EN BANC alleged fund irregularities in the Armed Forces of the
Philippines.1cräläwvirtualibräry
G.R. No. 136760. July 29, 2003
THE SENATE BLUE RIBBON COMMITTEE, represented by its
Chairman, SENATOR AQUILINO Q. PIMENTEL, JR., petitioner,
vs. HON. JOSE B. MAJADUCON, Presiding Judge of Branch 23,
Regional Trial Court of General Santos City, and ATTY. NILO J.
FLAVIANO,respondents.
[G.R. No. 138378. July 29, 2003
AQUILINO Q. PIMENTEL, JR., Petitioner, vs. THE HONORABLE JOSE
S. MAJADUCON, in his capacity as Presiding Judge of Branch 23,
Regional Trial Court, General Santos City, respondent.
DECISION
YNARES-SANTIAGO, J.:
For resolution are two consolidated petitions: (a) G.R. No.
136760, for certiorari, prohibition, mandamus and preliminary
injunction, assailing the resolution dated November 11, 1998 of
Judge Jose S. Majaducon of the Regional Trial Court of General
Santos City, Branch 23, which denied the Senate Blue Ribbon
Committees motion to dismiss the petition for prohibition,
injunction with writ of preliminary injunction filed by private
respondent Atty. Nilo J. Flaviano; and (b) G.R. No. 138378, for
review of the resolution dated April 15, 1999 of respondent Judge
Majaducon declaring petitioner Senator Aquilino Q. Pimentel, Jr.
guilty of indirect contempt of court.
The antecedent facts are as follows:
G.R. No. 136760:
On August 28, 1998, Senator Blas F. Ople filed Senate Resolution
No. 157 directing the Committee on National Defense and Security
to conduct an inquiry, in aid of legislation, into the charges of then
Defense Secretary Orlando Mercado that a group of active and
retired military officers were organizing a coup detat to prevent the
administration of then President Joseph Estrada from probing
On the same date, Senator Vicente C. Sotto III also filed Resolution
No. 160, directing the appropriate senate committee to conduct an
inquiry, in aid of legislation, into the alleged mismanagement of the
funds and investment portfolio of the Armed Forces Retirement and
Separation Benefits System (AFP-RSBS) xxx. 2cräläwvirtualibräry
The Senate President referred the two resolutions to the
Committee on Accountability of Public Officers and Investigations
(Blue Ribbon Committee) and the Committee on National Defense
and Security.
During the public hearings conducted by the Senate Blue Ribbon
Committee (hereafter called the Committee), it appeared that the
AFP-RSBS purchased a lot in General Santos City, designated as Lot
X, MR-1160, for P10,500.00 per square meter from private
respondent Atty. Nilo J. Flaviano. However, the deed of sale filed
with the Register of Deeds indicated that the purchase price of the
lot was only P3,000.00 per square meter.
The Committee thereafter caused the service of a subpoena to
respondent Atty. Flaviano, directing him to appear and testify
before it. Respondent refused to appear at the hearing. Instead, he
filed a petition for prohibition and preliminary injunction with
prayer for temporary restraining order with the Regional Trial Court
of General Santos City, Branch 23, which was docketed as SP Civil
Case No. 496.
On October 21, 1998, the trial court issued a Temporary
Restraining Order directing the Committee to CEASE and DESIST
from proceeding with the inquiry in P.S. 160 particularly in General
Santos City and/or anywhere in Region XI or Manila on matters
affecting the patenting/titling and sale of Lot X, MR-1160-D to AFP-
RSBS, and from issuing subpoenas to witnesses from Region XI,
particularly from General Santos City, pending the hearing of the
petition for prohibition and injunction.3cräläwvirtualibräry
On November 5, 1998, the Committee filed a motion to dismiss the
petition on the grounds of (a) lack of jurisdiction, and (b) failure to
state a valid cause of action. It further argued that the issuance of
the Temporary Restraining Order was invalid for violating the rule
against ex-parte issuance thereof; and that the same was not
enforceable beyond the territorial jurisdiction of the trial court.
On November 11, 1998, the trial court denied petitioners motion to
dismiss and granted the writ of preliminary injunction, thus:
WHEREFORE, PREMISES CONSIDERED, the motion to dismiss is
DENIED, and the WRIT OF PRELIMINARY INJUNCTION is hereby
issued against respondent. It is enjoined from enforcing its
subpoenas to petitioner in Region XI to appear and testify before it
in any of its inquiry or investigation anywhere in the Philippines
regarding the acquisition by the AFP-RSBS of Lot X, MR-1160-D,
located in General Santos City. The bond of petitioner filed on
October 21, 1998, for P500,000.00 for the TRO also serves as his
bond in this injunction.
SO ORDERED.4cräläwvirtualibräry
Hence, the instant petition for certiorari which was docketed as
G.R. No. 136760, alleging that respondent Judge Majaducon
committed grave abuse of discretion and/or acted without or in
excess of jurisdiction when he:
I. DENIED PETITIONERS MOTION TO DISMISS THE PETITION
FOR PROHIBITION AND PRELIMINARY INJUNCTION
FILED BY PRIVATE RESPONDENT, ATTY. NILO J.
FLAVIANO, AGAINST THE PETITIONER IN SP. CIVIL
CASE NO. 496.
II. ISSUED (1) A TEMPORARY RESTRAINING ORDER EX-PARTE
FOR A PERIOD OF TWENTY (20) DAYS AGAINST THE
PETITIONER ON OCTOBER 21, 1998, AND (2) A WRIT
OF PRELIMINARY INJUNCTION ON NOVEMBER 11, 1998
ENJOINING THE PETITIONER FROM ENFORCING ITS
SUBPOENAS TO PRIVATE RESPONENT IN REGION XI.
III. APPLIED THE RULING OF BENGZON VS. SENATE BLUE
RIBBON IN GRANTING INJUNCTIVE RELIEF TO
PRIVATE RESPONDENT.5cräläwvirtualibräry
G.R. No. 138378:
On January 13, 1999, the newspaper, The Philippine Star published
a news report on the filing by the Committee with this Court of the
petition for certiorariwhich was docketed as G.R. No. 136760. The
news report quoted portions of the petition filed by the Committee,
alleging that Regional Trial Court Judge Majaducon was guilty of
gross ignorance of the rules and procedures when he issued the
temporary restraining order and the writ of preliminary injunction
because, under the principle of separation of powers, courts cannot
interfere with the exercise by the legislature of its authority to
conduct investigations in aid of legislation.6cräläwvirtualibräry
Reacting to the aforesaid news report, respondent Judge
Majaducon motu proprio initiated a charge for indirect contempt of
court against Senator Aquilino Q. Pimentel, Jr., news reporter
Perseus Echeminada, Philippine Star publisher Maximo Soliven,
editor-in-chief Ramon J. Farolan, and executive editor Bobby G.
dela Cruz, which was docketed as Special Civil Case No. 496. Judge
Majaducon averred that the news report created in the minds of the
reader the impression that he violated the separation of powers
clause of the Constitution and that he was guilty of gross ignorance
of the rules and procedures.
After the respondents submitted their respective answers, a
decision was rendered on April 15, 1999 finding petitioner Pimentel
guilty of indirect contempt.
Hence, the instant petition based on the following grounds:
I. THE EXPRESSION GROSS IGNORANCE OF THE RULES OF
PROCEDURE OR GROSS IGNORANCE OF THE LAW IN
REFERENCE TO THE RESPONDENTS EX-PARTE
ISSUANCE OF INJUNCTIVE RELIEF IS NOT PEJORATIVE
AS TO CONSTITUTE A GROUND FOR INDIRECT
CONTEMPT.
II. THIS HONORABLE COURT ITSELF USES GROSS IGNORANCE
OF THE LAW AND OTHER EXPRESSIONS OF SIMILAR
FORCEFUL IMPORT IN DESCRIBING GROSS AND
PALPABLE ERRORS OF JUDGES.
III. BY UPHOLDING HIS CONTEMPT CHARGE AGAINST THE
PETITIONER, THE RESPONDENT JUDGE HAS, IN EFFECT,
PREEMPTED THIS HONORABLE COURT IN RESOLVING
THE ISSUES RAISED AGAINST HIM IN G.R. NO. 136760.
IV. THE PUBLICATION BY PHILIPPINE STAR OF THE BLUE
RIBBON PETITION IN G.R. NO. 136760, OR EXCERPTS
THEREOF WAS A LEGITIMATE EXERCISE OF FREEDOM
OF EXPRESSION AND OF THE PRESS.
The two petitions, namely, G.R. No. 136760 and G.R. No. 138378,
were ordered consolidated on December 11, 2000.
The issues for resolution in these joint petitions are: (a) whether or
not respondent Judge Jose Majaducon committed grave abuse of
discretion when he dismissed petitioners motion to dismiss the
petition for prohibition and issued the writ of preliminary
injunction; and (b) whether or not respondent Judge erred in
convicting petitioner Pimentel of indirect contempt of court.
On the first issue, petitioner Committee contends that courts have
no jurisdiction to restrain Congress from performing its
constitutionally vested function to conduct investigations in aid of
legislation, following the principle of separation of powers.
Moreover, the petition filed by respondent Flaviano before the trial
court failed to state a cause of action considering that the
legislative inquiry did not deal with the issuance of the patent and
title to Lot X, MR-1160-D in the name of AFP-RSBS, which is well
within the courts jurisdiction, but with the anomaly in the purchase
thereof, which falls squarely within the ambit of Senate Resolutions
Nos. 1577 and 160.8cräläwvirtualibräry
On the other hand, respondent Flaviano contends that the trial
court may properly intervene into investigations by Congress
pursuant to the power of judicial review vested in it by the
Constitution. He avers that he has a valid cause of action to file the
petition for prohibition considering that the Committees
investigation will delve into the validity of the patenting and titling
of Lot X, MR-1160-D which, as admitted by petitioner, falls within
the competence of judicial courts. In fact, the validity of the
purchase by AFP-RSBS of the subject lot is already the subject of a
pending action before the Regional Trial Court of General Santos
City and the Ombudsman of Mindanao. Finally, he cites the case
of Bengzon v. Senate Blue Ribbon Committee,9 and argues that
preliminary injunction may issue in cases pending before
administrative bodies such as the Ombudsman or the Office of the
Prosecutor as long as the right to self-incrimination guaranteed by
the Bill of Rights is in danger. Furthermore, an information against
him has been filed with the Sandiganbayan.
We find for petitioner. There is grave abuse of discretion when the
respondent acts in a capricious, whimsical, arbitrary or despotic
manner in the exercise of his judgment, as when the assailed order
is bereft of any factual and legal justification.10 In this case, the
assailed resolution of respondent Judge Majaducon was issued
without legal basis.
The principle of separation of powers essentially means that
legislation belongs to Congress, execution to the Executive, and
settlement of legal controversies to the Judiciary. Each is prevented
from invading the domain of the others.11 When the Senate Blue
Ribbon Committee served subpoena on respondent Flaviano to
appear and testify before it in connection with its investigation of
the alleged misuse and mismanagement of the AFP-RSBS funds, it
did so pursuant to its authority to conduct inquiries in aid of
legislation. This is clearly provided in Article VI, Section 21 of the
Constitution, thus:
The Senate or the House of Representatives or any of its respective
committees may conduct inquiries in aid of legislation in
accordance with its duly published rules of procedure. The rights of
persons appearing in or affected by such inquiries shall be
respected.
Hence, the Regional Trial Court of General Santos City, or any court
for that matter, had no authority to prohibit the Committee from
requiring respondent to appear and testify before it.
The ruling in Bengzon, cited by respondent, does not apply in this
case. We agree with petitioner Committee that the factual
circumstances therein are different from those in the case at bar.
In Bengzon, no intended legislation was involved and the subject
matter of the inquiry was more within the province of the courts
rather than of the legislature. More specifically, the investigation in
the said case was an offshoot of the privilege speech of then
Senator Enrile, who urged the Senate to look into a possible
violation of the Anti-Graft and Corrupt Practices Act by the relatives
of then President Corazon Aquino, particularly Mr. Ricardo Lopa, in
connection with the alleged sale of 36 to 39 corporations belonging
to Benjamin Romualdez. On the other hand, there was in this case a
clear legislative purpose, as stated in Senate Resolution No. 160,
and the appropriate Senate Committee was directed to look into
the reported misuse and mismanagement of the AFP-RSBS funds,
with the intention of enacting appropriate legislation to protect the
rights and interests of the officers and members of the Armed
Forces of the Philippines. Further, in Bengzon, the validity of the
sale of Romualdezs corporations was pending with the
Sandiganbayan when the Senate Blue Ribbon Committee decided to
conduct its investigation. In short, the issue had already been pre-
empted by the court.
In the instant case, the complaint against respondent Flaviano
regarding the anomaly in the sale of Lot X, MR-1160 was still
pending before the Office of the Ombudsman when the Committee
served subpoena on him. In other words, no court had acquired
jurisdiction over the matter. Thus, there was as yet no
encroachment by the legislature into the exclusive jurisdiction of
another branch of the government. Clearly, there was no basis for
the respondent Judge to apply the ruling in Bengzon. Hence, the
denial of petitioners motion to dismiss the petition for prohibition
amounted to grave abuse of discretion.
In G.R. No. 138378, Petitioner, Senator Aquilino Pimentel, Jr.,
contends that respondent judge erred in finding him, as
representative of the Committee, guilty of indirect contempt of
court under Rule 71, Section 3(d) of the 1997 Rules of Civil
Procedure. According to Pimentel, the phrase gross ignorance of
the rules of law and procedure, which the Committee used in the
petition, is not depreciatory, but merely a description of normal
usage in petitions where the acts of lower courts are challenged
before higher judicial bodies. In fact, this Court often uses the
phrase in its decisions to describe judges who commit gross and
palpable mistakes in their interpretation and application of the law.
Petitioner further maintains that when the Committee used the
phrase, it did so without malice. Rather, it was only to stress the
unfamiliarity of or disregard by the respondent Judge of a basic
rule of procedure, and to buttress its arguments in support of its
petition for certiorari.
Petitioner Pimentel also contends that he had no participation in
the publication in the Philippine Star of excerpts from the
Committees petition for certiorari. Even assuming arguendo that it
was within his control, he pointed out that he could not have
prevented the editors and writers of the newspaper from
publishing the same, lest he violate their constitutional right of free
expression. Indeed, the report by the Philippine Star of the filing of
the petition and the reproduction of its contents was a legitimate
exercise of press freedom.
Respondent Judge counters that Pimentel was guilty of indirect
contempt of court, first, for causing the publication of the
Committees petition in the Philippine Star notwithstanding that the
same was sub judice; second, for making derogatory remarks in the
petition itself which affected the honor and integrity of the
respondent judge and degraded the administration of justice;
and third, for making it appear that an administrative complaint
was filed against respondent Judge for gross ignorance of the law.
These, he said, constituted malicious and false report which
obstructed the administration of justice.
Rule 71, Section 3(d) of the 1997 Rules of Civil Procedure provides:
Section 3. Indirect contempt to be punished after charge and
hearing. After a charge in writing has been filed, and an
opportunity given to the respondent to comment thereon within
such period as may be fixed by the court and to be heard by himself
or counsel, a person guilty of any of the following acts may be
punished for indirect contempt:
xxx
d) Any improper conduct tending, directly or indirectly, to impede,
obstruct, or degrade the administration of justice; x x x.
After deliberating on the parties arguments, we find that petitioner
Pimentel is not guilty of improper conduct which obstructs or
degrades the administration of justice.
Verily, it does not appear that Pimentel caused the publication in
the Philippine Star of the fact of filing of the petition for certiorari
by the Committee and the reproduction of excerpts thereof. He had
no right to choose which news articles will see print in the
newspaper. Rather, it is the publisher thereof which decides which
news events will be reported in the broadsheet. In doing so, it is
allowed the widest latitude of choice as to what items should see
the light of day so long as they are relevant to a matter of public
interest, pursuant to its right of press freedom.12cräläwvirtualibräry
Respondent Judges allegation that petitioner made it appear that
an administrative complaint was filed against him is without basis.
From a careful perusal of the records, it appears that while the
Committee prayed for the imposition of administrative sanctions
against respondent Judge Majaducon for gross ignorance of the
law, no formal administrative complaint was instituted separately
from the petition for certiorari.
Finally, the statement that respondent Judge was grossly ignorant
of the rules of law and procedure does not constitute improper
conduct that tends to impede, obstruct or degrade the
administration of justice. As correctly argued by petitioner, the
phrase gross ignorance of the rules of law and procedure is
ordinarily found in administrative complaints and is a necessary
description to support a petition which seeks the annulment of an
order of a judge wherein basic legal principles are disregarded.
In Spouses Bacar v. Judge De Guzman, Jr.,13 it was held that when
the law is so elementary, not to know it or to act as if a judge does
not know it, constitutes gross ignorance of the law. In this case,
there was no showing that petitioner Pimentel, as representative of
the Committee, used the phrase to malign the trial court. Rather, it
was used to express what he believed as a violation of the basic
principle of separation of powers.

In this connection, it bears stressing that the power to declare a

person in contempt of court must be exercised on the preservative,
not vindictive principle, and on the corrective and not retaliatory
idea of punishment.14 This was aptly expressed in the case
of Nazareno v. Barnes:15cräläwvirtualibräry

A judge, as a public servant, should not be so thin-skinned or

sensitive as to feel hurt or offended if a citizen expresses an honest
opinion about him which may not altogether be flattering to him.
After all, what matters is that a judge performs his duties in
accordance with the dictates of his conscience and the light that
God has given him. A judge should never allow himself to be moved
by pride, prejudice, passion, or pettiness in the performance of his
duties. He should always bear in mind that the power of the court
to punish for contempt should be exercised for purposes that are
impersonal, because that power is intended as a safeguard not for
the judges as persons but for the functions that they exercise.

WHEREFORE, in view of the foregoing, the petitions docketed as

G.R. Nos. 136760 and 138378 are GRANTED. The resolution of the
Regional Trial Court of General Santos City, Branch 23, in Special
Civil Case No. 496 dated November 11, 1998, which denied the
Senate Blue Ribbon Committees motion to dismiss, is REVERSED
and SET ASIDE. The Writ of Preliminary Injunction issued by the
trial court on November 11, 1998 is DISSOLVED. The resolution
dated April 15, 1999, which declared Senator Aquilino Q. Pimentel,
Jr. guilty of indirect contempt of court, is REVERSED and SET
ASIDE. The petition for indirect contempt is ordered DISMISSED.

SO ORDERED.
 [G.R. NO. 167173 : December 27, 2007]
STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON
MORRIS, SUNDARA RAMESH, OWEN BELMAN, SANJAY AGGARWAL,
RAJAMANI CHANDRASHEKAR, MARIVEL GONZALES, MA. ELLEN
VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS, RAMONA BERNAD,
MICHAELANGELO AGUILAR, and FERNAND
TANSINGCO, Petitioners, v. SENATE COMMITTEE ON BANKS,
FINANCIAL INSTITUTIONS AND CURRENCIES, as represented by its
Chairperson, HON. EDGARDO J. ANGARA, Respondent.
DECISION
NACHURA, J.:
Before us is a Petition for Prohibition (With Prayer for Issuance of
Temporary Restraining Order and/or Injunction) dated and filed on March
11, 2005 by petitioners against respondent Senate Committee on Banks,
Financial Institutions and Currencies, as represented by its Chairperson
Edgardo J. Angara (respondent).
Petitioner Standard Chartered Bank (SCB)-Philippines is an institution
incorporated in England with limited liability and is licensed to engage in
banking, trust, and other related operations in the Philippines. Petitioners
Paul Simon Morris, Sundara Ramesh, Owen Belman, Sanjay Aggarwal,
Rajamani Chandrashekar, Marivel Gonzales, Ma. Ellen Victor, Chona G.
Reyes, Zenaida Iglesias, Ramona Bernad, Michaelangelo Aguilar, and
Fernand Tansingco are the Chief Executive Officer, Chief Operations Officer,
Country Head of Consumer Banking, General Manager for Credit Card and
Personal Loans, Chief Financial Officer, Legal and Compliance Officer,
former Trust and Investment Services Head, Country Tax Officer, Head of
Corporate Affairs, Head of Banking Services, Head of Client Relationships,
and the Head of Global Markets of SCB-Philippines, respectively.
Respondent, on the other hand, is one of the permanent committees of the
Senate of the Philippines.
The petition seeks the issuance of a temporary restraining order (TRO) to
enjoin respondent from (1) proceeding with its inquiry pursuant to
Philippine Senate (P.S.) Resolution No. 166; (2) compelling petitioners who
are officers of petitioner SCB-Philippines to attend and testify before any
further hearing to be conducted by respondent, particularly that set on
March 15, 2005; and (3) enforcing any hold-departure order (HDO) and/or
putting the petitioners on the Watch List. It also prays that judgment be
rendered (1) annulling the subpoenae ad testificandum and duces tecum
issued to petitioners, and (2) prohibiting the respondent from compelling
petitioners to appear and testify in the inquiry being conducted pursuant to
P.S. Resolution No. 166.
The facts are as follows:
On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of
respondent, delivered a privilege speech entitled "Arrogance of
Wealth"1 before the Senate based on a letter from Atty. Mark R. Bocobo
denouncing SCB-Philippines for selling unregistered foreign securities in
violation of the Securities Regulation Code (R.A. No. 8799) and urging the
Senate to immediately conduct an inquiry, in aid of legislation, to prevent
the occurrence of a similar fraudulent activity in the future. Upon motion of
Senator Francis Pangilinan, the speech was referred to respondent. Prior to
the privilege speech, Senator Enrile had introduced P.S. Resolution No.
166,2 to wit:
RESOLUTION
DIRECTING THE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS
AND CURRENCIES, TO CONDUCT AN INQUIRY, IN AID OF
LEGISLATION, INTO THE ILLEGAL SALE OF UNREGISTERED AND
HIGH-RISK SECURITIES BY STANDARD CHARTERED BANK, WHICH
RESULTED IN BILLIONS OF PESOS OF LOSSES TO THE INVESTING
PUBLIC
WHEREAS, Republic Act No. 7721, otherwise known as the "Law
Liberalizing the Entry and Scope of Operations of Foreign Banks in the
Philippines," was approved on May 18, 1994 to promote greater
participation of foreign banks in the Philippine Banking Industry that will
stimulate economic growth and serve as a channel for the flow of funds
into the economy;
WHEREAS, to promote greater competition in the Philippine Banking
Industry, foreign banks were accorded the same privileges, allowed to
perform the same functions and subjected to the same limitations under
relevant banking laws imposed upon domestic banks;
WHEREAS, Standard Chartered Bank was among the foreign banks granted
the privilege to do business in our country under Republic Act No. 7721;
WHEREAS, there are complaints against Standard Chartered Bank whose
actions have reportedly defrauded hundreds of Filipino investors of billions
of pesos through the sale of unregistered securities in the form of high-risk
mutual funds falsely advertised and marketed as safe investment havens;
WHEREAS, there are reports that Standard Chartered Bank clearly knew
that its actions were violative of Philippine banking and securities laws but
cleverly disguised its illegal acts through the use of pro-forma agreements
containing waivers of liability in favor of the bank;
WHEREAS, there are reports that in the early stages of conducting these
questionable activities, the Bangko Sentral ng Pilipinas warned and
eventually fined Standard Chartered Bank a measly P30,000 for violating
Philippine banking laws;
WHEREAS, the particular operations of Standard Chartered Bank may
constitute "conducting business in an unsafe and unsound manner,"
punishable under Section 37 of Republic Act No. 7653 and should have
drawn the higher penalty of revocation of its quasi-banking license;
WHEREAS, Republic Act No. 8791 or the "General Banking Act of 2000"
deems a particular act or omission as conducting business in an unsafe and
unsound manner as follows:
"Section 56.2 The act or omission has resulted or may result in material
loss or damage or abnormal risk to the institution's depositors, creditors,
investors, stockholders or to the Bangko Sentral or to the public in
general."
WHEREAS, the sale of unregistered securities is also a clear violation of
Republic Act No. 8799 or "The Securities Regulation Code of 2000" which
states:
"Section 8.1 Securities shall not be sold or offered for sale or distribution
within the Philippines, without a registration statement duly filed with and
approved by the Commission. Prior to such sale, information on the
securities, in such form and with such substance as the Commission may
prescribe, shall be made available to each prospective purchaser."
WHEREAS, the Securities and Exchange Commission (SEC) reportedly
issued a Cease-and-Desist Order (CDO) against Standard Chartered Bank
for the sale of these unregistered securities but the case was reportedly
settled administratively and dismissed after Standard Chartered Bank paid
a fine of P7 Million;
WHEREAS, the SEC reportedly made an official finding that Standard
Chartered Bank actively engaged in promoting and marketing the so-called
"Global Third Party Mutual Funds" to the investing public and even set
revenue quotas for the sale of these funds;
WHEREAS, existing laws including the Securities Regulation Code seem to
be inadequate in preventing the sale of unregistered securities and in
effectively enforcing the registration rules intended to protect the investing
public from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise
appears inadequate in preventing the conduct of proscribed activities in a
manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation,
having in mind the imposition of proportionate penalties to offending
entities and their directors, officers and representatives among other
additional regulatory measures;
Now, therefore, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to direct
the Committee on Banks, Currencies, and Financial Institutions, to conduct
an inquiry, in aid of legislation, into the reported sale of unregistered and
high-risk securities by Standard Chartered Bank which resulted in billions
of losses to the investing public.
Acting on the referral, respondent, through its Chairperson, Senator
Edgardo J. Angara, set the initial hearing on February 28, 2005 to
investigate, in aid of legislation, the subject matter of the speech and
resolution filed by Senator Enrile.
Respondent invited petitioners, among others, to attend the hearing,
requesting them to submit their written position paper. Petitioners, through
counsel, submitted to respondent a letter3 dated February 24, 2005
presenting their position, particularly stressing that there were cases
pending in court allegedly involving the same issues subject of the
legislative inquiry, thereby posing a challenge to the jurisdiction of
respondent to continue with the inquiry.
On February 28, 2005, respondent commenced the investigation. Senator
Enrile inquired who among those invited as resource persons were present
and who were absent. Thereafter, Senator Enrile moved that subpoenae be
issued to those who did not attend the hearing and that the Senate request
the Department of Justice, through the Bureau of Immigration and
Deportation, to issue an HDO against them and/or include them in the
Bureau's Watch List. Senator Juan Flavier seconded the motion and the
motion was approved.
Respondent then proceeded with the investigation proper. Towards the end
of the hearing, petitioners, through counsel, made an Opening
Statement4 that brought to the attention of respondent the lack of proper
authorization from affected clients for the bank to make disclosures of their
accounts and the lack of copies of the accusing documents mentioned in
Senator Enrile's privilege speech, and reiterated that there were pending
court cases regarding the alleged sale in the Philippines by SCB-Philippines
of unregistered foreign securities.
The February 28, 2005 hearing was adjourned without the setting of the
next hearing date. However, petitioners were later served by respondent
with subpoenae ad testificandum and duces tecum to compel them to
attend and testify at the hearing set on March 15, 2005. Hence, this
petition.
The grounds relied upon by petitioners are as follows:
I.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
CONDUCTING AN INVESTIGATION, PURPORTEDLY IN AID OF
LEGISLATION, BUT IN REALITY PROBING INTO THE ISSUE OF WHETHER
THE STANDARD CHARTERED BANK HAD SOLD UNREGISTERED FOREIGN
SECURITIES IN THE PHILIPPINES. SAID ISSUE HAS LONG BEEN THE
SUBJECT OF CRIMINAL AND CIVIL ACTIONS NOW PENDING BEFORE THE
COURT OF APPEALS, REGIONAL TRIAL COURT OF PASIG CITY,
METROPOLITAN TRIAL COURT OF MAKATI CITY AND THE PROSECUTOR'S
OFFICE OF MAKATI CITY.
II.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION BY CONDUCTING AN INVESTIGATION,
PURPORTEDLY "IN AID OF LEGISLATION," BUT IN REALITY IN "AID OF
COLLECTION" BY A HANDFUL OF TWO (2) CLIENTS OF STANDARD
CHARTERED BANK OF LOSSES WHICH WERE FOR THEIR ACCOUNT AND
RISK. AT ANY RATE, SUCH COLLECTION IS WITHIN THE PROVINCE OF THE
COURT RATHER THAN OF THE LEGISLATURE.
III.
THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
COMPELLING PETITIONERS, SOME OF WHOM ARE RESPONDENTS IN THE
PENDING CRIMINAL AND CIVIL ACTIONS BROUGHT BY SAID CLIENTS, IN
VIOLATION OF PETITIONERS' RIGHT AGAINST SELF-INCRIMINATION AND
RIGHT TO PURSUE AND DEFEND THEIR CAUSE IN COURT RATHER THAN
ENGAGE IN TRIAL BY PUBLICITY - A CLEAR VIOLATION OF DUE PROCESS,
RIGHT TO PRIVACY AND TO TRAVEL.
IV.
THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION BY DISREGARDING ITS OWN RULES.5
Petitioners argue that respondent has no jurisdiction to conduct the inquiry
because its subject matter is the very same subject matter of the following
cases, to wit:
(a) CA-G.R. SP No. 85078, entitled "Manuel V. Baviera v. Hon. Esperanza
P. Rosario, et al., pending before the 9th Division of the Court of Appeals.
In the petition, Mr. Baviera seeks to annul and set aside the dismissal by
the Department of Justice of his complaint against Standard Chartered
Bank and its officers accusing them of SELLING UNREGISTERED
FOREIGN SECURITIES IN VIOLATION OF P.D. NO. 1869
(SYNDICATED ESTAFA) AND ARTICLE 315 OF THE REVISED PENAL
CODE.
(b) CA-G.R. SP No. 86200, entitled "Manuel V. Baviera v. Hon. Rafael
Buenaventura, et al.", pending before the 15th Division of the Court of
Appeals. In the petition, Mr. Baviera seeks to annul and set aside the
termination for lack of probable cause by the Anti-Money Laundering
Council ("AMLC") of the investigation of Standard Chartered Bank for
money laundering activities BY SELLING UNREGISTERED FOREIGN
SECURITIES.
(c) CA-G.R. SP No. 87328, entitled "Manuel V. Baviera v. Hon. Esperanza
Paglinawan Rozario, et al.," pending before the 16th Division of the Court
of Appeals. The petition seeks to annul and set aside the dismissal by the
Department of Justice of Mr. Baviera's complaint accusing SCB and its
officers of violation of the Securities Regulation Code by SELLING
UNREGISTERED FOREIGN SECURITIES.
(d) Civil Case No. 70173, entitled "Mr. Noel G. Sanchez, et al. v. Standard
Chartered Bank," pending before Branch 155 of the Regional Trial Court of
Pasig City. Plaintiff seeks damages and recovery of their investment
accusing the bank of SELLING UNREGISTERED FOREIGN SECURITIES.
(e) Criminal Case No. 332034, entitled "People of the Philippines v. Manuel
V. Baviera,"pending before Branch 64 of the Metropolitan Trial Court of
Makati City. Petitioner Morris is the private complainant in this information
for extortion or blackmail against Mr. Baviera for demanding the payment
of US$2 Million with the threat to EXPOSE THE BANK'S "LARGE SCALE
SCAM" CONSISTING [OF] ILLEGAL SELLING OF UNREGISTERED
FOREIGN SECURITIES BY THE BANK, before various government
offices, such as the Department of Justice, the BIR, Bangko Sentral ng
Pilipinas, Regional Trial Courts, and both houses of Congress.
(f) Criminal Case No. 331395, entitled "People of the Philippines v. Manuel
V. Baviera,"pending before Branch 64 of the Metropolitan Trial Court of
Makati City. Petitioners Victor and Chona Reyes are the private
complainants in this information for perjury committed by Mr. Baviera in
securing a hold departure order against the petitioners herein from the
Department of Justice for their alleged involvement in syndicated estafa
and swindling BY SELLING UNREGISTERED FOREIGN SECURITIES.
(g) I.S. No. 2004-B-2279-80, entitled "Aurelio Litonjua III and Aurelio
Litonjua, Jr. v. Antonette de los Reyes, et al.," pending before the Office of
the Prosecutor, Makati City. This is a criminal complaint accusing SCB and
its officers of estafa for SELLING UNREGISTERED FOREIGN SECURITIES.6
Citing Bengzon, Jr. v. Senate Blue Ribbon Committee,7 the petitioners
claim that since the issue of whether or not SCB-Philippines illegally sold
unregistered foreign securities is already preempted by the courts that took
cognizance of the foregoing cases, the respondent, by this investigation,
would encroach upon the judicial powers vested solely in these courts.
The argument is misplaced. Bengzon does not apply squarely to petitioners'
case.
It is true that in Bengzon, the Court declared that the issue to be
investigated was one over which jurisdiction had already been acquired by
the Sandiganbayan, and to allow the [Senate Blue Ribbon] Committee to
investigate the matter would create the possibility of conflicting judgments;
and that the inquiry into the same justiciable controversy would be an
encroachment on the exclusive domain of judicial jurisdiction that had set
in much earlier.
To the extent that, in the case at bench, there are a number of cases
already pending in various courts and administrative bodies involving the
petitioners, relative to the alleged sale of unregistered foreign securities,
there is a resemblance between this case and Bengzon. However, the
similarity ends there.
Central to the Court's ruling in Bengzon - - that the Senate Blue Ribbon
Committee was without any constitutional mooring to conduct the
legislative investigation - - was the Court's determination that the intended
inquiry was not in aid of legislation. The Court found that the speech of
Senator Enrile, which sought such investigation contained no suggestion of
any contemplated legislation; it merely called upon the Senate to look into
possible violations of Section 5, Republic Act No. 3019. Thus, the Court
held that the requested probe failed to comply with a fundamental
requirement of Section 21, Article VI of the Constitution, which states:
The Senate or the House of Representatives or any of its respective
committees may conduct inquiries in aid of legislation in accordance with
its duly published rules of procedure. The rights of persons appearing in or
affected by such inquiries shall be respected.
Accordingly, we stopped the Senate Blue Ribbon Committee from
proceeding with the legislative investigation in that case.
Unfortunately for the petitioners, this distinguishing factual milieu in
Bengzon does not obtain in the instant case. P.S. Resolution No. 166 is
explicit on the subject and nature of the inquiry to be (and already being)
conducted by the respondent Committee, as found in the last three
Whereas clauses thereof, viz.:
WHEREAS, existing laws including the Securities Regulation Code seem to
be inadequate in preventing the sale of unregistered securities and in
effectively enforcing the registration rules intended to protect the investing
public from fraudulent practices;
WHEREAS, the regulatory intervention by the SEC and BSP likewise
appears inadequate in preventing the conduct of proscribed activities in a
manner that would protect the investing public;
WHEREAS, there is a need for remedial legislation to address the situation,
having in mind the imposition of proportionate penalties to offending
entities and their directors, officers and representatives among other
additional regulatory measures; (emphasis supplied)
The unmistakable objective of the investigation, as set forth in the said
resolution, exposes the error in petitioners' allegation that the inquiry, as
initiated in a privilege speech by the very same Senator Enrile, was simply
"to denounce the illegal practice committed by a foreign bank in selling
unregistered foreign securities x x x." This fallacy is made more glaring
when we consider that, at the conclusion of his privilege speech, Senator
Enrile urged the Senate "to immediately conduct an inquiry, in aid of
legislation, so as to prevent the occurrence of a similar fraudulent activity
in the future."
Indeed, the mere filing of a criminal or an administrative complaint before
a court or a quasi-judicial body should not automatically bar the conduct of
legislative investigation. Otherwise, it would be extremely easy to subvert
any intended inquiry by Congress through the convenient ploy of instituting
a criminal or an administrative complaint. Surely, the exercise of sovereign
legislative authority, of which the power of legislative inquiry is an essential
component, cannot be made subordinate to a criminal or an administrative
investigation.
As succinctly stated in the landmark case Arnault v. Nazareno8'
[T]he power of inquiry - with process to enforce it - is an essential and
appropriate auxiliary to the legislative function. A legislative body cannot
legislate wisely or effectively in the absence of information respecting the
conditions which the legislation is intended to affect or change; and where
the legislative body does not itself possess the requisite information -
which is not infrequently true - recourse must be had to others who
possess it.
Neither can the petitioners claim that they were singled out by the
respondent Committee. The Court notes that among those invited as
resource persons were officials of the Securities and Exchange Commission
(SEC) and the Bangko Sentral ng Pilipinas (BSP). These officials were
subjected to the same critical scrutiny by the respondent relative to their
separate findings on the illegal sale of unregistered foreign securities by
SCB-Philippines. It is obvious that the objective of the investigation was
the quest for remedies, in terms of legislation, to prevent the recurrence of
the allegedly fraudulent activity.
Still, petitioners insist that the inquiry conducted by respondent was, in
fact, "in aid of collection." They claim that Atty. Bocobo and Manuel
Baviera, the latter a party to the pending court cases cited by petitioners,
were only seeking a friendly forum so that they could recover their
investments from SCB-Philippines; and that the respondent has allowed
itself to be used as the conveniently available vehicle to effect this purpose.
However, as correctly pointed out by respondent in its Comment on the
petition, Atty. Bocobo did not file a complaint before the Senate for the
purpose of recovering his investment. On the contrary, and as confirmed
during the initial hearing on February 28, 2005, his letter-complaint
humbly requested the Senate to conduct an inquiry into the purportedly
illegal activities of SCB-Philippines, with the end view of preventing the
future occurrence of any similar fraudulent activity by the banks in
general.9 Baviera, on the other hand, was not a "complainant" but merely a
witness in the investigation, invited to testify on the alleged illegal sale of
unregistered foreign securities by SCB-Philippines, being one of the
supposed victims thereof.
The Court further notes that when it denied petitioners' prayer for the
issuance of a TRO to restrain the hearing set on March 15,
2005,10 respondent proceeded with the investigation. On the said date,
outraged by petitioners' imputation that it was conducting the investigation
"in aid of collection," respondent held petitioners, together with their
counsel, Atty. Reynaldo Geronimo, in contempt and ordered their detention
for six hours.
Petitioners filed a Motion for Partial Reconsideration of this Court's
Resolution dated March 14, 2005 only with respect to the denial of the
prayer for the issuance of a TRO and/or writ of preliminary injunction,
alleging that their being held in contempt was without legal basis, as the
phrase "in aid of collection" partakes of an absolutely privileged allegation
in the petition.
We do not agree. The Court has already expounded on the essence of the
contempt power of Congress and its committees in this wise'
The principle that Congress or any of its bodies has the power to punish
recalcitrant witnesses is founded upon reason and policy. Said power must
be considered implied or incidental to the exercise of legislative power.
How could a legislative body obtain the knowledge and information on
which to base intended legislation if it cannot require and compel the
disclosure of such knowledge and information, if it is impotent to punish a
defiance of its power and authority? When the framers of the Constitution
adopted the principle of separation of powers, making each branch
supreme within the realm of its respective authority, it must have intended
each department's authority to be full and complete, independently of each
other's authority or power. And how could the authority and power become
complete if for every act of refusal, every act of defiance, every act of
contumacy against it, the legislative body must resort to the judicial
department for the appropriate remedy, because it is impotent by itself to
punish or deal therewith, with affronts committed against its authority or
dignity.11
The exercise by Congress or by any of its committees of the power to
punish contempt is based on the principle of self-preservation. As the
branch of the government vested with the legislative power, independently
of the judicial branch, it can assert its authority and punish contumacious
acts against it. Such power is sui generis, as it attaches not to the
discharge of legislative functions per se, but to the sovereign character of
the legislature as one of the three independent and coordinate branches of
government.12
In this case, petitioners' imputation that the investigation was "in aid of
collection" is a direct challenge against the authority of the Senate
Committee, as it ascribes ill motive to the latter. In this light, we find the
contempt citation against the petitioners reasonable and justified.
Furthermore, it is axiomatic that the power of legislative investigation
includes the power to compel the attendance of witnesses. Corollary to the
power to compel the attendance of witnesses is the power to ensure that
said witnesses would be available to testify in the legislative investigation.
In the case at bench, considering that most of the officers of SCB-
Philippines are not Filipino nationals who may easily evade the compulsive
character of respondent's summons by leaving the country, it was
reasonable for the respondent to request the assistance of the Bureau of
Immigration and Deportation to prevent said witnesses from evading the
inquiry and defeating its purpose. In any event, no HDO was issued by a
court. The BID instead included them only in the Watch List, which had the
effect of merely delaying petitioners' intended travel abroad for five (5)
days, provided no HDO is issued against them.13
With respect to the right of privacy which petitioners claim respondent has
violated, suffice it to state that privacy is not an absolute right. While it is
true that Section 21, Article VI of the Constitution, guarantees respect for
the rights of persons affected by the legislative investigation, not every
invocation of the right to privacy should be allowed to thwart a legitimate
congressional inquiry. In Sabio v. Gordon,14 we have held that the right of
the people to access information on matters of public concern generally
prevails over the right to privacy of ordinary financial transactions. In that
case, we declared that the right to privacy is not absolute where there is an
overriding compelling state interest. Employing the rational basis
relationship test, as laid down in Morfe v. Mutuc,15 there is no infringement
of the individual's right to privacy as the requirement to disclosure
information is for a valid purpose, in this case, to ensure that the
government agencies involved in regulating banking transactions
adequately protect the public who invest in foreign securities. Suffice it to
state that this purpose constitutes a reason compelling enough to proceed
with the assailed legislative investigation.16
As regards the issue of self-incrimination, the petitioners, officers of SCB-
Philippines, are not being indicted as accused in a criminal proceeding.
They were summoned by respondent merely as resource persons, or as
witnesses, in a legislative inquiry. As distinguished by this Court'
[An] accused occupies a different tier of protection from an ordinary
witness. Whereas an ordinary witness may be compelled to take the
witness stand and claim the privilege as each question requiring an
incriminating answer is shot at him, an accused may altogether refuse to
take the witness stand and refuse to answer any and all questions.17
Concededly, this right of the accused against self-incrimination is extended
to respondents in administrative investigations that partake of the nature
of or are analogous to criminal proceedings. The privilege has consistently
been held to extend to all proceedings sanctioned by law; and to all cases
in which punishment is sought to be visited upon a witness, whether a
party or not.18
However, in this case, petitioners neither stand as accused in a criminal
case nor will they be subjected by the respondent to any penalty by reason
of their testimonies. Hence, they cannot altogether decline appearing
before respondent, although they may invoke the privilege when a question
calling for an incriminating answer is propounded.19
Petitioners' argument, that the investigation before respondent may result
in a recommendation for their prosecution by the appropriate government
agencies, such as the Department of Justice or the Office of the
Ombudsman, does not persuade.
As held in Sinclair v. United States20 - -
It may be conceded that Congress is without authority to compel
disclosures for the purpose of aiding the prosecution of pending suits; but
the authority of that body, directly or through its Committees, to require
pertinent disclosures in aid of its own constitutional power is not abridged
because the information sought to be elicited may also be of use in such
suits. x x x It is plain that investigation of the matters involved in suits
brought or to be commenced under the Senate resolution directing the
institution of suits for the cancellation of the leases might directly aid in
respect of legislative action.
The prosecution of offenders by the prosecutorial agencies and the trial
before the courts is for the punishment of persons who transgress the law.
The intent of legislative inquiries, on the other hand, is to arrive at a policy
determination, which may or may not be enacted into law.
Except only when it exercises the power to punish for contempt, the
respondent, as with the other Committees of the Senate or of the House of
Representatives, cannot penalize violators even if there is overwhelming
evidence of criminal culpability. Other than proposing or initiating
amendatory or remedial legislation, respondent can only recommend
measures to address or remedy whatever irregularities may be unearthed
during the investigation, although it may include in its Report a
recommendation for the criminal indictment of persons who may appear
liable. At best, the recommendation, along with the evidence, contained in
such a Report would be persuasive, but it is still up to the prosecutorial
agencies and the courts to determine the liabilities of the offender.

Finally, petitioners sought anew, in their Manifestation and Motion21 dated

June 21, 2006, the issuance by this Court of a TRO and/or writ of
preliminary injunction to prevent respondent from submitting its
Committee Report No. 75 to the Senate in plenary for approval. However,
16 days prior to the filing of the Manifestation and Motion, or on June 5,
2006, respondent had already submitted the report to the Senate in
plenary. While there is no showing that the said report has been approved
by the Senate, the subject of the Manifestation and Motion has inescapably
become moot and academic.

WHEREFORE, the Petition for Prohibition is DENIED for lack of merit. The
Manifestation and Motion dated June 21, 2006 is, likewise, DENIED for
being moot and academic.

SO ORDERED.
 G.R. No. L-3820 July 18, 1950
JEAN L. ARNAULT, Petitioner, vs. LEON NAZARENO, Sergeant-at-
arms, Philippine Senate, and EUSTAQUIO BALAGTAS, Director of
Prisons, Respondents.
J.C. Orendain, Augusto Revilla, and Eduardo Arboleda for petitioner.
Office of the Solicitor General Felix Bautista Angelo, Lorenzo Sumulong,
Lorenzo Ta�ada, and Vicente J. Francisco for respondents.
OZAETA, J.:
This is an original petition for habeas corpus to relieve the petitioner from
his confinement in the New Bilibid Prison to which he has been committed
by virtue of a resolution adopted by the Senate on May 15, 1950, which
reads as follows:
Whereas, Jean L. Arnault refused to reveal the name of the person to
whom he gave the P440,000, as well as answer other pertinent questions
related to the said amount; Now, therefore, be
it.chanroblesvirtualawlibrary chanrobles virtual law library
Resolved, that for his refusal to reveal the name of the person to whom he
gave the P440,000 Jean L. Arnault be committed to the custody of the
Sergeant-at-Arms and imprisoned in the New Bilibid Prison, Muntinlupa,
Rizal, until discharged by further order of the Senate or by the special
committee created by Senate Resolution No. 8, such discharge to be
ordered when he shall have purged the contempt by revealing to the
Senate or to the said special committee the name of the person to whom
he gave the P440,000, as well as answer other pertinent questions in
connection therewith.
The facts that gave rise to the adoption of said resolution, insofar as
pertinent here, may be briefly stated as follows:chanrobles virtual law
library
In the latter part of October, 1949, the Philippine Government, through the
Rural Progress Administration, bought two estates known as Buenavista
and Tambobong for the sums of P4,500,000 and P500,000, respectively. Of
the first sum, P1,000,000 was paid to Ernest H. Burt, a nonresident
American, thru his attorney-in-fact in the Philippines, the Associated
Estates, Inc., represented by Jean L. Arnault, for alleged interest of the
said Burt in the Buenavista Estate. The second sum of P500,000 was all
paid to the same Ernest H. Burt through his other attorney-in-fact, the
North Manila Development Co., Inc., also represented by Jean L. Arnault,
for the alleged interest of the said Burt in the Tambobong
Estate.chanroblesvirtualawlibrary chanrobles virtual law library
The original owner of the Buenavista Estate was the San Juan de Dios
Hospital. The Philippine Government held a 25-year lease contract on said
estate, with an option to purchase it for P3,000,000 within the same period
of 25 years counted from January 1, 1939. The occupation Republic of the
Philippines purported to exercise that option by tendering to the owner the
sum of P3,000,000 and, upon its rejection, by depositing it in court on June
21, 1944, together with the accrued rentals amounting to P3224,000.
Since 1939 the Government has remained in possession of the
estate.chanroblesvirtualawlibrary chanrobles virtual law library
On June 29, 1946, the San Juan de Dios Hospital sold the Buenavista
Estate for P5,000,000 to Ernest H. Burt, who made a down payment of
P10,000 only and agreed to pay P5000,000 within one year and the
remainder in annual installments of P500,000 each, with the stipulation
that failure on his part to make any of said payments would cause the
forfeiture of his down payment of P10,000 and would entitle the Hospital to
rescind to sale to him. Aside from the down payment of P10,000, Burt has
made no other payment on account of the purchase price of said
estate.chanroblesvirtualawlibrary chanrobles virtual law library
The original owner of the Tambobong Estate was the Philippine Trust
Company. On May 14, 1946, the Philippine Trust Company sold estate for
the sum of P1,200,000 to Ernest H. Burt, who paid P10,000 down and
promise to pay P90,000 within nine months and the balance of P1,100,000
in ten successive installments of P110,000 each. The nine-month period
within which to pay the first installment of P90,000 expired on February 14,
1947, without Burt's having paid the said or any other amount then or
afterwards. On September 4, 1947, the Philippine Trust Company sold,
conveyed, and delivered the Tambobong Estate to the Rural Progress
Administration by an absolute deed of sale in consideration of the sum of
P750,000. On February 5, 1948, the Rural Progress Administration made,
under article 1504 of the Civil Code, a notarial demand upon Burt for the
resolution and cancellation of his contract of purchase with the Philippine
Trust Company due to his failure to pay the installment of P90,000 within
the period of nine months. Subsequently the Court of First Instance of Rizal
ordered the cancellation of Burt's certificate of title and the issuance of a
new one in the name of the Rural Progress Administration, from which
order he appealed to the Supreme Court. 1 chanrobles virtual law library
It was in the face of the antecedents sketched in the last three preceding
paragraphs that the Philippine Government, through the Secretary of
Justice as Chairman of the Board of Directors of the Rural Progress
Administration and as Chairman of the Board of Directors of the Philippine
National Bank, from which the money was borrowed, accomplished the
purchase of the two estates in the latter part of October, 1949, as stated at
the outset.chanroblesvirtualawlibrary chanrobles virtual law library
On February 27, 1950, the Senate adopted its Resolution No. 8, which
reads as follows:
RESOLUTION CREATING A SPECIAL COMMITTEE TO INVESTIGATE THE
BUENAVISTA AND THE TAMBOBONG ESTATES
DEAL.chanroblesvirtualawlibrary chanrobles virtual law library
WHEREAS, it is reported that the Philippine government, through the Rural
Progress Administration, has bought the Buenavista and the Tambobong
Estates for the aggregate sum of five million pesos;chanrobles virtual law
library
WHEREAS, it is reported that under the decision of the Supreme Court
dated October 31, 1949, the Buenavista Estate could have been bought for
three million pesos by virtue of a contract entered into between the San
Juan de Dios Hospital and Philippine Government in 1939;chanrobles
virtual law library
WHEREAS, it is even alleged that the Philippine Government did not have
to purchase the Buenavista Estate because the occupation government had
made tender of payment in the amount of three million pesos, Japanese
currency, which fact is believed sufficient to vest title of Ownership in the
Republic of the Philippines pursuant to decisions of the Supreme Court
sustaining the validity of payments made in Japanese military notes during
the occupation;chanrobles virtual law library
WHEREAS, it is reported that the Philippine Government did not have to
pay a single centavo for the Tambobong Estate as it was already practically
owned by virtue of a deed of sale from the Philippine Trust Company dated
September 3, 194, for seven hundred and fifty thousand pesos, and by
virtue of the recission of the contract through which Ernest H. Burt had an
interest in the estate; Now, therefore, be
it.chanroblesvirtualawlibrary chanrobles virtual law library
RESOLVED, That a Special Committee, be, as it hereby is, created,
composed of five members to be appointed by the President of the Senate
to investigate the Buenavista and Tambobong Estate deals. It shall be the
duty of the said Committee to determine whether the said purchase was
honest, valid, and proper and whether the price involved in the deal was
fair and just, the parties responsible therefor, and any other facts the
Committee may deem proper in the premises. Said Committee shall have
the power to conduct public hearings; issue subpoena or subpoena duces
tecumto compel the attendance of witnesses or the production of
documents before it; and may require any official or employee of any
bureau, office, branch, subdivision, agency, or instrumentality of the
Government to assist or otherwise cooperate with the Special Committee in
the performance of its functions and duties. Said Committee shall submit
its report of findings and recommendations within two weeks from the
adoption of this Resolution.
The special committee created by the above resolution called and
examined various witnesses, among the most important of whom was the
herein petitioner, Jean L. Arnault. An intriguing question which the
committee sought to resolve was that involved in the apparent
unnecessariness and irregularity of the Government's paying to Burt the
total sum of P1,500,000 for his alleged interest of only P20,000 in the two
estates, which he seemed to have forfeited anyway long before October,
1949. The committee sought to determine who were responsible for and
who benefited from the transaction at the expense of the
Government.chanroblesvirtualawlibrary chanrobles virtual law library
Arnault testified that two checks payable to Burt aggregating P1,500,000
were delivered to him on the afternoon of October 29, 1949; that on the
same date he opened a new account in the name of Ernest H. Burt with the
Philippine National Bank in which he deposited the two checks aggregating
P1,500,000; and that on the same occasion he draw on said account two
checks; one for P500,000, which he transferred to the account of the
Associated Agencies, Inc., with the Philippine National Bank, and another
for P440,000 payable to cash, which he himself cashed. It was the desire of
the committee to determine the ultimate recipient of this sum of P440,000
that gave rise to the present case.chanroblesvirtualawlibrary chanrobles
virtual law library
At first the petitioner claimed before the Committee:
Mr. ARNAULT (reading from a note). Mr. Chairman, for questions involving
the disposition of funds, I take the position that the transactions were
legal, that no laws were being violated, and that all requisites had been
complied with. Here also I acted in a purely functional capacity of
representative. I beg to be excused from making answer which might later
be used against me. I have been assured that it is my constitutional right
to refuse to incriminate myself, and I am certain that the Honorable
Members of this Committee, who, I understand, are lawyers, will see the
justness of my position.
At as subsequent session of the committee (March 16) Senator De Vera, a
member of the committee, interrogated him as follows:
Senator DE VERA. Now these transactions, according to your own
typewritten statement, were legal?chanrobles virtual law library
Mr. ARNAULT. I believe so.chanroblesvirtualawlibrary chanrobles virtual law
library
Senator DE VERA. And the disposition of that fund involved, according to
your own statement, did not violate any law?chanrobles virtual law library
Mr. ARNAULT. I believe so.
xxx xxx x x xchanrobles virtual law library
Senator DE VERA. So that if the funds were disposed of in such a manner
that no laws were violated, how is it that when you were asked by the
Committee to tell what steps you took to have this money delivered to
Burt, you refused to answer the questions, saying that it would incriminate
you?chanrobles virtual law library
Mr. ARNAULT. Because it violates the rights of a citizen to privacy in his
dealings with other people.
xxx xxx x x xchanrobles virtual law library
Senator DE VERA. Are you afraid to state how the money was disposed of
because you would be incriminated, or you would be incriminating
somebody? chanrobles virtual law library
Mr. ARNAULT. I am not afraid; I simply stand on the privilege to dispose of
the money that has been paid to me as a result of a legal transaction
without having to account for any use of it.
But when in the same session the chairman of the committee, Senator
Sumulong, interrogated the petitioner, the latter testified as follows:
The CHAIRMAN. The other check of P440,000 which you also made on
October 29, 1949, is payable to cash; and upon cashing this P440,000 on
October 29, 1949, what did you do with that amount?chanrobles virtual law
library
Mr. ARNAULT. I turned it over to a certain
person.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. The whole amount of P440,000? chanrobles virtual law
library
Mr. ARNAULT. Yes.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Who was that certain person to whom you delivered these
P440,000 which you cashed on October 29, 1949?chanrobles virtual law
library
Mr. ARNAULT. I don't remember the name; he was a representative of
Burt.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. That representative of Burt to whom you delivered the
P440,000 was a Filipino?chanrobles virtual law library
Mr. ARNAULT. I don't know.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. You do not remember the name of that representative of
Burt to whom you delivered this big amount of P440,000?chanrobles virtual
law library
Mr. ARNAULT. I am not sure; I do not remember the
name.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. That certain person who represented Burt to whom you
delivered the big amount on October 29, 1949, gave you a receipt for the
amount?chanrobles virtual law library
Mr. ARNAULT. No.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Neither did you ask a receipt? chanrobles virtual law
library
Mr. ARNAULT. I didn't ask.chanroblesvirtualawlibrary chanrobles virtual law
library
The CHAIRMAN. And why did you give that certain person, representative
of Burt, this big amount of P440,000 which forms part of the P1-� million
paid to Burt?chanrobles virtual law library
Mr. ARNAULT. Because I have instructions to that
effect.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Who gave you the instruction?chanrobles virtual law
library
Mr. ARNAULT. Burt.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Where is the instruction; was that in writing?chanrobles
virtual law library
Mr. ARNAULT. No.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. By cable?chanrobles virtual law library
Mr. ARNAULT. No.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. In what form did you receive that instruction?chanrobles
virtual law library
Mr. ARNAULT. Verbal instruction.chanroblesvirtualawlibrary chanrobles
virtual law library
The CHAIRMAN. When did you receive this verbal instruction from Burt to
deliver these P440,000 to a certain person whose name you do not like to
reveal?chanrobles virtual law library
Mr. ARNAULT. I have instruction to comply with the request of the
person.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Now, you said that instruction given to you by Burt was
verbal?chanrobles virtual law library
Mr. ARNAULT. Yes.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. When was that instruction given to you by Burt?chanrobles
virtual law library
Mr. ARNAULT. Long time ago.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. In what year did Burt give you that verbal instruction;
when Burt was still here in the Philippines?chanrobles virtual law library
Mr. ARNAULT. Yes.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. But at that time Burt already knew that he would receive
the money?chanrobles virtual law library
Mr. ARNAULT. No.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. In what year was that when Burt while he was here in the
Philippines gave you the verbal instruction?chanrobles virtual law library
Mr. ARNAULT. In 1946.chanroblesvirtualawlibrary chanrobles virtual law
library
The CHAIRMAN. And what has that certain person done for Burt to merit
receiving these P440,000?chanrobles virtual law library
Mr. ARNAULT. I absolutely do not
know.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. You do not know?chanrobles virtual law library
Mr. ARNAULT. I do not know.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. Burt did not tell you when he gave you the verbal
instruction why that certain person should receive these
P440,000?chanrobles virtual law library
Mr. ARNAULT. He did not tell me.chanroblesvirtualawlibrary chanrobles
virtual law library
The CHAIRMAN. And Burt also authorized you to give this big amount to
that certain person without receipt?chanrobles virtual law library
Mr. ARNAULT. He told me that a certain person would represent him and The CHAIRMAN. And how about his Christian name; is it also a Spanish
where could I meet him.chanroblesvirtualawlibrary chanrobles virtual law name?chanrobles virtual law library
library
Mr. ARNAULT. I am not sure; I think the initial is
The CHAIRMAN. Did Burt know already that certain person as early as J.chanroblesvirtualawlibrary chanrobles virtual law library
1946?chanrobles virtual law library
The CHAIRMAN. Did he have a middle name?chanrobles virtual law library
Mr. ARNAULT. I presume much before
that.chanroblesvirtualawlibrary chanrobles virtual law library
Mr. ARNAULT. I never knew it.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. Did that certain person have any intervention in the
prosecution of the two cases involving the Buenavista and Tambobong
The CHAIRMAN. And how about his family name which according to your
estates?chanrobles virtual law library
recollection is Spanish; can you remember the first letter with which that
family name begins?chanrobles virtual law library
Mr. ARNAULT. Not that I know of.chanroblesvirtualawlibrary chanrobles
virtual law library
Mr. ARNAULT. S, D or F.chanroblesvirtualawlibrary chanrobles virtual law
library
The CHAIRMAN. Is that certain person related to any high government
official?chanrobles virtual law library
The CHAIRMAN. And what was the last letter of the family
name?chanrobles virtual law library
Mr. ARNAULT. No, I do not know.chanroblesvirtualawlibrary chanrobles
virtual law library
Mr. ARNAULT. I do not know.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. Why can you not tell us the name of that certain
person?chanrobles virtual law library
The CHAIRMAN. Have you seen that person again after you have delivered
this P440,000?chanrobles virtual law library
Mr. ARNAULT. Because I am not sure of his name; I cannot remember the
name.chanroblesvirtualawlibrary chanrobles virtual law library
Mr. ARNAULT. Yes.chanroblesvirtualawlibrary chanrobles virtual law library

