PHILCONSA v ENRIQUEZ (1994)

FACTS:

House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed and approved by both houses of Congress. As passed, it
imposed conditions and limitations on certain items of appropriations in the proposed budget previously submitted/vetoed 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.

On December 30, 1993, the President signed the bill into law, and declared the same to have become RA 7663, entitled “ACT APPROPRIATING FUNDS
FOR THE OPERATION OF THE GOV OF THE PH FROM JAN 1 - DEC 31, 1994, 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, as follows:

1. Provision on Debt Ceiling, on the ground that “this debt reduction scheme cannot be validly done through the 1994 GAA.” And that
“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.

2. Special provisions which authorize the use of income and the creation, operation and maintenance of revolving funds in the appropriation for
State Universities and Colleges (SUC’s),

3. Provision on 70% (administrative)/30% (contract) ratio for road maintenance.

4. Special provision on the purchase by the AFP of medicines in compliance with the Generics Drugs Law.

5. The President vetoed the underlined proviso in the appropriation for the modernization of the AFP of the Special Provision No. 2 on the “Use of
Fund,” which requires the prior approval of the Congress for the release of the corresponding modernization funds, as well as the entire Special
Provision No. 3 on the “Specific Prohibition” which states that 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”

6. New provision authorizing the Chief of Staff to use savings in the AFP to augment pension and gratuity
funds.

7. Conditions on the appropriation for the Supreme Court, Ombudsman, COA, and CHR, the Congress.

ISSUES:

1. W/N the special provision allowing a member of Congress to realign his allocation for operational expenses to any other expenses violates Sec 25 (5),
Art VI of the Constitution?

 YES. Under the special provision applicable to Congress, the members of Congress are given the power to determine the necessity of realignment of
the savings in the allotment for their operating expenses. They are in the best position to do so because they are the ones who know whether there are
savings, or deficiencies in appropriation.
 HOWEVER, ONLY THE SENATE PRESIDENT AND THE SPEAKER OF THE HOUSE ARE ALLOWED TO APPROVE THE REALIGNMENT.
 Further, 2 conditions must be met:
1) the funds to be realigned are actually savings, and
2) the transfer is for the purpose of augmenting the items of expenditures to which said transfer is to be made.

2. W/N the President’s veto is valid?

 The veto power, while exercisable by the President, is actually a part of the legislative process. There is, therefore, sound basis to indu lge 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.

1. Veto on Debt Servicing (NOT VALID)

 President commented that the scheme is already taken cared of by other legislation and may be more properly addressed by revising the debt policy.
 He, however did not delete the P86,323,438,000.00 appropriation therefor.
 Tañada et al averred that the president cannot validly veto that provision w/o vetoing the amount allotted therefor.
 The veto of the president herein is sustained for the vetoed provision is considered “inappropriate.”
 In fact, the Court found that such provision if not vetoed would in effect repeal the Foreign Borrowing Act making the legislation as a log-rolling
legislation.
 As held by the court in Gonzales, the repeal of these laws should be done in a separate law, not in the appropriations law.

2. Veto of provisions for revolving funds of SUCs (VALID)

 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 was likewise vetoed.
 The reason for the veto is that there were already funds allotted for the same in the National expenditure Program.
 The SC ruled that the veto is valid for it is in compliant to the “One Fund Policy” – it avoided double funding and redundancy.

3. Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance (NOT VALID)

 The President vetoed this provision on the basis that it may result to a breach of contractual obligations. The funds if allotted may result to
abandonment of some existing contracts.
 The SC ruled that this 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 specifies 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. The veto herein is then not valid.

4. Veto on Purchases of Medicines by the AFP

 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.
 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.

5. Veto of provision on prior approval of Congress for purchase of military equipment (VALID)

 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
AFP.”

 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.” 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. Therefore, being “inappropriate” provisions,
Special Provisions Nos. 2 and 3 were properly vetoed.

 Furthermore, Special Provision No. 3, prohibiting the use of the Modernization fund 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.

 The SC affirmed the veto. 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.

6. Veto on the Special Provision, which allows the Chief of Staff to use savings to augment the AFP funds, is violative of Sections 25(5)
and 29(1) of the Article VI of the Constitution. (VALID)

 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. The SC
retained the veto per reasons provided by the president.

