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CASE CAPSULES ON THE PARTY LIST SYSTEM OF DISTRIBUTION: FROM VETERANS TO COCOFED

Dean Pablito V. Sanidad Sr. U.B. School of Law

THE CONSTITUTION AND THE LAW: Section 5, Article VI of the Constitution provides:

Section 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. (2) The party-list representatives shall constitute twenty per centum of the total number of representatives including those under the party-list. For three consecutive terms after the ratification of this Constitution, one-half of the seats allocated to party-list representatives shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor, indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except the religious sector.

R.A. No. 7941

Section 11. Number of Party-List Representatives. — The party-list representatives shall constitute twenty per centum (20%) of the total number of the members of the House of Representatives including those under the party-list.

In determining the allocation of seats for the second vote, the following procedure shall be observed: (a) The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the number of votes they garnered during the elections. (b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the party-list system shall be entitled to one seat each: Provided, That those garnering more than two percent (2%) of the votes shall be entitled to additional seats in proportion to their total number of votes: Provided, finally, That each party, organization, or coalition shall be entitled to not more than three (3) seats. Section 12. Procedure in Allocating Seats for Party-List Representatives. — The COMELEC shall tally all the votes for the parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received and allocate party-list representatives proportionately according to the percentage of votes obtained by each party, organization, or coalition as against the total nationwide votes cast for the party-list system. (Emphasis supplied)

CASES:

1 VETERANS FEDERATION PARTY V. COMELEC, 396 PHIL. 419 (2000) (Oct. 6, 2000).

The four inviolable parameters are: First, the twenty percent allocation — the combined number of all party-list congressmen shall not exceed twenty percent of the total membership of the House of Representatives, including those elected under the party list;

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Second, the two percent threshold — only those parties garnering a minimum of two percent of the total valid votes cast for the party-list system are “qualified” to have a seat in the House of Representatives; Third, the three-seat limit — each qualified party, regardless of the number of votes it actually obtained, is entitled to a maximum of three seats; that is, one “qualifying” and two additional seats; Fourth, proportional representation— the additional seats which a qualified party is entitled to shall be computed “in proportion to their total number of votes.”

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BANAT VS COMELEC. G.R. No. 179271, 179295, April 21, 2009 The second clause of Section 11(b) of R.A. No. 7941 provides that “those garnering more than two percent (2%) of the votes shall be entitled to additional seats in proportion to their total number of votes.” Veterans interprets the clause “in proportion to their total number of votes” to be in proportion to the votes of the first party. This interpretation is contrary to the express language of R.A. No. 7941.

We rule that, in computing the allocation of additional seats, the continued operation of the two

percent threshold for the distribution of the additional seats as found in the second clause of Section 11(b) of R.A. No. 7941 is unconstitutional.

This Court finds that the two percent threshold makes it mathematically impossible to achieve the

maximum number of available party list seats when the number of available party list seats exceeds 50. The continued operation of the two percent threshold in the distribution of the additional seats frustrates the attainment of the permissive ceiling that 20% of the members of the House of Representatives shall consist of party-list representatives.

We therefore strike down the two percent threshold only in relation to the distribution of

the additional seats as found in the second clause of Section 11(b) of R.A. No. 7941. The two percent threshold presents an unwarranted obstacle to the full implementation of Section 5(2), Article VI of the Constitution and prevents the attainment of “the broadest possible representation of party, sectoral or group interests in the House of Representatives.”

In determining the allocation of seats for party-list representatives under Section 11 of R.A. No.

7941, the following procedure shall be observed: 1. The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on

the number of votes they garnered during the elections. 2. The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes

cast for the party-list system shall be entitled to one guaranteed seat each. 3. Those garnering sufficient number of votes, according to the ranking in paragraph 1, shall be

entitled to additional seats in proportion to their total number of votes until all the additional seats are allocated.

4. Each party, organization, or coalition shall be entitled to not more than three (3) seats. In computing the additional seats, the guaranteed seats shall no longer be included because

they have already been allocated, at one seat each, to every two-percenter. Thus, the remaining available seats for allocation as “additional seats” are the maximum seats reserved under the Party List

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System less the guaranteed seats. Fractional seats are disregarded in the absence of a provision in R.A. No. 7941 allowing for a rounding off of fractional seats.

There are two steps in the second round of seat allocation: First, the percentage is multiplied by the remaining available seats, 38, which is the difference

between the 55 maximum seats reserved under the Party-List System and the 17 guaranteed seats of the two-percenters. The whole integer of the product of the percentage and of the remaining available seats corresponds to a party’s share in the remaining available seats.