The CHAIRMAN. When gave that certain person that P440,000 on October
The CHAIRMAN. Several times?chanrobles virtual law library
29, 1949, you knew already that person?chanrobles virtual law library

Mr. ARNAULT. Two or three times.chanroblesvirtualawlibrarychanrobles

Mr. ARNAULT. Yes, I have seen him several
virtual law library
times.chanroblesvirtualawlibrary chanrobles virtual law library

The CHAIRMAN. Here in Manila?chanrobles virtual law library

The CHAIRMAN. And the name of that certain person is a Filipino
name?chanrobles virtual law library
Mr. ARNAULT. Yes.chanroblesvirtualawlibrary chanrobles virtual law library
Mr. ARNAULT. I would say Spanish
name.chanroblesvirtualawlibrary chanrobles virtual law library The CHAIRMAN. And in spite of the fact that you met that person two or
three times, you never were able to find out what was his
name?chanrobles virtual law library
Mr. ARNAULT. If I knew, I would [have] taken it down. Mr. Peralta knows
my name; of course, we have not done business. Lots of people in Manila
know me, but they don't know my name, and I don't know them. They sa{
I am "chiflado" because I don't know their
names.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. That certain person is a male or female?chanrobles virtual
law library
Mr. ARNAULT. He is a male.chanroblesvirtualawlibrary chanrobles virtual
law library
The CHAIRMAN. You are sure that he is a male at least?chanrobles virtual
law library
Mr. ARNAULT. Let us say 38 or 40 years, more or
less.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Can you give us, more or less, a description of that certain
person? What is his complexion: light, dark or light brown?chanrobles
virtual law library
Mr. ARNAULT. He is like the gentleman there (pointing to Senator Cabili),
but smaller. He walks very straight, with military
bearing.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. Do you know the residence of that certain person to whom
you gave the P440,000?chanrobles virtual law library
Mr. ARNAULT. No.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. During these frequent times that you met that certain
person, you never came to know his residence?chanrobles virtual law
library
Mr. ARNAULT. No, because he was coming to the
office.chanroblesvirtualawlibrary chanrobles virtual law library
The CHAIRMAN. How tall is that certain person?chanrobles virtual law
library
Mr. ARNAULT. Between 5-2 and 5-6.
On May 15, 1950, the petitioner was haled before the bar of the Senate,
which approved and read to him the following resolution:
Be it resolved by the Senate of the Philippines in Session
assembled: chanrobles virtual law library
That Jean L. Arnault, now at the bar of the Senate, be arraigned for
contempt consisting of contumacious acts committed by him during the
investigation conducted by the Special Committee created by Senate
Resolution No. 8 to probe the Tambobong and Buenavista estates deal of
October 21, 1949, and that the President of the Senate propounded to him
the following interrogatories:chanrobles virtual law library
1. What excuse have you for persistently refusing to reveal the name of the
person to whom you gave the P440,000 on October 29, 1949, a person
whose name it is impossible for you not to remember not only because of
the big amount of money you gave to him without receipt, but also by your
own statements you knew him as early as 1946 when General Ernest H.
Burt was still in the Philippines, you made two other deliveries of money to
him without receipt, and the last time you saw him was in December 1949?
Thereupon petitioner's attorney, Mr. Orendain, submitted for him a written
answer alleging that the questions were incriminatory in nature and
begging leave to be allowed to stand on his constitutional right not to be
compelled to be a witness against himself. Not satisfied with that written
answer Senator Sumulong, over the objection of counsel for the petitioner,
propounded to the latter the following question:
Sen. SUMULONG. During the investigation, when the Committee asked you
for the name of that person to whom you gave the P440,000, you said that
you can [could] not remember his name. That was the reason then for
refusing to reveal the name of the person. Now, in the answer that you
have just cited, you are refusing to reveal the name of that person to
whom you gave the P440,000 on the ground that your answer will be self-
incriminating. Now, do I understand from you that you are abandoning
your former claim that you cannot remember the name of that person, and
that your reason now for your refusal to reveal the name of that person is
that your answer might be self-incriminating? In other words, the question
is this: What is your real reason for refusing to reveal the name of that
person to whom you gave the P440,000: that you do not remember his
name or that your answer would be self-incriminating?
xxx xxx xxx
Mr. ORENDAIN. Mr. President, we are begging for the rules of procedure
that the accused should not be required to testify unless he so
desires.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. It is the duty of the respondent to answer the question.
The question is very clear. It does not incriminate him.
xxx xxx xxx
Mr. ARNAULT. I stand by every statement that I have made before the
Senate Committee on the first, second, and third hearings to which I was
made in my letter to this Senate of May 2, 1950, in which I gave all the
reasons that were in my powers to give, as requested. I cannot change
anything in those statements that I made because they represent the best
that I can do , to the best of my
ability.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. You are not answering the question. The answer has
nothing to do with the question.chanroblesvirtualawlibrary chanrobles
virtual law library
Sen. SUMULONG. I would like to remind you , Mr. Arnault, that the reason
that you gave during the investigation for not revealing the name of the
person to whom you gave the P440,000 is not the same reason that you
are now alleging because during the investigation you told us: "I do not
remember his name." But, now, you are now saying: "My answer might
incriminate me." What is your real position?chanrobles virtual law library
Mr. ARNAULT. I have just stated that I stand by my statements that I
made at the first, second, and third hearings. I said that I wanted to be
excused from answering the question. I beg to be excused from making
any answer that might be incriminating in nature. However, in this answer,
if the detail of not remembering the name of the person has not been
included, it is an oversight.chanroblesvirtualawlibrary chanrobles virtual
law library
Sen. SUMULONG. Mr. Arnault, will you kindly answer a simple question: Do
you remember or not the name of the person to whom you gave the
P440,000?chanrobles virtual law library
Mr. ARNAULT. I do not remember .chanroblesvirtualawlibrarychanrobles
virtual law library
Sen. SUMULONG. Now, if you do not remember the name of that person,
how can you say that your answer might be incriminating? If you do not
remember his name, you cannot answer the question; so how could your
answer be self-incriminating? What do you say to that?chanrobles virtual
law library
Mr. ARNAULT. This is too complicated for me to explain. Please, I do not
see how to answer those questions. That is why I asked for a lawyer, so he
can help me. I have no means of knowing what the situation is about. I
have been in jail 13 days without communication with the outside. How
could I answer the question? I have no knowledge of legal procedure or
rule, of which I am completely ignorant.
xxx xxx xxx
Sen. SUMULONG. Mr. President, I ask that the question be
answered.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. The witness is ordered to answer the question. It is very
clear. It does not incriminate the witness.
xxx xxx xxx
Mr. ARNAULT. I do not remember. I stand on my constitutional rights. I
beg to be excused from making further answer,
please.chanroblesvirtualawlibrary chanrobles virtual law library
Sen. SUMULONG. In that mimeographed letter that you sent addressed to
the President of the Senate, dated May 2, 1950, you stated there that you
cannot reveal the name of the person to whom you gave the P440,000
because if he is a public official you might render yourself liable for
prosecution for bribery, and that if he is a private individual you might
render yourself liable for prosecution for slander. Why did you make those
statements when you cannot even tell us whether that person to whom you
gave the P440,000 is a public official or a private individual ? We are giving
you this chance to convince the Senate that all these allegations of yours
that your answers might incriminate you are given by you honestly or you
are just trying to make a pretext for not revealing the information desired
by the Senate.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. You are ordered to answer the
question.chanroblesvirtualawlibrary chanrobles virtual law library
Mr. ARNAULT. I do not even understand the question. (The question is
restated and explained.)chanrobles virtual law library
Mr. ARNAULT. That letter of May 2, was prepared by a lawyer for me and
signed it. That is all I can say how I stand about this letter. I have no
knowledge myself enough to write such a letter, so I had to secure the help
of a lawyer to help me in my period of distress.
In that same session of the Senate before which the petitioner was called
to show cause why he should not be adjudged guilty of contempt of the
Senate, Senator Sumulong propounded to the petitioner questions tending
to elicit information from him as to the identity of the person to whom he
delivered the P440,000; but the petitioner refused to reveal it by saying
that he did not remember. The President of the Senate then propounded to
him various questions concerning his past activities dating as far back as
when witness was seven years of age and ending as recently as the post
liberation period, all of which questions the witness answered satisfactorily.
In view thereof, the President of the Senate also made an attempt to illicit
the desired information from the witness, as follows:
The PRESIDENT. Now I am convinced that you have a good memory.
Answer: Did you deliver the P440,000 as a gift, or of any
consideration?chanrobles virtual law library
Mr. ARNAULT. I have said that I had instructions to deliver it to that
person, that is all.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. Was it the first time you saw that person?chanrobles
virtual law library
Mr. ARNAULT. I saw him various times, I have already
said.chanroblesvirtualawlibrary chanrobles virtual law library
The PRESIDENT. In spite of that, you do not have the least remembrance
of the name of that person?chanrobles virtual law library
Mr. ARNAULT. I cannot remember.chanroblesvirtualawlibrarychanrobles
virtual law library
The PRESIDENT. How is it that you do not remember events that happened
a short time ago and, on the other hand, you remember events that
occurred during your childhood?chanrobles virtual law library
Mr. ARNAULT. I cannot explain.
The Senate then deliberated and adopted the resolution of May 15
hereinabove quoted whereby the petitioner was committed to the custody
of the Sergeant-at-Arms and imprisoned until "he shall have purged the
contempt by revealing to the Senate or to the aforesaid Special Committee
the name of the person to whom he gave the P440,000, as well as answer
other pertinent questions in connection therewith."chanrobles virtual law
library
The Senate also adopted on the same date another resolution (No. 16) , to
wit:
That the Special Committee created by Senate Resolution No. 8 be
empowered and directed to continue its investigation of the Tambobong
and Buenavista Estates deal of October 21, 1949, more particularly to
continue the examination of Jean L. Arnault regarding the name of the
person to whom he gave the P440,000 and other matters related
therewith.
The first session of the Second Congress was adjourned at midnight on
May 18, 1950.chanroblesvirtualawlibrary chanrobles virtual law library
The case was argued twice before us. We have given its earnest and
prolonged consideration because it is the first of its kind to arise since the
Constitution of the Republic of the Philippines was adopted. For the first
time this Court is called upon to define the power of either House of
Congress to punish a person not a member for contempt; and we are fully
conscious that our pronouncements here will set an important precedent
for the future guidance of all
concerned.chanroblesvirtualawlibrary chanrobles virtual law library
Before discussing the specific issues raised by the parties, we deem it
necessary to lay down the general principles of law which form the
background of those issues.chanroblesvirtualawlibrary chanrobles virtual
law library
Patterned after the American system, our Constitution vests the powers of
the Government in three independent but coordinate Departments -
Legislative, Executive, and Judicial. The legislative power is vested in the
Congress, which consists of the Senate and the House of Representatives.
(Section 1, Article VI.) Each house may determine the rules of its
proceedings, punish its Members for disorderly behavior, and, with the
concurrence of two-thirds of all its Members, expel a Member. (Section 10,
Article VI.) The judicial power is vested in the Supreme Court and in such
inferior courts as may be established by law. (Section 1, Article VIII.) Like
the Constitution of the United States, ours does not contain an express
provision empowering either of the two Houses of Congress to punish
nonmembers for contempt. It may also be noted that whereas in the
United States the legislative power is shared by and between the Congress
of the United States, on the one hand, and the respective legislatures of
the different States, on the other - the powers not delegated to the United
States by the Constitution nor prohibited by it to States being reserved to
the States, respectively, or to the people - in the Philippines, the legislative
power is vested in the Congress of the Philippines alone. It may therefore
be said that the Congress of the Philippines has a wider range of legislative
field than the Congress of the United States or any State Legislature. Our
form of Government being patterned after the American system - the
framers of our Constitution having drawn largely from American institutions
and practices - we can, in this case, properly draw also from American
precedents in interpreting analogous provisions of our Constitution, as we
have done in other cases in the past. Although there is no provision in the
Constitution expressly investing either House of Congress with power to
make investigations and exact testimony to the end that it may exercise its
legislative functions as to be implied. In other words, the power of inquiry -
with process to enforce it - is an essential and appropriate auxiliary to the
legislative function. A legislative body cannot legislate wisely or effectively
in the absence of information respecting the conditions which the
legislation is intended to effect or change; and where the legislative body
does not itself possess the requisite information - which is not infrequently
true - recourse must be had to others who do possess it. Experience has
shown that mere requests for such information are often unavailing, and
also that information which is volunteered is not always accurate or
complete; so some means of compulsion is essential to obtain what is
needed. (McGrain vs. Daugherty, 273 U.S., 135; 71 L. ed., 580; 50 A.L R.,
1.) The fact that the Constitution expressly gives to Congress the power to
punish its Members for disorderly behavior, does not by necessary
implication exclude the power to punish for contempt any other person.
(Anderson vs.Dunn, 6, Wheaton, 204; 5 L. ed., 242.) But no person can be
punished for contumacy as a witness before either House, unless his
testimony is required in a matter into which that House has jurisdiction to
inquire. (Kilbourn vs. Thompson, 26 L. ed.,
377.).chanroblesvirtualawlibrary chanrobles virtual law library
Since, as we have noted, the Congress of the Philippines has a wider range
of legislative field than either the Congress of the United States or a State
Legislature, we think it is correct to say that the field of inquiry into which
it may enter is also wider. It would be difficult to define any limits by which
the subject matter of its inquiry can be bounded. It is not necessary to do
so in this case. Suffice it to say that it must be coextensive with the range
of the legislative power.chanroblesvirtualawlibrary chanrobles virtual law
library
In the present case the jurisdiction of the Senate, thru the Special
Committee created by it, to investigate the Buenavista and Tambobong
Estates deal is not challenged by the petitioner; and we entertain no doubt
as to the Senate's authority to do so and as to the validity of Resolution
No. 8 hereinabove quoted. The transaction involved a questionable and
allegedly unnecessary and irregular expenditure of no less than P5,000,000
of public funds, of which Congress is the constitutional guardian. It also
involved government agencies created by Congress to regulate or even
abolish. As a result of the yet uncompleted investigation, the investigating
committee has recommended and the Senate approved three bills (1)
prohibiting the Secretary of Justice or any other department head from
discharging functions and exercising powers other than those attached to
his own office, without ]previous congressional authorization; (2)
prohibiting brothers and near relatives of any President of the Philippines
from intervening directly or indirectly and in whatever capacity in
transactions in which the Government is a party, more particularly where
the decision lies in the hands of executive or administrative officers who
are appointees of the President; and (3) providing that purchases of the
Rural Progress Administration of big landed estates at a price of P100,000
or more, shall not become effective without previous congressional
confirmation. 2 chanrobles virtual law library
We shall now consider and pass upon each of the questions raised by the
petitioner in support of his contention that his commitment is
unlawful.chanroblesvirtualawlibrary chanrobles virtual law library
First He contends that the Senate has no power to punish him for contempt
for refusing to reveal the name of the person to whom he gave the
P440,000, because such information is immaterial to, and will not serve,
any intended or purported legislation and his refusal to answer the
question has not embarrassed, obstructed, or impeded the legislative
process. It is argued that since the investigating committee has already
rendered its report and has made all its recommendations as to what
legislative measures should be taken pursuant to its findings, there is no
necessity to force the petitioner to give the information desired other than
that mentioned in its report, to wit: "In justice to Judge Quirino and to
Secretary Nepomuceno, this atmosphere of suspicion that now pervades
the public mind must be dissipated, and it can only be done if appropriate
steps are taken by the Senate to compel Arnault to stop pretending that he
cannot remember the name of the person to whom he gave the P440,000
and answer the questions which will definitely establish the identity of that
person . . ." Senator Sumulong, Chairman of the Committee, who appeared
and argued the case for the respondents, denied that that was the only
purpose of the Senate in seeking the information from the witness. He said
that the investigation had not been completed, because, due to the
contumacy of the witness, his committee had not yet determined the
parties responsible for the anomalous transaction as required by Resolution
No. 8; that, by Resolution No. 16, his committee was empowered and
directed to continue its investigation, more particularly to continue its
examination of the witness regarding the name of the person to whom he
gave the P440,000 and other matters related therewith; that the bills
recommended by his committee had not been approved by the House and
might not be approved pending the completion of the investigation; and
that those bills were not necessarily all the measures that Congress might
deem it necessary to pass after the investigation is
finished.chanroblesvirtualawlibrary chanrobles virtual law library
Once an inquiry is admitted or established to be within the jurisdiction of a
legislative body to make, we think the investigating committee has the
power to require a witness to answer any question pertinent to that
inquiry, subject of course to his constitutional right against self-
incrimination. The inquiry, to be within the jurisdiction of the legislative
body to make, must be material or necessary to the exercise of a power in
it vested by the Constitution, such as to legislate, or to expel a Member;
and every question which the investigator is empowered to coerce a
witness to answer must be material or pertinent to the subject of the
inquiry or investigation. So a witness may not be coerced to answer a
question that obviously has no relation to the subject of the inquiry. But
from this it does not follow that every question that may be propounded to
a witness must be material to any proposed or possible legislation. In other
words, the materiality of the question must be determined by its direct
relation to any proposed or possible legislation. The reason is, that the
necessity or lack of necessity for legislative action and the form and
character of the action itself are determined by the sum total of the
information to be gathered as a result of the investigation, and not by a
fraction of such information elicited from a single
question.chanroblesvirtualawlibrary chanrobles virtual law library
In this connection, it is suggested by counsel for the respondents that the
power of the Court is limited to determining whether the legislative body
has jurisdiction to institute the inquiry or investigation; that once that
jurisdiction is conceded, this Court cannot control the exercise of that
jurisdiction; and it is insinuated, that the ruling of the Senate on the
materiality of the question propounded to the witness is not subject to
review by this Court under the principle of the separation of powers. We
have to qualify this proposition. As was said by the Court of Appeals of New
York: "We are bound to presume that the action of the legislative body was
with a legitimate object if it is capable of being so construed, and we have
no right to assume that the contrary was intended." (People ex
rel. McDonald vs. Keeler, 99 N.Y., 463; 52 Am. Rep., 49; 2 N.E., 615,
quoted with approval by the Supreme Court of the United States in the said
case of McGrain vs.Daugherty, it is necessary deduction from the decision
in Re Chapman, 41 L. ed., 1154, that where the questions are not pertinent
to the matter under inquiry a witness rightfully may refuse to answer. So
we are of the opinion that where the alleged immateriality of the
information sought by the legislative body from a witness is relied upon to
contest its jurisdiction, the court is in duty bound to pass upon the
contention. The fact that the legislative body has jurisdiction or the power
to make the inquiry would not preclude judicial intervention to correct a
clear abuse of discretion in the exercise of that
power.chanroblesvirtualawlibrary chanrobles virtual law library
Applying the criterion laid down in the last two preceding paragraphs to the
resolution of the issue under consideration, we find that the question for
the refusal to answer which the petitioner was held in contempt by the
Senate is pertinent to the matter under inquiry. In fact, this is not and
cannot be disputed. Senate Resolution No. 8, the validity of which is not
challenged by the petitioner, requires the Special Committee, among other
things, to determine the parties responsible for the Buenavista and
Tambobong estates deal, and it is obvious that the name of the person to
whom the witness gave the P440,000 involved in said deal is pertinent to
that determination - it is in fact the very thing sought to be determined.
The contention is not that the question is impertinent to the subject of the
inquiry but that it has no relation or materiality to any proposed legislation.
We have already indicated that it is not necessary for the legislative body
to show that every question propounded to a witness is material to any
proposed or possible legislation; what is required is that is that it be
pertinent to the matter under inquiry.chanroblesvirtualawlibrary chanrobles
virtual law library
It is said that the Senate has already approved the three bills
recommended by the Committee as a result of the uncompleted
investigation and that there is no need for it to know the name of the
person to whom the witness gave the P440,000. But aside from the fact
that those bills have not yet been approved by the lower house and by the
President and that they may be withdrawn or modified if after the inquiry is
completed they should be found unnecessary or inadequate, there is
nothing to prevent the Congress from approving other measures it may
deem necessary after completing the investigation. We are not called upon,
nor is it within our province, to determine or imagine what those measures
may be. And our inability to do so is no reason for overruling the question
propounded by the Senate to the
witness.chanroblesvirtualawlibrary chanrobles virtual law library
The case of Re Chapman , 166 U.S., 661; 41 L. ed., 1154, is in point here.
The inquiry there in question was conducted under a resolution of the
Senate and related to charges, published in the press, that senators were
yielding to corrupt influences in considering a tariff bill then before the
Senate and were speculating in stocks the value of which would be affected
by pending amendments to the bill. Chapman, a member of a firm of stock
brokers dealing in the stock of the American Sugar Refining Company,
appeared before the committee in response to a subpoena and asked,
among others, the following questions:
Had the firm, during the month of March, 1894, bought or sold any stock
or securities, known as sugar stocks, for or in the interest, directly or
indirectly, of any United Senate senator?chanrobles virtual law library
Was the said firm at that time carrying any sugar stock for the benefit of,
or in the interest, directly or indirectly, of any United Senate senator?
He refused to answer the questions and was prosecuted under an Act of
Congress for contempt of the Senate. Upon being convicted and sent to jail
he petitioned the Supreme Court of the United States for a writ of habeas
corpus. One of the questions decided by the Supreme Court of the United
States in that case was whether the committee had the right to compel the
witness to answer said questions, and the Court held that the committee
did have such right, saying:
The questions were undoubtedlypertinent to the subject-matter of the
inquiry. The resolution directed the committee to inquire whether any
senator has been, or is, speculating in what are known as sugar stocks
during the consideration of the tariff bill now before the Senate." What the
Senate might or might not do upon the facts when ascertained, we cannot
say, nor are we called upon to inquire whether such ventures might be
defensible, as contended in argument, but is plain that negative answers
would have cleared that body of what the Senate regarded as offensive
imputations, while affirmative answers might have led to further action on
the part of the Senate within its constitutional powers. (Emphasis
supplied.)
It may be contended that the determination of the parties responsible for
the deal is incumbent upon the judicial rather than upon the legislative
branch. But we think there is no basis in fact or in law for such assumption.
The petitioner has not challenged the validity of Senate Resolution No. 8,
and that resolution expressly requires the committee to determine the
parties responsible for the deal. We are bound to presume that the Senate
has acted in the due performance of its constitutional function in instituting
the inquiry, if the act is capable of being so construed. On the other hand,
there is no suggestion that the judiciary has instituted an inquiry to
determine the parties responsible for the deal. Under the circumstances of
the case, it appearing that the questioned transaction was affected by the
head of the Department of Justice himself, it is not reasonable to expect
that the Fiscal or the Court of First Instance of Manila will take the initiative
to investigate and prosecute the parties responsible for the deal until and
unless the Senate shall determined those parties are and shall taken such
measures as may be within its competence to take the redress the wrong
that may have been committed against the people as a result of the
transaction. As we have said, the transaction involved no less than
P5,000,000 of public funds. That certainly is a matter of a public concern
which it is the duty of the constitutional guardian of the treasury to
investigate.chanroblesvirtualawlibrary chanrobles virtual law library
If the subject of investigation before the committee is within the range of
legitimate legislative inquiry and the proposed testimony of the witness
called relates to that subject, obedience, to its process may be enforced by
the committee by imprisonment. (Sullivan vs. Hill, 73 W. Va., 49; 79 S.E.,
670; 40 Ann. Cas. [1916 B.], 1115.)chanrobles virtual law library
The decision in the case of Kilbourn vs.Thompson, 26 L. ed., 377, relied
upon by the petitioner, is not applicable here. In that case the inquiry
instituted by the House of Representatives of the United States related to a
private real-estate pool or partnership in the District of Columbia. Jay Cook
and Company had had an interest in the pool but become bankrupts, and
their estate was in course of administration in a federal bankruptcy court in
Pennsylvania. The United States was one of their creditors. The trustee in
the bankruptcy proceeding had effected a settlement of the bankrupts'
interest in the pool, and of course his action was subject to examination
and approval or disapproval by the bankruptcy court. Some of the
creditors, including the United States, were dissatisfied with the
settlement. The resolution of the House directed the Committee "to inquire
into the nature and history of said real-estate pool and the character of
said settlement, with the amount of property involve, in which Jay Cooke
and Co. were interested, and the amount paid or to be paid in said
settlement, with power to send for persons and papers, and report to this
House." The Supreme Court of the United States, speaking thru Mr. Justice
Miller, pointed out that the resolution contained no suggestion of
contemplated legislation; that the matter was one in respect of which no
valid legislation could be had; that the bankrupts' estate and the trustee's
settlement were still pending in the bankruptcy court; and that the United
States and other creditors were free to press their claims in that
proceeding. And on these grounds the court held that in undertaking the
investigation "the House of Representatives not only exceeded the limit of
its own authority, but assumed a power which could only be properly
exercised by another branch of the government, because the power was in
its nature clearly judicial." The principles announced and applied in that
case are: that neither House of Congress possesses a "general power of
making inquiry into the private affairs of the citizen"; that the power
actually possessed is limited to inquires relating to matters of which the
particular House has jurisdiction, and in respect of which it rightfully may
take other action; that if the inquiry relates to a matter wherein relief or
redress could be had only by judicial proceeding, it is not within the range
of this power , but must be left to the court, conformably to the the inquiry, place in its proper background, should have been regarded as
constitutional separation of government a normal and customary part of the legislative process. Detailed
powers.chanroblesvirtualawlibrary chanrobles virtual law library definiteness of legislative purpose was thus made the demand of the court
in Killbourn vs. Thompson. But investigators cannot foretell the results that
may be achieved. The power of Congress to exercise control over a real-
That case differs from the present case in two important respects: (1)
estate pool is not a matter for abstract speculation but one to be
There the court found that the subject of the inquiry, which related to a
determined only after an exhaustive examination of the problem.
private real-estate pool or partnership, was not within the jurisdiction of
Relationship, and not their possibilities, determine the extent of
either House of Congress; while here if it is not disputed that the subject of
congressional power. Constitutionality depends upon such disclosures.
the inquiry, which relates to a transaction involving a questionable
Their presence, whether determinative of legislative or judicial power,
expenditure by the Government of P5,000,000 of public funds, is within the
cannot be relegated to guesswork. Neither Congress nor the Court can
jurisdiction of the Senate, (2) There the claim of the Government as a
predict, prior to the event, the result of the investigation."chanrobles
creditor of Jay Cooke and Company, which had had an interest in the pool,
virtual law library
was pending adjudication by the court; while here the interposition of the
judicial power on the subject of the inquiry cannot be expected, as we have
pointed out above, until after the Senate shall have determined who the The other case relied upon by the petitioner is Marshall vs. Gordon, 243
parties responsible are and shall have taken such measures as may be U.S., 521; 61. ed., 881. The question there was whether the House of
within its competence to take to redress the wrong that may have been Representatives exceeded its power in punishing, as for contempt of its
committed against the people as a result of the authority, the District Attorney of the Southern District of New York, who
transaction.chanroblesvirtualawlibrary chanrobles virtual law library had written, published, and sent to the chairman of one of its committees
an ill-tempered and irritating letter respecting the action and purposes of
the committee in interfering with the investigation by the grand jury of
It is interesting to note that the decision in the case of
alleged illegal activities of a member of the House of Representatives.
Killbourn vs. Thompson has evoked strong criticisms from legal scholars.
Power to make inquires and obtain evidence by compulsory process was
(See Potts, Power of Legislative Bodies to Punish for Contempt [1926], 74
not involved. The court recognized distinctly that the House of
U. Pa. L. Rev., 692-699; James L. Land is, Constitutional Limitations on the
Representatives had implied power to punish a person not a member for
Congressional Power of Investigation [1926], 40 Harvard L. Rev., 153, 154,
contempt, but held that its action in this instance was without
214-220.) We quoted the following from Professor Land is' criticism: "Mr.
constitutional justification. The decision was put on the ground that the
Justice Miller saw the case purely as an attempt by the House to secure to
letter, while offensive and vexatious, was not calculated or likely to affect
the Government certain priority rights as creditor of the bankrupt concern.
the House in any of its proceedings or in the exercise of any of its
To him it assumed the character of a lawsuit between the Government and
functions. This brief statement of the facts and the issues decided in that
Jay Cooke and Co., with the Government, acting through the House,
case is sufficient to show the inapplicability thereof to the present case.
attempting to override the orderliness of established procedure and
There the contempt involved consisted in the district attorney's writing to
thereby prefer a creditors' bill not before the courts but before Congress.
the chairman of the committee an offensive and vexatious letter, while
That bankruptcy proceedings had already been instituted against Jay Cooke
here the contempt involved consists in the refusal of the witness to answer
and Co., in a federal court gave added impetus to such a conception. The
questions pertinent to the subject of an inquiry which the Senate has the
House was seeking to oust a court of prior acquired jurisdiction by an
power and jurisdiction to make . But in that case, it was recognized that
extraordinary and unwarranted assumption of "judicial power"! The broader
the House of Representatives has implied power to punish a person not a
aspect of the investigation had not been disclosed to the Court. That Jay
member of contempt. In that respect the case is applicable here in favor of
Cooke and Co.'s indebtedness and the particular funds in question were
the Senate's (and not of the Petitioner's )
only part of the great administrative problem connected with the use and
contention.chanroblesvirtualawlibrary chanrobles virtual law library
disposition of public monies, that the particular failure was of consequence
mainly in relation to the security demanded for all government deposits,
that the facts connected with one such default revealed the possibility of Second. It is next contended for the petitioner that the Senate lacks
other and greater maladministration, such considerations had not been put authority to commit him for contempt for a term beyond its period of
before the Court. Nor had it been acquainted with the every-day nature of legislative session, which ended on May 18, 1950. This contention is based
the particular investigation and the powers there exerted by the House, on the opinion of Mr. Justice Malcolm, concurred in by Justices Street and
powers whose exercise was customary and familiar in legislative practice. Villa-Real, in the case of Lopez vs. De los Reyes (1930), 55 Phil., 170. In
Instead of assuming the character of an extraordinary judicial proceeding, that case it appears that on October 23, 1929, Candido Lopez assaulted a
member of the House of Representatives while the latter was going to the
hall of the House of Representatives to attend the session which was then
about to begin, as a result of which assault said representative was unable
to attend the sessions on that day and those of the two days next following
by reason of the threats which Candido Lopez made against him. By the
resolution of the House adopted November 6, 1929, Lopez was declared
guilty of contempt of the House of Representatives and ordered punished
by confinement in Bilibid Prison for a period of twenty-four hours. That
resolution was not complied with because the session of the House of
Representatives adjourned at midnight on November 8, 1929, and was
reiterated at the next session on September 16, 1930. Lopez was
subsequently arrested, whereupon he applied for the writ of habeas
corpus in the Court of First Instance of Manila, which denied the
application. Upon appeal to the Supreme Court, six justices voted to grant
the writ: Justice Malcolm, Street, and Villa-real, on the ground that the
term of imprisonment meted out to the petitioner could not legally be
extended beyond the session of the body in which the contempt occurred;
and Justices Johns, Villamor, and Ostrand, on the ground that the
Philippine Legislature had no power to punish for contempt because it was
a creature merely of an Act of the Congress of the United States and not of
a Constitution adopted by the people. Chief Justice Avance�a, Justice
Johnson, and Justice Romualdez wrote separate opinions, concurring with
Justice Malcolm, Street, and Villa-Real, that the Legislature had inherent
power to punish for contempt but dissenting from the opinion that the
order of commitment could only be executed during the particular session
in which the act of contempt was
committed.chanroblesvirtualawlibrary chanrobles virtual law library
Thus, on the question under consideration, the Court was equally divided
and no decisive pronouncement was made. The opinion of Mr. Justice
Malcolm is based mainly on the following passage in the case of
Anderson vs.Dunn, supra:
And although the legislative power continues perpetual, the legislative body
ceases to exist on the moment of its adjournment or periodical dissolution.
It follows that imprisonment must terminate with that adjournment.
as well as on the following quotation from Marshall vs. Gordon, supra:
And the essential nature of the power also makes clear the cogency and
application of the two limitations which were expressly pointed out in
Anderson vs. Dunn, supra, that is, that the power even when applied to
subjects which justified its exercise is limited to imprisonment and such
imprisonment may not be extended beyond the session of the body in
which the contempt occurred.
Interpreting the above quotations, Chief Justice Avance�a held:
From this doctrine it follows, in my judgement, that the imposition of the
penalty is limited to the existence of the legislative body, which ceases to
function upon its final periodical dissolution. The doctrine refers to its
existence and not to any particular session thereof. This must be so,
inasmuch as the basis of the power to impose such penalty is the right
which the Legislature has to self-preservation, and which right is
enforceable during the existence of the legislative body. Many causes might
be conceived to constitute contempt to the Legislature, which would
continue to be a menace to its preservation during the existence of the
legislative body against which contempt was
committed.chanroblesvirtualawlibrary chanrobles virtual law library
If the basis of the power of the legislature to punish for contempt exists
while the legislative body exercising it is in session, then that power and
the exercise thereof must perforce continue until the final adjournment and
the election of its successor.
Mr. Justice Johnson's more elaborate opinion, supported by quotations
from Cooley's Constitutional Limitations and from Jefferson's Manual, is to
the same effect. Mr. Justice Romualdez said: "In my opinion, where as in
the case before us, the members composing the legislative body against
which the contempt was committed have not yet completed their three-
year term, the House may take action against the petitioner
herein."chanrobles virtual law library
We note that the quotations from Anderson vs. Dunn and
Marshall vs. Gordon relied upon by Justice Malcolm are obiter dicta.
Anderson vs. Dunn was an action of trespass against the Sergeant-at-Arms
of the House of Representatives of the United States for assault and
battery and false imprisonment. The plaintiff had been arrested for
contempt of the House, brought before the bar of the House, and
reprimanded by the Speaker, and then discharged from custody. The
question as to the duration of the penalty was not involved in that case.
The question there was "whether the House of Representatives can take
cognizance of contempt committed against themselves, under any
circumstances." The court there held that the House of Representatives
had the power to punish for contempt, and affirmed the judgment of the
lower court in favor of the defendant. In Marshall vs. Gordon, the question
presented was whether the House had the power under the Constitution to
deal with the conduct of the district attorney in writing a vexatious letter as
a contempt of its authority, and to inflict punishment upon the writer for
such contempt as a matter of legislative power. The court held that the
House had no such power because the writing of the letter did not obstruct
the performance of legislative duty and did not endanger the preservation
of the power of the House to carry out its legislative authority. Upon that
ground alone, and not because the House had adjourned, the court ordered
the discharge of the petitioner from
custody.chanroblesvirtualawlibrary chanrobles virtual law library
The case where the question was squarely decided is
McGrain vs. Daugherty, supra. There it appears that the Senate had
adopted a resolution authorizing and directing a select committee of five
senators to investigate various charges of misfeasance and nonfeasance in
the Department of Justice after Attorney General Harry M. Daugherty
became its supervising head. In the course of the investigation the
committee caused to be served on Mally S. Daugherty, brother of Harry M.
Daugherty and president of the Midland National Bank of Washington Court
House, Ohio, a subpoena commanding him to appear before it for the
purpose of giving testimony relating to the subject under consideration.
The witness failed to appear without offering any excuse for his failure. The
committee reported the matter to the Senate and the latter adopted a
resolution, "That the President of the Senate pro tempore issue his warrant
commanding the Sergeant-at-Arms or his deputy to take into custody the
body of the said M.S. Daugherty wherever found, and to bring the said
M.S. Daugherty before the bar of the Senate, then and there to answer
such questions pertinent to the matter under inquiry as the Senate may
order the President of the Senate pro tempore to propound; and to keep
the said M.S. Daugherty in custody to await the further order of the
Senate." Upon being arrested, the witness petitioned the federal court in
Cincinnati for a writ of habeas corpus. The federal court granted the writ
and discharged the witness on the ground that the Senate, in directing the
investigation and in ordering the arrest, exceeded its power under the
Constitution. Upon appeal to the Supreme Court of the United States, one
of the contentions of the witness was that the case ha become moot
because the investigation was ordered and the committee was appointed
during the Sixty-eighth Congress, which expired on March 4, 1926. In
overruling the contention, the court said:
. . . The resolution ordering the investigation in terms limited the
committee's authority to the period of the Sixty-eighth Congress; but this
apparently was changed by a later and amendatory resolution authorizing
the committee to sit at such times and places as it might deem advisable
or necessary. It is said in Jefferson's Manual: "Neither House can continue
any portion of itself in any parliamentary function beyond the end of the
session without the consent of the other two branches. When done, it is by
a bill constituting them commissioners for the particular purpose." But the
context shows that the reference is to the two houses of Parliament when
adjourned by prorogation or dissolution by the King. The rule may be the
same with the House of Representatives whose members are all elected for
the period of a single Congress: but it cannot well be the same with the
Senate, which is a continuing body whose members are elected for a term
of six years and so divided into classes that the seats of one third only
become vacant at the end of each Congress, two thirds always continuing
into the next Congress, save as vacancies may occur through death or
resignation.chanroblesvirtualawlibrary chanrobles virtual law library
Mr. Hinds in his collection of precedents, says: "The Senate, as a
continuing body, may continue its committees through the recess following
the expiration of a Congress;" and, after quoting the above statement from
Jefferson's Manual, he says: "The Senate, however being a continuing
body, gives authority to its committees during the recess after the
expiration of a Congress." So far as we are advised the select committee
having this investigation in charge has neither made a final report nor been
discharged; nor has been continued by an affirmative order. Apparently its
activities have been suspended pending the decision of this case. But, be
this as it may, it is certain that the committee may be continued or revived
now by motion to that effect, and if, continued or revived, will have all its
original powers. This being so, and the Senate being a continuing body, the
case cannot be said to have become moot in the ordinary sense. The
situation is measurably like that in Southern P. Terminal Co. vs. Interstate
Commerce Commission, 219 U. S., 498, 514-516; 55 L. ed., 310, 315,
316; 31 Sup. Ct. Rep., 279, where it was held that a suit to enjoin the
enforcement of an order of the Interstate Commerce Commission did not
become moot through the expiration of the order where it was capable of
repetition by the Commission and was a matter of public interest. Our
judgment may yet be carried into effect and the investigation proceeded
with from the point at which it apparently was interrupted by reason of
the habeas corpus proceedings. In these circumstances we think a
judgment should be rendered as was done in the case
cited.chanroblesvirtualawlibrary chanrobles virtual law library
What has been said requires that the final order in the District Court
discharging the witness from custody be reversed.
Like the Senate of the United States , the Senate of the Philippines is a
continuing body whose members are elected for a term of six years and so
divided that the seats of only one-third become vacant every two years,
two-thirds always continuing into the next Congress save as vacancies may
occur thru death or resignation. Members of the House of Representatives
are all elected for a term of four years; so that the term of every Congress
is four years. The Second Congress of the Philippines was constituted on
December 30, 1949, and will expire on December 30, 1953. The resolution
of the Senate committing the Petitioner was adopted during the first
session of the Second Congress, which began on the fourth Monday of
January and ended in May 18, 1950.chanroblesvirtualawlibrary chanrobles
virtual law library
Had said resolution of commitment been adopted by the House of
Representatives, we think it could be enforced until the final adjournment
of the last session of the Second Congress in 1953. We find no sound
reason to limit the power of the legislative body to punish for contempt to
the end of every session and not to the end of the last session terminating
the existence of that body. The very reason for the exercise of the power to
punish for contempt is to enable the legislative body to perform its
constitutional function without impediment or obstruction. Legislative
functions may be and in practice are performed during recess by duly
constituted committees charged with the duty of performing investigations
or conducting hearing relative to any proposed legislation. To deny to such
committees the power of inquiry with process to enforce it would be to
defeat the very purpose for which that the power is recognized in the
legislative body as an essential and appropriate auxiliary to is legislative
function. It is but logical to say that the power of self-preservation is
coexistent with the life to be
preserved.chanroblesvirtualawlibrary chanrobles virtual law library
But the resolution of commitment here in question was adopted by the
Senate, which is a continuing body and which does not cease exist upon
the periodical dissolution of the Congress or of the House of
Representatives. There is no limit as to time to the Senate's power to
punish for contempt in cases where that power may constitutionally be
exerted as in the present case.chanroblesvirtualawlibrary chanrobles virtual
law library
Mere reflection upon the situation at hand convinces us of the soundness of
this proposition. The Senate has ordered an investigation of the Buenavista
and Tambobong estates deal, which we have found it is within its
competence to make. That investigation has not been completed because
of the refusal of the petitioner as a witness to answer certain questions
pertinent to the subject of the inquiry. The Senate has empowered the
committee to continue the investigation during the recess. By refusing to
answer the questions, the witness has obstructed the performance by the
Senate of its legislative function, and the Senate has the power to remove
the obstruction by compelling the witness to answer the questions thru
restraint of his liberty until he shall have answered them. That power
subsists as long as the Senate, which is a continuing body, persists in
performing the particular legislative function involved. To hold that it may
punish the witness for contempt only during the session in which
investigation was begun, would be to recognize the right of the Senate to
perform its function but at the same time to deny to it an essential and
appropriate means for its performance. Aside from this, if we should hold
that the power to punish for contempt terminates upon the adjournment of
the session, the Senate would have to resume the investigation at the next
and succeeding sessions and repeat the contempt proceedings against the
witness until the investigation is completed-an absurd, unnecessary, and
vexatious procedure, which should be
avoided.chanroblesvirtualawlibrary chanrobles virtual law library
As against the foregoing conclusion it is argued for the petitioner that the
power may be abusively and oppressively exerted by the Senate which
might keep the witness in prison for life. But we must assume that the
Senate will not be disposed to exert the power beyond its proper bounds.
And if, contrary to this assumption, proper limitations are disregarded, the
portals of this Court are always open to those whose rights might thus be
transgressed.chanroblesvirtualawlibrary chanrobles virtual law library
Third. Lastly, the petitioner invokes the privilege against self-incrimination.
He contends that he would incriminate himself if he should reveal the name
of the person to whom he gave the P440,000 if that person be a public
official be (witness) might be accused of bribery, and if that person be a
private individual the latter might accuse him of oral
defamation.chanroblesvirtualawlibrary chanrobles virtual law library
The ground upon which the witness' claim is based is too shaky, in firm,
and slippery to afford him safety. At first he told the Committee that the
transactions were legal, that no laws were violated, and that all requisites
had been replied with; but at the time he begged to be excused from
making answers "which might later be used against me." A little later he
explained that although the transactions were legal he refused to answer
questions concerning them "because it violates the right of a citizen to
privacy in his dealings with other people . . . I simply stand on my privilege
to dispose of the money that has been paid to me as a result of a legal
transaction without having to account for the use of it." But after being
apparently convinced by the Committee that his position was untenable,
the witness testified that, without securing any receipt, he turned over the
P440,000 to a certain person, a representative of Burt, in compliance with
Burt's verbal instruction made in 1946; that as far as he know, that certain
person had nothing to do with the negotiations for the settlement of the
Buenavista and Tambobong cases; that he had seen that person several
times before he gave him the P440,000 on October 29, 1949, and that
since then he had seen him again two or three times, the last time being in
December, 1949, in Manila; that the person was a male, 39 to 40 years of
age, between 5 feet, 2 inches and 5 feet, 6 inches in height. Butt the
witness would not reveal the name of that person on these pretexts: " I
don't remember the name; he was a representative of Burt." "I am not
sure; I don't remember the name."chanrobles virtual law library
We are satisfied that those answers of the witness to the important
question, what is the name of that person to whom you gave the
P440,000? were obviously false. His insistent claim before the bar of the
Senate that if he should reveal the name he would incriminate himself,
necessarily implied that he knew the name. Moreover, it is unbelievable prosecution and punishment for such violation. The witness cannot assert
that he gave the P440,000 to a person to him his privilege by reason of some fanciful excuse, for protection against an
unknown.chanroblesvirtualawlibrary chanrobles virtual law library imaginary danger, or to secure immunity to a third person. ( 3
Wharton's Criminal Evidence, 11th ed., secs. 1135,1136.)chanrobles virtual
law library
"Testimony which is obviously false or evasive is equivalent to a refusal to
testify and is punishable as contempt, assuming that a refusal to testify
would be so punishable." (12 Am. Jur., sec. 15, Contempt, pp. 399-400.) It is the province of the trial judge to determine from all the facts and
In the case of Mason vs. U.S., 61 L. ed., 1198, it appears that Mason was circumstances of the case whether the witness is justified in refusing to
called to testify before a grand jury engaged in investigating a charge of answer. (People vs. Gonzo, 23 N.E. [2d], 210 [Ill. App., 1939].) A witness
gambling against six other men. After stating that he was sitting at a table is not relieved from answering merely on his own declaration that an
with said men when they were arrested, he refused to answer two answer might incriminate him, but rather it is for the trial judge to decide
questions, claiming so to do might tend to incriminate him: (1) "Was there that question. (Mason vs. U.S., 244 U. S., 362; 61 L. ed., 1193, 1200.)
a game of cards being played on this particular evening at the table at
which you are sitting?" (2) "Was there a game of cards being played at
As against witness's inconsistent and unjustified claim to a constitutional
another table at this time?" The foreman of the grand jury reported the
right, is his clear duty as a citizen to give frank, sincere, and truthful
matter to the judge, who ruled "that each and all of said questions are
testimony before a competent authority. The state has the right to exact
proper and that the answers thereto would not tend to incriminate the
fulfillment of a citizen's obligation, consistent of course with his right under
witness." Mason was again called and refused to answer the first question
the Constitution. The witness in this case has been vociferous and militant
propounded to him, but, half yielding to frustration, he said in response to
in claiming constitutional rights and privileges but patently recreant to his
the second question: "I don't know." In affirming the conviction for
duties and obligations to the Government which protects those rights under
contempt, the Supreme Court of the United States among other things
the law. When a specific right and a specific obligation conflict with each
said:
other, and one is doubtful or uncertain while the other is clear and
imperative, the former must give way to the latter. The right to life is one
In the present case, the witness certainly were not relieved from answering of the most sacred that the citizen may claim, and yet the state may
merely because they declared that so to do might incriminate them. The deprive him of it if he violates his corresponding obligation to respect the
wisdom of the rule in this regard is well illustrated by the enforced answer, life of others. As Mr. Justice Johnson said in Anderson vs. Dunn: "The
"I don't know ," given by Mason to the second question, after he had wretch beneath the gallows may repine at the fate which awaits him, and
refused to reply under a claim of constitutional privilege. yet it is not certain that the laws under which he suffers were made for the
security." Paraphrasing and applying that pronouncement here, the
petitioner may not relish the restraint of his liberty pending the fulfillment
Since according to the witness himself the transaction was legal, and that
by him of his duty, but it is no less certain that the laws under which his
he gave the P440,000 to a representative of Burt in compliance with the
liberty is restrained were made for his
latter's verbal instruction, we find no basis upon which to sustain his claim
welfare.chanroblesvirtualawlibrary chanrobles virtual law library
that to reveal the name of that person might incriminate him. There is no
conflict of authorities on the applicable rule, to wit:
From all the foregoing, it follows that the petition must be denied, and it is
so ordered, with costs.chanroblesvirtualawlibrary chanrobles virtual law
Generally, the question whether testimony is privileged is for the
library
determination of the Court. At least, it is not enough for the witness to say
that the answer will incriminate him. as he is not the sole judge of his
liability. The danger of self-incrimination must appear reasonable and real Paras, Pablo, Bengzon, Montemayor, and Reyes, JJ., concur.
to the court, from all the circumstances, and from the whole case, as well
as from his general conception of the relations of the witness. Upon the
facts thus developed, it is the province of the court to determine whether a
direct answer to a question may criminate or not. . . . The fact that the
testimony of a witness may tend to show that he has violated the law is not
sufficient to entitle him to claim the protection of the constitutional
provision against self-incrimination, unless he is at the same time liable to
 [G.R. NO. 169777* : April 20, 2006]
SENATE OF THE PHILIPPINES, represented by FRANKLIN M.
DRILON, in his capacity as Senate President, JUAN M. FLAVIER, in
his capacity as Senate President Pro Tempore, FRANCIS N.
PANGILINAN, in his capacity as Majority Leader, AQUILINO Q.
PIMENTEL, JR., in his capacity as Minority Leader, SENATORS
RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY
EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE
ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO
S.LIM, M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and
MAR ROXAS, Petitioners, v.EDUARDO R. ERMITA, in his capacity as
Executive Secretary and alter-ego of President Gloria Macapagal-
Arroyo, and anyone acting in his stead and in behalf of the
President of the Philippines, Respondents.
[G.R. NO. 169659 : April 20, 2006]
BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep.
SATUR OCAMPO, Rep. CRISPIN BELTRAN, Rep. RAFAEL MARIANO,
Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL VIRADOR,
COURAGE represented by FERDINAND GAITE, and COUNSELS FOR
THE DEFENSE OF LIBERTIES (CODAL) represented by ATTY.
REMEDIOS BALBIN, Petitioners, v.EDUARDO ERMITA, in his capacity
as Executive Secretary and alter-ego of President Gloria
Macapagal-Arroyo, Respondent.
[G.R. NO. 169660 : April 20, 2006]
FRANCISCO I. CHAVEZ, Petitioner, v.EDUARDO R. ERMITA, in his
capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his
capacity as Secretary of Defense, and GENEROSO S. SENGA, in his
capacity as AFP Chief of Staff, Respondents.
[G.R. NO. 169667 : April 20, 2006]
ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner, v. HON.
EDUARDO R. ERMITA, in his capacity as Executive
Secretary, Respondent.
[G.R. NO. 169834 : April 20, 2006]
PDP - LABAN, Petitioner, v. EXECUTIVE SECRETARY EDUARDO R.
ERMITA, Respondent.
[G.R. NO. 171246 : April 20, 2006]
JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R.
RIVERA, JOSE AMOR AMORANDO, ALICIA A. RISOS-VIDAL,
FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B. JOVY C.
BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the
INTEGRATED BAR FOR THE PHILIPPINES, Petitioners, v. HON.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION
CARPIO MORALES, J.:
A transparent government is one of the hallmarks of a truly republican
state. Even in the early history of republican thought, however, it has been
recognized that the head of government may keep certain information
confidential in pursuit of the public interest. Explaining the reason for
vesting executive power in only one magistrate, a distinguished delegate to
the U.S. Constitutional Convention said: "Decision, activity, secrecy, and
dispatch will generally characterize the proceedings of one man, in a much
more eminent degree than the proceedings of any greater number; and in
proportion as the number is increased, these qualities will be diminished."1
History has been witness, however, to the fact that the power to withhold
information lends itself to abuse, hence, the necessity to guard it zealously.
The present consolidated petitions for certiorari and prohibition proffer that
the President has abused such power by issuing Executive Order No. 464
(E.O. 464) last September 28, 2005. They thus pray for its declaration as
null and void for being unconstitutional.
In resolving the controversy, this Court shall proceed with the recognition
that the issuance under review has come from a co-equal branch of
government, which thus entitles it to a strong presumption of
constitutionality. Once the challenged order is found to be indeed violative
of the Constitution, it is duty-bound to declare it so. For the Constitution,
being the highest expression of the sovereign will of the Filipino people,
must prevail over any issuance of the government that contravenes its
mandates.
In the exercise of its legislative power, the Senate of the Philippines,
through its various Senate Committees, conducts inquiries or investigations
in aid of legislation which call for, inter alia, the attendance of officials and
employees of the executive department, bureaus, and offices including
those employed in Government Owned and Controlled Corporations, the
Armed Forces of the Philippines (AFP), and the Philippine National Police
(PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole
issued invitations to various officials of the Executive Department for them
to appear on September 29, 2005 as resource speakers in a public hearing
on the railway project of the North Luzon Railways Corporation with the
China National Machinery and Equipment Group (hereinafter North Rail
Project). The public hearing was sparked by a privilege speech of Senator
Juan Ponce Enrile urging the Senate to investigate the alleged overpricing
and other unlawful provisions of the contract covering the North Rail
Project.
The Senate Committee on National Defense and Security likewise issued
invitations2dated September 22, 2005 to the following officials of the AFP:
the Commanding General of the Philippine Army, Lt. Gen. Hermogenes C.
Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga;
Deputy Chief of Staff for Intelligence of the AFP Rear Admiral Tirso R.
Danga; Chief of the Intelligence Service of the AFP Brig. Gen. Marlu Q.
Quevedo; Assistant Superintendent of the Philippine Military Academy
(PMA) Brig. Gen. Francisco V. Gudani; and Assistant Commandant, Corps
of Cadets of the PMA, Col. Alexander F. Balutan, for them to attend as
resource persons in a public hearing scheduled on September 28, 2005 on
the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr.,
delivered on June 6, 2005 entitled "Bunye has Provided Smoking Gun or
has Opened a Can of Worms that Show Massive Electoral Fraud in the
Presidential Election of May 2005"; (2) Privilege Speech of Senator Jinggoy
E. Estrada delivered on July 26, 2005 entitled "The Philippines as the Wire-
Tapping Capital of the World"; (3) Privilege Speech of Senator Rodolfo
Biazon delivered on August 1, 2005 entitled "Clear and Present Danger";
(4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo
Madrigal - Resolution Directing the Committee on National Defense and
Security to Conduct an Inquiry, in Aid of Legislation, and in the National
Interest, on the Role of the Military in the So-called "Gloriagate Scandal";
and (5) Senate Resolution No. 295 filed by Senator Biazon - Resolution
Directing the Committee on National Defense and Security to Conduct an
Inquiry, in Aid of Legislation, on the Wire-Tapping of the President of the
Philippines.
Also invited to the above-said hearing scheduled on September 28 2005
was the AFP Chief of Staff, General Generoso S. Senga who, by
letter3 dated September 27, 2005, requested for its postponement "due to
a pressing operational situation that demands [his utmost personal
attention" while "some of the invited AFP officers are currently attending to
other urgent operational matters."
On September 28, 2005, Senate President Franklin M. Drilon received from
Executive Secretary Eduardo R. Ermita a letter4 dated September 27, 2005
"respectfully request[ing] for the postponement of the hearing [regarding
the NorthRail project] to which various officials of the Executive
Department have been invited" in order to "afford said officials ample time
and opportunity to study and prepare for the various issues so that they
may better enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5Executive Secretary Ermita that
the Senators "are unable to accede to [his request]" as it "was sent
belatedly" and "[a]ll preparations and arrangements as well as notices to
all resource persons were completed [the previous] week."
Senate President Drilon likewise received on September 28, 2005 a
letter6 from the President of the North Luzon Railways Corporation Jose L.
Cortes, Jr. requesting that the hearing on the NorthRail project be
postponed or cancelled until a copy of the report of the UP Law Center on
the contract agreements relative to the project had been secured.
On September 28, 2005, the President issued E.O. 464, "Ensuring
Observance of the Principle of Separation of Powers, Adherence to the Rule
on Executive Privilege and Respect for the Rights of Public Officials
Appearing in Legislative Inquiries in Aid of Legislation Under the
Constitution, and For Other Purposes,"7 which, pursuant to Section 6
thereof, took effect immediately. The salient provisions of the Order are as
follows:
SECTION 1. Appearance by Heads of Departments Before Congress. - In
accordance with Article VI, Section 22 of the Constitution and to implement
the Constitutional provisions on the separation of powers between co-equal
branches of the government, all heads of departments of the Executive
Branch of the government shall secure the consent of the President prior to
appearing before either House of Congress.
When the security of the State or the public interest so requires and the
President so states in writing, the appearance shall only be conducted in
executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege.'
(a) Nature and Scope. - The rule of confidentiality based on executive
privilege is fundamental to the operation of government and rooted in the
separation of powers under the Constitution (Almonte v. Vasquez, G.R. No.
95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of
Conduct and Ethical Standards for Public Officials and Employees provides
that Public Officials and Employees shall not use or divulge confidential or
classified information officially known to them by reason of their office and
not made available to the public to prejudice the public interest.
Executive privilege covers all confidential or classified information between
the President and the public officers covered by this executive order,
including:
Conversations and correspondence between the President and the public
official covered by this executive order (Almonte v. Vasquez G.R. No.
95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No. 133250,
9 July 2002);
Military, diplomatic and other national security matters which in the
interest of national security should not be divulged (Almonte v. Vasquez,
G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good
Government, G.R. No. 130716, 9 December 1998).
Information between inter-government agencies prior to the conclusion of
treaties and executive agreements (Chavez v. Presidential Commission on
Good Government, G.R. No. 130716, 9 December 1998);
Discussion in close-door Cabinet meetings (Chavez v. Presidential
Commission on Good Government, G.R. No. 130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public
Estates Authority, G.R. No. 133250, 9 July 2002).
(b) Who are covered. - The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the
department heads are covered by the executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such
other officers who in the judgment of the Chief of Staff are covered by the
executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or
higher and such other officers who in the judgment of the Chief of the PNP
are covered by the executive privilege;
Senior national security officials who in the judgment of the National
Security Adviser are covered by the executive privilege; andcralawlibrary
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. - All
public officials enumerated in Section 2 (b) hereof shall secure prior
consent of the President prior to appearing before either House of Congress
to ensure the observance of the principle of separation of powers,
adherence to the rule on executive privilege and respect for the rights of
public officials appearing in inquiries in aid of legislation. (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
Also on September 28, 2005, Senate President Drilon received from
Executive Secretary Ermita a copy of E.O. 464, and another
letter8 informing him "that officials of the Executive Department invited to
appear at the meeting [regarding the NorthRail project] will not be able to
attend the same without the consent of the President, pursuant to [E.O.
464]" and that "said officials have not secured the required consent from
the President." On even date which was also the scheduled date of the
hearing on the alleged wiretapping, Gen. Senga sent a letter9 to Senator
Biazon, Chairperson of the Committee on National Defense and Security,
informing him "that per instruction of [President Arroyo], thru the
Secretary of National Defense, no officer of the [AFP] is authorized to
appear before any Senate or Congressional hearings without seeking a
written approval from the President" and "that no approval has been
granted by the President to any AFP officer to appear before the public
hearing of the Senate Committee on National Defense and Security
scheduled [on] 28 September 2005."
Despite the communications received from Executive Secretary Ermita and
Gen. Senga, the investigation scheduled by the Committee on National
Defense and Security pushed through, with only Col. Balutan and Brig.
Gen. Gudani among all the AFP officials invited attending.
For defying President Arroyo's order barring military personnel from
testifying before legislative inquiries without her approval, Brig. Gen.
Gudani and Col. Balutan were relieved from their military posts and were
made to face court martial proceedings.
As to the NorthRail project hearing scheduled on September 29, 2005,
Executive Secretary Ermita, citing E.O. 464, sent letter of regrets, in
response to the invitations sent to the following government officials: Light
Railway Transit Authority Administrator Melquiades Robles, Metro Rail
Transit Authority Administrator Roberto Lastimoso, Department of Justice
(DOJ) Chief State Counsel Ricardo V. Perez, then Presidential Legal Counsel
Merceditas Gutierrez, Department of Transportation and Communication
(DOTC) Undersecretary Guiling Mamonding, DOTC Secretary Leandro
Mendoza, Philippine National Railways General Manager Jose Serase II,
Monetary Board Member Juanita Amatong, Bases Conversion Development
Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L.
Neri.10 NorthRail President Cortes sent personal regrets likewise citing E.O.
464.11
On October 3, 2005, three petitions, docketed as G.R. NOS. 169659,
169660, and 169667, for certiorari and prohibition, were filed before this
Court challenging the constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of
Representatives Members Satur Ocampo, Crispin Beltran, Rafael Mariano,
Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of
government employees, and Counsels for the Defense of Liberties
(CODAL), a group of lawyers dedicated to the promotion of justice,
democracy and peace, all claiming to have standing to file the suit because
of the transcendental importance of the issues they posed, pray, in their
petition that E.O. 464 be declared null and void for being unconstitutional;
that respondent Executive Secretary Ermita, in his capacity as Executive
Secretary and alter-ego of President Arroyo, be prohibited from imposing,
and threatening to impose sanctions on officials who appear before
Congress due to congressional summons. Additionally, petitioners claim
that E.O. 464 infringes on their rights and impedes them from fulfilling
their respective obligations. Thus, Bayan Muna alleges that E.O. 464
infringes on its right as a political party entitled to participate in
governance; Satur Ocampo, et al. allege that E.O. 464 infringes on their
rights and duties as members of Congress to conduct investigation in aid of
legislation and conduct oversight functions in the implementation of laws;
Courage alleges that the tenure of its members in public office is
predicated on, and threatened by, their submission to the requirements of
E.O. 464 should they be summoned by Congress; and CODAL alleges that
its members have a sworn duty to uphold the rule of law, and their rights
to information and to transparent governance are threatened by the
imposition of E.O. 464.
In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his
constitutional rights as a citizen, taxpayer and law practitioner, are affected
by the enforcement of E.O. 464, prays in his petition that E.O. 464 be
declared null and void for being unconstitutional.
In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12 (ALG),
alleging that as a coalition of 17 legal resource non-governmental
organizations engaged in developmental lawyering and work with the poor
and marginalized sectors in different parts of the country, and as an
organization of citizens of the Philippines and a part of the general public, it
has legal standing to institute the petition to enforce its constitutional right
to information on matters of public concern, a right which was denied to
the public by E.O. 464,13 prays, that said order be declared null and void
for being unconstitutional and that respondent Executive Secretary Ermita
be ordered to cease from implementing it.
On October 11, 2005, Petitioner Senate of the Philippines, alleging that it
has a vital interest in the resolution of the issue of the validity of E.O. 464
for it stands to suffer imminent and material injury, as it has already
sustained the same with its continued enforcement since it directly
interferes with and impedes the valid exercise of the Senate's powers and
functions and conceals information of great public interest and concern,
filed its petition for certiorari and prohibition, docketed as G.R. No. 169777
and prays that E.O. 464 be declared unconstitutional.
On October 14, 2005, PDP-Laban, a registered political party with members
duly elected into the Philippine Senate and House of Representatives, filed
a similar petition for certiorari and prohibition, docketed as G.R. No.
169834, alleging that it is affected by the challenged E.O. 464 because it
hampers its legislative agenda to be implemented through its members in
Congress, particularly in the conduct of inquiries in aid of legislation and
transcendental issues need to be resolved to avert a constitutional crisis
between the executive and legislative branches of the government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated
his invitation to Gen. Senga for him and other military officers to attend the
hearing on the alleged wiretapping scheduled on February 10, 2005. Gen.
Senga replied, however, by letter15dated February 8, 2006, that
"[p]ursuant to Executive Order No. 464, th[e] Headquarters requested for
a clearance from the President to allow [them] to appear before the public
hearing" and that "they will attend once [their] request is approved by the
President." As none of those invited appeared, the hearing on February 10,
2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on
Agriculture and Food and the Blue Ribbon Committee on the alleged
mismanagement and use of the fertilizer fund under the Ginintuang
Masaganang Ani program of the Department of Agriculture (DA), several
Cabinet officials were invited to the hearings scheduled on October 5 and
26, November 24 and December 12, 2005 but most of them failed to
attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix
Jose Montes, Fertilizer and Pesticide Authority Executive Director Norlito R.
Gicana,17 and those from the Department of Budget and
Management18 having invoked E.O. 464.
In the budget hearings set by the Senate on February 8 and 13, 2006,
Press Secretary and Presidential Spokesperson Ignacio R. Bunye,19 DOJ
Secretary Raul M. Gonzalez20and Department of Interior and Local
Government Undersecretary Marius P. Corpus21 communicated their
inability to attend due to lack of appropriate clearance from the President
pursuant to E.O. 464. During the February 13, 2005 budget hearing,
however, Secretary Bunye was allowed to attend by Executive Secretary
Ermita.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for
extension to file memorandum27 was granted, subsequently filed a
manifestation28 dated March 14, 2006 that it would no longer file its
memorandum in the interest of having the issues resolved soonest,
prompting this Court to issue a Resolution reprimanding them.29
Petitioners submit that E.O. 464 violates the following constitutional
provisions:

