maria carolina p. g.r. no. 209287 araullo, et al ... page/assessment/da… · araullo, et al.,...

REPUBLIC OF THE PHILIPPINES

SUPREME COURT

MANILA

EN BANC

MARIA CAROLINA P. ARAULLO, et al.,

Petitioners,

-versus-

BENIGNO SIMEON C. AQUINO III, et al.,

Respondents. x------------------------------------------x

G.R. No. 2092871

MOTION FOR RECONSIDERATION

“Great cases like hard cases make bad law. For great cases are called great not by reason of

their real importance in shaping the law of the future but because of some accident of

immediate interest which appeals to the feelings and distorts the judgment. These immediate

interests exercise a kind of hydraulic pressure which makes what previously was clear seem

doubtful, and before which even well settled principles of law will bend.”2

- Oliver Wendell Holmes, Jr.

1 Consolidated with Augusto L. Syjuco, Jr. v. Florencio B. Abad, et al. (G.R. No. 209135), Manuelito R. Luna v. Secretary Florencio B. Abad, et al. (G.R. No. 209136), Jose Malvar Villegas, Jr. v. The Honorable Executive Secretary Paquito N. Ochoa, Jr., et al. (G.R. No. 209155), Philippine Constitution Association (PHILCONSA), et al. v. The Department of Budget and Management and/or Hon. Florencio B. Abad (G.R. No. 209164), Integrated Bar of the Philippines (IBP) v. Secretary Florencio B. Abad of the Department of Budget and Management (DBM) (G.R. No. 209260), Greco Antonious Beda B. Belgica, et al. v. President Benigno Simeon C. Aquino III, et al. (G.R. No. 209442), Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE), et al. v. His Excellency Benigno Simeon C. Aquino III, et al. (G.R. No. 209517), Volunteers Against Crime and Corruption (VACC) v. Hon. Paquito N. Ochoa, Jr., et al. (G.R. No. 209569). 2 Northern Securities Co. v. United States, 193 U.S. 197, 400 (1904).

MOTION FOR RECONSIDERATION Araullo, et al. v. Aquino, et al. of 52

In a democratic system of government, it is an imperative that the great

departments recognize their proper place in the scheme of things, conscious of

the need to respect constitutional boundaries and institutional prerogatives.

Respondents respectfully move for a reconsideration of the Honorable

Court’s Decision so that it may apply fundamental norms of constitutional

litigation and basic fairness—the presumption of constitutionality and good faith, the

recognition of institutional competence and the value of bureaucratic practices,

the understanding of the constitutional role of the Executive in managing the

economy, the acknowledgment of the constitutional authority of Congress to

define savings, the shared role of the political departments in preparing the

budget, and the constitutionally-designed minimal role of the Supreme Court

on these matters.

Respondents seek reconsideration as a testament to their commitment to

the rule of law. We therefore ask this Honorable Court to take a second look

and reflect deeply on the strength of our arguments for a reversal.

The President and his alter egos, in implementing a decidedly successful

program, deserve to be afforded the traditional constitutional presumptions

that apply to most other forms of public actions, especially the presumption of good

faith.

Respondents, by counsel, respectfully state:

1. On 04 July 2014, the Office of the Solicitor General received this

Honorable Court’s Decision dated 01 July 2014, the dispositive portion of

which reads:

WHEREFORE, the Court PARTIALLY GRANTS the petitions

for certiorari and prohibition; and DECLARES the following acts and

practices under the Disbursement Acceleration Program, National Budget

Circular No. 541 and related executive issuances UNCONSTITUTIONAL

for being in violation of Section 25(5), Article VI of the 1987 Constitution

and the doctrine of separation of powers, namely:

(a) The withdrawal of unobligated allotments from the implementing

agencies, and the declaration of the withdrawn unobligated allotments and

unreleased appropriations as savings prior to the end of the fiscal year and

without complying with the statutory definition of savings contained in the

General Appropriations Acts;

(b) The cross-border transfers of the savings of the Executive to

augment the appropriations of other offices outside the Executive; and


(c) The funding of projects, activities and programs that were not

covered by any appropriation in the General Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed

funds despite the absence of certification by the National Treasurer that the

revenue collections exceeded the revenue targets for non-compliance with

the conditions provided in the relevant General Appropriations Acts.

SO ORDERED.

2. This reconsideration seeks a reversal of the majority decision of

this Honorable Court with a view to (1) highlighting certain contextual matters

in the consideration of the issues and (2) presenting errors that led to

inaccurate conclusions.

SUMMARY OF ARGUMENTS

I. PRELIMINARY CONSIDERATIONS

A. THE ISSUES WERE MISCHARACTERIZED AND

UNNCESSARILY CONSTITUTIONALIZED.

B. THE DBM DID NOT ENGAGE IN A POLICY OF

ACCUMULATING SAVINGS SO THAT THE PRESIDENT

MAY HAVE FUNDS FOR AUGMENTATION.

C. THE BUDGET IS A COMPROMISE BETWEEN THE

POLITICAL DEPARTMENTS THAT IS REVISITED

ANNUALLY.

II. SUBSTANTIVE ARGUMENTS

A. THE EXECUTIVE DEPARTMENT PROPERLY

INTERPRETED “SAVINGS” UNDER THE RELEVANT

PROVISIONS OF THE GAA.

1. WITHDRAWN UNOBLIGATED ALLOTMENTS ARE

SAVINGS.

2. UNRELEASED APPROPRIATIONS UNDER DAP

ARE SAVINGS.


3. SAVINGS FROM WITHDRAWN UNOBLIGATED

ALLOTMENTS AND UNRELEASED

APPROPRIATIONS MAY BE USED FOR

AUGMENTATION.

B. ALL DAP APPLICATIONS HAVE APPROPRIATION

COVER.

C. THE PRESIDENT HAS AUTHORITY TO TRANSFER

SAVINGS TO OTHER DEPARTMENTS PURSUANT TO

HIS CONSTITUTIONAL POWERS.

D. THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT

REVENUE COLLECTIONS FROM EACH SOURCE OF

REVENUE ENUMERATED IN THE BUDGET PROPOSAL

MUST EXCEED THE CORRESPONDING REVENUE

TARGET.

E. THE OPERATIVE FACT DOCRINE WAS WRONGLY

APPLIED.

III. PROCEDURAL ARGUMENTS

A. WITHOUT AN ACTUAL CASE OR CONTROVERSY,

ALLEGATIONS OF GRAVE ABUSE OF DISCRETION ON

THE PART OF ANY INSTRUMENTALITY OF THE

GOVERNMENT CANNOT CONFER ON THIS

HONORABLE COURT THE POWER TO DETERMINE

THE CONSTITUTIONALITY OF THE DAP AND NBC NO.

541.

B. PETITIONERS’ ACTIONS DO NOT PRESENT AN

ACTUAL CASE OR CONTROVERSY AND THEREFORE

THIS HONORABLE COURT DID NOT ACQUIRE

JURISDICTION.

C. PETITIONERS HAVE NEITHER BEEN INJURED NOR

THREATENED WITH INJURY AS A RESULT OF THE

OPERATION OF THE DAP AND THEREFORE SHOULD

HAVE BEEN HELD TO HAVE NO STANDING TO BRING

THESE SUITS FOR CERTIORARI AND PROHIBITION.


D. NOR CAN PETITIONERS’ STANDING BE SUSTAINED

ON THE GROUND THAT THEY ARE BRINGING THESE

SUITS AS CITIZENS AND AS TAXPAYERS.

E. THE DECISION OF THIS HONORABLE COURT IS NOT

BASED ON A CONSIDERATION OF THE ACTUAL

APPLICATIONS OF THE DAP IN 116 CASES BUT SOLELY

ON AN ABSTRACT CONSIDERATION OF NBC NO. 541.

I.

PRELIMINARY CONSIDERATIONS

A.

THE ISSUES WERE MISCHARACTERIZED AND UNNECESSARILY

CONSTITUTIONALIZED.

The question of interpretation of the GAA is

a statutory, not a constitutional issue.

3. The undeniable fundamental question with respect to the issue of

savings is whether the government violated the parameters set by the relevant

GAA preparatory to the President’s exercise of his constitutional authority to

augment. This question is clearly not a constitutional matter—it is an ordinary

species of statutory interpretation involving the proper reading of Congress’

definition of savings in the GAA.3

4. First. Article VI, Section 25(5) of the Constitution provides, “No

law shall be passed authorizing any transfer of appropriations; however, the

President, the President of the Senate, the Speaker of the House of

Representatives, the Chief Justice of the Supreme Court, and the heads of

Constitutional Commissions may, by law, be authorized to augment any item in

the general appropriations law for their respective offices from savings in other

items of their respective appropriations.”

5. While “savings” is a constitutional term, its meaning is entirely legislatively

determined. The Honorable Court itself held: “Section 25(5), supra, not being a

self-executing provision of the Constitution must have an implementing law for

it to be operative. That law, generally, is the GAA of a given fiscal year.”4 This

is a correct statement. The Constitution textually commits to Congress the

3 Respondents had previously raised this problem of characterization in their Memorandum. See par. 54, pp. 21-22. 4 Decision, p. 56.


authority to define the term “savings.” Respondents fully agree that Article VI,

Section 25(5) is not a self-executing provision, and that it must have an

implementing law for it to be operative. This is, in fact, consistent with the

government’s position in its Memorandum, where it was contended that

questions of interpretation of the “implementing law” are problems of

statutory interpretation, not constitutional law.5

6. Except for the so-called cross-border transfers, the issues

presented in these cases have nothing to do with the Constitution’s definition

of savings—because there is none—but with the Congress’ definition as it

appears in the various GAAs. This is evident in the majority opinion of this

Honorable Court which, quite understandably, focused entirely on the

provisions of the various GAAs concerned as they relate to the definition of

savings as “portions or balances of any programmed appropriation…free from

any obligation or encumbrance....”

7. Given this clarification of concepts, the relevant discussion on

whether the Executive properly accumulated savings is a matter of statutory

interpretation involving the question of administrative compliance with the

parameters set by the GAA, not by the Constitution.6

8. The Court’s interpretation of savings is not a statement of a constitutional rule

but merely an (unnecessary) interpretation of an act of Congress. If at all, any

administrative non-compliance with the Congress’ definition of savings cannot

trigger a declaration of unconstitutionality. To this extent, the dispositive

portion of the Decision relative to “(a)” is, with all due respect, erroneous.

Respondents’ acts pursuant to their interpretation of a statute cannot be

declared unconstitutional.

5 “The fact is that Congress has not expressed disagreement with the way the Executive has complied with the definition of savings found in the General Provisions of the GAA. From 2010 to 2013, the legislature has used the same set of definitions. In the absence of such disagreement between the Executive and Congress, this Honorable Court has no occasion to exercise its powers ‘to allocate constitutional boundaries.’ Any dispute regarding the definition of savings is merely a statutory and not a constitutional issue. We should not unnecessarily constitutionalize questions that are patently consigned by the Constitution to the judgment of our political branches.” Respondents’ Memorandum, par. 54, pp. 21-22. 6 “Article VI, Section 25(5) of the Constitution textually commits to Congress the authority to define the term ‘savings.’ It left no ‘judicially discoverable and manageable standards’ for constraining this authority of Congress. Pursuant to this constitutional authority, Congress has defined ‘savings’ in every relevant GAA. Congress, not this Honorable Court, is the institution constitutionally-empowered to check whether the President’s accumulation of savings is consistent with the definition in the GAA. If Congress disagrees with the way the President accumulates savings, this can be remedied through the political process: it can express that disagreement by conducting legislative inquiries in the exercise of its oversight function or redefining the term ‘savings’ in the exercise of its law-making powers. The remedy, therefore, lies with Congress, not before the Supreme Court.” Respondents’ Memorandum, par. 53, p. 21.


The DBM’s interpretation of the GAA is

entitled to a heavy presumption of validity.

9. The DBM is the agency institutionally competent to determine

compliance with the GAA, as it correctly did in this case, given that it is the

agency that prepares the National Expenditure Program (NEP) and actually

works with Congress to prepare the GAA. It is the DBM, based on its expertise

and institutional competence, that has the undeniable administrative know-how

to interpret the GAA because of its role in the drafting of the NEP. Any

question on the interpretation of non-constitutional terms in the GAA, especially in the

absence of disagreement with Congress, should naturally be resolved in favor of recognizing the

interpretive competence of those who not only helped write the document but also implement

such document.

The Court’s interpretation of savings is not a

constitutional rule, and can be overturned by

legislation.

10. The Honorable Court’s current interpretation of savings cannot

create a permanent, constitutional rule. The Honorable Court’s interpretation

of savings does not involve an articulation of a constitutional principle, but is

only an interpretation of the GAA that may legitimately be overturned through

the legislative process. This point is easy to demonstrate.

11. Suppose the Congress, pursuant to its authority under Article VI,

Section 25(5) of the Constitution, decided to redefine savings in any of the

following ways—

a) Any allotment for any work, activity, or purpose for which

the appropriation is authorized, which has not been

obligated notwithstanding the lapse of 6 months; and

b) Any appropriations balances arising from unfilled positions

shall not constitute savings and revert to the National

Treasury; provided, that 25% of such appropriations

balances may be treated as savings.

