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ARTURO M. TOLENTINO VS. THE SECRETARY OF FINANCE and

THECOMMISSIONER OF INTERNAL REVENUE1994 Aug 25G.R. No.

115455235 SCRA 3!FACTS"

The valued-added tax (VAT) is levied on the sale, barter or exchange of goodsand

properties as well as on the sale or exchange of services. It is equivalent to !" of

the gross selling price or gross value in #one$ of goods or properties sold, bartered

or exchanged or of the gross receipts fro# the sale or exchange of services.

%epublic Act&o. '' sees to widen the tax base of the existing VAT s$ste# and

enhance itsad#inistration b$ a#ending the &ational Internal %evenue *ode.The

*ha#ber of %eal +state and uilders Association (*%+A) contends that

thei#position of VAT on sales and leases b$ virtue of contracts entered into prior to

the

eectivit$ of the law would violate the constitutional provision of non-i#pair#ent of

contracts./

I001+2

3hether %.A. &o. '' is unconstitutional on ground that it violates the

contractclause under Art. III, sec ! of the ill of %ights.

%14I&52

&o. The 0upre#e *ourt the contention of *%+A, that the i#position of theVAT on

the sales and leases of real estate b$ virtue of contracts entered into prior to

theeectivit$ of the law would violate the constitutional provision of non-i#pair#ent

of contracts, is onl$ slightl$ less abstract but nonetheless h$pothetical. It is enough

to sa$that the parties to a contract cannot, through the exercise of prophetic

discern#ent,fetter the exercise of the taxing power of the 0tate. 6or not onl$ are

existing laws readinto contracts in order to 7x obligations as between parties, but

the reservation of essential attributes of sovereign power is also read into contracts

as a basic postulate of the legal order. The polic$ of protecting contracts against

i#pair#ent presupposes the#aintenance of a govern#ent which retains adequate

authorit$ to secure the peace andgood order of societ$. In truth, the *ontract *lause

has never been thought as ali#itation on the exercise of the 0tate8s power of

taxation save onl$ where a taxexe#ption has been granted for a valid

consideration.0uch is not the case of 9A4 in 5.%. &o. :;:

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law.6urther, the 0upre#e *ourt held the validit$ of %epublic Act &o. '' in its

for#al andsubstantive aspects as this has been raised in the various cases before it.

To su# up,the *ourt holds2() That the procedural require#ents of the *onstitution

have been co#plied with b$*ongress in the enact#ent of the statute=(udicial inquir$ whether the for#al require#ents for the enact#ent of statutes ?

#$%g&'a (. E)$'u*&($ S$'+$*a+,

6A*T02

In the 9hilippines, the por barrel/ (a ter# of A#erican-+nglish origin) has been

co##onl$ referred to as lu#p-su#, discretionar$ funds of @e#bers of the

4egislature (*ongressional 9or arrel/). owever, it has also co#e to refer to

certain funds to the +xecutive. The *ongressional 9or arrel/ can be traced fro#

Act B!CC (9ublic 3ors Act of D5eneral Appropriations Act for being unconstitutional, but the 0upre#e *ourt

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dis#issed the petition. In Gul$

began its probe into allegations that the govern#ent has been defrauded of so#e

9! illion over the past ! $ears b$ a s$ndicate using funds fro# the por barrel of

law#aers and various govern#ent agencies for scores of ghost pro>ects./ The

investigation was spawned b$ sworn adavits of six whistle-blowers who declared

that G4& *orporation ? G4&/ standing for Ganet 4i# &apoles ? had swindled billions ofpesos fro# the public coers for ghost pro>ects/ using no fewer than

non-govern#ent organiFations for an entire decade. In August

*o##ission on Audit (*oA) released the results of a three-$ear audit investigation

covering the use of legislatorsJ 9EA6 fro#

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. 0ubstantive Issues on the *ongressional 9or arrel/

3H& the

are unconstitutional considering that the$ violate the principles ofNconstitutional

provisions onO

.) Oseparation of powers

ects and to 7nance the

restoration of da#aged or destro$ed facilities due to cala#ities, as #a$ be directed

and authoriFed b$ the Hce of the 9resident of the 9hilippines/ under 0ection < of

9E ;D, as a#ended b$ 9E DDB, relating to the 9residential 0ocial 6und,

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are unconstitutional insofar as the$ constitute undue delegations of legislative

power

M +4E A&E %ATIH2

A. 9rocedural Issues

&o question involving the constitutionalit$ or validit$ of a law or govern#ental act

#a$ be heard and decided b$ the *ourt unless there is co#pliance with the legal

requisites for >udicial inquir$, na#el$2 (a) there #ust be an actual case or

controvers$ calling for the exercise of >udicial power= (b) the person challenging the

act #ust have the standing to question the validit$ of the sub>ect act or issuance=

(c) the question of constitutionalit$ #ust be raised at the earliest opportunit$= and

(d) the issue of constitutionalit$ #ust be the ver$ lis #ota of the case.