On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members
Art. VI, Sec. 2130
of the Board of Governors of the Integrated Bar of the Philippines, as
taxpayers, and the Integrated Bar of the Philippines as the official
organization of all Philippine lawyers, all invoking their constitutional right Art. VI, Sec. 2231
to be informed on matters of public interest, filed their petition
for certiorari and prohibition, docketed as G.R. No. 171246, and pray that Art. VI, Sec. 132
E.O. 464 be declared null and void.

Art. XI, Sec. 133

All the petitions pray for the issuance of a Temporary Restraining Order
enjoining respondents from implementing, enforcing, and observing E.O.
464. Art. III, Sec. 734

In the oral arguments on the petitions conducted on February 21, 2006, Art. III, Sec. 435
the following substantive issues were ventilated: (1) whether respondents
committed grave abuse of discretion in implementing E.O. 464 prior to its Art. XIII, Sec. 16 36

publication in the Official Gazette or in a newspaper of general circulation;

and (2) whether E.O. 464 violates the following provisions of the
Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec.
1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16.
The procedural issue of whether there is an actual case or controversy that
calls for judicial review was not taken up; instead, the parties were
instructed to discuss it in their respective memoranda.
Art. II, Sec. 2837
Respondents Executive Secretary Ermita et al., on the other hand, pray in
their consolidated memorandum38 on March 13, 2006 for the dismissal of
the petitions for lack of merit.

After the conclusion of the oral arguments, the parties were directed to The Court synthesizes the issues to be resolved as follows:
submit their respective memoranda, paying particular attention to the
following propositions: (1) that E.O. 464 is, on its face, unconstitutional;
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;
and (2) assuming that it is not, it is unconstitutional as applied in four
instances, namely: (a) the so called Fertilizer scam; (b) the NorthRail
investigation (c) the Wiretapping activity of the ISAFP; and (d) the 2. Whether E.O. 464 violates the right of the people to information on
investigation on the Venable contract.22 matters of public concern; andcralawlibrary

Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their
memoranda on March 7, 2006, while those in G.R. No. 16966725 and G.R.
No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in
G.R. No. 171246 did not file any memorandum.
3. Whether respondents have committed grave abuse of discretion when
they implemented E.O. 464 prior to its publication in a newspaper of
general circulation.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of E.O. 464,
ascertainment of whether the requisites for a valid exercise of the Court's
power of judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial
review is subject to limitations, to wit: (1) there must be an actual case or
controversy calling for the exercise of judicial power; (2) the person
challenging the act must have standing to challenge the validity of the
subject act or issuance; otherwise stated, he must have a personal and
substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the
issue of constitutionality must be the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual
case or controversy where the disagreement between the parties lies,
discussion of the rest of the requisites shall be omitted.
Standing
464, the Senate and its individual members are not the proper parties to
assail the constitutionality of E.O. 464.
Invoking this Court's ruling in National Economic Protectionism Association
v. Ongpin42 and Valmonte v. Philippine Charity Sweepstakes
Office,43 respondents assert that to be considered a proper party, one must
have a personal and substantial interest in the case, such that he has
sustained or will sustain direct injury due to the enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not
only for intelligent public decision-making in a democratic system, but
more especially for sound legislation45 is not disputed. E.O. 464, however,
allegedly stifles the ability of the members of Congress to access
information that is crucial to law-making.46 Verily, the Senate, including its
individual members, has a substantial and direct interest over the outcome
of the controversy and is the proper party to assail the constitutionality of
E.O. 464. Indeed, legislators have standing to maintain inviolate the
prerogative, powers and privileges vested by the Constitution in their office
and are allowed to sue to question the validity of any official action which
they claim infringes their prerogatives as legislators.47

Respondents, through the Solicitor General, assert that the allegations in

In the same vein, party-list representatives Satur Ocampo (Bayan Muna),
G.R. NOS. 169659, 169660 and 169667 make it clear that they, adverting
Teodoro Casino (Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran
to the non-appearance of several officials of the executive department in
(Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are
the investigations called by the different committees of the Senate, were
allowed to sue to question the constitutionality of E.O. 464, the absence of
brought to vindicate the constitutional duty of the Senate or its different
any claim that an investigation called by the House of Representatives or
committees to conduct inquiry in aid of legislation or in the exercise of its
any of its committees was aborted due to the implementation of E.O. 464
oversight functions. They maintain that Representatives Ocampo et al.
notwithstanding, it being sufficient that a claim is made that E.O. 464
have not shown any specific prerogative, power, and privilege of the House
infringes on their constitutional rights and duties as members of Congress
of Representatives which had been effectively impaired by E.O. 464, there
to conduct investigation in aid of legislation and conduct oversight
being no mention of any investigation called by the House of
functions in the implementation of laws.
Representatives or any of its committees which was aborted due to the
implementation of E.O. 464.
The national political party, Bayan Muna, likewise meets the standing
requirement as it obtained three seats in the House of Representatives in
As for Bayan Muna's alleged interest as a party-list representing the
the 2004 elections and is, therefore, entitled to participate in the legislative
marginalized and underrepresented, and that of the other petitioner groups
process consonant with the declared policy underlying the party list system
and individuals who profess to have standing as advocates and defenders
of affording citizens belonging to marginalized and underrepresented
of the Constitution, respondents contend that such interest falls short of
sectors, organizations and parties who lack well-defined political
that required to confer standing on them as parties "injured-in-fact."40
constituencies to contribute to the formulation and enactment of legislation
that will benefit the nation.48
Respecting petitioner Chavez, respondents contend that Chavez may not
claim an interest as a taxpayer for the implementation of E.O. 464 does not
As Bayan Muna and Representatives Ocampo et al. have the standing to
involve the exercise of taxing or spending power.41
file their petitions, passing on the standing of their co-petitioners Courage
and Codal is rendered unnecessary.49
With regard to the petition filed by the Senate, respondents argue that in
the absence of a personal or direct injury by reason of the issuance of E.O.
In filing their respective petitions, Chavez, the ALG which claims to be an
organization of citizens, and the incumbent members of the IBP Board of
Governors and the IBP in behalf of its lawyer members,50 invoke their
constitutional right to information on matters of public concern, asserting
that the right to information, curtailed and violated by E.O. 464, is
essential to the effective exercise of other constitutional rights51 and to the
maintenance of the balance of power among the three branches of the
government through the principle of checks and balances.52
It is well-settled that when suing as a citizen, the interest of the petitioner
in assailing the constitutionality of laws, presidential decrees, orders, and
other regulations, must be direct and personal. In Franciso v. House of
Representatives,53 this Court held that when the proceeding involves the
assertion of a public right, the mere fact that he is a citizen satisfies the
requirement of personal interest.
As for petitioner PDP-Laban, it asseverates that it is clothed with legal
standing in view of the transcendental issues raised in its petition which
this Court needs to resolve in order to avert a constitutional crisis. For it to
be accorded standing on the ground of transcendental importance,
however, it must establish (1) the character of the funds (that it is public)
or other assets involved in the case, (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public
respondent agency or instrumentality of the government, and (3) the lack
of any party with a more direct and specific interest in raising the questions
being raised.54 The first and last determinants not being present as no
public funds or assets are involved and petitioners in G.R. NOS. 169777
and 169659 have direct and specific interests in the resolution of the
controversy, petitioner PDP-Laban is bereft of standing to file its petition.
Its allegation that E.O. 464 hampers its legislative agenda is vague and
uncertain, and at best is only a "generalized interest" which it shares with
the rest of the political parties. Concrete injury, whether actual or
threatened, is that indispensable element of a dispute which serves in part
to cast it in a form traditionally capable of judicial resolution.55 In fine, PDP-
Laban's alleged interest as a political party does not suffice to clothe it with
legal standing.
Actual Case or Controversy
Petitioners assert that an actual case exists, they citing the absence of the
executive officials invited by the Senate to its hearings after the issuance of
E.O. 464, particularly those on the NorthRail project and the wiretapping
controversy.
Respondents counter that there is no case or controversy, there being no
showing that President Arroyo has actually withheld her consent or
prohibited the appearance of the invited officials.56 These officials, they
claim, merely communicated to the Senate that they have not yet secured
the consent of the President, not that the President prohibited their
attendance.57 Specifically with regard to the AFP officers who did not attend
the hearing on September 28, 2005, respondents claim that the instruction
not to attend without the President's consent was based on its role as
Commander-in-Chief of the Armed Forces, not on E.O. 464.
Respondents thus conclude that the petitions merely rest on an unfounded
apprehension that the President will abuse its power of preventing the
appearance of officials before Congress, and that such apprehension is not
sufficient for challenging the validity of E.O. 464.
The Court finds respondents' assertion that the President has not withheld
her consent or prohibited the appearance of the officials concerned
immaterial in determining the existence of an actual case or controversy
insofar as E.O. 464 is concerned. For E.O. 464 does not require either a
deliberate withholding of consent or an express prohibition issuing from the
President in order to bar officials from appearing before Congress.
As the implementation of the challenged order has already resulted in the
absence of officials invited to the hearings of petitioner Senate of the
Philippines, it would make no sense to wait for any further event before
considering the present case ripe for adjudication. Indeed, it would be
sheer abandonment of duty if this Court would now refrain from passing on
the constitutionality of E.O. 464.
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials
before Congress, deprives Congress of the information in the possession of
these officials. To resolve the question of whether such withholding of
information violates the Constitution, consideration of the general power of
Congress to obtain information, otherwise known as the power of inquiry,
is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of
Article VI of the Constitution which reads:
SECTION 21. The Senate or the House of Representatives or any of its
respective committees may conduct inquiries in aid of legislation in
accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected. (Underscoring
supplied)ςrαlαωlιbrαrÿ
This provision is worded exactly as Section 8 of Article VIII of the 1973
Constitution except that, in the latter, it vests the power of inquiry in the
unicameral legislature established therein - the Batasang Pambansa - and
its committees.
The 1935 Constitution did not contain a similar provision. Nonetheless, in
Arnault v. Nazareno,58 a case decided in 1950 under that Constitution, the
Court already recognized that the power of inquiry is inherent in the power
to legislate.
Arnault involved a Senate investigation of the reportedly anomalous
purchase of the Buenavista and Tambobong Estates by the Rural Progress
Administration. Arnault, who was considered a leading witness in the
controversy, was called to testify thereon by the Senate. On account of his
refusal to answer the questions of the senators on an important point, he
was, by resolution of the Senate, detained for contempt. Upholding the
Senate's power to punish Arnault for contempt, this Court held:
Although there is no provision in the Constitution expressly investing either
House of Congress with power to make investigations and exact testimony
to the end that it may exercise its legislative functions advisedly and
effectively, such power is so far incidental to the legislative function as to
be implied. In other words, the power of inquiry - with process to enforce it
- is an essential and appropriate auxiliary to the legislative function. A
legislative body cannot legislate wisely or effectively in the absence of
information respecting the conditions which the legislation is intended to
affect or change; and where the legislative body does not itself possess the
requisite information - which is not infrequently true - recourse must be
had to others who do possess it. Experience has shown that mere requests
for such information are often unavailing, and also that information which
is volunteered is not always accurate or complete; so some means of
compulsion is essential to obtain what is needed.59 . . . (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
That this power of inquiry is broad enough to cover officials of the
executive branch may be deduced from the same case. The power of
inquiry, the Court therein ruled, is co-extensive with the power to
legislate.60 The matters which may be a proper subject of legislation and
those which may be a proper subject of investigation are one. It follows
that the operation of government, being a legitimate subject for legislation,
is a proper subject for investigation.
Thus, the Court found that the Senate investigation of the government
transaction involved in Arnault was a proper exercise of the power of
inquiry. Besides being related to the expenditure of public funds of which
Congress is the guardian, the transaction, the Court held, "also involved
government agencies created by Congress and officers whose positions it is
within the power of Congress to regulate or even abolish."
Since Congress has authority to inquire into the operations of the executive
branch, it would be incongruous to hold that the power of inquiry does not
extend to executive officials who are the most familiar with and informed
on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it,"
is grounded on the necessity of information in the legislative process. If the
information possessed by executive officials on the operation of their
offices is necessary for wise legislation on that subject, by parity of
reasoning, Congress has the right to that information and the power to
compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy
era," however, the right of Congress to conduct inquiries in aid of
legislation is, in theory, no less susceptible to abuse than executive or
judicial power. It may thus be subjected to judicial review pursuant to the
Court's certioraripowers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the
inquiry itself might not properly be in aid of legislation, and thus beyond
the constitutional power of Congress. Such inquiry could not usurp judicial
functions. Parenthetically, one possible way for Congress to avoid such a
result as occurred in Bengzon is to indicate in its invitations to the public
officials concerned, or to any person for that matter, the possible needed
statute which prompted the need for the inquiry. Given such statement in
its invitations, along with the usual indication of the subject of inquiry and
the questions relative to and in furtherance thereof, there would be less
room for speculation on the part of the person invited on whether the
inquiry is in aid of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe
the legislative power of inquiry. The provision requires that the inquiry be
done in accordance with the Senate or House's duly published rules of
procedure, necessarily implying the constitutional infirmity of an inquiry
conducted without duly published rules of procedure. Section 21 also
mandates that the rights of persons appearing in or affected by such
inquiries be respected, an imposition that obligates Congress to adhere to
the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper
suit filed by the persons affected, even if they belong to the executive
branch. Nonetheless, there may be exceptional circumstances, none
appearing to obtain at present, wherein a clear pattern of abuse of the
legislative power of inquiry might be established, resulting in palpable
violations of the rights guaranteed to members of the executive
department under the Bill of Rights. In such instances, depending on the
particulars of each case, attempts by the Executive Branch to forestall
these abuses may be accorded judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized
exemptions to the power of inquiry, which exemptions fall under the rubric
of "executive privilege." Since this term figures prominently in the
challenged order, it being mentioned in its provisions, its preambular
clauses,62 and in its very title, a discussion of executive privilege is crucial
for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been
used even prior to the promulgation of the 1986 Constitution.63 Being of
American origin, it is best understood in light of how it has been defined
and used in the legal literature of the United States.
Schwartz defines executive privilege as "the power of the Government to
withhold information from the public, the courts, and the
Congress."64 Similarly, Rozell defines it as "the right of the President and
high-level executive branch officers to withhold information from Congress,
the courts, and ultimately the public."65
Executive privilege is, nonetheless, not a clear or unitary concept.66 It has
encompassed claims of varying kinds.67 Tribe, in fact, comments that while
it is customary to employ the phrase "executive privilege," it may be more
accurate to speak of executive privileges "since presidential refusals to
furnish information may be actuated by any of at least three distinct kinds
of considerations, and may be asserted, with differing degrees of success,
in the context of either judicial or legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege
invoked by U.S. Presidents, beginning with Washington, on the ground that
the information is of such nature that its disclosure would subvert crucial
military or diplomatic objectives. Another variety is the informer's privilege,
or the privilege of the Government not to disclose the identity of persons
who furnish information of violations of law to officers charged with the
enforcement of that law. Finally, a generic privilege for internal
deliberations has been said to attach to intragovernmental documents
reflecting advisory opinions, recommendations and deliberations
comprising part of a process by which governmental decisions and policies
are formulated.68
Tribe's comment is supported by the ruling in In re Sealed Case, thus:
Since the beginnings of our nation, executive officials have claimed a
variety of privileges to resist disclosure of information the confidentiality of
which they felt was crucial to fulfillment of the unique role and
responsibilities of the executive branch of our government. Courts ruled
early that the executive had a right to withhold documents that might
reveal military or state secrets. The courts have also granted the executive
a right to withhold the identity of government informers in some
circumstances and a qualified right to withhold information related to
pending investigations. x x x"69 (Emphasis and underscoring
supplied)ςrαlαωlιbrαrÿ
The entry in Black's Law Dictionary on "executive privilege" is similarly
instructive regarding the scope of the doctrine.
This privilege, based on the constitutional doctrine of separation of powers,
exempts the executive from disclosure requirements applicable to the
ordinary citizen or organization where such exemption is necessary to the
discharge of highly important executive responsibilities involved in
maintaining governmental operations, and extends not only to military and
diplomatic secrets but also to documents integral to an appropriate
exercise of the executive' domestic decisional and policy making functions,
that is, those documents reflecting the frank expression necessary in intra-
governmental advisory and deliberative communications.70 (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
That a type of information is recognized as privileged does not, however,
necessarily mean that it would be considered privileged in all instances. For
in determining the validity of a claim of privilege, the question that must be
asked is not only whether the requested information falls within one of the
traditional privileges, but also whether that privilege should be honored in
a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v.
Nixon, 72 decided in 1974. In issue in that case was the validity of President
Nixon's claim of executive privilege against a subpoena issued by a district
court requiring the production of certain tapes and documents relating to
the Watergate investigations. The claim of privilege was based on the
President's general interest in the confidentiality of his conversations and
correspondence. The U.S. Court held that while there is no explicit
reference to a privilege of confidentiality in the U.S. Constitution, it is
constitutionally based to the extent that it relates to the effective discharge
of a President's powers. The Court, nonetheless, rejected the President's
claim of privilege, ruling that the privilege must be balanced against the
public interest in the fair administration of criminal justice. Notably, the
Court was careful to clarify that it was not there addressing the issue of
claims of privilege in a civil litigation or against congressional demands for
information.
Cases in the U.S. which involve claims of executive privilege against
Congress are rare.73 Despite frequent assertion of the privilege to deny
information to Congress, beginning with President Washington's refusal to
turn over treaty negotiation records to the House of Representatives, the
U.S. Supreme Court has never adjudicated the issue.74However, the U.S.
Court of Appeals for the District of Columbia Circuit, in a case decided
earlier in the same year as Nixon, recognized the President's privilege over
his conversations against a congressional subpoena.75 Anticipating the
balancing approach adopted by the U.S. Supreme Court in Nixon, the Court
of Appeals weighed the public interest protected by the claim of privilege
against the interest that would be served by disclosure to the Committee.
Ruling that the balance favored the President, the Court declined to enforce
the subpoena.76
In this jurisdiction, the doctrine of executive privilege was recognized by
this Court in Almonte v. Vasquez.77 Almonte used the term in reference to
the same privilege subject of Nixon. It quoted the following portion of the
Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations
and correspondences, like the claim of confidentiality of judicial
deliberations, for example, has all the values to which we accord deference
for the privacy of all citizens and, added to those values, is the necessity
for protection of the public interest in candid, objective, and even blunt or
harsh opinions in Presidential decision-making. A President and those who
assist him must be free to explore alternatives in the process of shaping
policies and making decisions and to do so in a way many would be
unwilling to express except privately. These are the considerations
justifying a presumptive privilege for Presidential communications. The
privilege is fundamental to the operation of government and inextricably
rooted in the separation of powers under the Constitution x x x " (Emphasis
and underscoring supplied)ςrαlαωlιbrαrÿ
Almonte involved a subpoena duces tecum issued by the Ombudsman
against the therein petitioners. It did not involve, as expressly stated in the
decision, the right of the people to information.78 Nonetheless, the Court
recognized that there are certain types of information which the
government may withhold from the public, thus acknowledging, in
substance if not in name, that executive privilege may be claimed against
citizens' demands for information.
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the
common law holding that there is a "governmental privilege against public
disclosure with respect to state secrets regarding military, diplomatic and
other national security matters."80 The same case held that closed-door
Cabinet meetings are also a recognized limitation on the right to
information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the
right to information does not extend to matters recognized as "privileged
information under the separation of powers,"82 by which the Court meant
Presidential conversations, correspondences, and discussions in closed-
door Cabinet meetings. It also held that information on military and
diplomatic secrets and those affecting national security, and information on
investigations of crimes by law enforcement agencies before the
prosecution of the accused were exempted from the right to information.
From the above discussion on the meaning and scope of executive
privilege, both in the United States and in this jurisdiction, a clear principle
emerges. Executive privilege, whether asserted against Congress, the
courts, or the public, is recognized only in relation to certain types of
information of a sensitive character. While executive privilege is a
constitutional concept, a claim thereof may be valid or not depending on
the ground invoked to justify it and the context in which it is made.
Noticeably absent is any recognition that executive officials are exempt
from the duty to disclose information by the mere fact of being executive
officials. Indeed, the extraordinary character of the exemptions indicates
that the presumption inclines heavily against executive secrecy and in
favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by
them to secure the consent of the President prior to appearing before
Congress. There are significant differences between the two provisions,
however, which constrain this Court to discuss the validity of these
provisions separately.
Section 1 specifically applies to department heads. It does not, unlike does not mean that they need not come when they are invited or
Section 3, require a prior determination by any official whether they are subpoenaed by the committee of either House when it comes to inquiries in
covered by E.O. 464. The President herself has, through the challenged aid of legislation or congressional investigation. According to Commissioner
order, made the determination that they are. Further, unlike also Section Suarez, that is allowed and their presence can be had under Section 21.
3, the coverage of department heads under Section 1 is not made to Does the gentleman confirm this, Madam President?cralawlibrary
depend on the department heads' possession of any information which
might be covered by executive privilege. In fact, in marked contrast to
MR. DAVIDE. We confirm that, Madam President, because Section 20 refers
Section 3 vis - à-vis Section 2, there is no reference to executive privilege
only to what was originally the Question Hour, whereas, Section 21 would
at all. Rather, the required prior consent under Section 1 is grounded on
refer specifically to inquiries in aid of legislation, under which anybody for
Article VI, Section 22 of the Constitution on what has been referred to as
that matter, may be summoned and if he refuses, he can be held in
the question hour.
contempt of the House.83 (Emphasis and underscoring
supplied)ςrαlαωlιbrαrÿ
SECTION 22. The heads of departments may upon their own initiative, with
the consent of the President, or upon the request of either House, as the
A distinction was thus made between inquiries in aid of legislation and the
rules of each House shall provide, appear before and be heard by such
question hour. While attendance was meant to be discretionary in the
House on any matter pertaining to their departments. Written questions
question hour, it was compulsory in inquiries in aid of legislation. The
shall be submitted to the President of the Senate or the Speaker of the
reference to Commissioner Suarez bears noting, he being one of the
House of Representatives at least three days before their scheduled
proponents of the amendment to make the appearance of department
appearance. Interpellations shall not be limited to written questions, but
heads discretionary in the question hour.
may cover matters related thereto. When the security of the State or the
public interest so requires and the President so states in writing, the
appearance shall be conducted in executive session. So clearly was this distinction conveyed to the members of the Commission
that the Committee on Style, precisely in recognition of this distinction,
later moved the provision on question hour from its original position as
Determining the validity of Section 1 thus requires an examination of the
Section 20 in the original draft down to Section 31, far from the provision
meaning of Section 22 of Article VI. Section 22 which provides for the
on inquiries in aid of legislation. This gave rise to the following exchange
question hour must be interpreted vis - à-vis Section 21 which provides for
during the deliberations:
the power of either House of Congress to "conduct inquiries in aid of
legislation." As the following excerpt of the deliberations of the
Constitutional Commission shows, the framers were aware that these two MR. GUINGONA. [speaking in his capacity as Chairman of the Committee
provisions involved distinct functions of Congress. on Style] We now go, Mr. Presiding Officer, to the Article on Legislative and
may I request the chairperson of the Legislative Department,
Commissioner Davide, to give his reaction.
MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on
the Question Hour] yesterday, I noticed that members of the Cabinet
cannot be compelled anymore to appear before the House of THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is
Representatives or before the Senate. I have a particular problem in this recognized.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
regard, Madam President, because in our experience in the Regular
Batasang Pambansa - as the Gentleman himself has experienced in the MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to
interim Batasang Pambansa - one of the most competent inputs that we the Question Hour. I propose that instead of putting it as Section 31, it
can put in our committee deliberations, either in aid of legislation or in should follow Legislative Inquiries.
congressional investigations, is the testimonies of Cabinet ministers. We
usually invite them, but if they do not come and it is a congressional
investigation, we usually issue subpoenas. THE PRESIDING OFFICER. What does the committee say?cralawlibrary

I want to be clarified on a statement made by Commissioner Suarez when MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding
he said that the fact that the Cabinet ministers may refuse to come to the Officer.
House of Representatives or the Senate [when requested under Section 22]
MR. MAAMBONG. Actually, we considered that previously when we
sequenced this but we reasoned that in Section 21, which is Legislative
Inquiry, it is actually a power of Congress in terms of its own lawmaking;
whereas, a Question Hour is not actually a power in terms of its own
lawmaking power because in Legislative Inquiry, it is in aid of legislation.
And so we put Question Hour as Section 31. I hope Commissioner Davide
will consider this.
MR. DAVIDE. The Question Hour is closely related with the legislative
power, and it is precisely as a complement to or a supplement of the
Legislative Inquiry. The appearance of the members of Cabinet would be
very, very essential not only in the application of check and balance but
also, in effect, in aid of legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the
suggestion of Commissioner Davide. In other words, we are accepting that
and so this Section 31 would now become Section 22. Would it be,
Commissioner Davide?cralawlibrary
MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Consistent with their statements earlier in the deliberations,
Commissioners Davide and Maambong proceeded from the same
assumption that these provisions pertained to two different functions of the
legislature. Both Commissioners understood that the power to conduct
inquiries in aid of legislation is different from the power to conduct inquiries
during the question hour. Commissioner Davide's only concern was that the
two provisions on these distinct powers be placed closely together, they
being complementary to each other. Neither Commissioner considered
them as identical functions of Congress.
The foregoing opinion was not the two Commissioners' alone. From the
above-quoted exchange, Commissioner Maambong's committee - the
Committee on Style - shared the view that the two provisions reflected
distinct functions of Congress. Commissioner Davide, on the other hand,
was speaking in his capacity as Chairman of the Committee on the
Legislative Department. His views may thus be presumed as representing
that of his Committee.
In the context of a parliamentary system of government, the "question
hour" has a definite meaning. It is a period of confrontation initiated by
Parliament to hold the Prime Minister and the other ministers accountable
for their acts and the operation of the government,85 corresponding to what
is known in Britain as the question period. There was a specific provision
for a question hour in the 1973 Constitution86 which made the appearance
of ministers mandatory. The same perfectly conformed to the
parliamentary system established by that Constitution, where the ministers
are also members of the legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the
immediate accountability of the Prime Minister and the Cabinet to the
National Assembly. They shall be responsible to the National Assembly for
the program of government and shall determine the guidelines of national
policy. Unlike in the presidential system where the tenure of office of all
elected officials cannot be terminated before their term expired, the Prime
Minister and the Cabinet remain in office only as long as they enjoy the
confidence of the National Assembly. The moment this confidence is lost
the Prime Minister and the Cabinet may be changed.87
The framers of the 1987 Constitution removed the mandatory nature of
such appearance during the question hour in the present Constitution so as
to conform more fully to a system of separation of powers.88To that extent,
the question hour, as it is presently understood in this jurisdiction, departs
from the question period of the parliamentary system. That department
heads may not be required to appear in a question hour does not,
however, mean that the legislature is rendered powerless to elicit
information from them in all circumstances. In fact, in light of the absence
of a mandatory question period, the need to enforce Congress' right to
executive information in the performance of its legislative function becomes
more imperative. As Schwartz observes:
Indeed, if the separation of powers has anything to tell us on the subject
under discussion, it is that the Congress has the right to obtain information
from any source - even from officials of departments and agencies in the
executive branch. In the United States there is, unlike the situation which
prevails in a parliamentary system such as that in Britain, a clear
separation between the legislative and executive branches. It is this very
separation that makes the congressional right to obtain information from
the executive so essential, if the functions of the Congress as the elected
representatives of the people are adequately to be carried out. The
absence of close rapport between the legislative and executive branches in
this country, comparable to those which exist under a parliamentary
system, and the nonexistence in the Congress of an institution such as the
British question period have perforce made reliance by the Congress upon
its right to obtain information from the executive essential, if it is
intelligently to perform its legislative tasks. Unless the Congress possesses
the right to obtain executive information, its power of oversight of
administration in a system such as ours becomes a power devoid of most
of its practical content, since it depends for its effectiveness solely upon
information parceled out ex gratia by the executive.89(Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
Sections 21 and 22, therefore, while closely related and complementary to even counsel for the Senate, Sen. Joker Arroyo, admitted it during the oral
each other, should not be considered as pertaining to the same power of argument upon interpellation of the Chief Justice.
Congress. One specifically relates to the power to conduct inquiries in aid
of legislation, the aim of which is to elicit information that may be used for
Having established the proper interpretation of Section 22, Article VI of the
legislation, while the other pertains to the power to conduct a question
Constitution, the Court now proceeds to pass on the constitutionality of
hour, the objective of which is to obtain information in pursuit of Congress'
Section 1 of E.O. 464.
oversight function.

Section 1, in view of its specific reference to Section 22 of Article VI of the

When Congress merely seeks to be informed on how department heads are
implementing the statutes which it has issued, its right to such information
is not as imperative as that of the President to whom, as Chief Executive,
such department heads must give a report of their performance as a
matter of duty. In such instances, Section 22, in keeping with the
separation of powers, states that Congress may only request their
appearance. Nonetheless, when the inquiry in which Congress requires
their appearance is "in aid of legislation" under Section 21, the appearance
is mandatory for the same reasons stated in Arnault.90
In fine, the oversight function of Congress may be facilitated by
compulsory process only to the extent that it is performed in pursuit of
legislation. This is consistent with the intent discerned from the
deliberations of the Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive
officials under Section 21 and the lack of it under Section 22 find their
basis in the principle of separation of powers. While the executive branch is
a co-equal branch of the legislature, it cannot frustrate the power of
Congress to legislate by refusing to comply with its demands for
information.
When Congress exercises its power of inquiry, the only way for department
heads to exempt themselves therefrom is by a valid claim of privilege.
They are not exempt by the mere fact that they are department heads.
Only one executive official may be exempted from this power - the
President on whom executive power is vested, hence, beyond the reach of
Congress except through the power of impeachment. It is based on her
being the highest official of the executive branch, and the due respect
accorded to a co-equal branch of government which is sanctioned by a
long-standing custom.
By the same token, members of the Supreme Court are also exempt from
this power of inquiry. Unlike the Presidency, judicial power is vested in a
collegial body; hence, each member thereof is exempt on the basis not
only of separation of powers but also on the fiscal autonomy and the
constitutional independence of the judiciary. This point is not in dispute, as
Constitution and the absence of any reference to inquiries in aid of
legislation, must be construed as limited in its application to appearances
of department heads in the question hour contemplated in the provision of
said Section 22 of Article VI. The reading is dictated by the basic rule of
construction that issuances must be interpreted, as much as possible, in a
way that will render it constitutional.
The requirement then to secure presidential consent under Section 1,
limited as it is only to appearances in the question hour, is valid on its face.
For under Section 22, Article VI of the Constitution, the appearance of
department heads in the question hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads
in inquiries in aid of legislation. Congress is not bound in such instances to
respect the refusal of the department head to appear in such inquiry,
unless a valid claim of privilege is subsequently made, either by the
President herself or by the Executive Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section
2(b) to secure the consent of the President prior to appearing before either
house of Congress. The enumeration is broad. It covers all senior officials
of executive departments, all officers of the AFP and the PNP, and all senior
national security officials who, in the judgment of the heads of offices
designated in the same section (i.e. department heads, Chief of Staff of the
AFP, Chief of the PNP, and the National Security Adviser), are "covered by
the executive privilege."
The enumeration also includes such other officers as may be determined by
the President. Given the title of Section 2 - "Nature, Scope and Coverage of
Executive Privilege" ', it is evident that under the rule of ejusdem generis,
the determination by the President under this provision is intended to be
based on a similar finding of coverage under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states
that executive privilege actually covers persons. Such is a misuse of the
doctrine. Executive privilege, as discussed above, is properly invoked in
relation to specific categories of information and not to categories of
persons.
In light, however, of Sec 2(a) of E.O. 464 which deals with the nature,
scope and coverage of executive privilege, the reference to persons being
"covered by the executive privilege" may be read as an abbreviated way of
saying that the person is in possession of information which is, in the
judgment of the head of office concerned, privileged as defined in Section
2(a). The Court shall thus proceed on the assumption that this is the
intention of the challenged order.
Upon a determination by the designated head of office or by the President
that an official is "covered by the executive privilege," such official is
subjected to the requirement that he first secure the consent of the
President prior to appearing before Congress. This requirement effectively
bars the appearance of the official concerned unless the same is permitted
by the President. The proviso allowing the President to give its consent
means nothing more than that the President may reverse a prohibition
which already exists by virtue of E.O. 464.
Thus, underlying this requirement of prior consent is the determination by
a head of office, authorized by the President under E.O. 464, or by the
President herself, that such official is in possession of information that is
covered by executive privilege. This determination then becomes the basis
for the official's not showing up in the legislative investigation.
In view thereof, whenever an official invokes E.O. 464 to justify his failure
to be present, such invocation must be construed as a declaration to
Congress that the President, or a head of office authorized by the
President, has determined that the requested information is privileged, and
that the President has not reversed such determination. Such declaration,
however, even without mentioning the term "executive privilege," amounts
to an implied claim that the information is being withheld by the executive
branch, by authority of the President, on the basis of executive privilege.
Verily, there is an implied claim of privilege.
The letter dated September 28, 2005 of respondent Executive Secretary
Ermita to Senate President Drilon illustrates the implied nature of the claim
of privilege authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the
Whole regarding the Northrail Project of the North Luzon Railways
Corporation on 29 September 2005 at 10:00 a.m., please be informed that
officials of the Executive Department invited to appear at the meeting will
not be able to attend the same without the consent of the President,
pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring
Observance Of The Principle Of Separation Of Powers, Adherence To The
Rule On Executive Privilege And Respect For The Rights Of Public Officials
Appearing In Legislative Inquiries In Aid Of Legislation Under The
Constitution, And For Other Purposes". Said officials have not secured the
required consent from the President. (Underscoring supplied)ςrαlαωlιbrαrÿ
The letter does not explicitly invoke executive privilege or that the matter
on which these officials are being requested to be resource persons falls
under the recognized grounds of the privilege to justify their absence. Nor
does it expressly state that in view of the lack of consent from the
President under E.O. 464, they cannot attend the hearing.
Significant premises in this letter, however, are left unstated, deliberately
or not. The letter assumes that the invited officials are covered by E.O.
464. As explained earlier, however, to be covered by the order means that
a determination has been made, by the designated head of office or the
President, that the invited official possesses information that is covered by
executive privilege. Thus, although it is not stated in the letter that such
determination has been made, the same must be deemed implied.
Respecting the statement that the invited officials have not secured the
consent of the President, it only means that the President has not reversed
the standing prohibition against their appearance before Congress.
Inevitably, Executive Secretary Ermita's letter leads to the conclusion that
the executive branch, either through the President or the heads of offices
authorized under E.O. 464, has made a determination that the information
required by the Senate is privileged, and that, at the time of writing, there
has been no contrary pronouncement from the President. In fine, an
implied claim of privilege has been made by the executive.
While there is no Philippine case that directly addresses the issue of
whether executive privilege may be invoked against Congress, it is
gathered from Chavez v. PEA that certain information in the possession of
the executive may validly be claimed as privileged even against Congress.
Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is
privileged information rooted in the separation of powers. The information
does not cover Presidential conversations, correspondences, or discussions
during closed-door Cabinet meetings which, like internal-deliberations of
the Supreme Court and other collegiate courts, or executive sessions of
either house of Congress, are recognized as confidential. This kind of
information cannot be pried open by a co-equal branch of government. A
frank exchange of exploratory ideas and assessments, free from the glare
of publicity and pressure by interested parties, is essential to protect the
independence of decision-making of those tasked to exercise Presidential,
Legislative and Judicial power. This is not the situation in the instant
case.91(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by
the mere fact that it sanctions claims of executive privilege. This Court
must look further and assess the claim of privilege authorized by the Order
to determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case
basis, examining the ground invoked therefor and the particular
circumstances surrounding it, there is, in an implied claim of privilege, a
defect that renders it invalid per se. By its very nature, and as
demonstrated by the letter of respondent Executive Secretary quoted
above, the implied claim authorized by Section 3 of E.O. 464 is not
accompanied by any specific allegation of the basis thereof (e.g., whether
the information demanded involves military or diplomatic secrets, closed-
door Cabinet meetings, etc.). While Section 2(a) enumerates the types of
information that are covered by the privilege under the challenged order,
Congress is left to speculate as to which among them is being referred to
by the executive. The enumeration is not even intended to be
comprehensive, but a mere statement of what is included in the phrase
"confidential or classified information between the President and the public
officers covered by this executive order."
Certainly, Congress has the right to know why the executive considers the
requested information privileged. It does not suffice to merely declare that
the President, or an authorized head of office, has determined that it is so,
and that the President has not overturned that determination. Such
declaration leaves Congress in the dark on how the requested information
could be classified as privileged. That the message is couched in terms
that, on first impression, do not seem like a claim of privilege only makes it
more pernicious. It threatens to make Congress doubly blind to the
question of why the executive branch is not providing it with the
information that it has requested.
A claim of privilege, being a claim of exemption from an obligation to
disclose information, must, therefore, be clearly asserted. As U.S. v.
Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can
neither be claimed nor waived by a private party. It is not to be lightly
invoked. There must be a formal claim of privilege, lodged by the head of
the department which has control over the matter, after actual personal
consideration by that officer. The court itself must determine whether the
circumstances are appropriate for the claim of privilege, and yet do so
without forcing a disclosure of the very thing the privilege is designed to
protect.92(Underscoring supplied)ςrαlαωlιbrαrÿ
Absent then a statement of the specific basis of a claim of executive
privilege, there is no way of determining whether it falls under one of the
traditional privileges, or whether, given the circumstances in which it is
made, it should be respected.93 These, in substance, were the same criteria
in assessing the claim of privilege asserted against the Ombudsman in
Almonte v. Vasquez94 and, more in point, against a committee of the
Senate in Senate Select Committee on Presidential Campaign Activities v.
Nixon.95
A.O. Smith v. Federal Trade Commission is enlightening:
[T]he lack of specificity renders an assessment of the potential harm
resulting from disclosure impossible, thereby preventing the Court from
balancing such harm against plaintiffs' needs to determine whether to
override any claims of privilege.96(Underscoring supplied)ςrαlαωlιbrαrÿ
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform
this balancing operation. In stating its objection to claimant's
interrogatories, government asserts, and nothing more, that the
disclosures sought by claimant would inhibit the free expression of opinion
that non-disclosure is designed to protect. The government has not shown
- nor even alleged - that those who evaluated claimant's product were
involved in internal policymaking, generally, or in this particular instance.
Privilege cannot be set up by an unsupported claim. The facts upon which
the privilege is based must be established. To find these interrogatories
objectionable, this Court would have to assume that the evaluation and
classification of claimant's products was a matter of internal policy
formulation, an assumption in which this Court is unwilling to indulge sua
sponte.98 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Mobil Oil Corp. v. Department of Energy99similarly emphasizes that "an
agency must provide 'precise and certain' reasons for preserving the
confidentiality of requested information."
Black v. Sheraton Corp. of America100amplifies, thus:
A formal and proper claim of executive privilege requires a specific
designation and description of the documents within its scope as well as
precise and certain reasons for preserving their confidentiality. Without this
specificity, it is impossible for a court to analyze the claim short of
disclosure of the very thing sought to be protected. As the affidavit now
stands, the Court has little more than its sua sponte speculation with which
to weigh the applicability of the claim. An improperly asserted claim of
privilege is no claim of privilege. Therefore, despite the fact that a claim
was made by the proper executive as Reynolds requires, the Court can not
recognize the claim in the instant case because it is legally insufficient to
allow the Court to make a just and reasonable determination as to its
applicability. To recognize such a broad claim in which the Defendant has
given no precise or compelling reasons to shield these documents from
outside scrutiny, would make a farce of the whole procedure.101 (Emphasis
and underscoring supplied)ςrαlαωlιbrαrÿ
Due respect for a co-equal branch of government, moreover, demands no
less than a claim of privilege clearly stating the grounds therefor. Apropos
is the following ruling in McPhaul v. U.S:102
establish the hazard of incrimination. It is for the court to say whether his
silence is justified, and to require him to answer if 'it clearly appears to the
court that he is mistaken.' However, if the witness, upon interposing his
claim, were required to prove the hazard in the sense in which a claim is
usually required to be established in court, he would be compelled to
surrender the very protection which the privilege is designed to guarantee.
To sustain the privilege, it need only be evident from the implications of
the question, in the setting in which it is asked, that a responsive answer
to the question or an explanation of why it cannot be answered might be
dangerous because injurious disclosure could result." x x x (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
The claim of privilege under Section 3 of E.O. 464 in relation to Section
2(b) is thus invalid per se. It is not asserted. It is merely implied. Instead
of providing precise and certain reasons for the claim, it merely invokes
E.O. 464, coupled with an announcement that the President has not given
her consent. It is woefully insufficient for Congress to determine whether
the withholding of information is justified under the circumstances of each
case. It severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.

We think the Court's decision in United States v. Bryan, 339 U.S. 323, 70 No infirmity, however, can be imputed to Section 2(a) as it merely provides
S. Ct. 724, is highly relevant to these questions. For it is as true here as it guidelines, binding only on the heads of office mentioned in Section 2(b),
was there, that 'if (petitioner) had legitimate reasons for failing to produce on what is covered by executive privilege. It does not purport to be
the records of the association, a decent respect for the House of conclusive on the other branches of government. It may thus be construed
Representatives, by whose authority the subpoenas issued, would have as a mere expression of opinion by the President regarding the nature and
required that (he) state (his) reasons for noncompliance upon the return of scope of executive privilege.
the writ. Such a statement would have given the Subcommittee an
opportunity to avoid the blocking of its inquiry by taking other appropriate
Petitioners, however, assert as another ground for invalidating the
steps to obtain the records. 'To deny the Committee the opportunity to
challenged order the alleged unlawful delegation of authority to the heads
consider the objection or remedy is in itself a contempt of its authority and
of offices in Section 2(b). Petitioner Senate of the Philippines, in particular,
an obstruction of its processes. His failure to make any such statement was
cites the case of the United States where, so it claims, only the President
"a patent evasion of the duty of one summoned to produce papers before a
can assert executive privilege to withhold information from Congress.
congressional committee[, and] cannot be condoned." (Emphasis and
underscoring supplied; citations omitted)
Section 2(b) in relation to Section 3 virtually provides that, once the head
of office determines that a certain information is privileged, such
Upon the other hand, Congress must not require the executive to state the
determination is presumed to bear the President's authority and has the
reasons for the claim with such particularity as to compel disclosure of the
effect of prohibiting the official from appearing before Congress, subject
information which the privilege is meant to protect.103 A useful analogy in
only to the express pronouncement of the President that it is allowing the
determining the requisite degree of particularity would be the privilege
appearance of such official. These provisions thus allow the President to
against self-incrimination. Thus, Hoffman v. U.S.104declares:
authorize claims of privilege by mere silence.