 Under Sec 25(5), "No law shall be passed authorizing any transfer of appropriations." And under sec 29(1), "No money shall be paid out of the
treasury except in pursuance of an appropriation made by law."
 While sec 25(5) allows as an exception the requirement of saving 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.

Condition on the deactivation of the CAFGU’s

Congress appropriated compensation for the CAFGU’s including the payment of separation benefits. 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.
The SC ruled to retain the veto per reasons provided by the president. Further, if this provision is allowed then it would on ly lead to the repeal of said
existing laws.

Conditions on the appropriation for the Supreme Court, etc

In his veto message: “The said condition is consistent with the Constitutional injunction prescribed under Section 8, Article IX-B of the Constitutional
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. Tañada et al 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. The SC sustained the veto: 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 Const itutional 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.

Pork Barrel Constitutional

The pork barrel makes the unequal equal. The Congressmen, being representatives of their local districts know more about the problems in their
constituents areas than the national government or the president for that matter. Hence, with that knowledge, the Congressmen are in a better position
to recommend as to where funds should be allocated.
The DAP decision (Inquirer, Artemio Panganiban)

Araullo vs Aquino (July 1, 2014, penned by Justice Lucas P. Bersamin) declared unconstitutional four “acts and practices under the Disbursement
Acceleration Program, National Budget Circular No. 541 and related issuances.” It did not declare the DAP unconstitutional, only the “acts and practices
under” it, unlike Belgica vs Ochoa (Nov. 13, 2013) which plainly declared the Priority Development Assistance Fund unconstitutional. The four are
worded in deep legalese and need to be explained for lay readers.
Backgrounder. Annually, Congress approves the General Appropriations Act (GAA) or budget. In general, it contains an estimate of revenues and
funding sources, which are usually (1) taxes, (2) capital revenues (like proceeds from the sales of assets), (3) grants, (4) extraordinary income (like
dividends of government corporations) and (5) borrowings.
The budget also contains itemized public expenditures allotted to the three main branches of government (executive, legislative and judicial) and the
independent agencies (Commission on Audit or COA, Commission on Elections or Comelec, Office of the Ombudsman, etc.). The current budget totals
about P2 trillion.

Often, the estimated revenues are exceeded by actual receipts. These excess funds are referred to as “unprogrammed funds.” Examples are unexpected
large dividends from government institutions like the Social Security System and Government Service Insurance System. Often, too, the estimated
expenditures are not spent; hence “savings” occur.
The DAP aims to pool these unspent funds, and uses them to fund projects that stimulate the economy. Citing the World Bank, the Supreme Court’s
decision (p.36) acknowledged the program’s success, saying that “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.”
Unconstitutional acts. The Constitution states, “No public money shall be paid out of the Treasury except in pursuance of an appropriation made by
law.” Also, “No law shall be passed authorizing the transfer of appropriations…” Under these provisions, money allotted for one program, activity or
project (PAP) cannot be spent for another PAP even if both are in the GAA. Congress cannot even authorize “the transfer of appropriations” from one
budget item to another.
However, the Constitution allows one limited exception to that rule: “… [T]he 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, by law, be authorized to augment any
item in the [GAA] (or budget) for their respective offices from savings in other items of their respective appropriations” (bold types mine). This
exception is called the power of augmentation.
The bulk of DAP funds may have been pooled in strict adherence to this exception. However, the Court found that these four “acts and practices”
violated it:
(1) Only “actual savings” may be transferred from one budget item to another item in the GAA. Savings are “actual” only when “(a) the PAPs (projects,
activities or programs) 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.” (p.59)
Thus, the “act or practice” of transferring funds “prior to the end of the fiscal year,” which did not meet any of those three instances, were deemed
unconstitutional.
(2) Augmentation can be made only for items allocated “for their respective offices,” that is, within the same branch or office. Thus, the “act or practice”
of transferring savings from the executive to the Congress, or to the Comelec, or to the COA, being “cross-border” transfers, were declared
unconstitutional.
(3) The funding of PAPs that are not covered by any appropriation in the GAA is also unconstitutional because augmentation can be made only from one
existing item to another existing item in the budget. The President cannot use budgeted funds for PAPs not found in the GAA.
(4) Unconstitutional also is the use of unprogrammed funds in the absence of a legally required certification by the national treasurer that the revenue
collections exceeded the “total of the revenue targets.”
Accountability. As a rule, an unconstitutional “act or practice” is void and cannot give rise to any right or obligation. However, the Court held that the
exception to this rule, the old “doctrine of operative fact,” should be applied “in the implementation of the DAP.” (p.87)
Under this doctrine, acts done in good faith pursuant to a law or executive act that is later declared unconstitutional would remain valid and
enforceable. It also applies when the nullification of such acts would result in an injustice. In short, unconstitutionality has prospective effects only.
Example: A bridge is constructed from illegally augmented funds. The government officials who supervised in good faith the construction cannot be
forced to reimburse the government. Neither may injustice be heaped on suppliers of construction materials by refusing to pay them.
May the President, the “author” of the augmentation, be impeached? The Court did not take that up. Neither will I. Impeachment is more political than
legal. So, I will leave it to the politicians.
ARAULLO v AQUINO (2014)