.) P+0. There exists an actual and >usticiable controvers$ in these cases. The

require#ent of contrariet$ of legal rights is clearl$ satis7ed b$ the antagonistic

positions of the parties on the constitutionalit$ of the 9or arrel 0$ste#./ Also, the

questions in these consolidated cases are ripe for ad>udication since the challenged

funds and the provisions allowing for their utiliFation ? such as the

the 9residential 0ocial 6und ? are currentl$ existing and operational= hence, there

exists an i##ediate or threatened in>ur$ to petitioners as a result of the

unconstitutional use of these public funds.

As for the 9EA6, the *ourt dispelled the notion that the issues related thereto had

been rendered #oot and acade#ic b$ the refor#s undertaen b$ respondents. A

case beco#es #oot when there is no #ore actual controvers$ between the parties

or no useful purpose can be served in passing upon the #erits. The respondentsJproposed line-ite# budgeting sche#e would not ter#inate the controvers$ nor

di#inish the useful purpose for its resolution since said refor# is geared towards

the ect

#atter, re#ains legall$ eective and existing. &either will the 9residentJs

declaration that he had alread$ abolished the 9EA6/ render the issues on 9EA6

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#oot precisel$ because the +xecutive branch of govern#ent has no constitutional

authorit$ to nullif$ or annul its legal existence.

+ven on the assu#ption of #ootness, nevertheless, >urisprudence dictates that the

Q#oot and acade#icJ principle is not a #agical for#ula that can auto#aticall$

dissuade the *ourt in resolving a case./ The *ourt will decide cases, otherwise

#oot, if2

i.) There is a grave violation of the *onstitution2 This is clear fro# the funda#ental

posture of petitioners ? the$ essentiall$ allege grave violations of the *onstitution

with respect to the principles of separation of powers, non-delegabilit$ of legislative

power, checs and balances, accountabilit$ and local autono#$.

ii.) The exceptional character of the situation and the para#ount public interest is

involved2 This is also apparent fro# the nature of the interests involved ? the

constitutionalit$ of the ver$ s$ste# within which signi7cant a#ounts of public funds

have been and continue to be utiliFed and expended undoubtedl$ presents a

situation of exceptional character as well as a #atter of para#ount public interest.

The present petitions, in fact, have been lodged at a ti#e when the s$ste#Js Raws

have never before been #agni7ed. To the *ourtJs #ind, the coalescence of the *oA

%eport, the accounts of nu#erous whistle-blowers, and the govern#entJs own

recognition that refor#s are needed to address the reported abuses of the 9EA6/

de#onstrates a pri#a facie pattern of abuse which onl$ underscores thei#portance of the #atter.

It is also b$ this 7nding that the *ourt 7nds petitionersJ clai#s as not #erel$

theoriFed, speculative or h$pothetical. Hf note is the weight accorded b$ the *ourt

to the 7ndings #ade b$ the *oA which is the constitutionall$-#andated audit ar# of

the govern#ent. if onl$ for the purpose of validating the existence of an actual and

>usticiable controvers$ in these cases, the *ourt dee#s the 7ndings under the *oA

%eport to be sucient.

iii.) 3hen the constitutional issue raised requires for#ulation of controlling

principles to guide the bench, the bar, and the public2 This is applicable largel$ due

to the practical need for a de7nitive ruling on the s$ste#Js constitutionalit$. There is

a co#pelling need to for#ulate controlling principles relative to the issues raised

herein in order to guide the bench, the bar, and the public, not >ust for the

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expeditious resolution of the anticipated disallowance cases, but #ore i#portantl$,

so that the govern#ent #a$ be guided on how public funds should be utiliFed in

accordance with constitutional principles.

iv.) The case is capable of repetition $et evading review. This is called for b$ the

recognition that the preparation and passage of the national budget is, b$

constitutional i#pri#atur, an aair of annual occurrence. The #$riad of issues

underl$ing the #anner in which certain public funds are spent, if not resolved at this

#ost opportune ti#e, are capable of repetition and hence, #ust not evade >udicial

review.

udicial power. @ore i#portantl$, the present *onstitution has not

onl$ vested the Gudiciar$ the right to exercise >udicial power but essentiall$ #aes it

a dut$ to proceed therewith (0ection , Article VIII of the D;' *onstitution).

