 71 L. ed., 580; 50 ALR 1) The fact that the Constitution expressly gives to
Congress the power to punish its Members for disorderly behaviour, does not by necessary implication
exclude the power to punish for contempt by any person. (Anderson vs. Dunn, 6 Wheaton 204; 5 L.
ed., 242)
But no person can be punished for contumacy as a witness before either House, unless his testimony is
required in a matter into which that House has jurisdiction to inquire. (Kilbourn vs. Thompson, 26,
L.ed., 377.)
The Court proceeded to delve deeper into the essence of the contempt power of the Philippine Congress in a
subsequent decision (Arnault v. Balagtas, 97 Phil. 358 [1955]) arising from the same factual antecedents:
The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is
founded upon reason and policy. Said power must be considered implied or incidental to the exercise
of legislative power. How could a legislative body obtain the knowledge and information on which to
base intended legislation if it cannot require and compel the disclosure of such knowledge and
information, if it is impotent to punish a defiance of its power and authority? When the framers of the
Constitution adopted the principle of separation of powers, making each branch supreme within the
real of its respective authority, it must have intended each department's authority to be full and
complete, independently of the other's authority or power. And how could the authority and power
become complete if for every act of refusal every act of defiance, every act of contumacy against it,
the legislative body must resort to the judicial department for the appropriate remedy, because it is
impotent by itself to punish or deal therewith, with the affronts committed against its authority or
dignity. . . (Arnault v. Balagtas, L-6749, July 30, 1955; 97 Phil. 358, 370 [1955]).

The aforequoted pronouncements in the two Arnault cases, supra, broke ground in what was then an unexplored
area of jurisprudence, and succeeded in supplying the raison d' etre of this power of Congress even in the absence
of express constitutional grant. Whether or not the reasons for upholding the existence of said power in Congress
may be applied mutatis mutandis to a questioned exercise of the power of contempt by the respondent committee
of a city council is the threshold issue in the present controversy.
3. The exercise by the legislature of the contempt power is a matter of self-preservation as that branch of the
government vested with the legislative power, independently of the judicial branch, asserts its authority and
punishes contempts thereof. The contempt power of the legislature is, therefore, sui generis, and local legislative
bodies cannot correctly claim to possess it for the same reasons that the national legislature does. The power
attaches not to the discharge of legislative functions per se but to the character of the legislature as one of the three
independent and coordinate branches of government. The same thing cannot be said of local legislative bodies
which are creations of law.
4. To begin with, there is no express provision either in the 1973 Constitution or in the Local Government Code
(Batas Pambansa Blg. 337) granting local legislative bodies, the power to subpoena witnesses and the power to
punish non-members for contempt. Absent a constitutional or legal provision for the exercise of these powers, the
only possible justification for the issuance of a subpoena and for the punishment of non-members for contumacious
behaviour would be for said power to be deemed implied in the statutory grant of delegated legislative power. But,
the contempt power and the subpoena power partake of a judicial nature. They cannot be implied in the grant of
legislative power. Neither can they exist as mere incidents of the performance of legislative functions. To allow
local legislative bodies or administrative agencies to exercise these powers without express statutory basis would
run afoul of the doctrine of separation of powers.
Thus, the contempt power, as well as the subpoena power, which the framers of the fundamental law did not
expressly provide for but which the then Congress has asserted essentially for self-preservation as one of three co-

equal branches of the government cannot be deemed implied in the delegation of certain legislative functions to
local legislative bodies. These cannot be presumed to exist in favor of the latter and must be considered as an
exception to Sec. 4 of B.P. 337 which provides for liberal rules of interpretation in favor of local autonomy. Since
the existence of the contempt power in conjunction with the subpoena power in any government body inevitably
poses a potential derogation of individual rights, i.e. compulsion of testimony and punishment for refusal to testify,
the law cannot be liberally construed to have impliedly granted such powers to local legislative bodies. It cannot be
lightly presumed that the sovereign people, the ultimate source of all government powers, have reposed these
powers in all government agencies. The intention of the sovereign people, through their representatives in the
legislature, to share these unique and awesome powers with the local legislative bodies must therefore clearly
appear in pertinent legislation.
There being no provision in the Local Government Code explicitly granting local legislative bodies, the power to
issue compulsory process and the power to punish for contempt, the Sanggunian Panlungsod of Dumaguete is
devoid of power to punish the petitioners Torres and Umbac for contempt. The Ad-Hoc Committee of said
legislative body has even less basis to claim that it can exercise these powers.
5. Even assuming that the respondent Sangguniang Panlungsod and the respondent Ad-Hoc Committee had the
power to issue the subpoena and the order complained of, such issuances would still be void for being ultra
vires.The contempt power (and the subpoena power) if actually possessed, may only be exercised where the subject
matter of the investigation is within the jurisdiction of the legislative body (Arnault v. Nazareno, supra, citing
Kilbourn v. Thompson). As admitted by the respondents in their Comment, the investigation to be conducted by the
Ad-Hoc Committee was to look into the use by NORECO II of inefficient power lines "of pre-war vintage" which
the latter had acquired from the Visayan Electric Com. company, and "to hear the side of the petitioners"
(Comment, Rollo, p. 50). It comes evident that the inquiry would touch upon the efficiency of the electric service

of NORECO II and, necessarily, its compliance with the franchise. Such inquiry is beyond the jurisdiction of the
respondent Sangguniang Panlungsod and the respondent committee.
There is no doubt that a city government has the power to enact ordinances regulating the installation and
maintenance of electric power lines or wires within its territorial jurisdiction. The power subsists notwithstanding
the creation of the National Electrification Administration (NEA), to which body the franchise powers of local
government units were transferred by Presidential Decree No. 269. Section 42 of the Decree states:
SEC. 42. Repeal of Franchise Powers of Municipal City and Provincial Governments. The powers
of municipal, city and provincial governments to grant franchises, as provided for in Title 34 of the
Philippines Statutes or in any special law, are hereby repealed; Provided, That this section shall not
impair or invalidate any franchise heretofore lawfully granted by such a government or repeal any
other subsisting power of such governments to require that electric facilities and related properties be
so located, constructed and operated and maintained as to be safe to the public and not to unduly
interfere with the primary use of streets, roads, alleys and other public ways, buildings and grounds
over, upon or under which they may be built. (This Section was not among those amended by Pres.
Dec. Nos. 1370 [May 2, 1978] and 1645 [October 8, 1979]).
This particular power of the city government is included in the enumeration of powers and duties of a Sangguniang
Panlungsod in Section 177 of the Local Government Code (Batas Pambansa Blg. 337, February 10, 1983), to wit:
SEC. 177. Powers and Duties. The Sangguniang Panlungsod shall:
xxx xxx xxx

(j) . . . regulate the digging and excavation for the laying of gas, water, power, and other pipelines, the
building and repair of tunnels, sewers and drains, and all structures thereunder; the placing, stringing,
attaching, installing, repair and construction of all gas mains, electric, telegraph and telephone
wires, conduits meters and other apparatus, and the correction, condemnation of the same when
dangerous or defective;
xxx xxx xxx
The Sangguniang Panlungsod of Dumaguete may, therefore, enact ordinances to regulate the installation and
maintenance of electric power lines, e.g. prohibit the use of inefficient power lines, in order to protect the city
residents from the hazards these may pose. In aid of this ordinance making power, said body or any of its
committees may conduct investigations similar to, but not the same as, the legislative investigations conducted by
the national legislature. As already discussed, the difference lies in the lack of subpoena power and of the power to
punish for contempt on the part of the local legislative bodies. They may only invite resource persons who are
willing to supply information which may be relevant to the proposed ordinance. The type of investigation which
may be conducted by the Sangguniang PanLungsod does not include within its ambit an inquiry into any suspected
violation by an electric cooperative of the conditions of its electric franchise.
The power to inquire into the efficiency of the service supplied by electric cooperatives is within the franchising
powers of the NEA under Sec. 43 of Pres. Dec. No. 269, i.e.:
(2) to repeal and cancel any franchise if the NEA finds that the holder thereof is not then furnishing,
and is unable to or unailling within reasonable time to furnish adequate and dependable service on an
area coverage within such area;
xxx xxx xxx

In the exercise of this power, the NEA may conduct hearings and investigations, issle subpoenas and invoke the aid
of the courts in case of disobedience to its subpoenas (Sec. 47 & Sec. 54, P.D. 269). Clearly, then, the Sangguniang
Panlungsod of Dumaguete cannot look into an suspected failure of NORECO II to comply with the standards of
electric service prescribed by law and in its franchise. The proper recourse is to file a complaint with the NEA
against NORECO II if there be sufficient basis therefor.
WHEREFORE, the subpoena dated October 25, 1985 requiring the attendance and testimony of the petitioners at
an investigation by the respondent Ad-Hoc Committee, and the Order issued by the latter on October 29, 1985
directing herein petitioners to show cause why they should not be punished for legislative contempt for their
disobedience of said subpoena, is declared null and void for being ultra vires. The respondent Sangguniang
Panlungsod and the respondent Ad-Hoc Committee are without power to punish non- members for contempt. The
Temporary Restraining Order issued by this Court on November 7, 1985 enjoining said respondents, their agents
and representatives, and the police and other peace officers from enforcing the aforesaid Order of the respondent
committee is made permanent. Petition is GRANTED. No costs.
SO ORDERED

G.R. No. L-3820

July 18, 1950

JEAN L. ARNAULT, petitioner,

vs.
LEON NAZARENO, Sergeant-at-arms, Philippine Senate, and EUSTAQUIO BALAGTAS, Director of
Prisons,respondents.
J.C. Orendain, Augusto Revilla, and Eduardo Arboleda for petitioner.
Office of the Solicitor General Felix Bautista Angelo, Lorenzo Sumulong, Lorenzo Taada, and Vicente J.
Francisco for respondents.
OZAETA, J.:
This is an original petition for habeas corpus to relieve the petitioner from his confinement in the New Bilibid
Prison to which he has been committed by virtue of a resolution adopted by the Senate on May 15, 1950, which
reads as follows:
Whereas, Jean L. Arnault refused to reveal the name of the person to whom he gave the P440,000, as well as
answer other pertinent questions related to the said amount; Now, therefore, be it.

Resolved, that for his refusal to reveal the name of the person to whom he gave the P440,000 Jean L. Arnault
be committed to the custody of the Sergeant-at-Arms and imprisoned in the New Bilibid Prison, Muntinlupa,
Rizal, until discharged by further order of the Senate or by the special committee created by Senate
Resolution No. 8, such discharge to be ordered when he shall have purged the contempt by revealing to the
Senate or to the said special committee the name of the person to whom he gave the P440,000, as well as
answer other pertinent questions in connection therewith.
The facts that gave rise to the adoption of said resolution, insofar as pertinent here, may be briefly stated as
follows:
In the latter part of October, 1949, the Philippine Government, through the Rural Progress Administration, bought
two estates known as Buenavista and Tambobong for the sums of P4,500,000 and P500,000, respectively. Of the
first sum, P1,000,000 was paid to Ernest H. Burt, a nonresident American, thru his attorney-in-fact in the
Philippines, the Associated Estates, Inc., represented by Jean L. Arnault, for alleged interest of the said Burt in the
Buenavista Estate. The second sum of P500,000 was all paid to the same Ernest H. Burt through his other attorneyin-fact, the North Manila Development Co., Inc., also represented by Jean L. Arnault, for the alleged interest of the
said Burt in the Tambobong Estate.
The original owner of the Buenavista Estate was the San Juan de Dios Hospital. The Philippine Government held a
25-year lease contract on said estate, with an option to purchase it for P3,000,000 within the same period of 25
years counted from January 1, 1939. The occupation Republic of the Philippines purported to exercise that option
by tendering to the owner the sum of P3,000,000 and, upon its rejection, by depositing it in court on June 21, 1944,
together with the accrued rentals amounting to P3224,000. Since 1939 the Government has remained in possession
of the estate.
On June 29, 1946, the San Juan de Dios Hospital sold the Buenavista Estate for P5,000,000 to Ernest H. Burt, who
made a down payment of P10,000 only and agreed to pay P5000,000 within one year and the remainder in annual
installments of P500,000 each, with the stipulation that failure on his part to make any of said payments would
cause the forfeiture of his down payment of P10,000 and would entitle the Hospital to rescind to sale to him. Aside

from the down payment of P10,000, Burt has made no other payment on account of the purchase price of said
estate.
The original owner of the Tambobong Estate was the Philippine Trust Company. On May 14, 1946, the Philippine
Trust Company sold estate for the sum of P1,200,000 to Ernest H. Burt, who paid P10,000 down and promise to
pay P90,000 within nine months and the balance of P1,100,000 in ten successive installments of P110,000 each.
The nine-month period within which to pay the first installment of P90,000 expired on February 14, 1947, without
Burt's having paid the said or any other amount then or afterwards. On September 4, 1947, the Philippine Trust
Company sold, conveyed, and delivered the Tambobong Estate to the Rural Progress Administration by an absolute
deed of sale in consideration of the sum of P750,000. On February 5, 1948, the Rural Progress Administration
made, under article 1504 of the Civil Code, a notarial demand upon Burt for the resolution and cancellation of his
contract of purchase with the Philippine Trust Company due to his failure to pay the installment of P90,000 within
the period of nine months. Subsequently the Court of First Instance of Rizal ordered the cancellation of Burt's
certificate of title and the issuance of a new one in the name of the Rural Progress Administration, from which
order he appealed to the Supreme Court.1
It was in the face of the antecedents sketched in the last three preceding paragraphs that the Philippine
Government, through the Secretary of Justice as Chairman of the Board of Directors of the Rural Progress
Administration and as Chairman of the Board of Directors of the Philippine National Bank, from which the money
was borrowed, accomplished the purchase of the two estates in the latter part of October, 1949, as stated at the
outset.
On February 27, 1950, the Senate adopted its Resolution No. 8, which reads as follows:
RESOLUTION CREATING A SPECIAL COMMITTEE TO INVESTIGATE THE BUENAVISTA AND
THE TAMBOBONG ESTATES DEAL.
WHEREAS, it is reported that the Philippine government, through the Rural Progress Administration, has
bought the Buenavista and the Tambobong Estates for the aggregate sum of five million pesos;

WHEREAS, it is reported that under the decision of the Supreme Court dated October 31, 1949, the
Buenavista Estate could have been bought for three million pesos by virtue of a contract entered into
between the San Juan de Dios Hospital and Philippine Government in 1939;
WHEREAS, it is even alleged that the Philippine Government did not have to purchase the Buenavista
Estate because the occupation government had made tender of payment in the amount of three million pesos,
Japanese currency, which fact is believed sufficient to vest title of Ownership in the Republic of the
Philippines pursuant to decisions of the Supreme Court sustaining the validity of payments made in Japanese
military notes during the occupation;
WHEREAS, it is reported that the Philippine Government did not have to pay a single centavo for the
Tambobong Estate as it was already practically owned by virtue of a deed of sale from the Philippine Trust
Company dated September 3, 194, for seven hundred and fifty thousand pesos, and by virtue of the recission
of the contract through which Ernest H. Burt had an interest in the estate; Now, therefore, be it.
RESOLVED, That a Special Committee, be, as it hereby is, created, composed of five members to be
appointed by the President of the Senate to investigate the Buenavista and Tambobong Estate deals. It shall
be the duty of the said Committee to determine whether the said purchase was honest, valid, and proper and
whether the price involved in the deal was fair and just, the parties responsible therefor, and any other facts
the Committee may deem proper in the premises. Said Committee shall have the power to conduct public
hearings; issue subpoena or subpoena duces tecum to compel the attendance of witnesses or the production
of documents before it; and may require any official or employee of any bureau, office, branch, subdivision,
agency, or instrumentality of the Government to assist or otherwise cooperate with the Special Committee in
the performance of its functions and duties. Said Committee shall submit its report of findings and
recommendations within two weeks from the adoption of this Resolution.
The special committee created by the above resolution called and examined various witnesses, among the most
important of whom was the herein petitioner, Jean L. Arnault. An intriguing question which the committee sought
to resolve was that involved in the apparent unnecessariness and irregularity of the Government's paying to Burt

the total sum of P1,500,000 for his alleged interest of only P20,000 in the two estates, which he seemed to have
forfeited anyway long before October, 1949. The committee sought to determine who were responsible for and
who benefited from the transaction at the expense of the Government.
Arnault testified that two checks payable to Burt aggregating P1,500,000 were delivered to him on the afternoon of
October 29, 1949; that on the same date he opened a new account in the name of Ernest H. Burt with the Philippine
National Bank in which he deposited the two checks aggregating P1,500,000; and that on the same occasion he
draw on said account two checks; one for P500,000, which he transferred to the account of the Associated
Agencies, Inc., with the Philippine National Bank, and another for P440,000 payable to cash, which he himself
cashed. It was the desire of the committee to determine the ultimate recipient of this sum of P440,000 that gave rise
to the present case.
At first the petitioner claimed before the Committee:
Mr. ARNAULT (reading from a note). Mr. Chairman, for questions involving the disposition of funds, I take
the position that the transactions were legal, that no laws were being violated, and that all requisites had been
complied with. Here also I acted in a purely functional capacity of representative. I beg to be excused from
making answer which might later be used against me. I have been assured that it is my constitutional right to
refuse to incriminate myself, and I am certain that the Honorable Members of this Committee, who, I
understand, are lawyers, will see the justness of my position.
At as subsequent session of the committee (March 16) Senator De Vera, a member of the committee, interrogated
him as follows:
Senator DE VERA. Now these transactions, according to your own typewritten statement, were legal?
Mr. ARNAULT. I believe so.

Senator DE VERA. And the disposition of that fund involved, according to your own statement, did not
violate any law?
Mr. ARNAULT. I believe so.
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Senator DE VERA. So that if the funds were disposed of in such a manner that no laws were violated, how is
it that when you were asked by the Committee to tell what steps you took to have this money delivered to
Burt, you refused to answer the questions, saying that it would incriminate you?
Mr. ARNAULT. Because it violates the rights of a citizen to privacy in his dealings with other people.
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Senator DE VERA. Are you afraid to state how the money was disposed of because you would be
incriminated, or you would be incriminating somebody?
Mr. ARNAULT. I am not afraid; I simply stand on the privilege to dispose of the money that has been paid to
me as a result of a legal transaction without having to account for any use of it.
But when in the same session the chairman of the committee, Senator Sumulong, interrogated the petitioner, the
latter testified as follows:
The CHAIRMAN. The other check of P440,000 which you also made on October 29, 1949, is payable to
cash; and upon cashing this P440,000 on October 29, 1949, what did you do with that amount?
Mr. ARNAULT. I turned it over to a certain person.
The CHAIRMAN. The whole amount of P440,000?

Mr. ARNAULT. Yes.

The CHAIRMAN. Who was that certain person to whom you delivered these P440,000 which you cashed on
October 29, 1949?
Mr. ARNAULT. I don't remember the name; he was a representative of Burt.
The CHAIRMAN. That representative of Burt to whom you delivered the P440,000 was a Filipino?
Mr. ARNAULT. I don't know.
The CHAIRMAN. You do not remember the name of that representative of Burt to whom you delivered this
big amount of P440,000?
Mr. ARNAULT. I am not sure; I do not remember the name.
The CHAIRMAN. That certain person who represented Burt to whom you delivered the big amount on
October 29, 1949, gave you a receipt for the amount?
Mr. ARNAULT. No.
The CHAIRMAN. Neither did you ask a receipt?
Mr. ARNAULT. I didn't ask.
The CHAIRMAN. And why did you give that certain person, representative of Burt, this big amount of
P440,000 which forms part of the P1- million paid to Burt?
Mr. ARNAULT. Because I have instructions to that effect.

The CHAIRMAN. Who gave you the instruction?

Mr. ARNAULT. Burt.
The CHAIRMAN. Where is the instruction; was that in writing?
Mr. ARNAULT. No.
The CHAIRMAN. By cable?
Mr. ARNAULT. No.
The CHAIRMAN. In what form did you receive that instruction?
Mr. ARNAULT. Verbal instruction.
The CHAIRMAN. When did you receive this verbal instruction from Burt to deliver these P440,000 to a
certain person whose name you do not like to reveal?
Mr. ARNAULT. I have instruction to comply with the request of the person.
The CHAIRMAN. Now, you said that instruction given to you by Burt was verbal?
Mr. ARNAULT. Yes.
The CHAIRMAN. When was that instruction given to you by Burt?
Mr. ARNAULT. Long time ago.

The CHAIRMAN. In what year did Burt give you that verbal instruction; when Burt was still here in the
Philippines?
Mr. ARNAULT. Yes.
The CHAIRMAN. But at that time Burt already knew that he would receive the money?
Mr. ARNAULT. No.
The CHAIRMAN. In what year was that when Burt while he was here in the Philippines gave you the verbal
instruction?
Mr. ARNAULT. In 1946.
The CHAIRMAN. And what has that certain person done for Burt to merit receiving these P440,000?
Mr. ARNAULT. I absolutely do not know.
The CHAIRMAN. You do not know?
Mr. ARNAULT. I do not know.
The CHAIRMAN. Burt did not tell you when he gave you the verbal instruction why that certain person
should receive these P440,000?
Mr. ARNAULT. He did not tell me.
The CHAIRMAN. And Burt also authorized you to give this big amount to that certain person without
receipt?

Mr. ARNAULT. He told me that a certain person would represent him and where could I meet him.
The CHAIRMAN. Did Burt know already that certain person as early as 1946?
Mr. ARNAULT. I presume much before that.
The CHAIRMAN. Did that certain person have any intervention in the prosecution of the two cases
involving the Buenavista and Tambobong estates?
Mr. ARNAULT. Not that I know of.
The CHAIRMAN. Is that certain person related to any high government official?
Mr. ARNAULT. No, I do not know.
The CHAIRMAN. Why can you not tell us the name of that certain person?
Mr. ARNAULT. Because I am not sure of his name; I cannot remember the name.
The CHAIRMAN. When gave that certain person that P440,000 on October 29, 1949, you knew already that
person?
Mr. ARNAULT. Yes, I have seen him several times.
The CHAIRMAN. And the name of that certain person is a Filipino name?
Mr. ARNAULT. I would say Spanish name.
The CHAIRMAN. And how about his Christian name; is it also a Spanish name?

Mr. ARNAULT. I am not sure; I think the initial is J.

The CHAIRMAN. Did he have a middle name?
Mr. ARNAULT. I never knew it.
The CHAIRMAN. And how about his family name which according to your recollection is Spanish; can you
remember the first letter with which that family name begins?
Mr. ARNAULT. S, D or F.
The CHAIRMAN. And what was the last letter of the family name?
Mr. ARNAULT. I do not know.
The CHAIRMAN. Have you seen that person again after you have delivered this P440,000?
Mr. ARNAULT. Yes.
The CHAIRMAN. Several times?
Mr. ARNAULT. Two or three times.
The CHAIRMAN. Here in Manila?
Mr. ARNAULT. Yes.
The CHAIRMAN. And in spite of the fact that you met that person two or three times, you never were able
to find out what was his name?