12. Hypothetical situation (a) entirely wipes out the Honorable

Court’s analysis in the present cases, as it eliminates the concept of savings

from “completion or final discontinuance or abandonment of the work….”

On the other hand, hypothetical situation (b) redefines the concept of

unreleased appropriations and overturns the practice of accumulating savings


even of the Honorable Court, as held in Sanchez v. Commission on Audit7 which

allows the Chief Justice to accumulate savings from unfilled positions in the

judiciary.8 Congress, under Article VI, Section 25(5), can even completely do

away with the concept of savings by simply withdrawing the authorization to

use savings in the GAA, thereby rendering academic all debate about what

constitutes savings.

13. In sum, and properly characterized, the important questions in

these cases are—

(1) Whether the government properly interpreted the relevant

portions of the GAA involving the legislative parameters for

accumulating savings;

(2) Whether the President properly augmented items with

appropriation covers;

(3) Whether the President can transfer savings to the other

departments, upon the latter’s request; and

(4) Whether releases from the Unprogrammed Fund are valid.

Issues (1) and (4) are questions of statutory interpretation. Issue (2) is

essentially a factual question involving a scrutiny of the 116 DAP projects.

Issue (3) is a constitutional question to which respondents have an answer

based on the text, history, structure of the Constitution, and the demonstrated

practice of the Honorable Court.

B.

THE DBM DID NOT ENGAGE IN A POLICY OF ACCUMULATING SAVINGS SO

THAT THE PRESIDENT MAY HAVE FUNDS FOR AUGMENTATION.

14. Much of the efforts of petitioners and the discussions of this

Honorable Court focus on the subjective question of whether there was an

overarching intent on the part of the government, through the DBM, to

generate savings that the President can use for augmentation. This context

appears to be an important point of contact among the various legal

conclusions with respect to the GAA’s definition of savings and the meaning of

certain crucial clauses in NBC 541. This is an important question for which

there is a clear, objective answer susceptible of being tested by the crucible of

facts and context, both of which demonstrate that the DBM and the President

7 G.R. No. 127545, 23 April 2008. 8 Id. “As a case in point, the Chief Justice himself transfers funds only when there are actual savings, e.g., from unfilled positions in the Judiciary.” Emphasis in the original.


not only acted in good faith but also did what was right, consistent with the

traditional prerogatives of their offices.

15. First. Re-enacted budgets and automatic accumulation of savings. All that an

administration bent on accumulating savings has to do is to not pass the budget

on time and let the previous budget get automatically re-enacted pursuant to

Article VI, Section 25(7) of the Constitution. This is because under a re-enacted

budget, all items representing appropriations for a completed work or activity

(for example, a P5 billion airport and a P10 billion expressway) are

automatically converted into savings and are immediately available for use by

the President on the first day of the year. Thus, by the sheer fact of doing nothing, a

President immediately generates savings to the tune of the total amount of all

appropriations for the funded projects and activities of the previous GAA.

16. This strategy of generating savings through re-enactment is a

factual, not a theoretical, claim. The primary exemplar for this scheme is the

previous administration, which had either a partially or fully re-enacted budget

for the entire duration of its term. And just for purposes of comparison, the

overall savings of the Arroyo administration during the last three years of its

term amounted to P117.5 billion in 2007, P178.7 billion in 2008, and P268.3

billion in 2009, while the Aquino administration’s overall savings amounted to

P46.6 billion in 2010, P67.5 billion in 2011, P65.6 billion in 2012, and a

preliminary figure of P57.8 billion in 2013.

17. Second. The timely passage of the budget is an important fact that

attests to the demonstrated intent of the President and Secretary Florencio B.

Abad to engage in disciplined spending, that is, according to a program

embedded in the GAA and therefore consistent with the wishes of Congress.

Considering the advantages afforded to a President by a re-enacted budget and

the limited flexibility afforded by a programmed expenditure under a timely

enacted budget, not to mention the great effort required of the entire

government machinery to complete the NEP, one wonders why a President

would even pass a budget on time, if at all. And yet, the Aquino

administration, through Secretary Abad, has never failed to pass the budget on

time. This is not only a mark of good faith; it is, more important, also an

unmistakable sign of full and diligent compliance with the Constitution. A

judgment constrained by this important context will find it difficult to assign

malice to the current practice of passing budgets on time that has in fact

substantially reduced the flexibility of the President and his economic

managers.

18. Third. DAP was a response to a fiscal emergency—under-

utilization of public funds. This is another uncontested fact. It was a plan to


remedy a glut in public funds languishing in agencies with low levels of

obligation. The President and Secretary Abad did not invent this scenario.9 As

stated in respondents’ Comment:

1. In the first three quarters of 2011, the Aquino administration

was faced with inefficiencies and other systemic issues that hampered the

capacity of some government institutions to spend their budgets and

implement programs and projects. The national government’s disbursement

level shrank, falling significantly below target by 16.1 percent. This problem

was expressed at the macroeconomic level in terms of a reduction in the

Gross Domestic Product (GDP).

2. Apart from the usual transition glitches brought about by a

change in leadership, the Aquino administration’s underspending can also be

traced to the cancellation of some of the programs, activities and projects

initiated by the previous administration, which were found to be anomalous

or fraught with irregularities.

19. When President Aquino came into office in 2010, the budget he

had to implement was that of the previous administration. His administration

saw “the prevalence of questionable and poorly designed programs and

projects” and “also found huge agency lump-sum funds which were susceptible

to abuse and which created implementation bottlenecks through zero-based

budgeting and other tools.” They “weeded out these questionable programs

and projects…and pursued the elimination of agency lump-sum funds by

fleshing budgets out into greater detail.” The administration’s “early efforts to

plug leakages had the effect of slowing down spending which hampered

domestic economic growth.”10

20. Even the World Bank acknowledged that the “slowdown in

disbursements in the first three quarters is partly attributable to measures to

improve transparency and accountability in national government agencies.”11 It

cited, as an example, “a thorough review of the bidding process…conducted by

the Department of Public Works and Highways to improve cost-efficiency and

transparency of procurement and budget execution.”12 This review

9 See http://www.rappler.com/business/779-p72-b-stimulus-fund-in-2011-disbursed,-budget-chief-says. 10 Transcript of Stenographic Notes of Oral Arguments dated 28 January 2014, p. 11. 11 Philippines Quarterly Update: From Stability to Prosperity for All, p. 43, available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/06/12/000333037_20120612011744/Rendered/PDF/698330WP0P12740ch020120FINAL0051012.pdf. 12 Id.

http://www.rappler.com/business/779-p72-b-stimulus-fund-in-2011-disbursed,-budget-chief-says

http://www.rappler.com/business/779-p72-b-stimulus-fund-in-2011-disbursed,-budget-chief-says

http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/06/12/000333037_20120612011744/Rendered/PDF/698330WP0P12740ch020120FINAL0051012.pdf




“inadvertently led to the slowdown in public infrastructure spending as the

review uncovered significant procedural and governance issues.”13

21. Tasked with implementing a budget he did not propose and

spending on projects his department heads were not comfortable with because

of numerous irregularities, the President decided that the prudent course of

action was to stop expenditures on certain projects until he was confident that

the reforms he introduced ensured the proper use of funds.

22. If government projects were proceeding as planned, there would

have been no need for a program such as DAP as expenditure levels would

have been normal and not a cause for concern at the macro-economic level.

This is a demonstrated fact.14

23. Fourth. There was a diminishing use of the DAP, starting with the

downward shift in 2012 and 2013, and a total disuse by the last quarter of 2013.

This belies the claim that there was intent to accumulate savings so that the

President may use them for discretionary spending. Even before the various

present petitions were filed, DAP had already become operationally dead. We

invite the Honorable members of the Court to look at the numbers: from

P75.1 billion in 2011, P53.2 billion in 2012, to P16 billion in 2013.

24. Fifth. The mechanisms used to realize savings under the DAP

have existed in one form or another throughout all administrations under the

1987 Constitution. In the absence of any specific constitutional prohibition, it

is the essence of sound management to stop the flow of scarce resources from

projects that are failing and not moving and to reallocate them into projects

that have higher chances of success. This is the fundamental idea behind the

President’s power to augment under Article VI, Section 25(5) of the

Constitution.

13 Id. 14 Id. “1. Weak government spending pulled down growth in 2011. Public construction contracted by almost 30 percent in 2011 despite efforts to revive infrastructure spending in the fourth quarter (Q4). The decline was most pronounced in Q2 2011 with a 51 percent drop in spending compared to the same period in 2010. Current expenditures (i.e., personnel services, maintenance and other operating expenditures) contracted by eight percent in Q1 2011 but slowly recovered in the next three quarters, growing by five percent for full year 2011. 2. Compared to programmed expenditures, disbursement was lower by nine percent in 2011. Total disbursement at PHP 1.558 trillion was only 91 percent of programmed expenditure for the year and 82 percent of total available appropriations (Figure 4.1). The deterioration in spending performance was most pronounced in infrastructure and other capital expenditures where only 66 percent of the full-year programmed expenditure was disbursed as of December.” Emphasis in the original.


25. No malice could be attributed to these mechanisms, which

represent the Executive’s contemporaneous interpretation of the budget which

it helped prepare with Congress. This interpretation was validated repeatedly,

year after year, through budget deliberations before Congress.

Where a statute has received a contemporaneous and practical

interpretation and the statute as interpreted is re-enacted, the practical

interpretation is accorded greater weight than it ordinarily receives, and is

regarded as presumptively the correct interpretation of the law. The rule here

is based upon the theory that the legislature is acquainted with the

contemporaneous interpretation of a statute, especially when made by an

administrative body or executive officers charged with the duty of

administering or enforcing the law, and therefore impliedly adopts the

interpretation upon re-enactment.15

26. Respondents strongly object to any suggestion that bad faith

attended the formulation of the DAP, made years before the Court’s

unprecedented decision in these cases. With all due respect, the Honorable

Court’s decision redefines existing administrative practice and potentially

assigns malice post facto. Prior to this decision, respondents had the right to rely

on the contemporaneous administrative interpretation of the law, deemed

adopted in subsequent enactments of the GAA.

27. To be sure, the particular mechanisms used by the Aquino

administration—the withdrawal of unobligated allotments and use of

appropriations balances—are much more benign than the practice of previous

administrations of imposing reserves on government agencies including, in

some instances, members of the Constitutional Fiscal Autonomy Group

(CFAG), through a Reserve Control Account at the beginning of the year. Such

a practice results in the automatic reduction of appropriations of the agency

concerned, regardless of any proof of inability to use their allotments or the

presence of an appropriations balance.

28. Theories linking DAP to pork-barrel type discretionary spending

do not account for the bureaucratic hurdles, the frequent review exercises

conducted in order to identify projects for realignment and augmentation. The

determination of slow-moving projects, the identification of high-impact

alternatives, the laying down of a process and timeline for withdrawal of

allotments are at odds with the notion that the DAP was a scheme to generate

savings. This evaluation is especially true considering another, easier method is available—

the repeated re-enactment of the budget.

15 Laxamana v. Baltazar, G.R. No. L-5955, 19 September 1952.


29. The Court held: “Contrary to the respondents’ insistence, the

withdrawals were upon the initiative of the DBM itself.”16 This conclusion is

mistaken. The reality is, as was pleaded by respondents in their Comment, the

withdrawal actually occurs upon the instance of the head of agency, as was the

case of Secretary Abaya.17 Another fact is undeniable: if the department

secretary declares that his unobligated allotments can be used or obligated, then

the DBM cannot and will not withdraw the unobligated allotment. This is

because, as is obvious from context, the problem of the President and DBM

was low levels of spending borne by inability of the agencies to obligate their

allotment, which affected the expenditure program of the government to the

detriment of the economy. This is why the determinative slogan was “Use it or

lose it.” A reasonable mind would consider these facts as important to support

the conclusion that money unspent in one place should be treated as savings so

it may be spent somewhere else.

30. The Constitution does not prevent the pooling of savings. The Honorable

Court seems to have reservations with the idea of pooling savings. This fear is

ungrounded. The Constitution does not require a one-to-one correspondence

between savings from one item and augmentation in another. In addition, the

pooling of savings is simply a virtual tally or accounting of the total savings on

any given time so the Executive (or even the Supreme Court for that matter)

may determine how much savings are available for augmentation purposes.

Because all savings may be used for augmentation purposes, it necessarily

follows that all savings may be pooled.

C.

THE BUDGET IS A COMPROMISE BETWEEN THE POLITICAL DEPARTMENTS

THAT IS REVISITED ANNUALLY.

31. The augmentation provision of the Constitution and the laws implementing

such constitutional authority are meant to respond to the reality that budgets are prepared a

year in advance of their implementation. There are therefore a lot of occurrences

during implementation year that may not have been anticipated by the

Executive when it prepared the NEP, and by the Congress, when it passed the

GAA. Under the Constitution, the flexibility of the President in the form of his

power to augment responds to this gap between planned expenditure and the

necessities of the moment.