Second, we assign one party-list seat to each of the parties next in rank until all available seats are completely distributed. We distributed all of the remaining 38 seats in the second round of seat allocation. Finally, we apply the three-seat cap to determine the number of seats each qualified party-list candidate is entitled.

However, by a vote of 8-7, the Court decided to continue the ruling in Veterans disallowing major

political parties from participating in the party-list elections, directly or indirectly.

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ATONG PAGLAUM VS. COMELEC, G.R. No. 203766, April 2, 2013 Previously, and because of the rulings of the SC in Ang Bagong Bayani and BANAT, among the general guidelines used by the COMELEC for qualifying and/or disqualifying those who desire to participate in the party-list system were:

First, the political party, sector, organization or coalition must represent the marginalized and

underrepresented groups identified in Section 5 of RA 7941. x x x

Seventh, not only the candidate party or organization must represent marginalized and

underrepresented sectors; so also must its nominees. x x x.

In the present Decision, new parameters in the qualification of national, regional, and sectoral parties under the party-list system are adopted thereby abandoning the rulings in the decisions previously applied by the COMELEC.

In determining who may participate in the coming 13 May 2013 and subsequent party-list elections, the

COMELEC shall adhere with the following parameters:

Three different groups may participate in the party-list system:

(a) national parties or organizations, (b) regional parties or organizations, and (c) sectoral parties or organizations.

National parties or organizations and regional parties or organizations do not need to organize

along sectoral lines and do not need to represent any “marginalized and underrepresented” sector.

Political parties can participate in party-list elections provided:

a. they register under the party-list system, and b. they do not field candidates in legislative district elections. c. A political party, whether major or not, that fields candidates in legislative district elections can participate in party-list elections only through its sectoral wing that can separately register under the party-list system.

The sectoral wing is by itself an independent sectoral party, and is linked to a political party through a coalition.

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Sectoral parties or organizations may either be:

a. “marginalized and underrepresented” or b. lacking in “well-defined political constituencies.”

It is enough that their principal advocacy pertains to the special interest and concerns of their sector. The sectors that are “marginalized and underrepresented” include labor, peasant, fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, and overseas workers. The sectors that lack “well-defined political constituencies” include professionals, the elderly, women, and the youth. A majority of the members of sectoral parties or organizations that represent the “marginalized and underrepresented” must belong to the “marginalized and underrepresented” sector they represent. Similarly, a majority of the members of sectoral parties or organizations that lack “well-defined political constituencies” must belong to the sector they represent. The nominees of sectoral parties or organizations that represent the “marginalized and underrepresented,” or that represent those who lack “well-defined political constituencies,” either:

a. must belong to their respective sectors, or b. must have a track record of advocacy for their respective sectors.

The nominees of national and regional parties or organizations must be bona-fide members of such parties

or organizations. National, regional, and sectoral parties or organizations shall not be disqualified if some of their nominees

are disqualified, provided that they have at least one nominee who remains qualified. Reason for the ruling:

The indisputable intent of the framers of the 1987 Constitution to include in the party-list system both sectoral and non-sectoral parties is clearly written in Section 5(1), Article VI of the Constitution, which states:

Section 5. (1) The House of Representative shall be composed of not more that 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. (Emphasis

supplied)

Section 5(1), Article VI of the Constitution is crystal-clear that there shall be “a party-list system of registered national, regional, and sectoral parties or organizations.”

Thus, the party-list system is composed of three different groups: (1) national parties or organizations; (2) regional parties or organizations; and (3) sectoral parties or organizations. National and regional parties or organizations are different from sectoral parties or organizations. National

and regional parties or organizations need not be organized along sectoral lines and need not represent any particular sector.

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Hence, the clear intent, express wording, and party-list structure ordained in Section 5(1) and (2), Article VI of the 1987 Constitution cannot be disputed: the party-list system is not for sectoral parties only, but also for non-sectoral parties.

Republic Act No. 7941 or the Party-List System Act, which is the law that implements the party-list system

prescribed in the Constitution does not require national and regional parties or organizations to represent the “marginalized and underrepresented” sectors. To require all national and regional parties under the party-list system to represent the “marginalized and underrepresented” is to deprive and exclude, by judicial fiat, ideology-based and cause-oriented parties from the party-list system.

Under the party-list system, an ideology-based or cause-oriented political party is clearly different from a

sectoral party. A political party need not be organized as a sectoral party and need not represent any particular sector. There is no requirement in R.A. No. 7941 that a national or regional political party must represent a “marginalized and underrepresented” sector. It is sufficient that the political party consists of citizens who advocate the same ideology or platform, or the same governance principles and policies, regardless of their economic status as citizens.