B. P+0. 9etitioners have sucient locus standi to 7le the instant cases. 9etitioners

have co#e before the *ourt in their respective capacities as citiFen-taxpa$ers and

accordingl$, assert that the$ dutifull$ contribute to the coers of the &ationalTreasur$./ As taxpa$ers, the$ possess the requisite standing to question the validit$

of the existing 9or arrel 0$ste#/ under which the taxes the$ pa$ have been and

continue to be utiliFed. The$ are bound to suer fro# the unconstitutional usage of

public funds, if the *ourt so rules. Invariabl$, taxpa$ers have been allowed to sue

where there is a clai# that public funds are illegall$ disbursed or that public #one$

is being deRected to an$ i#proper purpose, or that public funds are wasted through

the enforce#ent of an invalid or unconstitutional law, as in these cases.

@oreover, as citiFens, petitioners have equall$ ful7lled the standing require#entgiven that the issues the$ have raised #a$ be classi7ed as #atters of

transcendental i#portance, of overreaching signi7cance to societ$, or of para#ount

public interest./ The *oA *hairpersonJs state#ent during the Hral Argu#ents that

the present controvers$ involves not K#erel$L a s$ste#s failure/ but a co#plete

breadown of controls/ a#pli7es the seriousness of the issues involved. Indeed, of

greater i#port than the da#age caused b$ the illegal expenditure of public funds is

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the #ortal wound inRicted upon the funda#ental law b$ the enforce#ent of an

invalid statute.

C.) &H. Hn the one hand, res >udicata states that a >udg#ent on the #erits in a

previous case rendered b$ a court of co#petent >urisdiction would bind a

subsequent case if, between the 7rst and second actions, there exists an identit$ of

parties, of sub>ect #atter, and of causes of action. This required identit$ is not

attendant hereto since 9hilconsa and 4A@9 involved constitutional challenges

against the DDC *E6 Article and

cases at bar call for a broader constitutional scrutin$ of the entire 9or arrel

0$ste#/. Also, the ruling in 4A@9 is essentiall$ a dis#issal based on a procedural

technicalit$ ? and, thus, hardl$ a >udg#ent on the #erits. Thus, res >udicata cannot

appl$.

Hn the other hand, the doctrine of stare decisis is a bar to an$ atte#pt to re-litigate

where the sa#e questions relating to the sa#e event have been put forward b$ the

parties si#ilarl$ situated as in a previous case litigated and decided b$ a co#petent

court. Absent an$ powerful countervailing considerations, lie cases ought to be

decided alie. 9hilconsa was a li#ited response to a separation of powers proble#,

speci7call$ on the propriet$ of conferring post-enact#ent identi7cation authorit$ to

@e#bers of *ongress. Hn the contrar$, the present cases call for a #ore holistic

exa#ination of (a) the inter-relation between the *E6 and 9EA6 Articles with each

other, for#ative as the$ are of the entire 9or arrel 0$ste#/ as well as (b) the

intra-relation of post-enact#ent #easures contained within a particular *E6 or9EA6 Article, including not onl$ those related to the area of pro>ect identi7cation but

also to the areas of fund release and realign#ent. The co#plexit$ of the issues and

the broader legal anal$ses herein warranted #a$ be, therefore, considered as a

powerful countervailing reason against a wholesale application of the stare decisis

principle.

In addition, the *ourt observes that the 9hilconsa ruling was actuall$ riddled with

inherent constitutional inconsistencies which si#ilarl$ countervail against a full

resort to stare decisis. 0ince the *ourt now bene7ts fro# hindsight and current7ndings (such as the *oA %eport), it #ust partiall$ abandon its previous ruling in

9hilconsa insofar as it validated the post-enact#ent identi7cation authorit$ of

@e#bers of *ongress on the guise that the sa#e was #erel$ reco##endator$.

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Again, since 4A@9 was dis#issed on a procedural technicalit$ and, hence, has not

set an$ controlling doctrine susceptible of current application to the substantive

issues in these cases, stare decisis would not appl$.

. 0ubstantive Issues on the *ongressional 9or arrel/

.) P+0. At its core, legislators have been consistentl$ accorded post-enact#ent

authorit$ to identif$ the pro>ects the$ desire to be funded through various

*ongressional 9or arrel allocations. 1nder the

authorit$ of legislators to identif$ pro>ects post-5AA #a$ be construed fro# 0pecial

9rovisions to B and the second paragraph of 0pecial 9rovision C. 4egislators have

also been accorded post-enact#ent authorit$ in the areas of fund release (0pecial

9rovision : under the

paragraphs and < under the

Thus, legislators have been, in one for# or another, authoriFed to participate in the

various operational aspects of budgeting,/ including the evaluation of wor and

7nancial plans for individual activities/ and the regulation and release of funds/, in

violation of the separation of powers principle. That the said authorit$ is treated as

#erel$ reco##endator$ in nature does not alter its unconstitutional tenor since the

prohibition covers an$ role in the i#ple#entation or enforce#ent of the law.

Towards this end, the *ourt #ust therefore abandon its ruling in 9hilconsa. The

*ourt also points out that respondents have failed to substantiate their position thatthe identi7cation authorit$ of legislators is onl$ of reco##endator$ i#port.