32. Any argument justifying Court intervention based on the need to

protect Congressional control over the budget, without more, is misplaced. In

the first place, Congress, as the real party in interest, has never objected to the

16 Decision, p. 64. 17 See Comment, pars. 52 and 55, pp. 21-22.


Executive’s interpretation of the GAA and has not seen it fit to invoke the

Court’s boundary-setting function. Second, citing Congress’ “power of the

purse” does not take into account that the President is not a mere spectator in

budget legislation. By constitutional design, the enactment of the national

budget differs from ordinary legislation in that (1) it is initiated through a

proposal from the President instead of any member of Congress; (2) it is only

effective for one year; and (3) it is subject to the President’s line-item veto.

33. We strongly object to the notion that the President colluded with

Congress, or that he undermined the Congress’ power of the purse and that

Congress allowed its prerogatives to be undermined. The constitutional

requirement of an annual exercise between the two political branches simply

reflects the fact that the political departments, not the judiciary, are those in

charge of running the government and managing the economy.

34. Each annual budget represents a compromise on varied and

conflicting priorities. If Congress disagrees with the way the Executive

implemented the GAA’s savings requirement, then it can always impose a more

restrictive language in the next budget cycle, hold public hearings and make

executive officials explain. If an agency erred in releasing or accepting

allotments, Congress may respond directly against the agency’s appropriation.

Far from Congress colluding with the Executive, its inaction or silence in such

instances effectively amounts to a positive ratification of executive action.

Neither can we ascribe ignorance on the part of Congress which regularly

receives information on how public funds are spent through the NEP. The

lengthy process that precedes the passage of the GAA is proof of the active

interchange between the Executive and the Legislature with respect to how

public funds should be spent and accounted for.

II.

SUBSTANTIVE ARGUMENTS

A.

THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED

“SAVINGS” UNDER THE RELEVANT PROVISIONS OF THE GAA.

1.

WITHDRAWN UNOBLIGATED ALLOTMENTS ARE SAVINGS.

35. The Honorable Court held that withdrawn unobligated allotments

under the DAP are not savings because though they are “free from any

obligation or encumbrance,” the withdrawal of the unobligated allotments was

predicated on whether “the allotments pertained to slow-moving projects or


not”18—thus disregarding the “three enumerated instances of when savings

would be realized.”19 Moreover, the quarterly withdrawal of unobligated

allotments under the Memorandum for the President dated 20 May 2013

violated the period of availability of appropriations in the GAA.

36. With due respect, this is not correct. Withdrawn unobligated

allotments are savings because they are already “portions or balances of [ ]

programmed appropriations free from any obligation or encumbrance which

are…still available after the…final discontinuance or abandonment of the

work, activity or purpose for which the appropriation is authorized.” Under

Book VI, Chapter 5, Section 38 of the Administrative Code,20 the President has

the authority to “stop the further expenditure of funds allotted” for slow-

moving projects to uphold the public interest of maximizing limited public

funds. As this country cannot afford to waste money, it is commonsensical to

use limited funds for fast-moving projects which are better able to absorb

them.

37. Book VI, Chapter 5, Section 38 of the Administrative Code is an

express legislative authorization for the President to permanently stop further

expenditures from allotments given to agencies based on the President’s

judgment that the “public interest so requires.” This is (1) a reasonable reading

of the Administrative Code in relation to the GAA; (2) consistent with the role

of the President as chief economic manager; and (3) consistent with what an

ordinary citizen understand as savings—the money that remains if the original

purpose is fulfilled or defeated. If Congress wanted to grant the President the

power to stop funding items in the GAA based on a broad public interest

standard, this Honorable Court cannot withhold or limit that power.21 The

President faithfully executes the laws under Article VII, Section 17 of the

Constitution, and such power necessarily includes the ability to interpret the

power granted to him by Congress in a manner that is both reasonable and

practical.

38. The net effect of the President’s exercise of his authority under Book VI,

Chapter 5, Section 38 of the Administrative Code is the final discontinuance or

18 Decision, p. 61. 19 Id., at 60. 20 Section 38. Suspension of Expenditure of Appropriations. Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees. 21 Congress does not intend to repeal, but in fact affirms Book VI, Chapter 5, Section 38 of the Administrative Code which was issued by President Corazon Aquino in the exercise of her legislative powers.


abandonment of a project which results in unobligated portions or balances of appropriations.

Thus, withdrawn unobligated allotments are savings under the GAA. These are

funds that remain unspent and unobligated because the project has been

discontinued or abandoned. These are also funds that are unused and free from

any obligation or encumbrance. As such, the President can either use them to

augment items in the GAA under Article VI, Section 25(5) of the Constitution

and Book VI, Chapter 5, Section 39 of the Administrative Code or retain them

so that they may be reverted to the National Treasury (following Book VI,

Chapter 4, Section 28 of the Administrative Code) at the end of the year or the

end of validity of the appropriation, i.e, one, two, or three years. For the

Honorable Court to declare that they should only go to the National Treasury

would be to violate the authorization given by Congress to the President to use

such savings if he deems proper.

39. To require that savings may only be incurred at or near the end of

the year (or the validity of the appropriation) and then mandate that all year-

end savings must go to the National Treasury is to operationally defeat the

President’s power to augment. If savings can only be declared near the end of

any given year, such as November, this would mean that the President will have

to allow public funds to be idle and languish for months while some projects

are not moving and then hurriedly augment from November to December,

after which time what is left is reverted to the National Treasury. The concept

behind having an Administrative Code is to provide legislative sanction for the

exercise of administrative discretion so as to empower executive officials with

authority to act effectively given their knowledge of what happens on the

ground.

40. There is no requirement that the Executive should generate

savings only so that they may be reverted to the General Fund at the end of the

fiscal year. Book VI, Chapter 4, Section 28 of the Administrative Code provides

no such requirement and does not incorporate such a policy. For the

Honorable Court to declare that they should only go to the National Treasury

would be to violate the authorization given by Congress to the President to use

such savings as he deems proper. Such declaration would also intrude into the

President’s prerogative to decide, as the economic manager of this country,

whether to adopt fiscal austerity or stimulus measures.

41. The lifespan of an appropriation (one, two or three years) simply

represents the maximum period for using the authorization of Congress to

spend for such work, activity or project. It is logically independent of the

authorization to the Executive under Book VI, Chapter 5, Section 38 of the

Administrative Code to suspend or stop further expenditure if the public

interest so requires. The lifespan of an appropriation does not convert the

Executive into an automaton, blindly implementing projects that cannot be


completed. The function of Book VI, Chapter 5, Section 38 of the

Administrative Code is to allow the Executive to exercise managerial

prerogatives because those in the Executive are the ones familiar with the

terrain of implementing projects and activities authorized by Congress. This is

also the point of Justice Del Castillo when he said that “[i]t does not follow that

the [lifespan of the appropriation] prevents the President from finally

discontinuing or abandoning such work, activity or purpose, through the

exercise of the power to permanently stop further expenditure, if the public

interest so requires, under the second phrase of Section 38 of the

Administrative Code.”22

2.

UNRELEASED APPROPRIATIONS UNDER DAP ARE SAVINGS.

42. The Honorable Court held that unreleased appropriations under

the DAP are not savings because for savings to accrue, the appropriations must

first be “released” or allotted to an agency. However, the Court also said that

“if an agency has unfilled positions in its plantilla and did not receive an

allotment and NCA for such vacancies, appropriations for such positions,

although unreleased, may already constitute savings for that agency under the

second instance”23 (i.e. savings from appropriation balances arising from unpaid

compensation and related costs pertaining to vacant positions and leaves of

absence without pay). This is a misunderstanding of fact and incompatible with

the Honorable Court’s own practice.

43. Appropriations need not be released to the agencies before they

can be considered savings precisely because Personal Services appropriations

for unfilled positions are not released to the agencies until and unless these

positions are filled for the proper and optimal use of public funds and a request

by the department is submitted to the DBM. As per express definition in the

GAA, these are already savings. As an exception, unfilled positions for CFAG

are “released” simply because of their fiscally autonomous status.

44. Thus, whether in the Executive or the CFAG, (which includes the

Honorable Court), it is not the status of appropriations as released or unreleased that makes

them available for use as savings, but the fact that the allocations for positions under Personal

Services are vacant or unfilled and therefore unspent. We reiterate the basic concept

“money unspent is savings” is what animates the entire augmentation

framework of the Executive and Congress. The explanation is simple, if you

did not hire anyone for three months, the salary of that unhired employee is

22 Concurring and Dissenting Opinion, Associate Justice Del Castillo, p. 21. 23 Decision, p. 60.


savings whether the appropriation is with the DBM or another agency, or the

Honorable Court.

45. Under the DAP, unreleased appropriations mostly pertain to

appropriations for personnel services arising from unfilled positions from the

plantilla of government offices. To reiterate, under the Honorable Court’s own

ruling in this case and in Sanchez v. Commission on Audit,24 the unreleased

appropriations under the DAP are savings because they pertain to

“appropriation balances arising from unpaid compensation and related costs

pertaining to vacant positions and leaves of absence without pay.”

46. It is incorrect to generalize and rule that appropriations must first

be “released” before there can be savings. Nowhere in the Constitution, the

GAA or in any other law is the “release” of appropriations a precondition for

the generation of savings. This Honorable Court itself has held that

appropriation balances from unfilled positions and leaves of absence without

pay are savings “although unreleased.” To hold, on one hand, that “release” of

appropriations is a prerequisite for the generation of savings, and on the other,

that appropriation balances from unfilled positions and leaves of absence

without pay are savings “although unreleased”—is contradictory.

3.

SAVINGS FROM WITHDRAWN UNOBLIGATED ALLOTMENTS AND

UNRELEASED APPROPRIATIONS MAY BE USED FOR AUGMENTATION.

Sections 38 and 39 of the Administrative

Code and the GAA are the operative

augmentation clauses.

47. Since the withdrawn unobligated allotments and unreleased

appropriations under the DAP are savings, the President is authorized under

the GAA to use such savings to augment an appropriation, with “a program,

activity or project…which upon implementation or subsequent evaluation of

needed resources, is determined to be deficient.” The GAA, in relation to

Article VI, Section 25(5) of the Constitution, authorizes the President to fund

his priority or fast-moving projects in the GAA by augmenting deficient

appropriations.

24 In Sanchez v. COA, supra note 7, the Honorable Court expressly recognized the use of appropriations for personnel services for incurring savings when it declared that “the Chief Justice himself transfers funds only when there are actual savings, e.g., from unfilled positions in the Judiciary.”


48. Book VI, Chapter 5, Section 39 of the Administrative Code

authorizes the President to approve the use of savings “to cover any deficit in

any other item of the regular appropriations.” It reads:

Section 39. Authority to Use Savings in Appropriations to Cover Deficits. - Except as

otherwise provided in the General Appropriations Act, any savings in the

regular appropriations authorized in the General Appropriations Act for

programs and projects of any department, office or agency, may, with the

approval of the President, be used to cover a deficit in any other item of the

regular appropriations: provided, that the creation of new positions or

increase of salaries shall not be allowed to be funded from budgetary savings

except when specifically authorized by law: provided, further, that whenever

authorized positions are transferred from one program or project to another

within the same department, office or agency, the corresponding amounts

appropriated for personal services are also deemed transferred, without,

however increasing the total outlay for personal services of the department,

office or agency concerned.

49. Book VI, Chapter 5, Section 39 of the Administrative Code is the

standing authority issued by Congress to the President to augment deficient

items. This is supplemented by the relevant provisions of the GAA which,

apart from providing the authority to augment, also defines savings.

50. The President’s exercise of his authority to stop the further

expenditure of funds for slow-moving projects is anchored on his reasonable

determination of “public interest.” This broad standard is an ordinary form of

delegation by Congress to the Executive, found in many statutes,25 which is

usually indicative of an understandable recognition by Congress of the need to

provide the Executive as much leeway as possible in making judgments based

on facts on the ground.

51. Article VI, Section 25(5) of the Constitution, and Book VI, Chapter 5,

Sections 38 and 39 of the Administrative Code constitute a coherent whole providing a

framework for which the economic managers of the nation may pull various levers in the form

of authorization from Congress to efficiently steer the economy towards the specific and general

purposes of the GAA. With respect, the Decision of this Honorable Court impairs

this coherent framework.

25 R.A No. 7875, as amended by R.A. 10606; R.A. No. 10173; R.A. No. 10071.


B.

ALL DAP APPLICATIONS HAVE APPROPRIATION COVER.

The Court overlooked the basic distinction

between an item and an allotment class.

52. The Honorable Court generalized: “‘savings’ pooled under the

DAP were allocated to PAPs [Program, Activity and Project] that were not

covered by any appropriations in the pertinent GAA.”26 It cited the DREAM

project and the Establishment of the Advanced Failure Analysis Laboratory as

examples of augmentation without proper appropriation cover. In support of

this conclusion, it held that “the failure of the GAAs to set aside any amounts

for an expense category sufficiently indicated that Congress purposely did not see

fit to fund, much less implement, the PAP concerned.”27

53. These are incorrect statements. The Honorable Court mixed two

important and entirely distinct concepts: item and allotment class. In Gonzales v.