B. NATURE OF THE DAP AS A FISCAL PLAN

1. DAP as DESIGNED TO PROMOTE ECONOMIC GROWTH

 World Bank: “The Philippines’ economic growth could be weakened should the Government continue with its underspending and fail to address the
large deficiencies in infrastructutes.
 The economic situation prevailing in the middle of 2011 paved 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 form “unprogrammed funds.”
 In that respect, DAP was a product of plain executive policy-making to stimulate the economy by way of accelerated spending through:
1. Streamlining the implementation process through the clustering of infrastructure projects of the DPWH and the DepEd
2. Frontloading PPP-related projects
 World Bank revealed, after the initial implementation of DAP, that it was partially successful.
 PAPs funded under the DAP were chosen based on their:
1. Multiplier impact in economy and infrastructure development
2. Beneficial effect to the poor
3. Translation into disbursements

2. HISTORY of DAP IMPLEMENTATION

 Memorandum on Oct. 12, 2011 from Sec. Abad seeking the approval of the Pres. to implement the proposed DAP, which contained a list of funding
sources for P72.11 billion and the proposed priority projects to be funded.
 Substantially indentical requests for authority to pool savings and to fund projects were contained in other various memoranda from June 25, 2012 –
Sept. 25, 2013.
 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
3. Applying the “savings” and unprogrammed funds to augment the existing PAPs or to support other priority PAPs

3. DAP was NOT AN APPROPRIATION MEASURE; HENCE, NO APPROPRIATION LAW WAS REQUIRED TO ADOPT OR TO IMPLEMENT IT
 OSG posts that “no law was necessary for the adoption and implementation of 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 DAP was by virtue of the authority of the President as the Chief
Executive to ensure that laws were faithfully executed.
 Adoption and Implementation is a function with the Executive as the main actor during the Budget Execution Stage.
 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 GAAs.

C. UNRELEASED APPROPRIATIONS AND WITHDRAWN UNOBLIGATED ALLOTMENTS UNDER THE DAP WERE NOT SAVINGS, AND THE USE
OF SUCH APPROPRIATIONS CONTRAVENED SEC 25 (5), ART VI OF THE 1987 CONSTITUTION (Petitioners)

1. Although executive discretion and flexibility are necessary in the execution of the budget, any transfer of appropriated funds must
still conform to Sec 25(5), Art VI

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

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

The Court stated in Nazareth v. Villar:

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 petitioner’s posture,

2. Requisites for the valid transfer of appropriated funds under Sec 25 (5), Art VI of the 1987 Constitution

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;

 First Requisite – GAAs of 2011 & 2012 lacked valid provisions to authorize transfers of funds under the DAP; hence, transfers under the DAP were
unconstitutional.
  Sec 25 (5) NOT being a self-executing provision must have an implementing law for it to be operative. In this case is the GAA.
 GAA (2011 and 2012), 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.”
 While the GAA expressly authorized the transfer of funds, the aforequoted provision is textually unfaithful to Sec 25(5) No law shall be passed authorizing
any transfer of appropriations; however, the President, the President of the Senate, xxx 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.”
 “For their respective offices” was to authorize only transfers of funds within their offices.
 “Any item in this Act” in Sec 59, 2011 GAA (same with Sec. 53 of 2012 GAA) thereby literally allowed the transfer of funds from savings
to augment any item in the GAAs even if it belonged to an office outside the Executive.