The witness is not exonerated from answering merely because he declares

Such presumptive authorization, however, is contrary to the exceptional
that in so doing he would incriminate himself - his say-so does not of itself
nature of the privilege. Executive privilege, as already discussed, is
recognized with respect to information the confidential nature of which is
crucial to the fulfillment of the unique role and responsibilities of the
executive branch,105 or in those instances where exemption from disclosure
is necessary to the discharge of highly important executive
responsibilities.106 The doctrine of executive privilege is thus premised on
the fact that certain informations must, as a matter of necessity, be kept
confidential in pursuit of the public interest. The privilege being, by
definition, an exemption from the obligation to disclose information, in this
case to Congress, the necessity must be of such high degree as to
outweigh the public interest in enforcing that obligation in a particular
case.
In light of this highly exceptional nature of the privilege, the Court finds it
essential to limit to the President the power to invoke the privilege. She
may of course authorize the Executive Secretary to invoke the privilege on
her behalf, in which case the Executive Secretary must state that the
authority is "By order of the President," which means that he personally
consulted with her. The privilege being an extraordinary power, it must be
wielded only by the highest official in the executive hierarchy. In other
words, the President may not authorize her subordinates to exercise such
power. There is even less reason to uphold such authorization in the
instant case where the authorization is not explicit but by mere silence.
Section 3, in relation to Section 2(b), is further invalid on this score.
It follows, therefore, that when an official is being summoned by Congress
on a matter which, in his own judgment, might be covered by executive
privilege, he must be afforded reasonable time to inform the President or
the Executive Secretary of the possible need for invoking the privilege. This
is necessary in order to provide the President or the Executive Secretary
with fair opportunity to consider whether the matter indeed calls for a claim
of executive privilege. If, after the lapse of that reasonable time, neither
the President nor the Executive Secretary invokes the privilege, Congress is
no longer bound to respect the failure of the official to appear before
Congress and may then opt to avail of the necessary legal means to
compel his appearance.
The Court notes that one of the expressed purposes for requiring officials
to secure the consent of the President under Section 3 of E.O. 464 is to
ensure "respect for the rights of public officials appearing in inquiries in aid
of legislation." That such rights must indeed be respected by Congress is
an echo from Article VI Section 21 of the Constitution mandating that
"[t]he rights of persons appearing in or affected by such inquiries shall be
respected."
In light of the above discussion of Section 3, it is clear that it is essentially
an authorization for implied claims of executive privilege, for which reason
it must be invalidated. That such authorization is partly motivated by the
need to ensure respect for such officials does not change the infirm nature
of the authorization itself.
Right to Information
E.O 464 is concerned only with the demands of Congress for the
appearance of executive officials in the hearings conducted by it, and not
with the demands of citizens for information pursuant to their right to
information on matters of public concern. Petitioners are not amiss in
claiming, however, that what is involved in the present controversy is not
merely the legislative power of inquiry, but the right of the people to
information.
There are, it bears noting, clear distinctions between the right of Congress
to information which underlies the power of inquiry and the right of the
people to information on matters of public concern. For one, the demand of
a citizen for the production of documents pursuant to his right to
information does not have the same obligatory force as a subpoena duces
tecum issued by Congress. Neither does the right to information grant a
citizen the power to exact testimony from government officials. These
powers belong only to Congress and not to an individual citizen.
Thus, while Congress is composed of representatives elected by the people,
it does not follow, except in a highly qualified sense, that in every exercise
of its power of inquiry, the people are exercising their right to information.
To the extent that investigations in aid of legislation are generally
conducted in public, however, any executive issuance tending to unduly
limit disclosures of information in such investigations necessarily deprives
the people of information which, being presumed to be in aid of legislation,
is presumed to be a matter of public concern. The citizens are thereby
denied access to information which they can use in formulating their own
opinions on the matter before Congress - opinions which they can then
communicate to their representatives and other government officials
through the various legal means allowed by their freedom of expression.
Thus holds Valmonte v. Belmonte:
It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and
be responsive to the people's will. Yet, this open dialogue can be effective
only to the extent that the citizenry is informed and thus able to formulate
its will intelligently. Only when the participants in the discussion are aware
of the issues and have access to information relating thereto can such bear
fruit.107 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
The impairment of the right of the people to information as a consequence
of E.O. 464 is, therefore, in the sense explained above, just as direct as its
violation of the legislature's power of inquiry.
Implementation of E.O. 464 prior to its publication
While E.O. 464 applies only to officials of the executive branch, it does not
follow that the same is exempt from the need for publication. On the need
for publishing even those statutes that do not directly apply to people in
general, Tañada v. Tuvera states:
[w]hat republican theory did accomplish was to reverse the old
presumption in favor of secrecy, based on the divine right of kings and
nobles, and replace it with a presumption in favor of publicity, based on the
doctrine of popular sovereignty. (Underscoring supplied)109
Resort to any means then by which officials of the executive branch could
refuse to divulge information cannot be presumed valid. Otherwise, we
shall not have merely nullified the power of our legislature to inquire into
the operations of government, but we shall have given up something of
much greater value - our right as a people to take part in government.

WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of

The term "laws" should refer to all laws and not only to those of general
Executive Order No. 464 (series of 2005), "Ensuring Observance of the
application, for strictly speaking all laws relate to the people in general
Principle of Separation of Powers, Adherence to the Rule on Executive
albeit there are some that do not apply to them directly. An example is a
law granting citizenship to a particular individual, like a relative of
President Marcos who was decreed instant naturalization. It surely cannot Privilege and Respect for the Rights of Public Officials Appearing in
be said that such a law does not affect the public although it Legislative Inquiries in Aid of Legislation Under the Constitution, and For
unquestionably does not apply directly to all the people. The subject of Other Purposes," are declared VOID. Sections 1 and 2(a) are, however,
such law is a matter of public interest which any member of the body VALID.
politic may question in the political forums or, if he is a proper party, even
in courts of justice.108(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
SO ORDERED.

Although the above statement was made in reference to statutes, logic

dictates that the challenged order must be covered by the publication
requirement. As explained above, E.O. 464 has a direct effect on the right
of the people to information on matters of public concern. It is, therefore, a
matter of public interest which members of the body politic may question
before this Court. Due process thus requires that the people should have
been apprised of this issuance before it was implemented.

Conclusion

Congress undoubtedly has a right to information from the executive branch

whenever it is sought in aid of legislation. If the executive branch withholds
such information on the ground that it is privileged, it must so assert it and
state the reason therefor and why it must be respected.

The infirm provisions of E.O. 464, however, allow the executive branch to
evade congressional requests for information without need of clearly
asserting a right to do so and/or proffering its reasons therefor. By the
mere expedient of invoking said provisions, the power of Congress to
conduct inquiries in aid of legislation is frustrated. That is impermissible.
For
 G.R. NO. 170165 : August 15, 2006]
B/GEN. (RET.) FRANCISCO V. GUDANI AND LT. COL. ALEXANDER F.
BALUTAN Petitioners, v. LT./GEN. GENEROSO S. SENGA CORONA, AS
CHIEF OF STAFF OF THE CARPIO-MORALES, ARMED FORCES OF THE
CALLEJO, SR., PHILIPPINES, COL. GILBERTO AZCUNA, JOSE C. ROA
AS THE PRE-TRIAL TINGA, INVESTIGATING OFFICER, THE CHICO-
NAZARIO, PROVOST MARSHALL GENERAL GARCIA, and OF THE
ARMED FORCES OF THE PHILIPPINES AND THE GENERAL COURT-
MARTIAL, Respondents.
DECISION
TINGA, J.:
A most dangerous general proposition is foisted on the Court - that soldiers
who defy orders of their superior officers are exempt
from the strictures of military law and discipline if such defiance is
predicated on an act otherwise valid under civilian law. Obedience and
deference to the military chain of command and the President as
commander-in-chief are the cornerstones of a professional military in the
firm cusp of civilian control. These values of obedience and deference
expected of military officers are content-neutral, beyond the sway of the
officer's own sense of what is prudent or rash, or more elementally, of right
or wrong. A self-righteous military invites itself as the scoundrel's activist
solution to the "ills" of participatory democracy.
Petitioners seek the annulment of a directive from President Gloria
Macapagal-Arroyo1enjoining them and other military officers from testifying
before Congress without the President's consent. Petitioners also pray for
injunctive relief against a pending preliminary investigation against them,
in preparation for possible court-martial proceedings, initiated within the
military justice system in connection with petitioners' violation of the
aforementioned directive.
The Court is cognizant that petitioners, in their defense, invoke weighty
constitutional principles that center on fundamental freedoms enshrined in
the Bill of Rights. Although these concerns will not be
addressed to the satisfaction of petitioners, the Court recognizes these
values as of paramount importance to our civil society, even if not
determinative of the resolution of this petition. Had the relevant issue
before us been the right of the Senate to compel the testimony of
petitioners, the constitutional questions raised by them would have come
to fore. Such a scenario could have very well been presented to the Court
in such manner, without the petitioners having had to violate a direct order
from their commanding officer. Instead, the Court has to resolve whether
petitioners may be subjected to military discipline on account of their
defiance of a direct order of the AFP Chief of Staff.
The solicited writs of certiorari and prohibition do not avail; the petition
must be denied.
I.
The petitioners are high-ranking officers of the Armed Forces of the
Philippines (AFP). Both petitioners, Brigadier General Francisco Gudani
(Gen. Gudani) and Lieutenant Colonel Alexander Balutan (Col. Balutan),
belonged to the Philippine Marines. At the time of the subject incidents,
both Gen. Gudani and Col. Balutan were assigned to the Philippine Military
Academy (PMA) in Baguio City, the former as the PMA Assistant
Superintendent, and the latter as the Assistant Commandant of Cadets.2
On 22 September 2005, Senator Rodolfo Biazon (Sen. Biazon) invited
several senior officers of the AFP to appear at a public hearing before the
Senate Committee on National Defense and Security (Senate Committee)
scheduled on 28 September 2005. The hearing was scheduled after topics
concerning the conduct of the 2004 elections emerged in the public eye,
particularly allegations of massive cheating and the surfacing of copies of
an audio excerpt purportedly of a phone conversation between President
Gloria Macapagal Arroyo and an official of the Commission on Elections
(COMELEC) widely reputed as then COMELEC Commissioner Virgilio
Garcillano. At the time of the 2004 elections, Gen. Gudani had been
designated as commander, and Col. Balutan a member, of "Joint Task
Force Ranao" by the AFP Southern Command. "Joint Task Force Ranao"
was tasked with the maintenance of peace and order during the 2004
elections in the provinces of Lanao del Norte and Lanao del Sur.3 `
Gen. Gudani, Col. Balutan, and AFP Chief of Staff Lieutenant General
Generoso Senga (Gen. Senga) were among the several AFP officers who
received a letter invitation from Sen. Biazon to attend the 28 September
2005 hearing. On 23 September 2005, Gen. Senga replied through a letter
to Sen. Biazon that he would be unable to attend the hearing due to a
previous commitment in Brunei, but he nonetheless "directed other officers
from the AFP who were invited to attend the hearing."4
On 26 September 2005, the Office of the Chief of Staff of the AFP issued a
Memorandum addressed to the Superintendent of the PMA Gen. Cristolito
P. Baloing (Gen. Baloing). It was signed by Lt. Col. Hernando DCA Iriberri
in behalf of Gen. Senga.5 Noting that Gen. Gudani and Col. Balutan had
been invited to attend the Senate Committee hearing on 28 September
2005, the Memorandum directed the two officers to attend the
hearing.6 Conformably, Gen. Gudani and Col. Balutan filed their respective
requests for travel authority addressed to the PMA Superintendent.
On 27 September 2005, Gen. Senga wrote a letter to Sen. Biazon,
requesting the postponement of the hearing scheduled for the following
day, since the AFP Chief of Staff was himself unable to attend said hearing,
and that some of the invited officers also could not attend as they were
"attending to other urgent operational matters." By this time, both Gen.
Gudani and Col. Balutan had already departed Baguio for Manila to attend
the hearing.
Then on the evening of 27 September 2005, at around 10:10 p.m., a
message was transmitted to the PMA Superintendent from the office of
Gen. Senga, stating as follows:
PER INSTRUCTION OF HER EXCELLENCY PGMA, NO AFP PERSONNEL SHALL
APPEAR BEFORE ANY CONGRESSIONAL OR SENATE HEARING WITHOUT
HER APPROVAL. INFORM BGEN FRANCISCO F GUDANI AFP AND LTC
ALEXANDER BALUTAN PA (GSC) ACCORDINGLY.7
The following day, Gen. Senga sent another letter to Sen. Biazon, this time
informing the senator that "no approval has been granted by the President
to any AFP officer to appear" before the hearing scheduled on that day.
Nonetheless, both Gen. Gudani and Col. Balutan were present as the
hearing started, and they both testified as to the conduct of the 2004
elections.
The Office of the Solicitor General (OSG), representing the respondents
before this Court, has offered additional information surrounding the
testimony of Gen. Gudani and Col. Balutan. The OSG manifests that the
couriers of the AFP Command Center had attempted to deliver the radio
message to Gen. Gudani's residence in a subdivision in Parañaque City late
in the night of 27 September 2005, but they were not permitted entry by
the subdivision guards. The next day, 28 September 2005, shortly before
the start of the hearing, a copy of Gen. Senga's letter to Sen. Biazon sent
earlier that day was handed at the Senate by Commodore Amable B.
Tolentino of the AFP Office for Legislative Affairs to Gen. Gudani, who
replied that he already had a copy. Further, Gen. Senga called Commodore
Tolentino on the latter's cell phone and asked to talk to Gen. Gudani, but
Gen. Gudani refused. In response, Gen. Senga instructed Commodore
Tolentino to inform Gen. Gudani that "it was an order," yet Gen. Gudani
still refused to take Gen. Senga's call.8
A few hours after Gen. Gudani and Col. Balutan had concluded their
testimony, the office of Gen. Senga issued a statement which noted that
the two had appeared before the Senate Committee "in spite of the fact
that a guidance has been given that a Presidential approval should be
sought prior to such an appearance;" that such directive was "in keeping
with the time[-]honored principle of the Chain of Command;" and that the
two officers "disobeyed a legal order, in violation of A[rticles of] W[ar] 65
(Willfully Disobeying Superior Officer), hence they will be subjected to
General Court Martial proceedings x x x" Both Gen. Gudani and Col.
Balutan were likewise relieved of their assignments then.9
On the very day of the hearing, 28 September 2005, President Gloria-
Macapagal-Arroyo issued Executive Order No. 464 (E.O. 464). The OSG
notes that the E.O. "enjoined officials of the executive department
including the military establishment from appearing in any legislative
inquiry without her approval."10This Court subsequently ruled on the
constitutionality of the said executive order in Senate v. Ermita.11 The
relevance of E.O. 464 and Senate to the present petition shall be discussed
forthwith.
In the meantime, on 30 September 2005, petitioners were directed by
General Senga, through Col. Henry A. Galarpe of the AFP Provost Marshal
General, to appear before the Office of the Provost Marshal General
(OPMG) on 3 October 2005 for investigation. During their appearance
before Col. Galarpe, both petitioners invoked their right to remain
silent.12 The following day, Gen. Gudani was compulsorily retired from
military service, having reached the age of 56.13
In an Investigation Report dated 6 October 2005, the OPMG recommended
that petitioners be charged with violation of Article of War 65, on willfully
disobeying a superior officer, in relation to Article of War 97, on conduct
prejudicial to the good order and military discipline.14 As recommended, the
case was referred to a Pre-Trial Investigation Officer (PTIO) preparatory to
trial by the General Court Martial (GCM).15 Consequently, on 24 October
2005, petitioners were separately served with Orders respectively
addressed to them and signed by respondent Col. Gilbert Jose C. Roa, the
Pre-Trial Investigating Officer of the PTIO. The Orders directed petitioners
to appear in person before Col. Roa at the Pre-Trial Investigation of the
Charges for violation of Articles 6516and 9717 of Commonwealth Act No.
408,18and to submit their counter-affidavits and affidavits of witnesses at
the Office of the Judge Advocate General.19 The Orders were accompanied
by respective charge sheets against petitioners, accusing them of violating
Articles of War 65 and 97.
It was from these premises that the present petition for certiorari and
prohibition was filed, particularly seeking that (1) the order of President
Arroyo coursed through Gen. Senga preventing petitioners from testifying
before Congress without her prior approval be declared unconstitutional;
(2) the charges stated in the charge sheets against petitioners be quashed;
and (3) Gen. Senga, Col. Galarpe, Col. Roa, and their successors-in-
interest or persons acting for and on their behalf or orders, be permanently
enjoined from proceeding against petitioners, as a consequence of their
having testified before the Senate on 28 September 2005.20
Petitioners characterize the directive from President Arroyo requiring her
prior approval before any AFP personnel appear before Congress as a "gag
order," which violates the principle of separation of powers in government
as it interferes with the investigation of the Senate Committee conducted in
aid of legislation. They also equate the "gag order" with culpable violation
of the Constitution, particularly in relation to the public's constitutional
right to information and transparency in matters of public concern.
Plaintively, petitioners claim that "the Filipino people have every right to
hear the [petitioners'] testimonies," and even if the "gag order" were
unconstitutional, it still was tantamount to "the crime of obstruction of
justice." Petitioners further argue that there was no law prohibiting them
from testifying before the Senate, and in fact, they were appearing in
obeisance to the authority of Congress to conduct inquiries in aid of
legislation.
Finally, it is stressed in the petition that Gen. Gudani was no longer subject
to military jurisdiction on account of his compulsory retirement on 4
October 2005. It is pointed out that Article 2, Title I of the Articles of War
defines persons subject to military law as "all officers and soldiers in the
active service" of the AFP.
II.
We first proceed to define the proper litigable issues. Notably, the guilt or
innocence of petitioners in violating Articles 65 and 97 of the Articles of
War is not an issue before this Court, especially considering that per
records, petitioners have not yet been subjected to court martial
proceedings. Owing to the absence of such proceedings, the correct inquiry
should be limited to whether respondents could properly initiate such
proceedings preparatory to a formal court-martial, such as the
aforementioned preliminary investigation, on the basis of petitioners' acts
surrounding their testimony before the Senate on 28 September 2005. Yet
this Court, consistent with the principle that it is not a trier of facts at first
instance,21 is averse to making any authoritative findings of fact, for that
function is first for the court-martial court to fulfill.
Thus, we limit ourselves to those facts that are not controverted before the
Court, having been commonly alleged by petitioners and the OSG (for
respondents). Petitioners were called by the Senate Committee to testify in
its 28 September 2005 hearing. Petitioners attended such hearing and
testified before the Committee, despite the fact that the day before, there
was an order from Gen. Senga (which in turn was sourced "per instruction"
from President Arroyo) prohibiting them from testifying without the prior
approval of the President. Petitioners do not precisely admit before this
Court that they had learned of such order prior to their testimony, although
the OSG asserts that at the very least, Gen. Gudani already knew of such
order before he testified.22 Yet while this fact may be ultimately material in
the court-martial proceedings, it is not determinative of this petition, which
as stated earlier, does not proffer as an issue whether petitioners are guilty
of violating the Articles of War.
What the Court has to consider though is whether the violation of the
aforementioned order of Gen. Senga, which emanated from the President,
could lead to any investigation for court-martial of petitioners. It has to be
acknowledged as a general principle23 that AFP personnel of whatever rank
are liable under military law for violating a direct order of an officer
superior in rank. Whether petitioners did violate such an order is not for
the Court to decide, but it will be necessary to assume, for the purposes of
this petition, that petitioners did so.
III.
Preliminarily, we must discuss the effect of E.O. 464 and the Court's ruling
in Senate on the present petition. Notably, it is not alleged that
petitioners were in any way called to task for violating E.O. 464,
but instead, they were charged for violating the direct order of Gen.
Senga not to appear before the Senate Committee, an order that
stands independent of the executive order. Distinctions are called for,
since Section 2(b) of E.O. 464 listed "generals and flag officers of the
Armed Forces of the Philippines and such other officers who in the
judgment of the Chief of Staff are covered by the executive privilege," as
among those public officials required in Section 3 of E.O. 464 "to secure
prior consent of the President prior to appearing before either House of
Congress." The Court in Senate declared both Section 2(b) and Section 3
void,24 and the impression may have been left following Senate that it
settled as doctrine, that the President is prohibited from requiring military
personnel from attending congressional hearings without having first
secured prior presidential consent. That impression is wrong.
Senate turned on the nature of executive privilege, a presidential
prerogative which is encumbered by significant limitations. Insofar as E.O.
464 compelled officials of the executive branch to seek prior presidential
approval before appearing before Congress, the notion of executive control Citing Colonel Winthrop's treatise on Military Law, the Court further stated:
also comes into consideration.25 However, the ability of the President to
require a military official to secure prior consent before appearing before
We have gone through the treatise of Colonel Winthrop and We find the
Congress pertains to a wholly different and independent specie of
following passage which goes against the contention of the petitioners, viz'
presidential authority the commander-in-chief powers of the President. By
tradition and jurisprudence, the commander-in-chief powers of the
President are not encumbered by the same degree of restriction as that 3. Offenders in general - Attaching of jurisdiction. It has further been held,
which may attach to executive privilege or executive control. and is now settled law, in regard to military offenders in general, that if the
military jurisdiction has once duly attached to them previous to the date of
the termination of their legal period of service, they may be brought to trial
During the deliberations in Senate, the Court was very well aware of the
by court-martial after that date, their discharge being meanwhile withheld.
pendency of this petition as well as the issues raised herein. The decision
This principle has mostly been applied to cases where the offense was
in Senate was rendered with the comfort that the nullification of portions of
committed just prior to the end of the term. In such cases the interests of
E.O. 464 would bear no impact on the present petition since petitioners
discipline clearly forbid that the offender should go unpunished. It is held
herein were not called to task for violating the executive order. Moreover,
therefore that if before the day on which his service legally
the Court was then cognizant that Senate and this case would ultimately
terminates and his right to a discharge is complete, proceedings
hinge on disparate legal issues. Relevantly, Senate purposely did not touch
with a view to trial are commenced against him - as by arrest or
upon or rule on the faculty of the President, under the aegis of the
the service of charges, - the military jurisdiction will fully attach
commander-in-chief powers26 to require military officials from securing
and once attached may be continued by a trial by court-martial
prior consent before appearing before Congress. The pertinent factors in
ordered and held after the end of the term of the enlistment of the
considering that question are markedly outside of those which did become
accused x x x 29
relevant in adjudicating the issues raised in Senate. It is in this petition
that those factors come into play.
Thus, military jurisdiction has fully attached to Gen. Gudani inasmuch as
both the acts complained of and the initiation of the proceedings against
At this point, we wish to dispose of another peripheral issue before we
him occurred before he compulsorily retired on 4 October 2005. We see no
strike at the heart of the matter. General Gudani argues that he can no
reason to unsettle the Abadilladoctrine. The OSG also points out that under
longer fall within the jurisdiction of the court-martial, considering his
Section 28 of Presidential Decree No. 1638, as amended, "[a]n officer or
retirement last 4 October 2005. He cites Article 2, Title I of Commonwealth
enlisted man carried in the retired list [of the Armed Forces of the
Act No. 408, which defines persons subject to military law as, among
Philippines] shall be subject to the Articles of War x x x"30 To this citation,
others, "all officers and soldiers in the active service of the [AFP]," and
petitioners do not offer any response, and in fact have excluded the matter
points out that he is no longer in the active service.
of Gen. Gudani's retirement as an issue in their subsequent memorandum.

This point was settled against Gen. Gudani's position in Abadilla v.

Ramos,27 where the Court declared that an officer whose name was
dropped from the roll of officers cannot be considered to be outside the
jurisdiction of military authorities when military justice proceedings were
initiated against him before the termination of his service. Once jurisdiction
has been acquired over the officer, it continues until his case is terminated.
Thus, the Court held:
The military authorities had jurisdiction over the person of Colonel Abadilla
at the time of the alleged offenses. This jurisdiction having been vested in
the military authorities, it is retained up to the end of the proceedings
against Colonel Abadilla. Well-settled is the rule that jurisdiction once
acquired is not lost upon the instance of the parties but continues until the
case is terminated.28
IV.
We now turn to the central issues.
Petitioners wish to see annulled the "gag order" that required them to
secure presidential consent prior to their appearance before the Senate,
claiming that it violates the constitutional right to information and
transparency in matters of public concern; or if not, is tantamount at least
to the criminal acts of obstruction of justice and grave coercion. However,
the proper perspective from which to consider this issue entails the
examination of the basis and authority of the President to issue such an
order in the first place to members of the AFP and the determination of
whether such an order is subject to any limitations.
The vitality of the tenet that the President is the commander-in-chief of the
Armed Forces is most crucial to the democratic way of life, to civilian
supremacy over the military, and to the general stability of our
representative system of government. The Constitution reposes final
authority, control and supervision of the AFP to the President, a civilian
who is not a member of the armed forces, and whose duties as
commander-in-chief represent only a part of the organic duties imposed
upon the office, the other functions being clearly civil in nature.31Civilian
supremacy over the military also countermands the notion that the military
may bypass civilian authorities, such as civil courts, on matters such as
conducting warrantless searches and seizures.32
Pursuant to the maintenance of civilian supremacy over the military, the
Constitution has allocated specific roles to the legislative and executive
branches of government in relation to military affairs. Military
appropriations, as with all other appropriations, are determined by
Congress, as is the power to declare the existence of a state of
war.33 Congress is also empowered to revoke a proclamation of martial law
or the suspension of the writ of habeas corpus.34The approval of the
Commission on Appointments is also required before the President can
promote military officers from the rank of colonel or naval
captain.35Otherwise, on the particulars of civilian dominance and
administration over the military, the Constitution is silent, except for the
commander-in-chief clause which is fertile in meaning and
implication as to whatever inherent martial authority the President may
possess.36
The commander-in-chief provision in the Constitution is denominated as
Section 18, Article VII, which begins with the simple declaration that "[t]he
President shall be the Commander-in-Chief of all armed forces of the
Philippines x x x"37 Outside explicit constitutional limitations, such as those
found in Section 5, Article XVI, the commander-in-chief clause vests on the
President, as commander-in-chief, absolute authority over the persons and
actions of the members of the armed forces. Such authority includes the
ability of the President to restrict the travel, movement and speech of
military officers, activities which may otherwise be sanctioned under
civilian law.
Reference to Kapunan, Jr. v. De Villa38 is useful in this regard. Lt. Col.
Kapunan was ordered confined under "house arrest" by then Chief of Staff
(later President) Gen. Fidel Ramos. Kapunan was also ordered, as a
condition for his house arrest, that he may not issue any press statements
or give any press conference during his period of detention. The Court
unanimously upheld such restrictions, noting:
[T]he Court is of the view that such is justified by the requirements of
military discipline. It cannot be gainsaid that certain liberties of
persons in the military service, including the freedom of speech,
may be circumscribed by rules of military discipline. Thus, to a
certain degree, individual rights may be curtailed, because the
effectiveness of the military in fulfilling its duties under the law
depends to a large extent on the maintenance of discipline within
its ranks. Hence, lawful orders must be followed without question
and rules must be faithfully complied with, irrespective of a
soldier's personal views on the matter. It is from this viewpoint that
the restrictions imposed on petitioner Kapunan, an officer in the AFP, have
to be considered.39
Any good soldier, or indeed any ROTC cadet, can attest to the fact that the
military way of life circumscribes several of the cherished freedoms of
civilian life. It is part and parcel of the military package. Those who cannot
abide by these limitations normally do not pursue a military career and
instead find satisfaction in other fields; and in fact many of those
discharged from the service are inspired in their later careers precisely by
their rebellion against the regimentation of military life. Inability or
unwillingness to cope with military discipline is not a stain on character, for
the military mode is a highly idiosyncratic path which persons are not
generally conscripted into, but volunteer themselves to be part of. But for
those who do make the choice to be a soldier, significant concessions to
personal freedoms are expected. After all, if need be, the men and women
of the armed forces may be commanded upon to die for country, even
against their personal inclinations.
It may be so that military culture is a remnant of a less democratic era, yet
it has been fully integrated into the democratic system of governance. The
constitutional role of the armed forces is as protector of the people and of
the State.40 Towards this end, the military must insist upon a respect for
duty and a discipline without counterpart in civilian life.41 The laws and
traditions governing that discipline have a long history; but they are
founded on unique military exigencies as powerful now as in the past.42In
the end, it must be borne in mind that the armed forces has a distinct
subculture with unique needs, a specialized society separate from civilian
society.43 In the elegant prose of the eminent British military historian,
John Keegan:
[Warriors who fight wars have] values and skills [which] are not those of
politicians and diplomats. They are those of a world apart, a very ancient
world, which exists in parallel with the everyday world but does not belong
to it. Both worlds change over time, and the warrior world adopts in step to
the civilian. It follows it, however, at a distance. The distance can never be
closed, for the culture of the warrior can never be that of civilization
itself'.44
Critical to military discipline is obeisance to the military chain of command.
Willful disobedience of a superior officer is punishable by court-martial
under Article 65 of the Articles of War.45 "An individual soldier is not free to
ignore the lawful orders or duties assigned by his immediate superiors. For
there would be an end of all discipline if the seaman and marines on board
a ship of war [or soldiers deployed in the field], on a distant service, were
permitted to act upon their own opinion of their rights [or their opinion of
the
President's intent], and to throw off the authority of the
commander whenever they supposed it to be unlawfully
exercised."46
Further traditional restrictions on members of the armed forces are those
imposed on free speech and mobility.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Kapunan is ample precedent in justifying that a soldier may be restrained
by a superior officer from speaking out on certain matters. As a general
rule, the discretion of a military officer to restrain the speech of a soldier
under his/her command will be accorded deference, with minimal regard if
at all to the reason for such restraint. It is integral to military discipline that
the soldier's speech be with the consent and approval of the military
commander.
The necessity of upholding the ability to restrain speech becomes even
more imperative if the soldier desires to speak freely on political matters.
The Constitution requires that "[t]he armed forces shall be insulated from
partisan politics," and that '[n]o member of the military shall engage
directly or indirectly in any partisan political activity, except to
vote."47 Certainly, no constitutional provision or military indoctrination will
eliminate a soldier's ability to form a personal political opinion, yet it is vital
that such opinions be kept out of the public eye. For one, political belief is a
potential source of discord among people, and a military torn by political
strife is incapable of fulfilling its constitutional function as protectors of the
people and of the State. For another, it is ruinous to military discipline to
foment an atmosphere that promotes an active dislike of or dissent against
the President, the commander-in-chief of the armed forces. Soldiers are
constitutionally obliged to obey a President they may dislike or distrust.
This fundamental principle averts the country from going the way of
banana republics.
Parenthetically, it must be said that the Court is well aware that our
country's recent past is marked by regime changes wherein active military
dissent from the chain of command formed a key, though not exclusive,
element. The Court is not blind to history, yet it is a judge not of history
but of the Constitution. The Constitution, and indeed our modern
democratic order, frown in no uncertain terms on a politicized military,
informed as they are on the trauma of absolute martial rule. Our history
might imply that a political military is part of the natural order, but this
view cannot be affirmed by the legal order. The evolutionary path of our
young democracy necessitates a reorientation from this view, reliant as our
socio-political culture has become on it. At the same time, evolution
mandates a similar demand that our system of governance be more
responsive to the needs and aspirations of the citizenry, so as to avoid an
environment vulnerable to a military apparatus able at will to exert an
undue influence in our polity.
Of possibly less gravitas, but of equal importance, is the principle that
mobility of travel is another necessary restriction on members of the
military. A soldier cannot leave his/her post without the consent of the
commanding officer. The reasons are self-evident. The commanding officer
has to be aware at all times of the location of the troops under command,
so as to be able to appropriately respond to any exigencies. For the same
reason, commanding officers have to be able to restrict the movement or
travel of their soldiers, if in their judgment, their presence at place of call
of duty is necessary. At times, this may lead to unsentimental, painful
consequences, such as a soldier being denied permission to witness the
birth of his first-born, or to attend the funeral of a parent. Yet again,
military life calls for considerable personal sacrifices during the period of
conscription, wherein the higher duty is not to self but to country.
Indeed, the military practice is to require a soldier to obtain permission
from the commanding officer before he/she may leave his destination. A
soldier who goes from the properly appointed place of duty or absents from
his/her command, guard, quarters, station, or camp without proper leave is
subject to punishment by court-martial.48 It is even clear from the record
that petitioners had actually requested for travel authority from the PMA in
Baguio City to Manila, to attend the Senate Hearing.49 Even petitioners are
well aware that it was necessary for them to obtain permission from their
superiors before they could travel to Manila to attend the Senate Hearing.
It is clear that the basic position of petitioners impinges on these
fundamental principles we have discussed. They seek to be exempted from
military justice for having traveled to the Senate to testify before the
Senate Committee against the express orders of Gen. Senga, the AFP Chief
of Staff. If petitioners' position is affirmed, a considerable exception would
be carved from the unimpeachable right of military officers to restrict the
speech and movement of their juniors. The ruinous consequences to the
chain of command and military discipline simply cannot warrant the
Court's imprimaturon petitioner's position.
V.
Still, it would be highly myopic on our part to resolve the issue solely on
generalities surrounding military discipline. After all, petitioners seek to
impress on us that their acts are justified as they were responding to an
invitation from the Philippine Senate, a component of the legislative branch
of government. At the same time, the order for them not to testify
ultimately came from the President, the head of the executive branch of
government and the commander-in-chief of the armed forces.
Thus, we have to consider the question: may the President prevent a
member of the armed forces from testifying before a legislative inquiry?
We hold that the President has constitutional authority to do so, by virtue
of her power as commander-in-chief, and that as a consequence a military
officer who defies such injunction is liable under military justice. At the
same time, we also hold that any chamber of Congress which seeks the
appearance before it of a military officer against the consent of the
President has adequate remedies under law to compel such attendance.
Any military official whom Congress summons to testify before it may be
compelled to do so by the President. If the President is not so inclined, the
President may be commanded by judicial order to compel the attendance of
the military officer. Final judicial orders have the force of the law of the
land which the President has the duty to faithfully execute.50
Explication of these principles is in order.
As earlier noted, we ruled in Senate that the President may not issue a
blanket requirement of prior consent on executive officials summoned by
the legislature to attend a congressional hearing. In doing so, the Court
recognized the considerable limitations on executive privilege, and affirmed
that the privilege must be formally invoked on specified
grounds. However, the ability of the President to prevent military
officers from testifying before Congress does not turn on executive
privilege, but on the Chief Executive's power as commander-in-
chief to control the actions and speech of members of the armed
forces. The President's prerogatives as commander-in-chief are not
hampered by the same limitations as in executive privilege.
Our ruling that the President could, as a general rule, require military
officers to seek presidential approval before appearing before Congress is
based foremost on the notion that a contrary rule unduly diminishes the
prerogatives of the President as commander-in-chief. Congress holds
significant control over the armed forces in matters such as budget
appropriations and the approval of higher-rank promotions,51 yet it is on
the President that the Constitution vests the title as commander-in-chief
and all the prerogatives and functions appertaining to the position. Again,
the exigencies of military discipline and the chain of command mandate
that the President's ability to control the individual members of the armed
forces be accorded the utmost respect. Where a military officer is torn
between obeying the President and obeying the Senate, the Court will
without hesitation affirm that the officer has to choose the President. After
all, the Constitution prescribes that it is the President, and not the Senate,
who is the commander-in-chief of the armed forces.52
At the same time, the refusal of the President to allow members of the
military to appear before Congress is still subject to judicial relief. The
Constitution itself recognizes as one of the legislature's functions is the
conduct of inquiries in aid of legislation.53Inasmuch as it is ill-advised for
Congress to interfere with the President's power as commander-in-chief, it
is similarly detrimental for the President to unduly interfere with Congress's
right to conduct legislative inquiries. The impasse did not come to pass in
this petition, since petitioners testified anyway despite the presidential
prohibition. Yet the Court is aware that with its pronouncement today that
the President has the right to require prior consent from members of the
armed forces, the clash may soon loom or actualize.
We believe and hold that our constitutional and legal order sanctions a
modality by which members of the military may be compelled to attend
legislative inquiries even if the President desires otherwise, a modality
which does not offend the Chief Executive's prerogatives as commander-in-
chief. The remedy lies with the courts.
The fact that the executive branch is an equal, coordinate branch of
government to the legislative creates a wrinkle to any basic rule that
persons summoned to testify before Congress must do so. There is
considerable interplay between the legislative and executive branches,
informed by due deference and respect as to their various constitutional
functions. Reciprocal courtesy idealizes this relationship; hence, it is only
as a last resort that one branch seeks to compel the other to a particular
mode of behavior. The judiciary, the third coordinate branch of
government, does not enjoy a similar dynamic with either the legislative or
executive branches. Whatever weakness inheres on judicial power due to
its inability to originate national policies and legislation, such is balanced by
the fact that it is the branch empowered by the Constitution to compel
obeisance to its rulings by the other branches of government.
As evidenced by Arnault v. Nazareno54 and Bengzon v. Senate Blue Ribbon
Committee,55among others, the Court has not shirked from reviewing the
exercise by Congress of its power of legislative inquiry.56 Arnaultrecognized
that the legislative power of inquiry and the process to enforce it, "is an
essential and appropriate auxiliary to the legislative function."57 On the
other hand, Bengzon acknowledged that the power of both houses of
Congress to conduct inquiries in aid of legislation is not "absolute or
unlimited", and its exercise is circumscribed by Section 21, Article VI of the
Constitution.58 From these premises, the Court enjoined the Senate Blue
Ribbon Committee from requiring the petitioners in Bengzon from testifying
and producing evidence before the committee, holding that the inquiry in
question did not involve any intended legislation.
Senate affirmed both the Arnault and Bengzon rulings. It elucidated on the
constitutional scope and limitations on the constitutional power of
congressional inquiry. Thus:
As discussed in Arnault, the power of inquiry, "with process to enforce it,"
is grounded on the necessity of information in the legislative process. If the
information possessed by executive officials on the operation of their
offices is necessary for wise legislation on that subject, by parity of
reasoning, Congress has the right to that information and the power to
compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy
era", however, the right of Congress to conduct inquirites in aid of
legislation is, in theory, no less susceptible to abuse than executive or
judicial power. It may thus be subjected to judicial review pursuant to the
Court's certioraripowers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee, the inquiry
itself might not properly be in aid of legislation, and thus beyond the
constitutional power of Congress. Such inquiry could not usurp judicial
functions. Parenthetically, one possible way for Congress to avoid such
result as occurred in Bengzon is to indicate in its invitations to the public
officials concerned, or to any person for that matter, the possible needed
statute which prompted the need for the inquiry. Given such statement in
its invitations, along with the usual indication of the subject of inquiry and
the questions relative to and in furtherance thereof, there would be less
room for speculation on the part of the person invited on whether the
inquiry is in aid of legislation.
Section 21, Article VI likewise establishes critical safeguards that proscribe
the legislative power of inquiry. The provision requires that the inquiry be
done in accordance with the Senate or House's duly published rules of
procedure, necessarily implying the constitutional infirmity of an inquiry
conducted without duly published rules of procedure. Section 21 also
mandates that the rights of persons appearing in or affected by such
inquiries be respected, an imposition that obligates Congress to adhere to
the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper
suit filed by the persons affected, even if they belong to the executive
branch. Nonetheless, there may be exceptional circumstances' wherein a
clear pattern of abuse of the legislative power of inquiry might be
established, resulting in palpable violations of the rights guaranteed to
members of the executive department under the Bill of Rights. In such
instances, depending on the particulars of each case, attempts by the
Executive Branch to forestall these abuses may be accorded judicial
sanction59 .
In Senate, the Court ruled that the President could not impose a blanket
prohibition barring executive officials from testifying before Congress
without the President's consent notwithstanding the invocation of executive
privilege to justify such prohibition. The Court did not rule that the power
to conduct legislative inquiry ipso facto superseded the claim of executive
privilege, acknowledging instead that the viability of executive privilege
stood on a case to case basis. Should neither branch yield to the other
branch's assertion, the constitutional recourse is to the courts, as the final
arbiter if the dispute. It is only the courts that can compel, with
conclusiveness, attendance or non-attendance in legislative inquiries.
Following these principles, it is clear that if the President or the Chief of
Staff refuses to allow a member of the AFP to appear before Congress, the
legislative body seeking such testimony may seek judicial relief to compel
the attendance. Such judicial action should be directed at the heads of the
executive branch or the armed forces, the persons who wield authority and
control over the actions of the officers concerned. The legislative purpose
of such testimony, as well as any defenses against the same - whether
grounded on executive privilege, national security or similar concerns -
would be accorded due judicial evaluation. All the constitutional
considerations pertinent to either branch of government may be raised,
assessed, and ultimately weighed against each other. And once the courts
speak with finality, both branches of government have no option but to
comply with the decision of the courts, whether the effect of the decision is
to their liking or disfavor.
Courts are empowered, under the constitutional principle of judicial review,
to arbitrate disputes between the legislative and executive branches of
government on the proper constitutional parameters of power.60This is the
fair and workable solution implicit in the constitutional allocation of powers
among the three branches of government. The judicial filter helps assure orderly manner by which the same result could have been achieved without
that the particularities of each case would ultimately govern, rather than offending constitutional principles.
any overarching principle unduly inclined towards one branch of
government at the expense of the other. The procedure may not move as
WHEREFORE, the petition is DENIED. No pronouncement as to costs.
expeditiously as some may desire, yet it ensures thorough deliberation of
all relevant and cognizable issues before one branch is compelled to yield
to the other. Moreover, judicial review does not preclude the legislative and SO ORDERED.
executive branches from negotiating a mutually acceptable solution to the
impasse. After all, the two branches, exercising as they do functions and
responsibilities that are political in nature, are free to smooth over the
thorns in their relationship with a salve of their own choosing.

And if emphasis be needed, if the courts so rule, the duty falls on

the shoulders of the President, as commander-in-chief, to authorize
the appearance of the military officers before Congress. Even if the
President has earlier disagreed with the notion of officers
appearing before the legislature to testify, the Chief Executive is
nonetheless obliged to comply with the final orders of the courts.

Petitioners have presented several issues relating to the tenability or

wisdom of the President's order on them and other military officers not to
testify before Congress without the President's consent. Yet these issues
ultimately detract from the main point - that they testified before the
Senate despite an order from their commanding officer and their
commander-in-chief for them not to do so,61in contravention of the
traditions of military discipline which we affirm
today.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The issues raised by petitioners could have very well been raised and
properly adjudicated if the proper procedure was observed. Petitioners
could have been appropriately allowed to testify before the Senate without
having to countermand their Commander-in-chief and superior officer
under the setup we have prescribed.

We consider the other issues raised by petitioners unnecessary to the

resolution of this petition.

Petitioners may have been of the honest belief that they were defying a
direct order of their Commander-in-Chief and Commanding General in
obeisance to a paramount idea formed within their consciences, which
could not be lightly ignored. Still, the Court, in turn, is guided by the
superlative principle that is the Constitution, the embodiment of the
national conscience. The Constitution simply does not permit the infraction
which petitioners have allegedly committed, and moreover, provides for an
G.R. No. 174340 October 17, 2006 SERVICES, its Members and Chairman, the HONORABLE SENATOR
JOKER P. ARROYO, respondents.
IN THE MATTER OF THE PETITION FOR ISSUANCE OF WRIT OF
HABEAS CORPUS OF CAMILO L. SABIO,petitioner,
J. ERMIN ERNEST LOUIE R. MIGUEL, petitioner-relator,
vs.
HONORABLE SENATOR RICHARD GORDON, in his capacity as
DECISION
Chairman, and the HONORABLE MEMBERS OF THE COMMITTEE ON
GOVERNMENT CORPORATIONS AND PUBLIC ENTERPRISES and THE
COMMITTEE ON PUBLIC SERVICES of the Senate, HONORABLE
SENATOR JUAN PONCE-ENRILE, in his official capacity as Member,
HONORABLE MANUEL VILLAR, Senate President, SENATE
SERGEANT-AT-ARMS, and the SENATE OF THE SANDOVAL-GUTIERREZ, J.:
PHILIPPINES, respondents.

Two decades ago, on February 28, 1986, former President Corazon C.

x --------------------------------------------------------------------------- x
G.R. No. 174318 October 17, 2006
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) and
CAMILO L. SABIO, Chairman, NARCISO S. NARIO, RICARDO M.
ABCEDE, TERESO L. JAVIER and NICASIO A. CONTI, Commissioners,
MANUEL ANDAL and JULIO JALANDONI, PCGG nominees to
Philcomsat Holdings Corporation, petitioners,
vs.
RICHARD GORDON, in his capacity as Chairman, and MEMBERS OF
THE COMMITTEE ON GOVERNMENT CORPORATIONS AND PUBLIC
ENTERPRISES, MEMBERS OF THE COMMITTEE ON PUBLIC
SERVICES, SENATOR JUAN PONCE-ENRILE, in his capacity as
member of both said Committees, MANUEL VILLAR, Senate
President, THE SENATE SERGEANT-AT-ARMS, and SENATE OF THE
PHILIPPINES, respondents.
x --------------------------------------------------------------------------- x
G.R. No. 174177 October 17, 2006
PHILCOMSAT HOLDINGS CORPORATIONS, PHILIP G. BRODETT,
LUIS K. LOKIN, JR., ROBERTO V. SAN JOSE, DELFIN P. ANGCAO,
ROBERTO L. ABAD, ALMA KRISTINA ALOBBA, and JOHNNY
TAN, petitioners,
vs.
SENATE COMMITTEE ON GOVERNMENT CORPORATIONS and PUBLIC
ENTERPRISES, its MEMBERS and CHAIRMAN, the HONORABLE
SENATOR RICHARD GORDON and SENATE COMMITTEE ON PUBLIC
Aquino installed her regime by issuing Executive Order (E.O.) No.
1,1 creating the Presidential Commission on Good Government (PCGG). She
entrusted upon this Commission the herculean task of recovering the ill-
gotten wealth accumulated by the deposed President Ferdinand E. Marcos,
his family, relatives, subordinates and close associates.2 Section 4 (b) of
E.O. No. 1 provides that: "No member or staff of the Commission shall
be required to testify or produce evidence in any judicial,
legislative or administrative proceeding concerning matters within
its official cognizance." Apparently, the purpose is to ensure PCGG's
unhampered performance of its task.3
Today, the constitutionality of Section 4(b) is being questioned on the
ground that it tramples upon the Senate's power to conduct legislative
inquiry under Article VI, Section 21 of the 1987 Constitution, which reads:
The Senate or the House of Representatives or any of its
respective committees may conduct inquiries in aid of legislation
in accordance with its duly published rules of procedure. The
rights of persons appearing in or affected by such inquiries shall
be respected.
The facts are undisputed.
On February 20, 2006, Senator Miriam Defensor Santiago introduced
Philippine Senate Resolution No. 455 (Senate Res. No. 455),4 "directing an
inquiry in aid of legislation on the anomalous losses incurred by the
Philippines Overseas Telecommunications Corporation (POTC), Philippine
Communications Satellite Corporation (PHILCOMSAT), and PHILCOMSAT
Holdings Corporation (PHC) due to the alleged improprieties in their
operations by their respective Board of Directors."
The pertinent portions of the Resolution read:
WHEREAS, in the last quarter of 2005, the representation and
entertainment expense of the PHC skyrocketed to P4.3 million, as
compared to the previous year's mere P106 thousand;
WHEREAS, some board members established wholly owned PHC
subsidiary called Telecommunications Center, Inc. (TCI), where
PHC funds are allegedly siphoned; in 18 months, over P73 million
had been allegedly advanced to TCI without any accountability
report given to PHC and PHILCOMSAT;
WHEREAS, the Philippine Star, in its 12 February 2002 issue
reported that the executive committee of Philcomsat has
precipitately released P265 million and granted P125 million loan
to a relative of an executive committee member; to date there
have been no payments given, subjecting the company to an
estimated interest income loss of P11.25 million in 2004;
WHEREAS, there is an urgent need to protect the interest of the
Republic of the Philippines in the PHC, PHILCOMSAT, and POTC
from any anomalous transaction, and to conserve or salvage any
remaining value of the government's equity position in these
corporations from any abuses of power done by their respective
board of directors;
transferred to the Committee on Government Corporations and Public
Enterprises.5
On May 8, 2006, Chief of Staff Rio C. Inocencio, under the authority of
Senator Richard J. Gordon, wrote Chairman Camilo L. Sabio of the PCGG,
one of the herein petitioners, inviting him to be one of the resource
persons in the public meeting jointly conducted by the Committee on
Government Corporations and Public Enterprises and Committee on Public
Services. The purpose of the public meeting was to deliberate on Senate
Res. No. 455.6
On May 9, 2006, Chairman Sabio declined the invitation because of prior
commitment.7 At the same time, he invoked Section 4(b) of E.O. No.
1 earlier quoted.
On August 10, 2006, Senator Gordon issued a Subpoena Ad
Testificandum,8 approved by Senate President Manuel Villar, requiring
Chairman Sabio and PCGG Commissioners Ricardo Abcede, Nicasio
Conti, Tereso Javier and Narciso Nario to appear in the public hearing
scheduled on August 23, 2006 and testify on what they know relative to
the matters specified in Senate Res. No. 455. Similar subpoenae were
issued against the directors and officers of Philcomsat Holdings
Corporation, namely: Benito V. Araneta, Philip J. Brodett, Enrique L. Locsin,
Manuel D. Andal, Roberto L. Abad, Luis K. Lokin, Jr., Julio J. Jalandoni,
Roberto V. San Jose, Delfin P. Angcao, Alma Kristina Alloba and Johnny
Tan.9