Macaraig,28 the Honorable Court defined an “item” as referring to (1) “the

particulars, the details, the distinct and severable parts . . . of the bill;” (2) “an

indivisible sum of money dedicated to a stated purpose;” and (3) “a specific

appropriation of money.” An allotment class, on the other hand, refers to the

expense category of the item, such as Personal Services, Maintenance and

Other Operating Expenses, and Capital Outlay.

54. What Article VI, Section 25(5) of the Constitution requires is that

the augmentation by the President and other constitutional officers shall be for

“any item in the general appropriations law for their respective offices.”29 What

is actually augmented is the item, and not an allotment class or expense

category. Thus, the litmus test for whether or not an augmentation has an

appropriation cover is the presence or absence of an item in the GAA. This is

because it is the item, not the allotment class, that has the description of the

PAPs which the President then augments. As long as there is a certain sum of

money set apart for an item, the specified program, activity or project can be

augmented, regardless of its allotment class. In the case of the DREAM

project, that item is the “Generation of new knowledge and technologies and

research capability building in priority areas identified as strategic to National

Development.”

26 Decision, p. 69. 27 Id., at 70. Italics supplied. 28 G.R. No. 87636, 19 November 1990. 29 Italics supplied.


55. That Congress did not set any amount for a specific allotment

class within an item does not amount to a lack of intent on the part of

Congress to fund the PAP concerned. This is because there is no constitutional

requirement for Congress to create allotment classes within an item in the first

place, and Congress could very well remove allotment classes altogether

without impairing the Constitution so long as the item is retained. What is

required in the GAA is for Congress to create items (in broad or particular

terms) to comply with the line-item veto of the President. Again, this is basic

constitutional law.

56. In fact, just to demonstrate how the Honorable Court did not

distinguish between an item and an allotment class, and how easily the

Congress may again overturn the Honorable Court’s ruling on this point, all

that Congress and the DBM need to do in the next budget cycle is to ensure

that every allotment class within an item will have at least P1 funding in order

that the President may augment every allotment class in the GAA.

57. The Constitution does not limit the amount of augmentation by the President.

The Honorable Court also makes salient the fact that some augmentations

under the DAP exceeded many times over the item’s original appropriations, as

some augmentations proved considerable. Sheer magnitude of augmentation

alone, however, is not a ground to declare the DAP or any other augmentation

unconstitutional. 30 There is nothing in the Constitution or in the law that limits

the power to augment in terms of percentage or amount, save for the condition

that it shall come “from savings in other items of their respective

appropriations.”31 The deliberations in the Constitutional Commission are

clear:

MR. SARMIENTO. I have one last question. Section 25, paragraph (5)

authorizes the Chief Justice of the Supreme Court, the Speaker of the House

of Representatives, the President, the President of the Senate to augment any

item in the General Appropriations Law. Do we have a limit in terms of percentage

as to how much they should augment any item in the General Appropriations Law?

MR. AZCUNA. The limit is not in percentage but “from savings.” So it is only to the

extent of their savings.32

58. It is, in fact, possible that a P1 appropriation for a particular item

may be augmented with P1 Billion, so long as the P1 Billion is part of the

savings from their respective appropriations. This Honorable Court has no

30 Concurring and Dissenting Opinion of Associate Justice Del Castillo, p. 37. 31 CONST., Article VI, Section 25(5). 32 II RECORD OF THE CONSTITUTIONAL COMMISSION, p. 111, 22 July 1986. Italics supplied. See also Concurring and Dissenting Opinion of Associate Justice Del Castillo, p. 37.


constitutional authority to set a limit on how much the President can augment

an item.

59. The nullification of all 116 augmentation exercises on the basis of supposed

errors in two SAROs is a sweeping generalization which is factually ungrounded. The

Honorable Court found that: “[a]side from this transfer under the DAP to the

DREAM project exceeding by almost 300% the appropriation by Congress for

the program Generation of new knowledge and technologies and research capability building

in priority areas identified as strategic to National Development, the Executive allotted

funds for personnel services and capital outlays. The Executive thereby

substituted its will to that of Congress.”33 It cited SARO No. E-11-02253 dated

22 December 201134 which allotted P43,504,024 for personnel services,

P1,164,517,589 for maintenance and other operating expenses, and

P391,978,387 for capital outlays. The Court found this to be in conflict with

the 2011 GAA which appropriated an amount only for maintenance and other

operating expenses, but nothing for personnel services and capital outlay.

60. The Honorable Court’s finding is based on an incorrect factual

basis. The SARO it cited is no longer valid as there was a modification under a

subsequent SARO. Under SARO No. E-11-02386 dated 29 December 2011,35

issued only seven days after the issuance of SARO No. E-11-02253, personnel

services in the amount of P43,504,024 and capital outlays in the amount of

P391,978,387, or a total amount of P435,482,411, were realigned to

maintenance and other operating expenses. Thus, the augmentations under the

allotment classes personnel services and capital outlays were actually allotted to

maintenance and other operating expenses.

61. A simple cross-reference with respondents’ Evidence Packet 7

would have avoided the Honorable Court’s misappreciation of facts. Page 66 of

this evidence packet clearly shows that the amounts previously allotted to

personnel services and capital outlays for the DREAM project under SARO

No. E-11-02253 were transferred to maintenance and other operating expenses

under SARO No. E-11-02386.

62. The Honorable Court also found that the “Establishment of the

Advanced Failure Analysis Laboratory” project of the Philippine Council for

Industry, Energy and Emerging Technology Research and Development

(PCIEETRD) did not have an appropriation cover because “the appropriation

code and the particulars appearing in the said SARO did not correspond to the

program specified in the GAA.”36 It cited SARO No. E-11-02254 dated 22 33 Decision, p. 70. 34 Attached as Annex “A.” 35 Attached as Annex “B.” 36 Decision, p. 71.


December 2011 where the particulars for the project were indicated as

“Development, integration and coordination of the National Research System

for Industry, Energy and Emerging Technology and Related Fields.” However,

the program specified in the 2011 GAA corresponding to the appropriation

code in the SARO (“A.02.a”) is “Research and Management Activities.”

63. This invalidation is unwarranted. What the President did was to

augment an item “Research and Management Services” by allotting P300

million for the “Establishment of the Advanced Failure Analysis Laboratory.”

This is a correct augmentation exercise because the project (“Establishment of

the Advanced Failure Analysis Laboratory”) clearly and reasonably falls under

the item “Research and Management Services.”

64. The fact remains that a PAP with an appropriation cover has

legislative authorization. Any mistake in the wording of the SARO cannot

negate this. The validity of a certain appropriation neither depends on nor

affected by mistakes in the SARO, the same being merely a budget document

created for the purpose of efficiency. We also cannot impute any malice or

corrupt motive to the error, which benefits no one. What matters is that there

is an item (“Research and Management Services”) which can be augmented

with a project (“Establishment of the Advanced Failure Analysis Laboratory”)

that is reasonably connected to it.

65. Moreover, the discrepancy in the particulars in the SARO and the

program specified in the GAA can be fully explained. In the middle of 2011, in

the implementation of their rationalization plan, the Philippine Council for

Industry and Energy Research and Development (PCIERD) and the Philippine

Council for Advanced Science and Technology Research and Development

(PCASTRD), were consolidated to form the Philippine Council for Industry,

Energy and Emerging Technology Research and Development (PCIEETRD),

pursuant to E.O. No. 366, s. 2004. Thus, PCIERD and PCASTRD still had

separate budgets in the 2011 GAA where the item “Research and

Management” can be found under PCIERD. When the SARO was issued on

22 December 2011, PCIERD and PCASTRD were already merged into

PCIEETRD. Thus, the particulars appearing in the SARO as “Development,

integration and coordination of the National Research System for Industry,

Energy and Emerging Technology and Related Fields” referred to the

consolidated functions of both agencies as reflected in the 2012 NEP which

already mentions PCIEETRD. This is another error that could have been

clarified had the Honorable Court granted respondents’ plea to subject the 116

augmentations to a full trial instead of deciding their validity en masse with

insufficient facts.


66. The Court’s ruling that the savings pooled under the DAP were

allocated to PAPs that were not covered by any appropriations in pertinent

GAAs, therefore, with the foregoing clarifications, cannot hold. On the

contrary, a careful perusal of the documentary evidence presented by the

government will sufficiently show the existence of appropriation covers for all

DAP-augmented projects. This is likewise clearly reiterated in the government’s

Memorandum:

67. A big part of petitioners’ presentation hinges on the claim

that the Executive Department invented non-existent appropriations. This

claim is irresponsible. It is refuted by respondents’ submissions consisting of:

(a) a list of fifteen (15) DAP applications, with corresponding SAROs and

appropriation covers, composed of projects identified in respondents’

Consolidated Comment and those questioned by the petitioners in their

pleadings or during the oral arguments; and (b) a list of all DAP applications

per department/agency, with corresponding SARO numbers and

appropriation covers.

68. As shown by respondents’ submissions, it is the standard

practice of the DBM to itemize the details of each and every allotment thus:

a) The particular office of the government concerned; b) The PAP code or the “programs, activities or projects” code

under the relevant GAA; c) The SARO number of the document; d) The date of issuance of the SARO; e) The original amount of the appropriation under the relevant

GAA; f) The amount of augmentation involved; and g) The specific page of the GAA where the item may be found. 69. This unfailing adherence to particularity has a two-fold

function: (1) to ensure proper record-keeping and easy access to the history

of every specific allocation and release of funds; and (2) to provide detailed

compliance with the constitutional requirements with respect to

augmentations. The built-in PAP code, for instance, corresponds to an item

of appropriation in the GAA and ensures that all disbursements have

appropriation covers.

67. Given that respondents have clearly shown that the two

augmentation exercises used by this Honorable Court to declare all the 116

projects under DAP as augmentations without appropriation cover are in fact

correct augmentation exercises, this Honorable Court can make the proper

clarifications.


C.

THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS

TO OTHER DEPARTMENTS PURSUANT TO HIS

CONSTITUTIONAL POWERS.

68. The Honorable Court stated that the “plain text of Section 25(5)

disallowing cross-border transfers was disobeyed. Cross-border transfers,

whether as augmentation, or as aid, were prohibited under Section 25(5).”37

This is not consistent with a reasonable reading of the text, history, and

structure of the Constitution. A reasonable reading of the constitutional

provision leads to an alternative interpretations that justifies the transfer of

savings to other departments under limited conditions.

69. The Executive’s reading of Article VI, Section 25(5) of the

Constitution justifies the transfer of savings to other departments. It is

grounded on the text of the Constitution, the practice of past presidents, and

consistent with the role of a Chief Executive.

70. Article VI, Section 25(5) of the Constitution provides:

No law shall be passed authorizing any transfer of appropriations;

however, the President, the President of the Senate, the Speaker of the

House of Representatives, the Chief Justice of the Supreme Court, and the

heads of Constitutional Commissions may, by law, be authorized to augment

any item in the general appropriations law for their respective offices from

savings in other items of their respective appropriations.

71. The first clause prohibits the transfer of “appropriations.” As an

exception, the second clause allows constitutional officers to use “savings” to

augment items in their respective appropriations. This authority was put in

place to give these officers some flexibility in executing their own budgets to

enable them to respond to various circumstances.

72. “Appropriations” and “savings” are two different, independent constitutional

concepts. An appropriation is defined as “an authorization made by law or other

legislative enactment, directing payment out of government funds under

specified conditions or for specified purposes.”38 Appropriations usually come

in the form of items in the budget particularized in the form of PAPs. They

exist from the time of the passage of the GAA, and remain valid for the period

provided for by law. Savings, on the other hand, are “appropriations balances,”

as defined by Congress pursuant to its authority under Article VI, Section

37 Id., at 77. 38 ADMINISTRATIVE CODE, Book VI, Chapter 1, Section 2(1).


25(5). They therefore exist only when the requirements under the general

provisions of the GAA are met. The moment an appropriation incurs a balance, its

constitutional character may be qualitatively altered into savings—funds that can be used for

purposes other than the original appropriation.

73. While Article VI, Section 25(5) prohibits the transfer of

“appropriations,” it does not prohibit the transfer of “savings.” At the same

time, while the second clause allows unilateral, intra-departmental

augmentations, it prohibits unilateral, inter-departmental augmentations. Thus,

the President may use savings to unilaterally augment items in the Executive

department, but he cannot, on his own, ascertain the existence of a deficiency

in an item of appropriation in another department, and augment that

deficiency.

74. The Constitution does not prevent the President from

transferring savings of his department to another department upon the latter’s

request, provided it is the recipient department that uses such funds to augment

its own appropriation. In such a case, the President merely gives the other

department access to public funds but he cannot dictate how they shall be

applied by that department whose fiscal autonomy is guaranteed by the

Constitution.