The phrase “marginalized and underrepresented” should refer only to the sectors in Section 5 that are, by

their nature, economically “marginalized and underrepresented.” These sectors are: labor, peasant, fisherfolk, urban poor, indigenous cultural communities, handicapped, veterans, overseas workers, and other similar sectors. For these sectors, a majority of the members of the sectoral party must belong to the “marginalized and underrepresented.”

The nominees of the sectoral party either must belong to the sector, or must have a track record of

advocacy for the sector represented. Belonging to the “marginalized and underrepresented” sector does not mean one must “wallow in poverty, destitution or infirmity.” It is sufficient that one, or his or her sector, is below the middle class. More specifically, the economically “marginalized and underrepresented” are those who fall in the low income group as classified by the National Statistical Coordination Board.

The recognition that national and regional parties, as well as sectoral parties of professionals, the elderly,

women and the youth, need not be “marginalized and underrepresented” will allow small ideology-based and cause-oriented parties who lack “well-defined political constituencies” a chance to win seats in the House of Representatives.

The major political parties are those that field candidates in the legislative district elections. Major political

parties cannot participate in the party-list elections since they neither lack “well-defined political constituencies” nor represent “marginalized and underrepresented” sectors. Thus, the national or regional parties under the party-list system are necessarily those that do not belong to major political parties.

This automatically reserves the national and regional parties under the party-list system to those who “lack

well-defined political constituencies,” giving them the opportunity to have members in the House of Representatives.

However, major political parties should participate in party-list elections only through their sectoral

wings. The participation of major political parties through their sectoral wings, a majority of whose members are “marginalized and underrepresented” or lacking in “well-defined political constituencies,” will facilitate the entry of the “marginalized and underrepresented” and those who “lack well-defined political constituencies” as members of the House of Representatives.

Such sectoral wing of a major political party must have its own constitution, by-laws, platform or program

of government, officers and members, a majority of whom must belong to the sector represented. The sectoral wing is in itself an independent sectoral party, and is linked to a major political party through a coalition.

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A party-list nominee must be a bona fide member of the party or organization which he or she seeks to represent. In the case of sectoral parties, to be a bona fide party-list nominee one must either (1) belong to the sector represented, or (2) have a track record of advocacy for such sector.

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ABANG LINGKOD VS. COMELEC, G.R. No. 206952, Oct. 22, 2013 The flaw in the COMELEC's disposition lies in the fact that it insists on requiring party-list groups to

present evidence showing that they have a track record in representing the marginalized and underrepresented.

R.A. No. 7941 did not require groups intending to register under the party-list system to submit proof of

their track record as a group. In this light, the Court finds it appropriate to lay down the following guidelines, culled from the law and the

Constitution, to assist the Comelec in its work. First, the political party, sector, organization or coalition must represent the marginalized and

underrepresented groups identified in Sec. 5 of RA 7941. In other words, it must show -- through its constitution, articles of incorporation, bylaws, history, platform of government and track record -- that it represents and seeks to uplift marginalized and underrepresented sectors. Verily, majority of its membership should belong to the marginalized and underrepresented. And it must demonstrate that in a conflict of interests, it has chosen or is likely to choose the interest of such sectors.

Track record is not the same as the submission or presentation of "constitution, by-laws, platform of

government, list of officers, coalition agreement, and other relevant information as may be required by the COMELEC," which are but mere pieces of documentary evidence intended to establish that the group exists and is a going concern. The said documentary evidence presents an abstract of the ideals that national, regional, and sectoral parties or organizations seek to achieve.

Under Section 5 of R.A. No. 7941, groups intending to register under the party-list system are not required

to submit evidence of their track record; they are merely required to attach to their verified petitions their "constitution, by-laws, platform of government, list of officers, coalition agreement, and other relevant information as may be required by the COMELEC."

In Atong Paglaum the Court has modified to a great extent the jurisprudential doctrines on who may

register under the party-list system and the representation of the marginalized and underrepresented. For purposes of registration under the party-list system, national or regional parties or organizations need not represent any marginalized and underrepresented sector; that representation of the marginalized and underrepresented is only required of sectoral organizations that represent the sectors stated under Section 5 of R.A. No. 7941 that are, by their nature, economically marginalized and underrepresented.

There was no mention that sectoral organizations intending to participate in the party-list elections are still

required to present a track record. If at all, evidence showing a track record in representing the marginalized and underrepresented sectors is

only required from nominees of sectoral parties or organizations that represent the marginalized and underrepresented who do not factually belong to the sector represented by their party or organization.