WHEREFORE, be it resolved that the proper Senate

Committee shall conduct an inquiry in aid of legislation, on
the anomalous losses incurred by the Philippine Overseas
Telecommunications Corporation (POTC), Philippine
Communications Satellite Corporation (PHILCOMSAT), and
Philcomsat Holdings Corporations (PHC) due to the alleged
improprieties in the operations by their respective board of
directors.
Adopted.
(Sgd) MIRIAM DEFENSOR SANTIAGO
On the same date, February 20, 2006, Senate Res. No. 455 was submitted
to the Senate and referred to the Committee on Accountability of Public
Officers and Investigations and Committee on Public Services. However, on
March 28, 2006, upon motion of Senator Francis N. Pangilinan, it was
Again, Chairman Sabio refused to appear. In his letter to Senator Gordon
dated August 18, 2006, he reiterated his earlier position, invoking Section
4(b) of E.O. No. 1. On the other hand, the directors and officers of
Philcomsat Holdings Corporation relied on the position paper they
previously filed, which raised issues on the propriety of legislative inquiry.
Thereafter, Chief of Staff Ma. Carissa O. Coscolluela, under the authority of
Senator Gordon, sent another notice10to Chairman Sabio requiring him to
appear and testify on the same subject matter set on September 6, 2006.
The notice was issued "under the same authority of the Subpoena Ad
Testificandum previously served upon (him) last 16 August 2006."
Once more, Chairman Sabio did not comply with the notice. He sent a
letter11 dated September 4, 2006 to Senator Gordon reiterating his reason
for declining to appear in the public hearing.
This prompted Senator Gordon to issue an Order dated September 7, 2006
requiring Chairman Sabio and Commissioners Abcede, Conti, Javier and
Nario to show cause why they should not be cited in contempt of the
Senate. On September 11, 2006, they submitted to the Senate their
Compliance and Explanation,12 which partly reads:
Doubtless, there are laudable intentions of the subject
inquiry in aid of legislation. But the rule of law requires that
even the best intentions must be carried out within the
parameters of the Constitution and the law. Verily, laudable
purposes must be carried out by legal methods. (Brillantes, Jr., et
al. v. Commission on Elections, En Banc [G.R. No. 163193, June
15, 2004])
On this score, Section 4(b) of E.O. No. 1 should not be ignored as
it explicitly provides:
No member or staff of the Commission shall be
required to testify or produce evidence in any
judicial legislative or administrative proceeding
concerning matters within its official cognizance.
With all due respect, Section 4(b) of E.O. No. 1 constitutes a
limitation on the power of legislative inquiry, and a recognition by
the State of the need to provide protection to the PCGG in order to
ensure the unhampered performance of its duties under its
charter. E.O. No. 1 is a law, Section 4(b) of which had not been
amended, repealed or revised in any way.
To say the least, it would require both Houses of Congress and
Presidential fiat to amend or repeal the provision in controversy.
Until then, it stands to be respected as part of the legal system in
this jurisdiction. (As held in People v. Veneracion, G.R. Nos.
119987-88, October 12, 1995: Obedience to the rule of law forms
the bedrock of our system of justice. If judges, under the guise of
religious or political beliefs were allowed to roam unrestricted
beyond boundaries within which they are required by law to
exercise the duties of their office, then law becomes meaningless.
A government of laws, not of men excludes the exercise of broad
discretionary powers by those acting under its authority. Under
this system, judges are guided by the Rule of Law, and ought to
'protect and enforce it without fear or favor,' 4 [Act of Athens
(1955)] resist encroachments by governments, political parties, or
even the interference of their own personal beliefs.)
xxxxxx
Relevantly, Chairman Sabio's letter to Sen. Gordon dated August
19, 2006 pointed out that the anomalous transactions referred to
in the P.S. Resolution No. 455 are subject of pending cases before
the regular courts, the Sandiganbayan and the Supreme Court
(Pending cases include: a. Samuel Divina v. Manuel Nieto, Jr., et
al., CA-G.R. No. 89102; b. Philippine Communications Satellite
Corporation v. Manuel Nieto, et al.; c. Philippine Communications
Satellite Corporation v. Manuel D. Andal, Civil Case No. 06-095,
RTC, Branch 61, Makati City; d. Philippine Communications
Satellite Corporation v. PHILCOMSAT Holdings Corporation, et al.,
Civil Case No. 04-1049) for which reason they may not be able to
testify thereon under the principle of sub judice. The laudable
objectives of the PCGG's functions, recognized in several cases
decided by the Supreme Court, of the PCGG will be put to naught
if its recovery efforts will be unduly impeded by a legislative
investigation of cases that are already pending before the
Sandiganbayan and trial courts.
In Bengzon v. Senate Blue Ribbon Committee, (203 SCRA 767,
784 [1991]) the Honorable Supreme Court held:
"…[T]he issues sought to be investigated by the
respondent Committee is one over which jurisdiction had
been acquired by the Sandiganbayan. In short, the issue
has been pre-empted by that court. To allow the
respondent Committee to conduct its own investigation of
an issue already before the Sandigabayan would not only
pose the possibility of conflicting judgments between a
legislative committee and a judicial tribunal, but if the
Committee's judgment were to be reached before that of
the Sandiganbayan, the possibility of its influence being
made to bear on the ultimate judgment of the
Sandiganbayan can not be discounted.
xxxxxx
IT IS IN VIEW OF THE FOREGOING CONSIDERATIONS that
the Commission decided not to attend the Senate inquiry to testify
and produce evidence thereat.
Unconvinced with the above Compliance and Explanation, the Committee
on Government Corporations and Public Enterprises and the Committee on
Public Services issued an Order13 directing Major General Jose Balajadia
(Ret.), Senate Sergeant-At-Arms, to place Chairman Sabio and his
Commissioners under arrest for contempt of the Senate. The Order bears
the approval of Senate President Villar and the majority of the authority; fourth, the conduct of legislative inquiry pursuant to Senate Res.
Committees' members. No. 455 constitutes undue encroachment by respondents into justiciable
controversies over which several courts and tribunals have already
acquired jurisdiction; and fifth, the subpoenae violated petitioners' rights to
On September 12, 2006, at around 10:45 a.m., Major General Balajadia
privacy and against self-incrimination.
arrested Chairman Sabio in his office at IRC Building, No. 82 EDSA,
Mandaluyong City and brought him to the Senate premises where he was
detained. In their Consolidated Comment, the above-named respondents
countered: first, the issues raised in the petitions involve political questions
over which this Court has no jurisdiction; second, Section 4(b) has been
Hence, Chairman Sabio filed with this Court a petition for habeas
repealed by the Constitution; third, respondent Senate Committees are
corpus against the Senate Committee on Government Corporations and
vested with contempt power; fourth, Senate's Rules of Procedure
Public Enterprises and Committee on Public Services, their Chairmen,
Governing Inquiries in Aid of Legislation have been duly published; fifth,
Senators Richard Gordon and Joker P. Arroyo and Members. The case was
respondents have not violated any civil right of the individual petitioners,
docketed as G.R. No. 174340.
such as their (a) right to privacy; and (b) right against self-incrimination;
and sixth, the inquiry does not constitute undue encroachment into
Chairman Sabio, Commissioners Abcede, Conti, Nario, and Javier, and the justiciable controversies.
PCGG's nominees to Philcomsat Holdings Corporation, Manuel Andal and
Julio Jalandoni, likewise filed a petition for certiorari and prohibition against
During the oral arguments held on September 21, 2006, the parties were
the same respondents, and also against Senate President Manuel Villar,
directed to submit simultaneously their respective memoranda within a
Senator Juan Ponce Enrile, the Sergeant-at-Arms, and the entire Senate.
non-extendible period of fifteen (15) days from date. In the meantime, per
The case was docketed as G.R. No. 174318.
agreement of the parties, petitioner Chairman Sabio was allowed to go
home. Thus, his petition for habeas corpus has become moot. The parties
Meanwhile, Philcomsat Holdings Corporation and its officers and directors, also agreed that the service of the arrest warrants issued against all
namely: Philip G. Brodett, Luis K. Lokin, Jr., Roberto V. San Jose, Delfin P. petitioners and the proceedings before the respondent Senate Committees
Angcao, Roberto L. Abad, Alma Kristina Alobba and Johnny Tan filed a are suspended during the pendency of the instant cases.14
petition for certiorari and prohibition against the Senate Committees on
Government Corporations and Public Enterprisesand Public Services, their
Crucial to the resolution of the present petitions is the fundamental issue of
Chairmen, Senators Gordon and Arroyo, and Members. The case was
whether Section 4(b) of E.O. No. 1 is repealed by the 1987
docketed as G.R. No. 174177.
Constitution. On this lone issue hinges the merit of the contention of
Chairman Sabio and his Commissioners that their refusal to appear before
In G.R. No. 174340 (for habeas corpus) and G.R. No. 174318 (for certiorari respondent Senate Committees is justified. With the resolution of this
and prohibition) Chairman Sabio, Commissioners Abcede, Conti, Nario, and issue, all the other issues raised by the parties have become
Javier; and the PCGG's nominees Andal and Jalandoni alleged: first, inconsequential.
respondent Senate Committees disregarded Section 4(b) of E.O. No. 1
without any justifiable reason; second, the inquiries conducted by
Perched on one arm of the scale of justice is Article VI, Section 21 of the
respondent Senate Committees are not in aid of legislation; third, the
1987 Constitution granting respondent Senate Committees the power of
inquiries were conducted in the absence of duly published Senate Rules of
legislative inquiry. It reads:
Procedure Governing Inquiries in Aid of Legislation; and fourth, respondent
Senate Committees are not vested with the power of contempt.
The Senate or the House of Representatives or any of its
respective committees may conduct inquiries in aid of
In G.R. No. 174177, petitioners Philcomsat Holdings Corporation and its
legislation in accordance with its duly published rules of
directors and officers alleged: first, respondent Senate Committees have no
procedure. The rights of persons appearing in or affected
jurisdiction over the subject matter stated in Senate Res. No. 455; second,
by such inquiries shall be respected.
the same inquiry is not in accordance with the Senate's Rules of Procedure
Governing Inquiries in Aid of Legislation; third, the subpoenae against the
individual petitioners are void for having been issued without
On the other arm of the scale is Section 4(b) of E.O. No.1 limiting such
power of legislative inquiry by exempting all PCGG members or staff from
testifying in any judicial, legislative or administrative proceeding, thus:
No member or staff of the Commission shall be required to
testify or produce evidence in any judicial, legislative or
administrative proceeding concerning matters within its
official cognizance.
To determine whether there exists a clear and unequivocal repugnancy
between the two quoted provisions that warrants a declaration that Section
4(b) has been repealed by the 1987 Constitution, a brief consideration of
the Congress' power of inquiry is imperative.
The Congress' power of inquiry has been recognized in foreign jurisdictions
long before it reached our shores through McGrain v. Daugherty,15 cited
in Arnault v. Nazareno.16 In those earlier days, American courts considered
the power of inquiry as inherent in the power to legislate. The 1864 case
of Briggs v. MacKellar17 explains the breath and basis of the power, thus:
Where no constitutional limitation or restriction exists, it is
competent for either of the two bodies composing the legislature
to do, in their separate capacity, whatever may be essential to
enable them to legislate….It is well-established principle of this
parliamentary law, that either house may institute any
investigationhaving reference to its own organization, the
conduct or qualification of its members, its proceedings, rights, or
privileges or any matter affecting the public interest upon
which it may be important that it should have exact
information, and in respect to which it would be competent
for it to legislate. The right to pass laws, necessarily
implies the right to obtain information upon any matter
which may become the subject of a law. It is essential to
the full and intelligent exercise of the legislative
function….In American legislatures the investigation of
public matters before committees, preliminary to
legislation, or with the view of advising the house
appointing the committee is, as a parliamentary usage, well
established as it is in England, and the right of either house to
compel witnesses to appear and testify before its committee, and
to punish for disobedience has been frequently enforced….The
right of inquiry, I think, extends to other matters, in respect to
which it may be necessary, or may be deemed advisable to apply
for legislative aid.
Remarkably, in Arnault, this Court adhered to a similar theory. Citing
McGrain, it recognized that the power of inquiry is "an essential and
appropriate auxiliary to the legislative function," thus:
Although there is no provision in the "Constitution expressly
investing either House of Congress with power to make
investigations and exact testimony to the end that it may exercise
its legislative functions advisedly and effectively, such power is so
far incidental to the legislative function as to be implied. In other
words, the power of inquiry – with process to enforce it – is
an essential and appropriate auxiliary to the legislative
function. A legislative body cannot legislate wisely or
effectively in the absence of information respecting the
conditions which the legislation is intended to affect or
change; and where the legislation body does not itself
possess the requisite information – which is not
infrequently true – recourse must be had to others who
possess it."
Dispelling any doubt as to the Philippine Congress' power of inquiry,
provisions on such power made their maiden appearance in Article VIII,
Section 12 of the 1973 Constitution.18 Then came the 1987 Constitution
incorporating the present Article VI, Section 12. What was therefore
implicit under the 1935 Constitution, as influenced by American
jurisprudence, became explicit under the 1973 and 1987 Constitutions.19
Notably, the 1987 Constitution recognizes the power of investigation, not
just of Congress, but also of "any of its committee." This is significant
because it constitutes a direct conferral of investigatory power upon the
committees and it means that the mechanisms which the Houses can take
in order to effectively perform its investigative function are also available to
the committees.20
It can be said that the Congress' power of inquiry has gained more solid
existence and expansive construal. The Court's high regard to such power
is rendered more evident in Senate v. Ermita,21 where it categorically ruled
that "the power of inquiry is broad enough to cover officials of the
executive branch." Verily, the Court reinforced the doctrine in Arnault
that "the operation of government, being a legitimate subject for
legislation, is a proper subject for investigation" and that "the
power of inquiry is co-extensive with the power to legislate."
Considering these jurisprudential instructions, we find Section 4(b) directly
repugnant with Article VI, Section 21. Section 4(b) exempts the PCGG
members and staff from the Congress' power of inquiry. This cannot
be countenanced. Nowhere in the Constitution is any provision granting
such exemption. The Congress' power of inquiry, being broad,
encompasses everything that concerns the administration of existing laws
as well as proposed or possibly needed statutes.22 It even extends "to
government agencies created by Congress and officers whose
positions are within the power of Congress to regulate or even
abolish."23 PCGG belongs to this class.
Certainly, a mere provision of law cannot pose a limitation to the broad
power of Congress, in the absence of any constitutional basis.
Furthermore, Section 4(b) is also inconsistent with Article XI, Section 1 of
the Constitution stating that: "Public office is a public trust. Public officers
and employees must at all times be accountable to the people, serve them
with utmost responsibility, integrity, loyalty, and efficiency, act with
patriotism and justice, and lead modest lives."
The provision presupposes that since an incumbent of a public office is
invested with certain powers and charged with certain duties pertinent to
sovereignty, the powers so delegated to the officer are held in trust for
the people and are to be exercised in behalf of the government or
of all citizens who may need the intervention of the officers. Such
trust extends to all matters within the range of duties pertaining to
the office. In other words, public officers are but the servants of
the people, and not their rulers.24
Section 4(b), being in the nature of an immunity, is inconsistent with
the principle of public accountability. It places the PCGG members and
staff beyond the reach of courts, Congress and other administrative bodies.
Instead of encouraging public accountability, the same provision only
institutionalizes irresponsibility and non-accountability. In Presidential
Commission on Good Government v. Peña,25 Justice Florentino P. Feliciano
characterized as "obiter" the portion of the majority opinion barring, on the
basis of Sections 4(a) and (b) of E.O. No. 1, a civil case for damages filed
against the PCGG and its Commissioners. He eloquently opined:
The above underscored portions are, it is respectfully submitted,
clearly obiter. It is important to make clear that the Court is
not here interpreting, much less upholding as valid and
constitutional, the literal terms of Section 4 (a), (b) of
Executive Order No.1. If Section 4 (a) were given its literal
import as immunizing the PCGG or any member thereof from civil
liability "for anything done or omitted in the discharge of the task
contemplated by this Order," the constitutionality of Section 4 (a)
would, in my submission, be open to most serious doubt. For so
viewed, Section 4 (a) would institutionalize the irresponsibility and
non-accountability of members and staff of the PCGG, a notion
that is clearly repugnant to both the 1973 and 1987 Constitution
and a privileged status not claimed by any other official of the
Republic under the 1987 Constitution. x x x.
xxxxxx
It would seem constitutionally offensive to suppose that a
member or staff member of the PCGG could not be required
to testify before the Sandiganbayan or that such members
were exempted from complying with orders of this Court.
Chavez v. Sandiganbayan26 reiterates the same view. Indeed, Section 4(b)
has been frowned upon by this Court even before the filing of the present
petitions.
Corollarily, Section 4(b) also runs counter to the following constitutional
provisions ensuring the people's access to information:
Article II, Section 28
Subject to reasonable conditions prescribed by law, the
State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
Article III, Section 7
The right of the people to information on matters of
public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to
government research data used as basis for policy
development, shall be afforded the citizen, subject to
such limitations as may be provided by law.
These twin provisions of the Constitution seek to promote transparency in
policy-making and in the operations of the government, as well as provide
the people sufficient information to enable them to exercise effectively their
constitutional rights. Armed with the right information, citizens can
participate in public discussions leading to the formulation of government
policies and their effective implementation. In Valmonte v. Belmonte,
Jr.27 the Court explained that an informed citizenry is essential to the
existence and proper functioning of any democracy, thus:
 An essential element of these freedoms is to keep open a
continuing dialogue or process of communication between the
government and the people. It is in the interest of the State that
the channels for free political discussion be maintained to the end
that the government may perceive and be responsive to the
people's will. Yet, this open dialogue can be effective only to the
extent that the citizenry is informed and thus able to formulate its
will intelligently. Only when the participants in the discussion are
aware of the issues and have access to information relating
thereto can such bear fruit.
Consequently, the conduct of inquiries in aid of legislation is not only
intended to benefit Congress but also the citizenry. The people are equally
concerned with this proceeding and have the right to participate therein in
order to protect their interests. The extent of their participation will largely
depend on the information gathered and made known to them. In other
words, the right to information really goes hand-in-hand with the
constitutional policies of full public disclosure and honesty in the public
service. It is meant to enhance the widening role of the citizenry in
governmental decision-making as well as in checking abuse in the
government.28 The cases of Tañada v. Tuvera29and Legaspi v. Civil Service
Commission30 have recognized a citizen's interest and personality to
enforce a public duty and to bring an action to compel public officials and
employees to perform that duty.
Section 4(b) limits or obstructs the power of Congress to secure from PCGG
members and staff information and other data in aid of its power to
legislate. Again, this must not be countenanced. In Senate v. Ermita,31 this
Court stressed:
To the extent that investigations in aid of legislation are generally
conducted in public, however, any executive issuance tending
to unduly limit disclosures of information in such
investigations necessarily deprives the people of
information which, being presumed to be in aid of
legislation, is presumed to be a matter of public concern.
The citizens are thereby denied access to information which they
can use in formulating their own opinions on the matter before
Congress – opinions which they can then communicate to their
representatives and other government officials through the
various legal means allowed by their freedom of expression.
A statute may be declared unconstitutional because it is not within the
legislative power to enact; or it creates or establishes methods or forms
that infringe constitutional principles; or its purpose or effect violates the
Constitution or its basic principles.32 As shown in the above discussion,
Section 4(b) is inconsistent with Article VI, Section 21 (Congress' power
of inquiry), Article XI, Section 1 (principle of public
accountability), Article II, Section 28 (policy of full disclosure)
and Article III, Section 7 (right to public information).
Significantly, Article XVIII, Section 3 of the Constitution provides:
All existing laws, decrees, executive orders, proclamations, letters
of instructions, and other executive issuances not
inconsistent with this Constitution shall remain operative until
amended, repealed, or revoked.
The clear import of this provision is that all existing laws, executive orders,
proclamations, letters of instructions and other executive issuances
inconsistent or repugnant to the Constitution are repealed.
Jurisprudence is replete with decisions invalidating laws, decrees, executive
orders, proclamations, letters of instructions and other executive issuances
inconsistent with the Constitution. In Pelaez v. Auditor General,33 the Court
considered repealed Section 68 of the Revised Administrative Code of 1917
authorizing the Executive to change the seat of the government of any
subdivision of local governments, upon the approval of the 1935
Constitution. Section 68 was adjudged incompatible and inconsistent with
the Constitutional grant of limited executive supervision over local
governments. In Islamic Da'wah Council of the Philippines, Inc., v. Office of
the Executive Secretary,34 the Court declared Executive Order No. 46,
entitled "Authorizing the Office on Muslim Affairs to Undertake Philippine
Halal Certification," void for encroaching on the religious freedom of
Muslims. In The Province of Batangas v. Romulo,35 the Court declared some
provisions of the General Appropriations Acts of 1999, 2000 and 2001
unconstitutional for violating the Constitutional precept on local autonomy.
And in Ople v. Torres,36the Court likewise declared unconstitutional
Administrative Order No. 308, entitled "Adoption of a National
Computerized Identification Reference System," for being violative of the
right to privacy protected by the Constitution.
These Decisions, and many others, highlight that the Constitution is the
highest law of the land. It is "the basic and paramount law to which all
other laws must conform and to which all persons, including the
highest officials of the land, must defer. No act shall be valid,
however noble its intentions, if it conflicts with the
Constitution."37 Consequently, this Court has no recourse but to declare
Section 4(b) of E.O. No. 1 repealed by the 1987 Constitution.
Significantly, during the oral arguments on September 21, 2006, Chairman
Sabio admitted that should this Court rule that Section 4(b) is
unconstitutional or that it does not apply to the Senate, he will answer the
questions of the Senators, thus:
CHIEF JUSTICE PANGANIBAN:
Okay. Now, if the Supreme Court rules that Sec. 4(b) is
unconstitutional or that it does not apply to the Senate,
will you answer the questions of the Senators?
CHAIRMAN SABIO:
Your Honor, my father was a judge, died being a judge. I
was here in the Supreme Court as Chief of Staff of Justice
Feria. I would definitely honor the Supreme Court and the
rule of law.
CHIEF JUSTICE PANGANIBAN:
You will answer the questions of the Senators if we say
that?
CHAIRMAN SABIO:
Yes, Your Honor. That is the law already as far as I am
concerned.
With his admission, Chairman Sabio is not fully convinced that he and his
Commissioners are shielded from testifying before respondent Senate
Committees by Section 4(b) of E.O. No. 1. In effect, his argument that the
said provision exempts him and his co-respondent Commissioners from
testifying before respondent Senate Committees concerning Senate Res.
No. 455 utterly lacks merit.
Incidentally, an argument repeated by Chairman Sabio is that respondent
Senate Committees have no power to punish him and his Commissioners
for contempt of the Senate.
The argument is misleading.
Article VI, Section 21 provides:
The Senate or the House of Representatives or any of its
respective committees may conduct inquiries in aid of
legislation in accordance with its duly published rules of
procedure. The rights of persons appearing in or affected
by such inquiries shall be respected.
It must be stressed that the Order of Arrest for "contempt of Senate
Committees and the Philippine Senate" was approved by Senate
President Villar and signed by fifteen (15) Senators. From this, it can
be concluded that the Order is under the authority, not only of the
respondent Senate Committees, but of the entire Senate.
At any rate, Article VI, Section 21 grants the power of inquiry not only to
the Senate and the House of Representatives, but also to any of their
respective committees. Clearly, there is a direct conferral of power to
the committees. Father Bernas, in his Commentary on the 1987
Constitution, correctly pointed out its significance:
It should also be noted that the Constitution explicitly recognizes
the power of investigation not just of Congress but also of "any of
its committees." This is significant because it constitutes a
direct conferral of investigatory power upon the
committees and it means that the means which the Houses
can take in order to effectively perform its investigative
function are also available to the Committees.38
This is a reasonable conclusion. The conferral of the legislative power of
inquiry upon any committee of Congress must carry with it all powers
necessary and proper for its effective discharge. Otherwise, Article VI,
Section 21 will be meaningless. The indispensability and usefulness of the
power of contempt in a legislative inquiry is underscored in a catena of
cases, foreign and local.
In the 1821 case of Anderson v. Dunn,39 the function of the Houses of
Congress with respect to the contempt power was likened to that of a
court, thus:
…But the court in its reasoning goes beyond this, and though the
grounds of the decision are not very clearly stated, we take them
to be: that there is in some cases a power in each House of
Congress to punish for contempt; that this power is
analogous to that exercised by courts of justice, and that it
being the well established doctrine that when it appears
that a prisoner is held under the order of a court of general
jurisdiction for a contempt of its authority, no other court
 will discharge the prisoner or make further inquiry into the
cause of his commitment. That this is the general rule…as
regards the relation of one court to another must be conceded.
In McGrain,40 the U.S. Supreme Court held: "Experience has shown that
mere requests for such information are often unavailing, and also
that information which is volunteered is not always accurate or
complete; so some means of compulsion is essential to obtain what
is needed." The Court, in Arnault v. Nazareno,41sustained the Congress'
power of contempt on the basis of this observation.
In Arnault v. Balagtas,42 the Court further explained that the contempt
power of Congress is founded upon reason and policy and that the power of
inquiry will not be complete if for every contumacious act, Congress has to
resort to judicial interference, thus:
The principle that Congress or any of its bodies has the power
to punish recalcitrant witnesses is founded upon reason and
policy. Said power must be considered implied or incidental to the
exercise of legislative power. How could a legislative body
obtain the knowledge and information on which to base
intended legislation if it cannot require and compel the
disclosure of such knowledge and information if it is
impotent to punish a defiance of its power and authority?
When the framers of the Constitution adopted the principle
of separation of powers, making each branch supreme
within the realm of its respective authority, it must have
intended each department's authority to be full and
complete, independently of the other's authority or power.
And how could the authority and power become complete if
for every act of refusal, every act of defiance, every act of
contumacy against it, the legislative body must resort to
the judicial department for the appropriate remedy,
because it is impotent by itself to punish or deal therewith,
with the affronts committed against its authority or
dignity.43
In Negros Oriental II Electric Cooperative, Inc. v. Sangguniang Panlungsod
of Dumaguete,44 the Court characterized contempt power as a matter of
self-preservation, thus:
The exercise by the legislature of the contempt power is a matter
of self-preservation as that branch of the government vested
with the legislative power, independently of the judicial branch,
asserts its authority and punishes contempts thereof. The
contempt power of the legislature is, therefore, sui generis x x x.
Meanwhile, with respect to G.R. No. 174177, the petition of Philcomsat
Holdings Corporation and its directors and officers, this Court holds that the
respondent Senate Committees' inquiry does not violate their right to
privacy and right against self-incrimination.
One important limitation on the Congress' power of inquiry is that "the
rights of persons appearing in or affected by such inquiries shall be
respected." This is just another way of saying that the power of inquiry
must be "subject to the limitations placed by the Constitution on
government action." As held in Barenblatt v. United States,45"the
Congress, in common with all the other branches of the
Government, must exercise its powers subject to the limitations
placed by the Constitution on governmental action, more
particularly in the context of this case, the relevant limitations of
the Bill of Rights."
First is the right to privacy.
Zones of privacy are recognized and protected in our laws.46 Within these
zones, any form of intrusion is impermissible unless excused by law and in
accordance with customary legal process. The meticulous regard we accord
to these zones arises not only from our conviction that the right to privacy
is a "constitutional right" and "the right most valued by civilized
men,"47 but also from our adherence to the Universal Declaration of Human
Rights which mandates that, "no one shall be subjected to arbitrary
interference with his privacy" and "everyone has the right to the protection
of the law against such interference or attacks."48
Our Bill of Rights, enshrined in Article III of the Constitution, provides at
least two guarantees that explicitly create zones of privacy. It highlights a
person's "right to be let alone" or the "right to determine what, how much,
to whom and when information about himself shall be disclosed."49 Section
2 guarantees "the right of the people to be secure in their persons,
houses, papers and effects against unreasonable searches and
seizures of whatever nature and for any purpose." Section 3 renders
inviolable the "privacy of communication and correspondence" and
further cautions that "any evidence obtained in violation of this or the
preceding section shall be inadmissible for any purpose in any
proceeding."
In evaluating a claim for violation of the right to privacy, a court must
determine whether a person has exhibited a reasonable expectation of
privacy and, if so, whether that expectation has been violated by
unreasonable government intrusion.50 Applying this determination to these
cases, the important inquiries are: first, did the directors and officers of
Philcomsat Holdings Corporation exhibit a reasonable expectation of
privacy?; and second, did the government violate such expectation?
The answers are in the negative. Petitioners were invited in the Senate's
public hearing to deliberate on Senate Res. No. 455, particularly "on the
anomalous losses incurred by the Philippine Overseas
Telecommunications Corporation (POTC), Philippine
Communications Satellite Corporation (PHILCOMSAT), and
Philcomsat Holdings Corporations (PHC) due to the alleged
improprieties in the operations by their respective board of
directors." Obviously, the inquiry focus on petitioners' acts committed in
the discharge of their duties as officers and directors of the said
corporations, particularly Philcomsat Holdings Corporation. Consequently,
they have no reasonable expectation of privacy over matters
involving their offices in a corporation where the government has
interest. Certainly, such matters are of public concern and over
which the people have the right to information.
This goes to show that the right to privacy is not absolute where there is
an overriding compelling state interest. In Morfe v. Mutuc,51 the Court,
in line with Whalen v. Roe,52 employed the rational basis relationship test
when it held that there was no infringement of the individual's right to
privacy as the requirement to disclosure information is for a valid purpose,
i.e., to curtail and minimize the opportunities for official corruption,
maintain a standard of honesty in public service, and promote morality in
public administration.53 In Valmonte v. Belmonte,54 the Court remarked
that as public figures, the Members of the former Batasang Pambansa
enjoy a more limited right to privacy as compared to ordinary
individuals, and their actions are subject to closer scrutiny. Taking this into
consideration, the Court ruled that the right of the people to access
information on matters of public concern prevails over the right to privacy
of financial transactions.
Under the present circumstances, the alleged anomalies in the
PHILCOMSAT, PHC and POTC, ranging in millions of pesos, and the
conspiratorial participation of the PCGG and its officials are compelling
reasons for the Senate to exact vital information from the directors and
officers of Philcomsat Holdings Corporations, as well as from Chairman
Sabio and his Commissioners to aid it in crafting the necessary legislation
to prevent corruption and formulate remedial measures and policy
determination regarding PCGG's efficacy. There being no reasonable
expectation of privacy on the part of those directors and officers over the
subject covered by Senate Res. No. 455, it follows that their right to
privacy has not been violated by respondent Senate Committees.
Anent the right against self-incrimination, it must be emphasized that this
right maybe invoked by the said directors and officers of Philcomsat
Holdings Corporation only when the incriminating question is being
asked, since they have no way of knowing in advance the nature or
effect of the questions to be asked of them."55 That this right
may possibly be violated or abused is no ground for denying respondent
Senate Committees their power of inquiry. The consolation is that when
this power is abused, such issue may be presented before the courts. At
this juncture, what is important is that respondent Senate Committees
have sufficient Rules to guide them when the right against self-
incrimination is invoked. Sec. 19 reads:
Sec. 19. Privilege Against Self-Incrimination
A witness can invoke his right against self-incrimination only when
a question tends to elicit an answer that will incriminate him is
propounded to him. However, he may offer to answer any
question in an executive session.
No person can refuse to testify or be placed under oath or
affirmation or answer questions before an incriminatory question
is asked. His invocation of such right does not by itself excuse him
from his duty to give testimony.
In such a case, the Committee, by a majority vote of the members
present there being a quorum, shall determine whether the right
has been properly invoked. If the Committee decides otherwise, it
shall resume its investigation and the question or questions
previously refused to be answered shall be repeated to the
witness. If the latter continues to refuse to answer the question,
the Committee may punish him for contempt for contumacious
conduct.
The same directors and officers contend that the Senate is barred from
inquiring into the same issues being litigated before the Court of Appeals
and the Sandiganbayan. Suffice it to state that the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation provide that the filing or
pendency of any prosecution of criminal or administrative action should not
stop or abate any inquiry to carry out a legislative purpose.
Let it be stressed at this point that so long as the constitutional rights of
witnesses, like Chairman Sabio and his Commissioners, will be respected
by respondent Senate Committees, it their duty to cooperate with them in
their efforts to obtain the facts needed for intelligent legislative action. The
unremitting obligation of every citizen is to respond to subpoenae, to
respect the dignity of the Congress and its Committees, and to testify fully
with respect to matters within the realm of proper investigation.
In fine, PCGG Chairman Camilo Sabio and Commissioners Ricardo Abcede,
Narciso Nario, Nicasio Conti, and Tereso Javier; and Manuel Andal and Julio
Jalandoni, PCGG's nominees to Philcomsat Holdings Corporation, as well as
its directors and officers, must comply with the Subpoenae Ad
Testificandum issued by respondent Senate Committees directing them to
appear and testify in public hearings relative to Senate Resolution No. 455.
WHEREFORE, the petition in G.R. No. 174340 for habeas
corpus is DISMISSED, for being moot. The petitions in G.R Nos. 174318
and 174177 are likewise DISMISSED.
Section 4(b) of E.O. No. 1 is declared REPEALED by the 1987 Constitution.
Respondent Senate Committees' power of inquiry relative to Senate
Resolution 455 is upheld. PCGG Chairman Camilo L. Sabio and
Commissioners Ricardo Abcede, Narciso Nario, Nicasio Conti and Tereso
Javier; and Manuel Andal and Julio Jalandoni, PCGG's nominees to
Philcomsat Holdings Corporation, as well as its directors and officers,
petitioners in G.R. No. 174177, are ordered to comply with
the Subpoenae Ad Testificandum issued by respondent Senate Committees
directing them to appear and testify in public hearings relative to Senate
Resolution No. 455.
SO ORDERED.
Panganiban, C.J., Puno, Quisumbing, Ynares-Santiago, Carpio, Austria-
Martinez, Corona, Carpio Morales, Callejo, Sr., Azcuna, Chico-Nazario,
Tinga, Garcia, and Velasco, JJ., concur.
G.R. No. 180643 March 25, 2008
ROMULO L. NERI, petitioner,
vs.
SENATE COMMITTEE ON ACCOUNTABILITY OF PUBLIC OFFICERS
AND INVESTIGATIONS, SENATE COMMITTEE ON TRADE AND
COMMERCE, AND SENATE COMMITTEE ON NATIONAL DEFENSE AND
SECURITY, respondents.
DECISION
LEONARDO-DE CASTRO, J.:
At bar is a petition for certiorari under Rule 65 of the Rules of Court
assailing the show cause Letter1 dated November 22, 2007 and contempt
Order2 dated January 30, 2008 concurrently issued by respondent
Senate Committees on Accountability of Public Officers and
Investigations,3 Trade and Commerce,4 and National Defense and
Security5 against petitioner Romulo L. Neri, former Director General of the
National Economic and Development Authority (NEDA).
The facts, as culled from the pleadings, are as follows:
On April 21, 2007, the Department of Transportation and Communication
(DOTC) entered into a contract with Zhong Xing Telecommunications
Equipment (ZTE) for the supply of equipment and services for the National
Broadband Network (NBN) Project in the amount of U.S. $ 329,481,290
(approximately P16 Billion Pesos). The Project was to be financed by the
People's Republic of China.
In connection with this NBN Project, various Resolutions were introduced in
the Senate, as follows:
(1) P.S. Res. No. 127, introduced by Senator Aquilino Q.
Pimentel, Jr., entitled RESOLUTION DIRECTING THE BLUE RIBBON
COMMITTEE AND THE COMMITTEE ON TRADE AND INDUSTRY TO
INVESTIGATE, IN AID OF LEGISLATION, THE CIRCUMSTANCES
LEADING TO THE APPROVAL OF THE BROADBAND CONTRACT
WITH ZTE AND THE ROLE PLAYED BY THE OFFICIALS CONCERNED
IN GETTING IT CONSUMMATED AND TO MAKE
RECOMMENDATIONS TO HALE TO THE COURTS OF LAW THE
PERSONS RESPONSIBLE FOR ANY ANOMALY IN CONNECTION
THEREWITH AND TO PLUG THE LOOPHOLES, IF ANY IN THE BOT
LAW AND OTHER PERTINENT LEGISLATIONS.
(2) P.S. Res. No. 144, introduced by Senator Mar Roxas, entitled
Á RESOLUTION URGING PRESIDENT GLORIA MACAPAGAL
ARROYO TO DIRECT THE CANCELLATION OF THE ZTE CONTRACT
(3) P.S. Res. No. 129, introduced by Senator Panfilo M. Lacson,
entitled RESOLUTION DIRECTING THE COMMITTEE ON NATIONAL
DEFENSE AND SECURITY TO CONDUCT AN INQUIRY IN AID OF
 LEGISLATION INTO THE NATIONAL SECURITY IMPLICATIONS OF
AWARDING THE NATIONAL BROADBAND NETWORK CONTRACT TO
THE CHINESE FIRM ZHONG XING TELECOMMUNICATIONS
EQUIPMENT COMPANY LIMITED (ZTE CORPORATION) WITH THE
END IN VIEW OF PROVIDING REMEDIAL LEGISLATION THAT WILL
PROTECT OUR NATIONAL SOVEREIGNTY, SECURITY AND
TERRITORIAL INTEGRITY.
(4) P.S. Res. No. 136, introduced by Senator Miriam Defensor
Santiago, entitled RESOLUTION DIRECTING THE PROPER SENATE
COMMITTEE TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION,
ON THE LEGAL AND ECONOMIC JUSTIFICATION OF THE
NATIONAL BROADBAND NETWORK (NBN) PROJECT OF THE
NATIONAL GOVERNMENT.
At the same time, the investigation was claimed to be relevant to the
consideration of three (3) pending bills in the Senate, to wit:
1. Senate Bill No. 1793, introduced by Senator Mar Roxas,
entitled AN ACT SUBJECTING TREATIES, INTERNATIONAL OR
EXECUTIVE AGREEMENTS INVOLVING FUNDING IN THE
PROCUREMENT OF INFRASTRUCTURE PROJECTS, GOODS, AND
CONSULTING SERVICES TO BE INCLUDED IN THE SCOPE AND
APPLICATION OF PHILIPPINE PROCUREMENT LAWS, AMENDING
FOR THE PURPOSE REPUBLIC ACT NO. 9184, OTHERWISE KNOWN
AS THE GOVERNMENT PROCUREMENT REFORM ACT, AND FOR
OTHER PURPOSES;
2. Senate Bill No. 1794, introduced by Senator Mar Roxas,
entitled AN ACT IMPOSING SAFEGUARDS IN CONTRACTING
LOANS CLASSIFIED AS OFFICIAL DEVELOPMENT ASSISTANCE,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 8182, AS
AMENDED BY REPUBLIC ACT NO. 8555, OTHERWISE KNOWN AS
THE OFFICIAL DEVELOPMENT ASSISTANCE ACT OF 1996, AND
FOR OTHER PURPOSES; and
3. Senate Bill No. 1317, introduced by Senator Miriam Defensor
Santiago, entitled AN ACT MANDATING CONCURRENCE TO
INTERNATIONAL AGREEMENTS AND EXECUTIVE AGREEMENTS.
Respondent Committees initiated the investigation by sending invitations to
certain personalities and cabinet officials involved in the NBN Project.
Petitioner was among those invited. He was summoned to appear and
testify on September 18, 20, and 26 and October 25, 2007. However, he
attended only the September 26 hearing, claiming he was "out of town"
during the other dates.
In the September 18, 2007 hearing, businessman Jose de Venecia III
testified that several high executive officials and power brokers were using
their influence to push the approval of the NBN Project by the NEDA. It
appeared that the Project was initially approved as a Build-Operate-
Transfer (BOT) project but, on March 29, 2007, the NEDA acquiesced to
convert it into a government-to-government project, to be financed
through a loan from the Chinese Government.
On September 26, 2007, petitioner testified before respondent Committees
for eleven (11) hours. He disclosed that then Commission on Elections
(COMELEC) Chairman Benjamin Abalos offered him P200 Million in
exchange for his approval of the NBN Project. He further narrated that he
informed President Arroyo about the bribery attempt and that she
instructed him not to accept the bribe. However, when probed further on
what they discussed about the NBN Project, petitioner refused to answer,
invoking "executive privilege". In particular, he refused to answer the
questions on (a) whether or not President Arroyo followed up the NBN
Project,6 (b) whether or not she directed him to prioritize it,7 and (c)
whether or not she directed him to approve.8
Unrelenting, respondent Committees issued a Subpoena Ad
Testificandum to petitioner, requiring him to appear and testify on
November 20, 2007.
However, in the Letter dated November 15, 2007, Executive Secretary
Eduardo R. Ermita requested respondent Committees to dispense with
petitioner's testimony on the ground of executive privilege. The pertinent
portion of the letter reads:
With reference to the subpoena ad testificandum issued to
Secretary Romulo Neri to appear and testify again on 20
November 2007 before the Joint Committees you chair, it will be
recalled that Sec. Neri had already testified and exhaustively
discussed the ZTE / NBN project, including his conversation with
the President thereon last 26 September 2007.
Asked to elaborate further on his conversation with the President,
Sec. Neri asked for time to consult with his superiors in line with
the ruling of the Supreme Court in Senate v. Ermita, 488 SCRA 1
(2006).
Specifically, Sec. Neri sought guidance on the possible invocation
of executive privilege on the following questions, to wit:
a) Whether the President followed up the (NBN)
project?
b) Were you dictated to prioritize the ZTE?
c) Whether the President said to go ahead and
approve the project after being told about the
alleged bribe?
Following the ruling in Senate v. Ermita, the foregoing questions
fall under conversations and correspondence between the
President and public officials which are considered executive
privilege (Almonte v. Vasquez, G.R. 95637, 23 May 1995; Chavez
v. PEA, G.R. 133250, July 9, 2002). Maintaining the confidentiality
of conversations of the President is necessary in the exercise of
her executive and policy decision making process. The expectation
of a President to the confidentiality of her conversations and
correspondences, like the value which we accord deference for the
privacy of all citizens, is the necessity for protection of the public
interest in candid, objective, and even blunt or harsh opinions in
Presidential decision-making. Disclosure of conversations of the
President will have a chilling effect on the President, and will
hamper her in the effective discharge of her duties and
responsibilities, if she is not protected by the confidentiality of her
conversations.
The context in which executive privilege is being invoked is that
the information sought to be disclosed might impair our diplomatic
as well as economic relations with the People's Republic of China.
Given the confidential nature in which these information were
conveyed to the President, he cannot provide the Committee any
further details of these conversations, without disclosing the very
thing the privilege is designed to protect.
In light of the above considerations, this Office is constrained to
invoke the settled doctrine of executive privilege as refined
in Senate v. Ermita, and has advised Secretary Neri accordingly.
Considering that Sec. Neri has been lengthily interrogated on the
subject in an unprecedented 11-hour hearing, wherein he has
answered all questions propounded to him except the foregoing
questions involving executive privilege, we therefore request that
his testimony on 20 November 2007 on the ZTE / NBN project be
dispensed with.
On November 20, 2007, petitioner did not appear before respondent
Committees. Thus, on November 22, 2007, the latter issued the show
cause Letter requiring him to explain why he should not be cited in
contempt. The Letter reads:
Since you have failed to appear in the said hearing, the
Committees on Accountability of Public Officers and Investigations
(Blue Ribbon), Trade and Commerce and National Defense and
Security require you to show cause why you should not be cited in
contempt under Section 6, Article 6 of the Rules of the Committee
on Accountability of Public Officers and Investigations (Blue
Ribbon).
The Senate expects your explanation on or before 2 December
2007.
On November 29, 2007, petitioner replied to respondent Committees,
manifesting that it was not his intention to ignore the Senate hearing and
that he thought the only remaining questions were those he claimed to be
covered by executive privilege, thus:
It was not my intention to snub the last Senate hearing. In fact, I
have cooperated with the task of the Senate in its inquiry in aid of
legislation as shown by my almost 11 hours stay during the
hearing on 26 September 2007. During said hearing, I answered
all the questions that were asked of me, save for those which I
thought was covered by executive privilege, and which was
confirmed by the Executive Secretary in his Letter 15 November
2007. In good faith, after that exhaustive testimony, I thought
that what remained were only the three questions, where the
Executive Secretary claimed executive privilege. Hence, his
request that my presence be dispensed with.
Be that as it may, should there be new matters that were not yet
taken up during the 26 September 2007 hearing, may I be
furnished in advance as to what else I need to clarify, so that as a
resource person, I may adequately prepare myself.
In addition, petitioner submitted a letter prepared by his counsel, Atty.
Antonio R. Bautista, stating, among others that: (1) his (petitioner) non-
appearance was upon the order of the President; and (2) his conversation
with President Arroyo dealt with delicate and sensitive national security and
diplomatic matters relating to the impact of the bribery scandal involving
high government officials and the possible loss of confidence of foreign
investors and lenders in the Philippines. The letter ended with a reiteration
of petitioner's request that he "be furnished in advance" as to what else he
needs to clarify so that he may adequately prepare for the hearing.
In the interim, on December 7, 2007, petitioner filed with this Court the
present petition for certiorari assailing the show cause Letter dated
November 22, 2007.
Respondent Committees found petitioner's explanations unsatisfactory.
Without responding to his request for advance notice of the matters that he
should still clarify, they issued the Order dated January 30, 2008, citing
him in contempt of respondent Committees and ordering his arrest and
detention at the Office of the Senate Sergeant-At-Arms until such time that
he would appear and give his testimony. The said Order states:
ORDER
For failure to appear and testify in the Committee's hearing on
Tuesday, September 18, 2007; Thursday, September 20, 2007;
Thursday, October 25, 2007; and Tuesday, November 20, 2007,
despite personal notice and Subpoenas Ad Testificandum sent to
and received by him, which thereby delays, impedes and
obstructs, as it has in fact delayed, impeded and obstructed the
inquiry into the subject reported irregularities, AND for failure to
explain satisfactorily why he should not be cited for contempt
(Neri letter of 29 November 2007), herein attached) ROMULO L.
NERI is hereby cited in contempt of this (sic) Committees
and ordered arrested and detained in the Office of the
Senate Sergeant-At-Arms until such time that he will
appear and give his testimony.
The Sergeant-At-Arms is hereby directed to carry out and
implement this Order and make a return hereof within twenty four
(24) hours from its enforcement.
SO ORDERED.
On the same date, petitioner moved for the reconsideration of the above
Order.9 He insisted that he has not shown "any contemptible conduct
worthy of contempt and arrest." He emphasized his willingness to testify on
new matters, however, respondent Committees did not respond to his
request for advance notice of questions. He also mentioned the petition
for certiorari he filed on December 7, 2007. According to him, this should
restrain respondent Committees from enforcing the show cause Letter
"through the issuance of declaration of contempt" and arrest.
In view of respondent Committees' issuance of the contempt Order,
petitioner filed on February 1, 2008 a Supplemental Petition for
Certiorari (With Urgent Application for TRO/Preliminary Injunction), seeking
to restrain the implementation of the said contempt Order.
On February 5, 2008, the Court issued a Status Quo Ante Order (a)
enjoining respondent Committees from implementing their contempt Order,
(b) requiring the parties to observe the status quo prevailing prior to the
issuance of the assailed order, and (c) requiring respondent Committees to
file their comment.
Petitioner contends that respondent Committees' show cause Letter and
contempt Order were issued with grave abuse of discretion amounting to
lack or excess of jurisdiction. He stresses that his conversations with
President Arroyo are "candid discussions meant to explore options in
making policy decisions." According to him, these discussions "dwelt on
the impact of the bribery scandal involving high government
officials on the country's diplomatic relations and economic and
military affairs and the possible loss of confidence of foreign
investors and lenders in the Philippines." He also emphasizes that his
claim of executive privilege is upon the order of the President and within
the parameters laid down in Senate v. Ermita10 and United States v.
Reynolds.11Lastly, he argues that he is precluded from disclosing
communications made
to him in official confidence under Section 712 of Republic Act No. 6713,
otherwise known as Code of Conduct and Ethical Standards for Public
Officials and Employees, and Section 2413 (e) of Rule 130 of the Rules of
Court.
Respondent Committees assert the contrary. They argue that (1)
petitioner's testimony is material and pertinent in the investigation
conducted in aid of legislation; (2) there is no valid justification for
petitioner to claim executive privilege; (3) there is no abuse of their
authority to order petitioner's arrest; and (4) petitioner has not come to
court with clean hands.
In the oral argument held last March 4, 2008, the following issues were
ventilated:
1. What communications between the President and petitioner
Neri are covered by the principle of 'executive privilege'?
 1.a Did Executive Secretary Ermita correctly invoke the
principle of executive privilege, by order of the President,
to cover (i) conversations of the President in the exercise
of her executive and policy decision-making
and (ii) information, which might impair our diplomatic
as well as economic relations with the People's Republic
of China?
1.b. Did petitioner Neri correctly invoke executive
privilege to avoid testifying on his conversations with the
President on the NBN contract on his assertions that the
said conversations "dealt with delicate and sensitive
national security and diplomatic matters relating to
the impact of bribery scandal involving high
government officials and the possible loss of
confidence of foreign investors and lenders in the
Philippines" x x x within the principles laid down in
Senate v. Ermita (488 SCRA 1 [2006])?
1.c Will the claim of executive privilege in this case
violate the following provisions of the Constitution:
Sec. 28, Art. II (Full public disclosure of all
transactions involving public interest)
Sec. 7, Art. III (The right of the people to
information on matters of public concern)
Sec. 1, Art. XI (Public office is a public trust)
Sec. 17, Art. VII (The President shall ensure
that the laws be faithfully executed)
and the due process clause and the principle of separation of
powers?
2. What is the proper procedure to be followed in invoking
executive privilege?
3. Did the Senate Committees gravely abuse their discretion in
ordering the arrest of petitioner for non-compliance with the
subpoena?
After the oral argument, the parties were directed to manifest to the Court
within twenty-four (24) hours if they are amenable to the Court's proposal
of allowing petitioner to immediately resume his testimony before the
Senate Committees to answer the other questions of the Senators without
prejudice to the decision on the merits of this pending petition. It was
understood that petitioner may invoke executive privilege in the course of
the Senate Committees proceedings, and if the respondent Committees
disagree thereto, the unanswered questions will be the subject of a
supplemental pleading to be resolved along with the three (3) questions
subject of the present petition.14 At the same time, respondent Committees
were directed to submit several pertinent documents.15
The Senate did not agree with the proposal for the reasons stated in the
Manifestation dated March 5, 2008. As to the required documents, the
Senate and respondent Committees manifested that they would not be able
to submit the latter's "Minutes of all meetings" and the "Minute Book"
because it has never been the "historical and traditional legislative practice
to keep them."16 They instead submitted the Transcript of Stenographic
Notes of respondent Committees' joint public hearings.
On March 17, 2008, the Office of the Solicitor General (OSG) filed a Motion
for Leave to Intervene and to Admit Attached Memorandum, founded on
the following arguments:
(1) The communications between petitioner and the President are
covered by the principle of "executive privilege."
(2) Petitioner was not summoned by respondent Senate
Committees in accordance with the law-making body's power to
conduct inquiries in aid of legislation as laid down in Section 21,
Article VI of the Constitution and Senate v. Ermita.
(3) Respondent Senate Committees gravely abused its discretion
for alleged non-compliance with the Subpoena dated November
13, 2007.
The Court granted the OSG's motion the next day, March 18, 2008.
As the foregoing facts unfold, related events transpired.
On March 6, 2008, President Arroyo issued Memorandum Circular No. 151,
revoking Executive Order No. 464 and Memorandum Circular No. 108. She
advised executive officials and employees to follow and abide by the
Constitution, existing laws and jurisprudence, including, among others, the
case of Senate v. Ermita17 when they are invited to legislative inquiries in
aid of legislation.
At the core of this controversy are the two (2) crucial queries, to wit:
First, are the communications elicited by the subject three (3)
questions covered by executive privilege?
And second, did respondent Committees commit grave abuse of
discretion in issuing the contempt Order?
We grant the petition.
At the outset, a glimpse at the landmark case of Senate v.
Ermita18 becomes imperative. Senate draws in bold strokes the distinction
between the legislative and oversight powers of the Congress, as
embodied under Sections 21 and 22, respectively, of Article VI of the
Constitution, to wit:
SECTION 21. The Senate or the House of Representatives or any
of its respective committees may conduct inquiries in aid of
legislation in accordance with its duly published rules of
procedure. The rights of persons appearing in or affected by such
inquiries shall be respected.
SECTION 22. The heads of department may upon their own
initiative, with the consent of the President, or upon the request of
either House, or as the rules of each House shall provide, appear
before and be heard by such House on any matter pertaining to
their departments. Written questions shall be submitted to the
President of the Senate or the Speaker of the House of
Representatives at least three days before their scheduled
appearance. Interpellations shall not be limited to written
questions, but may cover matters related thereto. When the
security of the state or the public interest so requires and the
President so states in writing, the appearance shall be conducted
in executive session.
Senate cautions that while the above provisions are closely related and
complementary to each other, they should not be considered as pertaining
to the same power of Congress. Section 21 relates to the power to conduct
inquiries in aid of legislation. Its aim is to elicit information that may be
used for legislation. On the other hand, Section 22 pertains to the power to
conduct a question hour, the objective of which is to obtain information in
pursuit of Congress' oversight function.19 Simply stated, while both powers
allow Congress or any of its committees to conduct inquiry,
their objectives are different.
This distinction gives birth to another distinction with regard to the use of
compulsory process. Unlike in Section 21, Congress cannot compel the
appearance of executive officials under Section 22. The Court's
pronouncement in Senate v. Ermita20 is clear:
When Congress merely seeks to be informed on how department
heads are implementing the statutes which it has issued, its right
to such information is not as imperative as that of the President to
whom, as Chief Executive, such department heads must give a
report of their performance as a matter of duty. In such instances,
Section 22, in keeping with the separation of powers, states that
Congress may only request their appearance. Nonetheless, when
the inquiry in which Congress requires their appearance is 'in aid
of legislation' under Section 21, the appearance is mandatory for
the same reasons stated in Arnault.
In fine, the oversight function of Congress may be
facilitated by compulsory process only to the extent that it
is performed in pursuit of legislation. This is consistent with
the intent discerned from the deliberations of the Constitutional
Commission
Ultimately, the power of Congress to compel the appearance of
executive officials under section 21 and the lack of it under
Section 22 find their basis in the principle of separation of powers.
While the executive branch is a co-equal branch of the legislature,
it cannot frustrate the power of Congress to legislate by refusing
to comply with its demands for information. (Emphasis supplied.)
The availability of the power of judicial review to resolve the issues raised
in this case has also been settled in Senate v. Ermita, when it held:
As evidenced by the American experience during the so-called
"McCarthy era," however, the right of Congress to conduct
inquiries in aid of legislation is, in theory, no less susceptible to
abuse than executive or judicial power. It may thus be subjected
to judicial review pursuant to the Court's certiorari powers under
Section 1, Article VIII of the Constitution.
Hence, this decision.
 I The Nixon and post-Watergate cases established the broad contours of
The Communications Elicited by the Three (3) Questions are
Covered by Executive Privilege
We start with the basic premises where the parties have conceded.
The power of Congress to conduct inquiries in aid of legislation is broad.
This is based on the proposition that a legislative body cannot legislate
wisely or effectively in the absence of information respecting the conditions
which the legislation is intended to affect or change.21 Inevitably, adjunct
thereto is the compulsory process to enforce it. But, the power, broad as it
is, has limitations. To be valid, it is imperative that it is done in accordance
with the Senate or House duly published rules of procedure and that the
rights of the persons appearing in or affected by such inquiries be
respected.
The power extends even to executive officials and the only way for them to
be exempted is through a valid claim of executive privilege.22 This directs
us to the consideration of the question -- is there a recognized claim of
executive privilege despite the revocation of E.O. 464?
A- There is a Recognized Claim
of Executive Privilege Despite the
Revocation of E.O. 464
At this juncture, it must be stressed that the revocation of E.O. 464 does
not in any way diminish our concept of executive privilege. This is because
this concept has Constitutional underpinnings. Unlike the United States
which has further accorded the concept with statutory status by enacting
the Freedom of Information Act23 and the Federal Advisory Committee
Act,24 the Philippines has retained its constitutional origination, occasionally
interpreted only by this Court in various cases. The most recent of these is
the case of Senate v. Ermita where this Court declared unconstitutional
substantial portions of E.O. 464. In this regard, it is worthy to note that
Executive Ermita's Letter dated November 15, 2007 limits its bases for the
claim of executive privilege to Senate v. Ermita, Almonte v.
Vasquez,25 and Chavez v. PEA.26 There was never a mention of E.O. 464.
While these cases, especially Senate v. Ermita,27 have comprehensively
discussed the concept of executive privilege, we deem it imperative to
explore it once more in view of the clamor for this Court to clearly define
the communications covered by executive privilege.
the presidential communications privilege.28 In United States v.
Nixon,29 the U.S. Court recognized a great public interest in preserving
"the confidentiality of conversations that take place in the
President's performance of his official duties." It thus considered
presidential communications as "presumptively privileged." Apparently,
the presumption is founded on the "President's generalized interest in
confidentiality." The privilege is said to be necessary to guarantee the
candor of presidential advisors and to provide "the President and those
who assist him… with freedom to explore alternatives in the
process of shaping policies and making decisions and to do so in a
way many would be unwilling to express except privately."
In In Re: Sealed Case,30 the U.S. Court of Appeals delved deeper. It ruled
that there are two (2) kinds of executive privilege; one is the presidential
communications privilege and, the other is the deliberative process
privilege. The former pertains to "communications, documents or
other materials that reflect presidential decision-making and
deliberations and that the President believes should remain
confidential." The latter includes 'advisory opinions,
recommendations and deliberations comprising part of a process by
which governmental decisions and policies are formulated."
Accordingly, they are characterized by marked distinctions. Presidential
communications privilege applies to decision-making of the
President while, the deliberative process privilege, to decision-
making of executive officials. The first is rooted in the constitutional
principle of separation of power and the President's unique constitutional
role; the second on common law privilege. Unlike the deliberative
process privilege, the presidential communications
privilege applies to documents in their entirety, and covers final and
post-decisional materials as well as pre-deliberative ones31 As a
consequence, congressional or judicial negation of the presidential
communications privilege is always subject to greater scrutiny than
denial of the deliberative process privilege.
Turning on who are the officials covered by the presidential
communications privilege, In Re: Sealed Caseconfines the privilege only
to White House Staff that has "operational proximity" to direct presidential
decision-making. Thus, the privilege is meant to encompass only those
functions that form the core of presidential authority, involving what the
court characterized as "quintessential and non-delegable Presidential
power," such as commander-in-chief power, appointment and removal
power, the power to grant pardons and reprieves, the sole-authority to
receive ambassadors and other public officers, the power to negotiate
treaties, etc.32
The situation in Judicial Watch, Inc. v. Department of Justice33 tested
the In Re: Sealed Case principles. There, while the presidential decision
involved is the exercise of the President's pardon power, a non-delegable,
core-presidential function, the Deputy Attorney General and the Pardon
Attorney were deemed to be too remote from the President and his senior
White House advisors to be protected. The Court conceded that
functionally those officials were performing a task directly related to the
President's pardon power, but concluded that an organizational test was
more appropriate for confining the potentially broad sweep that would
result from the In Re: Sealed Case's functional test. The majority
concluded that, the lesser protections of the deliberative process privilege
would suffice. That privilege was, however, found insufficient to justify the
confidentiality of the 4,341 withheld documents.
But more specific classifications of communications covered by executive
privilege are made in older cases. Courts ruled early that the Executive has
a right to withhold documents that might reveal military or state
secrets,34identity of government informers in some
circumstances,,35 and information related to pending
investigations.36 An area where the privilege is highly revered is
in foreign relations. In United States v. Curtiss-Wright Export Corp.37 the
U.S. Court, citing President George Washington, pronounced:
The nature of foreign negotiations requires caution, and their
success must often depend on secrecy, and even when brought to
a conclusion, a full disclosure of all the measures, demands, or
eventual concessions which may have been proposed or
contemplated would be extremely impolitic, for this might have a
pernicious influence on future negotiations or produce immediate
inconveniences, perhaps danger and mischief, in relation to other
powers. The necessity of such caution and secrecy was one cogent
reason for vesting the power of making treaties in the President,
with the advice and consent of the Senate, the principle on which
the body was formed confining it to a small number of members.
To admit, then, a right in the House of Representatives to demand
and to have as a matter of course all the papers respecting a
negotiation with a foreign power would be to establish a
dangerous precedent.
Majority of the above jurisprudence have found their way in our
jurisdiction. In Chavez v. PCGG38, this Court held that there is a
"governmental privilege against public disclosure with respect to state
secrets regarding military, diplomatic and other security matters."
In Chavez v. PEA,39 there is also a recognition of the confidentiality of
Presidential conversations, correspondences, and discussions in closed-
door Cabinet meetings. In Senate v. Ermita, the concept of presidential
communications privilege is fully discussed.
As may be gleaned from the above discussion, the claim of executive
privilege is highly recognized in cases where the subject of inquiry relates
to a power textually committed by the Constitution to the President, such
as the area of military and foreign relations. Under our Constitution, the
President is the repository of the commander-in-
chief,40appointing,41 pardoning,42 and diplomatic43 powers. Consistent with
the doctrine of separation of powers, the information relating to these
powers may enjoy greater confidentiality than others.
The above cases, especially, Nixon, In Re Sealed Case and Judicial Watch,
somehow provide the elements of presidential communications
privilege, to wit:
1) The protected communication must relate to a "quintessential
and non-delegable presidential power."
2) The communication must be authored or "solicited and
received" by a close advisor of the President or the President
himself. The judicial test is that an advisor must be in "operational
proximity" with the President.
3) The presidential communications privilege remains a
qualified privilege that may be overcome by a showing of
adequate need, such that the information sought "likely contains
important evidence" and by the unavailability of the information
elsewhere by an appropriate investigating authority.44
In the case at bar, Executive Secretary Ermita premised his claim of
executive privilege on the ground that the communications elicited by the
three (3) questions "fall under conversation and correspondence between
the President and public officials" necessary in "her executive and policy
decision-making process" and, that "the information sought to be disclosed
might impair our diplomatic as well as economic relations with the People's
Republic of China." Simply put, the bases are presidential
communications privilege and executive privilege on matters relating
to diplomacy or foreign relations.
Using the above elements, we are convinced that, indeed, the
communications elicited by the three (3) questions are covered by
the presidential communications privilege. First, the communications
relate to a "quintessential and non-delegable power" of the President, i.e.
the power to enter into an executive agreement with other countries. This
authority of the President to enter into executive agreements without the
concurrence of the Legislature has traditionally been recognized in
Philippine jurisprudence.45 Second, the communications are "received" by
a close advisor of the President. Under the "operational proximity" test,
petitioner can be considered a close advisor, being a member of President
Arroyo's cabinet. And third, there is no adequate showing of a compelling
need that would justify the limitation of the privilege and of
the unavailability of the information elsewhere by an appropriate
investigating authority.
The third element deserves a lengthy discussion.
United States v. Nixon held that a claim of executive privilege is subject
to balancing against other interest. In other words, confidentiality in
executive privilege is not absolutely protected by the Constitution. The
U.S. Court held:
[N]either the doctrine of separation of powers, nor the need for
confidentiality of high-level communications, without more, can
sustain an absolute, unqualified Presidential privilege of immunity
from judicial process under all circumstances.
The foregoing is consistent with the earlier case of Nixon v. Sirica,46 where
it was held that presidential communications are presumptively
privileged and that the presumption can be overcome only by mere
showing of public need by the branch seeking access to conversations. The
courts are enjoined to resolve the competing interests of the political
branches of the government "in the manner that preserves the essential
functions of each Branch."47 Here, the record is bereft of any categorical
explanation from respondent Committees to show a compelling or citical
need for the answers to the three (3) questions in the enactment of a law.
Instead, the questions veer more towards the exercise of the legislative
oversight function under Section 22 of Article VI rather than Section 21 of
the same Article. Senate v. Ermita ruled that the "the oversight function
of Congress may be facilitated by compulsory process only to the
extent that it is performed in pursuit of legislation." It is conceded
that it is difficult to draw the line between an inquiry in aid of
legislation and an inquiry in the exercise of oversight function of Congress.
In this regard, much will depend on the content of the questions and the
manner the inquiry is conducted.
Respondent Committees argue that a claim of executive privilege does not
guard against a possible disclosure of a crime or wrongdoing. We see no
dispute on this. It is settled in United States v. Nixon48 that "demonstrated,
specific need for evidence in pending criminal trial" outweighs the
President's "generalized interest in confidentiality." However, the present
case's distinction with the Nixon case is very evident. In Nixon, there is a
pending criminal proceeding where the information is requested and it is
the demands of due process of law and the fair administration of criminal
justice that the information be disclosed. This is the reason why the U.S.
Court was quick to "limit the scope of its decision." It stressed that it is
"not concerned here with the balance between the President's
generalized interest in confidentiality x x x and congressional
demands for information." Unlike in Nixon, the information here is
elicited, not in a criminal proceeding, but in a legislative inquiry. In this
regard, Senate v. Ermita stressed that the validity of the claim of executive
privilege depends not only on the ground invoked but, also, on
the procedural setting or the context in which the claim is made.
Furthermore, in Nixon, the President did not interpose any claim of need to
protect military, diplomatic or sensitive national security secrets. In the
present case, Executive Secretary Ermita categorically claims executive
privilege on the grounds of presidential communications privilege in
relation to her executive and policy decision-making process and diplomatic
secrets.
The respondent Committees should cautiously tread into the investigation
of matters which may present a conflict of interest that may provide a
ground to inhibit the Senators participating in the inquiry if later on an
impeachment proceeding is initiated on the same subject matter of the
present Senate inquiry. Pertinently, in Senate Select Committee on
Presidential Campaign Activities v. Nixon,49 it was held that since an
impeachment proceeding had been initiated by a House Committee, the
Senate Select Committee's immediate oversight need for five presidential
tapes should give way to the House Judiciary Committee which has the
constitutional authority to inquire into presidential impeachment. The Court
expounded on this issue in this wise:
It is true, of course, that the Executive cannot, any more than the
other branches of government, invoke a general confidentiality
privilege to shield its officials and employees from investigations
by the proper governmental institutions into possible criminal
wrongdoing. The Congress learned this as to its own privileges
in Gravel v. United States, as did the judicial branch, in a sense,
in Clark v. United States, and the executive branch itself in Nixon
v. Sirica. But under Nixon v. Sirica, the showing required to
overcome the presumption favoring confidentiality turned,
not on the nature of the presidential conduct that the subpoenaed
material might reveal, but, instead, on the nature and
appropriateness of the function in the performance of
which the material was sought, and the degree to which
the material was necessary to its fulfillment. Here also our
task requires and our decision implies no judgment
whatever concerning possible presidential involvement in events; Congress frequently legislates on the basis of conflicting
culpable activity. On the contrary, we think the sufficiency information provided in its hearings. In contrast, the responsibility
of the Committee's showing must depend solely on whether of the grand jury turns entirely on its ability to determine whether
the subpoenaed evidence is demonstrably critical to the there is probable cause to believe that certain named individuals
responsible fulfillment of the Committee's functions. did or did not commit specific crimes. If, for example, as in Nixon
v. Sirica, one of those crimes is perjury concerning the content of
certain conversations, the grand jury's need for the most precise
In its initial briefs here, the Committee argued that it has shown
evidence, the exact text of oral statements recorded in their
exactly this. It contended that resolution, on the basis of the
original form, is undeniable. We see no comparable need in
subpoenaed tapes, of the conflicts in the testimony before it
the legislative process, at least not in the circumstances of
'would aid in a determination whether legislative involvement in
this case. Indeed, whatever force there might once have been in
political campaigns is necessary' and 'could help engender the
the Committee's argument that the subpoenaed materials are
public support needed for basic reforms in our electoral system.'
necessary to its legislative judgments has been substantially
Moreover, Congress has, according to the Committee, power to
undermined by subsequent events. (Emphasis supplied)
oversee the operations of the executive branch, to investigate
instances of possible corruption and malfeasance in office, and to
expose the results of its investigations to public view. The Respondent Committees further contend that the grant of petitioner's claim
Committee says that with respect to Watergate-related matters, of executive privilege violates the constitutional provisions on the right of
this power has been delegated to it by the Senate, and that to the people to information on matters of public concern.50 We might have
exercise its power responsibly, it must have access to the agreed with such contention if petitioner did not appear before them at all.
subpoenaed tapes. But petitioner made himself available to them during the September 26
hearing, where he was questioned for eleven (11) hours. Not only that, he
expressly manifested his willingness to answer more questions from the
We turn first to the latter contention. In the circumstances of this
Senators, with the exception only of those covered by his claim of
case, we need neither deny that the Congress may have, quite
executive privilege.
apart from its legislative responsibilities, a general oversight
power, nor explore what the lawful reach of that power might be
under the Committee's constituent resolution. Since passage of The right to public information, like any other right, is subject to limitation.
that resolution, the House Committee on the Judiciary has begun Section 7 of Article III provides:
an inquiry into presidential impeachment. The investigative
authority of the Judiciary Committee with respect to presidential
The right of the people to information on matters of public concern
conduct has an express constitutional source. x x x We have
shall be recognized. Access to official records, and to documents,
been shown no evidence indicating that Congress itself
and papers pertaining to official acts, transactions, or decisions, as
attaches any particular value to this interest. In these
well as to government research data used as basis for policy
circumstances, we think the need for the tapes premised
development, shall be afforded the citizen, subject to such
solely on an asserted power to investigate and inform
limitations as may be provided by law.
cannot justify enforcement of the Committee's subpoena.