75. We submit that this is an instance of a benign and necessary

interaction between interdependent departments, grounded in our

constitutional tradition. In fact, Presidents under the 1987 Constitution have,

from time to time, assisted other departments of government with the use of

savings from the Executive department. Respondents have previously attached

as part of their Evidence Packets, evidence of such cross-border transfers over

the years, including those to the judiciary.

76. It is in this manner that the so-called “cross-border transfers”

should be understood. In relation to the DAP, the President made available to

the Commission on Audit (COA) and House of Representatives, the savings of

his department upon their request for funds, but it was those institutions that applied

such savings to augment items in their respective appropriations. In any case, these

augmentations had the effect of even empowering institutions of government

that have oversight functions over the Executive.

77. This understanding of the Constitution is not exclusive to the

political branches of government. Documentary evidence exists to show that

the Supreme Court itself has (1) approved the allocation of amounts from its

savings to augment an item within the Executive and (2) sought funds from the


Executive for transfer to the Judiciary. These practices validate respondents’

theory of benign and necessary interdepartmental augmentations.

78. On 17 July 2012, when Justice Antonio T. Carpio was Acting

Chief Justice, the Supreme Court en banc issued a Resolution in A.M. No. 12-7-

14-SC,39 which reads:

The Court Resolved to APPROVE the allocation, from existing

savings of the Court, of the following amounts for the construction of

courthouses:

1. Manila Hall of Justice (120 courts) P1,865,000,000.00

2. Cebu Court of Appeals Building 266,950,000.00

3. Cagayan de Oro Court of Appeals Building 251,270,000.00

TOTAL P2,383,220,000.00

The foregoing amounts are hereby set aside and earmarked for the

construction costs of the said buildings.

79. As can be gleaned from the above Resolution, the Supreme Court

earmarked its existing savings of P1.865 billion to augment the P100 million

budget for the Manila Hall of Justice, which is an item (B.I.d.—“Civil Works

and Construction Design for the Manila Hall of Justice”)40 in the 2012 budget

of the Department of Justice-Office of the Secretary, which is within the

Executive Department. This is an example of the benign and necessary

interaction between interdependent departments. Obviously, the Supreme

Court has an interest in the construction of Halls of Justice, and no one can say

that this cross-border augmentation was a means by which the judiciary tried to

co-opt the Executive.

80. Moreover, on 05 March 2013, the Supreme Court en banc issued a

Resolution in A.M. No. 13-1-4-SC,41 the dispositive portion of which reads:

WHEREFORE, the Court hereby requests the Department of

Budget and Management to approve the transfer of the amount of One

Hundred Million Pesos (P100,000,000.00) which was included in the DOJ-

JUSIP budget for Fiscal Year 2012 for the Manila Hall of Justice to the

budget of the Judiciary, subject to existing budgeting policies and procedures,

to be used for the construction of the Malabon Hall of Justice.

81. In the above Resolution, the Supreme Court requested the DBM

to transfer the P100 million in the budget of the DOJ for the Manila Hall of

Justice to the Judiciary, which it intended to utilize to fund the construction of

39 Attached as “C.” 40 2012 GAA, p. 610. 41 Attached as Annex “D.”


the Malabon Hall of Justice. This means that the P100 million allocation will be

taken away from the Manila Hall of Justice, which has an item in the 2012

GAA under the Executive, and used instead to fund the construction of the

Malabon Hall of Justice, which has no item in the 2012 or the 2013 GAA.

82. When the petitions were filed and while they were being heard,

Chief Justice Sereno, in a letter dated 23 December 2013,42 informed the DBM

that the Supreme Court was withdrawing its request to realign the P100 million

intended for the Manila Hall of Justice to the budget of the Judiciary. These

two instances show both cross-border transfers on the part of the Supreme

Court—(a) the augmentation of an item in the Executive from funds in the

Judiciary; and (b) the “transfer” of funds from the Executive to the Supreme

Court, whether or not for purposes of augmentation.

83. With all due respect, this is by no means a disapprobation of the

Honorable Court. But it does serve to highlight the fact that the Honorable

Court’s practice was based on an understanding of the constitutional provision

that coincides with the government’s.

84. To be sure, the changes to the 1987 Constitution were made to

prevent one department from co-opting the other departments by transferring

funds to them in exchange for concessions or political favors. In this case, the

fact that the transfers were few and far between and made only under the most

exigent of circumstances and upon the request of other departments shows that the

President has not committed the evil the Constitution seeks to eradicate and

that he has remained true to the policy of Article VI, Section 25(5) of the

Constitution.

85. This practice of cross-border transfers was not begun by

President Aquino, as in fact Presidents under the 1987 Constitution—Fidel V.

Ramos, Joseph E. Estrada, and Gloria Macapagal-Arroyo—have, from time to

time, transferred savings to the other departments. This history of transfers

forms part of Annex B of the government’s Compliance dated 14 February

2014.

86. The President, informed by the long-standing practice of his predecessors, and

reinforced by his own reasonable reading of the constitutional provision, made the decision to

transfer savings of the Executive Department to the other departments. These transfers were

not made haphazardly and were only approved after careful consideration of the needs of the

government. Far from being a violation of the Constitution, much less a culpable violation of

the Constitution, this is a reasonable reading of the text of the Constitution, informed by

42 Attached as Annex “E.”


previous presidential, legislative and judicial exercises, and impelled by the need to respond to

the requests of other departments.

D.

THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT

REVENUE COLLECTIONS FROM EACH SOURCE OF REVENUE

ENUMERATED IN THE BUDGET PROPOSAL MUST EXCEED

THE CORRESPONDING REVENUE TARGET.

87. The Honorable Court ruled that revenue collections must exceed

the total of the revenue targets stated in the Budget for Expenditures and

Sources of Financing (BESF) before expenditures under the Unprogrammed

Fund can be made.43 This is incorrect not only because this is not what those

who wrote the item—the DBM—intended, which intention was ratified by

Congress over the years, but also because such interpretation defeats the

purpose of creating the Unprogrammed Fund.

88. This interpretation is incorrect, for a simple reason: everybody

knows that the government’s total revenue collections have never exceeded the

total original revenue targets. Certainly, the government—the Executive and

the Legislature—would never have created the Unprogrammed Fund as a

revenue source if, apart from newly-approved loans for foreign-assisted project,

it would have never been available for use. The effect of the Honorable Court’s

interpretation is to effectively nullify the Unprogrammed Fund for the years

2011 to 2013. Certainly, the Executive would not have proposed billions of pesos44 under

the Unprogrammed Fund in the NEP, and Congress would not have provided for said

appropriation in the GAA, with the intention that it can never be implemented.

89. Because we are not interpreting the Constitution with respect to

the meaning of the Unprogrammed Fund, with respect, it is incorrect for the

Honorable Court to reject the interpretation placed by those who actually

wrote the item for the Unprogrammed Fund. What is the purpose to be served

in nullifying the intention of the authors of the Unprogrammed Fund, which

intention was effectively ratified by Congress over the course of several years?

In the absence of a violation of the Constitution, this Honorable Court should

not reject the Executive department’s reading of the provisions of the

Unprogrammed Fund which it co-authored with Congress.

90. The text is clear: excess revenue collections refer to the excess of

actual revenue collections over estimated revenue targets, not the difference

43 Decision, p. 82. 44 P66,908,492,000 under the 2011 GAA; P152,821,845,000 under the 2012 GAA; and P117,548,371,000 under the 2013 GAA.


between revenue collections and expenditures. The 2011, 2012 and 2013 GAAs

only require that revenue collections from each source of revenue enumerated in the

budget proposal must exceed the corresponding revenue target.

91. To illustrate, under the 2011 BESF, the estimated revenues to be

collected from dividends from shares of stock in government-owned and

controlled corporations is P5.5 billion. By 31 January 2011, the National

Government had already collected dividend income in the amount of P23.8

billion.45 In such case, the difference between the revenues collected (P23.8

billion) and the revenue target (P5.5) becomes excess revenue which can be

used to fund the purposes under the Unprogrammed Fund.

92. The provisions of the Unprogrammed Fund under the relevant

GAAS provide—

2011 GAA

Special Provision(s)

1. Release of Fund. The amounts authorized herein shall be released

only when the revenue collections exceed the original revenue targets

submitted by the President of the Philippines to Congress pursuant to Section

22, Article VII of the Constitution, including savings generated from

programmed appropriations for the year: PROVIDED, That collections

arising from sources not considered in the aforesaid original revenue targets

may be used to cover releases from appropriations in this Fund: PROVIDED,

FURTHER, That in case of newly approved loans for foreign-assisted

projects, the existence of a perfected loan agreement for the purpose shall be

sufficient basis for the issuance of a SARO covering the loan proceeds:

PROVIDED, FURTHERMORE, That if there are savings generated from

the programmed appropriations for the first two quarters of the year, the

DBM may, subject to the approval of the President, release the pertinent

appropriations under the Unprogrammed Fund corresponding to only fifty

percent (50%) of the said savings net of revenue shortfall: PROVIDED,

FINALLY, That the release of the balance of the total savings from

programmed appropriations for the year shall be subject to fiscal

programming and approval of the President.

2012 GAA


1. Release of the Fund. The amounts authorized herein shall be released



22, Article VII of the Constitution: PROVIDED, That collections arising

from sources not considered in the aforesaid original revenue targets may be

45 See Certification dated 04 March 2011 signed by Department of Finance Undersecretary Gil S. Beltran.


used to cover releases from appropriations in this Fund: PROVIDED,

FURTHER, That in case of newly approved loans for foreign-assisted


sufficient basis for the issuance of a SARO covering the loan proceeds.

2013 GAA





22, Article VII of the Constitution, including collections arising from sources

not considered in the aforesaid original revenue targets, as certified by the

BTr: PROVIDED, That in case of newly approved loans for foreign-assisted


sufficient basis for the issuance of a SARO covering the loan proceeds.46

93. Apart from the fact that the Honorable Court’s interpretation

would render much of the Unprogrammed Fund useless, the text of the special

provision referring to the Unprogrammed Fund supports the government’s

intention and interpretation: (1) if the provision was meant to refer to aggregate

amounts, it would have used the word “total” or the phrase “only when the

revenue collection exceeds the original revenue target;” (2) the phrase “original

revenue targets” clearly indicates a plurality of revenue targets with which the

revenue collections must be matched.

94. The impracticality of the interpretation espoused by the Honorable Court is

further highlighted by the fact that the actual total revenue collections cannot be determined

before the close of the fiscal year. The Bureau of Treasury (BTr) has to reconcile first

its estimated revenue collections with the actual revenues collected by the Bureau

of Internal Revenue, Bureau of Customs, and other agencies, as of December

31. Thereafter, the BTr prepares a cash operations report, which is

subsequently audited by COA. Thus, the BTr cannot issue a certification that

the actual total revenue collections exceed the total of the revenue targets

before the cash operations report is approved by COA. This process, which

obviously cannot be started until after December 31, is usually completed

around March of the next fiscal year, in which case, even if by some miracle the

total revenue collections are found to exceed the total of the revenue targets,

the excess revenue collections can no longer be released as they are deemed

reverted to the unappropriated surplus of the General Fund and are no longer

available for expenditure except by subsequent legislative enactment.

46 Emphasis supplied.


95. It is a general rule of statutory construction that a law should not

be so construed as to produce an absurd result.47 An interpretation should, if

possible, be avoided under which a provision being construed is defeated,

nullified, destroyed, emasculated, repealed, or rendered insignificant,

meaningless, inoperative, or nugatory.48 As recognized in the decision, the

Unprogrammed Fund functions as a “standby appropriation to support

additional expenditures for certain priority PAPs.”49 It is included in the GAA

“to provide ready cover so as not to delay the implementation of the PAPs

should new or additional revenue sources be realized during the year.”50 By

providing for the Unprogrammed Fund in the GAA, Congress has allowed the

Executive flexibility to use additional funds brought about by good fiscal

management or some contingent event, without need of returning to Congress

to obtain authorization to spend such funds. The GAA should therefore be

reasonably construed to give effect to such legislative intent and avoid an

absurd result. This is the DBM’s intention when it proposed the language of

the Unprogrammed Fund. The Congress approved such language.

96. A revenue surplus is not a condition precedent for the release of revenue

collections from sources not originally considered in the budget proposal. In general,

expenditures under the Unprogrammed Fund are authorized if there are:

a) Revenue collections in excess of the original revenue targets

in the budget proposal submitted by the President to

Congress;

b) Revenue collections from sources not originally considered

in the budget proposal; and

c) Newly-approved loans for foreign-assisted projects that were

obtained.

97. The above items are independent of one another. Thus, a revenue

surplus is not a condition precedent for the release of “revenue collections

from sources not originally considered in the budget proposal.” Likewise, these

“revenue collections from sources not originally considered in the budget

proposal” should not be taken into account in determining if the revenue

collections exceed the original revenue targets.