There is no logic in treating sectoral organizations differently from national and regional parties or

organizations as regards their bid for registration under the party-list system.

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There is thus no basis in law and established jurisprudence to insist that groups seeking registration under the party-list system still comply with the track record requirement. Indeed, nowhere in R.A. No. 7941 is it mandated that groups seeking registration thereunder must submit evidence to show their track record as a group.

Lest it be misunderstood, the Court does not condone the deceit perpetrated by ABANG LINGKOD in

connection with its bid for continued registration under the party-list system. That ABANG LINGKOD, to establish its track record, submitted photographs that were edited to make it appear that it conducted activities aimed at ameliorating the plight of the sectors it represents is a factual finding by the COMELEC, which the Court, considering that it is supported by substantial evidence, will not disturb.

Nevertheless, considering that track record is no longer a requirement, a group’s misrepresentation as to

its track record cannot be used as a ground to deny or cancel its registration -it is no longer material to its qualification under the party-list system.

6 ARARO PARTY-LISTvs.COMELEC, G.R. No. 192803, December 10, 2013

The petitioner asks the Court to modify the Commission on Elections’ interpretation of the formula stated

in BANAT v. COMELEC by making the divisor for the computation of the percentage votes, from total number of votes cast minus the votes for the disqualified party-list candidates, to the total number of votes cast regardless whether party-list groups are disqualified.

Ruling:

a.

This case is moot and academic. Several supervening events have already rendered this case moot and academic. First, the Commission on

Elections En Banc already proclaimed other winning party-list groups. Second, the term of office of the winning party-list groups in the May 2010 national elections ended on June 30, 2013. Finally, the conduct of the May 13, 2013 elections resulted in a new set of party-list groups.

However, the following exceptions to the rule of declining jurisdiction over moot and academic cases are

allowed: (1) there was a grave violation of the Constitution; (2) the case involved a situation of exceptional character and was of paramount public interest; (3) the issues raised required the formulation of controlling principles to guide the Bench, the Bar and the public; and (4) the case was capable of repetition yet evading review.31 On the importance of the assailed formula, this Court will discuss the issues raised by the petitioner as these are capable of repetition yet evading review32 and for the guidance of the bench, bar, and public.

b.

However, we review the interpretation of the formula used for the determination of wining party-list candidates with respect to the divisor used for the guidance of bench and bar and for future elections.

In Veterans Federation Party v. Commission on Elections, we laid down the "four inviolable

parameters" in determining the winners in a Philippine-style party-list election based on a reading of the Constitution and Republic Act No. 7941:

First, the twenty percent allocation-the combined number of all party-list congressmen shall not

exceed twenty percent of the total membership of the House of Representatives, including those elected under the party list.

Second, the two percent threshold-only those parties garnering a minimum of two percent of the total valid votes cast for the party-list system are "qualified" to have a seat in the House of Representatives.

Third, the three-seat limit-each qualified party, regardless of the number of votes it actually obtained, is entitled to a maximum of three seats; that is, one "qualifying" and two additional seats.

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Fourth, proportional representation-the additional seats which a qualified party is entitled to shall be computed "in proportion to their total number of votes." In BANAT v. COMELEC, we declared the 2% threshold in relation to the distribution of the additional seats

as void. We said in that case that:

x x x The two percent threshold presents an unwarranted obstacle to the full implementation of Section 5(2), Article VI of the Constitution and prevents the attainment of "the broadest possible representation of party, sectoral or group interests in the House of Representatives." (Republic Act No. 7941, Section 2)

x x x x x x x There are two steps in the second round of seat allocation. First, the percentage is multiplied

by the remaining available seats, 38, which is the difference between the 55 maximum seats reserved under the Party-List System and the 17 guaranteed seats of the two-percenters. The whole integer of the product of the percentage and of the remaining available seats corresponds to a party’s share in the remaining available seats. Second, we assign one party-list seat to each of the parties next in rank until all available seats are completely distributed. We distributed all of the remaining 38 seats in the second round of seat allocation. Finally, we apply the three-seat cap to determine the number of seats each qualified party-list candidate is entitled. The most recent Atong Paglaum v. COMELEC does not in any way modify the formula set in Veterans. It

only corrects the definition of valid party-list groups. We affirmed that party-list groups maybe national, regional, and sectoral parties or organizations. We abandoned the requirement introduced in Ang Bagong Bayani that all party-list groups should prove that they represent a "marginalized" or "under-represented" sector.

The petitioner now argues that the votes of all the registered voters who actually voted in the May 2010

elections should be included in the computation of the divisor whether valid or invalid. All of the votes should be included in the divisor to determine the 2% threshold.