Mr. ARNAULT. If I knew, I would [have] taken it down. Mr. Peralta knows my name; of course, we have not
done business. Lots of people in Manila know me, but they don't know my name, and I don't know them.
They sa{ I am "chiflado" because I don't know their names.
The CHAIRMAN. That certain person is a male or female?
Mr. ARNAULT. He is a male.
The CHAIRMAN. You are sure that he is a male at least?
Mr. ARNAULT. Let us say 38 or 40 years, more or less.
The CHAIRMAN. Can you give us, more or less, a description of that certain person? What is his
complexion: light, dark or light brown?
Mr. ARNAULT. He is like the gentleman there (pointing to Senator Cabili), but smaller. He walks very
straight, with military bearing.
The CHAIRMAN. Do you know the residence of that certain person to whom you gave the P440,000?
Mr. ARNAULT. No.
The CHAIRMAN. During these frequent times that you met that certain person, you never came to know his
residence?
Mr. ARNAULT. No, because he was coming to the office.
The CHAIRMAN. How tall is that certain person?
Mr. ARNAULT. Between 5-2 and 5-6.

On May 15, 1950, the petitioner was haled before the bar of the Senate, which approved and read to him the
following resolution:
Be it resolved by the Senate of the Philippines in Session assembled:
That Jean L. Arnault, now at the bar of the Senate, be arraigned for contempt consisting of contumacious
acts committed by him during the investigation conducted by the Special Committee created by Senate
Resolution No. 8 to probe the Tambobong and Buenavista estates deal of October 21, 1949, and that the
President of the Senate propounded to him the following interrogatories:
1. What excuse have you for persistently refusing to reveal the name of the person to whom you gave the
P440,000 on October 29, 1949, a person whose name it is impossible for you not to remember not only
because of the big amount of money you gave to him without receipt, but also by your own statements you
knew him as early as 1946 when General Ernest H. Burt was still in the Philippines, you made two other
deliveries of money to him without receipt, and the last time you saw him was in December 1949?
Thereupon petitioner's attorney, Mr. Orendain, submitted for him a written answer alleging that the questions were
incriminatory in nature and begging leave to be allowed to stand on his constitutional right not to be compelled to
be a witness against himself. Not satisfied with that written answer Senator Sumulong, over the objection of
counsel for the petitioner, propounded to the latter the following question:
Sen. SUMULONG. During the investigation, when the Committee asked you for the name of that person to
whom you gave the P440,000, you said that you can [could] not remember his name. That was the reason
then for refusing to reveal the name of the person. Now, in the answer that you have just cited, you are
refusing to reveal the name of that person to whom you gave the P440,000 on the ground that your answer
will be self-incriminating. Now, do I understand from you that you are abandoning your former claim that
you cannot remember the name of that person, and that your reason now for your refusal to reveal the name
of that person is that your answer might be self-incriminating? In other words, the question is this: What is

your real reason for refusing to reveal the name of that person to whom you gave the P440,000: that you do
not remember his name or that your answer would be self-incriminating?
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Mr. ORENDAIN. Mr. President, we are begging for the rules of procedure that the accused should not be
required to testify unless he so desires.
The PRESIDENT. It is the duty of the respondent to answer the question. The question is very clear. It does
not incriminate him.
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Mr. ARNAULT. I stand by every statement that I have made before the Senate Committee on the first,
second, and third hearings to which I was made in my letter to this Senate of May 2, 1950, in which I gave
all the reasons that were in my powers to give, as requested. I cannot change anything in those statements
that I made because they represent the best that I can do , to the best of my ability.
The PRESIDENT. You are not answering the question. The answer has nothing to do with the question.
Sen. SUMULONG. I would like to remind you , Mr. Arnault, that the reason that you gave during the
investigation for not revealing the name of the person to whom you gave the P440,000 is not the same
reason that you are now alleging because during the investigation you told us: "I do not remember his
name." But, now, you are now saying: "My answer might incriminate me." What is your real position?
Mr. ARNAULT. I have just stated that I stand by my statements that I made at the first, second, and third
hearings. I said that I wanted to be excused from answering the question. I beg to be excused from making
any answer that might be incriminating in nature. However, in this answer, if the detail of not remembering
the name of the person has not been included, it is an oversight.

Sen. SUMULONG. Mr. Arnault, will you kindly answer a simple question: Do you remember or not the
name of the person to whom you gave the P440,000?
Mr. ARNAULT. I do not remember .
Sen. SUMULONG. Now, if you do not remember the name of that person, how can you say that your
answer might be incriminating? If you do not remember his name, you cannot answer the question; so how
could your answer be self-incriminating? What do you say to that?
Mr. ARNAULT. This is too complicated for me to explain. Please, I do not see how to answer those
questions. That is why I asked for a lawyer, so he can help me. I have no means of knowing what the
situation is about. I have been in jail 13 days without communication with the outside. How could I answer
the question? I have no knowledge of legal procedure or rule, of which I am completely ignorant.
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Sen. SUMULONG. Mr. President, I ask that the question be answered.

The PRESIDENT. The witness is ordered to answer the question. It is very clear. It does not incriminate the
witness.
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Mr. ARNAULT. I do not remember. I stand on my constitutional rights. I beg to be excused from making
further answer, please.
Sen. SUMULONG. In that mimeographed letter that you sent addressed to the President of the Senate, dated
May 2, 1950, you stated there that you cannot reveal the name of the person to whom you gave the P440,000
because if he is a public official you might render yourself liable for prosecution for bribery, and that if he is
a private individual you might render yourself liable for prosecution for slander. Why did you make those

statements when you cannot even tell us whether that person to whom you gave the P440,000 is a public
official or a private individual ? We are giving you this chance to convince the Senate that all these
allegations of yours that your answers might incriminate you are given by you honestly or you are just trying
to make a pretext for not revealing the information desired by the Senate.
The PRESIDENT. You are ordered to answer the question.
Mr. ARNAULT. I do not even understand the question. (The question is restated and explained.)
Mr. ARNAULT. That letter of May 2, was prepared by a lawyer for me and signed it. That is all I can say
how I stand about this letter. I have no knowledge myself enough to write such a letter, so I had to secure the
help of a lawyer to help me in my period of distress.
In that same session of the Senate before which the petitioner was called to show cause why he should not be
adjudged guilty of contempt of the Senate, Senator Sumulong propounded to the petitioner questions tending to
elicit information from him as to the identity of the person to whom he delivered the P440,000; but the petitioner
refused to reveal it by saying that he did not remember. The President of the Senate then propounded to him
various questions concerning his past activities dating as far back as when witness was seven years of age and
ending as recently as the post liberation period, all of which questions the witness answered satisfactorily. In view
thereof, the President of the Senate also made an attempt to illicit the desired information from the witness, as
follows:
The PRESIDENT. Now I am convinced that you have a good memory. Answer: Did you deliver the
P440,000 as a gift, or of any consideration?
Mr. ARNAULT. I have said that I had instructions to deliver it to that person, that is all.
The PRESIDENT. Was it the first time you saw that person?
Mr. ARNAULT. I saw him various times, I have already said.

The PRESIDENT. In spite of that, you do not have the least remembrance of the name of that person?
Mr. ARNAULT. I cannot remember.
The PRESIDENT. How is it that you do not remember events that happened a short time ago and, on the
other hand, you remember events that occurred during your childhood?
Mr. ARNAULT. I cannot explain.
The Senate then deliberated and adopted the resolution of May 15 hereinabove quoted whereby the petitioner was
committed to the custody of the Sergeant-at-Arms and imprisoned until "he shall have purged the contempt by
revealing to the Senate or to the aforesaid Special Committee the name of the person to whom he gave the
P440,000, as well as answer other pertinent questions in connection therewith."
The Senate also adopted on the same date another resolution (No. 16) , to wit:
That the Special Committee created by Senate Resolution No. 8 be empowered and directed to continue its
investigation of the Tambobong and Buenavista Estates deal of October 21, 1949, more particularly to
continue the examination of Jean L. Arnault regarding the name of the person to whom he gave the P440,000
and other matters related therewith.
The first session of the Second Congress was adjourned at midnight on May 18, 1950.
The case was argued twice before us. We have given its earnest and prolonged consideration because it is the first
of its kind to arise since the Constitution of the Republic of the Philippines was adopted. For the first time this
Court is called upon to define the power of either House of Congress to punish a person not a member for
contempt; and we are fully conscious that our pronouncements here will set an important precedent for the future
guidance of all concerned.

Before discussing the specific issues raised by the parties, we deem it necessary to lay down the general principles
of law which form the background of those issues.
Patterned after the American system, our Constitution vests the powers of the Government in three independent but
coordinate Departments Legislative, Executive, and Judicial. The legislative power is vested in the Congress,
which consists of the Senate and the House of Representatives. (Section 1, Article VI.) Each house may determine
the rules of its proceedings, punish its Members for disorderly behavior, and, with the concurrence of two-thirds of
all its Members, expel a Member. (Section 10, Article VI.) The judicial power is vested in the Supreme Court and
in such inferior courts as may be established by law. (Section 1, Article VIII.) Like the Constitution of the United
States, ours does not contain an express provision empowering either of the two Houses of Congress to punish
nonmembers for contempt. It may also be noted that whereas in the United States the legislative power is shared by
and between the Congress of the United States, on the one hand, and the respective legislatures of the different
States, on the other the powers not delegated to the United States by the Constitution nor prohibited by it to
States being reserved to the States, respectively, or to the people in the Philippines, the legislative power is
vested in the Congress of the Philippines alone. It may therefore be said that the Congress of the Philippines has a
wider range of legislative field than the Congress of the United States or any State Legislature. Our form of
Government being patterned after the American system the framers of our Constitution having drawn largely
from American institutions and practices we can, in this case, properly draw also from American precedents in
interpreting analogous provisions of our Constitution, as we have done in other cases in the past. Although there is
no provision in the Constitution expressly investing either House of Congress with power to make investigations
and exact testimony to the end that it may exercise its legislative functions as to be implied. In other words, the
power of inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative
function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the
conditions which the legislation is intended to effect or change; and where the legislative body does not itself
possess the requisite information which is not infrequently true recourse must be had to others who do
possess it. Experience has shown that mere requests for such information are often unavailing, and also that
information which is volunteered is not always accurate or complete; so some means of compulsion is essential to
obtain what is needed. (McGrain vs. Daugherty, 273 U.S., 135; 71 L. ed., 580; 50 A.L R., 1.) The fact that the
Constitution expressly gives to Congress the power to punish its Members for disorderly behavior, does not by

necessary implication exclude the power to punish for contempt any other person. (Anderson vs. Dunn, 6,
Wheaton, 204; 5 L. ed., 242.) But no person can be punished for contumacy as a witness before either House,
unless his testimony is required in a matter into which that House has jurisdiction to inquire.
(Kilbourn vs. Thompson, 26 L. ed., 377.).
Since, as we have noted, the Congress of the Philippines has a wider range of legislative field than either the
Congress of the United States or a State Legislature, we think it is correct to say that the field of inquiry into which
it may enter is also wider. It would be difficult to define any limits by which the subject matter of its inquiry can be
bounded. It is not necessary to do so in this case. Suffice it to say that it must be coextensive with the range of the
legislative power.
In the present case the jurisdiction of the Senate, thru the Special Committee created by it, to investigate the
Buenavista and Tambobong Estates deal is not challenged by the petitioner; and we entertain no doubt as to the
Senate's authority to do so and as to the validity of Resolution No. 8 hereinabove quoted. The transaction involved
a questionable and allegedly unnecessary and irregular expenditure of no less than P5,000,000 of public funds, of
which Congress is the constitutional guardian. It also involved government agencies created by Congress to
regulate or even abolish. As a result of the yet uncompleted investigation, the investigating committee has
recommended and the Senate approved three bills (1) prohibiting the Secretary of Justice or any other department
head from discharging functions and exercising powers other than those attached to his own office, without ]
previous congressional authorization; (2) prohibiting brothers and near relatives of any President of the Philippines
from intervening directly or indirectly and in whatever capacity in transactions in which the Government is a party,
more particularly where the decision lies in the hands of executive or administrative officers who are appointees of
the President; and (3) providing that purchases of the Rural Progress Administration of big landed estates at a price
of P100,000 or more, shall not become effective without previous congressional confirmation.2
We shall now consider and pass upon each of the questions raised by the petitioner in support of his contention that
his commitment is unlawful.

First He contends that the Senate has no power to punish him for contempt for refusing to reveal the name of the
person to whom he gave the P440,000, because such information is immaterial to, and will not serve, any intended
or purported legislation and his refusal to answer the question has not embarrassed, obstructed, or impeded the
legislative process. It is argued that since the investigating committee has already rendered its report and has made
all its recommendations as to what legislative measures should be taken pursuant to its findings, there is no
necessity to force the petitioner to give the information desired other than that mentioned in its report, to wit: "In
justice to Judge Quirino and to Secretary Nepomuceno, this atmosphere of suspicion that now pervades the public
mind must be dissipated, and it can only be done if appropriate steps are taken by the Senate to compel Arnault to
stop pretending that he cannot remember the name of the person to whom he gave the P440,000 and answer the
questions which will definitely establish the identity of that person . . ." Senator Sumulong, Chairman of the
Committee, who appeared and argued the case for the respondents, denied that that was the only purpose of the
Senate in seeking the information from the witness. He said that the investigation had not been completed, because,
due to the contumacy of the witness, his committee had not yet determined the parties responsible for the
anomalous transaction as required by Resolution No. 8; that, by Resolution No. 16, his committee was empowered
and directed to continue its investigation, more particularly to continue its examination of the witness regarding the
name of the person to whom he gave the P440,000 and other matters related therewith; that the bills recommended
by his committee had not been approved by the House and might not be approved pending the completion of the
investigation; and that those bills were not necessarily all the measures that Congress might deem it necessary to
pass after the investigation is finished.
Once an inquiry is admitted or established to be within the jurisdiction of a legislative body to make, we think the
investigating committee has the power to require a witness to answer any question pertinent to that inquiry, subject
of course to his constitutional right against self-incrimination. The inquiry, to be within the jurisdiction of the
legislative body to make, must be material or necessary to the exercise of a power in it vested by the Constitution,
such as to legislate, or to expel a Member; and every question which the investigator is empowered to coerce a
witness to answer must be material or pertinent to the subject of the inquiry or investigation. So a witness may not
be coerced to answer a question that obviously has no relation to the subject of the inquiry. But from this it does
not follow that every question that may be propounded to a witness must be material to any proposed or possible
legislation. In other words, the materiality of the question must be determined by its direct relation to any proposed

or possible legislation. The reason is, that the necessity or lack of necessity for legislative action and the form and
character of the action itself are determined by the sum total of the information to be gathered as a result of the
investigation, and not by a fraction of such information elicited from a single question.
In this connection, it is suggested by counsel for the respondents that the power of the Court is limited to
determining whether the legislative body has jurisdiction to institute the inquiry or investigation; that once that
jurisdiction is conceded, this Court cannot control the exercise of that jurisdiction; and it is insinuated, that the
ruling of the Senate on the materiality of the question propounded to the witness is not subject to review by this
Court under the principle of the separation of powers. We have to qualify this proposition. As was said by the Court
of Appeals of New York: "We are bound to presume that the action of the legislative body was with a legitimate
object if it is capable of being so construed, and we have no right to assume that the contrary was intended."
(People ex rel. McDonald vs. Keeler, 99 N.Y., 463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the
Supreme Court of the United States in the said case of McGrain vs. Daugherty, it is necessary deduction from the
decision in Re Chapman, 41 L. ed., 1154, that where the questions are not pertinent to the matter under inquiry a
witness rightfully may refuse to answer. So we are of the opinion that where the alleged immateriality of the
information sought by the legislative body from a witness is relied upon to contest its jurisdiction, the court is in
duty bound to pass upon the contention. The fact that the legislative body has jurisdiction or the power to make the
inquiry would not preclude judicial intervention to correct a clear abuse of discretion in the exercise of that power.
Applying the criterion laid down in the last two preceding paragraphs to the resolution of the issue under
consideration, we find that the question for the refusal to answer which the petitioner was held in contempt by the
Senate is pertinent to the matter under inquiry. In fact, this is not and cannot be disputed. Senate Resolution No. 8,
the validity of which is not challenged by the petitioner, requires the Special Committee, among other things, to
determine the parties responsible for the Buenavista and Tambobong estates deal, and it is obvious that the name of
the person to whom the witness gave the P440,000 involved in said deal is pertinent to that determination it is in
fact the very thing sought to be determined. The contention is not that the question is impertinent to the subject of
the inquiry but that it has no relation or materiality to any proposed legislation. We have already indicated that it is
not necessary for the legislative body to show that every question propounded to a witness is material to any
proposed or possible legislation; what is required is that is that it be pertinent to the matter under inquiry.

It is said that the Senate has already approved the three bills recommended by the Committee as a result of the
uncompleted investigation and that there is no need for it to know the name of the person to whom the witness
gave the P440,000. But aside from the fact that those bills have not yet been approved by the lower house and by
the President and that they may be withdrawn or modified if after the inquiry is completed they should be found
unnecessary or inadequate, there is nothing to prevent the Congress from approving other measures it may deem
necessary after completing the investigation. We are not called upon, nor is it within our province, to determine or
imagine what those measures may be. And our inability to do so is no reason for overruling the question
propounded by the Senate to the witness.
The case of Re Chapman , 166 U.S., 661; 41 L. ed., 1154, is in point here. The inquiry there in question was
conducted under a resolution of the Senate and related to charges, published in the press, that senators were
yielding to corrupt influences in considering a tariff bill then before the Senate and were speculating in stocks the
value of which would be affected by pending amendments to the bill. Chapman, a member of a firm of stock
brokers dealing in the stock of the American Sugar Refining Company, appeared before the committee in response
to a subpoena and asked, among others, the following questions:
Had the firm, during the month of March, 1894, bought or sold any stock or securities, known as sugar
stocks, for or in the interest, directly or indirectly, of any United Senate senator?
Was the said firm at that time carrying any sugar stock for the benefit of, or in the interest, directly or
indirectly, of any United Senate senator?
He refused to answer the questions and was prosecuted under an Act of Congress for contempt of the Senate. Upon
being convicted and sent to jail he petitioned the Supreme Court of the United States for a writ of habeas corpus.
One of the questions decided by the Supreme Court of the United States in that case was whether the committee
had the right to compel the witness to answer said questions, and the Court held that the committee did have such
right, saying:

The questions were undoubtedly pertinent to the subject-matter of the inquiry. The resolution directed the
committee to inquire whether any senator has been, or is, speculating in what are known as sugar stocks
during the consideration of the tariff bill now before the Senate." What the Senate might or might not do
upon the facts when ascertained, we cannot say, nor are we called upon to inquire whether such ventures
might be defensible, as contended in argument, but is plain that negative answers would have cleared that
body of what the Senate regarded as offensive imputations, while affirmative answers might have led to
further action on the part of the Senate within its constitutional powers. (Emphasis supplied.)
It may be contended that the determination of the parties responsible for the deal is incumbent upon the judicial
rather than upon the legislative branch. But we think there is no basis in fact or in law for such assumption. The
petitioner has not challenged the validity of Senate Resolution No. 8, and that resolution expressly requires the
committee to determine the parties responsible for the deal. We are bound to presume that the Senate has acted in
the due performance of its constitutional function in instituting the inquiry, if the act is capable of being so
construed. On the other hand, there is no suggestion that the judiciary has instituted an inquiry to determine the
parties responsible for the deal. Under the circumstances of the case, it appearing that the questioned transaction
was affected by the head of the Department of Justice himself, it is not reasonable to expect that the Fiscal or the
Court of First Instance of Manila will take the initiative to investigate and prosecute the parties responsible for the
deal until and unless the Senate shall determined those parties are and shall taken such measures as may be within
its competence to take the redress the wrong that may have been committed against the people as a result of the
transaction. As we have said, the transaction involved no less than P5,000,000 of public funds. That certainly is a
matter of a public concern which it is the duty of the constitutional guardian of the treasury to investigate.
If the subject of investigation before the committee is within the range of legitimate legislative inquiry and the
proposed testimony of the witness called relates to that subject, obedience, to its process may be enforced by the
committee by imprisonment. (Sullivan vs. Hill, 73 W. Va., 49; 79 S.E., 670; 40 Ann. Cas. [1916 B.], 1115.)
The decision in the case of Kilbourn vs. Thompson, 26 L. ed., 377, relied upon by the petitioner, is not applicable
here. In that case the inquiry instituted by the House of Representatives of the United States related to a private
real-estate pool or partnership in the District of Columbia. Jay Cook and Company had had an interest in the pool

but become bankrupts, and their estate was in course of administration in a federal bankruptcy court in
Pennsylvania. The United States was one of their creditors. The trustee in the bankruptcy proceeding had effected a
settlement of the bankrupts' interest in the pool, and of course his action was subject to examination and approval
or disapproval by the bankruptcy court. Some of the creditors, including the United States, were dissatisfied with
the settlement. The resolution of the House directed the Committee "to inquire into the nature and history of said
real-estate pool and the character of said settlement, with the amount of property involve, in which Jay Cooke and
Co. were interested, and the amount paid or to be paid in said settlement, with power to send for persons and
papers, and report to this House." The Supreme Court of the United States, speaking thru Mr. Justice Miller,
pointed out that the resolution contained no suggestion of contemplated legislation; that the matter was one in
respect of which no valid legislation could be had; that the bankrupts' estate and the trustee's settlement were still
pending in the bankruptcy court; and that the United States and other creditors were free to press their claims in
that proceeding. And on these grounds the court held that in undertaking the investigation "the House of
Representatives not only exceeded the limit of its own authority, but assumed a power which could only be
properly exercised by another branch of the government, because the power was in its nature clearly judicial." The
principles announced and applied in that case are: that neither House of Congress possesses a "general power of
making inquiry into the private affairs of the citizen"; that the power actually possessed is limited to inquires
relating to matters of which the particular House has jurisdiction, and in respect of which it rightfully may take
other action; that if the inquiry relates to a matter wherein relief or redress could be had only by judicial
proceeding, it is not within the range of this power , but must be left to the court, conformably to the constitutional
separation of government powers.
That case differs from the present case in two important respects: (1) There the court found that the subject of the
inquiry, which related to a private real-estate pool or partnership, was not within the jurisdiction of either House of
Congress; while here if it is not disputed that the subject of the inquiry, which relates to a transaction involving a
questionable expenditure by the Government of P5,000,000 of public funds, is within the jurisdiction of the Senate,
(2) There the claim of the Government as a creditor of Jay Cooke and Company, which had had an interest in the
pool, was pending adjudication by the court; while here the interposition of the judicial power on the subject of the
inquiry cannot be expected, as we have pointed out above, until after the Senate shall have determined who the

parties responsible are and shall have taken such measures as may be within its competence to take to redress the
wrong that may have been committed against the people as a result of the transaction.
It is interesting to note that the decision in the case of Killbourn vs. Thompson has evoked strong criticisms from
legal scholars. (See Potts, Power of Legislative Bodies to Punish for Contempt [1926], 74 U. Pa. L. Rev., 692-699;
James L. Land is, Constitutional Limitations on the Congressional Power of Investigation [1926], 40 Harvard L.
Rev., 153, 154, 214-220.) We quoted the following from Professor Land is' criticism: "Mr. Justice Miller saw the
case purely as an attempt by the House to secure to the Government certain priority rights as creditor of the
bankrupt concern. To him it assumed the character of a lawsuit between the Government and Jay Cooke and Co.,
with the Government, acting through the House, attempting to override the orderliness of established procedure
and thereby prefer a creditors' bill not before the courts but before Congress. That bankruptcy proceedings had
already been instituted against Jay Cooke and Co., in a federal court gave added impetus to such a conception. The
House was seeking to oust a court of prior acquired jurisdiction by an extraordinary and unwarranted assumption
of "judicial power"! The broader aspect of the investigation had not been disclosed to the Court. That Jay Cooke
and Co.'s indebtedness and the particular funds in question were only part of the great administrative problem
connected with the use and disposition of public monies, that the particular failure was of consequence mainly in
relation to the security demanded for all government deposits, that the facts connected with one such default
revealed the possibility of other and greater maladministration, such considerations had not been put before the
Court. Nor had it been acquainted with the every-day nature of the particular investigation and the powers there
exerted by the House, powers whose exercise was customary and familiar in legislative practice. Instead of
assuming the character of an extraordinary judicial proceeding, the inquiry, place in its proper background, should
have been regarded as a normal and customary part of the legislative process. Detailed definiteness of legislative
purpose was thus made the demand of the court in Killbourn vs. Thompson. But investigators cannot foretell the
results that may be achieved. The power of Congress to exercise control over a real-estate pool is not a matter for
abstract speculation but one to be determined only after an exhaustive examination of the problem. Relationship,
and not their possibilities, determine the extent of congressional power. Constitutionality depends upon such
disclosures. Their presence, whether determinative of legislative or judicial power, cannot be relegated to
guesswork. Neither Congress nor the Court can predict, prior to the event, the result of the investigation."