2. The funds to be transferred are savings generated from the appropriations for their respective offices; and
 Were the funds used in DAP actually savings?
 Petitioners’ definition: SAVINGS (Belgica) – 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.
 Petitioners assert:
1. “There could only be savings only when the PAPs for which the funds had been appropriated were actually
implemented and completed, or discontinued or abandoned.”
2. “Savings could not be realized with certainty in the middle of the fiscal year.”
3. “The funds for “slow-moving” PAPs could not be considered as ‘savings’ because such PAPs had not actually been
abandoned or discontinued yet.
 Respondents’ (OSG) definition: SAVINGS – were “appropriations balances;” the
difference between the appropriation authorized by Congress and the actual amount
allotted for the appropriation
Assertions:
1. That it only sets parameters for determining when savings occurred
2. That it was still the President who ultimately determined when savings actually existed because savings could be
determined only during the stage of budget execution.
 COURT:
 Principles in Budget:
1st Principle: “Congress wields the POWER OF THE PURSE”
1. Decides how the budget will be spent
2. What PAPs to fund
3. Amounts of money to be spent for each PAP
nd
2 Principle: “Executive enforce the laws.”
1. Faithfully execute the GAA
2. Spend the budget in accordance with the provisions of GAA.
3. Implement the PAPs for which Congress allocated funds, and;
4. to limit the expenditures within the allocations, unless exigencies result to deficiencies for which
augmentation is authorized
rd
3 Principle: “In making the President’s ‘power to augment’ operative under the GAA, Congress
recognizes the need for flexibility in budget execution.”
 In doing so, Congress diminishes its 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.
4th Principle: “Savings could be ACTUAL.”
 ACTUAL – something that is real or substantial; exists presently in fact.

 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.
 “The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs (SAVINGS are “portions or
balances of any programmed appropriation in this Act free from any obligation or encumbrance”) conveyed the notion that the
appropriation was at that stage when the appropriation was already obligated and released.”

 WHEN SAVINGS COULD BE REALIZED:

(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 three instances listed in the GAAs’ 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.

 DBM declares that 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 etc.”

 Appropriations have been considered released if there has already been an allotment or authorization to incur obligations and
disbursement authority. (If DBM has already issued an ABM – does not need clearance, SARO – need clearance, NCA, NCAA or
CDC)

 The fact alone (DBM explaining that DAP came from unreleased appropriations) that the appropriations are unreleased or
unalloted means that they have not yet ripened into categories of items from which savings can be generated.
 Instances when appropriations remain unreleased:
1. non-compliance with documentary requirements
2. unavailability of funds
*Appropriations do not reach the agencies.
 When unreleased appropriations are valid as savings:
1. If an agency has unfilled positions in its plantilla and did not receive allotment and NCA for such vacancies.
o Unobligated allotments – DBM’s Memorandum for the President (NBC 541): On Authority to Withdraw Unobligated
Allotments provision
 Reveals that it targeted the “withdrawal of unobligated allotments of agencies with low levels of obligations”
“to fund priority and/or fast-moving programs/projects.” Further stated in (8), “To maximize the use of
 available allotment, all unobligated balances at the end of every quarter, xxx shall be withdrawn and pooled
to fund fast-moving programs/projects.”
 Petitioners accrue (On the part that the validity period of the affected appropriations, already given the
brief lifespan of 1 year, was further shortened to only a quarter of a year), to which the Court agreed:
“Respondents force the generation of savings in order to have a larger fund available for discretionary
spending. By withdrawing unobligated allotments in the middle of the fiscal year, in effect deprived funding for
PAPs with existing appropriation under the GAAs.
 “The unbridled withdrawal of unobligated allotments and the retention of appropriated funds were akin to
the impoundment of appropriations that could be allowed only in case of “unmanageable national government
budget deficit” under the GAAs, thus violating the GAA provision ‘prohibiting the retention or reduction of
allotments.’
 Impoundment (Philconsa v Enriquez): “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.”

 DBM did not suspend or stop further expenditures in accordance with Sec 38 of Administrative Code but instead transferred the
funds to other PAPs.
o It is relevant to remind that “the balances of appropriations that remained unexpected at the end of the fiscal year were
to be reverted to the General Fund. (Sec 28, Chapter IV, Book VI, Admin. Code)
o Executive Branch could not circumvent this provision by declaring unreleased appropriations and unobligated allotments
as savings prior to the end of the fiscal year.