We agree with the petitioner but only to the extent that votes later on determined to be invalid due to no

cause attributable to the voter should not be excluded in the divisor. In other words, votes cast validly for a party-list group listed in the ballot but later on disqualified

should be counted as part of the divisor. To do otherwise would be to disenfranchise the voters who voted on the basis of good faith that that ballot contained all the qualified candidates. However, following this rationale, party-list groups listed in the ballot but whose disqualification attained finality PRIOR to the elections and whose disqualification was reasonably made known by the Commission on Elections to the voters prior to such elections should not be included in the divisor.

Therefore, the divisor should now include all votes cast for party-list groups that are subsequently

disqualified for so long as they were presented as a choice to the electorate. However, there are instances when the Commission on Elections include the name of the party-list group in

the ballot but such group is disqualified with finality prior to the elections. To be consistent, the party-list group in the ballot that has been disqualified with finality and whose final

disqualification was made known to the electorate by the Commission on Elections should also not be included in the divisor.

Thus, the formula to determine the proportion garnered by the party-list group would now henceforth be:

Number of votes of party-list ______________________________ = Proportion or Percentage of votes garnered by party-list Total number of valid votes for party-list candidates

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The formula in determining the winning party-list groups, as used and interpreted in the case of BANAT v. COMELEC, is MODIFIED.

The divisor shall be the total number of valid votes cast for the party-list system including votes cast for

party-list groups whose names are in the ballot but are subsequently disqualified. Party-list groups listed in the ballot but whose disqualification attained finality prior to the elections and whose disqualification was reasonably made known by the Commission on Elections to the voters prior to such elections should not be included in the divisor. The divisor shall also not include votes that are declared spoiled or invalid.

7 COCOFED VS. COMELEC, G.R. No. 207026, Aug. 6, 2013

In its November 7, 2012 resolution, the COMELEC cancelled COCOFED’s registration and accreditation as a

party-list organization on several grounds. Notably, that since COCOFED submitted only two nominees, then it failed to comply with Section 8 of Republic Act (RA) No. 7941 that requires the party to submit to COMELEC a list of not less than five nominees.

The law expressly requires the submission of a list containing at least five qualified nominees. Section 8 of

RA No. 7941 reads:

Section 8. Nomination of Party-List Representatives. Each registered party, organization or coalition shall submit to the COMELEC not later than forty-five (45) days before the election a list of names, not less than five (5), from which party-list representatives shall be chosen in case it obtains the required number of votes. Under Section 6(5) of RA No. 7941, violation of or failure to comply with laws, rules or regulations relating

to elections is a ground for the cancellation of registration. However, not every kind of violation automatically warrants the cancellation of a party-list group’s registration. Since a reading of the entire Section 6 shows that all the grounds for cancellation actually pertain to the party itself, then the laws, rules and regulations violated to warrant cancellation under Section 6(5) must be one that is primarily imputable to the party itself and not one that is chiefly confined to an individual member or its nominee.

COCOFED’s failure to submit a list of five nominees, despite ample opportunity to do so before the

elections, is a violation imputable to the party under Section 6(5) of RA No. 7941. The language of Section 8 of RA No. 7941 does not only use the word "shall" in connection with the

requirement of submitting a list of nominees; it uses this mandatory term in conjunction with the number of names to be submitted that is couched negatively, i.e., "not less than five." The use of these terms together is a plain indication of legislative intent to make the statutory requirement mandatory for the party to undertake.

The fact that a party-list group is entitled to no more than three seats in Congress, regardless of the number

of votes it may garner, does not render Section 8 of RA No. 7941 permissive in nature.

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BELGICA VS. OCHOA, JR., 710 SCRA 1(2013) Syllabi

Dean Pablito V. Sanidad Sr. September 18, 2014

Pork Barrel

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 fund’s utilization through various post-enactment measures and/or practices.

Second, there is the Presidential Pork Barrel which is herein defined as a kind of lump-sum,

discretionary fund which allows the President to determine the manner of its utilization. For reasons earlier stated, the Court shall delimit the use of such term to refer only to the Malampaya Funds and the Presidential Social Fund. Procedural Issues. Legal requisites for the valid exercise of the power of judicial review

The prevailing rule in constitutional litigation is that no question involving the constitutionality or validity

of a law or governmental act may be heard and decided by the Court unless there is compliance with the legal requisites for judicial inquiry, namely:

(a) there must be an actual case or controversy calling for the exercise of judicial power; (b) the person challenging the act must have the standing to question the validity of the subject act or

issuance; (c) the question of constitutionality must be raised at the earliest opportunity; and (d) the issue of constitutionality must be the very lis mota of the case.

a. actual case: “[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.”