In addition to declaring the

which si#ilarl$ allow legislators to wield an$ for# of post-enact#ent authorit$ in the

i#ple#entation or enforce#ent of the budget, the *ourt also declared that infor#al

practices, through which legislators have eectivel$ intruded into the proper phases

of budget execution, #ust be dee#ed as acts of grave abuse of discretion

a#ounting to lac or excess of >urisdiction and, hence, accorded the sa#e

unconstitutional treat#ent.

legislators are eectivel$ allowed to individuall$ exercise the power of

appropriation, which, as settled in 9hilconsa, is lodged in *ongress. The power to

appropriate #ust be exercised onl$ through legislation, pursuant to 0ection

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Article VI of the D;' *onstitution which states2 &o #one$ shall be paid out of the

Treasur$ except in pursuance of an appropriation #ade b$ law./ The power of

appropriation, as held b$ the *ourt in engFon v. 0ecretar$ of Gustice and Insular

Auditor, involves (a) setting apart b$ law a certain su# fro# the public revenue for

(b) a speci7ed purpose. 1nder the

a personal lu#p-su# fund fro# which the$ are able to dictate (a) how #uch fro#such fund would go to (b) a speci7c pro>ect or bene7ciar$ that the$ the#selves also

deter#ine. 0ince these two acts co#prise the exercise of the power of appropriation

as described in engFon, and given that the

legislators to perfor# the sa#e, undoubtedl$, said legislators have been conferred

the power to legislate which the *onstitution does not, however, allow.

B.) P+0. 1nder the ects of

the legislators, which #a$ or #a$ not be consistent with his national agenda and

(b) re>ecting the whole 9EA6 to the detri#ent of all other legislators with legiti#ate

pro>ects.

+ven without its post-enact#ent legislative identi7cation feature, the

Article would re#ain constitutionall$ Rawed since the lu#p-su# a#ount of 9

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in #ore stringentl$ auditing the utiliFation of said 6unds./ Accordingl$, she

reco##ends the adoption of a line b$ line budget or a#ount per proposed

progra#, activit$ or pro>ect, and per i#ple#enting agenc$./

C.) P+0. To a certain extent, the conduct of oversight would be tainted as said

legislators, who are vested with post-enact#ent authorit$, would, in eect, be

checing on activities in which the$ the#selves participate. Also, this ver$ sa#e

concept of post-enact#ent authoriFation runs afoul of 0ection C, Article VI of the

D;' *onstitution which provides that2 OKA 0enator or @e#ber of the ouse of

%epresentativesL shall not intervene in an$ #atter before an$ oce of the

5overn#ent for his pecuniar$ bene7t or where he #a$ be called upon to act on

account of his oce./ Allowing legislators to intervene in the various phases of

pro>ect i#ple#entation renders the# susceptible to taing undue advantage of

their own oce.

owever, the *ourt cannot co#pletel$ agree that the sa#e post-enact#ent

authorit$ andNor the individual legislatorJs control of his 9EA6 per se would allow

hi# to perpetrate hi#self in oce. This is a #atter which #ust be anal$Fed based

on particular facts and on a case-to-case basis.

Also, while the *ourt accounts for the possibilit$ that the close operational proxi#it$

between legislators and the +xecutive depart#ent, through the for#erJs post-

enact#ent participation, #a$ aect the process of i#peach#ent, this #atterlargel$ borders on the do#ain of politics and does not strictl$ concern the 9or

arrel 0$ste#Js intrinsic constitutionalit$. As such, it is an i#proper sub>ect of

>udicial assess#ent.

:.) &H. 0ection

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In an$ event, the *ourt 7nds the above-stated argu#ent on this score to be largel$

speculative since it has not been properl$ de#onstrated how the 9or arrel 0$ste#

would be able to propagate political d$nasties.

.) P+0. The *ourt, however, 7nds an inherent defect in the s$ste# which actuall$

belies the avowed intention of #aing equal the unequal/ (9hilconsa, DDC). The

gauge of 9EA6 and *E6 allocationNdivision is based solel$ on the fact of oce,

without taing into account the speci7c interests and peculiarities of the district the

legislator represents. As a result, a district representative of a highl$-urbaniFed

#etropolis gets the sa#e a#ount of funding as a district representative of a far-

Rung rural province which would be relativel$ underdeveloped/ co#pared to the

for#er. To add, what rouses graver scrutin$ is that even 0enators and 9art$-4ist

%epresentatives ? and in so#e $ears, even the Vice-9resident ? who do not

represent an$ localit$, receive funding fro# the *ongressional 9or arrel as well.