The provision itself expressly provides the limitation, i.e. as may be

The sufficiency of the Committee's showing of need has come to
provided by law. Some of these laws are Section 7 of Republic Act (R.A.)
depend, therefore, entirely on whether the subpoenaed materials
No. 6713,51 Article 22952 of the Revised Penal Code, Section 3 (k)53 of R.A.
are critical to the performance of its legislative functions. There is
No. 3019, and Section 24(e)54 of Rule 130 of the Rules of Court. These are
a clear difference between Congress' legislative tasks and the
in addition to what our body of jurisprudence classifies as confidential55 and
responsibility of a grand jury, or any institution engaged in like
what our Constitution considers as belonging to the larger concept of
functions. While fact-finding by a legislative committee is
executive privilege. Clearly, there is a recognized public interest in the
undeniably a part of its task, legislative judgments
confidentiality of certain information. We find the information subject of
normally depend more on the predicted consequences of
this case belonging to such kind.
proposed legislative actions and their political
acceptability, than on precise reconstruction of past
More than anything else, though, the right of Congress or any of its
Committees to obtain information in aid of legislation cannot be equated
with the people's right to public information. The former cannot claim that
every legislative inquiry is an exercise of the people's right to information.
The distinction between such rights is laid down in Senate v. Ermita:
There are, it bears noting, clear distinctions between the right of
Congress to information which underlies the power of inquiry and
the right of people to information on matters of public concern.
For one, the demand of a citizen for the production of documents
pursuant to his right to information does not have the same
obligatory force as a subpoena duces tecum issued by Congress.
Neither does the right to information grant a citizen the power to
exact testimony from government officials. These powers belong
only to Congress, not to an individual citizen.
Thus, while Congress is composed of representatives
elected by the people, it does not follow, except in a highly
qualified sense, that in every exercise of its power of
inquiry, the people are exercising their right to
information.
The members of respondent Committees should not invoke as justification
in their exercise of power a right properly belonging to the people in
general. This is because when they discharge their power, they do so as
public officials and members of Congress. Be that as it may, the right to
information must be balanced with and should give way, in appropriate
cases, to constitutional precepts particularly those pertaining to delicate
interplay of executive-legislative powers and privileges which is the subject
of careful review by numerous decided cases.
B- The Claim of Executive Privilege
is Properly Invoked
We now proceed to the issue -- whether the claim is properly invoked
by the President. Jurisprudence teaches that for the claim to be properly
invoked, there must be a formal claim of privilege, lodged by the head of
the department which has control over the matter."56 A formal and proper
claim of executive privilege requires a "precise and certain reason" for
preserving their confidentiality.57
The Letter dated November 17, 2007 of Executive Secretary Ermita
satisfies the requirement. It serves as the formal claim of privilege. There,
he expressly states that "this Office is constrained to invoke the
settled doctrine of executive privilege as refined in Senate v.
Ermita, and has advised Secretary Neri accordingly." Obviously, he is
referring to the Office of the President. That is more than enough
compliance. In Senate v. Ermita, a less categorical letter was even
adjudged to be sufficient.
With regard to the existence of "precise and certain reason," we find the
grounds relied upon by Executive Secretary Ermita specific enough so as
not "to leave respondent Committees in the dark on how the requested
information could be classified as privileged." The case of Senate v.
Ermita only requires that an allegation be made "whether the information
demanded involves military or diplomatic secrets, closed-door Cabinet
meetings, etc." The particular ground must only be specified. The
enumeration is not even intended to be comprehensive."58 The following
statement of grounds satisfies the requirement:
The context in which executive privilege is being invoked is that
the information sought to be disclosed might impair our diplomatic
as well as economic relations with the People's Republic of China.
Given the confidential nature in which these information were
conveyed to the President, he cannot provide the Committee any
further details of these conversations, without disclosing the very
thing the privilege is designed to protect.
At any rate, as held further in Senate v. Ermita, 59 the Congress must not
require the executive to state the reasons for the claim with such
particularity as to compel disclosure of the information which the privilege
is meant to protect. This is a matter of respect to a coordinate and co-
equal department.
II
Respondent Committees Committed Grave Abuse of Discretion
in Issuing the Contempt Order
Grave abuse of discretion means "such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or, in other words where
the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility and it must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law."60
It must be reiterated that when respondent Committees issued the show
cause Letter dated November 22, 2007, petitioner replied immediately,
manifesting that it was not his intention to ignore the Senate hearing and
that he thought the only remaining questions were the three (3) questions
he claimed to be covered by executive privilege. In addition thereto, he
submitted Atty. Bautista's letter, stating that his non-appearance was upon
the order of the President and specifying the reasons why his conversations
with President Arroyo are covered by executive privilege. Both
correspondences include an expression of his willingness to testify
again, provided he "be furnished in advance" copies of the
questions. Without responding to his request for advance list of questions,
respondent Committees issued the Order dated January 30, 2008, citing
him in contempt of respondent Committees and ordering his arrest and
detention at the Office of the Senate Sergeant-At-Arms until such time that
he would appear and give his testimony. Thereupon, petitioner filed a
motion for reconsideration, informing respondent Committees that he had
filed the present petition for certiorari.
Respondent Committees committed grave abuse of discretion in issuing the
contempt Order in view of five (5) reasons.
First, there being a legitimate claim of executive privilege, the issuance of
the contempt Order suffers from constitutional infirmity.
Second, respondent Committees did not comply with the requirement laid
down in Senate v. Ermita that the invitations should contain the "possible
needed statute which prompted the need for the inquiry," along with "the
usual indication of the subject of inquiry and the questions relative to and
in furtherance thereof." Compliance with this requirement is imperative,
both under Sections 21 and 22 of Article VI of the Constitution. This must
be so to ensure that the rights of both persons appearing in or
affected by such inquiry are respected as mandated by said Section 21
and by virtue of the express language of Section 22. Unfortunately, despite
petitioner's repeated demands, respondent Committees did not send him
an advance list of questions.
Third, a reading of the transcript of respondent Committees' January 30,
2008 proceeding reveals that only a minority of the members of the Senate
Blue Ribbon Committee was present during the deliberation. 61 Section 18
of the Rules of Procedure Governing Inquiries in Aid of Legislation provides
that:
"The Committee, by a vote of majority of all its members, may
punish for contempt any witness before it who disobeys any order
of the Committee or refuses to be sworn or to testify or to answer
proper questions by the Committee or any of its members."
Clearly, the needed vote is a majority of all the members of the
Committee. Apparently, members who did not actually participate in the
deliberation were made to sign the contempt Order. Thus, there is a cloud
of doubt as to the validity of the contempt Order dated January 30, 2008.
We quote the pertinent portion of the transcript, thus:
THE CHAIRMAN (SEN. CAYETANO, A). For clarification. x x x
The Chair will call either a caucus or will ask the Committee
on Rules if there is a problem. Meaning, if we do not have
the sufficient numbers. But if we have a sufficient number,
we will just hold a caucus to be able to implement that
right away because…Again, our Rules provide that any one
held in contempt and ordered arrested, need the
concurrence of a majority of all members of the said
committee and we have three committees conducting this.
So thank you very much to the members…
SEN. PIMENTEL. Mr. Chairman.
THE CHAIRMAN (SEN. CAYETANO,A). May I recognize the
Minority Leader and give him the floor, Senator Pimentel.
SEN. PIMENTEL. Mr. Chairman, there is no problem, I think,
with consulting the other committees. But I am of the
opinion that the Blue Ribbon Committee is the lead
committee, and therefore, it should have preference in
enforcing its own decisions. Meaning to say, it is not
something that is subject to consultation with other
committees. I am not sure that is the right interpretation. I
think that once we decide here, we enforce what we
decide, because otherwise, before we know it, our
determination is watered down by delay and, you know, the
so-called "consultation" that inevitably will have to take
place if we follow the premise that has been explained.
So my suggestion, Mr. Chairman, is the Blue Ribbon Committee
should not forget it's the lead committee here, and therefore, the
will of the lead committee prevails over all the other, you, know
reservations that other committees might have who are only
secondary or even tertiary committees, Mr. Chairman.
THE CHAIRMAN (SEN. CAYETANO, A.) Thank you very much to
the Minority Leader. And I agree with the wisdom of his
statements. I was merely mentioning that under Section 6 of the
Rules of the Committee and under Section 6, "The Committee by a
vote of a majority of all its members may punish for contempt any push for this and show the executive branch that the well-decided
witness before it who disobeys any order of the Committee." – the issue has been decided upon the Sabio versus Gordon case.
And it's very clear that we are all allowed to call witnesses. And if
they refure or they disobey not only can we cite them in contempt
So the Blue Ribbon Committee is more than willing to take that
and have them arrested. x x x 62
responsibility. But we only have six members here today, I
am the seventh as chair and so we have not met that
number. So I am merely stating that, sir, that when we will Fourth, we find merit in the argument of the OSG that respondent
prepare the documentation, if a majority of all members sign and Committees likewise violated Section 21 of Article VI of the Constitution,
I am following the Sabio v. Gordon rule wherein I do believe, if I requiring that the inquiry be in accordance with the "duly published rules
am not mistaken, Chairman Gordon prepared the documentation of procedure." We quote the OSG's explanation:
and then either in caucus or in session asked the other members
to sign. And once the signatures are obtained, solely for the
The phrase 'duly published rules of procedure' requires the Senate
purpose that Secretary Neri or Mr. Lozada will not be able to
of every Congress to publish its rules of procedure governing
legally question our subpoena as being insufficient in accordance
inquiries in aid of legislation because every Senate is distinct from
with law.
the one before it or after it. Since Senatorial elections are held
every three (3) years for one-half of the Senate's membership,
SEN. PIMENTEL. Mr. Chairman, the caution that the chair is the composition of the Senate also changes by the end of each
suggesting is very well-taken. But I'd like to advert to the fact that term. Each Senate may thus enact a different set of rules as it
the quorum of the committee is only two as far as I remember. may deem fit. Not having published its Rules of Procedure,
Any two-member senators attending a Senate committee hearing the subject hearings in aid of legislation conducted by the
provide that quorum, and therefore there is more than a quorum 14th Senate, are therefore, procedurally infirm.
demanded by our Rules as far as we are concerned now, and
acting as Blue Ribbon Committee, as Senator Enrile pointed out.
And fifth, respondent Committees' issuance of the contempt Order is
In any event, the signatures that will follow by the additional
arbitrary and precipitate. It must be pointed out that respondent
members will only tend to strengthen the determination of this
Committees did not first pass upon the claim of executive privilege and
Committee to put its foot forward – put down on what is
inform petitioner of their ruling. Instead, they curtly dismissed his
happening in this country, Mr. Chairman, because it really looks
explanation as "unsatisfactory" and simultaneously issued the Order citing
terrible if the primary Committee of the Senate, which is the Blue
him in contempt and ordering his immediate arrest and detention.
Ribbon Committee, cannot even sanction people who openly defy,
you know, the summons of this Committee. I know that the Chair
is going through an agonizing moment here. I know that. But A fact worth highlighting is that petitioner is not an unwilling witness.
nonetheless, I think we have to uphold, you know, the institution He manifested several times his readiness to testify before respondent
that we are representing because the alternative will be a disaster Committees. He refused to answer the three (3) questions because he was
for all of us, Mr. Chairman. So having said that, I'd like to ordered by the President to claim executive privilege. It behooves
reiterate my point. respondent Committees to first rule on the claim of executive privilege and
inform petitioner of their finding thereon, instead of peremptorily
dismissing his explanation as "unsatisfactory." Undoubtedly, respondent
THE CHAIRMAN (SEN. CAYETANO, A.) First of all, I agree 100
Committees' actions constitute grave abuse of discretion for being arbitrary
percent with the intentions of the Minority Leader. But let me
and for denying petitioner due process of law. The same quality afflicted
very respectfully disagree with the legal requirements.
their conduct when they (a) disregarded petitioner's motion for
Because, yes, we can have a hearing if we are only two but
reconsideration alleging that he had filed the present petition before this
both under Section 18 of the Rules of the Senate and under
Court and (b) ignored petitioner's repeated request for an advance list of
Section 6 of the Rules of the Blue Ribbon Committee, there
questions, if there be any aside from the three (3) questions as to which he
is a need for a majority of all members if it is a case of
claimed to be covered by executive privilege.
contempt and arrest. So, I am simply trying to avoid the court
rebuking the Committee, which will instead of strengthening will
weaken us. But I do agree, Mr. Minority Leader, that we should
Even the courts are repeatedly advised to exercise the power of contempt
judiciously and sparingly with utmost self-restraint with the end in view of
utilizing the same for correction and preservation of the dignity of the
court, not for retaliation or vindication.63 Respondent Committees should
have exercised the same restraint, after all petitioner is not even an
ordinary witness. He holds a high position in a co-equal branch of
government.
In this regard, it is important to mention that many incidents of judicial
review could have been avoided if powers are discharged with
circumspection and deference. Concomitant with the doctrine of separation
of powers is the mandate to observe respect to a co-equal branch of the
government.
One last word.
The Court was accused of attempting to abandon its constitutional duty
when it required the parties to consider a proposal that would lead to a
possible compromise. The accusation is far from the truth. The Court did
so, only to test a tool that other jurisdictions find to be effective in settling
similar cases, to avoid a piecemeal consideration of the questions for
review and to avert a constitutional crisis between the executive and
legislative branches of government.
In United States v. American Tel. & Tel Co.,64 the court refrained from
deciding the case because of its desire to avoid a resolution that might
disturb the balance of power between the two branches and inaccurately
reflect their true needs. Instead, it remanded the record to the District
Court for further proceedings during which the parties are required to
negotiate a settlement. In the subsequent case of United States v.
American Tel. &Tel Co.,65 it was held that "much of this spirit of
compromise is reflected in the generality of language found in the
Constitution." It proceeded to state:
is enhanced by the mutual accommodation required by the
separation of powers."
In rendering this decision, the Court emphasizes once more that the basic
principles of constitutional law cannot be subordinated to the needs of a
particular situation. As magistrates, our mandate is to rule objectively and
dispassionately, always mindful of Mr. Justice Holmes' warning on the
dangers inherent in cases of this nature, thus:
"some accident of immediate and overwhelming interest…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."66
In this present crusade to "search for truth," we should turn to the
fundamental constitutional principles which underlie our tripartite system of
government, where the Legislature enacts the law, the Judiciary interprets
it and the Executive implements it. They are considered separate, co-equal,
coordinate and supreme within their respective spheres but, imbued with a
system of checks and balances to prevent unwarranted exercise of power.
The Court's mandate is to preserve these constitutional principles at all
times to keep the political branches of government within constitutional
bounds in the exercise of their respective powers and prerogatives, even if
it be in the search for truth. This is the only way we can preserve the
stability of our democratic institutions and uphold the Rule of Law.
WHEREFORE, the petition is hereby GRANTED. The subject Order
dated January 30, 2008, citing petitioner Romulo L. Neri in contempt of the
Senate Committees and directing his arrest and detention, is hereby
nullified.
SO ORDERED.

Under this view, the coordinate branches do not exist in an

exclusively adversary relationship to one another when a conflict
in authority arises. Rather each branch should take cognizance of
an implicit constitutional mandate to seek optimal accommodation
through a realistic evaluation of the needs of the conflicting
branches in the particular fact situation.

It thereafter concluded that: "The Separation of Powers often impairs

efficiency, in terms of dispatch and the immediate functioning of
government. It is the long-term staying power of government that
G.R. No. 170338 December 23, 2008 contained the President’s instructions to COMELEC Commissioner Virgilio
Garcillano to manipulate in her favor results of the 2004 presidential
elections. These recordings were to become the subject of heated
VIRGILIO O. GARCILLANO, petitioner,
legislative hearings conducted separately by committees of both Houses of
vs.
Congress.1
THE HOUSE OF REPRESENTATIVES COMMITTEES ON PUBLIC
INFORMATION, PUBLIC ORDER AND SAFETY, NATIONAL DEFENSE
AND SECURITY, INFORMATION AND COMMUNICATIONS In the House of Representatives (House), on June 8, 2005, then Minority
TECHNOLOGY, and SUFFRAGE AND ELECTORAL Floor Leader Francis G. Escudero delivered a privilege speech, "Tale of Two
REFORMS, respondents. Tapes," and set in motion a congressional investigation jointly conducted
by the Committees on Public Information, Public Order and Safety, National
Defense and Security, Information and Communications Technology, and
x----------------------x
Suffrage and Electoral Reforms (respondent House Committees). During
the inquiry, several versions of the wiretapped conversation emerged. But
G.R. No. 179275 December 23, 2008 on July 5, 2005, National Bureau of Investigation (NBI) Director Reynaldo
Wycoco, Atty. Alan Paguia and the lawyer of former NBI Deputy Director
SANTIAGO JAVIER RANADA and OSWALDO D. Samuel Ong submitted to the respondent House Committees seven alleged
AGCAOILI, petitioners, "original" tape recordings of the supposed three-hour taped conversation.
vs. After prolonged and impassioned debate by the committee members on the
THE SENATE OF THE REPUBLIC OF THE PHILIPPINES, admissibility and authenticity of the recordings, the tapes were eventually
REPRESENTED BY THE SENATE PRESIDENT THE HONORABLE played in the chambers of the House.2
MANUEL VILLAR, respondents.
On August 3, 2005, the respondent House Committees decided to suspend
x----------------------x the hearings indefinitely. Nevertheless, they decided to prepare committee
reports based on the said recordings and the testimonies of the resource
persons.3
MAJ. LINDSAY REX SAGGE, petitioner-in-intervention

Alarmed by these developments, petitioner Virgilio O. Garcillano

x----------------------x (Garcillano) filed with this Court a Petition for Prohibition and Injunction,
with Prayer for Temporary Restraining Order and/or Writ of Preliminary
AQUILINO Q. PIMENTEL, JR., BENIGNO NOYNOY C. AQUINO, Injunction4docketed as G.R. No. 170338. He prayed that the respondent
RODOLFO G. BIAZON, PANFILO M. LACSON, LOREN B. LEGARDA, House Committees be restrained from using these tape recordings of the
M.A. JAMBY A.S. MADRIGAL, and ANTONIO F. "illegally obtained" wiretapped conversations in their committee reports
TRILLANES, respondents-intervenors and for any other purpose. He further implored that the said recordings
and any reference thereto be ordered stricken off the records of the
inquiry, and the respondent House Committees directed to desist from
DECISION further using the recordings in any of the House proceedings.5

NACHURA, J.:
More than three years ago, tapes ostensibly containing a wiretapped
conversation purportedly between the President of the Philippines and a
high-ranking official of the Commission on Elections (COMELEC) surfaced.
They captured unprecedented public attention and thrust the country into a
controversy that placed the legitimacy of the present administration on the
line, and resulted in the near-collapse of the Arroyo government. The
tapes, notoriously referred to as the "Hello Garci" tapes, allegedly
Without reaching its denouement, the House discussion and debates on the
"Garci tapes" abruptly stopped.
After more than two years of quiescence, Senator Panfilo Lacson roused
the slumbering issue with a privilege speech, "The Lighthouse That Brought
Darkness." In his discourse, Senator Lacson promised to provide the public
"the whole unvarnished truth – the what’s, when’s, where’s, who’s and
why’s" of the alleged wiretap, and sought an inquiry into the perceived
willingness of telecommunications providers to participate in nefarious
wiretapping activities.
On motion of Senator Francis Pangilinan, Senator Lacson’s speech was
referred to the Senate Committee on National Defense and Security,
chaired by Senator Rodolfo Biazon, who had previously filed two
bills6 seeking to regulate the sale, purchase and use of wiretapping
equipment and to prohibit the Armed Forces of the Philippines (AFP) from
performing electoral duties.7
In the Senate’s plenary session the following day, a lengthy debate ensued
when Senator Richard Gordon aired his concern on the possible
transgression of Republic Act (R.A.) No. 42008 if the body were to conduct
a legislative inquiry on the matter. On August 28, 2007, Senator Miriam
Defensor-Santiago delivered a privilege speech, articulating her considered
view that the Constitution absolutely bans the use, possession, replay or
communication of the contents of the "Hello Garci" tapes. However, she
recommended a legislative investigation into the role of the Intelligence
Service of the AFP (ISAFP), the Philippine National Police or other
government entities in the alleged illegal wiretapping of public officials.9
On September 6, 2007, petitioners Santiago Ranada and Oswaldo Agcaoili,
retired justices of the Court of Appeals, filed before this Court a Petition for
Prohibition with Prayer for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction,10 docketed as G.R. No. 179275,
seeking to bar the Senate from conducting its scheduled legislative inquiry.
They argued in the main that the intended legislative inquiry violates R.A.
No. 4200 and Section 3, Article III of the Constitution.11
As the Court did not issue an injunctive writ, the Senate proceeded with its
public hearings on the "Hello Garci" tapes on September 7,12 1713 and
October 1,14 2007.
Intervening as respondents,15 Senators Aquilino Q. Pimentel, Jr., Benigno
Noynoy C. Aquino, Rodolfo G. Biazon, Panfilo M. Lacson, Loren B. Legarda,
M.A. Jamby A.S. Madrigal and Antonio F. Trillanes filed their Comment16 on
the petition on September 25, 2007.
The Court subsequently heard the case on oral argument.17
On October 26, 2007, Maj. Lindsay Rex Sagge, a member of the ISAFP and
one of the resource persons summoned by the Senate to appear and testify
at its hearings, moved to intervene as petitioner in G.R. No. 179275.18
On November 20, 2007, the Court resolved to consolidate G.R. Nos.
170338 and 179275.19
It may be noted that while both petitions involve the "Hello Garci"
recordings, they have different objectives–the first is poised at preventing
the playing of the tapes in the House and their subsequent inclusion in the
committee reports, and the second seeks to prohibit and stop the conduct
of the Senate inquiry on the wiretapped conversation.
The Court dismisses the first petition, G.R. No. 170338, and grants the
second, G.R. No. 179275.
-I-
Before delving into the merits of the case, the Court shall first resolve the
issue on the parties’ standing, argued at length in their pleadings.
In Tolentino v. COMELEC,20 we explained that "‘[l]egal standing’ or locus
standi refers to a personal and substantial interest in a case such that the
party has sustained or will sustain direct injury because of the challenged
governmental act x x x," thus,
generally, a party will be allowed to litigate only when (1) he can
show that he has personally suffered some actual or threatened
injury because of the allegedly illegal conduct of the government;
(2) the injury is fairly traceable to the challenged action; and (3)
the injury is likely to be redressed by a favorable action.21
The gist of the question of standing is whether a party has "alleged such a
personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional
questions."22
However, considering that locus standi is a mere procedural technicality,
the Court, in recent cases, has relaxed the stringent direct injury
test. David v. Macapagal-Arroyo23 articulates that a "liberal policy has been
observed, allowing ordinary citizens, members of Congress, and civic
organizations to prosecute actions involving the constitutionality or validity
of laws, regulations and rulings."24 The fairly recent Chavez v.
Gonzales25 even permitted a non-member of the broadcast media, who
failed to allege a personal stake in the outcome of the controversy, to
challenge the acts of the Secretary of Justice and the National
Telecommunications Commission. The majority, in the said case, echoed
the current policy that "this Court has repeatedly and consistently refused
to wield procedural barriers as impediments to its addressing and resolving
serious legal questions that greatly impact on public interest, in keeping
with the Court’s duty under the 1987 Constitution to determine whether or
not other branches of government have kept themselves within the limits
of the Constitution and the laws, and that they have not abused the
discretion given to them."26
In G.R. No. 170338, petitioner Garcillano justifies his standing to initiate
the petition by alleging that he is the person alluded to in the "Hello Garci"
tapes. Further, his was publicly identified by the members of the
respondent committees as one of the voices in the recordings.27 Obviously,
therefore, petitioner Garcillano stands to be directly injured by the House
committees’ actions and charges of electoral fraud. The Court recognizes
his standing to institute the petition for prohibition.
In G.R. No. 179275, petitioners Ranada and Agcaoili justify their standing
by alleging that they are concerned citizens, taxpayers, and members of
the IBP. They are of the firm conviction that any attempt to use the "Hello
Garci" tapes will further divide the country. They wish to see the legal and
proper use of public funds that will necessarily be defrayed in the ensuing
public hearings. They are worried by the continuous violation of the laws
and individual rights, and the blatant attempt to abuse constitutional
processes through the conduct of legislative inquiries purportedly in aid of
legislation.28
Intervenor Sagge alleges violation of his right to due process considering
that he is summoned to attend the Senate hearings without being apprised
not only of his rights therein through the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation, but also of the intended
legislation which underpins the investigation. He further intervenes as a
taxpayer bewailing the useless and wasteful expenditure of public funds
involved in the conduct of the questioned hearings.29
Given that petitioners Ranada and Agcaoili allege an interest in the
execution of the laws and that intervenor Sagge asserts his constitutional
right to due process,30 they satisfy the requisite personal stake in the
outcome of the controversy by merely being citizens of the Republic.
Following the Court’s ruling in Francisco, Jr. v. The House of
Representatives,31 we find sufficient petitioners Ranada’s and Agcaoili’s and
intervenor Sagge’s allegation that the continuous conduct by the Senate of
the questioned legislative inquiry will necessarily involve the expenditure of
public funds.32 It should be noted that in Francisco, rights personal to then
Chief Justice Hilario G. Davide, Jr. had been injured by the alleged
unconstitutional acts of the House of Representatives, yet the Court
granted standing to the petitioners therein for, as in this case, they
invariably invoked the vindication of their own rights–as taxpayers,
members of Congress, citizens, individually or in a class suit, and members
of the bar and of the legal profession–which were also supposedly violated
by the therein assailed unconstitutional acts.33
Likewise, a reading of the petition in G.R. No. 179275 shows that the
petitioners and intervenor Sagge advance constitutional issues which
deserve the attention of this Court in view of their seriousness, novelty and
weight as precedents. The issues are of transcendental and paramount
importance not only to the public but also to the Bench and the Bar, and
should be resolved for the guidance of all.34
Thus, in the exercise of its sound discretion and given the liberal attitude it
has shown in prior cases climaxing in the more recent case of Chavez, the
Court recognizes the legal standing of petitioners Ranada and Agcaoili and
intervenor Sagge.
- II -
The Court, however, dismisses G.R. No. 170338 for being moot and
academic. Repeatedly stressed in our prior decisions is the principle that
the exercise by this Court of judicial power is limited to the determination
and resolution of actual cases and controversies.35 By actual cases, we
mean existing conflicts appropriate or ripe for judicial determination, not
conjectural or anticipatory, for otherwise the decision of the Court will
amount to an advisory opinion. The power of judicial inquiry does not
extend to hypothetical questions because any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions
unrelated to actualities.36 Neither will the Court determine a moot question
in a case in which no practical relief can be granted. A case becomes moot
when its purpose has become stale.37 It is unnecessary to indulge in
academic discussion of a case presenting a moot question as a judgment
thereon cannot have any practical legal effect or, in the nature of things,
cannot be enforced.38
In G.R. No. 170338, petitioner Garcillano implores from the Court, as
aforementioned, the issuance of an injunctive writ to prohibit the
respondent House Committees from playing the tape recordings and from
including the same in their committee report. He likewise prays that the
said tapes be stricken off the records of the House proceedings. But the
Court notes that the recordings were already played in the House and
heard by its members.39 There is also the widely publicized fact that the
committee reports on the "Hello Garci" inquiry were completed and
submitted to the House in plenary by the respondent committees.40 Having
been overtaken by these events, the Garcillano petition has to be
dismissed for being moot and academic. After all, prohibition is a
preventive remedy to restrain the doing of an act about to be done, and
not intended to provide a remedy for an act already accomplished.41
- III -
As to the petition in G.R. No. 179275, the Court grants the same. The
Senate cannot be allowed to continue with the conduct of the questioned
legislative inquiry without duly published rules of procedure, in clear
derogation of the constitutional requirement.
Section 21, Article VI of the 1987 Constitution explicitly provides that
"[t]he Senate or the House of Representatives, or any of its respective
committees may conduct inquiries in aid of legislation in accordance with
its duly published rules of procedure." The requisite of publication of the
rules is intended to satisfy the basic requirements of due
process.42 Publication is indeed imperative, for it will be the height of
injustice to punish or otherwise burden a citizen for the transgression of a
law or rule of which he had no notice whatsoever, not even a constructive
one.43What constitutes publication is set forth in Article 2 of the Civil Code,
which provides that "[l]aws shall take effect after 15 days following the
completion of their publication either in the Official Gazette, or in a
newspaper of general circulation in the Philippines."44
The respondents in G.R. No. 179275 admit in their pleadings and even on
oral argument that the Senate Rules of Procedure Governing Inquiries in
Aid of Legislation had been published in newspapers of general circulation
only in 1995 and in 2006.45 With respect to the present Senate of the
14th Congress, however, of which the term of half of its members
commenced on June 30, 2007, no effort was undertaken for the publication
of these rules when they first opened their session.
Recently, the Court had occasion to rule on this very same question.
In Neri v. Senate Committee on Accountability of Public Officers and
Investigations,46 we said:
Fourth, we find merit in the argument of the OSG that
respondent Committees likewise violated Section 21 of Article VI
of the Constitution, requiring that the inquiry be in accordance
with the "duly published rules of procedure." We quote the
OSG’s explanation:
The phrase "duly published rules of procedure" requires
the Senate of every Congress to publish its rules of
procedure governing inquiries in aid of legislation
because every Senate is distinct from the one before it or
after it. Since Senatorial elections are held every three
(3) years for one-half of the Senate’s membership, the
composition of the Senate also changes by the end of
each term. Each Senate may thus enact a different set of
rules as it may deem fit. Not having published
its Rules of Procedure, the subject hearings in aid
of legislation conducted by the 14th Senate, are
therefore, procedurally infirm.
Justice Antonio T. Carpio, in his Dissenting and Concurring Opinion,
reinforces this ruling with the following rationalization:
The present Senate under the 1987 Constitution is no longer a
continuing legislative body. The present Senate has twenty-four
members, twelve of whom are elected every three years for a
term of six years each. Thus, the term of twelve Senators expires
every three years, leaving less than a majority of Senators to
continue into the next Congress. The 1987 Constitution, like
the 1935 Constitution, requires a majority of Senators to
"constitute a quorum to do business." Applying the same
reasoning in Arnault v. Nazareno, the Senate under the 1987
Constitution is not a continuing body because less than majority of
the Senators continue into the next Congress. The consequence is
that the Rules of Procedure must be republished by the Senate
after every expiry of the term of twelve Senators.47
The subject was explained with greater lucidity in our Resolution48 (On the
Motion for Reconsideration) in the same case, viz.:
On the nature of the Senate as a "continuing body," this Court
sees fit to issue a clarification. Certainly, there is no debate that
the Senate as an institution is "continuing," as it is not dissolved
as an entity with each national election or change in the
composition of its members. However, in the conduct of its day-
to-day business the Senate of each Congress acts separately and
independently of the Senate of the Congress before it. The Rules
of the Senate itself confirms this when it states:
RULE XLIV
UNFINISHED BUSINESS
 SEC. 123. Unfinished business at the end of the session
shall be taken up at the next session in the same status.
All pending matters and proceedings shall
terminate upon the expiration of one (1) Congress,
but may be taken by the succeeding Congress as if
present for the first time.
Undeniably from the foregoing, all pending matters and
proceedings, i.e., unpassed bills and even legislative
investigations, of the Senate of a particular Congress are
considered terminated upon the expiration of that Congress and
it is merely optional on the Senate of the succeeding Congress to
take up such unfinished matters, not in the same status, but as
if presented for the first time. The logic and practicality of such
a rule is readily apparent considering that the Senate of the
succeeding Congress (which will typically have a different
composition as that of the previous Congress) should not be
bound by the acts and deliberations of the Senate of which they
had no part. If the Senate is a continuing body even with respect
to the conduct of its business, then pending matters will not be
deemed terminated with the expiration of one Congress but will,
as a matter of course, continue into the next Congress with the
same status.
This dichotomy of the continuity of the Senate as an institution
and of the opposite nature of the conduct of its business is
reflected in its Rules. The Rules of the Senate (i.e. the Senate’s
main rules of procedure) states:
RULE LI
AMENDMENTS TO, OR REVISIONS OF, THE RULES
SEC. 136. At the start of each session in which the
Senators elected in the preceding elections shall begin
their term of office, the President may endorse the Rules
to the appropriate committee for amendment or revision.
The Rules may also be amended by means of a motion
which should be presented at least one day before its
consideration, and the vote of the majority of the
Senators present in the session shall be required for its
approval.
RULE LII
DATE OF TAKING EFFECT
SEC. 137. These Rules shall take effect on the date of
their adoption and shall remain in force until they are
amended or repealed.
Section 136 of the Senate Rules quoted above takes into account
the new composition of the Senate after an election and the
possibility of the amendment or revision of the Rules at the start
of each session in which the newly elected Senators shall begin
their term.
However, it is evident that the Senate has determined that its
main rules are intended to be valid from the date of their adoption
until they are amended or repealed. Such language is
conspicuously absent from the Rules. The Rules simply state
"(t)hese Rules shall take effect seven (7) days after publication in
two (2) newspapers of general circulation." The latter does not
explicitly provide for the continued effectivity of such rules until
they are amended or repealed. In view of the difference in the
language of the two sets of Senate rules, it cannot be presumed
that the Rules (on legislative inquiries) would continue into the
next Congress. The Senate of the next Congress may easily adopt
different rules for its legislative inquiries which come within the
rule on unfinished business.
The language of Section 21, Article VI of the Constitution requiring
that the inquiry be conducted in accordance with the duly
published rules of procedure is categorical. It is incumbent upon
the Senate to publish the rules for its legislative inquiries in each
Congress or otherwise make the published rules clearly state that
the same shall be effective in subsequent Congresses or until they
are amended or repealed to sufficiently put public on notice.
If it was the intention of the Senate for its present rules on
legislative inquiries to be effective even in the next Congress, it
could have easily adopted the same language it had used in its
main rules regarding effectivity.
Respondents justify their non-observance of the constitutionally mandated
publication by arguing that the rules have never been amended since 1995
and, despite that, they are published in booklet form available to anyone
for free, and accessible to the public at the Senate’s internet web page.49
The Court does not agree. The absence of any amendment to the rules
cannot justify the Senate’s defiance of the clear and unambiguous
language of Section 21, Article VI of the Constitution. The organic law
instructs, without more, that the Senate or its committees may conduct
inquiries in aid of legislation only in accordance with duly published rules of
procedure, and does not make any distinction whether or not these rules
have undergone amendments or revision. The constitutional mandate to
publish the said rules prevails over any custom, practice or tradition
followed by the Senate.
issues of Manila Bulletin and Malaya. While we take judicial notice of this
fact, the recent publication does not cure the infirmity of the inquiry sought
to be prohibited by the instant petitions. Insofar as the consolidated cases
are concerned, the legislative investigation subject thereof still could not be
undertaken by the respondent Senate Committees, because no published
rules governed it, in clear contravention of the Constitution.
With the foregoing disquisition, the Court finds it unnecessary to discuss
the other issues raised in the consolidated petitions.

Justice Carpio’s response to the same argument raised by the respondents

WHEREFORE, the petition in G.R. No. 170338 is DISMISSED, and the
is illuminating:
petition in G.R. No. 179275 is GRANTED. Let a writ of prohibition be issued
enjoining the Senate of the Republic of the Philippines and/or any of its
The publication of the Rules of Procedure in the website of the committees from conducting any inquiry in aid of legislation centered on
Senate, or in pamphlet form available at the Senate, is not the "Hello Garci" tapes.
sufficient under the Tañada v. Tuvera ruling which requires
publication either in the Official Gazette or in a newspaper of
SO ORDERED.
general circulation. The Rules of Procedure even provide that the
rules "shall take effect seven (7) days after publication in two (2)
newspapers of general circulation," precluding any other form of
publication. Publication in accordance with Tañada is mandatory to
comply with the due process requirement because the Rules of
Procedure put a person’s liberty at risk. A person who violates
the Rules of Procedure could be arrested and detained by the
Senate.

The invocation by the respondents of the provisions of R.A. No.

8792,50 otherwise known as the Electronic Commerce Act of 2000, to
support their claim of valid publication through the internet is all the more
incorrect. R.A. 8792 considers an electronic data message or an electronic
document as the functional equivalent of a written document only
for evidentiary purposes.51 In other words, the law merely recognizes the
admissibility in evidence (for their being the original) of electronic data
messages and/or electronic documents.52 It does not make the internet a
medium for publishing laws, rules and regulations.

Given this discussion, the respondent Senate Committees, therefore, could

not, in violation of the Constitution, use its unpublished rules in the
legislative inquiry subject of these consolidated cases. The conduct of
inquiries in aid of legislation by the Senate has to be deferred until it shall
have caused the publication of the rules, because it can do so only "in
accordance with its duly published rules of procedure."

Very recently, the Senate caused the publication of the Senate Rules of
Procedure Governing Inquiries in Aid of Legislation in the October 31, 2008
 [G.R. NO. 169777* : April 20, 2006]
SENATE OF THE PHILIPPINES, represented by FRANKLIN M.
DRILON, in his capacity as Senate President, JUAN M. FLAVIER, in
his capacity as Senate President Pro Tempore, FRANCIS N.
PANGILINAN, in his capacity as Majority Leader, AQUILINO Q.
PIMENTEL, JR., in his capacity as Minority Leader, SENATORS
RODOLFO G. BIAZON, "COMPANERA" PIA S. CAYETANO, JINGGOY
EJERCITO ESTRADA, LUISA "LOI" EJERCITO ESTRADA, JUAN PONCE
ENRILE, RICHARD J. GORDON, PANFILO M. LACSON, ALFREDO
S.LIM, M. A. MADRIGAL, SERGIO OSMENA III, RALPH G. RECTO, and
MAR ROXAS, Petitioners, v. EDUARDO R. ERMITA, in his capacity as
Executive Secretary and alter-ego of President Gloria Macapagal-
Arroyo, and anyone acting in his stead and in behalf of the
President of the Philippines, Respondents.
[G.R. NO. 169659 : April 20, 2006]
BAYAN MUNA represented by DR. REYNALDO LESACA, JR., Rep.
SATUR OCAMPO, Rep. CRISPIN BELTRAN, Rep. RAFAEL MARIANO,
Rep. LIZA MAZA, Rep. TEODORO CASINO, Rep. JOEL VIRADOR,
COURAGE represented by FERDINAND GAITE, and COUNSELS FOR
THE DEFENSE OF LIBERTIES (CODAL) represented by ATTY.
REMEDIOS BALBIN, Petitioners, v. EDUARDO ERMITA, in his capacity
as Executive Secretary and alter-ego of President Gloria
Macapagal-Arroyo, Respondent.
[G.R. NO. 169660 : April 20, 2006]
FRANCISCO I. CHAVEZ, Petitioner, v. EDUARDO R. ERMITA, in his
capacity as Executive Secretary, AVELINO J. CRUZ, JR., in his
capacity as Secretary of Defense, and GENEROSO S. SENGA, in his
capacity as AFP Chief of Staff, Respondents.
[G.R. NO. 169667 : April 20, 2006]
ALTERNATIVE LAW GROUPS, INC. (ALG), Petitioner, v.HON.
EDUARDO R. ERMITA, in his capacity as Executive
Secretary, Respondent.
[G.R. NO. 169834 : April 20, 2006]
PDP - LABAN, Petitioner, v. EXECUTIVE SECRETARY EDUARDO R.
ERMITA, Respondent.
[G.R. NO. 171246 : April 20, 2006]
JOSE ANSELMO I. CADIZ, FELICIANO M. BAUTISTA, ROMULO R.
RIVERA, JOSE AMOR AMORANDO, ALICIA A. RISOS-VIDAL,
FILEMON C. ABELITA III, MANUEL P. LEGASPI, J. B. JOVY C.
BERNABE, BERNARD L. DAGCUTA, ROGELIO V. GARCIA, and the
INTEGRATED BAR FOR THE PHILIPPINES, Petitioners, v. HON.
EXECUTIVE SECRETARY EDUARDO R. ERMITA, Respondent.
DECISION
CARPIO MORALES, J.:
A transparent government is one of the hallmarks of a truly republican
state. Even in the early history of republican thought, however, it has been
recognized that the head of government may keep certain information
confidential in pursuit of the public interest. Explaining the reason for
vesting executive power in only one magistrate, a distinguished delegate to
the U.S. Constitutional Convention said: "Decision, activity, secrecy, and
dispatch will generally characterize the proceedings of one man, in a much
more eminent degree than the proceedings of any greater number; and in
proportion as the number is increased, these qualities will be diminished."1
History has been witness, however, to the fact that the power to withhold
information lends itself to abuse, hence, the necessity to guard it zealously.
The present consolidated petitions for certiorari and prohibition proffer that
the President has abused such power by issuing Executive Order No. 464
(E.O. 464) last September 28, 2005. They thus pray for its declaration as
null and void for being unconstitutional.
In resolving the controversy, this Court shall proceed with the recognition
that the issuance under review has come from a co-equal branch of
government, which thus entitles it to a strong presumption of
constitutionality. Once the challenged order is found to be indeed violative
of the Constitution, it is duty-bound to declare it so. For the Constitution,
being the highest expression of the sovereign will of the Filipino people,
must prevail over any issuance of the government that contravenes its
mandates.
In the exercise of its legislative power, the Senate of the Philippines,
through its various Senate Committees, conducts inquiries or investigations
in aid of legislation which call for, inter alia, the attendance of officials and
employees of the executive department, bureaus, and offices including
those employed in Government Owned and Controlled Corporations, the
Armed Forces of the Philippines (AFP), and the Philippine National Police
(PNP).
On September 21 to 23, 2005, the Committee of the Senate as a whole
issued invitations to various officials of the Executive Department for them
to appear on September 29, 2005 as resource speakers in a public hearing
on the railway project of the North Luzon Railways Corporation with the
China National Machinery and Equipment Group (hereinafter North Rail
Project). The public hearing was sparked by a privilege speech of Senator
Juan Ponce Enrile urging the Senate to investigate the alleged overpricing
and other unlawful provisions of the contract covering the North Rail
Project.
The Senate Committee on National Defense and Security likewise issued
invitations2 dated September 22, 2005 to the following officials of the AFP:
the Commanding General of the Philippine Army, Lt. Gen. Hermogenes C.
Esperon; Inspector General of the AFP Vice Admiral Mateo M. Mayuga;
Deputy Chief of Staff for Intelligence of the AFP Rear Admiral Tirso R.
Danga; Chief of the Intelligence Service of the AFP Brig. Gen. Marlu Q.
Quevedo; Assistant Superintendent of the Philippine Military Academy
(PMA) Brig. Gen. Francisco V. Gudani; and Assistant Commandant, Corps
of Cadets of the PMA, Col. Alexander F. Balutan, for them to attend as
resource persons in a public hearing scheduled on September 28, 2005 on
the following: (1) Privilege Speech of Senator Aquilino Q. Pimentel Jr.,
delivered on June 6, 2005 entitled "Bunye has Provided Smoking Gun or
has Opened a Can of Worms that Show Massive Electoral Fraud in the
Presidential Election of May 2005"; (2) Privilege Speech of Senator Jinggoy
E. Estrada delivered on July 26, 2005 entitled "The Philippines as the Wire-
Tapping Capital of the World"; (3) Privilege Speech of Senator Rodolfo
Biazon delivered on August 1, 2005 entitled "Clear and Present Danger";
(4) Senate Resolution No. 285 filed by Senator Maria Ana Consuelo
Madrigal - Resolution Directing the Committee on National Defense and
Security to Conduct an Inquiry, in Aid of Legislation, and in the National
Interest, on the Role of the Military in the So-called "Gloriagate Scandal";
and (5) Senate Resolution No. 295 filed by Senator Biazon - Resolution
Directing the Committee on National Defense and Security to Conduct an
Inquiry, in Aid of Legislation, on the Wire-Tapping of the President of the
Philippines.
Also invited to the above-said hearing scheduled on September 28 2005
was the AFP Chief of Staff, General Generoso S. Senga who, by
letter3 dated September 27, 2005, requested for its postponement "due to
a pressing operational situation that demands [his utmost personal
attention" while "some of the invited AFP officers are currently attending to
other urgent operational matters."
On September 28, 2005, Senate President Franklin M. Drilon received from
Executive Secretary Eduardo R. Ermita a letter4dated September 27, 2005
"respectfully request[ing] for the postponement of the hearing [regarding
the NorthRail project] to which various officials of the Executive
Department have been invited" in order to "afford said officials ample time
and opportunity to study and prepare for the various issues so that they
may better enlighten the Senate Committee on its investigation."
Senate President Drilon, however, wrote5 Executive Secretary Ermita that
the Senators "are unable to accede to [his request]" as it "was sent
belatedly" and "[a]ll preparations and arrangements as well as notices to
all resource persons were completed [the previous] week."
Senate President Drilon likewise received on September 28, 2005 a
letter6 from the President of the North Luzon Railways Corporation Jose L.
Cortes, Jr. requesting that the hearing on the NorthRail project be
postponed or cancelled until a copy of the report of the UP Law Center on
the contract agreements relative to the project had been secured.
On September 28, 2005, the President issued E.O. 464, "Ensuring
Observance of the Principle of Separation of Powers, Adherence to the Rule
on Executive Privilege and Respect for the Rights of Public Officials
Appearing in Legislative Inquiries in Aid of Legislation Under the
Constitution, and For Other Purposes,"7 which, pursuant to Section 6
thereof, took effect immediately. The salient provisions of the Order are as
follows:
SECTION 1. Appearance by Heads of Departments Before Congress. - In
accordance with Article VI, Section 22 of the Constitution and to implement
the Constitutional provisions on the separation of powers between co-equal
branches of the government, all heads of departments of the Executive
Branch of the government shall secure the consent of the President prior to
appearing before either House of Congress.
When the security of the State or the public interest so requires and the
President so states in writing, the appearance shall only be conducted in
executive session.
SECTION. 2. Nature, Scope and Coverage of Executive Privilege.'
(a) Nature and Scope. - The rule of confidentiality based on executive
privilege is fundamental to the operation of government and rooted in the
separation of powers under the Constitution (Almonte v. Vasquez, G.R. No.
95367, 23 May 1995). Further, Republic Act No. 6713 or the Code of
Conduct and Ethical Standards for Public Officials and Employees provides
that Public Officials and Employees shall not use or divulge confidential or
classified information officially known to them by reason of their office and
not made available to the public to prejudice the public interest.
Executive privilege covers all confidential or classified information between
the President and the public officers covered by this executive order,
including:
Conversations and correspondence between the President and the public
official covered by this executive order (Almonte v. Vasquez G.R. No.
95367, 23 May 1995; Chavez v. Public Estates Authority, G.R. No. 133250,
9 July 2002);
Military, diplomatic and other national security matters which in the
interest of national security should not be divulged (Almonte v. Vasquez,
G.R. No. 95367, 23 May 1995; Chavez v. Presidential Commission on Good
Government, G.R. No. 130716, 9 December 1998).
Information between inter-government agencies prior to the conclusion of
treaties and executive agreements (Chavez v. Presidential Commission on
Good Government, G.R. No. 130716, 9 December 1998);
Discussion in close-door Cabinet meetings (Chavez v. Presidential
Commission on Good Government, G.R. No. 130716, 9 December 1998);
Matters affecting national security and public order (Chavez v. Public
Estates Authority, G.R. No. 133250, 9 July 2002).
(b) Who are covered. - The following are covered by this executive order:
Senior officials of executive departments who in the judgment of the
department heads are covered by the executive privilege;
Generals and flag officers of the Armed Forces of the Philippines and such
other officers who in the judgment of the Chief of Staff are covered by the
executive privilege;
Philippine National Police (PNP) officers with rank of chief superintendent or
higher and such other officers who in the judgment of the Chief of the PNP
are covered by the executive privilege;
Senior national security officials who in the judgment of the National
Security Adviser are covered by the executive privilege; andcralawlibrary
Such other officers as may be determined by the President.
SECTION 3. Appearance of Other Public Officials Before Congress. - All
public officials enumerated in Section 2 (b) hereof shall secure prior
consent of the President prior to appearing before either House of Congress
to ensure the observance of the principle of separation of powers,
adherence to the rule on executive privilege and respect for the rights of
public officials appearing in inquiries in aid of legislation. (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
Also on September 28, 2005, Senate President Drilon received from
Executive Secretary Ermita a copy of E.O. 464, and another
letter8 informing him "that officials of the Executive Department invited to
appear at the meeting [regarding the NorthRail project] will not be able to
attend the same without the consent of the President, pursuant to [E.O.
464]" and that "said officials have not secured the required consent from
the President." On even date which was also the scheduled date of the
hearing on the alleged wiretapping, Gen. Senga sent a letter9 to Senator
Biazon, Chairperson of the Committee on National Defense and Security,
informing him "that per instruction of [President Arroyo], thru the
Secretary of National Defense, no officer of the [AFP] is authorized to
appear before any Senate or Congressional hearings without seeking a
written approval from the President" and "that no approval has been
granted by the President to any AFP officer to appear before the public
hearing of the Senate Committee on National Defense and Security
scheduled [on] 28 September 2005."
Despite the communications received from Executive Secretary Ermita and
Gen. Senga, the investigation scheduled by the Committee on National
Defense and Security pushed through, with only Col. Balutan and Brig.
Gen. Gudani among all the AFP officials invited attending.
For defying President Arroyo's order barring military personnel from
testifying before legislative inquiries without her approval, Brig. Gen.
Gudani and Col. Balutan were relieved from their military posts and were
made to face court martial proceedings.
As to the NorthRail project hearing scheduled on September 29, 2005,
Executive Secretary Ermita, citing E.O. 464, sent letter of regrets, in
response to the invitations sent to the following government officials: Light
Railway Transit Authority Administrator Melquiades Robles, Metro Rail
Transit Authority Administrator Roberto Lastimoso, Department of Justice
(DOJ) Chief State Counsel Ricardo V. Perez, then Presidential Legal Counsel
Merceditas Gutierrez, Department of Transportation and Communication
(DOTC) Undersecretary Guiling Mamonding, DOTC Secretary Leandro
Mendoza, Philippine National Railways General Manager Jose Serase II,
Monetary Board Member Juanita Amatong, Bases Conversion Development
Authority Chairperson Gen. Narciso Abaya and Secretary Romulo L.
Neri.10 NorthRail President Cortes sent personal regrets likewise citing E.O.
464.11
On October 3, 2005, three petitions, docketed as G.R. NOS. 169659,
169660, and 169667, for certiorari and prohibition, were filed before this
Court challenging the constitutionality of E.O. 464.
In G.R. No. 169659, petitioners party-list Bayan Muna, House of
Representatives Members Satur Ocampo, Crispin Beltran, Rafael Mariano,
Liza Maza, Joel Virador and Teodoro Casino, Courage, an organization of
government employees, and Counsels for the Defense of Liberties
(CODAL), a group of lawyers dedicated to the promotion of justice,
democracy and peace, all claiming to have standing to file the suit because
of the transcendental importance of the issues they posed, pray, in their
petition that E.O. 464 be declared null and void for being unconstitutional;
that respondent Executive Secretary Ermita, in his capacity as Executive
Secretary and alter-ego of President Arroyo, be prohibited from imposing,
and threatening to impose sanctions on officials who appear before
Congress due to congressional summons. Additionally, petitioners claim
that E.O. 464 infringes on their rights and impedes them from fulfilling
their respective obligations. Thus, Bayan Muna alleges that E.O. 464
infringes on its right as a political party entitled to participate in
governance; Satur Ocampo, et al. allege that E.O. 464 infringes on their
rights and duties as members of Congress to conduct investigation in aid of
legislation and conduct oversight functions in the implementation of laws;
Courage alleges that the tenure of its members in public office is
predicated on, and threatened by, their submission to the requirements of
E.O. 464 should they be summoned by Congress; and CODAL alleges that
its members have a sworn duty to uphold the rule of law, and their rights
to information and to transparent governance are threatened by the
imposition of E.O. 464.
In G.R. No. 169660, petitioner Francisco I. Chavez, claiming that his
constitutional rights as a citizen, taxpayer and law practitioner, are affected
by the enforcement of E.O. 464, prays in his petition that E.O. 464 be
declared null and void for being unconstitutional.
In G.R. No. 169667, petitioner Alternative Law Groups, Inc.12(ALG),
alleging that as a coalition of 17 legal resource non-governmental
organizations engaged in developmental lawyering and work with the poor
and marginalized sectors in different parts of the country, and as an
organization of citizens of the Philippines and a part of the general public, it
has legal standing to institute the petition to enforce its constitutional right
to information on matters of public concern, a right which was denied to
the public by E.O. 464,13 prays, that said order be declared null and void
for being unconstitutional and that respondent Executive Secretary Ermita
be ordered to cease from implementing it.
On October 11, 2005, Petitioner Senate of the Philippines, alleging that it
has a vital interest in the resolution of the issue of the validity of E.O. 464
for it stands to suffer imminent and material injury, as it has already
sustained the same with its continued enforcement since it directly
interferes with and impedes the valid exercise of the Senate's powers and
functions and conceals information of great public interest and concern,
filed its petition for certiorari and prohibition, docketed as G.R. No. 169777
and prays that E.O. 464 be declared unconstitutional.
On October 14, 2005, PDP-Laban, a registered political party with members
duly elected into the Philippine Senate and House of Representatives, filed
a similar petition for certiorariand prohibition, docketed as G.R. No.
169834, alleging that it is affected by the challenged E.O. 464 because it
hampers its legislative agenda to be implemented through its members in
Congress, particularly in the conduct of inquiries in aid of legislation and
transcendental issues need to be resolved to avert a constitutional crisis
between the executive and legislative branches of the government.
Meanwhile, by letter14 dated February 6, 2006, Senator Biazon reiterated
his invitation to Gen. Senga for him and other military officers to attend the
hearing on the alleged wiretapping scheduled on February 10, 2005. Gen.
Senga replied, however, by letter15 dated February 8, 2006, that
"[p]ursuant to Executive Order No. 464, th[e] Headquarters requested for
a clearance from the President to allow [them] to appear before the public
hearing" and that "they will attend once [their] request is approved by the
President." As none of those invited appeared, the hearing on February 10,
2006 was cancelled.16
In another investigation conducted jointly by the Senate Committee on
Agriculture and Food and the Blue Ribbon Committee on the alleged
mismanagement and use of the fertilizer fund under the Ginintuang
Masaganang Ani program of the Department of Agriculture (DA), several
Cabinet officials were invited to the hearings scheduled on October 5 and
26, November 24 and December 12, 2005 but most of them failed to
attend, DA Undersecretary Belinda Gonzales, DA Assistant Secretary Felix
Jose Montes, Fertilizer and Pesticide Authority Executive Director Norlito R.
Gicana,17 and those from the Department of Budget and
Management18having invoked E.O. 464.
In the budget hearings set by the Senate on February 8 and 13, 2006,
Press Secretary and Presidential Spokesperson Ignacio R. Bunye,19 DOJ
Secretary Raul M. Gonzalez20 and Department of Interior and Local
Government Undersecretary Marius P. Corpus21 communicated their
inability to attend due to lack of appropriate clearance from the President
pursuant to E.O. 464. During the February 13, 2005 budget hearing,
however, Secretary Bunye was allowed to attend by Executive Secretary
Ermita.
Petitioners Bayan Muna et al. in G.R. No. 169659, after their motion for
extension to file memorandum27 was granted, subsequently filed a
manifestation28 dated March 14, 2006 that it would no longer file its
memorandum in the interest of having the issues resolved soonest,
prompting this Court to issue a Resolution reprimanding them.29
Petitioners submit that E.O. 464 violates the following constitutional
provisions:

On February 13, 2006, Jose Anselmo I. Cadiz and the incumbent members
Art. VI, Sec. 2130
of the Board of Governors of the Integrated Bar of the Philippines, as
taxpayers, and the Integrated Bar of the Philippines as the official
organization of all Philippine lawyers, all invoking their constitutional right Art. VI, Sec. 2231
to be informed on matters of public interest, filed their petition
for certiorari and prohibition, docketed as G.R. No. 171246, and pray that Art. VI, Sec. 132
E.O. 464 be declared null and void.