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. b. Moot and academic?

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1. As for the PDAF, the Court must dispel the notion that the issues related thereto had been rendered

moot and academic by the reforms undertaken by respondents. A case becomes moot when there is no more actual controversy between the parties or no useful purpose can be served in passing upon the merits. Differing from this description, the Court observes that respondents’ proposed line-item budgeting scheme would not terminate the controversy nor diminish the useful purpose for its resolution since said reform is geared towards the 2014 budget, and not the 2013 PDAF Article which, being a distinct subject matter, remains legally effective and existing.

2. Neither will the President’s 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.

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.

a. The applicability of the first exception is clear from the fundamental posture of petitioners — they

essentially allege grave violations of the Constitution with respect to, inter alia, the principles of separation of powers, non-delegability of legislative power, checks and balances, accountability and local autonomy.

b. 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.

c. The Court also finds the third exception to be applicable largely due to the practical need for a

definitive ruling on the system’s constitutionality. d. 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. c. Political Question

The issues raised before the Court do not present political but legal questions which are within its province to resolve.

A political question refers to “those questions which, under the Constitution, are to be decided by the

people in their sovereign capacity, or in regard to which full discretionary authority has been delegated to the Legislature or executive branch of the Government. It is concerned with issues dependent upon the wisdom, not legality, of a particular measure.”

The intrinsic constitutionality of the “Pork Barrel System” is not an issue dependent upon the wisdom of

the political branches of government but rather a legal one which the Constitution itself has commanded the Court to act upon.

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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, the expanded concept of judicial power under the 1987 Constitution and its effect on the political question doctrine was explained as follows:

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

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.” d. 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.”

Petitioners have come before the Court in their respective capacities as citizen-taxpayers and accordingly, assert that they “dutifully contribute to the coffers of the National Treasury.” Clearly, as taxpayers, they possess the requisite standing to question the validity of the existing “Pork Barrel System” under which the taxes they pay have been and continue to be utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer from the unconstitutional usage of public funds, if the Court so rules. e. Res Judicata and Stare Decisis

Res judicata (which means a “matter adjudged”) and stare decisis non quieta et movere ([or simply, stare decisis] which means “follow past precedents and do not disturb what has been settled”) are general procedural law principles which both deal with the effects of previous but factually similar dispositions to subsequent cases. For the cases at bar, the Court examines the applicability of these principles in relation to its prior rulings in Philconsa and LAMP.

The focal point of res judicata is the judgment. The principle states that a judgment on the merits in a previous case rendered by a court of competent jurisdiction would bind a subsequent case if, between the first and second actions, there exists an identity of parties, of subject matter, and of causes of action. This required identity is not, however, attendant hereto since Philconsa and LAMP, respectively involved constitutional challenges against the 1994 CDF Article and 2004 PDAF Article, whereas the cases at bar call for a broader constitutional scrutiny of the entire “Pork Barrel System

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

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(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.

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.”

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.

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.” e. SEPARATION OF POWERS

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.

This is rooted in the principle that the allocation of power in the three principal branches of government is

a grant of all powers inherent in them. Thus, unless the Constitution provides otherwise, the Executive department should exclusively exercise all roles and prerogatives which go into the implementation of the national budget as provided under the GAA as well as any other appropriation law.

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.

Upon approval and passage of the GAA, Congress’ law-making role necessarily comes to an end and from there the Executive’s role of implementing the national budget begins. So as not to blur the constitutional boundaries between them, Congress must “not concern itself with details for implementation by the Executive.” The foregoing cardinal postulates were definitively enunciated in Abakada where the Court held that “[f]rom 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.” f. Legislative Oversight function

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.

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As the Court ruled in Abakada: [A]ny post-enactment congressional measure x x x should be limited to scrutiny and investigation. 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. Application of Separation of Powers principle

As may be observed from its legal history, the defining feature of all forms of Congressional Pork Barrel would be the authority of legislators to participate in the post-enactment phases of project implementation.

At its core, legislators — may it be through project lists, prior consultations or program menus — have been consistently accorded post-enactment authority to identify the projects they desire to be funded through various Congressional Pork Barrel allocations.

Aside from the area of project identification, legislators have also been accorded post-enactment authority in the areas of fund release and realignment.

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.

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.

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. g. Non-delegability of Legislative Power.

As an adjunct to the separation of powers principle, legislative power shall be exclusively exercised by the body to which the Constitution has conferred the same.

In 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.