The other case relied upon by the petitioner is Marshall vs. Gordon, 243 U.S., 521; 61. ed., 881. The question there
was whether the House of Representatives exceeded its power in punishing, as for contempt of its authority, the
District Attorney of the Southern District of New York, who had written, published, and sent to the chairman of one
of its committees an ill-tempered and irritating letter respecting the action and purposes of the committee in
interfering with the investigation by the grand jury of alleged illegal activities of a member of the House of
Representatives. Power to make inquires and obtain evidence by compulsory process was not involved. The court
recognized distinctly that the House of Representatives had implied power to punish a person not a member for
contempt, but held that its action in this instance was without constitutional justification. The decision was put on
the ground that the letter, while offensive and vexatious, was not calculated or likely to affect the House in any of
its proceedings or in the exercise of any of its functions. This brief statement of the facts and the issues decided in
that case is sufficient to show the inapplicability thereof to the present case. There the contempt involved consisted
in the district attorney's writing to the chairman of the committee an offensive and vexatious letter, while here the
contempt involved consists in the refusal of the witness to answer questions pertinent to the subject of an inquiry
which the Senate has the power and jurisdiction to make . But in that case, it was recognized that the House of
Representatives has implied power to punish a person not a member of contempt. In that respect the case is
applicable here in favor of the Senate's (and not of the Petitioner's ) contention.
Second. It is next contended for the petitioner that the Senate lacks authority to commit him for contempt for a term
beyond its period of legislative session, which ended on May 18, 1950. This contention is based on the opinion of
Mr. Justice Malcolm, concurred in by Justices Street and Villa-Real, in the case of Lopez vs. De los Reyes (1930),
55 Phil., 170. In that case it appears that on October 23, 1929, Candido Lopez assaulted a member of the House of
Representatives while the latter was going to the hall of the House of Representatives to attend the session which
was then about to begin, as a result of which assault said representative was unable to attend the sessions on that
day and those of the two days next following by reason of the threats which Candido Lopez made against him. By
the resolution of the House adopted November 6, 1929, Lopez was declared guilty of contempt of the House of
Representatives and ordered punished by confinement in Bilibid Prison for a period of twenty-four hours. That
resolution was not complied with because the session of the House of Representatives adjourned at midnight on
November 8, 1929, and was reiterated at the next session on September 16, 1930. Lopez was subsequently arrested,
whereupon he applied for the writ of habeas corpus in the Court of First Instance of Manila, which denied the

application. Upon appeal to the Supreme Court, six justices voted to grant the writ: Justice Malcolm, Street, and
Villa-real, on the ground that the term of imprisonment meted out to the petitioner could not legally be extended
beyond the session of the body in which the contempt occurred; and Justices Johns, Villamor, and Ostrand, on the
ground that the Philippine Legislature had no power to punish for contempt because it was a creature merely of an
Act of the Congress of the United States and not of a Constitution adopted by the people. Chief Justice Avancea,
Justice Johnson, and Justice Romualdez wrote separate opinions, concurring with Justice Malcolm, Street, and
Villa-Real, that the Legislature had inherent power to punish for contempt but dissenting from the opinion that the
order of commitment could only be executed during the particular session in which the act of contempt was
committed.
Thus, on the question under consideration, the Court was equally divided and no decisive pronouncement was
made. The opinion of Mr. Justice Malcolm is based mainly on the following passage in the case of
Anderson vs.Dunn, supra:
And although the legislative power continues perpetual, the legislative body ceases to exist on the moment
of its adjournment or periodical dissolution. It follows that imprisonment must terminate with that
adjournment.
as well as on the following quotation from Marshall vs. Gordon, supra:
And the essential nature of the power also makes clear the cogency and application of the two limitations
which were expressly pointed out in Anderson vs. Dunn, supra, that is, that the power even when applied to
subjects which justified its exercise is limited to imprisonment and such imprisonment may not be extended
beyond the session of the body in which the contempt occurred.
Interpreting the above quotations, Chief Justice Avancea held:
From this doctrine it follows, in my judgement, that the imposition of the penalty is limited to the existence
of the legislative body, which ceases to function upon its final periodical dissolution. The doctrine refers to

its existence and not to any particular session thereof. This must be so, inasmuch as the basis of the power to
impose such penalty is the right which the Legislature has to self-preservation, and which right is
enforceable during the existence of the legislative body. Many causes might be conceived to constitute
contempt to the Legislature, which would continue to be a menace to its preservation during the existence of
the legislative body against which contempt was committed.
If the basis of the power of the legislature to punish for contempt exists while the legislative body exercising
it is in session, then that power and the exercise thereof must perforce continue until the final adjournment
and the election of its successor.
Mr. Justice Johnson's more elaborate opinion, supported by quotations from Cooley's Constitutional Limitationsand
from Jefferson's Manual, is to the same effect. Mr. Justice Romualdez said: "In my opinion, where as in the case
before us, the members composing the legislative body against which the contempt was committed have not yet
completed their three-year term, the House may take action against the petitioner herein."
We note that the quotations from Anderson vs. Dunn and Marshall vs. Gordon relied upon by Justice Malcolm
areobiter dicta. Anderson vs. Dunn was an action of trespass against the Sergeant-at-Arms of the House of
Representatives of the United States for assault and battery and false imprisonment. The plaintiff had been arrested
for contempt of the House, brought before the bar of the House, and reprimanded by the Speaker, and then
discharged from custody. The question as to the duration of the penalty was not involved in that case. The question
there was "whether the House of Representatives can take cognizance of contempt committed against themselves,
under any circumstances." The court there held that the House of Representatives had the power to punish for
contempt, and affirmed the judgment of the lower court in favor of the defendant. In Marshall vs.Gordon, the
question presented was whether the House had the power under the Constitution to deal with the conduct of the
district attorney in writing a vexatious letter as a contempt of its authority, and to inflict punishment upon the writer
for such contempt as a matter of legislative power. The court held that the House had no such power because the
writing of the letter did not obstruct the performance of legislative duty and did not endanger the preservation of
the power of the House to carry out its legislative authority. Upon that ground alone, and not because the House
had adjourned, the court ordered the discharge of the petitioner from custody.

The case where the question was squarely decided is McGrain vs. Daugherty, supra. There it appears that the
Senate had adopted a resolution authorizing and directing a select committee of five senators to investigate various
charges of misfeasance and nonfeasance in the Department of Justice after Attorney General Harry M. Daugherty
became its supervising head. In the course of the investigation the committee caused to be served on Mally S.
Daugherty, brother of Harry M. Daugherty and president of the Midland National Bank of Washington Court
House, Ohio, a subpoena commanding him to appear before it for the purpose of giving testimony relating to the
subject under consideration. The witness failed to appear without offering any excuse for his failure. The
committee reported the matter to the Senate and the latter adopted a resolution, "That the President of the Senate
pro tempore issue his warrant commanding the Sergeant-at-Arms or his deputy to take into custody the body of the
said M.S. Daugherty wherever found, and to bring the said M.S. Daugherty before the bar of the Senate, then and
there to answer such questions pertinent to the matter under inquiry as the Senate may order the President of the
Senate pro tempore to propound; and to keep the said M.S. Daugherty in custody to await the further order of the
Senate." Upon being arrested, the witness petitioned the federal court in Cincinnati for a writ of habeas corpus.
The federal court granted the writ and discharged the witness on the ground that the Senate, in directing the
investigation and in ordering the arrest, exceeded its power under the Constitution. Upon appeal to the Supreme
Court of the United States, one of the contentions of the witness was that the case ha become moot because the
investigation was ordered and the committee was appointed during the Sixty-eighth Congress, which expired on
March 4, 1926. In overruling the contention, the court said:
. . . The resolution ordering the investigation in terms limited the committee's authority to the period of the
Sixty-eighth Congress; but this apparently was changed by a later and amendatory resolution authorizing the
committee to sit at such times and places as it might deem advisable or necessary. It is said in Jefferson's
Manual: "Neither House can continue any portion of itself in any parliamentary function beyond the end of
the session without the consent of the other two branches. When done, it is by a bill constituting them
commissioners for the particular purpose." But the context shows that the reference is to the two houses of
Parliament when adjourned by prorogation or dissolution by the King. The rule may be the same with the
House of Representatives whose members are all elected for the period of a single Congress: but it cannot
well be the same with the Senate, which is a continuing body whose members are elected for a term of six
years and so divided into classes that the seats of one third only become vacant at the end of each Congress,

two thirds always continuing into the next Congress, save as vacancies may occur through death or
resignation.
Mr. Hinds in his collection of precedents, says: "The Senate, as a continuing body, may continue its
committees through the recess following the expiration of a Congress;" and, after quoting the above
statement from Jefferson's Manual, he says: "The Senate, however being a continuing body, gives authority
to its committees during the recess after the expiration of a Congress." So far as we are advised the select
committee having this investigation in charge has neither made a final report nor been discharged; nor has
been continued by an affirmative order. Apparently its activities have been suspended pending the decision
of this case. But, be this as it may, it is certain that the committee may be continued or revived now by
motion to that effect, and if, continued or revived, will have all its original powers. This being so, and the
Senate being a continuing body, the case cannot be said to have become moot in the ordinary sense. The
situation is measurably like that in Southern P. Terminal Co. vs. Interstate Commerce Commission, 219 U.
S., 498, 514-516; 55 L. ed., 310, 315, 316; 31 Sup. Ct. Rep., 279, where it was held that a suit to enjoin the
enforcement of an order of the Interstate Commerce Commission did not become moot through the
expiration of the order where it was capable of repetition by the Commission and was a matter of public
interest. Our judgment may yet be carried into effect and the investigation proceeded with from the point at
which it apparently was interrupted by reason of the habeas corpus proceedings. In these circumstances we
think a judgment should be rendered as was done in the case cited.
What has been said requires that the final order in the District Court discharging the witness from custody be
reversed.
Like the Senate of the United States , the Senate of the Philippines is a continuing body whose members are elected
for a term of six years and so divided that the seats of only one-third become vacant every two years, two-thirds
always continuing into the next Congress save as vacancies may occur thru death or resignation. Members of the
House of Representatives are all elected for a term of four years; so that the term of every Congress is four years.
The Second Congress of the Philippines was constituted on December 30, 1949, and will expire on December 30,

1953. The resolution of the Senate committing the Petitioner was adopted during the first session of the Second
Congress, which began on the fourth Monday of January and ended in May 18, 1950.
Had said resolution of commitment been adopted by the House of Representatives, we think it could be enforced
until the final adjournment of the last session of the Second Congress in 1953. We find no sound reason to limit the
power of the legislative body to punish for contempt to the end of every session and not to the end of the last
session terminating the existence of that body. The very reason for the exercise of the power to punish for contempt
is to enable the legislative body to perform its constitutional function without impediment or obstruction.
Legislative functions may be and in practice are performed during recess by duly constituted committees charged
with the duty of performing investigations or conducting hearing relative to any proposed legislation. To deny to
such committees the power of inquiry with process to enforce it would be to defeat the very purpose for which that
the power is recognized in the legislative body as an essential and appropriate auxiliary to is legislative function. It
is but logical to say that the power of self-preservation is coexistent with the life to be preserved.
But the resolution of commitment here in question was adopted by the Senate, which is a continuing body and
which does not cease exist upon the periodical dissolution of the Congress or of the House of Representatives.
There is no limit as to time to the Senate's power to punish for contempt in cases where that power may
constitutionally be exerted as in the present case.
Mere reflection upon the situation at hand convinces us of the soundness of this proposition. The Senate has
ordered an investigation of the Buenavista and Tambobong estates deal, which we have found it is within its
competence to make. That investigation has not been completed because of the refusal of the petitioner as a witness
to answer certain questions pertinent to the subject of the inquiry. The Senate has empowered the committee to
continue the investigation during the recess. By refusing to answer the questions, the witness has obstructed the
performance by the Senate of its legislative function, and the Senate has the power to remove the obstruction by
compelling the witness to answer the questions thru restraint of his liberty until he shall have answered them. That
power subsists as long as the Senate, which is a continuing body, persists in performing the particular legislative
function involved. To hold that it may punish the witness for contempt only during the session in which
investigation was begun, would be to recognize the right of the Senate to perform its function but at the same time

to deny to it an essential and appropriate means for its performance. Aside from this, if we should hold that the
power to punish for contempt terminates upon the adjournment of the session, the Senate would have to resume the
investigation at the next and succeeding sessions and repeat the contempt proceedings against the witness until the
investigation is completed-an absurd, unnecessary, and vexatious procedure, which should be avoided.
As against the foregoing conclusion it is argued for the petitioner that the power may be abusively and oppressively
exerted by the Senate which might keep the witness in prison for life. But we must assume that the Senate will not
be disposed to exert the power beyond its proper bounds. And if, contrary to this assumption, proper limitations are
disregarded, the portals of this Court are always open to those whose rights might thus be transgressed.
Third. Lastly, the petitioner invokes the privilege against self-incrimination. He contends that he would incriminate
himself if he should reveal the name of the person to whom he gave the P440,000 if that person be a public official
be (witness) might be accused of bribery, and if that person be a private individual the latter might accuse him of
oral defamation.
The ground upon which the witness' claim is based is too shaky, in firm, and slippery to afford him safety. At first
he told the Committee that the transactions were legal, that no laws were violated, and that all requisites had been
replied with; but at the time he begged to be excused from making answers "which might later be used against me."
A little later he explained that although the transactions were legal he refused to answer questions concerning them
"because it violates the right of a citizen to privacy in his dealings with other people . . . I simply stand on my
privilege to dispose of the money that has been paid to me as a result of a legal transaction without having to
account for the use of it." But after being apparently convinced by the Committee that his position was untenable,
the witness testified that, without securing any receipt, he turned over the P440,000 to a certain person, a
representative of Burt, in compliance with Burt's verbal instruction made in 1946; that as far as he know, that
certain person had nothing to do with the negotiations for the settlement of the Buenavista and Tambobong cases;
that he had seen that person several times before he gave him the P440,000 on October 29, 1949, and that since
then he had seen him again two or three times, the last time being in December, 1949, in Manila; that the person
was a male, 39 to 40 years of age, between 5 feet, 2 inches and 5 feet, 6 inches in height. Butt the witness would

not reveal the name of that person on these pretexts: " I don't remember the name; he was a representative of Burt."
"I am not sure; I don't remember the name."
We are satisfied that those answers of the witness to the important question, what is the name of that person to
whom you gave the P440,000? were obviously false. His insistent claim before the bar of the Senate that if he
should reveal the name he would incriminate himself, necessarily implied that he knew the name. Moreover, it is
unbelievable that he gave the P440,000 to a person to him unknown.
"Testimony which is obviously false or evasive is equivalent to a refusal to testify and is punishable as contempt,
assuming that a refusal to testify would be so punishable." (12 Am. Jur., sec. 15, Contempt, pp. 399-400.) In the
case of Mason vs. U.S., 61 L. ed., 1198, it appears that Mason was called to testify before a grand jury engaged in
investigating a charge of gambling against six other men. After stating that he was sitting at a table with said men
when they were arrested, he refused to answer two questions, claiming so to do might tend to incriminate him: (1)
"Was there a game of cards being played on this particular evening at the table at which you are sitting?" (2) "Was
there a game of cards being played at another table at this time?" The foreman of the grand jury reported the matter
to the judge, who ruled "that each and all of said questions are proper and that the answers thereto would not tend
to incriminate the witness." Mason was again called and refused to answer the first question propounded to him,
but, half yielding to frustration, he said in response to the second question: "I don't know." In affirming the
conviction for contempt, the Supreme Court of the United States among other things said:
In the present case, the witness certainly were not relieved from answering merely because they declared that
so to do might incriminate them. The wisdom of the rule in this regard is well illustrated by the enforced
answer, "I don't know ," given by Mason to the second question, after he had refused to reply under a claim
of constitutional privilege.
Since according to the witness himself the transaction was legal, and that he gave the P440,000 to a representative
of Burt in compliance with the latter's verbal instruction, we find no basis upon which to sustain his claim that to
reveal the name of that person might incriminate him. There is no conflict of authorities on the applicable rule, to
wit:

Generally, the question whether testimony is privileged is for the determination of the Court. At least, it is
not enough for the witness to say that the answer will incriminate him. as he is not the sole judge of his
liability. The danger of self-incrimination must appear reasonable and real to the court, from all the
circumstances, and from the whole case, as well as from his general conception of the relations of the
witness. Upon the facts thus developed, it is the province of the court to determine whether a direct answer
to a question may criminate or not. . . . The fact that the testimony of a witness may tend to show that he has
violated the law is not sufficient to entitle him to claim the protection of the constitutional provision against
self-incrimination, unless he is at the same time liable to prosecution and punishment for such violation. The
witness cannot assert his privilege by reason of some fanciful excuse, for protection against an imaginary
danger, or to secure immunity to a third person. ( 3 Wharton's Criminal Evidence, 11th ed., secs. 1135,1136.)
It is the province of the trial judge to determine from all the facts and circumstances of the case whether the
witness is justified in refusing to answer. (People vs. Gonzo, 23 N.E. [2d], 210 [Ill. App., 1939].) A witness is
not relieved from answering merely on his own declaration that an answer might incriminate him, but rather
it is for the trial judge to decide that question. (Mason vs. U.S., 244 U. S., 362; 61 L. ed., 1193, 1200.)
As against witness's inconsistent and unjustified claim to a constitutional right, is his clear duty as a citizen to give
frank, sincere, and truthful testimony before a competent authority. The state has the right to exact fulfillment of a
citizen's obligation, consistent of course with his right under the Constitution. The witness in this case has been
vociferous and militant in claiming constitutional rights and privileges but patently recreant to his duties and
obligations to the Government which protects those rights under the law. When a specific right and a specific
obligation conflict with each other, and one is doubtful or uncertain while the other is clear and imperative, the
former must give way to the latter. The right to life is one of the most sacred that the citizen may claim, and yet the
state may deprive him of it if he violates his corresponding obligation to respect the life of others. As Mr. Justice
Johnson said in Anderson vs. Dunn: "The wretch beneath the gallows may repine at the fate which awaits him, and
yet it is not certain that the laws under which he suffers were made for the security." Paraphrasing and applying
that pronouncement here, the petitioner may not relish the restraint of his liberty pending the fulfillment by him of
his duty, but it is no less certain that the laws under which his liberty is restrained were made for his welfare.

From all the foregoing, it follows that the petition must be denied, and it is so ordered, with costs.
Paras, Pablo, Bengzon, Montemayor, and Reyes, JJ., concur.

Separate Opinions
TUASON, J., dissenting:
The estates deal which gave the petitioner's examination by a committee of the Senate was one that aroused
popular indignation as few cases of graft and corruption have. The investigation was greeted with spontaneous
outburst of applause by an outraged citizenry, and the Senate was rightly commended for making the lead in
getting at the bottom of an infamous transaction.
All the more necessary it is that we should approach the consideration of this case with circumspection, lest the
influence of strong public passions should get the batter of our judgment. It is trite to say that public sentiment
fades into insignificance before a proper observance of constitutional processes, the maintenance of the
constitutional structure, and the protection of individual rights. Only thus can a government of laws, the foundation
stone of human liberty, be strengthened and made secure for that very public.
It is with these thoughts in mind that, with sincere regret, I am constrained to dissent.
The power of the legislative bodies under the American system of government to punish for contempt was at the
beginning totally denied by some courts and students of constitutional law, on the ground that this power is judicial
in nature and belongs to the judiciary branch of the government under the constitutional scheme. The point
however is now settled in favor of the existence of the power. This rule is based on the necessity for the attainment
of the ends for which legislative body is created. Nor can the legitimacy of the purpose of the investigation which
the Senate ordered in this case be disputed. As a corollary, it was likewise legitimate and necessary for the

committee to summon the petitioner with a command to produce his books and documents, and to commit him to
prison for his refusal or failure to obey the subpoena. And, finally, there is no question that the arresting officers
were fully justified in using necessary bodily force to bring him before the bar of the Senate when he feigned
illness and stalled for time in the mistaken belief that after the closing of the then current session of Congress he
could go scot-free.
At the same time, there is also universal agreement that the power is not absolute. The disagreement lies in the
extent of the power, and such disagreement is to be found even between decisions of the same court.
Andersonvs. Dunn, 6 Wheat., No. 204, may be said to have taken the most liberal view of the legislature's authority
and Kilbourn vs. Thompson, 103 U.S. 168, which partly overruled and qualified the former, the strictest. By the
most liberal standard the power is restricted "by considerations as to the nature of the inquiry, occasion, or action in
connection with which the contemptuous conduct has occurred." Punishment must be resorted to for the efficient
exercise of the legislative function. Even Anderson vs. Dunn speaks of the power as "the least possible power
adequate to the end proposed."
Judged by any test, the question propounded to the witness does not, in my opinion, meet the constitutional
requirement. It is obvious, I think, that the query has nothing to do with any matter within the cognizance of the
Congress. There is, on the contrary, positive suggestion that the question has no relation to the contemplated
legislation. The statement of the committee in its report that the information sought to be obtained would clear the
names of the persons suspected of having received the money, is, on the surface, the most or only plausible reason
that can be advanced. Assuming this to be the motive behind the question, yet little reflection will show that the
same is beyond the scope of legislative authority and prerogatives. It is outside the concern of the Congress to
protect the honor of particular citizens except that of its own members' as a means of preserving respect and
confidence in that body. Moreover, the purported good intention must assume, if it is to materialize, that the
persons under suspicion are really innocent; for if they are not and the witness will tell the truth, the result will be
to augment their disgrace rather than vindicate their honor. This is all the more likely to happen because one of
those persons, is judged from the committee's findings, the most likely one, to say the least, who got the money.