3. Third Requisite:

A. No funds from savings could be transferred under the DAP to augment deficient items not provided in the GAA.

 Augmentation (GAAs 2011-2013) – to increase resources that are determined to be deficient.

 PAP must first be determined to be deficient before it could be augmented from savings.
 Upon careful review of the seven evidence packets submitted by OSG in support of their defense that DAP-financed PAPs were
implemented with appropriation covers and hence could be properly accounted for, Court held that the “savings” pooled under the DAP were
allocated to PAPs that were not covered by any appropriations in the pertinent GAAs.
 Respondents contend in defending disbursements that “the Executive enjoyed sound discretion in implementing the budget given the
generality in the language and the broad policy objectives identified under the GAAs; and that the President enjoyed unlimited authority to
spend the initial appropriations under his authority to declare and utilize savings; and keep in line with his mandate to faithfully execute
laws.”
o Court: “Such authority did not translate to unfettered discretion that allowed the Pres. 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.
o The power to spend the public wealth resided in Congress, not in the Executive.
o It is the President who proposes the budget but it is Congress that has the final say on matters of appropriation.
o 2 Governing Principles of Appropriation:
1. Principle of the Public Fisc – asserting that all monies received from whatever source by any part of the
government are public funds
2. Principle of Appropriations Control – prohibiting expenditure of any public money without legislative authorization.
o Executive cannot therefore circumvent the prohibition by Congress of “an expenditure for a PAP by resorting to either public or
private funds.
o Nor could the Executive transfer appropriate funds be resulting in an increase in the budget for one PAP, for by so doing, the
appropriation for another PAP is necessarily decreased. Terms of both appropriations will thereby be violated.

B. Cross-border augmentations from savings were prohibited by the Constitution (Transfer of appropriation from one branch to another)

 Records show that funds amounting to P143 Billion and P250B were transferred under DAP to CIA and HOR respectively.

 Sec 25 (5), “…for their respective offices” – 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. Such is called cross-
border transfers or cross-border augmentations.
 The power to augment may only be made to increase any item in the General Appropriations Law for their respective offices. –
Justice Bersamin to Sec. Abad

D. SOURCING THE DAP FROM UNPROGRAMMED FUNDS DESPITE THE ORIGINAL REVENUE TARGETS NOT HAVING BEEN EXCEEDED WAS
INVALID

 Respondents: Funding of DAP also sourced out from unprogrammed funds, and that consequently the release and use them were not
subject to the restrictions of Sec 25 (5).
 Court: Even so, release of such funds is still subject to restrictions for to start with, the GAAs specified the instances when the
unprogrammed funds could be released and the purposes for which they could be used; that the condition for the release of the
unprogrammed funds was that the revenue collections must exceed revenue targets. Such condition was not met, hence, the release
was illegal.

 Unprogrammed Funds (BESFs) – appropriations that provided standby authority to incur additional agency obligations for priority PAPs
when revenue collection exceeded targets and when additional foreign funds are generated.
 Instances when Unprogrammed Funds could be availed (DBM):
1. Revenue collections exceeded the original revenue targets
2. New revenues were collected or realized from sources not originally considered in BESFs (NOT INCLUDED IN BESF’s definition)
3. Newly-approved loans for foreign-assisted projects were secured, or when conditions were triggered for other sources of funds ie perfected
loan agreements for foreign-assisted projects.
E. EQUAL PROTECTION, CHECKS AND BALANCES, AND PUBLIC ACCOUNTABILITY CHALLENGES

 DAP as violative of the:

1. Equal Protection Clause:
a. some refuse to avail them, others being unaware of its availability;
b. Senators differently treated as to the amounts they respectively achieved),

2. System of checks and balances:

a. grant of funds under DAP forced their silence upon the issues and anomalies surrounding the DAP
b. authorized them to take part in the implementation and execution of GAAs, a function exclusive to the Executive;
c. the President arrogated unto himself the power of appropriation vested in Congress
 Principle of public accountability:
a. Legislators relinquished the power of appropriation to the Executive
b. Exhibited a reluctance to inquire into the legality of DAP

F. DOCTRINE OF OPERATIVE FACT WAS APPLICABLE

 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.

 To declare the implementation of the DAP unconstitutional without recognizing that its prior implementation constituted an operative fact that
produced consequences in the the world, nation, and the government, would be impractical and unfair (could literally cause the physical undoing of
worthy projects such as public infrastructures, hospitals, classrooms, and the like, to destruction.