The *ourt also observes that this concept of legislator control underl$ing the *E6

and 9EA6 conRicts with the functions of the various 4ocal Eevelop#ent *ouncils

(4E*s) which are alread$ legall$ #andated to assist the corresponding sanggunian

in setting the direction of econo#ic and social develop#ent, and coordinating

develop#ent eorts within its territorial >urisdiction./ *onsidering that 4E*s are

instru#entalities whose functions are essentiall$ geared towards #anaging local

aairs, their progra#s, policies and resolutions should not be overridden nor

duplicated b$ individual legislators, who are national ocers that have no law-

#aing authorit$ except onl$ when acting as a bod$.

*. 0ubstantive Issues on the 9residential 9or arrel/

P+0. %egarding the @ala#pa$a 6und2 The phrase and for such other purposes as

#a$ be hereafter directed b$ the 9resident/ under 0ection ; of 9E D! constitutes

an undue delegation of legislative power insofar as it does not la$ down a sucient

standard to adequatel$ deter#ine the li#its of the 9residentJs authorit$ with

respect to the purpose for which the @ala#pa$a 6unds #a$ be used. As it reads,the said phrase gives the 9resident wide latitude to use the @ala#pa$a 6unds for

an$ other purpose he #a$ direct and, in eect, allows hi# to unilaterall$

appropriate public funds be$ond the purview of the law.

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That the sub>ect phrase #a$ be con7ned onl$ to energ$ resource develop#ent and

exploitation progra#s and pro>ects of the govern#ent/ under the principle of

e>usde# generis, #eaning that the general word or phrase is to be construed to

include ? or be restricted to ? things ain to, rese#bling, or of the sa#e ind or class

as those speci7call$ #entioned, is belied b$ three (B) reasons2 7rst, the phrase

energ$ resource develop#ent and exploitation progra#s and pro>ects of thegovern#ent/ states a singular and general class and hence, cannot be treated as a

statutor$ reference of speci7c things fro# which the general phrase for such other

purposes/ #a$ be li#ited= second, the said phrase also exhausts the class it

represents, na#el$ energ$ develop#ent progra#s of the govern#ent= and, third,

the +xecutive depart#ent has used the @ala#pa$a 6unds for non-energ$ related

purposes under the sub>ect phrase, thereb$ contradicting respondentsJ own position

that it is li#ited onl$ to energ$ resource develop#ent and exploitation progra#s

and pro>ects of the govern#ent./

owever, the rest of 0ection ;, insofar as it allows for the use of the @ala#pa$a

6unds to 7nance energ$ resource develop#ent and exploitation progra#s and

pro>ects of the govern#ent,/ re#ains legall$ eective and subsisting.

%egarding the 9residential 0ocial 6und2 0ection < of 9E ;D, as a#ended b$ 9E

DDB, indicates that the 9residential 0ocial 6und #a$ be used to K7rst,L 7nance the

priorit$ infrastructure develop#ent pro>ects and Ksecond,L to 7nance the restoration

of da#aged or destro$ed facilities due to cala#ities, as #a$ be directed and

authoriFed b$ the Hce of the 9resident of the 9hilippines./

The second indicated purpose adequatel$ curtails the authorit$ of the 9resident to

spend the 9residential 0ocial 6und onl$ for restoration purposes which arise fro#

cala#ities. The 7rst indicated purpose, however, gives hi# carte blanche authorit$

to use the sa#e fund for an$ infrastructure pro>ect he #a$ so deter#ine as a

priorit$. Veril$, the law does not suppl$ a de7nition of priorit$ infrastructure

develop#ent pro>ects/ and hence, leaves the 9resident without an$ guideline to

construe the sa#e. To note, the deli#itation of a pro>ect as one of infrastructure/ is

too broad of a classi7cation since the said ter# could pertain to an$ ind of facilit$.Thus, the phrase to 7nance the priorit$ infrastructure develop#ent pro>ects/ #ust

be stricen down as unconstitutional since ? si#ilar to 0ection ; of 9E D! - it lies

independentl$ unfettered b$ an$ sucient standard of the delegating law. As the$

are severable, all other provisions of 0ection < of 9E ;D, as a#ended b$ 9E

DDB, re#ains legall$ eective and subsisting.

elgica v. +xecutive 0ecretar$ (5.%. &os.