Art. XI, Sec. 133

All the petitions pray for the issuance of a Temporary Restraining Order
enjoining respondents from implementing, enforcing, and observing E.O.
464. Art. III, Sec. 734

In the oral arguments on the petitions conducted on February 21, 2006, Art. III, Sec. 435
the following substantive issues were ventilated: (1) whether respondents
committed grave abuse of discretion in implementing E.O. 464 prior to its Art. XIII, Sec. 16 36

publication in the Official Gazette or in a newspaper of general circulation;

and (2) whether E.O. 464 violates the following provisions of the
Constitution: Art. II, Sec. 28, Art. III, Sec. 4, Art. III, Sec. 7, Art. IV. Sec.
1, Art. VI, Sec. 21, Art. VI, Sec. 22, Art. XI, Sec. 1, and Art. XIII, Sec. 16.
The procedural issue of whether there is an actual case or controversy that
calls for judicial review was not taken up; instead, the parties were
instructed to discuss it in their respective memoranda.
Art. II, Sec. 2837
Respondents Executive Secretary Ermita et al., on the other hand, pray in
their consolidated memorandum38 on March 13, 2006 for the dismissal of
the petitions for lack of merit.

After the conclusion of the oral arguments, the parties were directed to The Court synthesizes the issues to be resolved as follows:
submit their respective memoranda, paying particular attention to the
following propositions: (1) that E.O. 464 is, on its face, unconstitutional;
1. Whether E.O. 464 contravenes the power of inquiry vested in Congress;
and (2) assuming that it is not, it is unconstitutional as applied in four
instances, namely: (a) the so called Fertilizer scam; (b) the NorthRail
investigation (c) the Wiretapping activity of the ISAFP; and (d) the 2. Whether E.O. 464 violates the right of the people to information on
investigation on the Venable contract.22 matters of public concern; andcralawlibrary

Petitioners in G.R. No. 16966023 and G.R. No. 16977724 filed their
memoranda on March 7, 2006, while those in G.R. No. 16966725 and G.R.
No. 16983426 filed theirs the next day or on March 8, 2006. Petitioners in
G.R. No. 171246 did not file any memorandum.
3. Whether respondents have committed grave abuse of discretion when
they implemented E.O. 464 prior to its publication in a newspaper of
general circulation.
Essential requisites for judicial review
Before proceeding to resolve the issue of the constitutionality of E.O. 464,
ascertainment of whether the requisites for a valid exercise of the Court's
power of judicial review are present is in order.
Like almost all powers conferred by the Constitution, the power of judicial
review is subject to limitations, to wit: (1) there must be an actual case or
controversy calling for the exercise of judicial power; (2) the person
challenging the act must have standing to challenge the validity of the
subject act or issuance; otherwise stated, he must have a personal and
substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the
issue of constitutionality must be the very lis mota of the case.39
Except with respect to the requisites of standing and existence of an actual
case or controversy where the disagreement between the parties lies,
discussion of the rest of the requisites shall be omitted.
Standing
464, the Senate and its individual members are not the proper parties to
assail the constitutionality of E.O. 464.
Invoking this Court's ruling in National Economic Protectionism Association
v. Ongpin42 and Valmonte v. Philippine Charity Sweepstakes
Office,43 respondents assert that to be considered a proper party, one must
have a personal and substantial interest in the case, such that he has
sustained or will sustain direct injury due to the enforcement of E.O. 464.44
That the Senate of the Philippines has a fundamental right essential not
only for intelligent public decision-making in a democratic system, but
more especially for sound legislation45 is not disputed. E.O. 464, however,
allegedly stifles the ability of the members of Congress to access
information that is crucial to law-making.46 Verily, the Senate, including its
individual members, has a substantial and direct interest over the outcome
of the controversy and is the proper party to assail the constitutionality of
E.O. 464. Indeed, legislators have standing to maintain inviolate the
prerogative, powers and privileges vested by the Constitution in their office
and are allowed to sue to question the validity of any official action which
they claim infringes their prerogatives as legislators.47

Respondents, through the Solicitor General, assert that the allegations in

In the same vein, party-list representatives Satur Ocampo (Bayan Muna),
G.R. NOS. 169659, 169660 and 169667 make it clear that they, adverting
Teodoro Casino (Bayan Muna), Joel Virador (Bayan Muna), Crispin Beltran
to the non-appearance of several officials of the executive department in
(Anakpawis), Rafael Mariano (Anakpawis), and Liza Maza (Gabriela) are
the investigations called by the different committees of the Senate, were
allowed to sue to question the constitutionality of E.O. 464, the absence of
brought to vindicate the constitutional duty of the Senate or its different
any claim that an investigation called by the House of Representatives or
committees to conduct inquiry in aid of legislation or in the exercise of its
any of its committees was aborted due to the implementation of E.O. 464
oversight functions. They maintain that Representatives Ocampo et al.
notwithstanding, it being sufficient that a claim is made that E.O. 464
have not shown any specific prerogative, power, and privilege of the House
infringes on their constitutional rights and duties as members of Congress
of Representatives which had been effectively impaired by E.O. 464, there
to conduct investigation in aid of legislation and conduct oversight
being no mention of any investigation called by the House of
functions in the implementation of laws.
Representatives or any of its committees which was aborted due to the
implementation of E.O. 464.
The national political party, Bayan Muna, likewise meets the standing
requirement as it obtained three seats in the House of Representatives in
As for Bayan Muna's alleged interest as a party-list representing the
the 2004 elections and is, therefore, entitled to participate in the legislative
marginalized and underrepresented, and that of the other petitioner groups
process consonant with the declared policy underlying the party list system
and individuals who profess to have standing as advocates and defenders
of affording citizens belonging to marginalized and underrepresented
of the Constitution, respondents contend that such interest falls short of
sectors, organizations and parties who lack well-defined political
that required to confer standing on them as parties "injured-in-fact."40
constituencies to contribute to the formulation and enactment of legislation
that will benefit the nation.48
Respecting petitioner Chavez, respondents contend that Chavez may not
claim an interest as a taxpayer for the implementation of E.O. 464 does not
As Bayan Muna and Representatives Ocampo et al. have the standing to
involve the exercise of taxing or spending power.41
file their petitions, passing on the standing of their co-petitioners Courage
and Codal is rendered unnecessary.49
With regard to the petition filed by the Senate, respondents argue that in
the absence of a personal or direct injury by reason of the issuance of E.O.
In filing their respective petitions, Chavez, the ALG which claims to be an
organization of citizens, and the incumbent members of the IBP Board of
Governors and the IBP in behalf of its lawyer members,50 invoke their
constitutional right to information on matters of public concern, asserting
that the right to information, curtailed and violated by E.O. 464, is
essential to the effective exercise of other constitutional rights51 and to the
maintenance of the balance of power among the three branches of the
government through the principle of checks and balances.52
It is well-settled that when suing as a citizen, the interest of the petitioner
in assailing the constitutionality of laws, presidential decrees, orders, and
other regulations, must be direct and personal. In Franciso v. House of
Representatives,53 this Court held that when the proceeding involves the
assertion of a public right, the mere fact that he is a citizen satisfies the
requirement of personal interest.
As for petitioner PDP-Laban, it asseverates that it is clothed with legal
standing in view of the transcendental issues raised in its petition which
this Court needs to resolve in order to avert a constitutional crisis. For it to
be accorded standing on the ground of transcendental importance,
however, it must establish (1) the character of the funds (that it is public)
or other assets involved in the case, (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public
respondent agency or instrumentality of the government, and (3) the lack
of any party with a more direct and specific interest in raising the questions
being raised.54The first and last determinants not being present as no
public funds or assets are involved and petitioners in G.R. NOS. 169777
and 169659 have direct and specific interests in the resolution of the
controversy, petitioner PDP-Laban is bereft of standing to file its petition.
Its allegation that E.O. 464 hampers its legislative agenda is vague and
uncertain, and at best is only a "generalized interest" which it shares with
the rest of the political parties. Concrete injury, whether actual or
threatened, is that indispensable element of a dispute which serves in part
to cast it in a form traditionally capable of judicial resolution.55 In fine, PDP-
Laban's alleged interest as a political party does not suffice to clothe it with
legal standing.
Actual Case or Controversy
Petitioners assert that an actual case exists, they citing the absence of the
executive officials invited by the Senate to its hearings after the issuance of
E.O. 464, particularly those on the NorthRail project and the wiretapping
controversy.
Respondents counter that there is no case or controversy, there being no
showing that President Arroyo has actually withheld her consent or
prohibited the appearance of the invited officials.56 These officials, they
claim, merely communicated to the Senate that they have not yet secured
the consent of the President, not that the President prohibited their
attendance.57 Specifically with regard to the AFP officers who did not attend
the hearing on September 28, 2005, respondents claim that the instruction
not to attend without the President's consent was based on its role as
Commander-in-Chief of the Armed Forces, not on E.O. 464.
Respondents thus conclude that the petitions merely rest on an unfounded
apprehension that the President will abuse its power of preventing the
appearance of officials before Congress, and that such apprehension is not
sufficient for challenging the validity of E.O. 464.
The Court finds respondents' assertion that the President has not withheld
her consent or prohibited the appearance of the officials concerned
immaterial in determining the existence of an actual case or controversy
insofar as E.O. 464 is concerned. For E.O. 464 does not require either a
deliberate withholding of consent or an express prohibition issuing from the
President in order to bar officials from appearing before Congress.
As the implementation of the challenged order has already resulted in the
absence of officials invited to the hearings of petitioner Senate of the
Philippines, it would make no sense to wait for any further event before
considering the present case ripe for adjudication. Indeed, it would be
sheer abandonment of duty if this Court would now refrain from passing on
the constitutionality of E.O. 464.
Constitutionality of E.O. 464
E.O. 464, to the extent that it bars the appearance of executive officials
before Congress, deprives Congress of the information in the possession of
these officials. To resolve the question of whether such withholding of
information violates the Constitution, consideration of the general power of
Congress to obtain information, otherwise known as the power of inquiry,
is in order.
The power of inquiry
The Congress power of inquiry is expressly recognized in Section 21 of
Article VI of the Constitution which reads:
SECTION 21. The Senate or the House of Representatives or any of its
respective committees may conduct inquiries in aid of legislation in
accordance with its duly published rules of procedure. The rights of persons
appearing in or affected by such inquiries shall be respected. (Underscoring
supplied)ςrαlαωlιbrαrÿ
This provision is worded exactly as Section 8 of Article VIII of the 1973
Constitution except that, in the latter, it vests the power of inquiry in the
unicameral legislature established therein - the Batasang Pambansa - and
its committees.
The 1935 Constitution did not contain a similar provision. Nonetheless, in
Arnault v. Nazareno,58 a case decided in 1950 under that Constitution, the
Court already recognized that the power of inquiry is inherent in the power
to legislate.
Arnault involved a Senate investigation of the reportedly anomalous
purchase of the Buenavista and Tambobong Estates by the Rural Progress
Administration. Arnault, who was considered a leading witness in the
controversy, was called to testify thereon by the Senate. On account of his
refusal to answer the questions of the senators on an important point, he
was, by resolution of the Senate, detained for contempt. Upholding the
Senate's power to punish Arnault for contempt, this Court held:
Although there is no provision in the Constitution expressly investing either
House of Congress with power to make investigations and exact testimony
to the end that it may exercise its legislative functions advisedly and
effectively, such power is so far incidental to the legislative function as to
be implied. In other words, the power of inquiry - with process to enforce it
- is an essential and appropriate auxiliary to the legislative function. A
legislative body cannot legislate wisely or effectively in the absence of
information respecting the conditions which the legislation is intended to
affect or change; and where the legislative body does not itself possess the
requisite information - which is not infrequently true - recourse must be
had to others who do possess it. Experience has shown that mere requests
for such information are often unavailing, and also that information which
is volunteered is not always accurate or complete; so some means of
compulsion is essential to obtain what is needed.59 . . . (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
That this power of inquiry is broad enough to cover officials of the
executive branch may be deduced from the same case. The power of
inquiry, the Court therein ruled, is co-extensive with the power to
legislate.60 The matters which may be a proper subject of legislation and
those which may be a proper subject of investigation are one. It follows
that the operation of government, being a legitimate subject for legislation,
is a proper subject for investigation.
Thus, the Court found that the Senate investigation of the government
transaction involved in Arnault was a proper exercise of the power of
inquiry. Besides being related to the expenditure of public funds of which
Congress is the guardian, the transaction, the Court held, "also involved
government agencies created by Congress and officers whose positions it is
within the power of Congress to regulate or even abolish."
Since Congress has authority to inquire into the operations of the executive
branch, it would be incongruous to hold that the power of inquiry does not
extend to executive officials who are the most familiar with and informed
on executive operations.
As discussed in Arnault, the power of inquiry, "with process to enforce it,"
is grounded on the necessity of information in the legislative process. If the
information possessed by executive officials on the operation of their
offices is necessary for wise legislation on that subject, by parity of
reasoning, Congress has the right to that information and the power to
compel the disclosure thereof.
As evidenced by the American experience during the so-called "McCarthy
era," however, the right of Congress to conduct inquiries in aid of
legislation is, in theory, no less susceptible to abuse than executive or
judicial power. It may thus be subjected to judicial review pursuant to the
Court's certiorari powers under Section 1, Article VIII of the Constitution.
For one, as noted in Bengzon v. Senate Blue Ribbon Committee,61 the
inquiry itself might not properly be in aid of legislation, and thus beyond
the constitutional power of Congress. Such inquiry could not usurp judicial
functions. Parenthetically, one possible way for Congress to avoid such a
result as occurred in Bengzon is to indicate in its invitations to the public
officials concerned, or to any person for that matter, the possible needed
statute which prompted the need for the inquiry. Given such statement in
its invitations, along with the usual indication of the subject of inquiry and
the questions relative to and in furtherance thereof, there would be less
room for speculation on the part of the person invited on whether the
inquiry is in aid of legislation.
Section 21, Article VI likewise establishes crucial safeguards that proscribe
the legislative power of inquiry. The provision requires that the inquiry be
done in accordance with the Senate or House's duly published rules of
procedure, necessarily implying the constitutional infirmity of an inquiry
conducted without duly published rules of procedure. Section 21 also
mandates that the rights of persons appearing in or affected by such
inquiries be respected, an imposition that obligates Congress to adhere to
the guarantees in the Bill of Rights.
These abuses are, of course, remediable before the courts, upon the proper
suit filed by the persons affected, even if they belong to the executive
branch. Nonetheless, there may be exceptional circumstances, none
appearing to obtain at present, wherein a clear pattern of abuse of the
legislative power of inquiry might be established, resulting in palpable
violations of the rights guaranteed to members of the executive
department under the Bill of Rights. In such instances, depending on the
particulars of each case, attempts by the Executive Branch to forestall
these abuses may be accorded judicial sanction.
Even where the inquiry is in aid of legislation, there are still recognized
exemptions to the power of inquiry, which exemptions fall under the rubric
of "executive privilege." Since this term figures prominently in the
challenged order, it being mentioned in its provisions, its preambular
clauses,62and in its very title, a discussion of executive privilege is crucial
for determining the constitutionality of E.O. 464.
Executive privilege
The phrase "executive privilege" is not new in this jurisdiction. It has been
used even prior to the promulgation of the 1986 Constitution.63 Being of
American origin, it is best understood in light of how it has been defined
and used in the legal literature of the United States.
Schwartz defines executive privilege as "the power of the Government to
withhold information from the public, the courts, and the
Congress."64 Similarly, Rozell defines it as "the right of the President and
high-level executive branch officers to withhold information from Congress,
the courts, and ultimately the public."65
Executive privilege is, nonetheless, not a clear or unitary concept.66 It has
encompassed claims of varying kinds.67Tribe, in fact, comments that while
it is customary to employ the phrase "executive privilege," it may be more
accurate to speak of executive privileges "since presidential refusals to
furnish information may be actuated by any of at least three distinct kinds
of considerations, and may be asserted, with differing degrees of success,
in the context of either judicial or legislative investigations."
One variety of the privilege, Tribe explains, is the state secrets privilege
invoked by U.S. Presidents, beginning with Washington, on the ground that
the information is of such nature that its disclosure would subvert crucial
military or diplomatic objectives. Another variety is the informer's privilege,
or the privilege of the Government not to disclose the identity of persons
who furnish information of violations of law to officers charged with the
enforcement of that law. Finally, a generic privilege for internal
deliberations has been said to attach to intragovernmental documents
reflecting advisory opinions, recommendations and deliberations
comprising part of a process by which governmental decisions and policies
are formulated.68
Tribe's comment is supported by the ruling in In re Sealed Case, thus:
Since the beginnings of our nation, executive officials have claimed a
variety of privileges to resist disclosure of information the confidentiality of
which they felt was crucial to fulfillment of the unique role and
responsibilities of the executive branch of our government. Courts ruled
early that the executive had a right to withhold documents that might
reveal military or state secrets. The courts have also granted the executive
a right to withhold the identity of government informers in some
circumstances and a qualified right to withhold information related to
pending investigations. x x x"69 (Emphasis and underscoring
supplied)ςrαlαωlιbrαrÿ
The entry in Black's Law Dictionary on "executive privilege" is similarly
instructive regarding the scope of the doctrine.
This privilege, based on the constitutional doctrine of separation of powers,
exempts the executive from disclosure requirements applicable to the
ordinary citizen or organization where such exemption is necessary to the
discharge of highly important executive responsibilities involved in
maintaining governmental operations, and extends not only to military and
diplomatic secrets but also to documents integral to an appropriate
exercise of the executive' domestic decisional and policy making functions,
that is, those documents reflecting the frank expression necessary in intra-
governmental advisory and deliberative communications.70 (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
That a type of information is recognized as privileged does not, however,
necessarily mean that it would be considered privileged in all instances. For
in determining the validity of a claim of privilege, the question that must be
asked is not only whether the requested information falls within one of the
traditional privileges, but also whether that privilege should be honored in
a given procedural setting.71
The leading case on executive privilege in the United States is U.S. v.
Nixon, 72 decided in 1974. In issue in that case was the validity of President
Nixon's claim of executive privilege against a subpoena issued by a district
court requiring the production of certain tapes and documents relating to
the Watergate investigations. The claim of privilege was based on the
President's general interest in the confidentiality of his conversations and
correspondence. The U.S. Court held that while there is no explicit
reference to a privilege of confidentiality in the U.S. Constitution, it is
constitutionally based to the extent that it relates to the effective discharge
of a President's powers. The Court, nonetheless, rejected the President's
claim of privilege, ruling that the privilege must be balanced against the
public interest in the fair administration of criminal justice. Notably, the
Court was careful to clarify that it was not there addressing the issue of
claims of privilege in a civil litigation or against congressional demands for
information.
Cases in the U.S. which involve claims of executive privilege against
Congress are rare.73 Despite frequent assertion of the privilege to deny
information to Congress, beginning with President Washington's refusal to
turn over treaty negotiation records to the House of Representatives, the
U.S. Supreme Court has never adjudicated the issue.74 However, the U.S.
Court of Appeals for the District of Columbia Circuit, in a case decided
earlier in the same year as Nixon, recognized the President's privilege over
his conversations against a congressional subpoena.75 Anticipating the
balancing approach adopted by the U.S. Supreme Court in Nixon, the Court
of Appeals weighed the public interest protected by the claim of privilege
against the interest that would be served by disclosure to the Committee.
Ruling that the balance favored the President, the Court declined to enforce
the subpoena.76
In this jurisdiction, the doctrine of executive privilege was recognized by
this Court in Almonte v. Vasquez.77 Almonte used the term in reference to
the same privilege subject of Nixon. It quoted the following portion of the
Nixon decision which explains the basis for the privilege:
"The expectation of a President to the confidentiality of his conversations
and correspondences, like the claim of confidentiality of judicial
deliberations, for example, has all the values to which we accord deference
for the privacy of all citizens and, added to those values, is the necessity
for protection of the public interest in candid, objective, and even blunt or
harsh opinions in Presidential decision-making. A President and those who
assist him must be free to explore alternatives in the process of shaping
policies and making decisions and to do so in a way many would be
unwilling to express except privately. These are the considerations
justifying a presumptive privilege for Presidential communications. The
privilege is fundamental to the operation of government and inextricably
rooted in the separation of powers under the Constitution x x x " (Emphasis
and underscoring supplied)ςrαlαωlιbrαrÿ
Almonte involved a subpoena duces tecum issued by the Ombudsman
against the therein petitioners. It did not involve, as expressly stated in the
decision, the right of the people to information.78 Nonetheless, the Court
recognized that there are certain types of information which the
government may withhold from the public, thus acknowledging, in
substance if not in name, that executive privilege may be claimed against
citizens' demands for information.
In Chavez v. PCGG,79 the Court held that this jurisdiction recognizes the
common law holding that there is a "governmental privilege against public
disclosure with respect to state secrets regarding military, diplomatic and
other national security matters."80 The same case held that closed-door
Cabinet meetings are also a recognized limitation on the right to
information.
Similarly, in Chavez v. Public Estates Authority,81 the Court ruled that the
right to information does not extend to matters recognized as "privileged
information under the separation of powers,"82 by which the Court meant
Presidential conversations, correspondences, and discussions in closed-
door Cabinet meetings. It also held that information on military and
diplomatic secrets and those affecting national security, and information on
investigations of crimes by law enforcement agencies before the
prosecution of the accused were exempted from the right to information.
From the above discussion on the meaning and scope of executive
privilege, both in the United States and in this jurisdiction, a clear principle
emerges. Executive privilege, whether asserted against Congress, the
courts, or the public, is recognized only in relation to certain types of
information of a sensitive character. While executive privilege is a
constitutional concept, a claim thereof may be valid or not depending on
the ground invoked to justify it and the context in which it is made.
Noticeably absent is any recognition that executive officials are exempt
from the duty to disclose information by the mere fact of being executive
officials. Indeed, the extraordinary character of the exemptions indicates
that the presumption inclines heavily against executive secrecy and in
favor of disclosure.
Validity of Section 1
Section 1 is similar to Section 3 in that both require the officials covered by
them to secure the consent of the President prior to appearing before
Congress. There are significant differences between the two provisions,
however, which constrain this Court to discuss the validity of these
provisions separately.
Section 1 specifically applies to department heads. It does not, unlike does not mean that they need not come when they are invited or
Section 3, require a prior determination by any official whether they are subpoenaed by the committee of either House when it comes to inquiries in
covered by E.O. 464. The President herself has, through the challenged aid of legislation or congressional investigation. According to Commissioner
order, made the determination that they are. Further, unlike also Section Suarez, that is allowed and their presence can be had under Section 21.
3, the coverage of department heads under Section 1 is not made to Does the gentleman confirm this, Madam President?cralawlibrary
depend on the department heads' possession of any information which
might be covered by executive privilege. In fact, in marked contrast to
MR. DAVIDE. We confirm that, Madam President, because Section 20 refers
Section 3 vis - à-vis Section 2, there is no reference to executive privilege
only to what was originally the Question Hour, whereas, Section 21 would
at all. Rather, the required prior consent under Section 1 is grounded on
refer specifically to inquiries in aid of legislation, under which anybody for
Article VI, Section 22 of the Constitution on what has been referred to as
that matter, may be summoned and if he refuses, he can be held in
the question hour.
contempt of the House.83 (Emphasis and underscoring
supplied)ςrαlαωlιbrαrÿ
SECTION 22. The heads of departments may upon their own initiative, with
the consent of the President, or upon the request of either House, as the
A distinction was thus made between inquiries in aid of legislation and the
rules of each House shall provide, appear before and be heard by such
question hour. While attendance was meant to be discretionary in the
House on any matter pertaining to their departments. Written questions
question hour, it was compulsory in inquiries in aid of legislation. The
shall be submitted to the President of the Senate or the Speaker of the
reference to Commissioner Suarez bears noting, he being one of the
House of Representatives at least three days before their scheduled
proponents of the amendment to make the appearance of department
appearance. Interpellations shall not be limited to written questions, but
heads discretionary in the question hour.
may cover matters related thereto. When the security of the State or the
public interest so requires and the President so states in writing, the
appearance shall be conducted in executive session. So clearly was this distinction conveyed to the members of the Commission
that the Committee on Style, precisely in recognition of this distinction,
later moved the provision on question hour from its original position as
Determining the validity of Section 1 thus requires an examination of the
Section 20 in the original draft down to Section 31, far from the provision
meaning of Section 22 of Article VI. Section 22 which provides for the
on inquiries in aid of legislation. This gave rise to the following exchange
question hour must be interpreted vis - à-vis Section 21 which provides for
during the deliberations:
the power of either House of Congress to "conduct inquiries in aid of
legislation." As the following excerpt of the deliberations of the
Constitutional Commission shows, the framers were aware that these two MR. GUINGONA. [speaking in his capacity as Chairman of the Committee
provisions involved distinct functions of Congress. on Style] We now go, Mr. Presiding Officer, to the Article on Legislative and
may I request the chairperson of the Legislative Department,
Commissioner Davide, to give his reaction.
MR. MAAMBONG. x x x When we amended Section 20 [now Section 22 on
the Question Hour] yesterday, I noticed that members of the Cabinet
cannot be compelled anymore to appear before the House of THE PRESIDING OFFICER (Mr. Jamir). Commissioner Davide is
Representatives or before the Senate. I have a particular problem in this recognized.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
regard, Madam President, because in our experience in the Regular
Batasang Pambansa - as the Gentleman himself has experienced in the MR. DAVIDE. Thank you, Mr. Presiding Officer. I have only one reaction to
interim Batasang Pambansa - one of the most competent inputs that we the Question Hour. I propose that instead of putting it as Section 31, it
can put in our committee deliberations, either in aid of legislation or in should follow Legislative Inquiries.
congressional investigations, is the testimonies of Cabinet ministers. We
usually invite them, but if they do not come and it is a congressional
investigation, we usually issue subpoenas. THE PRESIDING OFFICER. What does the committee say?cralawlibrary

I want to be clarified on a statement made by Commissioner Suarez when MR. GUINGONA. I ask Commissioner Maambong to reply, Mr. Presiding
he said that the fact that the Cabinet ministers may refuse to come to the Officer.
House of Representatives or the Senate [when requested under Section 22]
MR. MAAMBONG. Actually, we considered that previously when we
sequenced this but we reasoned that in Section 21, which is Legislative
Inquiry, it is actually a power of Congress in terms of its own lawmaking;
whereas, a Question Hour is not actually a power in terms of its own
lawmaking power because in Legislative Inquiry, it is in aid of legislation.
And so we put Question Hour as Section 31. I hope Commissioner Davide
will consider this.
MR. DAVIDE. The Question Hour is closely related with the legislative
power, and it is precisely as a complement to or a supplement of the
Legislative Inquiry. The appearance of the members of Cabinet would be
very, very essential not only in the application of check and balance but
also, in effect, in aid of legislation.
MR. MAAMBONG. After conferring with the committee, we find merit in the
suggestion of Commissioner Davide. In other words, we are accepting that
and so this Section 31 would now become Section 22. Would it be,
Commissioner Davide?cralawlibrary
MR. DAVIDE. Yes.84 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Consistent with their statements earlier in the deliberations,
Commissioners Davide and Maambong proceeded from the same
assumption that these provisions pertained to two different functions of the
legislature. Both Commissioners understood that the power to conduct
inquiries in aid of legislation is different from the power to conduct inquiries
during the question hour. Commissioner Davide's only concern was that the
two provisions on these distinct powers be placed closely together, they
being complementary to each other. Neither Commissioner considered
them as identical functions of Congress.
The foregoing opinion was not the two Commissioners' alone. From the
above-quoted exchange, Commissioner Maambong's committee - the
Committee on Style - shared the view that the two provisions reflected
distinct functions of Congress. Commissioner Davide, on the other hand,
was speaking in his capacity as Chairman of the Committee on the
Legislative Department. His views may thus be presumed as representing
that of his Committee.
In the context of a parliamentary system of government, the "question
hour" has a definite meaning. It is a period of confrontation initiated by
Parliament to hold the Prime Minister and the other ministers accountable
for their acts and the operation of the government,85 corresponding to what
is known in Britain as the question period. There was a specific provision
for a question hour in the 1973 Constitution86 which made the appearance
of ministers mandatory. The same perfectly conformed to the
parliamentary system established by that Constitution, where the ministers
are also members of the legislature and are directly accountable to it.
An essential feature of the parliamentary system of government is the
immediate accountability of the Prime Minister and the Cabinet to the
National Assembly. They shall be responsible to the National Assembly for
the program of government and shall determine the guidelines of national
policy. Unlike in the presidential system where the tenure of office of all
elected officials cannot be terminated before their term expired, the Prime
Minister and the Cabinet remain in office only as long as they enjoy the
confidence of the National Assembly. The moment this confidence is lost
the Prime Minister and the Cabinet may be changed.87
The framers of the 1987 Constitution removed the mandatory nature of
such appearance during the question hour in the present Constitution so as
to conform more fully to a system of separation of powers.88 To that
extent, the question hour, as it is presently understood in this jurisdiction,
departs from the question period of the parliamentary system. That
department heads may not be required to appear in a question hour does
not, however, mean that the legislature is rendered powerless to elicit
information from them in all circumstances. In fact, in light of the absence
of a mandatory question period, the need to enforce Congress' right to
executive information in the performance of its legislative function becomes
more imperative. As Schwartz observes:
Indeed, if the separation of powers has anything to tell us on the subject
under discussion, it is that the Congress has the right to obtain information
from any source - even from officials of departments and agencies in the
executive branch. In the United States there is, unlike the situation which
prevails in a parliamentary system such as that in Britain, a clear
separation between the legislative and executive branches. It is this very
separation that makes the congressional right to obtain information from
the executive so essential, if the functions of the Congress as the elected
representatives of the people are adequately to be carried out. The
absence of close rapport between the legislative and executive branches in
this country, comparable to those which exist under a parliamentary
system, and the nonexistence in the Congress of an institution such as the
British question period have perforce made reliance by the Congress upon
its right to obtain information from the executive essential, if it is
intelligently to perform its legislative tasks. Unless the Congress possesses
the right to obtain executive information, its power of oversight of
administration in a system such as ours becomes a power devoid of most
of its practical content, since it depends for its effectiveness solely upon
information parceled out ex gratia by the executive.89 (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
Sections 21 and 22, therefore, while closely related and complementary to even counsel for the Senate, Sen. Joker Arroyo, admitted it during the oral
each other, should not be considered as pertaining to the same power of argument upon interpellation of the Chief Justice.
Congress. One specifically relates to the power to conduct inquiries in aid
of legislation, the aim of which is to elicit information that may be used for
Having established the proper interpretation of Section 22, Article VI of the
legislation, while the other pertains to the power to conduct a question
Constitution, the Court now proceeds to pass on the constitutionality of
hour, the objective of which is to obtain information in pursuit of Congress'
Section 1 of E.O. 464.
oversight function.

Section 1, in view of its specific reference to Section 22 of Article VI of the

When Congress merely seeks to be informed on how department heads are
implementing the statutes which it has issued, its right to such information
is not as imperative as that of the President to whom, as Chief Executive,
such department heads must give a report of their performance as a
matter of duty. In such instances, Section 22, in keeping with the
separation of powers, states that Congress may only request their
appearance. Nonetheless, when the inquiry in which Congress requires
their appearance is "in aid of legislation" under Section 21, the appearance
is mandatory for the same reasons stated in Arnault.90
In fine, the oversight function of Congress may be facilitated by
compulsory process only to the extent that it is performed in pursuit of
legislation. This is consistent with the intent discerned from the
deliberations of the Constitutional Commission.
Ultimately, the power of Congress to compel the appearance of executive
officials under Section 21 and the lack of it under Section 22 find their
basis in the principle of separation of powers. While the executive branch is
a co-equal branch of the legislature, it cannot frustrate the power of
Congress to legislate by refusing to comply with its demands for
information.
When Congress exercises its power of inquiry, the only way for department
heads to exempt themselves therefrom is by a valid claim of privilege.
They are not exempt by the mere fact that they are department heads.
Only one executive official may be exempted from this power - the
President on whom executive power is vested, hence, beyond the reach of
Congress except through the power of impeachment. It is based on her
being the highest official of the executive branch, and the due respect
accorded to a co-equal branch of government which is sanctioned by a
long-standing custom.
By the same token, members of the Supreme Court are also exempt from
this power of inquiry. Unlike the Presidency, judicial power is vested in a
collegial body; hence, each member thereof is exempt on the basis not
only of separation of powers but also on the fiscal autonomy and the
constitutional independence of the judiciary. This point is not in dispute, as
Constitution and the absence of any reference to inquiries in aid of
legislation, must be construed as limited in its application to appearances
of department heads in the question hour contemplated in the provision of
said Section 22 of Article VI. The reading is dictated by the basic rule of
construction that issuances must be interpreted, as much as possible, in a
way that will render it constitutional.
The requirement then to secure presidential consent under Section 1,
limited as it is only to appearances in the question hour, is valid on its face.
For under Section 22, Article VI of the Constitution, the appearance of
department heads in the question hour is discretionary on their part.
Section 1 cannot, however, be applied to appearances of department heads
in inquiries in aid of legislation. Congress is not bound in such instances to
respect the refusal of the department head to appear in such inquiry,
unless a valid claim of privilege is subsequently made, either by the
President herself or by the Executive Secretary.
Validity of Sections 2 and 3
Section 3 of E.O. 464 requires all the public officials enumerated in Section
2(b) to secure the consent of the President prior to appearing before either
house of Congress. The enumeration is broad. It covers all senior officials
of executive departments, all officers of the AFP and the PNP, and all senior
national security officials who, in the judgment of the heads of offices
designated in the same section (i.e. department heads, Chief of Staff of the
AFP, Chief of the PNP, and the National Security Adviser), are "covered by
the executive privilege."
The enumeration also includes such other officers as may be determined by
the President. Given the title of Section 2 - "Nature, Scope and Coverage of
Executive Privilege" ', it is evident that under the rule of ejusdem generis,
the determination by the President under this provision is intended to be
based on a similar finding of coverage under executive privilege.
En passant, the Court notes that Section 2(b) of E.O. 464 virtually states
that executive privilege actually covers persons. Such is a misuse of the
doctrine. Executive privilege, as discussed above, is properly invoked in
relation to specific categories of information and not to categories of
persons.
In light, however, of Sec 2(a) of E.O. 464 which deals with the nature,
scope and coverage of executive privilege, the reference to persons being
"covered by the executive privilege" may be read as an abbreviated way of
saying that the person is in possession of information which is, in the
judgment of the head of office concerned, privileged as defined in Section
2(a). The Court shall thus proceed on the assumption that this is the
intention of the challenged order.
Upon a determination by the designated head of office or by the President
that an official is "covered by the executive privilege," such official is
subjected to the requirement that he first secure the consent of the
President prior to appearing before Congress. This requirement effectively
bars the appearance of the official concerned unless the same is permitted
by the President. The proviso allowing the President to give its consent
means nothing more than that the President may reverse a prohibition
which already exists by virtue of E.O. 464.
Thus, underlying this requirement of prior consent is the determination by
a head of office, authorized by the President under E.O. 464, or by the
President herself, that such official is in possession of information that is
covered by executive privilege. This determination then becomes the basis
for the official's not showing up in the legislative investigation.
In view thereof, whenever an official invokes E.O. 464 to justify his failure
to be present, such invocation must be construed as a declaration to
Congress that the President, or a head of office authorized by the
President, has determined that the requested information is privileged, and
that the President has not reversed such determination. Such declaration,
however, even without mentioning the term "executive privilege," amounts
to an implied claim that the information is being withheld by the executive
branch, by authority of the President, on the basis of executive privilege.
Verily, there is an implied claim of privilege.
The letter dated September 28, 2005 of respondent Executive Secretary
Ermita to Senate President Drilon illustrates the implied nature of the claim
of privilege authorized by E.O. 464. It reads:
In connection with the inquiry to be conducted by the Committee of the
Whole regarding the Northrail Project of the North Luzon Railways
Corporation on 29 September 2005 at 10:00 a.m., please be informed that
officials of the Executive Department invited to appear at the meeting will
not be able to attend the same without the consent of the President,
pursuant to Executive Order No. 464 (s. 2005), entitled "Ensuring
Observance Of The Principle Of Separation Of Powers, Adherence To The
Rule On Executive Privilege And Respect For The Rights Of Public Officials
Appearing In Legislative Inquiries In Aid Of Legislation Under The
Constitution, And For Other Purposes". Said officials have not secured the
required consent from the President. (Underscoring supplied)ςrαlαωlιbrαrÿ
The letter does not explicitly invoke executive privilege or that the matter
on which these officials are being requested to be resource persons falls
under the recognized grounds of the privilege to justify their absence. Nor
does it expressly state that in view of the lack of consent from the
President under E.O. 464, they cannot attend the hearing.
Significant premises in this letter, however, are left unstated, deliberately
or not. The letter assumes that the invited officials are covered by E.O.
464. As explained earlier, however, to be covered by the order means that
a determination has been made, by the designated head of office or the
President, that the invited official possesses information that is covered by
executive privilege. Thus, although it is not stated in the letter that such
determination has been made, the same must be deemed implied.
Respecting the statement that the invited officials have not secured the
consent of the President, it only means that the President has not reversed
the standing prohibition against their appearance before Congress.
Inevitably, Executive Secretary Ermita's letter leads to the conclusion that
the executive branch, either through the President or the heads of offices
authorized under E.O. 464, has made a determination that the information
required by the Senate is privileged, and that, at the time of writing, there
has been no contrary pronouncement from the President. In fine, an
implied claim of privilege has been made by the executive.
While there is no Philippine case that directly addresses the issue of
whether executive privilege may be invoked against Congress, it is
gathered from Chavez v. PEA that certain information in the possession of
the executive may validly be claimed as privileged even against Congress.
Thus, the case holds:
There is no claim by PEA that the information demanded by petitioner is
privileged information rooted in the separation of powers. The information
does not cover Presidential conversations, correspondences, or discussions
during closed-door Cabinet meetings which, like internal-deliberations of
the Supreme Court and other collegiate courts, or executive sessions of
either house of Congress, are recognized as confidential. This kind of
information cannot be pried open by a co-equal branch of government. A
frank exchange of exploratory ideas and assessments, free from the glare
of publicity and pressure by interested parties, is essential to protect the
independence of decision-making of those tasked to exercise Presidential,
Legislative and Judicial power. This is not the situation in the instant
case.91 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Section 3 of E.O. 464, therefore, cannot be dismissed outright as invalid by
the mere fact that it sanctions claims of executive privilege. This Court
must look further and assess the claim of privilege authorized by the Order
to determine whether it is valid.
While the validity of claims of privilege must be assessed on a case to case
basis, examining the ground invoked therefor and the particular
circumstances surrounding it, there is, in an implied claim of privilege, a
defect that renders it invalid per se. By its very nature, and as
demonstrated by the letter of respondent Executive Secretary quoted
above, the implied claim authorized by Section 3 of E.O. 464 is not
accompanied by any specific allegation of the basis thereof (e.g., whether
the information demanded involves military or diplomatic secrets, closed-
door Cabinet meetings, etc.). While Section 2(a) enumerates the types of
information that are covered by the privilege under the challenged order,
Congress is left to speculate as to which among them is being referred to
by the executive. The enumeration is not even intended to be
comprehensive, but a mere statement of what is included in the phrase
"confidential or classified information between the President and the public
officers covered by this executive order."
Certainly, Congress has the right to know why the executive considers the
requested information privileged. It does not suffice to merely declare that
the President, or an authorized head of office, has determined that it is so,
and that the President has not overturned that determination. Such
declaration leaves Congress in the dark on how the requested information
could be classified as privileged. That the message is couched in terms
that, on first impression, do not seem like a claim of privilege only makes it
more pernicious. It threatens to make Congress doubly blind to the
question of why the executive branch is not providing it with the
information that it has requested.
A claim of privilege, being a claim of exemption from an obligation to
disclose information, must, therefore, be clearly asserted. As U.S. v.
Reynolds teaches:
The privilege belongs to the government and must be asserted by it; it can
neither be claimed nor waived by a private party. It is not to be lightly
invoked. There must be a formal claim of privilege, lodged by the head of
the department which has control over the matter, after actual personal
consideration by that officer. The court itself must determine whether the
circumstances are appropriate for the claim of privilege, and yet do so
without forcing a disclosure of the very thing the privilege is designed to
protect.92(Underscoring supplied)ςrαlαωlιbrαrÿ
Absent then a statement of the specific basis of a claim of executive
privilege, there is no way of determining whether it falls under one of the
traditional privileges, or whether, given the circumstances in which it is
made, it should be respected.93 These, in substance, were the same criteria
in assessing the claim of privilege asserted against the Ombudsman in
Almonte v. Vasquez94 and, more in point, against a committee of the
Senate in Senate Select Committee on Presidential Campaign Activities v.
Nixon.95
A.O. Smith v. Federal Trade Commission is enlightening:
[T]he lack of specificity renders an assessment of the potential harm
resulting from disclosure impossible, thereby preventing the Court from
balancing such harm against plaintiffs' needs to determine whether to
override any claims of privilege.96 (Underscoring supplied)ςrαlαωlιbrαrÿ
And so is U.S. v. Article of Drug:97
On the present state of the record, this Court is not called upon to perform
this balancing operation. In stating its objection to claimant's
interrogatories, government asserts, and nothing more, that the
disclosures sought by claimant would inhibit the free expression of opinion
that non-disclosure is designed to protect. The government has not shown
- nor even alleged - that those who evaluated claimant's product were
involved in internal policymaking, generally, or in this particular instance.
Privilege cannot be set up by an unsupported claim. The facts upon which
the privilege is based must be established. To find these interrogatories
objectionable, this Court would have to assume that the evaluation and
classification of claimant's products was a matter of internal policy
formulation, an assumption in which this Court is unwilling to indulge sua
sponte.98 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
Mobil Oil Corp. v. Department of Energy99 similarly emphasizes that "an
agency must provide 'precise and certain' reasons for preserving the
confidentiality of requested information."
Black v. Sheraton Corp. of America100 amplifies, thus:
A formal and proper claim of executive privilege requires a specific
designation and description of the documents within its scope as well as
precise and certain reasons for preserving their confidentiality. Without this
specificity, it is impossible for a court to analyze the claim short of
disclosure of the very thing sought to be protected. As the affidavit now
stands, the Court has little more than its sua sponte speculation with which
to weigh the applicability of the claim. An improperly asserted claim of
privilege is no claim of privilege. Therefore, despite the fact that a claim
was made by the proper executive as Reynolds requires, the Court can not
recognize the claim in the instant case because it is legally insufficient to
allow the Court to make a just and reasonable determination as to its
applicability. To recognize such a broad claim in which the Defendant has
given no precise or compelling reasons to shield these documents from
outside scrutiny, would make a farce of the whole procedure.101(Emphasis
and underscoring supplied)ςrαlαωlιbrαrÿ
Due respect for a co-equal branch of government, moreover, demands no
less than a claim of privilege clearly stating the grounds therefor. Apropos
is the following ruling in McPhaul v. U.S:102
establish the hazard of incrimination. It is for the court to say whether his
silence is justified, and to require him to answer if 'it clearly appears to the
court that he is mistaken.' However, if the witness, upon interposing his
claim, were required to prove the hazard in the sense in which a claim is
usually required to be established in court, he would be compelled to
surrender the very protection which the privilege is designed to guarantee.
To sustain the privilege, it need only be evident from the implications of
the question, in the setting in which it is asked, that a responsive answer
to the question or an explanation of why it cannot be answered might be
dangerous because injurious disclosure could result." x x x (Emphasis and
underscoring supplied)ςrαlαωlιbrαrÿ
The claim of privilege under Section 3 of E.O. 464 in relation to Section
2(b) is thus invalid per se. It is not asserted. It is merely implied. Instead
of providing precise and certain reasons for the claim, it merely invokes
E.O. 464, coupled with an announcement that the President has not given
her consent. It is woefully insufficient for Congress to determine whether
the withholding of information is justified under the circumstances of each
case. It severely frustrates the power of inquiry of Congress.
In fine, Section 3 and Section 2(b) of E.O. 464 must be invalidated.

We think the Court's decision in United States v. Bryan, 339 U.S. 323, 70 No infirmity, however, can be imputed to Section 2(a) as it merely provides
S. Ct. 724, is highly relevant to these questions. For it is as true here as it guidelines, binding only on the heads of office mentioned in Section 2(b),
was there, that 'if (petitioner) had legitimate reasons for failing to produce on what is covered by executive privilege. It does not purport to be
the records of the association, a decent respect for the House of conclusive on the other branches of government. It may thus be construed
Representatives, by whose authority the subpoenas issued, would have as a mere expression of opinion by the President regarding the nature and
required that (he) state (his) reasons for noncompliance upon the return of scope of executive privilege.
the writ. Such a statement would have given the Subcommittee an
opportunity to avoid the blocking of its inquiry by taking other appropriate
Petitioners, however, assert as another ground for invalidating the
steps to obtain the records. 'To deny the Committee the opportunity to
challenged order the alleged unlawful delegation of authority to the heads
consider the objection or remedy is in itself a contempt of its authority and
of offices in Section 2(b). Petitioner Senate of the Philippines, in particular,
an obstruction of its processes. His failure to make any such statement was
cites the case of the United States where, so it claims, only the President
"a patent evasion of the duty of one summoned to produce papers before a
can assert executive privilege to withhold information from Congress.
congressional committee[, and] cannot be condoned." (Emphasis and
underscoring supplied; citations omitted)
Section 2(b) in relation to Section 3 virtually provides that, once the head
of office determines that a certain information is privileged, such
Upon the other hand, Congress must not require the executive to state the
determination is presumed to bear the President's authority and has the
reasons for the claim with such particularity as to compel disclosure of the
effect of prohibiting the official from appearing before Congress, subject
information which the privilege is meant to protect.103 A useful analogy in
only to the express pronouncement of the President that it is allowing the
determining the requisite degree of particularity would be the privilege
appearance of such official. These provisions thus allow the President to
against self-incrimination. Thus, Hoffman v. U.S.104declares:
authorize claims of privilege by mere silence.

The witness is not exonerated from answering merely because he declares

Such presumptive authorization, however, is contrary to the exceptional
that in so doing he would incriminate himself - his say-so does not of itself
nature of the privilege. Executive privilege, as already discussed, is
recognized with respect to information the confidential nature of which is
crucial to the fulfillment of the unique role and responsibilities of the
executive branch,105 or in those instances where exemption from disclosure
is necessary to the discharge of highly important executive
responsibilities.106 The doctrine of executive privilege is thus premised on
the fact that certain informations must, as a matter of necessity, be kept
confidential in pursuit of the public interest. The privilege being, by
definition, an exemption from the obligation to disclose information, in this
case to Congress, the necessity must be of such high degree as to
outweigh the public interest in enforcing that obligation in a particular
case.
In light of this highly exceptional nature of the privilege, the Court finds it
essential to limit to the President the power to invoke the privilege. She
may of course authorize the Executive Secretary to invoke the privilege on
her behalf, in which case the Executive Secretary must state that the
authority is "By order of the President," which means that he personally
consulted with her. The privilege being an extraordinary power, it must be
wielded only by the highest official in the executive hierarchy. In other
words, the President may not authorize her subordinates to exercise such
power. There is even less reason to uphold such authorization in the
instant case where the authorization is not explicit but by mere silence.
Section 3, in relation to Section 2(b), is further invalid on this score.
It follows, therefore, that when an official is being summoned by Congress
on a matter which, in his own judgment, might be covered by executive
privilege, he must be afforded reasonable time to inform the President or
the Executive Secretary of the possible need for invoking the privilege. This
is necessary in order to provide the President or the Executive Secretary
with fair opportunity to consider whether the matter indeed calls for a claim
of executive privilege. If, after the lapse of that reasonable time, neither
the President nor the Executive Secretary invokes the privilege, Congress is
no longer bound to respect the failure of the official to appear before
Congress and may then opt to avail of the necessary legal means to
compel his appearance.
The Court notes that one of the expressed purposes for requiring officials
to secure the consent of the President under Section 3 of E.O. 464 is to
ensure "respect for the rights of public officials appearing in inquiries in aid
of legislation." That such rights must indeed be respected by Congress is
an echo from Article VI Section 21 of the Constitution mandating that
"[t]he rights of persons appearing in or affected by such inquiries shall be
respected."
In light of the above discussion of Section 3, it is clear that it is essentially
an authorization for implied claims of executive privilege, for which reason
it must be invalidated. That such authorization is partly motivated by the
need to ensure respect for such officials does not change the infirm nature
of the authorization itself.
Right to Information
E.O 464 is concerned only with the demands of Congress for the
appearance of executive officials in the hearings conducted by it, and not
with the demands of citizens for information pursuant to their right to
information on matters of public concern. Petitioners are not amiss in
claiming, however, that what is involved in the present controversy is not
merely the legislative power of inquiry, but the right of the people to
information.
There are, it bears noting, clear distinctions between the right of Congress
to information which underlies the power of inquiry and the right of the
people to information on matters of public concern. For one, the demand of
a citizen for the production of documents pursuant to his right to
information does not have the same obligatory force as a subpoena duces
tecum issued by Congress. Neither does the right to information grant a
citizen the power to exact testimony from government officials. These
powers belong only to Congress and not to an individual citizen.
Thus, while Congress is composed of representatives elected by the people,
it does not follow, except in a highly qualified sense, that in every exercise
of its power of inquiry, the people are exercising their right to information.
To the extent that investigations in aid of legislation are generally
conducted in public, however, any executive issuance tending to unduly
limit disclosures of information in such investigations necessarily deprives
the people of information which, being presumed to be in aid of legislation,
is presumed to be a matter of public concern. The citizens are thereby
denied access to information which they can use in formulating their own
opinions on the matter before Congress - opinions which they can then
communicate to their representatives and other government officials
through the various legal means allowed by their freedom of expression.
Thus holds Valmonte v. Belmonte:
It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and
be responsive to the people's will. Yet, this open dialogue can be effective
only to the extent that the citizenry is informed and thus able to formulate
its will intelligently. Only when the participants in the discussion are aware
of the issues and have access to information relating thereto can such bear
fruit.107 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
The impairment of the right of the people to information as a consequence
of E.O. 464 is, therefore, in the sense explained above, just as direct as its
violation of the legislature's power of inquiry.
Implementation of E.O. 464 prior to its publication
While E.O. 464 applies only to officials of the executive branch, it does not
follow that the same is exempt from the need for publication. On the need
for publishing even those statutes that do not directly apply to people in
general, Tañada v. Tuvera states:
[w]hat republican theory did accomplish was to reverse the old
presumption in favor of secrecy, based on the divine right of kings and
nobles, and replace it with a presumption in favor of publicity, based on the
doctrine of popular sovereignty. (Underscoring supplied)109
Resort to any means then by which officials of the executive branch could
refuse to divulge information cannot be presumed valid. Otherwise, we
shall not have merely nullified the power of our legislature to inquire into
the operations of government, but we shall have given up something of
much greater value - our right as a people to take part in government.

WHEREFORE, the petitions are PARTLY GRANTED. Sections 2(b) and 3 of

The term "laws" should refer to all laws and not only to those of general
Executive Order No. 464 (series of 2005), "Ensuring Observance of the
application, for strictly speaking all laws relate to the people in general
Principle of Separation of Powers, Adherence to the Rule on Executive
albeit there are some that do not apply to them directly. An example is a
law granting citizenship to a particular individual, like a relative of
President Marcos who was decreed instant naturalization. It surely cannot Privilege and Respect for the Rights of Public Officials Appearing in
be said that such a law does not affect the public although it Legislative Inquiries in Aid of Legislation Under the Constitution, and For
unquestionably does not apply directly to all the people. The subject of Other Purposes," are declared VOID. Sections 1 and 2(a) are, however,
such law is a matter of public interest which any member of the body VALID.
politic may question in the political forums or, if he is a proper party, even
in courts of justice.108(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
SO ORDERED.