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

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pursuance of an appropriation made by law.” To understand what constitutes an act of appropriation, the Court, in Bengzon v. Secretary of Justice and Insular Auditor (Bengzon), held that the power of appropriation involves

(a) the setting apart by law of a certain sum from the public revenue for (b) a specified purpose. Essentially, under the 2013 PDAF Article, individual legislators are given a personal lump-sum fund from

which they are able to dictate (a) how much from such fund would go to (b) a specific project or beneficiary that they themselves also determine.

h. Checks and Balances.

Item-Veto Power.

A prime example of a constitutional check and balance would be the President’s 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 President’s item-veto power is found in Section 27(2), Article VI of the 1987 Constitution which reads as follows:

Sec. 27. x x x. x x x x (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.

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.

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 President’s power of item veto.

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. i. Accountability of legislators

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

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be tainted as said legislators, who are vested with post-enactment authority, would, in effect, be checking on activities in which they themselves participate.

Also, it must be pointed out that this very same concept of post-enactment authorization runs afoul of

Section 14, Article VI of the 1987 Constitution which provides that:

Sec. 14. No Senator or Member of the House of Representatives may personally appear as counsel before any court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither shall he, directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by the Government, or any subdivision, agency, or instrumentality thereof, including any government-owned or controlled corporation, or its subsidiary, during his term of office. He shall not intervene in any matter before any office of the Government for his pecuniary benefit or where he may be called upon to act on account of his office.

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. j. PDAF effect on Local Autonomy

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.

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. k. Validity of Appropriation

“An appropriation made by law” under the contemplation of Section 29(1), Article VI of the 1987 Constitution exists when a provision of law

(a) sets apart a determinate or determinable amount of money and (b) allocates the same for a particular public purpose. 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.

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l. Undue Delegation to the Executive

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.”

While the designation of a determinate or determinable amount for a particular public purpose is sufficient

for a legal appropriation to exist, the appropriation law must contain adequate legislative guidelines if the same law delegates rule-making authority to the Executive either for the purpose of

(a) filling up the details of the law for its enforcement, known as supplementary rule-making,

or (b) ascertaining facts to bring the law into actual operation, referred to as contingent rule-

making. There are two (2) fundamental tests to ensure that the legislative guidelines for delegated rule-making are

indeed adequate. The first test is called the “completeness test.” Case law states that a law is complete when it sets forth

therein the policy to be executed, carried out, or implemented by the delegate. On the other hand, the second test is called the “sufficient standard test.” 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 President’s 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. m. Prayer of petitioners to be furnished copies of lists

It bears clarification that the Court’s 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.

n. Consequential Effects of Decision. – Doctrine of Operative Fact

As a final point, it must be stressed that the Court’s 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.

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As explained in the recent case of Commissioner of Internal Revenue v. San Roque Power Corporation, the doctrine merely “reflect[s] 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.’ ”

For these reasons, this Decision should be heretofore applied prospectively. 17. 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: 1. 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; 2. 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;

3. 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;

4. 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;

5. 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;

6. and again, insofar as it has conferred to the President the power to appropriate funds intended by

law for energy-related purposes only to other purposes he may deem fit as well as other public funds under the broad classification of “priority infrastructure development projects,” it has once more transgressed the principle of non-delegability.

ARAULLO VS AQUINO

July 1, 2014

Syllabi

Dean Pablito V. Sanidad Sr.

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:

1. 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

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Constitution to transfer funds out of savings to augment the appropriations of offices within the Executive Branch

of the Government.

2. and further complicated by the interjection of allegations of transfer of funds to agencies or offices

outside of the Executive.

ISSUES:

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. On TRO

F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.

RULING: On the procedural issue:

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.

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

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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 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.

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.

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.

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 be an actual case or justiciable controversy before the Court;

(2) the question before the Court must be ripe for adjudication;

(3) the person challenging the act must be a proper party; and

(4) the issue of constitutionality must be raised at the earliest opportunity and must be the very litis mota of

the case.

a. actual case

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.

Mootness

Sec. Abad manifested that the DAP as a program had been meanwhile discontinued because it had fully served

its purpose. 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 DAP’s constitutionality.

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.

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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.

Locus Standi

Except for PHILCONSA, 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 Araullo and 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. On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring cases

upon constitutional issues. Luna, cites his additional capacity as a lawyer. The IBP, 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.”

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

Court’s 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.”

The Philippine Budget Cycle

Four phases comprise the Philippine budget process. Each phase is distinctly separate from the others but they

overlap in the implementation of the budget during the budget year.