ARAULLO v AQUINO (2015)

POLITICAL LAW; POWER OF THE SUPREME COURT; JUDICIAL REVIEW. 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 in terpretation 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 determin ation 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.

ADMINISTRATIVE LAW; 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. Necessarily, savings, their utilization and their management will also be strictly construed
against expanding the scope of the power to augment. 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. 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 re main 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.

ADMINISTRATIVE LAW; POWER TO AUGMENT; CANNOT BE USED TO FUND NON-EXISTENT PROVISION IN THE GAA. Further, in Nazareth v. Villar, 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.

PHILCONSA vs GIMENEZ (1965)

FACTS:
 Philippine Constitution Association, Inc (PHILCONSA) assails the validity of RA 3836 insofar as the same allows retirement gratuity and
commutation of vacation and sick leave to Senators and Representatives, and to the elective officials of both Houses.
 The petitioners challenge the constitutionality by the ff propositions:

1.) The provision for the retirement of the members and certain officers of Congress is not expressed in the title of the bill, in violation of Sec
27(1) Art VI
2.) The provision on retirement gratuity is an attempt to circumvent the Constitutional ban on increase of salaries of the members of
Congress during their term of office, contrary to the provisions of Article VI, Section 14 of the Constitution.
3.) The same provision constitutes “selfish class legislation” because it allows members and officers of Congress to retire after twelve (12)
years of service and gives them a gratuity equivalent to one year salary for every four years of service, which is not refundable in case of
reinstatement or re election of the retiree, while all other officers and employees of the government can retire only after at least twenty (20)
years of service and are given a gratuity which is only equivalent to one month salary for every year of service, which, in any case, cannot
exceed 24 months.
4.) The provision on vacation and sick leave, commutable at the highest rate received, insofar as members of Congress are concerned, is
another attempt of the legislator to further increase their compensation in violation of the Constitution.

 The Solicitor General counter-argued alleging that:

 1.) The grant of retirement or pension benefits under Republic Act No. 3836 to the officers objected to by the petitioner does not constitute
“forbidden compensation” within the meaning of Section 14 of Article VI of the Philippine Constitution.
2.) The title of law in question sufficiently complies with Sec 26(1) Art VI
3.) The law in question does not constitute class legislation.
4.) certain indispensable parties(elected officers of Congress authorize to approve vouchers for payment of funds and claimants to voucher)
were not included in the petition.
5.) The petitioner has no standing to institute the suit.
6.) The payment of commutable vacation and sick leave benefits under the said Act is merely “in the nature of a basis for computing the
gratuity due each retiring member” and, therefore, is not an indirect scheme to increase their salary.
ISSUES:
1. W/N the petitioner has standing to institutr this suit?
2. W/N RA 3836 falls within the prohibition embodied in Art VI sec 14 of Const.?
3. W/N the law in question violates equal protection clause?
4. W/N the titlr of RA 3836 is germane to the subject matter expressed in the act?

HELD:
1. YES! The Court has repeatedly held that when the petitioner, like in this case, is composed of substantial taxpayers, and the outcome will
affect their vital interests, they are allowed to bring suit. In determination of degree of interest essential to give the requisite standing to
attack the constitutionality of a statute, the general rule is NOT ONLY persons individually affected, BUT ALSO taxpayers have sufficient
interest in preventing the illegal expenditure of public moneys. (From American jurisprudence)
2. YES! Section 14, Article VI, of the Constitution reads as follows: (yung no italicized portion sec 10 na sa 1987 Consti) “The senators and the
Members of the House of Representatives shall, unless otherwise provided by law, receive an annual compensation of seven thousand two
hundred pesos each, including per diems and OTHER EMOLUMENTS or allowances, and exclusive only of travelling expenses to and from their
respective districts in the case of Members of the House of Representative and to and from their places of residence in the case of Senators,
when attending sessions of the Congress.

No increase in said compensation shall take effect until after the expiration of the full term of all the Members of the Senate and of the House
of Representatives approving such increase. Until otherwise provided by law, the President of the Senate and the Speaker of the House of
Representatives shall each receive an annual compensation of sixteen thousand pesos.” Emolument is defined as the profit arising from office
or employment; that which is received as compensation for services or which is annexed to the possession of an office, as salary, fees and
perquisites. It is evident that retirement benefit is a form or another species of emolument, because it is a part of compensation for services
of one possessing any office.