98. Under the 2011 and 2012 GAAs, the phrase “collections arising

from sources not considered in the aforesaid original revenue targets may be

47 Lim v. The Insular Collector of Customs, G.R. No. L-11759, 16 March 1917. 48 Civil Service Commission v. Department of Budget and Management, G.R. No. 158791, 22 July 2005. 49 Decision, p. 82. 50 Id.


used to cover releases from appropriations in this Fund” is contained in a

proviso, making it a separate and distinct condition from the phrase “revenue

collections exceed the original revenue targets submitted by the President of

the Philippines to Congress.” As correctly pointed out by Justice Del Castillo—

These provisos should be reasonably construed as exceptions to the general

rule that revenue collections should exceed the original revenue targets

because of the plain meaning of the word “provided” and the tenor of the

wording of these provisos. Further, in both the 2011 and 2012 GAA

provisions, the phrase “may be used to cover releases from appropriations in

this Fund” in the first proviso is essentially of the same meaning as the phrase

“shall be sufficient basis for the issuance of a SARO covering the loan

proceeds” in the second proviso because, precisely, the SARO is the authority

to incur obligations. In other words, both phrases pertain to the

authorization to release funds under the Unprogrammed Fund when the

conditions therein are met even if the revenue collections do not exceed the

original revenue targets.51

The various provisions in the GAA confirm Justice Del Castillo’s position that

the word “PROVIDED” operates to introduce an exception.

99. Under the 2013 GAA, the phrase “collections arising from

sources not considered in the original revenue targets” is no longer contained

in a proviso—



submitted by the President of the Philippines to Congress…including

collections arising from sources not considered in the original revenue

targets…52

100. The Honorable Court finds this as an “explicit” mandate that “the

additional revenues from sources not considered in the BESFs must be taken

into account in determining if the revenue collections exceeded the original

revenue targets.”53

101. With due respect, the interpretation espoused by the Honorable

Court leads to the conclusion that the revenue targets should be considered as a

whole—a consequence, which, as previously discussed, could not have been

intended by the Executive and Congress.

51 Concurring and Dissenting Opinion of Associate Justice Del Castillo, p. 43. 52 Italics supplied. 53 Decision, p. 80.


102. Although under the 2013 GAA the phrase “collections arising

from sources not considered in the original revenue targets” is no longer

contained in a proviso, it remains distinct from the phrase “revenue collections

exceed the original revenue targets submitted by the President of the

Philippines to Congress…” This is because the word “including” pertains to

“the amounts authorized,” such that the amounts authorized under the

Unprogrammed Fund include collections arising from sources not considered in

the original revenue targets. This is a reasonable construction that will

effectuate the intention of both the Executive and Congress and avoid an

absurd result.

103. Finally, if only to finally settle the issues (1) whether a revenue

surplus is a condition precedent for the release of revenues from sources not

originally considered, and (2) whether revenues from sources not originally

considered are an independent source of funding for the Unprogrammed Fund,

we invite the Honorable Court’s attention to the 2014 GAA—


1. Release of the Fund. The amounts authorized herein shall be

released only when the revenue collections exceed the original revenue

targets submitted by the President of the Philippines to Congress pursuant

to Section 22, Article VII of the Constitution, as certified by the BTr:

PROVIDED, That in case of newly approved loans for foreign-assisted


sufficient basis for the issuance of a SARO covering the loan proceeds:

PROVIDED, FURTHER, That the release of Unprogrammed Fund shall be

subject to Section 63 of the General Provisions of this Act.

Implementation of this provision shall be subject to guidelines to be

jointly issued by the DBM, DOF and BTr.

…. … …

4. Reconstruction and Rehabilitation Program. The amount of Eighty

Billion Pesos (P80,000,000,000) appropriated herein for Reconstruction and

Rehabilitation Program shall be released in accordance with a rehabilitation

plan and shall be subject to Section 63 of the General Provisions of this Act:

PROVIDED, That collections arising from sources not considered in

the aforesaid original revenue targets, proceeds from grants, loans for the

repair and rehabilitation of calamity stricken areas, and subject to the

approval of the President, savings generated from the programmed

appropriations in this Act may be released to cover the appropriations herein

provided.54

104. Clearly, under the present GAA, “collections arising from sources

not considered in the aforesaid original revenue targets” are an independent

54 Emphasis supplied.


source of funding for the release of the Unprogrammed Fund and do not

depend on the existence of a revenue surplus. If we are to follow the

Honorable Court’s interpretation, this would effectively deprive millions of

Filipinos access to funds for reconstruction and rehabilitation.

E.

THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED.

105. Since the start of the controversy in late 2013, the DBM has been

releasing information to the public on the legal bases and policy justifications

for the DAP. During the proceedings before this Honorable Court,

respondents, which include the DBM and the Office of the President,

demonstrated the legal and constitutional bases of DAP through its

Consolidated Comment dated 07 November 2013, and have offered, at their

own instance, factual information on the application of DAP despite the

palpable insufficiency of the petitions.

106. The DBM and the Office of the President necessarily interpret

applicable laws in implementing the budget. They are government agencies

which have the institutional competence in interpreting these laws informed as

they are by the knowledge of implementing the budget. Even an incorrect legal

interpretation by these agencies does not warrant a penalty, because they are

presumed to have adopted the interpretation which best aids their

responsibility of executing the budget.

107. This Honorable Court itself stated in the decision that the

doctrine of operative fact “is resorted to only as a matter of equity and fair

play.”55 In Planters Products, Inc. v. Fertiphil Corporation,56 this Court held that this

doctrine “nullifies the effects of an unconstitutional law by recognizing that the

existence of a statute prior to a determination of its unconstitutionality is an

operative fact and may have consequences which cannot always be ignored.”

This is because “[i]t would deprive the law of its quality of fairness and

justice…if there be no recognition of what had transpired prior

to…adjudication.”57

108. Thus, the doctrine of operative fact only applies to questions

involving the problem of undoing acts done prior to a declaration of

55 Decision, p. 87. 56 G.R. No. 166006, 14 March 2008. See The Municipality of Malabang, Lanao Del Sur v. Benito, G.R. No. L-28113, 28 March 1969. 57 De Agbayani v. Philippine National Bank, G.R. No. L-23127, 29 April 1971.


unconstitutionality of a law or executive act.58 The doctrine is applied by

determining the retroactivity or prospectivity of the judicial declaration of

unconstitutionality. In other words, the doctrine of operative fact is about

determining when the judicial declaration of unconstitutionality becomes

effective, considering that prior to such declaration, a law or executive act is

presumed valid, and that people have relied on such validity. It would indeed

be unreasonable if people who were dutiful in following a law would be

deprived of certain rights and privileges by the subsequent invalidation of such

law. It speaks of nothing about the liability of so-called authors, proponents, or

implementors.

109. In De Agbayani v. Philippine National Bank,59 the Honorable Court

considered the effect of a debt moratorium law (which was declared

unconstitutional in Rutter v. Esteban)60 in counting the prescriptive period for

foreclosing a mortgage. Even if the debt moratorium law was considered void

for being unconstitutional, the Court held in De Agbayani that the creditor did

not lose the prescriptive period for foreclosing the mortgage because it has

relied on the validity of such law prior to the declaration of its

unconstitutionality. In the words of the Court, the existence of the debt

moratorium law is “a fact to be reckoned with.”61 Thus, even if the debt

moratorium law was declared unconstitutional, the Honorable Court in De

Agbayani fixed the effectivity of such declaration of unconstitutionality from the

promulgation of Rutter v. Esteban to avoid injustice to people who relied on the

debt moratorium law. In other words, the Court made the declaration of

unconstitutionality of the debt moratorium law prospective from (or retroactive

to) the promulgation of Rutter v. Esteban.

110. The doctrine of operative fact has nothing to do with the

potential liability of persons who acted pursuant to a then-constitutional

statute, order, or practice. They are presumed to have acted in good faith and

the court cannot load the dice, so to speak, by disabling possible defenses in

potential suits against so-called “authors, proponents and implementors.” The

mere nullification of an act has no bearing on individual liability precisely

because the doctrine primarily seeks to ensure that acts performed prior to

nullification are still deemed valid on the theory that judicial nullification is a

contingent or unforeseen event.

58 The doctrine of operative fact covers statutes and executive acts. The Court said in the Decision that “[t]he doctrine of operative fact recognizes the existence of the law or executive act that produced consequences that cannot always be erased, ignored or disregarded, p. 87. See also Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, 08 October 2013; Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council, G.R. No. 171101, 22 November 2011. 59 De Agbayani, supra note 57. 60 G.R. No. L-3708, 18 May 1953. 61 De Agbayani, supra note 57.


111. The cases before us are about the statutory and constitutional

interpretation of so-called acts and practices under a government program,

DAP. These are not civil, administrative, or criminal actions against the public

officials responsible for DAP, and any statement about bad faith may be

unfairly and maliciously exploited for political ends. At the same time, any

negation of the presumption of good faith, which is the unfortunate

implication of paragraphs 3 and 4 of page 90 of the Decision,62 violates the

constitutional presumption of innocence, and is inconsistent with the

Honorable Court’s recognition that “the implementation of the DAP yielded

undeniably positive results that enhanced the economic welfare of the

country.”63

112. The policy behind the operative fact doctrine is consistent with

the idea that regardless of the nullification of certain acts and practices under

the DAP and/or NBC No. 541, it does not operate to impute bad faith to

authors, proponents and implementors who continue to enjoy the presumption

of innocence and regularity in the performance of official functions and duties.

Good faith is presumed, whereas bad faith requires the existence of facts. To

hold otherwise would send a chilling effect to all public officers whether of

minimal or significant discretion, the result of which would be a dangerous

paralysis of bureaucratic activity.

III.

PROCEDURAL ARGUMENTS

113. Our substantive arguments simply bolster the need to strictly

comply with the procedural requirements for judicial review. The Honorable

Court’s denigration of procedural requirements as mere technicalities to be set

aside whenever it finds the issues of transcendental importance cannot be

reconciled with the high estate given to them in Lozano v. Nograles.64

62 “Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not always apply, and is not always the consequence of every declaration of constitutional validity. It can be invoked only in situations where the nullification of the effects of what used to be a valid law would result in inequity and injustice; but where no such result would ensue, the general rule that an unconstitutional law is totally ineffective should apply.

In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can no longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.” 63 Decision, p. 90. 64 G.R. No. 187883, 16 June 2009.


A.

WITHOUT AN ACTUAL CASE OR CONTROVERSY, ALLEGATIONS OF GRAVE

ABUSE OF DISCRETION ON THE PART OF ANY INSTRUMENTALITY OF THE

GOVERNMENT CANNOT CONFER ON THIS HONORABLE COURT THE

POWER TO DETERMINE THE CONSTITUTIONALITY OF THE DAP AND NBC

NO. 541.

114. Article VIII of the Constitution provides:

Section 1. The judicial power shall be vested in one Supreme Court and in

such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle

actual controversies involving rights which are legally demandable and

enforceable, and to determine whether or not there has been a grave abuse of

discretion amounting to lack or excess of jurisdiction on the part of any

branch or instrumentality of the Government.

115. Referring to the second paragraph of Section 1 of Article VIII,

this Honorable Court says that “[The] Constitution thereby expanded the

concept of judicial power, which up to then was confined to its traditional

ambit of settling actual controversies involving rights that were legally

demandable and enforceable.”65

116. Respondents do not dispute the fact that under the second

paragraph of Section1 above, courts can inquire into questions of grave abuse

of discretion on the part of the other departments of the government even in

cases involving political questions.66 The question, however, is whether courts

65 Decision, p. 15. 66 History of Art. VIII, Sec. 1, par. 2. For a long time, spanning a period 66 years, it was established doctrine that the Executive’s proclamation that the exigencies justifying the suspension of the privilege of the writ of habeas corpus have arisen “is final and conclusive upon this [Judicial] department of the Government and upon all persons.”. The doctrine was first announced in Barcelon v. Baker, 5 Phil. 87 (1905), when the privilege of the writ was suspended by the Governor General and the Philippine Commission, because of uprising in Cavite and Batangas). The rule was reiterated in Montenegro v. Castaneda, 91 Phil. 882 (1952), when President Quirino suspended the privilege for the second time because of the Huk rebellion of the 1950s. When President Marcos suspended the privilege a third time on August 21, 1971 on account of the bombing of a political rally on Plaza Miranda in Quiapo, Manila, by subversives and the government counsel raised the political question doctrine as a defense to petitions for habeas corpus seeking the release of those arrested and detained under the proclamation, the Court ordered a second round of arguments on whether the President’s determination of the exigencies giving rise to the suspension of the privilege of the writ was a political question which courts could not review. In Lansang v. Garcia, 42 SCRA 448 (1971) the Supreme Court, through Chief Justice Concepcion, held that the suspension of the privilege of the writ of habeas corpus is subject to limited review by the courts, the role of courts being “merely to check – not to supplant – the Executive, or to ascertain merely whether he has gone beyond the constitutional limits of his jurisdiction, not


can determine the constitutionality of the acts of any government agency on

allegations solely that the act in question constitutes a grave abuse of discretion

by the government agency when there is no actual case or controversy, .