If the process of deduction is pressed further, the reasonable conclusion seems to be that the object of the question
is, to mention only one, to prepare the way for a court action. The majority, decision indirectly admits or insinuates
this to be the case. It says, "It appearing that the questioned transaction was affected by the head of the Department
of Justice himself, it is not reasonable to expect the fiscal or the Court of First Instance of Manila will take the
initiative to investigate and prosecute the parties responsible for the deal until and unless the Senate shall have
determined who those parties are and shall have taken such measures as may be within its competence to take, to
redress the wrong that may have been committed against the people as a result of the transaction." So here is an
admission, implied if not express, that the Senate wants the witness to give names because the fiscal or the courts
will not initiate an action against parties who should be prosecuted. It is needless to say that the institution of a
criminal or civil suit is a matter that devolves upon other departments of the government, alien to the duties of the
Congress to look after.
The Congress is at full liberty, of course, to make any investigation for the purpose of aiding the fiscal or the
courts, but this liberty does not carry with it the authority to imprison persons who refuse to testify.
In the intricacy and complexity of an investigation it is often impossible to foretell before its close what relation
certain facts may bear on the final results, and experience has shown that investigators and courts would do well to
veer on the liberal side in the resolution of doubtful questions. But the Senate is not now in the midst of an inquiry
with the situation still in a fluid or tentative state. Now the facts are no longer confused. The committee has
finished its investigation and submitted its final report and the Senate has approved a bill on the bases of the facts
found. All the pertinent facts having been gathered, as is to be inferred from that the report and the nature of the
Senate's action, every question, every fact, every bit of testimony has taken a distinct meaning susceptible of
concrete and definite evaluation; the task has been reduced to the simple process of sifting the grain from the
chaffs.
In the light of the committee's report and of the bill introduced and approved in the Senate, it seems quite plain that
the express naming of the recipient or recipients of the money is entirely unessential to anything the Senate has a
right or duty to do in premises. Names may be necessary for the purpose of criminal prosecution, impeachment or
civil suit. In such proceedings, identities are essential. In some legislative investigations it is important to know the

names of public officials involved. But the particular disclosure sought of the petitioner here is immaterial to the
proposed law. It is enough for the Senate, for its own legitimate object, to learn how the Department of Justice had
in the purchase, and to have a moral conviction as to the identity of the person who benefited thereby. The need for
such legislation and translated into the bill approved by the Senate is met by an insight into a broad outline of the
deal. To paraphrase the U.S. Supreme Court in Anderson vs. Dunn, although the passage was used in another
connection, legislation is a science of experiment and the relation between the legislator and the end does not have
to be so direct as to strike the eye of the former.
One of the proposed laws have prohibits brothers and near relatives of any president of the Philippines from
intervening directly or indirectly in transactions in which the Government is a party. It is stated that this is subject
to change depending on the answer Arnault may give. This statement is wide open to challenge.
If Arnault should Antonio Quirino it must be admitted that the bill would not be altered. But let us suppose that the
witness will point to another man. Will the result be any different? Will the Senate recall the bill? I can not perceive
the slightest possibility of such eventuality. The pending bill was framed on the assumption that Antonio Quirino
was a party to the deal in question. As has been said, the committee entertains a moral conviction that this brother
of the President was the recipient of a share of the proceeds of sale. No amount of assurance by Arnault to the
contrary would be believed for truth. And, I repeat, the proposed legislation does not need for its justification legal
evidence of Antonio Quirino's intervention in the transaction.
All this in the first place. In the second place, it is not to be assumed that the present bill is aimed solely against
Antonio Quirino whose relation to the Administration is but temporary. It is more reasonable to presume that the
proposed enactment is intended for all time and for all brothers of future presidents, for in reality it is no more than
an extension or enlargement of laws already found in the statute book which guard against temptations to exploit
official positions or influence to the prejudice of public interests.
The disputed question is, in fact, not only irrelevant but moot. This is decisive of the irrelevancy of this question.
As has been noticed, the committee has submitted its final report and recommendation, and a bill has been

approved by the Senate calculated to prevent recurrence of the anomalies exposed. For the purpose for which it
was instituted the inquiry is over and the committee's mission accomplished.
It is true that the committee continues to sit during the recess of Congress, but it is obvious from all the
circumstances that the sole and real object of the extension of the committee's sittings is to receive the witness'
answer in the event he capitulates. I am unable to see any new phase of the deal which the Senate could
legitimately wish to know, and the respondents and this Court have not pointed out any. That the committee has not
sat and nothing has been done so far except to wait for Arnault's answer is a convincing manifestation of the above
conclusion.
The order "to continue its investigation" contained in Senate Resolution No. 16 cannot disguise the realities
revealed by the Senate's actions already referred to and by the emphasis given to the instruction "to continue its
(committee's) examination of Jean L. Arnault regarding the name of the person to whom he gave the P440,000."
The instruction 'to continue the investigation' is not entitled to the blind presumption that it embraces matters other
than the revelation by the witness of the name of the person who got the money. Jurisdiction to deprive a citizen of
liberty outside the usual process is not acquired by innuendoes or vague assertions of the facts on which
jurisdiction is made to depend. If the judgment of the court of law of limited jurisdiction does not enjoy the
presumption of legality, much less can the presumption of regularity be invoked for a resolution of a deliberative
body whose power to inflict punishment upon private citizens is wholly derived by implication and vehemently
contested by some judges. At any rate, "the stronger presumption of innocence attends accused at the trial", "and it
is incumbent" upon the respondents "to show that the question pertains to some matter under investigation."
(Sinclair vs. U. S., 73 L. ed., 693.) This rule stems from the fact that the power is in derogation of the constitutional
guarantee that no person shall be deprived of life, liberty, or property without due process of law, which
presupposes " a trial in which the rights of the parties shall be decided by a tribunal appointed by law, which
tribunal is to governed by rules of law previously established." Powers so dangerous to the liberty of a citizen can
not be allowed except where the pertinence is clear. A Judge who abuses such power may be impeached and he acts
at all times under the sense of this accountability and responsibility. His victims may be reached by the pardoning
power. But if the Congress be allowed this unbounded jurisdiction of discretion, there is no redress, The Congress
may dispoil of a citizen's life, liberty or property and there is no power on earth to stop its hand. There is, there can

be, no such unlimited power in any department of the government of the Republic. (Loan Association vs. Topeka,
20 Wall, Nos. 662, 663; Taylor vs. Porter, 4 Hill No. N.Y. 140.)
The above rule and discussion apply with equal force to the instruction to the committee in the original resolution,
"to determine the parties responsible for the deal." It goes without saying that the congress cannot authorize a
committee to do what it itself cannot do. In other words, the` Senate could not insist on the disclosure of Arnault's
accomplice in the present state of the investigation if the Senate were conducting the inquiry itself instead of
through a committee.
Our attention is called to the fact that "in the Philippines, the legislative power is vested in the Congress of the
Philippines alone, and therefore that the Congress of the Philippines has a wider range of legislative field than the
Congress of the United States or any state legislature." From this premise the inference is drawn that " the field of
inquiry into it (Philippine Congress) may enter is also wider."
This argument overlooks the important fact that congressional or legislative committees both here and in the
Unived States, do not embark upon fishing expeditions in search of information which by chance may be useful to
legislation. Inquiries entrusted to congressional committee, whether here or in the United States, are necessarily for
specific objects within the competence of the Congress to look into. I do not believe any reason, rule or principle
could be found which would sustain the theory that just because the United States Congress or a state legislature
could legislate on, say, only ten subjects and the Philippine Congress on twenty, the latter's power to commit to
prison for contempt is proportionately as great as that of the former. In the consideration of the legality of an
imprisonment for the contempt by each House, the power is gauged not be the greater or lesser number of subject
matters that fall within its sphere of action, but by the answer to the question, has it jurisdiction over the matter
under investigation? Bearing this distinction in mind, it is apparent that the power of a legislature to punish for
contempt can be no greater nor less than that of any other. Were it possible for the Philippine Senate and the United
States Senate to undertake an investigation of exactly identical anomalies in their respective departments of justice,
could it be asserted with any support of logic that one Senate has a wider authority to imprison for contempt in
such investigation simply because it has a "wider range of legislative field?"

It is said that the Senate bill has not been acted upon by the lower house and that even if it should pass in that
chamber it would still have the President's veto to hurdle. It has been expressly stated at the oral argument, and
there is insinuation in this Court's decision, that the revelation of the name or names of the person or persons who
received the money may help in convincing the House of Representatives or the President of the wisdom of the
pending measure. Entirely apart from the discussion that the House of Representatives and the Chief Executive
have their own idea of what they need to guide them in the discharge of their respective duties, and they have the
facilities of their own for obtaining the requisite data.
There is another objection, more fundamental, to the Senate invoking the interest or convenience of the other
House or the President as ground of jurisdiction. The House of Representatives and the President are absolutely
independent of the Senate, in the conduct of legislative and administrative inquiries, and the power of each House
to imprison for contempt does not go beyond the necessity for its own self-preservation or for making its express
powers effective. Each House exercises this power to protect or accomplish its own authority and not that of the
other House or the President. Each House and the President are supposed to take care of their respective affairs.
The two Houses and the Chief Executive act separately although the concurrence of the three is required in the
passage of legislation and of both Houses in the approval of resolutions. As the U.S. Supreme Court in
Kilbournvs. Thompson, said, "No general power of inflicting punishment by the Congress (as distinct from a
House is found in the Constitution." "An act of Congress it said which proposed to adjudge a man guilty of a
crime and inflict the punishment, will be considered by all thinking men to be unauthorized by the Constitution."
Kilbourn vs. Thompson, supra, it is said can not be relied on in this case as a precedent because, so it is also said,
"the subject of the inquiry, which related to a private real-estate pool or partnership, was not within the jurisdiction
of either House of Congress; while here it is not disputed that the subject of the inquiry, which relates to a
transaction involving a questionable expenditure by the Government of P5,000,000 of public funds, is within the
Jurisdiction of the Senate." Yet the remarks of Judge Land is which are quoted in the majority decision point out
that the inquiry "was a normal and customary part of the legislative process." Moreover, Kilbourn vs.Thompson is
important, not for the matter it treated but for the principles it enunciated.

It is also said that Kilbourn vs. Thompson did not meet with universal approval as Judge Land is' article above
mentioned shows. The jurist who delivered the opinion in that case, Mr. Justice Miller, was one of the "giants" who
have ever sat on the Supreme Federal Bench, venerated and eminent for the width and depth of his learning.
Subsequent decisions, as far as I have been able to ascertain, have not rejected or criticized but have followed it,
and it still stands as a landmark in this branch of constitutional law.
If we can lean on private opinions and magazine articles for comfort, the petitioner can cite one by a legal scholar
and author no less reknown and respected than Judge Land is. I refer to Judge Wigmore who, referring to an
investigation of the U.S. Department of Justice said in an article published in 19 (1925) Illinois Law Review, 452:
The senatorial debauch of investigations poking into political garbage cans and dragging the sewers of
political intrigue filled the winter of 1923-24 with a stench which has not yet passed away. Instead of
employing the constitutional, manly, fair procedure of impeachment, the Senate flung self-respect and
fairness to the winds. As a prosecutor, the Senate presented a spectacle which cannot even be dignified by a
comparison with the persecutive scoldings of Coke and Scroggs and Jeffreys, but fell rather in popular
estimate to the level of professional searchers of the municipal dunghills.
It is far from my thought to subscribe to this vituperation as applied to our Senate. Certainly, this august body said
not only do the right thing but is entitled to the lasting gratitude of the people for taking the courageous stand it did
in probing into an anomaly that robbed a depleted treasury of a huge amount. I have tried to make it clear that my
disagreement with the majority lies not in the propriety or constitutionality of the investigation but in the
pertinence to that investigation of a single question. The investigation, as had been said, was legal and
commendable. My objection is that the Senate having started within the bounds of its authority, has, in entire good
faith, overstepped those bounds and trespassed on a territory reserved to other branches of the government, when it
imprisoned a witness for contumacy on a point that is unimportant, useless, impertinent and irrelevant, let alone
moot.
Thus understood, this humble opinion does not conflict with the views of Judge Land is and all other advocates of
wide latitude for congressional investigations. All are agreed, and the majority accept the proposition, that there is a

limit to the legislative power to punish for contempt. The limit is set in Anderson vs. Dunn which Judge Land is
approved "the least possible power adequate to the end proposed."

B/GEN. (RET.) FRANCISCO V. G.R. No. 170165

GUDANI AND LT. COL.
ALEXANDER F. BALUTAN
Petitioners, Present:
PANGANIBAN, C.J.,
PUNO,
- versus - QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
LT./GEN. GENEROSO S. SENGA CORONA,
AS CHIEF OF STAFF OF THE CARPIO-MORALES,
ARMED FORCES OF THE CALLEJO, SR.,
PHILIPPINES, COL. GILBERTO AZCUNA,
JOSE C. ROA AS THE PRE-TRIAL TINGA,
INVESTIGATING OFFICER, THE CHICO-NAZARIO,
PROVOST MARSHALL GENERAL GARCIA, and

OF THE ARMED FORCES OF THE VELASCO, JR., JJ.

PHILIPPINES AND THE GENERAL
COURT-MARTIAL,
Respondents.
Promulgated:
August 15, 2006
x--------------------------------------------------------------------------- x
DECISION
TINGA, J.:
A most dangerous general proposition is foisted on the Court that soldiers who defy orders of their superior officers
are exempt

from the strictures of military law and discipline if such defiance is predicated on an act otherwise valid under
civilian law. Obedience and deference to the military chain of command and the President as commander-in-chief
are the cornerstones of a professional military in the firm cusp of civilian control. These values of obedience and
deference expected of military officers are content-neutral, beyond the sway of the officers own sense of what is
prudent or rash, or more elementally, of right or wrong. A self-righteous military invites itself as the scoundrels
activist solution to the ills of participatory democracy.
Petitioners seek the annulment of a directive from President Gloria Macapagal-Arroyo [1] enjoining them and
other military officers from testifying before Congress without the Presidents consent. Petitioners also pray for

injunctive relief against a pending preliminary investigation against them, in preparation for possible court-martial
proceedings, initiated within the military justice system in connection with petitioners violation of the
aforementioned directive.
The Court is cognizant that petitioners, in their defense, invoke weighty constitutional principles that center
on fundamental freedoms enshrined in the Bill of Rights. Although these concerns will not be

addressed to the satisfaction of petitioners, the Court recognizes these values as of paramount importance to our
civil society, even if not determinative of the resolution of this petition. Had the relevant issue before us been the
right of the Senate to compel the testimony of petitioners, the constitutional questions raised by them would have
come to fore. Such a scenario could have very well been presented to the Court in such manner, without the
petitioners having had to violate a direct order from their commanding officer. Instead, the Court has to resolve
whether petitioners may be subjected to military discipline on account of their defiance of a direct order of the AFP
Chief of Staff.
The solicited writs of certiorari and prohibition do not avail; the petition must be denied.
I.
The petitioners are high-ranking officers of the Armed Forces of the Philippines (AFP). Both petitioners, Brigadier
General Francisco Gudani (Gen. Gudani) and Lieutenant Colonel Alexander Balutan (Col. Balutan), belonged to
the Philippine Marines. At the time of the subject incidents, both Gen. Gudani and Col. Balutan were assigned to
the Philippine Military Academy (PMA) in Baguio City, the former as the PMA Assistant Superintendent, and the
latter as the Assistant Commandant of Cadets.[2]

On 22 September 2005, Senator Rodolfo Biazon (Sen. Biazon) invited several senior officers of the AFP to appear
at a public hearing before the Senate Committee on National Defense and Security (Senate Committee) scheduled
on 28 September 2005. The hearing was scheduled after topics concerning the conduct of the 2004 elections
emerged in the public eye, particularly allegations of massive cheating and the surfacing of copies of an audio
excerpt purportedly of a phone conversation between President Gloria Macapagal Arroyo and an official of the
Commission on Elections (COMELEC) widely reputed as then COMELEC Commissioner Virgilio Garcillano. At

the time of the 2004 elections, Gen. Gudani had been designated as commander, and Col. Balutan a member, of
Joint Task Force Ranao by the AFP Southern Command. Joint Task Force Ranao was tasked with the maintenance
of peace and order during the 2004 elections in the provinces of Lanao del Norte and Lanao del Sur.[3] `
Gen. Gudani, Col. Balutan, and AFP Chief of Staff Lieutenant General Generoso Senga (Gen. Senga) were among
the several AFP officers who received a letter invitation from Sen. Biazon to attend the 28 September 2005 hearing.
On 23 September 2005, Gen. Senga replied through a letter to Sen. Biazon that he would be unable to attend the
hearing due to a previous commitment in Brunei, but he nonetheless directed other officers from the AFP who were
invited to attend the hearing.[4]
On 26 September 2005, the Office of the Chief of Staff of the AFP issued a Memorandum addressed to the
Superintendent of the PMA Gen. Cristolito P. Baloing (Gen. Baloing). It was signed by Lt. Col. Hernando DCA
Iriberri in behalf of Gen. Senga. [5] Noting that Gen. Gudani and Col. Balutan had been invited to attend the Senate
Committee hearing on 28 September 2005, the Memorandum directed the two officers to attend the hearing.
[6]
Conformably, Gen. Gudani and Col. Balutan filed their respective requests for travel authority addressed to the
PMA Superintendent.
On 27 September 2005, Gen. Senga wrote a letter to Sen. Biazon, requesting the postponement of the hearing
scheduled for the following day, since the AFP Chief of Staff was himself unable to attend said hearing, and that
some of the invited officers also could not attend as they were attending to other urgent operational matters. By this
time, both Gen. Gudani and Col. Balutan had already departed Baguio for Manila to attend the hearing.
Then on the evening of 27 September 2005, at around 10:10 p.m., a message was transmitted to the PMA
Superintendent from the office of Gen. Senga, stating as follows:

PER INSTRUCTION OF HER EXCELLENCY PGMA, NO AFP PERSONNEL SHALL

APPEAR BEFORE ANY CONGRESSIONAL OR SENATE HEARING WITHOUT HER
APPROVAL. INFORM BGEN FRANCISCO F GUDANI AFP AND LTC ALEXANDER BALUTAN
PA (GSC) ACCORDINGLY.[7]

The following day, Gen. Senga sent another letter to Sen. Biazon, this time informing the senator that no approval
has been granted by the President to any AFP officer to appear before the hearing scheduled on that day.
Nonetheless, both Gen. Gudani and Col. Balutan were present as the hearing started, and they both testified as to
the conduct of the 2004 elections.
The Office of the Solicitor General (OSG), representing the respondents before this Court, has offered additional
information surrounding the testimony of Gen. Gudani and Col. Balutan. The OSG manifests that the couriers of
the AFP Command Center had attempted to deliver the radio message to Gen. Gudanis residence in a subdivision
in Paraaque City late in the night of 27 September 2005, but they were not permitted entry by the subdivision
guards. The next day, 28 September 2005, shortly before the start of the hearing, a copy of Gen. Sengas letter to
Sen. Biazon sent earlier that day was handed at the Senate by Commodore Amable B. Tolentino of the AFP Office
for Legislative Affairs to Gen. Gudani, who replied that he already had a copy. Further, Gen. Senga called
Commodore Tolentino on the latters cell phone and asked to talk to Gen. Gudani, but Gen. Gudani refused. In
response, Gen. Senga instructed Commodore Tolentino to inform Gen. Gudani that it was an order, yet Gen.
Gudani still refused to take Gen. Sengas call.[8]
A few hours after Gen. Gudani and Col. Balutan had concluded their testimony, the office of Gen. Senga issued a
statement which noted that the two had appeared before the Senate Committee in spite of the fact that a guidance
has been given that a Presidential approval should be sought prior to such an appearance; that such directive was in

keeping with the time[-]honored principle of the Chain of Command; and that the two officers disobeyed a legal
order, in violation of A[rticles of] W[ar] 65 (Willfully Disobeying Superior Officer), hence they will be subjected
to General Court Martial proceedings x x x Both Gen. Gudani and Col. Balutan were likewise relieved of their
assignments then.[9]
On the very day of the hearing, 28 September 2005, President Gloria-Macapagal-Arroyo issued Executive Order
No. 464 (E.O. 464). The OSG notes that the E.O. enjoined officials of the executive department including the
military establishment from appearing in any legislative inquiry without her approval. [10] This Court subsequently
ruled on the constitutionality of the said executive order in Senate v. Ermita.[11] The relevance of E.O. 464
and Senate to the present petition shall be discussed forthwith.
In the meantime, on 30 September 2005, petitioners were directed by General Senga, through Col. Henry A.
Galarpe of the AFP Provost Marshal General, to appear before the Office of the Provost Marshal General (OPMG)
on 3 October 2005 for investigation. During their appearance before Col. Galarpe, both petitioners invoked their
right to remain silent.[12] The following day, Gen. Gudani was compulsorily retired from military service, having
reached the age of 56.[13]
In an Investigation Report dated 6 October 2005, the OPMG recommended that petitioners be charged with
violation of Article of War 65, on willfully disobeying a superior officer, in relation to Article of War 97, on
conduct prejudicial to the good order and military discipline. [14] As recommended, the case was referred to a PreTrial Investigation Officer (PTIO) preparatory to trial by the General Court Martial (GCM). [15] Consequently, on 24
October 2005, petitioners were separately served with Orders respectively addressed to them and signed by
respondent Col. Gilbert Jose C. Roa, the Pre-Trial Investigating Officer of the PTIO. The Orders directed
petitioners to appear in person before Col. Roa at the Pre-Trial Investigation of the Charges for violation of Articles
65[16] and 97[17] of Commonwealth Act No. 408,[18] and to submit their counter-affidavits and affidavits of witnesses

at the Office of the Judge Advocate General. [19] The Orders were accompanied by respective charge sheets against
petitioners, accusing them of violating Articles of War 65 and 97.
It was from these premises that the present petition for certiorari and prohibition was filed, particularly
seeking that (1) the order of President Arroyo coursed through Gen. Senga preventing petitioners from testifying
before Congress without her prior approval be declared unconstitutional; (2) the charges stated in the charge sheets
against petitioners be quashed; and (3) Gen. Senga, Col. Galarpe, Col. Roa, and their successors-in-interest or
persons acting for and on their behalf or orders, be permanently enjoined from proceeding against petitioners, as a
consequence of their having testified before the Senate on 28 September 2005.[20]
Petitioners characterize the directive from President Arroyo requiring her prior approval before any AFP personnel
appear before Congress as a gag order, which violates the principle of separation of powers in government as it
interferes with the investigation of the Senate Committee conducted in aid of legislation. They also equate the gag
order with culpable violation of the Constitution, particularly in relation to the publics constitutional right to
information and transparency in matters of public concern. Plaintively, petitioners claim that the Filipino people
have every right to hear the [petitioners] testimonies, and even if the gag order were unconstitutional, it still was
tantamount to the crime of obstruction of justice. Petitioners further argue that there was no law prohibiting them
from testifying before the Senate, and in fact, they were appearing in obeisance to the authority of Congress to
conduct inquiries in aid of legislation.
Finally, it is stressed in the petition that Gen. Gudani was no longer subject to military jurisdiction on account of
his compulsory retirement on 4 October 2005. It is pointed out that Article 2, Title I of the Articles of War defines
persons subject to military law as all officers and soldiers in the active service of the AFP.
II.