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I. 010TA&TIV+ I001+0

A. *ongressional 9or arrel

3H& the

are unconstitutional considering that the$ violate the principles ofNconstitutional

provisions onO

.) Oseparation of powers

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(b) to 7nance the priorit$ infrastructure develop#ent pro>ects and to 7nance the

restoration of da#aged or destro$ed facilities due to cala#ities, as #a$ be directed

and authoriFed b$ the Hce of the 9resident of the 9hilippines/ under 0ection < of

9E ;D, as a#ended b$ 9E DDB, relating to the 9residential 0ocial 6und,

are unconstitutional insofar as the$ constitute undue delegations of legislative

power

M +4E A&E %ATIH2

A. *ongressional 9or arrel

.) P+0. At its core, legislators have been consistentl$ accorded post-enact#ent

authorit$ (a) to identif$ the pro>ects the$ desire to be funded through various

*ongressional 9or arrel allocations= (b) and in the areas of fund release and

realign#ent. Thus, legislators have been, in one for# or another, authoriFed to

participate in the various operational aspects of budgeting,/ violating the

separation of powers principle. That the said authorit$ is treated as #erel$

reco##endator$ in nature does not alter its unconstitutional tenor since the

prohibition covers an$ role in the i#ple#entation or enforce#ent of the law.Infor#al practices, through which legislators have eectivel$ intruded into the

proper phases of budget execution, #ust be dee#ed as acts of grave abuse of

discretion a#ounting to lac or excess of >urisdiction and, hence, accorded the

sa#e unconstitutional treat#ent.

legislators are eectivel$ allowed to individuall$ exercise the power of

appropriation, which, as settled in 9hilconsa, is lodged in *ongress.

B.) P+0. 1nder the

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su#Npost-enact#ent legislative identi7cation budgeting s$ste# fosters the creation

of a budget within a budget/ which subverts the prescribed procedure of

present#ent and consequentl$ i#pairs the 9residentJs power of ite# veto. As

petitioners aptl$ point out, the 9resident is forced to decide between (a) accepting

the entire 9

illion would be treated as a #ere funding source allotted for #ultiple purposes of

spending (i.e. scholarships, #edical #issions, assistance to indigents, preservation

of historical #aterials, construction of roads, Rood control, etc). This setup connotes

that the appropriation law leaves the actual a#ounts and purposes of theappropriation for further deter#ination and, therefore, does not readil$ indicate a

discernible ite# which #a$ be sub>ect to the 9residentJs power of ite# veto.

C.) P+0. To a certain extent, the conduct of oversight would be tainted as said

legislators, who are vested with post-enact#ent authorit$, would, in eect, be

checing on activities in which the$ the#selves participate. Also, this ver$ sa#e

concept of post-enact#ent authoriFation runs afoul of 0ection C, Article VI of the

D;' *onstitution which provides that2 OKA 0enator or @e#ber of the ouse of

%epresentativesL shall not intervene in an$ #atter before an$ oce of the5overn#ent for his pecuniar$ bene7t or where he #a$ be called upon to act on

account of his oce./ Allowing legislators to intervene in the various phases of

pro>ect i#ple#entation renders the# susceptible to taing undue advantage of

their own oce.

owever, the sa#e post-enact#ent authorit$ andNor the individual legislatorJs

control of his 9EA6 per se would allow hi# to perpetrate hi#self in oce. This is a

#atter which #ust be anal$Fed based on particular facts and on a case-to-case

basis.

Also, while it is possible that the close operational proxi#it$ between legislators and

the +xecutive depart#ent, through the for#erJs post-enact#ent participation, #a$

aect the process of i#peach#ent, this #atter largel$ borders on the do#ain of

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politics and does not strictl$ concern the 9or arrel 0$ste#Js intrinsic

constitutionalit$. As such, it is an i#proper sub>ect of >udicial assess#ent.

:.) &H. 0ection

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an$ other purpose he #a$ direct and, in eect, allows hi# to unilaterall$

appropriate public funds be$ond the purview of the law.

%egarding the 9residential 0ocial 6und2 0ection < of 9E ;D, as a#ended b$ 9E

DDB, indicates that the 9residential 0ocial 6und #a$ be used to 7nance the

priorit$ infrastructure develop#ent pro>ects/. This gives hi# carte blanche authorit$

to use the sa#e fund for an$ infrastructure pro>ect he #a$ so deter#ine as a

priorit$/. The law does not suppl$ a de7nition of priorit$ infrastructure

develop#ent pro>ects/ and hence, leaves the 9resident without an$ guideline to

construe the sa#e. To note, the deli#itation of a pro>ect as one of infrastructure/ is

too broad of a classi7cation since the said ter# could pertain to an$ ind of facilit$.

Thus, the phrase to 7nance the priorit$ infrastructure develop#ent pro>ects/ #ust

be stricen down as unconstitutional since ? si#ilar to 0ection ; of 9E D! ? it lies

independentl$ unfettered b$ an$ sucient standard of the delegating law.

Ma+&a Ca+o%&na A+au%%o (- #$n&gno Au&no III

9olitical 4aw ? *onstitutional 4aw ? 0eparation of 9owers ? 6und %ealign#ent ?