(1) Budget Preparation;

The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The Budget Call

contains budget parameters as well as policy guidelines and procedures to aid government agencies in the preparation and

submission of their budget proposals. The Budget Call is of two kinds, namely:

(1) a National Budget Call, which is addressed to all agencies, including state universities and colleges; and

(2) a Corporate Budget Call, which is addressed to all government-owned and -controlled corporations (GOCCs)

and government financial institutions (GFIs).

(2) Budget Legislation;

The Budget Legislation Phase covers the period commencing from the time Congress receives the President’s

Budget up to the President’s 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.

(3) Budget Execution; 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.

(4) Accountability. 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 State’s socio-economic goals. It also allows the DBM to assess the

performance of agencies during the fiscal year for the purpose of implementing reforms and establishing new policies.

An agency’s accountability may be examined and evaluated through

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(1) performance targets and outcomes;

(2) budget accountability reports;

(3) review of agency performance; and

(4) audit conducted by the Commission on Audit (COA).

DAP was not an appropriation measure; hence, no appropriation law was

required to adopt or to implement it

The petitioners contend 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 DAP was a government policy or strategy designed to stimulate the economy through accelerated spending.

In the context of the DAP’s 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.”

On the other hand, the President, in keeping with his duty to faithfully execute the laws, had sufficient discretion

during the execution of the budget to adapt the budget to changes in the country’s economic situation. 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.

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.

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

The 1987 Constitution, Section 25(5) of Article VI provides:

Section 25. x x x

xxx 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.

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

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(3) The purpose of the transfer is to augment an item in the general appropriations law for their respective

offices.

b.1. First Requisite –GAAs of 2011 and 2012 lacked valid provisions to authorize transfers of funds

under the DAP; hence, transfers under the DAP were unconstitutional

Both the 2011 GAA and the 2012 GAA allowed 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.

The said 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 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.

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:

a. that the source of funds to be transferred were savings from appropriations within the respective offices;

and

b. 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

In ascertaining the meaning of savings, certain principles should be borne in mind.

The first principle is that Congress wields the power of the purse. Congress decides how the budget will be

spent; what PAPs to fund; and the amounts of money to be spent for each PAP.

The second principle is that the Executive, as the department of the Government tasked to enforce the laws, is

expected to faithfully execute the GAA and to spend the budget in accordance with the provisions of the GAA. The

Executive is expected to faithfully implement the PAPs for which Congress allocated funds, and to limit the expenditures

within the allocations, unless exigencies result to deficiencies for which augmentation is authorized, subject to the

conditions provided by law.

The third principle is that in making the President’s 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.

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

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(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.

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 DBM’s withdrawal of unobligated

allotments had disregarded the definition of savings under the GAAs.

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.

No impoundment

“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 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.

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.

Upon careful review of the documents we conclude that the “savings” pooled under the DAP were allocated to

PAPs that were not covered by any appropriations in the pertinent GAAs.

Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate to

faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered discretion that

allowed the President to substitute his own will for that of Congress. He was still required to remain faithful to the

provisions of the GAAs, given that his power to spend pursuant to the GAAs was but a delegation to him from Congress.

Verily, the power to spend the public wealth resided in Congress, not in the Executive. Moreover, leaving the spending

power of the Executive unrestricted would threaten to undo the principle of separation of powers.

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. Pertinently, when it exercises its power of the

purse, Congress wields control by specifying the PAPs for which public money should be spent.

b.4 Fourth Requisite – Cross-border augmentations from savings were prohibited by the

Constitution

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By providing that the President, the President of the Senate, the Speaker of the House of Representatives, the

Chief Justice of the Supreme Court, and the Heads of the Constitutional Commissions may be authorized to augment any

item in the GAA “for their respective offices,” Section 25(5), supra, has delineated borders between their offices, such

that funds appropriated for one office are prohibited from crossing over to another office even in the guise of

augmentation of a deficient item or items. Thus, we call such transfers of funds cross-border transfers or cross-border

augmentations.

To be sure, the phrase “respective offices” used in Section 25(5), supra, refers to the entire Executive, with respect

to the President; the Senate, with respect to the Senate President; the House of Representatives, with respect to the

Speaker; the Judiciary, with respect to the Chief Justice; the Constitutional Commissions, with respect to their respective

Chairpersons.

Augmentation granted to the House of Representatives, the COA and the Comelec were cross border transfers.

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).

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 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 is void.

Equal protection

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.

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. But its use must be subjected to great scrutiny and

circumspection, and it cannot be invoked to validate an unconstitutional law or executive act, but is resorted to only as a

matter of equity and fair play. It applies only to cases where extraordinary circumstances exist, and only when the

extraordinary circumstances have met the stringent conditions that will permit its application.

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.

In that context, 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

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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.