We first proceed to define the proper litigable issues. Notably, the guilt or innocence of petitioners in violating
Articles 65 and 97 of the Articles of War is not an issue before this Court, especially considering that per records,
petitioners have not yet been subjected to court martial proceedings. Owing to the absence of such proceedings, the
correct inquiry should be limited to whether respondents could properly initiate such proceedings preparatory to a
formal court-martial, such as the aforementioned preliminary investigation, on the basis of petitioners acts
surrounding their testimony before the Senate on 28 September 2005. Yet this Court, consistent with the principle
that it is not a trier of facts at first instance,[21] is averse to making any authoritative findings of fact, for that
function is first for the court-martial court to fulfill.
Thus, we limit ourselves to those facts that are not controverted before the Court, having been commonly alleged
by petitioners and the OSG (for respondents). Petitioners were called by the Senate Committee to testify in its 28
September 2005 hearing. Petitioners attended such hearing and testified before the Committee, despite the fact that
the day before, there was an order from Gen. Senga (which in turn was sourced per instruction from President
Arroyo) prohibiting them from testifying without the prior approval of the President. Petitioners do not precisely
admit before this Court that they had learned of such order prior to their testimony, although the OSG asserts that at
the very least, Gen. Gudani already knew of such order before he testified. [22] Yet while this fact may be ultimately
material in the court-martial proceedings, it is not determinative of this petition, which as stated earlier, does not
proffer as an issue whether petitioners are guilty of violating the Articles of War.
What the Court has to consider though is whether the violation of the aforementioned order of Gen. Senga, which
emanated from the President, could lead to any investigation for court-martial of petitioners. It has to be
acknowledged as a general principle[23] that AFP personnel of whatever rank are liable under military law for
violating a direct order of an officer superior in rank. Whether petitioners did violate such an order is not for the
Court to decide, but it will be necessary to assume, for the purposes of this petition, that petitioners did so.
III.

Preliminarily, we must discuss the effect of E.O. 464 and the Courts ruling in Senate on the present
petition. Notably, it is not alleged that petitioners were in any way called to task for violating E.O. 464, but
instead, they were charged for violating the direct order of Gen. Senga not to appear before the Senate
Committee, an order that stands independent of the executive order. Distinctions are called for, since Section
2(b) of E.O. 464 listed generals and flag officers of the Armed Forces of the Philippines and such other officers
who in the judgment of the Chief of Staff are covered by the executive privilege, as among those public officials
required in Section 3 of E.O. 464 to secure prior consent of the President prior to appearing before either House of
Congress. The Court in Senate declared both Section 2(b) and Section 3 void,[24] and the impression may have been
left following Senate that it settled as doctrine, that the President is prohibited from requiring military personnel
from attending congressional hearings without having first secured prior presidential consent. That impression is
wrong.
Senate turned on the nature of executive privilege, a presidential prerogative which is encumbered by significant
limitations. Insofar as E.O. 464 compelled officials of the executive branch to seek prior presidential approval
before appearing before Congress, the notion of executive control also comes into consideration. [25] However, the
ability of the President to require a military official to secure prior consent before appearing before Congress
pertains to a wholly different and independent specie of presidential authoritythe commander-in-chief powers of
the President. By tradition and jurisprudence, the commander-in-chief powers of the President are not encumbered
by the same degree of restriction as that which may attach to executive privilege or executive control.
During the deliberations in Senate, the Court was very well aware of the pendency of this petition as well as the
issues raised herein. The decision in Senate was rendered with the comfort that the nullification of portions of E.O.
464 would bear no impact on the present petition since petitioners herein were not called to task for violating the
executive order. Moreover, the Court was then cognizant that Senate and this case would ultimately hinge on
disparate legal issues. Relevantly, Senate purposely did not touch upon or rule on the faculty of the President,

under the aegis of the commander-in-chief powers[26] to require military officials from securing prior consent before
appearing before Congress. The pertinent factors in considering that question are markedly outside of those which
did become relevant in adjudicating the issues raised in Senate. It is in this petition that those factors come into
play.
At this point, we wish to dispose of another peripheral issue before we strike at the heart of the matter. General
Gudani argues that he can no longer fall within the jurisdiction of the court-martial, considering his retirement
last 4 October 2005. He cites Article 2, Title I of Commonwealth Act No. 408, which defines persons subject to
military law as, among others, all officers and soldiers in the active service of the [AFP], and points out that he is
no longer in the active service.
This point was settled against Gen. Gudanis position in Abadilla v. Ramos,[27] where the Court declared that
an officer whose name was dropped from the roll of officers cannot be considered to be outside the jurisdiction of
military authorities when military justice proceedings were initiated against him before the termination of his
service. Once jurisdiction has been acquired over the officer, it continues until his case is terminated. Thus, the
Court held:
The military authorities had jurisdiction over the person of Colonel Abadilla at the time of the
alleged offenses. This jurisdiction having been vested in the military authorities, it is retained up to the
end of the proceedings against Colonel Abadilla. Well-settled is the rule that jurisdiction once acquired
is not lost upon the instance of the parties but continues until the case is terminated.[28]
Citing Colonel Winthrops treatise on Military Law, the Court further stated:

We have gone through the treatise of Colonel Winthrop and We find the following passage
which goes against the contention of the petitioners, viz
3. Offenders in general Attaching of jurisdiction. It has further been held, and is
now settled law, in regard to military offenders in general, that if the military jurisdiction
has once duly attached to them previous to the date of the termination of their legal
period of service, they may be brought to trial by court-martial after that date, their
discharge being meanwhile withheld. This principle has mostly been applied to cases
where the offense was committed just prior to the end of the term. In such cases the
interests of discipline clearly forbid that the offender should go unpunished. It is held
therefore that if before the day on which his service legally terminates and his right
to a discharge is complete, proceedings with a view to trial are commenced against
him as by arrest or the service of charges, the military jurisdiction will fully attach
and once attached may be continued by a trial by court-martial ordered and held
after the end of the term of the enlistment of the accused x x x [29]
Thus, military jurisdiction has fully attached to Gen. Gudani inasmuch as both the acts complained of and the
initiation of the proceedings against him occurred before he compulsorily retired on 4 October 2005. We see no
reason to unsettle the Abadilla doctrine. The OSG also points out that under Section 28 of Presidential Decree No.
1638, as amended, [a]n officer or enlisted man carried in the retired list [of the Armed Forces of the Philippines]
shall be subject to the Articles of War x x x [30] To this citation, petitioners do not offer any response, and in fact
have excluded the matter of Gen. Gudanis retirement as an issue in their subsequent memorandum.
IV.
We now turn to the central issues.

Petitioners wish to see annulled the gag order that required them to secure presidential consent prior to their
appearance before the Senate, claiming that it violates the constitutional right to information and transparency in
matters of public concern; or if not, is tantamount at least to the criminal acts of obstruction of justice and grave
coercion. However, the proper perspective from which to consider this issue entails the examination of the basis
and authority of the President to issue such an order in the first place to members of the AFP and the determination
of whether such an order is subject to any limitations.
The vitality of the tenet that the President is the commander-in-chief of the Armed Forces is most crucial to the
democratic way of life, to civilian supremacy over the military, and to the general stability of our representative
system of government. The Constitution reposes final authority, control and supervision of the AFP to the
President, a civilian who is not a member of the armed forces, and whose duties as commander-in-chief represent
only a part of the organic duties imposed upon the office, the other functions being clearly civil in nature.
[31]
Civilian supremacy over the military also countermands the notion that the military may bypass civilian
authorities, such as civil courts, on matters such as conducting warrantless searches and seizures.[32]
Pursuant to the maintenance of civilian supremacy over the military, the Constitution has allocated specific roles to
the legislative and executive branches of government in relation to military affairs. Military appropriations, as with
all other appropriations, are determined by Congress, as is the power to declare the existence of a state of war.
[33]
Congress is also empowered to revoke a proclamation of martial law or the suspension of the writ of habeas
corpus.[34] The approval of the Commission on Appointments is also required before the President can promote
military officers from the rank of colonel or naval captain. [35] Otherwise, on the particulars of civilian dominance
and administration over the military, the Constitution is silent, except for the commander-inchief clause which is fertile in meaning and
implication as to whatever inherent martial authority the President may possess.[36]

The commander-in-chief provision in the Constitution is denominated as Section 18, Article VII, which
begins with the simple declaration that [t]he President shall be the Commander-in-Chief of all armed forces of the
Philippines x x x[37] Outside explicit constitutional limitations, such as those found in Section 5, Article XVI, the
commander-in-chief clause vests on the President, as commander-in-chief, absolute authority over the persons and
actions of the members of the armed forces. Such authority includes the ability of the President to restrict the
travel, movement and speech of military officers, activities which may otherwise be sanctioned under civilian law.
Reference to Kapunan, Jr. v. De Villa[38] is useful in this regard. Lt. Col. Kapunan was ordered confined
under house arrest by then Chief of Staff (later President) Gen. Fidel Ramos. Kapunan was also ordered, as a
condition for his house arrest, that he may not issue any press statements or give any press conference during his
period of detention. The Court unanimously upheld such restrictions, noting:

[T]he Court is of the view that such is justified by the requirements of military discipline. It
cannot be gainsaid that certain liberties of persons in the military service, including the freedom
of speech, may be circumscribed by rules of military discipline. Thus, to a certain degree,
individual rights may be curtailed, because the effectiveness of the military in fulfilling its duties
under the law depends to a large extent on the maintenance of discipline within its ranks. Hence,
lawful orders must be followed without question and rules must be faithfully complied with,
irrespective of a soldier's personal views on the matter. It is from this viewpoint that the restrictions
imposed on petitioner Kapunan, an officer in the AFP, have to be considered.[39]
Any good soldier, or indeed any ROTC cadet, can attest to the fact that the military way of life circumscribes
several of the cherished freedoms of civilian life. It is part and parcel of the military package. Those who cannot
abide by these limitations normally do not pursue a military career and instead find satisfaction in other fields; and
in fact many of those discharged from the service are inspired in their later careers precisely by their rebellion
against the regimentation of military life. Inability or unwillingness to cope with military discipline is not a stain on

character, for the military mode is a highly idiosyncratic path which persons are not generally conscripted into, but
volunteer themselves to be part of. But for those who do make the choice to be a soldier, significant concessions to
personal freedoms are expected. After all, if need be, the men and women of the armed forces may be commanded
upon to die for country, even against their personal inclinations.
It may be so that military culture is a remnant of a less democratic era, yet it has been fully integrated into the
democratic system of governance. The constitutional role of the armed forces is as protector of the people and of
the State.[40] Towards this end, the military must insist upon a respect for duty and a discipline without counterpart
in civilian life.[41] The laws and traditions governing that discipline have a long history; but they are founded on
unique military exigencies as powerful now as in the past.[42] In the end, it must be borne in mind that the armed
forces has a distinct subculture with unique needs, a specialized society separate from civilian society. [43] In the
elegant prose of the eminent British military historian, John Keegan:
[Warriors who fight wars have] values and skills [which] are not those of politicians and
diplomats. They are those of a world apart, a very ancient world, which exists in parallel with the
everyday world but does not belong to it. Both worlds change over time, and the warrior world adopts
in step to the civilian. It follows it, however, at a distance. The distance can never be closed, for the
culture of the warrior can never be that of civilization itself.[44]
Critical to military discipline is obeisance to the military chain of command. Willful disobedience of a superior
officer is punishable by court-martial under Article 65 of the Articles of War. [45] An individual soldier is not free to
ignore the lawful orders or duties assigned by his immediate superiors. For there would be an end of all discipline
if the seaman and marines on board a ship of war [or soldiers deployed in the field], on a distant service, were
permitted to act upon their own opinion of their rights [or their opinion of the

Presidents intent], and to throw off the authority of the commander whenever they supposed it to be unlawfully
exercised.[46]
Further traditional restrictions on members of the armed forces are those imposed on free speech and
mobility. Kapunan is ample precedent in justifying that a soldier may be restrained by a superior officer from
speaking out on certain matters. As a general rule, the discretion of a military officer to restrain the speech of a
soldier under his/her command will be accorded deference, with minimal regard if at all to the reason for such
restraint. It is integral to military discipline that the soldiers speech be with the consent and approval of the military
commander.
The necessity of upholding the ability to restrain speech becomes even more imperative if the soldier desires to
speak freely on political matters. The Constitution requires that [t]he armed forces shall be insulated from partisan
politics, and that [n]o member of the military shall engage directly or indirectly in any partisan political activity,
except to vote.[47] Certainly, no constitutional provision or military indoctrination will eliminate a soldiers ability to
form a personal political opinion, yet it is vital that such opinions be kept out of the public eye. For one, political
belief is a potential source of discord among people, and a military torn by political strife is incapable of fulfilling
its constitutional function as protectors of the people and of the State. For another, it is ruinous to military
discipline to foment an atmosphere that promotes an active dislike of or dissent against the President, the
commander-in-chief of the armed forces. Soldiers are constitutionally obliged to obey a President they may dislike
or distrust. This fundamental principle averts the country from going the way of banana republics.
Parenthetically, it must be said that the Court is well aware that our countrys recent past is marked by regime
changes wherein active military dissent from the chain of command formed a key, though not exclusive, element.
The Court is not blind to history, yet it is a judge not of history but of the Constitution. The Constitution, and
indeed our modern democratic order, frown in no uncertain terms on a politicized military, informed as they are on
the trauma of absolute martial rule. Our history might imply that a political military is part of the natural order, but

this view cannot be affirmed by the legal order. The evolutionary path of our young democracy necessitates a
reorientation from this view, reliant as our socio-political culture has become on it. At the same time, evolution
mandates a similar demand that our system of governance be more responsive to the needs and aspirations of the
citizenry, so as to avoid an environment vulnerable to a military apparatus able at will to exert an undue influence
in our polity.
Of possibly less gravitas, but of equal importance, is the principle that mobility of travel is another necessary
restriction on members of the military. A soldier cannot leave his/her post without the consent of the commanding
officer. The reasons are self-evident. The commanding officer has to be aware at all times of the location of the
troops under command, so as to be able to appropriately respond to any exigencies. For the same reason,
commanding officers have to be able to restrict the movement or travel of their soldiers, if in their judgment, their
presence at place of call of duty is necessary. At times, this may lead to unsentimental, painful consequences, such
as a soldier being denied permission to witness the birth of his first-born, or to attend the funeral of a parent. Yet
again, military life calls for considerable personal sacrifices during the period of conscription, wherein the higher
duty is not to self but to country.
Indeed, the military practice is to require a soldier to obtain permission from the commanding officer before he/she
may leave his destination. A soldier who goes from the properly appointed place of duty or absents from his/her
command, guard, quarters, station, or camp without proper leave is subject to punishment by court-martial. [48] It is
even clear from the record that petitioners had actually requested for travel authority from the PMA
in Baguio City to Manila, to attend the Senate Hearing.[49] Even petitioners are well aware that it was necessary for
them to obtain permission from their superiors before they could travel to Manila to attend the Senate Hearing.
It is clear that the basic position of petitioners impinges on these fundamental principles we have discussed. They
seek to be exempted from military justice for having traveled to the Senate to testify before the Senate Committee
against the express orders of Gen. Senga, the AFP Chief of Staff. If petitioners position is affirmed, a considerable

exception would be carved from the unimpeachable right of military officers to restrict the speech and movement
of their juniors. The ruinous consequences to the chain of command and military discipline simply cannot warrant
the Courts imprimatur on petitioners position.

V.
Still, it would be highly myopic on our part to resolve the issue solely on generalities surrounding military
discipline. After all, petitioners seek to impress on us that their acts are justified as they were responding to an
invitation from the Philippine Senate, a component of the legislative branch of government. At the same time, the
order for them not to testify ultimately came from the President, the head of the executive branch of government
and the commander-in-chief of the armed forces.
Thus, we have to consider the question: may the President prevent a member of the armed forces from testifying
before a legislative inquiry? We hold that the President has constitutional authority to do so, by virtue of her power
as commander-in-chief, and that as a consequence a military officer who defies such injunction is liable under
military justice. At the same time, we also hold that any chamber of Congress which seeks the appearance before it
of a military officer against the consent of the President has adequate remedies under law to compel such
attendance. Any military official whom Congress summons to testify before it may be compelled to do so by the
President. If the President is not so inclined, the President may be commanded by judicial order to compel the
attendance of the military officer. Final judicial orders have the force of the law of the land which the President has
the duty to faithfully execute.[50]
Explication of these principles is in order.

As earlier noted, we ruled in Senate that the President may not issue a blanket requirement of prior consent on
executive officials summoned by the legislature to attend a congressional hearing. In doing so, the Court
recognized the considerable limitations on executive privilege, and affirmed that the privilege must be formally
invoked on specified grounds. However, the ability of the President to prevent military officers from testifying
before Congress does not turn on executive privilege, but on the Chief Executives power as commander-inchief to control the actions and speech of members of the armed forces. The Presidents prerogatives as
commander-in-chief are not hampered by the same limitations as in executive privilege.
Our ruling that the President could, as a general rule, require military officers to seek presidential approval before
appearing before Congress is based foremost on the notion that a contrary rule unduly diminishes the prerogatives
of the President as commander-in-chief. Congress holds significant control over the armed forces in matters such as
budget appropriations and the approval of higher-rank promotions, [51] yet it is on the President that the Constitution
vests the title as commander-in-chief and all the prerogatives and functions appertaining to the position. Again, the
exigencies of military discipline and the chain of command mandate that the Presidents ability to control the
individual members of the armed forces be accorded the utmost respect. Where a military officer is torn between
obeying the President and obeying the Senate, the Court will without hesitation affirm that the officer has to choose
the President. After all, the Constitution prescribes that it is the President, and not the Senate, who is the
commander-in-chief of the armed forces.[52]
At the same time, the refusal of the President to allow members of the military to appear before Congress is still
subject to judicial relief. The Constitution itself recognizes as one of the legislatures functions is the conduct of
inquiries in aid of legislation.[53] Inasmuch as it is ill-advised for Congress to interfere with the Presidents power as
commander-in-chief, it is similarly detrimental for the President to unduly interfere with Congresss right to conduct
legislative inquiries. The impasse did not come to pass in this petition, since petitioners testified anyway despite

the presidential prohibition. Yet the Court is aware that with its pronouncement today that the President has the
right to require prior consent from members of the armed forces, the clash may soon loom or actualize.
We believe and hold that our constitutional and legal order sanctions a modality by which members of the military
may be compelled to attend legislative inquiries even if the President desires otherwise, a modality which does not
offend the Chief Executives prerogatives as commander-in-chief. The remedy lies with the courts.
The fact that the executive branch is an equal, coordinate branch of government to the legislative creates a
wrinkle to any basic rule that persons summoned to testify before Congress must do so. There is considerable
interplay between the legislative and executive branches, informed by due deference and respect as to their various
constitutional functions. Reciprocal courtesy idealizes this relationship; hence, it is only as a last resort that one
branch seeks to compel the other to a particular mode of behavior. The judiciary, the third coordinate branch of
government, does not enjoy a similar dynamic with either the legislative or executive branches. Whatever
weakness inheres on judicial power due to its inability to originate national policies and legislation, such is
balanced by the fact that it is the branch empowered by the Constitution to compel obeisance to its rulings by the
other branches of government.
As evidenced by Arnault v. Nazareno[54] and Bengzon v. Senate Blue Ribbon Committee,[55] among others, the
Court has not shirked from reviewing the exercise by Congress of its power of legislative inquiry.
[56]
Arnault recognized that the legislative power of inquiry and the process to enforce it, is an essential and
appropriate auxiliary to the legislative function.[57] On the other hand, Bengzon acknowledged that the power of
both houses of Congress to conduct inquiries in aid of legislation is not absolute or unlimited, and its exercise is
circumscribed by Section 21, Article VI of the Constitution. [58] From these premises, the Court enjoined the Senate
Blue Ribbon Committee from requiring the petitioners in Bengzonfrom testifying and producing evidence before
the committee, holding that the inquiry in question did not involve any intended legislation.

Senate affirmed both the Arnault and Bengzon rulings. It elucidated on the constitutional scope and limitations on
the constitutional power of congressional inquiry. Thus:
As discussed in Arnault, the power of inquiry, with process to enforce it, is grounded on the necessity
of information in the legislative process. If the information possessed by executive officials on the
operation of their offices is necessary for wise legislation on that subject, by parity of reasoning,
Congress has the right to that information and the power to compel the disclosure thereof.
As evidenced by the American experience during the so-called McCarthy era, however, the right of
Congress to conduct inquirites in aid of legislation is, in theory, no less susceptible to abuse than
executive or judicial power. It may thus be subjected to judicial review pursuant to the Courts
certiorari powers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee, the inquiry itself might not properly
be in aid of legislation, and thus beyond the constitutional power of Congress. Such inquiry could not
usurp judicial functions. Parenthetically, one possible way for Congress to avoid such result as
occurred in Bengzon is to indicate in its invitations to the public officials concerned, or to any person
for that matter, the possible needed statute which prompted the need for the inquiry. Given such
statement in its invitations, along with the usual indication of the subject of inquiry and the questions
relative to and in furtherance thereof, there would be less room for speculation on the part of the
person invited on whether the inquiry is in aid of legislation.
Section 21, Article VI likewise establishes critical safeguards that proscribe the legislative power of
inquiry. The provision requires that the inquiry be done in accordance with the Senate or Houses duly
published rules of procedure, necessarily implying the constitutional infirmity of an inquiry conducted
without duly published rules of procedure. Section 21 also mandates that the rights of persons
appearing in or affected by such inquiries be respected, an imposition that obligates Congress to
adhere to the guarantees in the Bill of Rights.

These abuses are, of course, remediable before the courts, upon the proper suit filed by the persons
affected, even if they belong to the executive branch. Nonetheless, there may be exceptional
circumstances wherein a clear pattern of abuse of the legislative power of inquiry might be
established, resulting in palpable violations of the rights guaranteed to members of the executive
department under the Bill of Rights. In such instances, depending on the particulars of each case,
attempts by the Executive Branch to forestall these abuses may be accorded judicial sanction[59].
In Senate, the Court ruled that the President could not impose a blanket prohibition barring executive officials from
testifying before Congress without the Presidents consent notwithstanding the invocation of executive privilege to
justify such prohibition. The Court did not rule that the power to conduct legislative inquiry ipso facto superseded
the claim of executive privilege, acknowledging instead that the viability of executive privilege stood on a case to
case basis. Should neither branch yield to the other branchs assertion, the constitutional recourse is to the courts, as
the final arbiter if the dispute. It is only the courts that can compel, with conclusiveness, attendance or nonattendance in legislative inquiries.
Following these principles, it is clear that if the President or the Chief of Staff refuses to allow a member of
the AFP to appear before Congress, the legislative body seeking such testimony may seek judicial relief to compel
the attendance. Such judicial action should be directed at the heads of the executive branch or the armed forces, the
persons who wield authority and control over the actions of the officers concerned. The legislative purpose of such
testimony, as well as any defenses against the same whether grounded on executive privilege, national security or
similar concerns would be accorded due judicial evaluation. All the constitutional considerations pertinent to either
branch of government may be raised, assessed, and ultimately weighed against each other. And once the courts
speak with finality, both branches of government have no option but to comply with the decision of the courts,
whether the effect of the decision is to their liking or disfavor.