*onstitutionalit$ of the Eisburse#ent Acceleration 9rogra#

9ower of the 9urse ? +xecutive I#pound#ent

3hen 9resident enigno Aquino III too oce, his ad#inistration noticed thesluggish growth of the econo#$. The 3orld an advised that the econo#$ needed

a sti#ulus plan. udget 0ecretar$ 6lorencio utch/ Abad then ca#e up with a

progra# called the Eisburse#ent Acceleration 9rogra# (EA9).

The EA9 was seen as a re#ed$ to speed up the funding of govern#ent pro>ects.

EA9 enables the +xecutive to realign funds fro# slow #oving pro>ects to priorit$

pro>ects instead of waiting for next $earJs appropriation. 0o what happens under the

EA9 was that if a certain govern#ent pro>ect is being undertaen slowl$ b$ a certain

executive agenc$, the funds allotted therefor will be withdrawn b$ the +xecutive.

Hnce withdrawn, these funds are declared as savings/ b$ the +xecutive and said

funds will then be reallotted to other priorit$ pro>ects. The EA9 progra# did wor to

sti#ulate the econo#$ as econo#ic growth was in fact reported and portion of such

growth was attributed to the EA9 (as noted b$ the 0upre#e *ourt).

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Hther sources of the EA9 include the unprogra##ed funds fro# the 5eneral

Appropriations Act (5AA). 1nprogra##ed funds are standb$ appropriations #ade

b$ *ongress in the 5AA.

@eanwhile, in 0epte#ber

that he, and other 0enators, received 9hp:!@ fro# the 9resident as an incentive for

voting in favor of the i#peach#ent of then *hief Gustice %enato *orona. 0ecretar$

Abad clai#ed that the #one$ was taen fro# the EA9 but was disbursed upon the

request of the 0enators.

This apparentl$ opened a can of wor#s as it turns out that the EA9 does not onl$

realign funds within the +xecutive. It turns out that so#e non-+xecutive pro>ects

were also funded= to na#e a few2 9hp.: for the *94A (*ordillera 9eopleJs

4iberation Ar#$), 9hp.; for the @&46 (@oro &ational 4iberation 6ront), 9'!!@ forthe ueFon 9rovince, 9:!-9!!@ for certain 0enators each, 9! for %elocation

9ro>ects, etc.

This pro#pted @aria *arolina Araullo, *hairperson of the agong Al$ansang

@aaba$an, and several other concerned citiFens to 7le various petitions with the

0upre#e *ourt questioning the validit$ of the EA9. A#ong their contentions was2

EA9 is unconstitutional because it violates the constitutional rule which provides

that no #one$ shall be paid out of the Treasur$ except in pursuance of an

appropriation #ade b$ law./

0ecretar$ Abad argued that the EA9 is based on certain laws particularl$ the 5AA

(savings and aug#entation provisions thereof), 0ec.

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I. 3hether or not the EA9 violates the principle no #one$ shall be paid out of the

Treasur$ except in pursuance of an appropriation #ade b$ law/ (0ec.

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realign#ent should onl$ be #ade within their respective oces/. Thus, no cross-

border transfersNaug#entations #a$ be allowed. ut under the EA9, this was

violated because funds appropriated b$ the 5AA for the +xecutive were being

transferred to the 4egislative and other non-+xecutive agencies.

6urther, transfers within their respective oces/ also conte#plate realign#ent of

funds to an existing pro>ect in the 5AA. 1nder the EA9, even though so#e pro>ects

were within the +xecutive, these pro>ects are non-existent insofar as the 5AA is

concerned because no funds were appropriated to the# in the 5AA. Although so#e

of these pro>ects #a$ be legiti#ate, the$ are still non-existent under the 5AA

because the$ were not provided for b$ the 5AA. As such, transfer to such pro>ects is

unconstitutional and is without legal basis.

Hn the issue of what are savings/

These EA9 transfers are not savings/ contrar$ to what was being declared b$ the

+xecutive. 1nder the de7nition of savings/ in the 5AA, savings onl$ occur, a#ong

other instances, when there is an excess in the funding of a certain pro>ect once it is

co#pleted, 7nall$ discontinued, or 7nall$ abandoned. The 5AA does not refer to

savings/ as funds withdrawn fro# a slow #oving pro>ect. Thus, since the statutor$

de7nition of savings was not co#plied with under the EA9, there is no basis at all

for the transfers. 6urther, savings should onl$ be declared at the end of the 7scal

$ear. ut under the EA9, funds are alread$ being withdrawn fro# certain pro>ects inthe #iddle of the $ear and then being declared as savings/ b$ the +xecutive

particularl$ b$ the E@.

IV. &o. 1nprogra##ed funds fro# the 5AA cannot be used as #one$ source for the

EA9 because under the law, such funds #a$ onl$ be used if there is a certi7cation

fro# the &ational Treasurer to the eect that the revenue collections have exceeded

the revenue targets. In this case, no such certi7cation was secured before

unprogra##ed funds were used.