117. It is submitted that courts cannot exercise the power of judicial

review unless there is an actual case or controversy. Courts are not fiscalizers.

The purpose of the second paragraph of Section 1 is not to expand the

jurisdiction of courts but their judicial power by extending it to questions of

grave abuse of discretion. This is new, because, before the decision in Lansang v.

Garcia,67 the moment the political question doctrine is invoked, courts

automatically took a hands-off policy. Now, the mere allegation that the

question presented is political does not automatically bar courts from inquiring

into the question whether in deciding political questions there has been no

grave abuse of discretion. Put in another way, the second paragraph of Section

1 refers to the scope of judicial power, whereas the jurisdiction of the Supreme

Court is defined in Section 5 which provides as follows:

Section 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other

public ministers and consuls, and over petitions for certiorari, prohibition,

mandamus, quo warranto, and habeas corpus.

to exercise the power vested in him or to determine the wisdom of his act … [I]t is urged is urged by the Solicitor General ‘…that judicial inquiry into the basis of the questioned proclamation can go no further than to satisfy the Court not that the President’s decision is correct and that the public safety was endangered by the rebellion and justified the suspension of the writ, but that in suspending the writ, the President did not act arbitrarily.’ No cogent reason has been submitted to warrant the rejection of such test.”

Chief Justice Concepcion subsequently became the Chairman of the Committee on Judicial Department of the 1986 Constitutional Commission. The second paragraph of Article VIII, Sec. 1 was his handiwork. The first sentence of this paragraph, which reads “Judicial power includes the duty of courts of justice to settle actual controversies involving rights which are legally demandable and enforceable,” is a restatement of his ponencia in Roxas v. Lopez, 71 SCRA 756 (1966) defining the term “judicial power” as “the authority to settle justiciable controversies or disputes involving rights that are enforceable and demandable before the courts of justice or the redress of wrongs for the violation of such rights.” On the other hand, the second sentence of the second paragraph which reads “to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government” embodies the ruling in Lansang v. Garcia, 42 SCRA 448 (1971).

In his sponsorship speech, Chief Justice Concepcion noted that during the martial law period, courts found it convenient to decline to rule on controversial questions on the ground that they were political questions. He said that the second paragraph of Art. VIII, Sec. 1 means that “courts cannot hereafter evade the duty to settle matters of this nature, by claiming that such matters constitute political question.” I RECORD OF THE

CONSTITUTIONAL COMMISSION, p. 436, 10 July 1986. 67 G.R. No. L-33964, 11 December 1971.


(2) Review, revise, modify, or affirm on appeal or certiorari, as the law or the

Rules of Court may provide, final judgments and orders of lower courts

in:

(a) All cases in which the constitutionality or validity of any treaty,

international or executive agreement, law, presidential decree,

proclamation, order, instruction, ordinance, or regulation is in

question.

(b) All cases involving the legality of any tax, impost, assessment, or toll,

or any penalty imposed in relation thereto.

(c) All cases in which the jurisdiction of any lower court is in issue.

(d) All criminal cases in which the penalty imposed is reclusion perpetua or

higher.

(e) All cases in which only an error or question of law is involved.

118. Indeed the framers of the 1987 Constitution were not concerned

with the jurisdiction of courts but with the scope of the judicial power because

of the perception that upon invocation of the political question doctrine, the

courts refused to exercise the judicial power to scrutinize Presidential

proclamations of the suspension of the privilege of the writ of habeas corpus

or declarations of martial law for possible abuse. They therefore incorporated

the ruling in Lansang v. Garcia, asserting the power of courts to inquire into

questions of “‘not that the President’s decision is correct and that the public

safety was endangered by the rebellion and justified the suspension of the writ,

but that in suspending the writ, the President did not act arbitrarily.’” As this

Honorable Court subsequently noted, Section 1, paragraph 2 of Article VIII

“incorporates in the fundamental law the ruling in Lansang vs. Garcia (42 SCRA

448, December 11, 1971).”

119. The Decision in these cases quotes the following from Angara v.

Electoral Commission:68

The Constitution is a definition of the powers of Government. Who

is to determine the nature, scope, and extent of such powers? The

Constitution itself has provided for the instrumentality of the judiciary as the

rational way. And when the judiciary mediates to allocate constitutional

boundaries, it does not assert any superiority over the other departments; it

does not in reality nullify or invalidate an act of the legislature, but only

asserts the solemn and sacred obligation assigned to it by the Constitution to

determine conflicting claims of authority under the Constitution and to

establish for the parties in an actual controversy the right which that

instrument secures and guarantees to them. This is in truth all that is

68 G.R. No. L-45081, 15 July 1936.


involved in what is termed “judicial supremacy” which properly is the power

of judicial review, under the Constitution. . . .

It omits however the following portion of the Angara opinion in which the

Supreme Court emphasized that its great power can be invoked only where

there is an actual case or controversy, to wit:

Even then, this power of judicial review is limited to actual cases and

controversies to be exercised after full opportunity of argument by the

parties, and limited further to the constitutional question raised or the very lis

mota presented. Any attempt at abstraction could only lead to dialectics and

barren legal questions and to sterile conclusions unrelated to actualities.

B.

PETITIONERS’ ACTIONS DO NOT PRESENT AN ACTUAL CASE OR

CONTROVERSY AND THEREFORE THIS HONORABLE COURT DID NOT

ACQUIRE JURISDICTION.

120. The Decision in these cases states:

An actual and justiciable controversy exists 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 a conflict between legal rights. The issues being raised herein

meet the requisite ripeness considering that the challenged executive acts

were already being implemented by the DBM, and there are averments by the

petitioners that such implementation of the 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.69

121. Just because people have “incompatible perspectives” on a

constitutional question does not mean they have a justiciable controversy that

any of them can ask the court to decide when, in such a case, all that is

necessary is to stage a public debate and ask the board of judges to decide. El

fallo del juez es inapelable.

122. What then is meant by an actual case or controversy”? In Aetna

Life Insurance Co. of Hartford Conn. v. Haworth,70 it was held:

69 Decision, p. 21. Emphasis supplied. 70 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed 617 (1937). Emphasis supplied.


A “controversy” must be one that is appropriate for judicial

determination. A justiciable controversy is thus distinguished from a

difference or dispute of a hypothetical or abstract character or from one that

is academic or moot. The controversy must be definite and concrete,

touching the legal relations of arties having adverse legal interests. It must be

real and substantial controversy admitting of specific relief through a decree

that is conclusive in character, as distinguished from an opinion advising

what the law would be upon a hypothetical state of facts. Where there is such

a concrete case admitting of an immediate and definitive determination of

the legal rights of the parties in an adversary proceedings upon the facts

alleged, adjudication of the rights of the litigants may the award of process or

the payment of damages. And it is not essential to the exercise of judicial

power that an injunction be sought; allegations that irreparable injury is

threatened are not required.

123. In Muskrat v. United States71 it was stated:

By cases and controversies are intended the claims of litigants brought before

the courts for determination by such regular proceedings as are established by law or

custom for the protection or enforcement of rights, or the prevention, redress, or

punishment of wrongs. Whenever the claim of a party under the Constitution, laws

or treaties of the United States takes such a form that the judicial power is capable of

action upon it, then it has become a case. The term implies the existence of present

or possible adverse parties, whose contentions are submitted to the court for

adjudication.

124. This Honorable Court points out that the fact that public funds

had been allocated, disbursed or utilized by reason or on account of the

executive acts gave rise to an actual controversy that was ripe for adjudication,72

but Courts do not exist to fiscalize the other branches of the government.

Their business is to decide cases and incidentally check the exercise of power

by the other departments of the government if the latter’s act is complained of

as being violative of the rights of one of the parties. In Muskrat, the U.S.

Supreme Court declared the act of March 1, 1907 of the U.S. Congress

unconstitutional, permitting certain individuals representing Indian tribes to

secure a ruling on the validity of prior statutes which altered the terms of

allotments made of Indian lands. What the Court said in the Muskrat case, in

invalidating the act of March 1, 1907, applies fully to these suits:

The whole purpose of the law is to determine the constitutional

validity of this class of legislation, in a suit not arising between parties

concerning a property right necessarily involved in the decision in question,

but in a proceeding against the government in its sovereign capacity, and

concerning which the only judgment required is to settle the doubtful

character of the legislation in question. Such judgment will not conclude

71 219 U.S..346, 31 S.Ct. 250, 55 L.Ed. 246 (1911). 72 Decision, p. 21.


private parties, when actual litigation brings to the court the question of the

constitutionality of such legislation. In a legal sense the judgment could not

be executed, and amounts in fact to no more than an expression of opinion

upon the validity of the acts in question. Confining the jurisdiction of this

court within the limitations conferred by the Constitution, which the court

has hitherto been careful to observe, and whose boundaries it has refused to

transcend, we think the Congress, in the act of March 1, 1907, exceeded the

limitations of legislative authority, so far as it required of this court action not

judicial in its nature within the meaning of the Constitution. . . .

125. Indeed, here in the suits at bar, where is the violation of

petitioners’ right as a result of which they have suffered injury so as to make

them more than mere request for advisory opinion on the validity of the DAP

and its related acts?

C.

PETITIONERS HAVE NEITHER BEEN INJURED NOR THREATENED WITH

INJURY AS A RESULT OF THE OPERATION OF THE DAP AND THEREFORE

SHOULD HAVE BEEN HELD TO HAVE NO STANDING TO BRING THESE

SUITS FOR CERTIORARI AND PROHIBITION.

126. The Decision makes a bow to the traditional constitutional

requirements with the statement that “The requisites for the exercise of judicial

review are the following, namely: (1) there must be an actual case or justiciable

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

adjudication; (3) the person challenging the act must be a proper party; and (4)

the issue of constitutionality must be raised at the earliest opportunity and must

be the very lis mota of the case.73 Then the Decision quotes from Belgica v.

Executive Secretary,74 in which it was stated:

It is a prerequisite that something had been accomplished or

performed by either branch before a court may come into the picture, and

the petitioner must allege the existence of an immediate or threatened injury

to itself as a result of a threatened injury to itself as a result of the challenged

action.

127. The Decision cites further the case of De Castro v. Judicial and Bar

Council75 which, quoting Agan, Jr. v. PIATCO76stated:

[Petitioner] must be able to show not only that the law or any

government act is invalid but also that he sustained or is in imminent danger

73 Decision, p. 20. 74 G.R. No. 208566, 19 November 2013. Emphasis supplied. 75 G. R. No. 191002, 20 April 2010. Emphasis supplied. 76 G.R. No. 155001, 5 May 2003.


of sustaining some direct injury as a result of its enforcement, and not merely

that he suffers thereby in some indefinite way. It must appear that the person

complaining has been or is about to be denied some right or privilege to

which he is lawfully entitled or that he is about to be subjected to some

burden or penalties by reason of the statute or act complained of.”77

128. Applying these rules to the facts of these cases, this Honorable

Court should have held petitioners to have no standing since they have not

alleged any injury or threatened injury to them as a result of the application or

enforcement of the DAP or NBC No. 541.

129. This Court says that even if petitioners do not pass the test of

“direct injury” they may nevertheless be allowed to sue because these cases are

of “transcendental importance.” The Court cited Araneta v. Dinglasan.78 In

Araneta, petitioners, Senator Eulogio Rodriguez, Nacionalista Party party

president, and then NP legal counsel Antonio Barredo questioned the

disbursement of public funds by the government under President Elpidio

Quirino on the ground that after Congress had been able to meet in regular

session, the President could no longer exercise his emergency powers. The

standing of the petitioners was questioned by the respondents, as was the

propriety of use of prohibition by the second petitioner, J. Antonio Araneta, to

stop his prosecution for violation of the President’s house rental law. The

Court said that instead of taking up these questions concerning standing and

the propriety of resorting to prohibition to stop criminal prosecution, it was

going to consider the third petition of Leon Ma. Guerrero, to compel the

Administrator of the Sugar Quota Office and the Commissioner of Customs to

permit the exportation of shoes by him. Both officials had refused to issue the

required export license on the ground that the exportation of shoes from the

Philippines is forbidden by Executive Order, and Guerrero’s standing to bring

the suit was proper.