Courts are empowered, under the constitutional principle of judicial review, to arbitrate disputes between the
legislative and executive branches of government on the proper constitutional parameters of power.[60] This is the
fair and workable solution implicit in the constitutional allocation of powers among the three branches of
government. The judicial filter helps assure that the particularities of each case would ultimately govern, rather
than any overarching principle unduly inclined towards one branch of government at the expense of the other. The
procedure may not move as expeditiously as some may desire, yet it ensures thorough deliberation of all relevant
and cognizable issues before one branch is compelled to yield to the other. Moreover, judicial review does not
preclude the legislative and executive branches from negotiating a mutually acceptable solution to the impasse.
After all, the two branches, exercising as they do functions and responsibilities that are political in nature, are free
to smooth over the thorns in their relationship with a salve of their own choosing.
And if emphasis be needed, if the courts so rule, the duty falls on the shoulders of the President, as
commander-in-chief, to authorize the appearance of the military officers before Congress. Even if the
President has earlier disagreed with the notion of officers appearing before the legislature to testify, the
Chief Executive is nonetheless obliged to comply with the final orders of the courts.
Petitioners have presented several issues relating to the tenability or wisdom of the Presidents order on them
and other military officers not to testify before Congress without the Presidents consent. Yet these issues ultimately
detract from the main point that they testified before the Senate despite an order from their commanding officer
and their commander-in-chief for them not to do so, [61] in contravention of the traditions of military discipline
which we

affirm today. The issues raised by petitioners could have very well been raised and properly adjudicated if the
proper procedure was observed. Petitioners could have been appropriately allowed to testify before the Senate
without having to countermand their Commander-in-chief and superior officer under the setup we have prescribed.
We consider the other issues raised by petitioners unnecessary to the resolution of this petition.
Petitioners may have been of the honest belief that they were defying a direct order of their Commander-in-Chief
and Commanding General in obeisance to a paramount idea formed within their consciences, which could not be
lightly ignored. Still, the Court, in turn, is guided by the superlative principle that is the Constitution, the
embodiment of the national conscience. The Constitution simply does not permit the infraction which petitioners
have allegedly committed, and moreover, provides for an orderly manner by which the same result could have been
achieved without offending constitutional principles.
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
SO ORDERED.

G.R. No. 180643

September 4, 2008

ROMULO L. NERI, petitioner,

vs.
SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS,
SENATE COMMITTEE ON TRADE AND COMMERCE, AND SENATE COMMITTEE ON NATIONAL
DEFENSE AND SECURITY, respondents.
RESOLUTION
LEONARDO-DE CASTRO, J.:
Executive privilege is not a personal privilege, but one that adheres to the Office of the President. It exists to
protect public interest, not to benefit a particular public official. Its purpose, among others, is to assure that the
nation will receive the benefit of candid, objective and untrammeled communication and exchange of information
between the President and his/her advisers in the process of shaping or forming policies and arriving at decisions in
the exercise of the functions of the Presidency under the Constitution. The confidentiality of the Presidents
conversations and correspondence is not unique. It is akin to the confidentiality of judicial deliberations. It
possesses the same value as the right to privacy of all citizens and more, because it is dictated by public interest
and the constitutionally ordained separation of governmental powers.
In these proceedings, this Court has been called upon to exercise its power of review and arbitrate a hotly, even
acrimoniously, debated dispute between the Courts co-equal branches of government. In this task, this Court
should neither curb the legitimate powers of any of the co-equal and coordinate branches of government nor allow
any of them to overstep the boundaries set for it by our Constitution. The competing interests in the case at bar are
the claim of executive privilege by the President, on the one hand, and the respondent Senate Committees
assertion of their power to conduct legislative inquiries, on the other. The particular facts and circumstances of the
present case, stripped of the politically and emotionally charged rhetoric from both sides and viewed in the light of

settled constitutional and legal doctrines, plainly lead to the conclusion that the claim of executive privilege must
be upheld.
Assailed in this motion for reconsideration is our Decision dated March 25, 2008 (the "Decision"), granting the
petition for certiorari filed by petitioner Romulo L. Neri against the respondent Senate Committees on
Accountability of Public Officers and Investigations,1 Trade and Commerce,2 and National Defense and Security
(collectively the "respondent Committees").3
A brief review of the facts is imperative.
On September 26, 2007, petitioner appeared before respondent Committees and testified for about eleven (11)
hours on matters concerning the National Broadband Project (the "NBN Project"), a project awarded by the
Department of Transportation and Communications ("DOTC") to Zhong Xing Telecommunications Equipment
("ZTE"). Petitioner disclosed that then Commission on Elections ("COMELEC") Chairman Benjamin Abalos
offered him P200 Million in exchange for his approval of the NBN Project. He further narrated that he informed
President Gloria Macapagal Arroyo ("President Arroyo") of the bribery attempt and that she instructed him not to
accept the bribe. However, when probed further on President Arroyo and petitioners discussions relating to the
NBN Project, petitioner refused to answer, invoking "executive privilege." To be specific, petitioner refused to
answer questions on: (a) whether or not President Arroyo followed up the NBN Project,4 (b) whether or not she
directed him to prioritize it,5 and (c) whether or not she directed him to approve it.6
Respondent Committees persisted in knowing petitioners answers to these three questions by requiring him to
appear and testify once more on November 20, 2007. On November 15, 2007, Executive Secretary Eduardo R.
Ermita wrote to respondent Committees and requested them to dispense with petitioners testimony on the ground
of executive privilege.7 The letter of Executive Secretary Ermita pertinently stated:
Following the ruling in Senate v. Ermita, the foregoing questions fall under conversations and
correspondence between the President and public officials which are considered executive privilege
(Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez v. PEA, G.R. 133250, July 9, 2002). Maintaining the

confidentiality of conversations of the President is necessary in the exercise of her executive and policy
decision making process. The expectation of a President to the confidentiality of her conversations and
correspondences, like the value which we accord deference for the privacy of all citizens, is the necessity for
protection of the public interest in candid, objective, and even blunt or harsh opinions in Presidential
decision-making. Disclosure of conversations of the President will have a chilling effect on the President,
and will hamper her in the effective discharge of her duties and responsibilities, if she is not protected by the
confidentiality of her conversations.
The context in which executive privilege is being invoked is that the information sought to be disclosed
might impair our diplomatic as well as economic relations with the Peoples Republic of China. Given the
confidential nature in which these information were conveyed to the President, he cannot provide the
Committee any further details of these conversations, without disclosing the very thing the privilege is
designed to protect.
In light of the above considerations, this Office is constrained to invoke the settled doctrine of executive
privilege as refined in Senate v. Ermita, and has advised Secretary Neri accordingly.
Considering that Sec. Neri has been lengthily interrogated on the subject in an unprecedented 11-hour
hearing, wherein he has answered all questions propounded to him except the foregoing questions involving
executive privilege, we therefore request that his testimony on 20 November 2007 on the ZTE / NBN project
be dispensed with.
On November 20, 2007, petitioner did not appear before respondent Committees upon orders of the President
invoking executive privilege. On November 22, 2007, the respondent Committees issued the show-cause letter
requiring him to explain why he should not be cited in contempt. On November 29, 2007, in petitioners reply to
respondent Committees, he manifested that it was not his intention to ignore the Senate hearing and that he thought
the only remaining questions were those he claimed to be covered by executive privilege. He also manifested his
willingness to appear and testify should there be new matters to be taken up. He just requested that he be furnished
"in advance as to what else" he "needs to clarify."

Respondent Committees found petitioners explanations unsatisfactory. Without responding to his request for
advance notice of the matters that he should still clarify, they issued the Order dated January 30, 2008; In Re: P.S.
Res. Nos. 127,129,136 & 144; and privilege speeches of Senator Lacson and Santiago (all on the ZTE-NBN
Project), citing petitioner in contempt of respondent Committees and ordering his arrest and detention at the Office
of the Senate Sergeant-at-Arms until such time that he would appear and give his testimony.
On the same date, petitioner moved for the reconsideration of the above Order.8 He insisted that he had not shown
"any contemptible conduct worthy of contempt and arrest." He emphasized his willingness to testify on new
matters, but respondent Committees did not respond to his request for advance notice of questions. He also
mentioned the petition for certiorari he previously filed with this Court on December 7, 2007. According to him,
this should restrain respondent Committees from enforcing the order dated January 30, 2008 which declared him in
contempt and directed his arrest and detention.
Petitioner then filed his Supplemental Petition for Certiorari (with Urgent Application for TRO/Preliminary
Injunction) on February 1, 2008. In the Courts Resolution dated February 4, 2008, the parties were required to
observe the status quo prevailing prior to the Order dated January 30, 2008.
On March 25, 2008, the Court granted his petition for certiorari on two grounds: first, the communications elicited
by the three (3) questions were covered by executive privilege; and second, respondent Committees committed
grave abuse of discretion in issuing the contempt order. Anent the first ground, we considered the subject
communications as falling under the presidential communications privilege because (a) they related to a
quintessential and non-delegable power of the President, (b) they were received by a close advisor of the President,
and (c) respondent Committees failed to adequately show a compelling need that would justify the limitation of the
privilege and the unavailability of the information elsewhere by an appropriate investigating authority. As to the
second ground, we found that respondent Committees committed grave abuse of discretion in issuing the contempt
order because (a) there was a valid claim of executive privilege, (b) their invitations to petitioner did not contain
the questions relevant to the inquiry, (c) there was a cloud of doubt as to the regularity of the proceeding that led to
their issuance of the contempt order, (d) they violated Section 21, Article VI of the Constitution because their

inquiry was not in accordance with the "duly published rules of procedure," and (e) they issued the contempt order
arbitrarily and precipitately.
On April 8, 2008, respondent Committees filed the present motion for reconsideration, anchored on the following
grounds:
I
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE IS NO DOUBT THAT THE
ASSAILED ORDERS WERE ISSUED BY RESPONDENT COMMITTEES PURSUANT TO THE
EXERCISE OF THEIR LEGISLATIVE POWER, AND NOT MERELY THEIR OVERSIGHT
FUNCTIONS.
II
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE CAN BE NO
PRESUMPTION THAT THE INFORMATION WITHHELD IN THE INSTANT CASE IS
PRIVILEGED.
III
CONTRARY TO THIS HONORABLE COURTS DECISION, THERE IS NO FACTUAL OR
LEGAL BASIS TO HOLD THAT THE COMMUNICATIONS ELICITED BY THE SUBJECT
THREE (3) QUESTIONS ARE COVERED BY EXECUTIVE PRIVILEGE, CONSIDERING THAT:
A. THERE IS NO SHOWING THAT THE MATTERS FOR WHICH EXECUTIVE PRIVILEGE IS
CLAIMED CONSTITUTE STATE SECRETS.

B. EVEN IF THE TESTS ADOPTED BY THIS HONORABLE COURT IN THE DECISION IS

APPLIED, THERE IS NO SHOWING THAT THE ELEMENTS OF PRESIDENTIAL
COMMUNICATIONS PRIVILEGE ARE PRESENT.
C. ON THE CONTRARY, THERE IS ADEQUATE SHOWING OF A COMPELLING NEED TO
JUSTIFY THE DISCLOSURE OF THE INFORMATION SOUGHT.
D. TO UPHOLD THE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT CASE WOULD
SERIOUSLY IMPAIR THE RESPONDENTS PERFORMANCE OF THEIR PRIMARY FUNCTION
TO ENACT LAWS.
E. FINALLY, THE CONSTITUTIONAL RIGHT OF THE PEOPLE TO INFORMATION, AND THE
CONSTITUTIONAL POLICIES ON PUBLIC ACCOUNTABILITY AND TRANSPARENCY
OUTWEIGH THE CLAIM OF EXECUTIVE PRIVILEGE.
IV
CONTRARY TO THIS HONORABLE COURTS DECISION, RESPONDENTS DID NOT COMMIT
GRAVE ABUSE OF DISCRETION IN ISSUING THE ASSAILED CONTEMPT ORDER,
CONSIDERING THAT:
A. THERE IS NO LEGITIMATE CLAIM OF EXECUTIVE PRIVILEGE IN THE INSTANT CASE.
B. RESPONDENTS DID NOT VIOLATE THE SUPPOSED REQUIREMENTS LAID DOWN
INSENATE V. ERMITA.
C. RESPONDENTS DULY ISSUED THE CONTEMPT ORDER IN ACCORDANCE WITH THEIR
INTERNAL RULES.

D. RESPONDENTS DID NOT VIOLATE THE REQUIREMENTS UNDER ARTICLE VI, SECTION
21 OF THE CONSTITUTION REQUIRING THAT ITS RULES OF PROCEDURE BE DULY
PUBLISHED, AND WERE DENIED DUE PROCESS WHEN THE COURT CONSIDERED THE
OSGS INTERVENTION ON THIS ISSUE WITHOUT GIVING RESPONDENTS THE
OPPORTUNITY TO COMMENT.
E. RESPONDENTS ISSUANCE OF THE CONTEMPT ORDER IS NOT ARBITRARY OR
PRECIPITATE.
In his Comment, petitioner charges respondent Committees with exaggerating and distorting the Decision of this
Court. He avers that there is nothing in it that prohibits respondent Committees from investigating the NBN Project
or asking him additional questions. According to petitioner, the Court merely applied the rule on executive
privilege to the facts of the case. He further submits the following contentions: first, the assailed Decision did not
reverse the presumption against executive secrecy laid down in Senate v. Ermita; second, respondent Committees
failed to overcome the presumption of executive privilege because it appears that they could legislate even without
the communications elicited by the three (3) questions, and they admitted that they could dispense with petitioners
testimony if certain NEDA documents would be given to them; third, the requirement of specificity applies only to
the privilege for State, military and diplomatic secrets, not to the necessarily broad and all-encompassing
presidential communications privilege; fourth, there is no right to pry into the Presidents thought processes or
exploratory exchanges; fifth, petitioner is not covering up or hiding anything illegal; sixth, the Court has the power
and duty to annul the Senate Rules; seventh, the Senate is not a continuing body, thus the failure of the present
Senate to publish its Rules of Procedure Governing Inquiries in Aid of Legislation (Rules) has a vitiating effect on
them; eighth, the requirement for a witness to be furnished advance copy of questions comports with due process
and the constitutional mandate that the rights of witnesses be respected; and ninth, neither petitioner nor
respondent has the final say on the matter of executive privilege, only the Court.
For its part, the Office of the Solicitor General maintains that: (1) there is no categorical pronouncement from the
Court that the assailed Orders were issued by respondent Committees pursuant to their oversight function; hence,
there is no reason for them "to make much" of the distinction between Sections 21 and 22, Article VI of the

Constitution; (2) presidential communications enjoy a presumptive privilege against disclosure as earlier held
in Almonte v. Vasquez9 and Chavez v. Public Estates Authority (PEA)10; (3) the communications elicited by the three
(3) questions are covered by executive privilege, because all the elements of the presidential communications
privilege are present; (4) the subpoena ad testificandum issued by respondent Committees to petitioner is fatally
defective under existing law and jurisprudence; (5) the failure of the present Senate to publish its Rules renders the
same void; and (6) respondent Committees arbitrarily issued the contempt order.
Incidentally, respondent Committees objection to the Resolution dated March 18, 2008 (granting the Office of the
Solicitor Generals Motion for Leave to Intervene and to Admit Attached Memorandum) only after the
promulgation of the Decision in this case is foreclosed by its untimeliness.
The core issues that arise from the foregoing respective contentions of the opposing parties are as follows:
(1) whether or not there is a recognized presumptive presidential communications privilege in our legal
system;
(2) whether or not there is factual or legal basis to hold that the communications elicited by the three (3)
questions are covered by executive privilege;
(3) whether or not respondent Committees have shown that the communications elicited by the three (3)
questions are critical to the exercise of their functions; and
(4) whether or not respondent Committees committed grave abuse of discretion in issuing the contempt
order.
We shall discuss these issues seriatim.
I

There Is a Recognized Presumptive

Presidential Communications Privilege
Respondent Committees ardently argue that the Courts declaration that presidential communications are
presumptively privileged reverses the "presumption" laid down in Senate v. Ermita11 that "inclines heavily against
executive secrecy and in favor of disclosure." Respondent Committees then claim that the Court erred in relying on
the doctrine in Nixon.
Respondent Committees argue as if this were the first time the presumption in favor of thepresidential
communications privilege is mentioned and adopted in our legal system. That is far from the truth. The Court, in
the earlier case of Almonte v. Vasquez,12 affirmed that the presidential communications privilege is fundamental
to the operation of government and inextricably rooted in the separation of powers under the Constitution.
Even Senate v. Ermita,13 the case relied upon by respondent Committees, reiterated this concept. There, the Court
enumerated the cases in which the claim of executive privilege was recognized, among them Almonte v.
Chavez, Chavez v. Presidential Commission on Good Government (PCGG),14 and Chavez v. PEA.15 The Court
articulated in these cases that "there are certain types of information which the government may withhold from the
public,16" that there is a "governmental privilege against public disclosure with respect to state secrets regarding
military, diplomatic and other national security matters";17 and that "the right to information does not extend to
matters recognized as privileged information under the separation of powers, by which the Court meant
Presidential conversations, correspondences, and discussions in closed-door Cabinet meetings."18
Respondent Committees observation that this Courts Decision reversed the "presumption that inclines heavily
against executive secrecy and in favor of disclosure" arises from a piecemeal interpretation of the said Decision.
The Court has repeatedly held that in order to arrive at the true intent and meaning of a decision, no specific
portion thereof should be isolated and resorted to, but the decision must be considered in its entirety.19
Note that the aforesaid presumption is made in the context of the circumstances obtaining in Senate v. Ermita,
which declared void Sections 2(b) and 3 of Executive Order (E.O.) No. 464, Series of 2005. The pertinent portion
of the decision in the said case reads:

From the above discussion on the meaning and scope of executive privilege, both in the United States and in
this jurisprudence, a clear principle emerges. Executive privilege, whether asserted against Congress, the
courts, or the public, is recognized only in relation to certain types of information of a sensitive character.
While executive privilege is a constitutional concept, a claim thereof may be valid or not depending on the
ground invoked to justify it and the context in which it is made. Noticeably absent is any recognition that
executive officials are exempt from the duty to disclose information by the mere fact of being executive
officials. Indeed, the extraordinary character of the exemptions indicates that the presumption inclines
heavily against executive secrecy and in favor of disclosure. (Emphasis and underscoring supplied)
Obviously, the last sentence of the above-quoted paragraph in Senate v. Ermita refers to the "exemption" being
claimed by the executive officials mentioned in Section 2(b) of E.O. No. 464, solely by virtue of their positions in
the Executive Branch. This means that when an executive official, who is one of those mentioned in the said Sec.
2(b) of E.O. No. 464, claims to be exempt from disclosure, there can be no presumption of authorization to
invoke executive privilege given by the President to said executive official, such that the presumption in this
situation inclines heavily against executive secrecy and in favor of disclosure.
Senate v. Ermita 20 expounds on the premise of the foregoing ruling in this wise:
Section 2(b) in relation to Section 3 virtually provides that, once the head of office determines that a certain
information is privileged, such determination is presumed to bear the Presidents authority and has the effect
of prohibiting the official from appearing before Congress, subject only to the express pronouncement of the
President that it is allowing the appearance of such official. These provisions thus allow the President to
authorize claims of privilege by mere silence.
Such presumptive authorization, however, is contrary to the exceptional nature of the privilege. Executive
privilege, as already discussed, is recognized with respect to information the confidential nature of which
is crucial to the fulfillment of the unique role and responsibilities of the executive branch, or in those
instances where exemption from disclosure is necessary to the discharge of highly important executive
responsibilities. The doctrine of executive privilege is thus premised on the fact that certain information

must, as a matter of necessity, be kept confidential in pursuit of the public interest. The privilege being, by
definition, an exemption from the obligation to disclose information, in this case to Congress, the necessity
must be of such high degree as to outweigh the public interest in enforcing that obligation in a particular
case.
In light of this highly exceptional nature of the privilege, the Court finds it essential to limit to the President
the power to invoke the privilege. She may of course authorize the Executive Secretary to invoke the
privilege on her behalf, in which case the Executive Secretary must state that the authority is "By order of
the President", which means that he personally consulted with her. The privilege being an extraordinary
power, it must be wielded only by the highest official in the executive hierarchy. In other words, the
President may not authorize her subordinates to exercise such power. There is even less reason to uphold
such authorization in the instant case where the authorization is not explicit but by mere silence. Section 3,
in relation to Section 2(b), is further invalid on this score.
The constitutional infirmity found in the blanket authorization to invoke executive privilege granted by the
President to executive officials in Sec. 2(b) of E.O. No. 464 does not obtain in this case.
In this case, it was the President herself, through Executive Secretary Ermita, who invoked executive privilege on a
specific matter involving an executive agreement between the Philippines and China, which was the subject of the
three (3) questions propounded to petitioner Neri in the course of the Senate Committees investigation. Thus, the
factual setting of this case markedly differs from that passed upon in Senate v. Ermita.
Moreover, contrary to the claim of respondents, the Decision in this present case hews closely to the ruling
in Senate v. Ermita,21 to wit:
Executive privilege

The phrase "executive privilege" is not new in this jurisdiction. It has been used even prior to the
promulgation of the 1986 Constitution. Being of American origin, it is best understood in light of how it has
been defined and used in the legal literature of the United States.
Schwart defines executive privilege as "the power of the Government to withhold information from the
public, the courts, and the Congress. Similarly, Rozell defines it as "the right of the President and highlevel executive branch officers to withhold information from Congress, the courts, and ultimately the
public." x x x In this jurisdiction, the doctrine of executive privilege was recognized by this Court in
Almonte v. Vasquez. Almonte used the term in reference to the same privilege subject of Nixon. It quoted the
following portion of the Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations and correspondences, like the
claim of confidentiality of judicial deliberations, for example, he has all the values to which we accord
deference for the privacy of all citizens and, added to those values, is the necessity for protection of the
public interest in candid, objective, and even blunt or harsh opinions in Presidential decision-making. A
President and those who assist him must be free to explore alternatives in the process of shaping policies
and making decisions and to do so in a way many would be unwilling to express except privately. These are
the considerations justifying a presumptive privilege for Presidential communications. The privilege is
fundamental to the operation of government and inextricably rooted in the separation of powers
under the Constitution x x x " (Emphasis and italics supplied)
Clearly, therefore, even Senate v. Ermita adverts to "a presumptive privilege for Presidential communication,"
which was recognized early on in Almonte v. Vasquez. To construe the passage inSenate v. Ermita adverted to in the
Motion for Reconsideration of respondent Committees, referring to the non-existence of a "presumptive
authorization" of an executive official, to mean that the "presumption" in favor of executive privilege "inclines
heavily against executive secrecy and in favor of disclosure" is to distort the ruling in the Senate v. Ermita and
make the same engage in self-contradiction.

Senate v. Ermita22 expounds on the constitutional underpinning of the relationship between the Executive
Department and the Legislative Department to explain why there should be no implied authorization or
presumptive authorization to invoke executive privilege by the Presidents subordinate officials, as follows:
When Congress exercises its power of inquiry, the only way for department heads to exempt
themselves therefrom is by a valid claim of privilege. They are not exempt by the mere fact that they
are department heads. Only one executive official may be exempted from this power - the President on
whom executive power is vested, hence, beyond the reach of Congress except through the power of
impeachment. It is based on he being the highest official of the executive branch, and the due respect
accorded to a co-equal branch of governments which is sanctioned by a long-standing custom.
(Underscoring supplied)
Thus, if what is involved is the presumptive privilege of presidential communications when invoked by the
President on a matter clearly within the domain of the Executive, the said presumption dictates that the same be
recognized and be given preference or priority, in the absence of proof of a compelling or critical need for
disclosure by the one assailing such presumption. Any construction to the contrary will render meaningless the
presumption accorded by settled jurisprudence in favor of executive privilege. In fact, Senate v. Ermita reiterates
jurisprudence citing "the considerations justifying a presumptive privilege for Presidential communications."23
II
There Are Factual and Legal Bases to
Hold that the Communications Elicited by the
Three (3) Questions Are Covered by Executive Privilege
Respondent Committees claim that the communications elicited by the three (3) questions are not covered by
executive privilege because the elements of the presidential communications privilegeare not present.
A. The power to enter into an executive agreement is a "quintessential and non-delegable presidential power."