V. Pes. The Eoctrine of Hperative 6act, which recogniFes the legal eects of an act

prior to it being declared as unconstitutional b$ the 0upre#e *ourt, is applicable.

The EA9 has de7nitel$ helped sti#ulate the econo#$. It has funded nu#erous

pro>ects. If the +xecutive is ordered to reverse all actions under the EA9, then it #a$

cause #ore har# than good. The EA9 eects can no longer be undone. The

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bene7ciaries of the EA9 cannot be ased to return what the$ received especiall$ so

that the$ relied on the validit$ of the EA9. owever, the Eoctrine of Hperative 6act

#a$ not be applicable to the authors, i#ple#enters, and proponents of the EA9 if it

is so found in the appropriate tribunals (civil, cri#inal, or ad#inistrative) that the$

have not acted in good faith.

#ana* (. Co/$%$' :; 0*%A

#ade a partial procla#ation of the winners in the part$-list elections which was held

in @a$

*onstitution)=

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C. In no wa$ shall a part$ be given #ore than three seats even if if garners #ore

than " of the votes cast for the part$-list election (B seat cap rule, sa#e case).

The aranga$ Association for &ational Advance#ent and Transparenc$ (A&AT), a

part$-list candidate, questioned the procla#ation as well as the for#ula being used.

A&AT averred that the

A&AT also questions if the

would be i#possible to 7ll the prescribed

#ere ceiling.

III. 3hether or not the

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V. 3hether or not #a>or political parties are allowed to participate in the part$-list

elections.

VI. 3hether or not the B seat cap rule (B 0eat 4i#it %ule) is valid.

+4E2

I. The ;!-

legislative districts, there shall be one seat allotted for a part$-list representative.

Hriginall$, the D;' *onstitution provides that there shall be not #ore than legislative districts, and :! would be fro# part$-list representatives. owever, the

*onstitution also allowed *ongress to 7x the nu#ber of the #e#bership of the

lower house as in fact, it can create additional legislative districts as it #a$ dee#

appropriate. As can be seen in the @a$

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III. &o. 0ection b of %A 'DC is unconstitutional. There is no constitutional basis to

allow that onl$ part$-lists which garnered

ut howU The 0upre#e *ourt laid down the following rules2

. The parties, organiFations, and coalitions shall be raned fro# the highest to thelowest based on the nu#ber of votes the$ garnered during the elections.

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B. Those garnering sucient nu#ber of votes, according to the raning in

paragraph , shall be entitled to additional seats in proportion to their total nu#ber

of votes until all the additional seats are allocated.

C. +ach part$, organiFation, or coalition shall be entitled to not #ore than three (B)

seats.

In co#puting the additional seats, the guaranteed seats shall no longer be included

because the$ have alread$ been allocated, at one seat each, to ever$ two-

percenter. Thus, the re#aining available seats for allocation as additional seats/

are the #axi#u# seats reserved under the 9art$ 4ist 0$ste# less the guaranteed

seats. 6ractional seats are disregarded in the absence of a provision in %.A. &o. 'DCallowing for a rounding o of fractional seats.

In short, there shall be two rounds in deter#ining the allocation of the seats. In the

7rst round, all part$-lists which garnered at least

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+xa#ple2

In this case, the 1AP part$-list garnered the highest total vote of ,D,

will still get B seats because the B seat li#it rule prohibits it fro# having #ore than

B seats.

&ow after all the tw!-percenters were given their guaranteed and additional seats,

and there are still unoccupied seats, those seats shall be distributed to there#aining part$-lists and those higher in ran in the voting shall be prioritiFed until

all the seats are occupied.

V. &o. $ a vote of ;-', the 0upre#e *ourt continued to disallow #a>or political

parties (the lies of 1&IEH, 4AA&, etc) fro# participating in the part$-list elections.

Although the ponencia (Gustice *arpio) did point out that there is no prohibition

either fro# the *onstitution or fro# %A 'DC against #a>or political parties fro#participating in the part$-list elections as the word part$/ was not quali7ed and

that even the fra#ers of the *onstitution in their deliberations deliberatel$ allowed

#a>or political parties to participate in the part$-list elections provided that the$

establish a sectoral wing which represents the #arginaliFed (indirect participation),

Gustice 9uno, in his separate opinion, concurred b$ ' other >ustices, explained that

the will of the people defeats the will of the fra#ers of the *onstitution precisel$

because it is the people who ulti#atel$ rati7ed the *onstitution ? and the will of the

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people is that onl$ the #arginaliFed sections of the countr$ shall participate in the

part$-list elections. ence, #a>or political parties cannot participate in the part$-list

elections, directl$ or indirectl$.

VI. Pes, the B seat li#it rule is valid. This is one wa$ to ensure that no one part$

shall do#inate the part$-list s$ste#.