130. Those were the facts in Araneta. Mention of the “transcendental

importance” of the question presented was thrown in as additional reason for

bypassing the questions of standing and propriety of remedy. Thus, the

transcendental importance of a question alone cannot justify finding the

existence of standing or case or controversy where none exist. The relevant

portion of the decision in Araneta must be quoted to forestall misinterpretation

of the “transcendental importance” basis which for some seems to be a

talismanic phrase upon the mere invocation of which a court automatically

accepts a case for consideration:

77 Decision, pp. 22-23. 78 G.R. No. L-2044, 26 August 1949.


Three of these cases were consolidated for argument and the other

two were argued separately on other dates. Inasmuch as all of them present

the same fundamental question which, in our view, is decisive, they will be

disposed of jointly. For the same reason we will pass up the objection to the

personality or sufficiency of interest of the petitioners in case G. R. No. L-

3054 and case G. R. No. L-3056 and the question whether prohibition lies in

cases Nos. L-2044 and L-2756. No practical benefit can be gained from a

discussion of the procedural matters since the decision in the cases wherein

the petitioners' cause of action or the propriety of the procedure followed is

not in dispute, will be controlling authority on the others. Above all, the

transcendental importance to the public of these cases demands that they be

settled promptly and definitely, brushing aside, if we must, technicalities of

procedure. (Avelino vs. Cuenco, G. R. No. L-2821.) The petitions challenge

the validity of executive orders of the President avowedly issued in virtue of

Commonwealth Act No. 671. Involved in cases Nos. L-2044 and L-2756 is

Executive Order No. 62, which regulates rentals for houses and lots for

residential buildings. The petitioner, J. Antonio Araneta, is under prosecution

in the Court of First Instance of Manila for violation of the provisions of this

Executive Order, and prays for the issuance of the writ of prohibition to the

judge and the city fiscal. Involved in case L-3055 is Executive Order No. 192,

which aims to control exports from the Philippines. In this case, Leon Ma.

Guerrero seeks a writ of mandamus to compel the Administrator of the Sugar

Quota Office and the Commissioner of Customs to permit the exportation

of shoes by the petitioner. Both official refuse to issue the required export

license on the ground that the exportation of shoes from the Philippines is

forbidden by this Executive Order. Case No. L-3054 relates to Executive

Order No. 225, which appropriates funds for the operation of the

Government of the Republic of the Philippines during the period from July

1, 1949 to June 30, 1950, and for other purposes. The petitioner Eulogio

Rodriguez, Sr., as a tax-payer, an elector, and president of the Nacionalista

Party, applies for a writ of prohibition to restrain the Treasurer of the

Philippines from disbursing this Executive Order. Affected in case No. L-

3056 is Executive Order No. 226, which appropriates P6,000,000 to defray

the expenses in connection with, and incidental to, the hold lug of the

national elections to be held in November, 1949. The petitioner, Antonio

Barredo, as a citizen, tax-payer and voter, asks this Court to prevent “the

respondents from disbursing, spending or otherwise disposing of that

amount or any part of it.”

D.

NOR CAN PETITIONERS’ STANDING BE SUSTAINED ON THE GROUND THAT

THEY ARE BRINGING THESE SUITS AS CITIZENS AND AS TAXPAYERS.

131. First, the Honorable Court holds that citizens have a right to bring

public actions to vindicate public rights. What specific public right are

petitioners seeking to vindicate? In Tanada v. Tuvera79 mandamus was granted

ordering the Executive Secretary to cause the publication of all presidential

decrees, orders, instructions, proclamations and other issuances, because these

79 G.R. No. L-63915, 25 April 1985.


are matters of public concern of which petitioners had a constitutional right to

be informed. In Severino v. Governor General80 mandamus was granted ordering

the Governor General to call a special election for municipal president of Silay,

Negros Occidental, because suffrage is a public right. There were thus

constitutional rights petitioners were enforcing as “public rights.” But here

petitioners cannot point to any constitutional right to seek a determination of

an act of the government even where they have no case or controversy to

litigate.

132. The Honorable Court says that as taxpayers petitioners have a

right to prevent the illegal disbursement of public funds. That is correct if their

action is for injunction, but the suits at bar are not for injunction but for

certiorari and prohibition to determine the constitutionality of the DAP and

NBC No. 541. There is a difference between an injunctive suit, on the one

hand, and an action for certiorari and or prohibition, on the other. In an

injunctive suit it is the acts of officials of disbursing public funds which is

sought to be enjoined, whereas in a petition for certiorari and prohibition, it is

the execution or enforcement of the DAP and NBC No. 541 which is sought

to be enjoined.81 Thus, Rule 64, Sec. 1 and Sec. 9 (on injunction) speak of

enjoining the “act or acts complained of,” while Rule 65 (on certiorari and

prohibition) speaks of “annulling or modifying the proceedings” of the

tribunal, board or officer concerned.

133. Second, nor can petitioners’ standing as taxpayers be sustained. The

DAP and NBC No. 541 are not exercises of the taxing power of the state or

spending power of Congress. In Pascual v. Secretary of Public Works,82 which this

Court cites to support its ruling that petitioners have standing, it was held that

“taxpayers have sufficient interest in preventing the illegal expenditure of

public moneys raised by taxation and may therefore question the

constitutionality of statutes requiring expenditure of public moneys.”

Accordingly, in that case, petitioner’s standing as a taxpayer was upheld because

the law (R.A. No. 920) he was challenging was an appropriation law,

appropriating a sum of money (P85,000) for the construction of roads inside a

private subdivision. Neither the DAP nor NBC No. 541 are legislative

enactments appropriating public funds.

134. Third, the Honorable Court states on page 23 of its Decision that

“even if the issue may appear to concern only in general, such capacities

nonetheless equip the petitioner with adequate interest to sue.” This contradicts

80 G.R. No. L-6250, 03 August 1910. 81 Frothingham v. Mellon; Massachussetts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078 (1923)(“If a case for preventive relief be presented the court enjoins, in effect, not the execution of the statute, but the acts of the official, the statute notwithstanding.”) 82 G.R. No. L-10405, 29 December 1960. Emphasis supplied.


what the Honorable Court said earlier on the same pages 22-23 of its decision

that, to have standing, a petitioner “must be able to show not only that the law

or any government act is invalid but also that he sustained or is in imminent

danger of sustaining some direct injury as a result of its enforcement, and not

merely that he suffers thereby in some indefinite way.”

135. Nor is reliance on state court decisions in some American states

justified. To be sure those decisions are equivocal. They merely state that the

“case law in most jurisdiction now allows both ‘citizen’ and ‘taxpayer’ standing

in public actions.”83

136. A more accurate statement of the state of public actions in the

United States is given by the leading casebook on the subject, Hart and Wechsler,

The Federal Courts and the Federal System:

The Supreme Court has never embraced the public action model of

the judicial role or abandoned the dispute resolution model. Thus, for

example, the Court has held that a federal district court exceeded its Article

III jurisdiction when it considered a constitutional issue not raised by the

parties - even though it did so at the express direction of the court of

appeals. . . Moreover, . . . the Court has recurrently rejected litigation

avowedly aimed at generally policing official conduct rather than seeking

relief for the complaining party.84

E.

THE DECISION OF THIS HONORABLE COURT IS NOT BASED ON A

CONSIDERATION OF THE ACTUAL APPLICATIONS OF THE DAP IN 116 CASES

BUT SOLELY ON AN ABSTRACT CONSIDERATION OF NBC NO. 541.

137. NBC No. 541 should have been judged “as applied” to the facts

of actual cases rather than abstractly “on its face” as the Honorable Court did.

In addition to stating why certain amounts transferred were not “savings”, why

there were no appropriation covers for some projects on which public funds

were spent, why in releasing funds for unprogrammed expenditures, the

Honorable Court should have used concrete examples by using any of the 116

applications of the DAP. For its failure to do so, its decision suffers from

abstraction and violates the constitutional principle that the validity of any

governmental act must be determined as applied to actual facts and not on its

83 Decision, p. 23. 84 Bator, Meltzer, Mishkin, and Shapiro, Hart and Wechsler The Federal Courts and the Federal System 82 (3d ed.) (1988).


face in an abstract, hypothetical manner. The rule is well stated in Southern

Hemisphere Engagement Network v. Anti-Terrorism Council:85

In determining the constitutionality of a statute, therefore, its

provisions which are alleged to have been violated in a case must be

examined in the light of the conduct with which the defendant is charged.

… … …

The Court reiterated that there are “critical limitations by which a

criminal statute may be challenged” and “underscored that an ‘on-its-face’

invalidation of penal statutes . . . may not be allowed.”

[T]he rule established in our jurisdiction is, only statutes on free

speech, religious freedom, and other fundamental rights may be facially

challenged. Under no case may ordinary penal statutes be subjected to a facial

challenge.

PRAYER

WHEREFORE, it is respectfully prayed that:

1) This Honorable Court PARTIALLY RECONSIDER its

Decision dated 01 July 2014, and declare that:

a. Withdrawn unobligated allotments and unreleased

appropriations under the DAP are savings;

b. Cross-border transfers under the DAP are

constitutional;

c. The President augmented items with appropriation

cover under the DAP;

d. The use of the Unprogrammed Fund under the

DAP complied with the conditions provided in the

relevant GAAs; and

e. Regardless of the nullification of certain acts and

practices under the DAP and/or NBC No. 541, the

operative fact doctrine does not operate to impute

bad faith to authors, proponents and implementors

who continue to enjoy the presumption of

innocence and regularity in the performance of

official functions and duties.

85 G.R. No. 178552, 05 October 2010.


2) The petitions be DISMISSED for LACK OF MERIT.

Respondents pray for such other reliefs as may be just and equitable.

Manila, 18 July 2014.

FRANCIS H. JARDELEZA Solicitor General Roll No. 25719

IBP Lifetime No. 00037 MCLE Exemption No. III-008523

FLORIN T. HILBAY Senior State Solicitor

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OFFICE OF THE SOLICITOR

GENERAL 134 Amorsolo St., Legapi Village,

1229 Makati City Tel No.: 8186301 to 09 (Trunkline)

Fax No.: 8176307 Website: www.osg.gov.ph Email: [email protected]

Copy Furnished:

Augusto L. Syjuco, Jr. Petitioner in G.R. No. 209135 No. 4 Rodriguez St., Sta. Barbara Iloilo City

President Benigno Simeon C. Aquino III Malacañan, Manila

Attys. Dante N. Garcia and Romeo C. Laguardia For Petitioner in G.R. No. 209135 3 Flame Tree Road, Forbes Park Makati City

Executive Secretary Paquito N. Ochoa, Jr. Office of the President, Malacañan Manila

Atty. Wanda M. Talosig Talosig Saquing and Associates Counsel for Petitioner in G.R. No. 209136 No. 321 FEMII Bldg., (Annex A) A. Soriano, Jr., Ave., Intramuros Manila

Secretary Florencio B. Abad Department of Budget and Management General Solano St., San Miguel Manila

Atty. Manuelito R. Luna Luna and Associates Petitioner in G.R. No. 209136 No. 412 FEMII Bldg., (Annex A) A. Soriano, Jr., Ave., Intramuros Manila

Senate President Franklin M. Drilon Senate of the Philippines 4th Floor, Senate Building, Roxas Boulevard Pasig City

Attys. Raymond Parsifal A. Fortun and Maria Romina M. Dalagan Counsel for Petitioner in G.R. No 209155 137 CRM Avenue cor. CRM Marina BF Homes Almanza, Las Piñas City Atty. Manuel M. Lazaro Counsel for Petitioners in G.R. No. 209164 Chatham House Bldg. Valero cor. Rufino Streets Salcedo Village, Makati City

Speaker Feliciano R. Belmonte, Jr. House of Representatives House of Representatives Complex Constitution Hills, Quezon City Secretary Cesar V. Purisima Department of Finance DOF Building, BSP Complex Roxas Boulevard, Manila

http://www.osg.gov.ph/

mailto:[email protected]


Dean Froilan M. Bacungan, Attys. Rita Linda V. Jimeno, Reynaldo Y. Maulit and Romulo B. Lumauig Counsel for Petitioners in G.R. No. 209164 2ndFloor, Philtrust Building Remedios cor. M.H. Del Pilar Sts. Malate, Manila

National Treasurer Rosalia V. De Leon Bureau of Treasury Palacio Del Gobernador Building Intramuros, Manila

Dean Pacifico M. Agabin Counsel for Petitioner in G.R. No. 209260 26th Floor, Pacific Star Building Gil Puyat Avenue cor. Makati Avenue Makati City

Chairperson Maria Gracia M. Pulido Tan Commission on Audit Commonwealth Avenue, Quezon City

Attys. Jovencio H. Evangelista, Vanessa Quiambao Maguigad and Maria Cristina P. Yambot Counsel for Petitioners in G.R. No. 209287 No. 45 K-7th St., Brgy. West Kamias Quezon City Attys. Remigio D. Saladero, Jr. Noel V. Neri and Vicente Jaime M. Topacio Pro-Labor Legal Assistance Center Counsel for Petitioners in G.R. No. 209517 No. 33-B E. Rodriguez Sr. Avenue Quezon City

Prof. Harry L. Roque, Jr. Attys. Joel Ruiz Butuyan and Roger R. Rayel Roque and Butuyan Law Offices Counsel for Petitioners in G.R. No. 209442 Antel Corporate Center, Unit 1904, 19th Flr. 121 Valero Street, Salcedo Village Makati City Atty. Manuel S. Obedoza, Jr. Counsel for Petitioner in G.R. No. 209569 108 Mendez Road, Project 8 Quezon City

EXPLANATION (Pursuant to Sec. 11, Rule 13 of the

1997 Rules of Civil Procedure) The foregoing Motion for Reconsideration is being served by registered mail due to lack of sufficient personnel in the Office of the Solicitor General to effect personal service.

MELBOURNE D. PANA Associate Solicitor

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