First, respondent Committees contend that the power to secure a foreign loan does not relate to a "quintessential
and non-delegable presidential power," because the Constitution does not vest it in the President alone, but also in
the Monetary Board which is required to give its prior concurrence and to report to Congress.
This argument is unpersuasive.
The fact that a power is subject to the concurrence of another entity does not make such power less executive.
"Quintessential" is defined as the most perfect embodiment of something, the concentrated essence of
substance.24 On the other hand, "non-delegable" means that a power or duty cannot be delegated to another or, even
if delegated, the responsibility remains with the obligor.25 The power to enter into an executive agreement is in
essence an executive power. This authority of the President to enter into executive agreements without the
concurrence of the Legislature has traditionally been recognized in Philippine jurisprudence.26 Now, the fact that
the President has to secure the prior concurrence of the Monetary Board, which shall submit to Congress a
complete report of its decision before contracting or guaranteeing foreign loans, does not diminish the executive
nature of the power.
The inviolate doctrine of separation of powers among the legislative, executive and judicial branches of
government by no means prescribes absolute autonomy in the discharge by each branch of that part of the
governmental power assigned to it by the sovereign people. There is the corollary doctrine of checks and balances,
which has been carefully calibrated by the Constitution to temper the official acts of each of these three branches.
Thus, by analogy, the fact that certain legislative acts require action from the President for their validity does not
render such acts less legislative in nature. A good example is the power to pass a law. Article VI, Section 27 of the
Constitution mandates that every bill passed by Congress shall, before it becomes a law, be presented to the
President who shall approve or veto the same. The fact that the approval or vetoing of the bill is lodged with the
President does not render the power to pass law executive in nature. This is because the power to pass law is
generally a quintessential and non-delegable power of the Legislature. In the same vein, the executive power to
enter or not to enter into a contract to secure foreign loans does not become less executive in nature because of
conditions laid down in the Constitution. The final decision in the exercise of the said executive power is still
lodged in the Office of the President.

B. The "doctrine of operational proximity" was laid down precisely to limit the scope of the presidential
communications privilege but, in any case, it is not conclusive.
Second, respondent Committees also seek reconsideration of the application of the "doctrine of operational
proximity" for the reason that "it maybe misconstrued to expand the scope of the presidential communications
privilege to communications between those who are operationally proximate to the President but who may have
"no direct communications with her."
It must be stressed that the doctrine of "operational proximity" was laid down in In re: Sealed Case27precisely to
limit the scope of the presidential communications privilege. The U.S. court was aware of the dangers that a
limitless extension of the privilege risks and, therefore, carefully cabined its reach by explicitly confining it to
White House staff, and not to staffs of the agencies, and then only to White House staff that has "operational
proximity" to direct presidential decision-making, thus:
We are aware that such an extension, unless carefully circumscribed to accomplish the purposes of the
privilege, could pose a significant risk of expanding to a large swath of the executive branch a privilege that
is bottomed on a recognition of the unique role of the President. In order to limit this risk, the presidential
communications privilege should be construed as narrowly as is consistent with ensuring that the
confidentiality of the Presidents decision-making process is adequately protected. Not every person who
plays a role in the development of presidential advice, no matter how remote and removed from the
President, can qualify for the privilege. In particular, the privilege should not extend to staff outside
the White House in executive branch agencies. Instead, the privilege should apply only to communications
authored or solicited and received by those members of an immediate White House advisors staff who have
broad and significant responsibility for investigation and formulating the advice to be given the President on
the particular matter to which the communications relate. Only communications at that level are close
enough to the President to be revelatory of his deliberations or to pose a risk to the candor of his
advisers. See AAPS, 997 F.2d at 910 (it is "operational proximity" to the President that matters in
determining whether "[t]he Presidents confidentiality interests" is implicated).(Emphasis supplied)

In the case at bar, the danger of expanding the privilege "to a large swath of the executive branch" (a fear
apparently entertained by respondents) is absent because the official involved here is a member of the Cabinet,
thus, properly within the term "advisor" of the President; in fact, her alter ego and a member of her official family.
Nevertheless, in circumstances in which the official involved is far too remote, this Court also mentioned in the
Decision the organizational test laid down in Judicial Watch, Inc. v. Department of Justice.28 This goes to show
that the operational proximity test used in the Decision is not considered conclusive in every case. In determining
which test to use, the main consideration is to limit the availability of executive privilege only to officials who
stand proximate to the President, not only by reason of their function, but also by reason of their positions in the
Executives organizational structure. Thus, respondent Committees fear that the scope of the privilege would be
unnecessarily expanded with the use of the operational proximity test is unfounded.
C. The Presidents claim of executive privilege is not merely based on a generalized interest; and in balancing
respondent Committees and the Presidents clashing interests, the Court did not disregard the 1987
Constitutional provisions on government transparency, accountability and disclosure of information.
Third, respondent Committees claim that the Court erred in upholding the Presidents invocation, through the
Executive Secretary, of executive privilege because (a) between respondent Committees specific and demonstrated
need and the Presidents generalized interest in confidentiality, there is a need to strike the balance in favor of the
former; and (b) in the balancing of interest, the Court disregarded the provisions of the 1987 Philippine
Constitution on government transparency, accountability and disclosure of information, specifically, Article III,
Section 7;29 Article II, Sections 2430 and 28;31 Article XI, Section 1;32 Article XVI, Section 10;33 Article VII,
Section 20;34 and Article XII, Sections 9,35 21,36 and 22.37
It must be stressed that the Presidents claim of executive privilege is not merely founded on her generalized
interest in confidentiality. The Letter dated November 15, 2007 of Executive Secretary Ermita
specified presidential communications privilege in relation to diplomatic and economic relations with another
sovereign nation as the bases for the claim. Thus, the Letter stated:

The context in which executive privilege is being invoked is that the information sought to be disclosed
might impair our diplomatic as well as economic relations with the Peoples Republic of China. Given
the confidential nature in which this information were conveyed to the President, he cannot provide the
Committee any further details of these conversations, without disclosing the very thing the privilege is
designed to protect. (emphasis supplied)
Even in Senate v. Ermita, it was held that Congress must not require the Executive to state the reasons for the claim
with such particularity as to compel disclosure of the information which the privilege is meant to protect. This is a
matter of respect for a coordinate and co-equal department.
It is easy to discern the danger that goes with the disclosure of the Presidents communication with her advisor. The
NBN Project involves a foreign country as a party to the agreement. It was actually a product of the meeting of
minds between officials of the Philippines and China. Whatever the President says about the agreement particularly while official negotiations are ongoing - are matters which China will surely view with particular
interest. There is danger in such kind of exposure. It could adversely affect our diplomatic as well as economic
relations with the Peoples Republic of China. We reiterate the importance of secrecy in matters involving foreign
negotiations as stated in United States v. Curtiss-Wright Export Corp., 38 thus:
The nature of foreign negotiations requires caution, and their success must often depend on secrecy, and
even when brought to a conclusion, a full disclosure of all the measures, demands, or eventual concessions
which may have been proposed or contemplated would be extremely impolitic, for this might have a
pernicious influence on future negotiations or produce immediate inconveniences, perhaps danger and
mischief, in relation to other powers. The necessity of such caution and secrecy was one cogent reason for
vesting the power of making treaties in the President, with the advice and consent of the Senate, the principle
on which the body was formed confining it to a small number of members. To admit, then, a right in the
House of Representatives to demand and to have as a matter of course all the papers respecting a negotiation
with a foreign power would be to establish a dangerous precedent.

US jurisprudence clearly guards against the dangers of allowing Congress access to all papers relating to a
negotiation with a foreign power. In this jurisdiction, the recent case of Akbayan Citizens Action Party, et al. v.
Thomas G. Aquino, et al.39 upheld the privileged character of diplomatic negotiations. In Akbayan, the Court stated:
Privileged character of diplomatic negotiations
The privileged character of diplomatic negotiations has been recognized in this jurisdiction. In discussing
valid limitations on the right to information, the Court in Chavez v. PCGG held that "information on intergovernment exchanges prior to the conclusion of treaties and executive agreements may be subject to
reasonable safeguards for the sake of national interest." Even earlier, the same privilege was upheld
in Peoples Movement for Press Freedom (PMPF) v. Manglapus wherein the Court discussed the reasons for
the privilege in more precise terms.
In PMPF v. Manglapus, the therein petitioners were seeking information from the Presidents representatives
on the state of the then on-going negotiations of the RP-US Military Bases Agreement. The Court denied the
petition, stressing that "secrecy of negotiations with foreign countries is not violative of the constitutional
provisions of freedom of speech or of the press nor of the freedom of access to information." The
Resolution went on to state, thus:
The nature of diplomacy requires centralization of authority and expedition of decision which
are inherent in executive action. Another essential characteristic of diplomacy is its confidential
nature. Although much has been said about "open" and "secret" diplomacy, with disparagement of the
latter, Secretaries of State Hughes and Stimson have clearly analyzed and justified the practice. In the
words of Mr. Stimson:
"A complicated negotiation cannot be carried through without many, many private
talks and discussion, man to man; many tentative suggestions and proposals. Delegates
from other countries come and tell you in confidence of their troubles at home and of their
differences with other countries and with other delegates; they tell you of what they would

do under certain circumstances and would not do under other circumstances If these
reports should become public who would ever trust American Delegations in another
conference? (United States Department of State, Press Releases, June 7, 1930, pp. 282-284)
xxxx
There is frequent criticism of the secrecy in which negotiation with foreign powers on nearly all
subjects is concerned. This, it is claimed, is incompatible with the substance of democracy. As
expressed by one writer, "It can be said that there is no more rigid system of silence anywhere in the
world." (E.J. Young, Looking Behind the Censorship, J. B. Lipincott Co., 1938) President Wilson in
starting his efforts for the conclusion of the World War declared that we must have "open covenants,
openly arrived at." He quickly abandoned his thought.
No one who has studied the question believes that such a method of publicity is possible.In the
moment that negotiations are started, pressure groups attempt to "muscle in." An ill-timed
speech by one of the parties or a frank declaration of the concession which are exacted or
offered on both sides would quickly lead to a widespread propaganda to block the
negotiations. After a treaty has been drafted and its terms are fully published, there is ample
opportunity for discussion before it is approved. (The New American Government and Its Works,
James T. Young, 4th Edition, p. 194) (Emphasis and underscoring supplied)
Still in PMPF v. Manglapus, the Court adopted the doctrine in U.S. v. Curtiss-Wright Export Corp. that the
President is the sole organ of the nation in its negotiations with foreign countries,viz:
"x x x In this vast external realm, with its important, complicated, delicate and manifold problems, the
President alone has the power to speak or listen as a representative of the nation. He makes treaties
with the advice and consent of the Senate; but he alone negotiates. Into the field of negotiation the
Senate cannot intrude; and Congress itself is powerless to invade it. As Marshall said in his great
arguments of March 7, 1800, in the House of Representatives, "The President is the sole organ of

the nation in its external relations, and its sole representative with foreign nations." Annals, 6th
Cong., col. 613 (Emphasis supplied; underscoring in the original)
Considering that the information sought through the three (3) questions subject of this Petition involves the
Presidents dealings with a foreign nation, with more reason, this Court is wary of approving the view that
Congress may peremptorily inquire into not only official, documented acts of the President but even her
confidential and informal discussions with her close advisors on the pretext that said questions serve some vague
legislative need. Regardless of who is in office, this Court can easily foresee unwanted consequences of subjecting
a Chief Executive to unrestricted congressional inquiries done with increased frequency and great publicity. No
Executive can effectively discharge constitutional functions in the face of intense and unchecked legislative
incursion into the core of the Presidents decision-making process, which inevitably would involve her
conversations with a member of her Cabinet.
With respect to respondent Committees invocation of constitutional prescriptions regarding the right of the people
to information and public accountability and transparency, the Court finds nothing in these arguments to support
respondent Committees case.
There is no debate as to the importance of the constitutional right of the people to information and the
constitutional policies on public accountability and transparency. These are the twin postulates vital to the effective
functioning of a democratic government. The citizenry can become prey to the whims and caprices of those to
whom the power has been delegated if they are denied access to information. And the policies on public
accountability and democratic government would certainly be mere empty words if access to such information of
public concern is denied.
In the case at bar, this Court, in upholding executive privilege with respect to three (3) specific questions, did not in
any way curb the publics right to information or diminish the importance of public accountability and
transparency.

This Court did not rule that the Senate has no power to investigate the NBN Project in aid of legislation. There is
nothing in the assailed Decision that prohibits respondent Committees from inquiring into the NBN Project. They
could continue the investigation and even call petitioner Neri to testify again. He himself has repeatedly expressed
his willingness to do so. Our Decision merely excludes from the scope of respondents investigation the three (3)
questions that elicit answers covered by executive privilege and rules that petitioner cannot be compelled to appear
before respondents to answer the said questions. We have discussed the reasons why these answers are covered by
executive privilege. That there is a recognized public interest in the confidentiality of such information is a
recognized principle in other democratic States. To put it simply, the right to information is not an absolute right.
Indeed, the constitutional provisions cited by respondent Committees do not espouse an absolute right to
information. By their wording, the intention of the Framers to subject such right to the regulation of the law is
unmistakable. The highlighted portions of the following provisions show the obvious limitations on the right to
information, thus:
Article III, Sec. 7. The right of the people to information on matters of public concern shall be recognized.
Access to official records, and to documents, and papers pertaining to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided
by law.
Article II, Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a
policy of full public disclosure of all its transactions involving public interest.(Emphasis supplied)
In Chavez v. Presidential Commission on Good Government,40 it was stated that there are no specific laws
prescribing the exact limitations within which the right may be exercised or the correlative state duty may be
obliged. Nonetheless, it enumerated the recognized restrictions to such rights, among them: (1) national security
matters, (2) trade secrets and banking transactions, (3) criminal matters, and (4) other confidential information.
National security matters include state secrets regarding military and diplomatic matters, as well as information on
inter-government exchanges prior to the conclusion of treaties and executive agreements. It was further held that

even where there is no need to protect such state secrets, they must be "examined in strict confidence and
given scrupulous protection."
Incidentally, the right primarily involved here is the right of respondent Committees to obtain information
allegedly in aid of legislation, not the peoples right to public information. This is the reason why we stressed in the
assailed Decision the distinction between these two rights. As laid down in Senate v. Ermita, "the demand of a
citizen for the production of documents pursuant to his right to information does not have the same obligatory force
as a subpoena duces tecum issued by Congress" and "neither does the right to information grant a citizen the power
to exact testimony from government officials." As pointed out, these rights belong to Congress, not to the
individual citizen. It is worth mentioning at this juncture that the parties here are respondent Committees and
petitioner Neri and that there was no prior request for information on the part of any individual citizen. This Court
will not be swayed by attempts to blur the distinctions between the Legislature's right to information in a legitimate
legislative inquiry and the public's right to information.
For clarity, it must be emphasized that the assailed Decision did not enjoin respondent Committees from
inquiring into the NBN Project. All that is expected from them is to respect matters that are covered by
executive privilege.
III.
Respondent Committees Failed to Show That
the Communications Elicited by the Three Questions
Are Critical to the Exercise of their Functions
In their Motion for Reconsideration, respondent Committees devote an unusually lengthy discussion on the
purported legislative nature of their entire inquiry, as opposed to an oversight inquiry.
At the outset, it must be clarified that the Decision did not pass upon the nature of respondent Committees inquiry
into the NBN Project. To reiterate, this Court recognizes respondent Committees power to investigate the NBN

Project in aid of legislation. However, this Court cannot uphold the view that when a constitutionally guaranteed
privilege or right is validly invoked by a witness in the course of a legislative investigation, the legislative purpose
of respondent Committees questions can be sufficiently supported by the expedient of mentioning statutes and/or
pending bills to which their inquiry as a whole may have relevance. The jurisprudential test laid down by this Court
in past decisions on executive privilege is that the presumption of privilege can only be overturned by a showing
of compelling need for disclosure of the information covered by executive privilege.
In the Decision, the majority held that "there is no adequate showing of a compelling need that would justify the
limitation of the privilege and of the unavailability of the information elsewhere by an appropriate investigating
authority." In the Motion for Reconsideration, respondent Committees argue that the information elicited by the
three (3) questions are necessary in the discharge of their legislative functions, among them, (a) to consider the
three (3) pending Senate Bills, and (b) to curb graft and corruption.
We remain unpersuaded by respondents assertions.
In U.S. v. Nixon, the U.S. Court held that executive privilege is subject to balancing against other interests and it is
necessary to resolve the competing interests in a manner that would preserve the essential functions of each branch.
There, the Court weighed between presidential privilege and the legitimate claims of the judicial process. In giving
more weight to the latter, the Court ruled that the President's generalized assertion of privilege must yield to the
demonstrated, specific need for evidence in a pending criminal trial.
The Nixon Court ruled that an absolute and unqualified privilege would stand in the way of the primary
constitutional duty of the Judicial Branch to do justice in criminal prosecutions. The said Court further ratiocinated,
through its ruling extensively quoted in the Honorable Chief Justice Puno's dissenting opinion, as follows:
"... this presumptive privilege must be considered in light of our historic commitment to the rule of law. This
is nowhere more profoundly manifest than in our view that 'the twofold aim (of criminal justice) is that guild
shall not escape or innocence suffer.' Berger v. United States, 295 U.S., at 88, 55 S.Ct., at 633. We have
elected to employ an adversary system of criminal justice in which the parties contest all issues before a

court of law. The need to develop all relevant facts in the adversary system is both fundamental and
comprehensive. The ends of criminal justice would be defeated if judgments were to be founded on a
partial or speculative presentation of the facts. The very integrity of the judicial system and public
confidence in the system depend on full disclosure of all the facts, within the framework of the rules of
evidence. To ensure that justice is done, it is imperative to the function of courts that compulsory
process be available for the production of evidence needed either by the prosecution or by the defense.
xxx xxx xxx
The right to the production of all evidence at a criminal trial similarly has constitutional dimensions. The
Sixth Amendment explicitly confers upon every defendant in a criminal trial theright 'to be confronted
with the witness against him' and 'to have compulsory process for obtaining witnesses in his favor.'
Moreover, the Fifth Amendment also guarantees that no person shall be deprived of liberty without due
process of law. It is the manifest duty of the courts to vindicate those guarantees, and to accomplish that
it is essential that all relevant and admissible evidence be produced.
In this case we must weigh the importance of the general privilege of confidentiality of Presidential
communications in performance of the President's responsibilities against the inroads of such a
privilege on the fair administration of criminal justice. (emphasis supplied)
xxx xxx xxx
...the allowance of the privilege to withhold evidence that is demonstrably relevant in a criminal trial
would cut deeply into the guarantee of due process of law and gravely impair the basic function of the
courts. A President's acknowledged need for confidentiality in the communications of his office
is general in nature, whereas theconstitutional need for production of relevant evidence in a criminal
proceeding is specific and central to the fair adjudication of a particular criminal case in the
administration of justice. Without access to specific facts a criminal prosecution may betotally frustrated.
The President's broad interest in confidentiality of communication willnot be vitiated by disclosure of a

limited number of conversations preliminarily shown to have some bearing on the pending criminal
cases.
We conclude that when the ground for asserting privilege as to subpoenaed materials sought for use in a
criminal trial is based only on the generalized interest in confidentiality, it cannot prevail over the
fundamental demands of due process of law in the fair administration of criminal justice. The
generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a
pending criminal trial. (emphasis supplied)
In the case at bar, we are not confronted with a courts need for facts in order to adjudge liability in a criminal case
but rather with the Senates need for information in relation to its legislative functions. This leads us to consider
once again just how critical is the subject information in the discharge of respondent Committees functions. The
burden to show this is on the respondent Committees, since they seek to intrude into the sphere of competence of
the President in order to gather information which, according to said respondents, would "aid" them in crafting
legislation.
Senate Select Committee on Presidential Campaign Activities v. Nixon41 expounded on the nature of a legislative
inquiry in aid of legislation in this wise:
The sufficiency of the Committee's showing of need has come to depend, therefore, entirely on whether the
subpoenaed materials are critical to the performance of its legislative functions. There is a clear difference
between Congress' legislative tasks and the responsibility of a grand jury, or any institution engaged in like
functions. While fact-finding by a legislative committee is undeniably a part of its task, legislative
judgments normally depend more on the predicted consequences of proposed legislative actions and
their political acceptability, than on precise reconstruction of past events; Congress frequently legislates
on the basis of conflicting information provided in its hearings. In contrast, the responsibility of the grand
jury turns entirely on its ability to determine whether there is probable cause to believe that certain named
individuals did or did not commit specific crimes. If, for example, as in Nixon v. Sirica, one of those crimes
is perjury concerning the content of certain conversations, the grand jury's need for the most precise

evidence, the exact text of oral statements recorded in their original form, is undeniable. We see no
comparable need in the legislative process, at least not in the circumstances of this case. Indeed,
whatever force there might once have been in the Committee's argument that the subpoenaed materials are
necessary to its legislative judgments has been substantially undermined by subsequent events. (Emphasis
supplied)
Clearly, the need for hard facts in crafting legislation cannot be equated with the compelling or demonstratively
critical and specific need for facts which is so essential to the judicial power to adjudicate actual controversies.
Also, the bare standard of "pertinency" set in Arnault cannot be lightly applied to the instant case, which
unlike Arnault involves a conflict between two (2) separate, co-equal and coordinate Branches of the Government.
Whatever test we may apply, the starting point in resolving the conflicting claims between the Executive and the
Legislative Branches is the recognized existence of the presumptive presidential communications privilege. This is
conceded even in the Dissenting Opinion of the Honorable Chief Justice Puno, which states:
A hard look at Senate v. Ermita ought to yield the conclusion that it bestowed a qualified presumption in
favor of the Presidential communications privilege. As shown in the previous discussion, U.S. v. Nixon, as
well as the other related Nixon cases Sirica and Senate Select Committee on Presidential Campaign
Activities, et al., v. Nixon in the D.C. Court of Appeals, as well as subsequent cases all recognize that there
is a presumptive privilege in favor of Presidential communications. The Almonte case quoted U.S. v.
Nixon and recognized a presumption in favor of confidentiality of Presidential communications.
The presumption in favor of Presidential communications puts the burden on the respondent Senate Committees to
overturn the presumption by demonstrating their specific need for the information to be elicited by the answers to
the three (3) questions subject of this case, to enable them to craft legislation. Here, there is simply
a generalized assertion that the information is pertinent to the exercise of the power to legislate and a broad and
non-specific reference to pending Senate bills. It is not clear what matters relating to these bills could not be
determined without the said information sought by the three (3) questions. As correctly pointed out by the
Honorable Justice Dante O. Tinga in his Separate Concurring Opinion:

If respondents are operating under the premise that the president and/or her executive officials have
committed wrongdoings that need to be corrected or prevented from recurring by remedial legislation,
the answer to those three questions will not necessarily bolster or inhibit respondents from proceeding
with such legislation. They could easily presume the worst of the president in enacting such legislation.
For sure, a factual basis for situations covered by bills is not critically needed before legislatives bodies can come
up with relevant legislation unlike in the adjudication of cases by courts of law. Interestingly, during the Oral
Argument before this Court, the counsel for respondent Committees impliedly admitted that the Senate could still
come up with legislations even without petitioner answering the three (3) questions. In other words, the
information being elicited is not so critical after all. Thus:
CHIEF JUSTICE PUNO
So can you tell the Court how critical are these questions to the lawmaking function of the Senate. For
instance, question Number 1 whether the President followed up the NBN project. According to the
other counsel this question has already been asked, is that correct?
ATTY. AGABIN
Well, the question has been asked but it was not answered, Your Honor.
CHIEF JUSTICE PUNO
Yes. But my question is how critical is this to the lawmaking function of the Senate?
ATTY. AGABIN
I believe it is critical, Your Honor.
CHIEF JUSTICE PUNO

Why?
ATTY. AGABIN
For instance, with respect to the proposed Bill of Senator Miriam Santiago, she would like to indorse a
Bill to include Executive Agreements had been used as a device to the circumventing the Procurement
Law.
CHIEF JUSTICE PUNO
But the question is just following it up.
ATTY. AGABIN
I believe that may be the initial question, Your Honor, because if we look at this problem in its factual
setting as counsel for petitioner has observed, there are intimations of a bribery scandal involving high
government officials.
CHIEF JUSTICE PUNO
Again, about the second question, were you dictated to prioritize this ZTE, is that critical to the
lawmaking function of the Senate? Will it result to the failure of the Senate to cobble a Bill without
this question?
ATTY. AGABIN
I think it is critical to lay the factual foundations for a proposed amendment to the Procurement Law,
Your Honor, because the petitioner had already testified that he was offered a P200 Million bribe, so if
he was offered a P200 Million bribe it is possible that other government officials who had something
to do with the approval of the contract would be offered the same amount of bribes.