Republic Act 3836 provides for an increase in the emoluments of Senators and Members of the House of Representatives, to take effect upon
the approval of said Act, which was on June 22, 1963. Retirement benefits were immediately available thereunder, without awaiting the
expiration of the full term of all the Members of the Senate and the House of Representatives approving such increase. Such provision clearly
runs counter to the prohibition in Article VI, Section 14 of the Constitution. RA 3836 is therefore unconstitutional. (Eto pinakaimportante!!)

3. YES! The featured of the Act are patently discriminatory, and therefore violate the equal protection clause of the Consti.(Art III SEC 1)

First, while the said law grants retirement benefits to Congress who are elective officials, it does not include other elective officials such as
governors and memebers of provincial boards, and of municipalities and chartered cities.

Second, all members of Congredd under the said law are given retirement benefits after serving 12 yrs, not necessarily continuous, whereas,
most govt officers and employees are given retirement benefits after serving for at least 20 yrs. in fact, original bill provided for 20 yrs of
service.

Third, all govt officers and employees are given ONLY ONE retirement benefit irrespective of their length of service in the govt, whereas,
under the RA 3836, bec of no age limitation, a member of Congress upon being electrd for 24 yrs will be entitled to 2 retirement benefits or
equivalent to 6 yrs salary. Lastly, it is peculiar that the Act grants retirement benefits to officials who are not member of Govt Service
Insurance System. Most granteed of this benefits must be a member or must at least contribute a portion of their monthly salaries to the
System.

4. Under the RA 3836, amending the first paragraph of sec 12(c) of CA 186, as ammended by RA 660 & 3096, the retirement benefits granted
to members of the GSIS who have rendered atleast 20yrs of service regardless of age. This provision is related and GERMANE to the subject
of CA 186. On the other hand, the succeeding par of the said Act refers to members of Congress and elective officials thereof who are not
member of GSIS.

To provide retirement benefits, therefore, for these officials would relate to subject matter, NOT GERMANE to CA 186. The requirement that
the subject of an act shall be expressed in its title is not a mere rule of legislative procedure, directory to Congress, IT IS MANDATORY.
Requirement explained by Cooley:

1. to prevent surprise or fraud upon the Legislature,

2. to fairly apprise the people, through such publication of legislation that are being considered, in order that they may have the
opportunity of being heard thereon by petition or otherwise, if they desire so.

The court now held that, RA 3836 is NULL AND VOID, as being UNCONSTITUTIONAL.
TIO v VIDEOGRAM REGULATORY BOARD

 In 1985, Presidential Dedree No. 1987 entitled “An Act Creating the Videogram Regulatory Board” was enacted which gave broad
powers to the VRB to regulate and supervise the videogram industry.

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.”

 The said law sought

1. to minimize the economic effects of piracy.
2. curb the violation of intellectual property rights
3. curb proliferation of pornographic videos.

 The proliferation of videograms has significantly lessened the revenue being acquired from the movie industry, and that such loss
may be recovered if videograms are to be taxed. Section 10 of the PD imposes a 30% tax on the gross receipts payable to the
LGUs.
 In 1986, Valentin Tio assailed the said PD as he averred that it is unconstitutional on the following grounds:
1. Section 10 thereof, which imposed the 30% tax on gross receipts, is a rider and is not germane to the subject matter of the law.
2. There is also undue delegation of legislative power to the VRB, an administrative body, because the law allowed the VRB to
deputize, upon its discretion, other government agencies to assist the VRB in enforcing the said PD.

ISSUE: Whether or not the Valentin Tio’s arguments are correct.

HELD: No.

1. The Constitutional requirement that “every bill shall embrace only one subject which shall be expressed in the title thereof” is
sufficiently complied with if the title be comprehensive enough to include the general purpose which a statute seeks to achieve. In the
case at bar, the questioned provision is allied and germane to, and is reasonably necessary for the accomplishment of, the general
object of the PD, which is the regulation of the video industry through the VRB 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 it is simply one of the regulatory and control
mechanisms scattered throughout the PD.

2. There is no undue delegation of legislative powers to the VRB. VRB is not being tasked to legislate. What was conferred to the VRB
was the authority or discretion to seek assistance in the execution, enforcement, and implementation of the law. 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 [VRB].”