CHIEF JUSTICE PUNO

Again, that is speculative.
ATTY. AGABIN
That is why they want to continue with the investigation, Your Honor.
CHIEF JUSTICE PUNO
How about the third question, whether the President said to go ahead and approve the project after
being told about the alleged bribe. How critical is that to the lawmaking function of the Senate? And
the question is may they craft a Bill a remedial law without forcing petitioner Neri to answer this
question?
ATTY. AGABIN
Well, they can craft it, Your Honor, based on mere speculation. And sound legislation requires that a
proposed Bill should have some basis in fact.42
The failure of the counsel for respondent Committees to pinpoint the specific need for the information sought or
how the withholding of the information sought will hinder the accomplishment of their legislative purpose is very
evident in the above oral exchanges. Due to the failure of the respondent Committees to successfully discharge this
burden, the presumption in favor of confidentiality of presidential communication stands. The implication of the
said presumption, like any other, is to dispense with the burden of proof as to whether the disclosure will
significantly impair the Presidents performance of her function. Needless to state this is assumed, by virtue of the
presumption.
Anent respondent Committees bewailing that they would have to "speculate" regarding the questions covered by
the privilege, this does not evince a compelling need for the information sought. Indeed,Senate Select Committee

on Presidential Campaign Activities v. Nixon43 held that while fact-finding by a legislative committee is undeniably
a part of its task, legislative judgments normally depend more on the predicted consequences of proposed
legislative actions and their political acceptability than on a precise reconstruction of past events. It added that,
normally, Congress legislates on the basis of conflicting information provided in its hearings. We cannot subscribe
to the respondent Committees self-defeating proposition that without the answers to the three (3) questions
objected to as privileged, the distinguished members of the respondent Committees cannot intelligently craft
legislation.
Anent the function to curb graft and corruption, it must be stressed that respondent Committees need for
information in the exercise of this function is not as compelling as in instances when the purpose of the inquiry is
legislative in nature. This is because curbing graft and corruption is merely an oversight function of
Congress.44 And if this is the primary objective of respondent Committees in asking the three (3) questions covered
by privilege, it may even contradict their claim that their purpose is legislative in nature and not oversight. In any
event, whether or not investigating graft and corruption is a legislative or oversight function of Congress,
respondent Committees investigation cannot transgress bounds set by the Constitution.
In Bengzon, Jr. v. Senate Blue Ribbon Committee,45 this Court ruled:
The "allocation of constitutional boundaries" is a task that this Court must perform under the
Constitution. Moreover, as held in a recent case, "the political question doctrine neither interposes an
obstacle to judicial determination of the rival claims. The jurisdiction to delimit constitutional boundaries
has been given to this Court. It cannot abdicate that obligation mandated by the 1987 Constitution, although
said provision by no means does away with the applicability of the principle in appropriate
cases.46 (Emphasis supplied)
There, the Court further ratiocinated that "the contemplated inquiry by respondent Committee is not really in aid
of legislation because it is not related to a purpose within the jurisdiction of Congress, since the aim of the
investigation is to find out whether or not the relatives of the President or Mr. Ricardo Lopa had violated

Section 5 of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, a matter that appears more within the
province of the courts rather than of the Legislature."47 (Emphasis and underscoring supplied)
The general thrust and the tenor of the three (3) questions is to trace the alleged bribery to the Office of the
President.48 While it may be a worthy endeavor to investigate the potential culpability of high government officials,
including the President, in a given government transaction, it is simply not a task for the Senate to perform. The
role of the Legislature is to make laws, not to determine anyones guilt of a crime or wrongdoing. Our Constitution
has not bestowed upon the Legislature the latter role. Just as the Judiciary cannot legislate, neither can the
Legislature adjudicate or prosecute.
Respondent Committees claim that they are conducting an inquiry in aid of legislation and a "search for truth,"
which in respondent Committees view appears to be equated with the search for persons responsible for
"anomalies" in government contracts.
No matter how noble the intentions of respondent Committees are, they cannot assume the power reposed upon our
prosecutorial bodies and courts. The determination of who is/are liable for a crime or illegal activity, the
investigation of the role played by each official, the determination of who should be haled to court for prosecution
and the task of coming up with conclusions and finding of facts regarding anomalies, especially the determination
of criminal guilt, are not functions of the Senate. Congress is neither a law enforcement nor a trial agency.
Moreover, it bears stressing that no inquiry is an end in itself; it must be related to, and in furtherance of, a
legitimate task of the Congress, i.e. legislation. Investigations conducted solely to gather incriminatory evidence
and "punish" those investigated are indefensible. There is no Congressional power to expose for the sake of
exposure.49In this regard, the pronouncement in Barenblatt v. United States50 is instructive, thus:
Broad as it is, the power is not, however, without limitations. Since Congress may only investigate into
the areas in which it may potentially legislate or appropriate, it cannot inquire into matters which are within
the exclusive province of one of the other branches of the government. Lacking the judicial power given to
the Judiciary, it cannot inquire into matters that are exclusively the concern of the Judiciary. Neither can it
supplant the Executive in what exclusively belongs to the Executive. (Emphasis supplied.)

At this juncture, it is important to stress that complaints relating to the NBN Project have already been filed against
President Arroyo and other personalities before the Office of the Ombudsman. Under our Constitution, it is the
Ombudsman who has the duty "to investigate any act or omission of any public official, employee, office or
agency when such act or omission appears to be illegal, unjust, improper, or inefficient."51 The Office of the
Ombudsman is the body properly equipped by the Constitution and our laws to preliminarily determine whether or
not the allegations of anomaly are true and who are liable therefor. The same holds true for our courts upon which
the Constitution reposes the duty to determine criminal guilt with finality. Indeed, the rules of procedure in the
Office of the Ombudsman and the courts are well-defined and ensure that the constitutionally guaranteed rights
of all persons, parties and witnesses alike, are protected and safeguarded.
Should respondent Committees uncover information related to a possible crime in the course of their investigation,
they have the constitutional duty to refer the matter to the appropriate agency or branch of government. Thus, the
Legislatures need for information in an investigation of graft and corruption cannot be deemed compelling enough
to pierce the confidentiality of information validly covered by executive privilege. As discussed above, the
Legislature can still legislate on graft and corruption even without the information covered by the three (3)
questions subject of the petition.
Corollarily, respondent Committees justify their rejection of petitioners claim of executive privilege on the ground
that there is no privilege when the information sought might involve a crime or illegal activity, despite the absence
of an administrative or judicial determination to that effect. Significantly, however, in Nixon v. Sirica,52 the
showing required to overcome the presumption favoring confidentiality turned, not on the nature of the
presidential conduct that the subpoenaed material might reveal, but, instead, on the nature and
appropriateness of the function in the performance of which the material was sought, and the degree to
which the material was necessary to its fulfillment.
Respondent Committees assert that Senate Select Committee on Presidential Campaign Activities v. Nixon does not
apply to the case at bar because, unlike in the said case, no impeachment proceeding has been initiated at present.
The Court is not persuaded. While it is true that no impeachment proceeding has been initiated, however,
complaints relating to the NBN Project have already been filed against President Arroyo and other personalities

before the Office of the Ombudsman. As the Court has said earlier, the prosecutorial and judicial arms of
government are the bodies equipped and mandated by the Constitution and our laws to determine whether or not
the allegations of anomaly in the NBN Project are true and, if so, who should be prosecuted and penalized for
criminal conduct.
Legislative inquiries, unlike court proceedings, are not subject to the exacting standards of evidence essential to
arrive at accurate factual findings to which to apply the law. Hence, Section 10 of the Senate Rules of Procedure
Governing Inquiries in Aid of Legislation provides that "technical rules of evidence applicable to judicial
proceedings which do not affect substantive rights need not be observed by the Committee." Court rules which
prohibit leading, hypothetical, or repetitive questions or questions calling for a hearsay answer, to name a few, do
not apply to a legislative inquiry. Every person, from the highest public official to the most ordinary citizen, has the
right to be presumed innocent until proven guilty in proper proceedings by a competent court or body.
IV
Respondent Committees Committed Grave
Abuse of Discretion in Issuing the Contempt Order
Respondent Committees insist that they did not commit grave abuse of discretion in issuing the contempt order
because (1) there is no legitimate claim of executive privilege; (2) they did not violate the requirements laid down
in Senate v. Ermita; (3) they issued the contempt order in accordance with their internal Rules; (4) they did not
violate the requirement under Article VI, Section 21 of the Constitution requiring the publication of their Rules;
and (5) their issuance of the contempt order is not arbitrary or precipitate.
We reaffirm our earlier ruling.
The legitimacy of the claim of executive privilege having been fully discussed in the preceding pages, we see no
reason to discuss it once again.

Respondent Committees second argument rests on the view that the ruling in Senate v. Ermita, requiring
invitations or subpoenas to contain the "possible needed statute which prompted the need for the inquiry" along
with the "usual indication of the subject of inquiry and the questions relative to and in furtherance thereof" is not
provided for by the Constitution and is merely an obiter dictum.
On the contrary, the Court sees the rationale and necessity of compliance with these requirements.
An unconstrained congressional investigative power, like an unchecked Executive, generates its own abuses.
Consequently, claims that the investigative power of Congress has been abused (or has the potential for abuse)
have been raised many times.53 Constant exposure to congressional subpoena takes its toll on the ability of the
Executive to function effectively. The requirements set forth in Senate v. Ermita are modest mechanisms that would
not unduly limit Congress power. The legislative inquiry must be confined to permissible areas and thus, prevent
the "roving commissions" referred to in the U.S. case, Kilbourn v. Thompson.54 Likewise, witnesses have their
constitutional right to due process. They should be adequately informed what matters are to be covered by the
inquiry. It will also allow them to prepare the pertinent information and documents. To our mind, these
requirements concede too little political costs or burdens on the part of Congress when viewed vis--vis the
immensity of its power of inquiry. The logic of these requirements is well articulated in the study conducted by
William P. Marshall,55 to wit:
A second concern that might be addressed is that the current system allows committees to continually
investigate the Executive without constraint. One process solution addressing this concern is to require
each investigation be tied to a clearly stated purpose. At present, the charters of some congressional
committees are so broad that virtually any matter involving the Executive can be construed to fall within
their province. Accordingly, investigations can proceed without articulation of specific need or purpose. A
requirement for a more precise charge in order to begin an inquiry should immediately work to limit the
initial scope of the investigation and should also serve to contain the investigation once it is
instituted.Additionally, to the extent clear statements of rules cause legislatures to pause and seriously
consider the constitutional implications of proposed courses of action in other areas, they would serve
that goal in the context of congressional investigations as well.

The key to this reform is in its details. A system that allows a standing committee to simply articulate
its reasons to investigate pro forma does no more than imposes minimal drafting burdens. Rather, the
system must be designed in a manner that imposes actual burdens on the committee to articulate its
need for investigation and allows for meaningful debate about the merits of proceeding with the
investigation.(Emphasis supplied)
Clearly, petitioners request to be furnished an advance copy of questions is a reasonable demand that should have
been granted by respondent Committees.
Unfortunately, the Subpoena Ad Testificandum dated November 13, 2007 made no specific reference to any
pending Senate bill. It did not also inform petitioner of the questions to be asked. As it were, the subpoena merely
commanded him to "testify on what he knows relative to the subject matter under inquiry."
Anent the third argument, respondent Committees contend that their Rules of Procedure Governing Inquiries in
Aid of Legislation (the "Rules") are beyond the reach of this Court. While it is true that this Court must refrain from
reviewing the internal processes of Congress, as a co-equal branch of government, however, when a constitutional
requirement exists, the Court has the duty to look into Congress compliance therewith. We cannot turn a blind eye
to possible violations of the Constitution simply out of courtesy. In this regard, the pronouncement in Arroyo v. De
Venecia56 is enlightening, thus:
"Cases both here and abroad, in varying forms of expression, all deny to the courts the power to inquire into
allegations that, in enacting a law, a House of Congress failed to comply with its own rules, in the absence of
showing that there was a violation of a constitutional provision or the rights of private individuals.
United States v. Ballin, Joseph & Co., the rule was stated thus: The Constitution empowers each House to
determine its rules of proceedings. It may not by its rules ignore constitutional restraints or violate
fundamental rights, and there should be a reasonable relation between the mode or method of
proceeding established by the rule and the result which is sought to be attained."

In the present case, the Courts exercise of its power of judicial review is warranted because there appears to be a
clear abuse of the power of contempt on the part of respondent Committees. Section 18 of the Rules provides that:
"The Committee, by a vote of majority of all its members, may punish for contempt any witness before it
who disobey any order of the Committee or refuses to be sworn or to testify or to answer proper questions by
the Committee or any of its members." (Emphasis supplied)
In the assailed Decision, we said that there is a cloud of doubt as to the validity of the contempt order because
during the deliberation of the three (3) respondent Committees, only seven (7) Senators were present. This number
could hardly fulfill the majority requirement needed by respondentCommittee on Accountability of Public Officers
and Investigations which has a membership of seventeen (17) Senators and respondent Committee on National
Defense and Security which has a membership of eighteen (18) Senators. With respect to respondent Committee on
Trade and Commerce which has a membership of nine (9) Senators, only three (3) members were present.57These
facts prompted us to quote in the Decision the exchanges between Senators Alan Peter Cayetano and Aquilino
Pimentel, Jr. whereby the former raised the issue of lack of the required majority to deliberate and vote on the
contempt order.
When asked about such voting during the March 4, 2008 hearing before this Court, Senator Francis Pangilinan
stated that any defect in the committee voting had been cured because two-thirds of the Senators effectively signed
for the Senate in plenary session.58
Obviously the deliberation of the respondent Committees that led to the issuance of the contempt order is flawed.
Instead of being submitted to a full debate by all the members of the respondent Committees, the contempt order
was prepared and thereafter presented to the other members for signing. As a result, the contempt order which was
issued on January 30, 2008 was not a faithful representation of the proceedings that took place on said date.
Records clearly show that not all of those who signed the contempt order were present during the January 30, 2008
deliberation when the matter was taken up.
Section 21, Article VI of the Constitution states that:

The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid
of legislation in accordance with its duly published rules of procedure. The rights of person appearing
in or affected by such inquiries shall be respected. (Emphasis supplied)
All the limitations embodied in the foregoing provision form part of the witness settled expectation. If the
limitations are not observed, the witness settled expectation is shattered. Here, how could there be a majority vote
when the members in attendance are not enough to arrive at such majority? Petitioner has the right to expect that he
can be cited in contempt only through a majority vote in a proceeding in which the matter has been fully
deliberated upon. There is a greater measure of protection for the witness when the concerns and objections of the
members are fully articulated in such proceeding. We do not believe that respondent Committees have the
discretion to set aside their rules anytime they wish. This is especially true here where what is involved is the
contempt power. It must be stressed that the Rules are not promulgated for their benefit. More than anybody else, it
is the witness who has the highest stake in the proper observance of the Rules.
Having touched the subject of the Rules, we now proceed to respondent Committees fourth argument. Respondent
Committees argue that the Senate does not have to publish its Rules because the same was published in 1995 and in
2006. Further, they claim that the Senate is a continuing body; thus, it is not required to republish the Rules, unless
the same is repealed or amended.
On the nature of the Senate as a "continuing body," this Court sees fit to issue a clarification. Certainly, there is no
debate that the Senate as an institution is "continuing", as it is not dissolved as an entity with each national
election or change in the composition of its members. However, in the conduct of its day-to-day business the
Senate of each Congress acts separately and independently of the Senate of the Congress before it. The Rules of the
Senate itself confirms this when it states:
RULE XLIV
UNFINISHED BUSINESS

SEC. 123. Unfinished business at the end of the session shall be taken up at the next session in the same
status.
All pending matters and proceedings shall terminate upon the expiration of one (1) Congress, but may
be taken by the succeeding Congress as if present for the first time. (emphasis supplied)
Undeniably from the foregoing, all pending matters and proceedings, i.e. unpassed bills and even legislative
investigations, of the Senate of a particular Congress are considered terminated upon the expiration of that
Congress and it is merely optional on the Senate of the succeeding Congress to take up such unfinished
matters, not in the same status, but as if presented for the first time. The logic and practicality of such a rule is
readily apparent considering that the Senate of the succeeding Congress (which will typically have a different
composition as that of the previous Congress) should not be bound by the acts and deliberations of the Senate of
which they had no part. If the Senate is a continuing body even with respect to the conduct of its business, then
pending matters will not be deemed terminated with the expiration of one Congress but will, as a matter of course,
continue into the next Congress with the same status.
This dichotomy of the continuity of the Senate as an institution and of the opposite nature of the conduct of its
business is reflected in its Rules. The Rules of the Senate (i.e. the Senates main rules of procedure) states:
RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE RULES
SEC. 136. At the start of each session in which the Senators elected in the preceding elections shall begin
their term of office, the President may endorse the Rules to the appropriate committee for amendment or
revision.
The Rules may also be amended by means of a motion which should be presented at least one day before its
consideration, and the vote of the majority of the Senators present in the session shall be required for its
approval. (emphasis supplied)

RULE LII
DATE OF TAKING EFFECT
SEC. 137. These Rules shall take effect on the date of their adoption and shall remain in force until they are
amended or repealed. (emphasis supplied)
Section 136 of the Senate Rules quoted above takes into account the new composition of the Senate after an
election and the possibility of the amendment or revision of the Rules at the start of eachsession in which the newly
elected Senators shall begin their term.
However, it is evident that the Senate has determined that its main rules are intended to be valid from the date of
their adoption until they are amended or repealed. Such language is conspicuously absent from the Rules.
The Rules simply state "(t)hese Rules shall take effect seven (7) days after publication in two (2) newspapers of
general circulation."59 The latter does not explicitly provide for the continued effectivity of such rules until they are
amended or repealed. In view of the difference in the language of the two sets of Senate rules, it cannot be
presumed that the Rules (on legislative inquiries) would continue into the next Congress. The Senate of the next
Congress may easily adopt different rules for its legislative inquiries which come within the rule on unfinished
business.
The language of Section 21, Article VI of the Constitution requiring that the inquiry be conducted in accordance
with the duly published rules of procedure is categorical. It is incumbent upon the Senate to publish the rules for
its legislative inquiries in each Congress or otherwise make the published rules clearly state that the same shall be
effective in subsequent Congresses or until they are amended or repealed to sufficiently put public on notice.
If it was the intention of the Senate for its present rules on legislative inquiries to be effective even in the next
Congress, it could have easily adopted the same language it had used in its main rules regarding effectivity.
Lest the Court be misconstrued, it should likewise be stressed that not all orders issued or proceedings conducted
pursuant to the subject Rules are null and void. Only those that result in violation of the rights of witnesses should

be considered null and void, considering that the rationale for the publication is to protect the rights of witnesses as
expressed in Section 21, Article VI of the Constitution. Sans such violation, orders and proceedings are considered
valid and effective.
Respondent Committees last argument is that their issuance of the contempt order is not precipitate or arbitrary.
Taking into account the totality of circumstances, we find no merit in their argument.
As we have stressed before, petitioner is not an unwilling witness, and contrary to the assertion of respondent
Committees, petitioner did not assume that they no longer had any other questions for him. He repeatedly
manifested his willingness to attend subsequent hearings and respond to new matters. His only request was that he
be furnished a copy of the new questions in advance to enable him to adequately prepare as a resource person. He
did not attend the November 20, 2007 hearing because Executive Secretary Ermita requested respondent
Committees to dispense with his testimony on the ground of executive privilege. Note that petitioner is an
executive official under the direct control and supervision of the Chief Executive. Why punish petitioner for
contempt when he was merely directed by his superior? Besides, save for the three (3) questions, he was very
cooperative during the September 26, 2007 hearing.
On the part of respondent Committees, this Court observes their haste and impatience. Instead of ruling on
Executive Secretary Ermitas claim of executive privilege, they curtly dismissed it as unsatisfactory and ordered
the arrest of petitioner. They could have informed petitioner of their ruling and given him time to decide whether to
accede or file a motion for reconsideration. After all, he is not just an ordinary witness; he is a high- ranking
official in a co-equal branch of government. He is an alter ego of the President. The same haste and impatience
marked the issuance of the contempt order, despite the absence of the majority of the members of the respondent
Committees, and their subsequent disregard of petitioners motion for reconsideration alleging the pendency of his
petition for certiorari before this Court.
On a concluding note, we are not unmindful of the fact that the Executive and the Legislature are political branches
of government. In a free and democratic society, the interests of these branches inevitably clash, but each must treat
the other with official courtesy and respect. This Court wholeheartedly concurs with the proposition that it is

imperative for the continued health of our democratic institutions that we preserve the constitutionally mandated
checks and balances among the different branches of government.
In the present case, it is respondent Committees contention that their determination on the validity of executive
privilege should be binding on the Executive and the Courts. It is their assertion that theirinternal procedures and
deliberations cannot be inquired into by this Court supposedly in accordance with the principle of respect between
co-equal branches of government. Interestingly, it is a courtesy that they appear to be unwilling to extend to the
Executive (on the matter of executive privilege) or this Court (on the matter of judicial review). It moves this Court
to wonder: In respondent Committees paradigm of checks and balances, what are the checks to the Legislatures
all-encompassing, awesome power of investigation? It is a power, like any other, that is susceptible to grave abuse.
While this Court finds laudable the respondent Committees well-intentioned efforts to ferret out corruption, even
in the highest echelons of government, such lofty intentions do not validate or accord to Congress powers denied to
it by the Constitution and granted instead to the other branches of government.
There is no question that any story of government malfeasance deserves an inquiry into its veracity. As respondent
Committees contend, this is founded on the constitutional command of transparency and public accountability. The
recent clamor for a "search for truth" by the general public, the religious community and the academe is an
indication of a concerned citizenry, a nation that demands an accounting of an entrusted power. However, the best
venue for this noble undertaking is not in the political branches of government. The customary partisanship and the
absence of generally accepted rules on evidence are too great an obstacle in arriving at the truth or achieving
justice that meets the test of the constitutional guarantee of due process of law. We believe the people deserve a
more exacting "search for truth" than the process here in question, if that is its objective.
WHEREFORE, respondent Committees Motion for Reconsideration dated April 8, 2008 is herebyDENIED.
SO ORDERED.