Although the above statement was made in reference to statutes, logic

dictates that the challenged order must be covered by the publication
requirement. As explained above, E.O. 464 has a direct effect on the right
of the people to information on matters of public concern. It is, therefore, a
matter of public interest which members of the body politic may question
before this Court. Due process thus requires that the people should have
been apprised of this issuance before it was implemented.

Conclusion

Congress undoubtedly has a right to information from the executive branch

whenever it is sought in aid of legislation. If the executive branch withholds
such information on the ground that it is privileged, it must so assert it and
state the reason therefor and why it must be respected.

The infirm provisions of E.O. 464, however, allow the executive branch to
evade congressional requests for information without need of clearly
asserting a right to do so and/or proffering its reasons therefor. By the
mere expedient of invoking said provisions, the power of Congress to
conduct inquiries in aid of legislation is frustrated. That is impermissible.
For
 [G.R. No. 89914. November 20, 1991.]
JOSE F.S. BENGZON JR., ABELARDO TERMULO, JOSE MANTECON,
VICENTE MILLS JR., LEONARDO GAMBOA, KURT BACHMANN JR.,
JOSE V.E. JIMENEZ, ERNESTO CALUYA, AGERICO UNGSON, SUSAN
ROXAS, ELVIE CASTILLO, and CYNTHIA SABIDO
LIMJAP, Petitioners, v. THE SENATE BLUE RIBBON COMMITTEE AND
ITS MEMBERS, represented by and through the CHAIRMAN, HON.
WIGBERTO TAÑADA, Respondents, JOSE S. SANDEJAS, intervenor.
SYLLABUS
1. POLITICAL LAW; JUDICIAL DEPARTMENT; HAS THE POWER TO
DETERMINE THE SCOPE AND EXTENT OF THE POWER OF THE LEGISLATIVE
COMMITTEES TO CONDUCT INQUIRIES INTO PRIVATE AFFAIRS IN
PURPORTED AID OF LEGISLATION. — The "allocation of constitutional
boundaries" is a task that this Court must perform under the Constitution.
Moreover, as held in a recent case," (t)he political question doctrine neither
interposes an obstacle to judicial determination of the rival claims. The
jurisdiction to delimit constitutional boundaries has been given to this
Court. It cannot abdicate that obligation mandated by the 1987
Constitution, although said provision by no means does away with the
applicability of the principle in appropriate cases." The Court is thus of the
considered view that it has jurisdiction over the present controversy for the
purpose of determining the scope and extent of the power of the Senate
Blue Ribbon Committee to conduct inquiries into private affairs in purported
aid of legislation.
2. ID.; LEGISLATIVE DEPARTMENT; POWER TO CONDUCT INQUIRIES IN
AID OF LEGISLATION; RULE. — The power of both houses of Congress to
conduct inquiries in aid of legislation is not, therefore, absolute or
unlimited. Its exercise is circumscribed by the afore-quoted provision of the
Constitution. Thus, as provided therein, the investigation must be "in aid of
legislation in accordance with its duly published rules of procedure" and
that "the rights of persons appearing in or affected by such inquiries shall
be respected." It follows then that the rights of persons under the Bill of
Rights must be respected, including the right to due process and the right
not to be compelled to testify against one’s self. The power to conduct
formal inquiries or investigations is specifically provided for in Sec. 1 of the
Senate Rules of Procedure Governing Inquiries in Aid of Legislation. Such
inquiries may refer to the implementation or re-examination of any law or
in connection with any proposed legislation or the formulation of future
legislation. They may also extend to any and all matters vested by the
Constitution in Congress and/or in the Senate alone. As held in Jean L.
Aznault v. Leon Nazareno, Et Al., the inquiry, to be within the jurisdiction of
the legislative body making it, must be material or necessary to the
exercise of a power in it vested by the Constitution, such as to legislate or
to expel a member. Under Sec. 4 of the aforementioned Rules, the Senate
may refer to any committee or committees any speech or resolution filed
by any Senator which in its judgment requires an appropriate inquiry in aid
of legislation. In order therefore to ascertain the character or nature of an
inquiry, resort must be had to the speech or resolution under which such
an inquiry is proposed to be made.
3. ID.; ID.; ID.; LIMITATIONS; REASONS THEREFOR. — Now to another
matter. It has been held that "a congressional committee’s right to inquire
is ‘subject to all relevant limitations placed by the Constitution on
governmental action,’ including `the relevant limitations of the Bill of
Rights’." In another case —." . . the mere semblance of legislative purpose
would not justify an inquiry in the face of the Bill of Rights. The critical
element is the existence of, and the weight to be ascribed to, the interest
of the Congress in demanding disclosures from an unwilling witness. We
cannot simply assume, however, that every congressional investigation is
justified by a public need that over-balances any private rights affected. To
do so would be to abdicate the responsibility placed by the Constitution
upon the judiciary to insure that the Congress does not unjustifiably
encroach upon an individual’s right to privacy nor abridge his liberty of
speech, press, religion or assembly." (Watkins v. US, 354 USS 178 citing
US v. Rumely, 345 US 41).
CRUZ, J., dissenting:chanrob1es virtual 1aw library
1. POLITICAL LAW; LEGISLATIVE DEPARTMENT; POWER TO CONDUCT
INVESTIGATION IN AID OF LEGISLATION; PRESUMED WITH A LEGITIMATE
OBJECT. — Justice Cruz do not agree that the investigation being
conducted by the Blue Ribbon Committee is not in aid of legislation. In
Arnault v. Nazareno, 87 Phil. 29, this Court observed that "we are bound to
presume that the action of the legislative body was with a legitimate object
if it is capable of being so construed, and we have no right to assume that
the contrary was intended." (People ex rel. McDonald v. Keeler, 99 N.Y.
463; 52 Am. Rep., 49; 2 N.E., 615, quoted with approval by the U.S.
Supreme Court in McGrain v. Daugherty, 273 U.S. 135). As far as He
knows, that is still the rule today. More importantly, the presumption is
supported by the established facts. The inquiry is sustainable as an implied
power of the legislature and even as expressly limited by the Constitution.
2. ID.; ID.; INDISPENSABLE DUTY TO INQUIRE INTO THE EXPENDITURE
OF ALL PUBLIC FUNDS. — The inquiry deals with alleged manipulations of
public funds and illicit acquisitions of properties now being claimed by the
PCGG for the Republic of the Philippines. The purpose of the Committee is
to ascertain if and how such anomalies have been committed. It is settled
that the legislature has a right to investigate the disposition of the public
funds it has appropriated; indeed, "an inquiry into the expenditure of all
public money is an indispensable duty of the legislature." Moreover, an
investigation of a possible violation of a law may be useful in the drafting of
mandatory legislation to correct or strengthen that law.
3. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT AGAINST SELF
INCRIMINATION; WHEN AVAILABLE. — The petitioners’ contention that the
questioned investigation would compel them to reveal their defense in the
cases now pending against them in the Sandiganbayan is untenable. They
know or should know that they cannot be compelled to answer
incriminating questions. The case of Chavez v. Court of Appeals, 24 SCRA
663, where we held that an accused may refuse at the outset to take the
stand on the ground that the questions to be put by the prosecutor will
tend to incriminate him is, of course, not applicable to them. They are not
facing criminal charges before the Blue Ribbon Committee. Like any
ordinary witness, they can invoke the right against self-incrimination only
when and as the incriminating question is propounded.
DECISION
This is a petition for prohibition with prayer for the issuance of a temporary
restraining order and/or injunctive relief, to enjoin the respondent Senate
Blue Ribbon Committee from requiring the petitioners to testify and
produce evidence at its inquiry into the alleged sale of the equity of
Benjamin "Kokoy" Romualdez to the Lopa Group in thirty-six (36) or thirty-
nine (39) corporations.
On 30 July 1987, the Republic of the Philippines, represented by the
Presidential Commission on Good Government (PCGG), assisted by the
Solicitor General, filed with the Sandiganbayan Civil Case No. 0035 (PCGG
Case No. 35) entitled "Republic of the Philippines v. Benjamin "Kokoy"
Romualdez, Et. Al.", for reconveyance, reversion, accounting, restitution
and damages.
The complaint was amended several times by impleading new defendants
and or amplifying the allegations therein. Under the Second Amended
Complaint, 1 the herein petitioners were impleaded as party defendants.
The complaint insofar as pertinent to herein petitioners, as defendants,
alleges among others that:jgc:chanrobles.com.ph
"14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez
Romualdez, acting by themselves and/or in unlawful concert with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking undue
advantage of their relationship, influence and connection with the latter
Defendant spouses, engaged in devices, schemes and stratagems to
unjustly enrich themselves at the expense of Plaintiff and the Filipino
people, among others:chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
(a) obtained, with the active collaboration of Defendants Senen J.
Gabaldon, Mario D. Camacho, Mamerto Nepomuceno, Carlos J. Valdez,
Cesar C. Zalamea and Francisco Tantuico, Atty. Jose Bengzon, Jr. and his
law partners, namely: Edilberto S. Narciso, Jr., Jose Vicente E. Jimenez,
Amando V. Faustino, Jr., and Leonardo C. Cruz; Jose S. Sandejas and his
fellow senior managers of FMMC/PNI Holdings groups of companies such as
Leonardo Gamboa, Vicente T. Mills, Jr., Jose M. Mantecon, Abelardo S.
Termulo, Rex C. Drilon II and Kurt Bachmann, Jr., control of some of the
biggest business enterprises in the Philippines, such as the Manila Electric
Company (MERALCO), Benguet Consolidated Mining Corporation
(BENGUET), Pilipinas Shell Corporation and the Philippine Commercial
International Bank (PCI Bank) by employing devious financial schemes and
techniques calculated to require the massive infusion and hemorrhage of
government funds with minimum or negligible ‘cashout’ from Defendant
Benjamin Romualdez. . . .
x x x
(m) manipulated, with the support, assistance and collaboration of
Philguarantee officials led by chairman Cesar E.A. Virata and the senior
managers of FMMC/PNI Holdings, Inc. led by Jose S. Sandejas, Jr., Jose M.
Mantecon and Kurt S. Bachmann, Jr., among others, the formation of
Erectors Holdings, Inc. without infusing additional capital solely for the
purpose of Erectors Incorporated with Philguarantee in the amount of
P527,387,440.71 with insufficient securities/collaterals just to enable
Erectors Inc. to appear viable and to borrow more capitals, so much so that
its obligation with Philguarantee has reached a total of more than P2 Billion
as of June 30, 1987.
(n) at the onset of the present Administration and/or within the week
following the February 1986 People’s Revolution, in conspiracy with,
support, assistance and collaboration of the abovenamed lawyers of the
Bengzon Law Offices, or specifically Defendants Jose F.S. Bengzon, Jr.,
Jose V.E. Jimenez, Amando V. Faustino, Jr., and Edilberto S. Narciso, Jr.
manipulated, schemed, and/or executed a series of devices intended to
conceal and place, and/or for the purpose of concealing and placing,
beyond the inquiry and jurisdiction of the Presidential Commission on Good
Government (PCGG) herein Defendants’ individual and collective funds,
properties, and assets subject of and/or suited in the instant Complaint.
(o) maneuvered, with the technical know-how and legalistic talents of the
FMMC senior managers and some of the Bengzon law partners, such as
Attys. Jose F.S. Bengzon, Jr., Edilberto S. Narciso, Jr., Amando V. Faustino,
Jose Vicente E. Jimenez and Leonardo C. Cruz, the purported sale of
defendant Benjamin Romualdez’s interests in the (i) Professional Managers,
Inc., (ii) A & E International Corporation (A & E), (iii) First Manila
Management Corporation (FMMC), (iv) Maguindanao Navigation (MNI), (v)
SOLOIL, Inc. (SOLOIL), (vi) Philippine World Travel Inc. (PWTI) and its
subsidiaries consisting of 36 corporations in all, to PNI Holdings, Inc.
(whose purported incorporators are all members of Atty. Jose F S.
Bengzon’s law firm) for only P5 million on March 3, 1986 or three days
after the creation of the Presidential Commission on Good Government on
February 28, 1986, for the sole purpose of deceiving and preempting the
Government, particularly the PCGG, and making it appear that defendant
Benjamin Romualdez had already divested himself of his ownership of the
same when in truth and in fact, his interests are well intact and being
protected by Atty. Jose F S. Bengzon, Jr. and some of hie law partners,
together with the FMMC senior managers who still control and run the
affairs of said corporations, and in order to entice the PCGG to approve the
said fictitious sale, the above-named defendants offered P20 million as
‘donation’ to the Government;
(p) misused, with the connivance, support and technical assistance of the
Bengzon law finn represented by Atty. Jose F.S. Bengzon, Jr. as legal
counsel, together with defendants Cesar Zalamea, Antonio Ozaeta, Mario
D. Camacho and Senen J. Gabaldon as members of the Board of Directors
of the Philippine Commercial International Bank (PCIB), the Meralco
Pension Fund (Fund, for short) in the amount of P25 million by causing it to
be invested in the PCIB and through the Bank’s TSG, assigned to PCI
Development and PCI Equity at 50% each, the Fund’s (a) 8,028,011
common shares in the Bank and (b) ‘Deposit in Subscription’ in the amount
of P4,929,972.50 but of the agreed consideration of P28 million for the said
assignment, PCI Development and PCI Equity were able to pay only
P5,500.00 downpayment and the first amortization of P3,937,500.00 thus
prompting the Fund to rescind its assignment, and the consequent
reversion of the assigned shares brought the total shareholding of the Fund
to 11,470,555 voting shares or 36.8% of the voting stock of the PCIB, and
this development (which the defendants themselves orchestrated or
allowed to happen) was used by them as an excuse for the unlawful
dismantling or cancellation of the Fund’s 10 million shares for allegedly
exceeding the 30-percent ceiling prescribed by Section 12-B of the General
Banking Act, although they know for a fact that what the law declares as
unlawful and void ab initio are the subscriptions in excess of the 30%
ceiling ‘to the extent of the excess over any of the ceilings prescribed . . .’
and not the whole or entire stockholding which they allowed to stay for six
years (from June 30, 1980 to March 24, 1986);
(q) cleverly hid behind the veil of corporate entity, through the use of the
names and managerial expertise of the FMMC senior managers and lawyers
identified as Jose B. Sandejas, Leonardo Gamboa, Vicente T. Mills,
Abelardo S. Termulo, Edilberto S. Narciso, Jr., Jose M. Mantecon, Rex C.
Drilon II, Kurt Bachmann, Jr. together with the legal talents of corporate
lawyers, such as Attys. Jose F.S. Bengzon, Jr., Jose V.E. Jimenez, Amando
V. Faustino, Jr. and Leonardo C. Cruz, the ill-gotten wealth of Benjamin T.
Romualdez including, among others, the 6,229,177 shares in PCIB
registered in the names of Trans Middle East Phils. Equities, Inc. and
Edilberto S. Narciso, Jr. which they refused to surrender to PCGG despite
their disclosure as they tried and continue to exert efforts in getting hold of
the same as well as the shares in Benguet registered in the names of Palm
Avenue Holdings and Palm Avenue Realty Development Corp. purportedly
to be applied as payment for the claim of P70 million of a ‘merger company
of the First Manila Management Corp. group’ supposedly owned by them
although the truth is that all the said firms are still beneficially owned by
defendants Benjamin Romualdez.
x x x"
On 28 September 1988, petitioners (as defendants) filed their respective
answers. 2 Meanwhile, from 2 to 6 August 1988, conflicting reports on the
disposition by the PCGG of the "Romualdez corporations" were carried in
various metropolitan newspapers. Thus, one newspaper reported that the
Romualdez firms had not been sequestered because of the opposition of
certain PCGG officials who "had worked previously as lawyers of the Marcos
crony firms." Another daily reported otherwise, while others declared that
on 3 March 1986, or shortly after the EDSA February 1986 revolution, the
"Romualdez companies" were sold for P5 million, without PCGG approval,
to a holding company controlled by Romualdez, and that Ricardo Lopa, the
President’s brother-in-law, had effectively taken over the firms, even
pending negotiations for the purchase of the corporations, for the same
price of P5 million which was reportedly way below the fair value of their
assets. 3
On 13 September 1988, the Senate Minority Floor Leader, Hon. Juan Ponce
Enrile delivered a speech "on a matter of personal privilege" before the
Senate on the alleged "take-over of SOLOIL Incorporated, the flagship of
the First Manila Management of Companies (FMMC) by Ricardo Lopa" and
called upon "the Senate to look into the possible violation of the law in the
case, particularly with regard to Republic Act No. 3019, the Anti-Graft and
Corrupt Practices Act." 4
On motion of Senator Orlando Mercado, the matter was referred by the
Senate to the Committee on Accountability of Public Officers (Blue Ribbon
Committee). 5 Thereafter, the Senate Blue Ribbon Committee started its
investigation on the matter. Petitioners and Ricardo Lopa were subpoenaed
by the Committee to appear before it and testify on "what they know"
regarding the "sale of the thirty-six (36) corporations belonging to
Benjamin "Kokoy" Romualdez." chanrobles lawlibrary : rednad
At the hearing held on 23 May 1989, Ricardo Lopa declined to testify on the
Found that his testimony may "unduly prejudice" the defendants in Civil
Case No. 0035 before the Sandiganbayan. Petitioner Jose F.S. Bengzon, Jr.
likewise refused to testify invoking his constitutional right to due process,
and averring that the publicity generated by respondent Committee’s
inquiry could adversely affect his rights as well as those of the other
petitioners who are his co-defendants in Civil Case No. 0035 before the
Sandiganbayan.
The Senate Blue Ribbon Committee, thereupon, suspended its inquiry and
directed the petitioners to file their memorandum on the constitutional
issues raised, after which, it issued a resolution 6 dated 5 June 1989
rejecting the petitioners’ plea to be excused from testifying, and the
Committee voted to pursue and continue its investigation of the matter.
Senator Neptali Gonzales dissented. 7
Claiming that the Senate Blue Ribbon Committee is poised to subpoena
them and require their attendance and testimony in proceedings before the
Committee, in excess of its jurisdiction and legislative purpose, in clear and
blatant disregard of their constitutional rights, and to their grave and
irreparable damage, prejudice and injury, and that there is no appeal nor
any other plain, speedy and adequate remedy in the ordinary course of
law, the petitioners filed the present petition for prohibition with a prayer
for temporary restraining order and/or injunctive relief.
Meanwhile, one of the defendants in Civil Case No. 0035 before the
Sandiganbayan, Jose S. Sandejas, filed with the Court a motion for
intervention, 8 which the Court granted in the resolution 9 of 21 December
1989, and required the respondent Senate Blue Ribbon Committee to
comment on the petition in intervention. In compliance therewith,
respondent Senate Blue Ribbon Committee filed its comment 10 thereon.
Before discussing the issues raised by petitioners and intervenor, we will
first tackle the jurisdictional question raised by the respondent Committee.
In its comment, respondent Committee claims that this Court cannot
properly inquire into the motives of the lawmakers in conducting legislative
investigations, much less can it enjoin the Congress or any of its regular
and special committees — like what petitioners seek — from making
inquiries in aid of legislation, under the doctrine of separation of powers,
which obtains in our present system of government.
The contention is untenable. In Angara v. Electoral Commission, 11 the
Court held:jgc:chanrobles.com.ph
"The separation of powers is a fundamental principle in our system of
government. It obtains not through express provision but by actual division
in our Constitution. Each department of the government has exclusive
cognizance of matters within its jurisdiction, and is supreme within its own
sphere. But it does not follow from the fact that the three powers are to be
kept separate and distinct that the Constitution intended them to be
absolutely unrestrained and independent of each other. The Constitution
has provided for an elaborate system of checks and balances to secure
coordination in the workings of the various departments of the
government.
x x x
"But in the main, the Constitution has blocked out with deft strokes and in
bold lines, allotment of power to the executive, the legislative and the
judicial departments of the government. The overlapping and interlacing of
functions and duties between the several departments, however,
sometimes makes it hard to say just where the one leaves off and the
other begins. In times of social disquietude or political excitement, the
great landmarks of the Constitution are apt to be forgotten or marred, if
not entirely obliterated. In cases of conflict, the judicial department is the
only constitutional organ which can be called upon to determine the proper
allocation of powers between the several departments and among the
integral or constituent units thereof.chanrobles.com:cralaw:red
x x x
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 rights which that
instrument secures and guarantees to them. This is in truth all that is
involved in what is termed ‘judicial supremacy’ which properly is the power
of judicial review under the Constitution. 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. Narrowed as its function is in
this manner, the judiciary does not pass upon questions of wisdom, justice
or expediency of legislation. More than that, courts accord the presumption
of constitutionality to legislative enactments, not only because the
legislature is presumed to abide by the Constitution but also because the
judiciary in the determination of actual cases and controversies must
reflect the wisdom and justice of the people as expressed through their
representatives in the executive and legislative departments of the
government."cralaw virtua1aw library
The "allocation of constitutional boundaries" is a task that this Court must
perform under the Constitution. Moreover, as held in a recent case, 12"
(t)he political question doctrine neither interposes an obstacle to judicial
determination of the rival claims. The jurisdiction to delimit constitutional
boundaries has been given to this Court. It cannot abdicate that obligation
mandated by the 1987 Constitution, although said provision by no means
does away with the applicability of the principle in appropriate cases." 13
The Court is thus of the considered view that it has jurisdiction over the
present controversy for the purpose of determining the scope and extent of
the power of the Senate Blue Ribbon Committee to conduct inquiries into
private affairs in purported aid of legislation.
Coming to the specific issues raised in this case, petitioners contend that
(1) the Senate Blue Ribbon Committee’s inquiry has no valid legislative
purpose, i.e., it is not done in aid of legislation; (2) the sale or disposition
of the Romualdez corporations is a "purely private transaction" which is
beyond the power of the Senate Blue Ribbon Committee to inquire into;
and (3) the inquiry violates their right to due process.
The 1987 Constitution expressly recognizes the power of both houses of
Congress to conduct inquiries in aid of legislation. 14 Thus, Section 21,
Article VI thereof provides:jgc:chanrobles.com.ph
"The Senate or the House of Representatives or any of its respective
committee may conduct inquiries in aid of legislation in accordance wish its
duly published rules of procedure. The rights of persons appearing in or
affected by such inquiries shall be respected." 15
The power of both houses of Congress to conduct inquiries in aid of
legislation is not, therefore, absolute or unlimited. Its exercise is
circumscribed by the afore-quoted provision of the Constitution. Thus, as
provided therein, the investigation must be "in aid of legislation in
accordance with its duly published rules of procedure" and that "the rights
of persons appearing in or affected by such inquiries shall be respected." It
follows then that the rights of persons under the Bill of Rights must be
respected, including the right to due process and the right not to be
compelled to testify against one’s self.chanrobles virtual lawlibrary
The power to conduct formal inquiries or investigations is specifically
provided for in Sec. 1 of the Senate Rules of Procedure Governing Inquiries
in Aid of Legislation. Such inquiries may refer to the implementation or re-
examination of any law or in connection with any proposed legislation or
the formulation of future legislation. They may also extend to any and all
matters vested by the Constitution in Congress and/or in the Senate alone.
As held in Jean L. Aznault v. Leon Nazareno, Et Al., 16 the inquiry, to be
within the jurisdiction of the legislative body making it, must be material or
necessary to the exercise of a power in it vested by the Constitution, such
as to legislate or to expel a member.
Under Sec. 4 of the aforementioned Rules, the Senate may refer to any
committee or committees any speech or resolution filed by any Senator
which in its judgment requires an appropriate inquiry in aid of legislation.
In order therefore to ascertain the character or nature of an inquiry, resort
must be had to the speech or resolution under which such an inquiry is
proposed to be made.
A perusal of the speech of Senator Enrile reveals that he (Senator Enrile)
made a statement which was published in various newspapers on 2
September 1988 accusing Mr. Ricardo "Baby" Lopa of "having taken over
the FMMC Group of Companies." As a consequence thereof, Mr. Lopa wrote
a letter to Senator Enrile on 4 September 1988 categorically denying that
he had "taken over" the FMMC Group of Companies; that former PCGG
Chairman Ramon Diaz himself categorically stated in a telecast interview
by Mr. Luis Beltran on Channel 7 on 31 August 1988 that there has been
no takeover by him (Lopa); and that these repeated allegations of a
"takeover" on his (Lopa’s) part of FMMC are baseless as they are malicious.
The Lopa reply prompted Senator Enrile, during the session of the Senate
on 13 September 1988, to avail of the privilege hour, 17 so that he could
respond to the said Lopa letter, and also to vindicate his reputation as a
Member of the Senate of the Philippines, considering the claim of Mr. Lopa
that his (Enrile’s) charges that he (Lopa) had taken over the FMMC Group
of Companies are "baseless" and "malicious." Thus, in his speech, 18
Senator Enrile said, among others, as follows:jgc:chanrobles.com.ph
"Mr. President, I rise this afternoon on a matter of personal privilege; the
privilege being that I received, Mr. President, a letter dated September 4,
1988, signed by Mr. Ricardo A. Lopa, a.k.a. or Baby Lopa, wherein he
denies categorically that he has taken over the First Manila Management
Group of Companies which includes SOLOIL Incorporated.
x x x
"In answer to Mr. Lopa, I will quote pertinent portions from an Official
Memorandum to the Presidential Commission on Good Government written
and signed by former Governor, now Congressman Jose Ramirez, in his
capacity as head of the PCGG Task Force for Region VIII. In his
memorandum dated July 3, 1986, then Governor Ramirez stated that when
he and the members of his task force sought to serve a sequestration order
on the management of SOLOIL in Tanauan, Leyte, management officials
assured him that relatives of the President of the Philippines were
personally discussing and representing SOLOIL so that the order of
sequestration would be lifted and that the new owner was Mr. Ricardo A.
Lopa.
"I will quote the pertinent portions in the Ramirez’ memorandum.
"The first paragraph of the memorandum reads as follows and I quote, Mr.
President:chanrob1es virtual 1aw library
‘Our sequestration work of SOLOIL in Tanauan, Leyte was not heeded by
management because they said another representation was being made to
this Commission for the eventual lifting of our sequestration order. They
even assured us that Mr. Ricardo Lopa and Peping Cojuangco were
personally discussing and representing SOLOIL, so the order of
sequestration will finally be lifted. While we attempted to carry on our
order, management refused to cooperate and vehemently turned down our
request to make available to us the records of the company. In fact it was
obviously clear that they will meet us with force the moment we insist on
doing normally our assigned task. In view of the impending threat, and to
avoid any untoward incident we decided to temporarily suspend our work
until there is a more categorical stand of this Commission in view of the
seemingly influential representation being made by SOLOIL for us not to
continue our work.’
"Another pertinent portion of the same memorandum is paragraph five,
which reads as follows, and I quote Mr. President:chanrobles.com : virtual
law library
‘The President, Mr. Gamboa, this is, I understand, the President of SOLOIL,
and the Plant Superintendent, Mr. Jimenez including their chief counsel,
Atty. Mandong Mendiola are now saying that there have been divestment,
and that the new owner is now Mr. Ricardo Lopa who according to them, is
the brother-in-law of the President. They even went further by telling us
that ever Peping Cojuangco who we know is the brother of her excellency is
also interested in the ownership and management of SOLOIL. When he
demanded for supporting papers which will indicate aforesaid divestment,
Messrs. Gamboa, Jimenez and Mendiola refused vehemently to submit
these papers to us, instead they said it will be submitted directly to this
Commission. To our mind their continuous dropping of names is not good
for this Commission and even to the President if our desire is to achieve
respectability and stability of the government.’
"The contents of the memorandum of then Governor and now
Congressman Jose Ramirez were personally confirmed by him in a news
interview last September 7, 1988.
x x x
"Also relevant to this case, Mr. President, is a letter of Mr. Ricardo Lopa
himself in August 11, 1988 issue of the newspaper Malaya headlined ‘On
Alleged Takeover of Romualdez Firms.’
"Mr. Lopa states in the last paragraph of the published letter and I quote
him:chanrob1es virtual 1aw library
‘12. As of this writing, the sales agreement is under review by the PCGG
solely to determine the appropriate price. The sale of these companies and
our prior right to reacquire them have never been at issue.’
"Perhaps I could not make it any clearer to Mr. Lopa that I was not really
making baseless and malicious statements."cralaw virtua1aw library
Senator Enrile concluded his privilege speech in the following
tenor:jgc:chanrobles.com.ph
"Mr. President, it may be worthwhile for the Senate to look into the
possible violation of the law in the case particularly with regard to Republic
Act No. 3019, the Anti-Graft and Corrupt Practices Act, Section 5 of which
reads as follows and I quote:chanrob1es virtual 1aw library
‘SECTION 5. Prohibition on certain relatives. — It shall be unlawful for the
spouse or for any relative, by consanguinity or affinity, within the third civil
degree, of the President of the Philippines, the Vice-President of the
Philippines, the President of the Senate, or the Speaker of the House of
Representatives, to intervene directly or indirectly, in any business,
transaction, contract or application with the Government: Provided, that
this section shall not apply to any person who prior to the assumption of
office of any of the above officials to whom he is related, has been already
dealing with the Government along the same line of business, nor to any
transaction, contract or application filed by him for approval of which is not
discretionary on the part of the officials concerned but depends upon
compliance with requisites provided by law, nor to any act lawfully
performed in an official capacity or in the exercise of a profession.’
"Mr. President, I have done duty to this Senate and to myself. I leave it to
this august Body to make its own conclusion."cralaw virtua1aw library
Verily, the speech of Senator Enrile contained no suggestion of
contemplated legislation; he merely called upon the Senate to look into a
possible violation of Sec. 5 of RA No. 3019, otherwise known as "The Anti-
Graft and Corrupt Practices Act." In other words, the purpose of the inquiry
to be conducted by respondent Blue Ribbon Committee was to find out
whether or not the relatives of President Aquino, particularly Mr. Ricardo
Lopa, had violated the law in connection with the alleged sale of the 36 or
39 corporations belonging to Benjamin "Kokoy" Romualdez to the Lopa
Group. There appears to be, therefore, no intended legislation involved.
The Court is also not impressed with the respondent Committee’s argument
that the questioned inquiry is to be conducted pursuant to Senate
Resolution No. 212. The said resolution was introduced by Senator Jose D.
Lina in view of the representations made by leaders of school youth,
community groups and youth of non-governmental organizations to the
Senate Committee on Youth and Sports Development, to look into the
charges against the PCGG filed by three (3) stockholders of Oriental
Petroleum, i.e., that it had adopted a "get-rich-quick scheme" for its
nominee-directors in a sequestered oil exploration firm. The pertinent
portion of Senate Resolution No. 212 reads as follows:chanrob1es virtual
1aw library
x x x Committee is not really "in aid of legislation" because it is not related to a
"WHEREAS, recent developments have shown that no less than the
Solicitor-General has stated that the PCGG Chairman and at least three
Commissioners should resign and that the agency should rid itself of
‘ineptness, incompetence and corruption’ and that the Sandiganbayan has
reportedly ordered the PCGG to answer charges filed by three stockholders
of Oriental Petroleum that it had adopted a ‘get-rich-quick scheme’ for its
nominee-directors in a sequestered oil exploration firm;chanrobles virtual
lawlibrary
"WHEREAS, leaders of school youth, community groups and youth of non-
governmental organization had made representations to the Senate
Committee on Youth and Sports Development to look into the charges
against PCGG since said agency is a symbol of the changes expected by the
people when the EDSA revolution took place and that the ill-gotten wealth
to be recovered will fund priority projects which will benefit our people such
as CARP, free education in the elementary and secondary levels,
reforestration, and employment generation for rural and urban workers;
"WHEREAS, the government and the present leadership must demonstrate
in their public and private lives integrity, honor and efficient management
of government services lest our youth become disillusioned and lose hope
and return to an ideology and form of government which is repugnant to
true freedom, democratic participation and human rights: Now, therefore,
be it.
"Resolved by the Senate, That the activities of the Presidential Commission
on Good Government be investigated by the appropriate Committee in
connection with the implementation of Section 26, Article XVIII of the
Constitution." 19
Thus, the inquiry under Senate Resolution No. 212 is to look into the
charges against the PCGG filed by the three (3) stockholders of Oriental
Petroleum in connection with the implementation of Section 26, Article
XVIII of the Constitution.
It cannot, therefore, be said that the contemplated inquiry on the subject
of the privilege speech of Senator Juan Ponce Enrile, i.e., the alleged sale
of the 36 (or 39) corporations belonging to Benjamin "Kokoy" Romualdez
to the Lopa Group is to be conducted pursuant to Senate Resolution No.
212, because, firstly, Senator Enrile did not indict the PCGG, and, secondly,
neither Mr. Ricardo Lopa nor the herein petitioners are connected with the
government but are private citizens.
It appears, therefore, that the contemplated inquiry by respondent
purpose within the jurisdiction of Congress, since the aim of the
investigation is to find out whether or not the relatives of the President or
Mr. Ricardo Lopa had violated Section 5 of RA No. 3019, the "Anti-Graft
and Corrupt Practices Act", a matter that appears more within the province
of the courts rather than of the legislature. Besides, the Court may take
judicial notice that Mr. Ricardo Lopa died during the pendency of this case.
In John T . Watkins v. United States, 20 it was held:jgc:chanrobles.com.ph
". . . . The power of congress to conduct investigations is inherent in the
legislative process. That power is broad. It encompasses inquiries
concerning the administration of existing laws as well as proposed or
possibly needed statutes. It includes surveys of defects in our social,
economic, or political system for the purpose of enabling Congress to
remedy them. It comprehends probes into departments of the Federal
Government to expose corruption, inefficiency or waste. But broad as is
this power of inquiry, it is not unlimited. There is no general authority to
expose the private affairs of individuals without justification in terms of the
functions of congress. This was freely conceded by the Solicitor General in
his argument in this case. Nor is the Congress a law enforcement or trial
agency. These are functions of the executive and judicial departments of
government. No inquiry is an end in itself; it must be related to and in
furtherance of a legitimate task of Congress. Investigations conducted
solely for the personal aggrandizement of the investigators or to ‘punish’
those investigated are indefensible." (Emphasis supplied)
It can not be overlooked that when respondent Committee decided to
conduct its investigation of the petitioners, the complaint in Civil Case No.
0035 had already been filed with the Sandiganbayan. A perusal of that
complaint shows that one of its principal causes of action against herein
petitioners, as defendants therein, is the alleged sale of the 36 (or 39)
corporations belonging to Benjamin "Kokoy" Romualdez. Since the issues in
said complaint had long been joined by the filing of petitioners’ respective
answers thereto, the issue sought to be investigated by the respondent
Committee is one over which jurisdiction had been acquired by the
Sandiganbayan. In short, the issue has been pre-empted by that court. To
allow the respondent Committee to conduct its own investigation of an
issue already before the Sandiganbayan would not only pose the possibility
of conflicting judgments between a legislative committee and a judicial
tribunal, but if the Committee’s judgment were to be reached before that of
the Sandiganbayan, the possibility of its influence being made to bear on
the ultimate judgment of the Sandiganbayan can not be discounted.
In fine, for the respondent Committee to probe and inquire into the same
justiciable controversy already before the Sandiganbayan, would be an
encroachment into the exclusive domain of judicial jurisdiction that had
much earlier set in. In Baremblatt v. United States, 21 it was held
that:jgc:chanrobles.com.ph
"Broad as it is, the power is not, however, without limitations. Since
Congress may only investigate into those areas in which it may potentially
legislate or appropriate, it cannot inquire into matters which are within the
exclusive province of one of the other branches of the government. Lacking
the judicial power given to the Judiciary, it cannot inquire into matters that
are exclusively the concern of the Judiciary. Neither can it supplant the
Executive in what exclusively belongs to the Executive. . . . ."cralaw
virtua1aw library
Now to another matter. It has been held that "a congressional committee’s
right to inquire is ‘subject to all relevant limitations placed by the
Constitution on governmental action,’ including ‘the relevant limitations of
the Bill of Rights’." 22
In another case —
". . . the mere semblance of legislative purpose would not justify an inquiry
in the face of the Bill of Rights. The critical element is the existence of, and
the weight to be ascribed to, the interest of the Congress in demanding
disclosures from an unwilling witness. We cannot simply assume, however,
that every congressional investigation is justified by a public need that
over-balances any private rights affected. To do so would be to abdicate
the responsibility placed by the Constitution upon the judiciary to insure
that the Congress does not unjustifiably encroach upon an individual’s right
to privacy nor abridge his liberty of speech, press, religion or assembly."
23
One of the basic rights guaranteed by the Constitution to an individual is
the right against self-incrimination. 24 This right construed as the right to
remain completely silent may be availed of by the accused in a criminal
case; but it may be invoked by other witnesses only as questions are asked
of them.
This distinction was enunciated by the Court in Romeo Chavez v. The
Honorable Court of Appeals, Et. Al. 25 thus —
Petitioner, as accused, occupies a different tier of protection from an
ordinary witness. Whereas an ordinary witness may be compelled to take
the witness stand and claim the privilege as each question requiring an
incriminating answer is shot at him, an accused may altogether refuse to
take the witness stand and refuse to answer any and all questions."cralaw
virtua1aw library
Moreover, this right of the accused is extended to respondents
administrative investigations but only if they partake of the nature of a
criminal proceeding or analogous to a criminal proceeding. In Galman v.
Pamaran, 26 the Court reiterated the doctrine in Cabal v. Kapunan (6 SCRA
1059) to illustrate the right of witnesses to invoke the right against self-
incrimination not only in criminal proceedings but also in all other types of
suit.
It was held that:jgc:chanrobles.com.ph
"We did not therein state that since he is not an accused and the case is
not a criminal case, Cabal cannot refuse to take the witness stand and
testify, and that he can invoke his right against self-incrimination only
when a question which tends to elicit an answer that will incriminate him is
propounded to him. Clearly then, it is not the character of the suit involved
but the nature of the proceedings that controls. The privilege has
consistently been held to extend to all proceedings sanctioned by law and
to all cases in which punishment is sought to be visited upon a witness,
whether a party or not."cralaw virtua1aw library
We do not here modify these doctrines. If we presently rule that petitioners
may not be compelled by the respondent Committee to appear, testify and
produce evidence before it, it is only because we hold that the questioned
inquiry is not in aid of legislation and, If pursued, would be violative of the
principle of separation of powers between the legislative and the judicial
departments of government, ordained by the Constitution.
WHEREFORE, the petition is GRANTED. The Court holds that, under the
facts, including the circumstance that petitioners are presently impleaded
as defendants in a case before the Sandiganbayan, which involves issues
intimately related to the subject of contemplated inquiry before the
respondent Committee, the respondent Senate Blue Ribbon Committee is
hereby enjoined from compelling the petitioners and intervenor to testify
before it and produce evidence at the said inquiry.
SO ORDERED.
 G.R. No. 115543 October 30, 1995
RAUL S. ROCO and the INTEGRATED BAR OF THE
PHILIPPINES, Petitioners, v. THE SECRETARY OF THE DEPARTMENT
OF FINANCE; THE COMMISSIONERS OF THE BUREAU OF INTERNAL
REVENUE AND BUREAU OF CUSTOMS, Respondents.
G.R. No. 115544 October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.;
KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE
JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, Petitioners, v. HON. LIWAYWAY V. CHATO, in her
capacity as Commissioner of Internal Revenue; HON. TEOFISTO T.
GUINGONA, JR., in his capacity as Executive Secretary; and HON.
ROBERTO B. DE OCAMPO, in his capacity as Secretary of
Finance, Respondents.
G.R. No. 115754 October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.,
(CREBA), Petitioner, v. THE COMMISSIONER OF INTERNAL
REVENUE, Respondent.
G.R. No. 115781 October 30, 1995
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME
CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM
TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN,
FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO,
JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS
FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
("MABINI"), FREEDOM FROM DEBT COALITION, INC., and
PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO
TAÑADA, Petitioners, v. THE EXECUTIVE SECRETARY, THE
SECRETARY OF FINANCE, THE COMMISSIONER OF INTERNAL
REVENUE and THE COMMISSIONER OF CUSTOMS, Respondents.
G.R. No. 115852 October 30, 1995
PHILIPPINE AIRLINES, INC., Petitioner, v. THE SECRETARY OF
FINANCE and COMMISSIONER OF INTERNAL REVENUE, Respondents.
G.R. No. 115873 October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, Petitioner, v. HON.
LIWAYWAY V. CHATO, in her capacity as the Commissioner of
Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his
capacity as Executive Secretary, and HON. ROBERTO B. DE
OCAMPO, in his capacity as Secretary of Finance, Respondents.
G.R. No. 115931 October 30, 1995
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and
ASSOCIATION OF PHILIPPINE BOOK SELLERS, Petitioners, v. HON.
ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON.
LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue;
and HON. GUILLERMO PARAYNO, JR., in his capacity as the
Commissioner of Customs, Respondents.
RESOLUTION
MENDOZA, J.:
These are motions seeking reconsideration of our decision dismissing the
petitions filed in these cases for the declaration of unconstitutionality of
R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law.
The motions, of which there are 10 in all, have been filed by the several
petitioners in these cases, with the exception of the Philippine Educational
Publishers Association, Inc. and the Association of Philippine Booksellers,
petitioners in G.R. No. 115931.chanroblesvirtualawlibrarychanrobles virtual
law library
The Solicitor General, representing the respondents, filed a consolidated
comment, to which the Philippine Airlines, Inc., petitioner in G.R. No.
115852, and the Philippine Press Institute, Inc., petitioner in G.R. No.
115544, and Juan T. David, petitioner in G.R. No. 115525, each filed a
reply. In turn the Solicitor General filed on June 1, 1995 a rejoinder to the
PPI's reply.chanroblesvirtualawlibrarychanrobles virtual law library
On June 27, 1995 the matter was submitted for
resolution.chanroblesvirtualawlibrarychanrobles virtual law library
I. Power of the Senate to propose amendments to revenue bills. Some of
the petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco,
and Chamber of Real Estate and Builders Association (CREBA)) reiterate
previous claims made by them that R.A. No. 7716 did not "originate
exclusively" in the House of Representatives as required by Art. VI, �24 of 1. R.A. NO. 7642chanrobles virtual law library
the Constitution. Although they admit that H. No. 11197 was filed in the
House of Representatives where it passed three readings and that
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR
afterward it was sent to the Senate where after first reading it was referred
THIS PURPOSE THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL
to the Senate Ways and Means Committee, they complain that the Senate
REVENUE CODE (December 28,
did not pass it on second and third readings. Instead what the Senate did
1992).chanroblesvirtualawlibrarychanrobles virtual law library
was to pass its own version (S. No. 1630) which it approved on May 24,
1994. Petitioner Tolentino adds that what the Senate committee should
have done was to amend H. No. 11197 by striking out the text of the bill House Bill No. 2165, October 5, 1992chanrobles virtual law library
and substituting it with the text of S. No. 1630. That way, it is said, "the
bill remains a House bill and the Senate version just becomes the text Senate Bill No. 32, December 7, 1992chanrobles virtual law library
(only the text) of the House bill."chanrobles virtual law library

2. R.A. NO. 7643chanrobles virtual law library

The contention has no merit.chanroblesvirtualawlibrarychanrobles virtual
law library
The enactment of S. No. 1630 is not the only instance in which the Senate
proposed an amendment to a House revenue bill by enacting its own
version of a revenue bill. On at least two occasions during the Eighth
Congress, the Senate passed its own version of revenue bills, which, in
consolidation with House bills earlier passed, became the enrolled bills.
These were:chanrobles virtual law library
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO
REQUIRE THE PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO
ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT REVENUE,
AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF THE NATIONAL
INTERNAL REVENUE CODE (December 28, 1992)chanrobles virtual law
library
House Bill No. 1503, September 3, 1992chanrobles virtual law library

R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF
1987 BY EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD Senate Bill No. 968, December 7, 1992chanrobles virtual law library
FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL
EQUIPMENT) which was approved by the President on April 10, 1992. This 3. R.A. NO. 7646chanrobles virtual law library
Act is actually a consolidation of H. No. 34254, which was approved by the
House on January 29, 1992, and S. No. 1920, which was approved by the
Senate on February 3, 1992.chanroblesvirtualawlibrarychanrobles virtual AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO
law library PRESCRIBE THE PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY
LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS
OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED (February 24,
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL 1993)chanrobles virtual law library
GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC
GAMES) which was approved by the President on May 22, 1992. This Act is
a consolidation of H. No. 22232, which was approved by the House of House Bill No. 1470, October 20, 1992chanrobles virtual law library
Representatives on August 2, 1989, and S. No. 807, which was approved
by the Senate on October 21, 1991.chanroblesvirtualawlibrarychanrobles Senate Bill No. 35, November 19, 1992chanrobles virtual law library
virtual law library
4. R.A. NO. 7649chanrobles virtual law library
On the other hand, the Ninth Congress passed revenue laws which were
also the result of the consolidation of House and Senate bills. These are the
AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL
following, with indications of the dates on which the laws were approved by
SUBDIVISIONS, INSTRUMENTALITIES OR AGENCIES INCLUDING
the President and dates the separate bills of the two chambers of Congress
GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS) TO
were respectively passed:
DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF
THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF
GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES
RENDERED BY CONTRACTORS (April 6, 1993)chanrobles virtual law library
House Bill No. 5260, January 26, 1993chanrobles virtual law library
Senate Bill No. 1141, March 30, 1993chanrobles virtual law library
5. R.A. NO. 7656chanrobles virtual law library
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS TO DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS
TO THE NATIONAL GOVERNMENT, AND FOR OTHER PURPOSES (November
9, 1993)chanrobles virtual law library
House Bill No. 11024, November 3, 1993chanrobles virtual law library
Senate Bill No. 1168, November 3, 1993chanrobles virtual law library
6. R.A. NO. 7660chanrobles virtual law library
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION
OF THE DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE
CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED, ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR
OTHER PURPOSES (December 23, 1993)chanrobles virtual law library
House Bill No. 7789, May 31, 1993chanrobles virtual law library
Senate Bill No. 1330, November 18, 1993chanrobles virtual law library
7. R.A. NO. 7717chanrobles virtual law library
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF
SHARES OF STOCK LISTED AND TRADED THROUGH THE LOCAL STOCK
EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR THE
PURPOSE THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY
INSERTING A NEW SECTION AND REPEALING CERTAIN SUBSECTIONS
THEREOF (May 5, 1994)chanrobles virtual law library
House Bill No. 9187, November 3, 1993chanrobles virtual law library
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the
Senate, in the exercise of its power to propose amendments to bills
required to originate in the House, passed its own version of a House
revenue measure. It is noteworthy that, in the particular case of S. No.
1630, petitioners Tolentino and Roco, as members of the Senate, voted to
approve it on second and third
readings.chanroblesvirtualawlibrarychanrobles virtual law library
On the other hand, amendment by substitution, in the manner urged by
petitioner Tolentino, concerns a mere matter of form. Petitioner has not
shown what substantial difference it would make if, as the Senate actually
did in this case, a separate bill like S. No. 1630 is instead enacted as a
substitute measure, "taking into Consideration . . . H.B. 11197."chanrobles
virtual law library
Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx xxx xxxchanrobles virtual law library
�68. Not more than one amendment to the original amendment shall be
considered.
No amendment by substitution shall be entertained unless the text thereof
is submitted in writing.chanroblesvirtualawlibrarychanrobles virtual law
library
Any of said amendments may be withdrawn before a vote is taken
thereon.chanroblesvirtualawlibrarychanrobles virtual law library
�69. No amendment which seeks the inclusion of a legislative provision
foreign to the subject matter of a bill (rider) shall be entertained.
xxx xxx xxxchanrobles virtual law library
�70-A. A bill or resolution shall not be amended by substituting it with
another which covers a subject distinct from that proposed in the original
bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to revenue
bills, the Philippine Senate possesses less power than the U.S. Senate
because of textual differences between constitutional provisions giving
them the power to propose or concur with
amendments.chanroblesvirtualawlibrarychanrobles virtual law library
Art. I, �7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of Representatives;
but the Senate may propose or concur with amendments as on other Bills.
Art. VI, �24 of our Constitution reads:
All appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose
or concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution and the
decision to drop the phrase "as on other Bills" in the American version,
according to petitioners, shows the intention of the framers of our
Constitution to restrict the Senate's power to propose amendments to
revenue bills. Petitioner Tolentino contends that the word "exclusively" was
inserted to modify "originate" and "the words 'as in any other bills' (sic)
were eliminated so as to show that these bills were not to be like other bills
but must be treated as a special kind."chanrobles virtual law library
The history of this provision does not support this contention. The
supposed indicia of constitutional intent are nothing but the relics of an
unsuccessful attempt to limit the power of the Senate. It will be recalled
that the 1935 Constitution originally provided for a unicameral National
Assembly. When it was decided in 1939 to change to a bicameral
legislature, it became necessary to provide for the procedure for lawmaking
by the Senate and the House of Representatives. The work of proposing
amendments to the Constitution was done by the National Assembly,
acting as a constituent assembly, some of whose members, jealous of
preserving the Assembly's lawmaking powers, sought to curtail the powers
of the proposed Senate. Accordingly they proposed the following provision:
All bills appropriating public funds, revenue or tariff bills, bills of local
application, and private bills shall originate exclusively in the Assembly, but
the Senate may propose or concur with amendments. In case of
disapproval by the Senate of any such bills, the Assembly may repass the
same by a two-thirds vote of all its members, and thereupon, the bill so
repassed shall be deemed enacted and may be submitted to the President
for corresponding action. In the event that the Senate should fail to finally
act on any such bills, the Assembly may, after thirty days from the opening
of the next regular session of the same legislative term, reapprove the
same with a vote of two-thirds of all the members of the Assembly. And
upon such reapproval, the bill shall be deemed enacted and may be
submitted to the President for corresponding action.
The special committee on the revision of laws of the Second National
Assembly vetoed the proposal. It deleted everything after the first
sentence. As rewritten, the proposal was approved by the National
Assembly and embodied in Resolution No. 38, as amended by Resolution
No. 73. (J. ARUEGO, KNOW YOUR CONSTITUTION 65-66 (1950)). The
proposed amendment was submitted to the people and ratified by them in
the elections held on June 18, 1940.chanroblesvirtualawlibrarychanrobles
virtual law library
This is the history of Art. VI, �18 (2) of the 1935 Constitution, from which
Art. VI, �24 of the present Constitution was derived. It explains why the
word "exclusively" was added to the American text from which the framers
of the Philippine Constitution borrowed and why the phrase "as on other
Bills" was not copied. Considering the defeat of the proposal, the power of
the Senate to propose amendments must be understood to be full, plenary
and complete "as on other Bills." Thus, because revenue bills are required
to originate exclusively in the House of Representatives, the Senate cannot
enact revenue measures of its own without such bills. After a revenue bill is
passed and sent over to it by the House, however, the Senate certainly can
pass its own version on the same subject matter. This follows from the
coequality of the two chambers of
Congress.chanroblesvirtualawlibrarychanrobles virtual law library
That this is also the understanding of book authors of the scope of the
Senate's power to concur is clear from the following commentaries:
The power of the Senate to propose or concur with amendments is
apparently without restriction. It would seem that by virtue of this power,
the Senate can practically re-write a bill required to come from the House
and leave only a trace of the original bill. For example, a general revenue
bill passed by the lower house of the United States Congress contained
provisions for the imposition of an inheritance tax . This was changed by
the Senate into a corporation tax. The amending authority of the Senate
was declared by the United States Supreme Court to be sufficiently broad
to enable it to make the alteration. [Flint v. Stone Tracy Company, 220
U.S. 107, 55 L. ed. 389].chanroblesvirtualawlibrarychanrobles virtual law
library
(L. TAÑADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247
(1961))chanrobles virtual law library
The above-mentioned bills are supposed to be initiated by the House of
Representatives because it is more numerous in membership and therefore
also more representative of the people. Moreover, its members are
presumed to be more familiar with the needs of the country in regard to
the enactment of the legislation
involved.chanroblesvirtualawlibrarychanrobles virtual law library
The Senate is, however, allowed much leeway in the exercise of its power
to propose or concur with amendments to the bills initiated by the House of
Representatives. Thus, in one case, a bill introduced in the U.S. House of
Representatives was changed by the Senate to make a proposed
inheritance tax a corporation tax. It is also accepted practice for the Senate
to introduce what is known as an amendment by substitution, which may
entirely replace the bill initiated in the House of
Representatives.chanroblesvirtualawlibrarychanrobles virtual law library
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, �24 provides that all appropriation, revenue or tariff
bills, bills authorizing increase of the public debt, bills of local application,
and private bills must "originate exclusively in the House of
Representatives," it also adds, "but the Senate may propose or concur with
amendments." In the exercise of this power, the Senate may propose an
entirely new bill as a substitute measure. As petitioner Tolentino states in a
high school text, a committee to which a bill is referred may do any of the
following:
(1) to endorse the bill without changes; (2) to make changes in the bill
omitting or adding sections or altering its language; (3) to make and
endorse an entirely new bill as a substitute, in which case it will be known
as a committee bill; or (4) to make no report at
all.chanroblesvirtualawlibrarychanrobles virtual law library
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))
To except from this procedure the amendment of bills which are required to
originate in the House by prescribing that the number of the House bill and
its other parts up to the enacting clause must be preserved although the
text of the Senate amendment may be incorporated in place of the original
body of the bill is to insist on a mere technicality. At any rate there is no
rule prescribing this form. S. No. 1630, as a substitute measure, is
therefore as much an amendment of H. No. 11197 as any which the Senate
could have made.chanroblesvirtualawlibrarychanrobles virtual law library
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error
is that they assume that S. No. 1630 is an independent and distinct bill.
Hence their repeated references to its certification that it was passed by
the Senate "in substitution of S.B. No. 1129, taking into considerationP.S.
Res. No. 734 and H.B. No. 11197," implying that there is something
substantially different between the reference to S. No. 1129 and the
reference to H. No. 11197. From this premise, they conclude that R.A. No.
7716 originated both in the House and in the Senate and that it is the
product of two "half-baked bills because neither H. No. 11197 nor S. No.
1630 was passed by both houses of Congress."chanrobles virtual law
library
In point of fact, in several instances the provisions of S. No. 1630, clearly
appear to be mere amendments of the corresponding provisions of H. No.
11197. The very tabular comparison of the provisions of H. No. 11197 and
S. No. 1630 attached as Supplement A to the basic petition of petitioner
Tolentino, while showing differences between the two bills, at the same
time indicates that the provisions of the Senate bill were precisely intended
to be amendments to the House bill.chanroblesvirtualawlibrarychanrobles
virtual law library
Without H. No. 11197, the Senate could not have enacted S. No. 1630.
Because the Senate bill was a mere amendment of the House bill, H. No.
11197 in its original form did not have to pass the Senate on second and
three readings. It was enough that after it was passed on first reading it
was referred to the Senate Committee on Ways and Means. Neither was it
required that S. No. 1630 be passed by the House of Representatives
before the two bills could be referred to the Conference
Committee.chanroblesvirtualawlibrarychanrobles virtual law library
There is legislative precedent for what was done in the case of H. No.
11197 and S. No. 1630. When the House bill and Senate bill, which became
R.A. No. 1405 (Act prohibiting the disclosure of bank deposits), were
referred to a conference committee, the question was raised whether the
two bills could be the subject of such conference, considering that the bill
from one house had not been passed by the other and vice versa. As
Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If a
House bill is passed by the House but not passed by the Senate, and a
Senate bill of a similar nature is passed in the Senate but never passed in
the House, can the two bills be the subject of a conference, and can a law
be enacted from these two bills? I understand that the Senate bill in this
particular instance does not refer to investments in government securities,
whereas the bill in the House, which was introduced by the Speaker, covers
two subject matters: not only investigation of deposits in banks but also
investigation of investments in government securities. Now, since the two
bills differ in their subject matter, I believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.)
said:
THE SPEAKER. The report of the conference committee is in order. It is
precisely in cases like this where a conference should be had. If the House
bill had been approved by the Senate, there would have been no need of a
conference; but precisely because the Senate passed another bill on the
same subject matter, the conference committee had to be created, and we
are now considering the report of that
committee.chanroblesvirtualawlibrarychanrobles virtual law library
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No. 11197
and S. No. 1630 are distinct and unrelated measures also accounts for the
petitioners' (Kilosbayan's and PAL's) contention that because the President
separately certified to the need for the immediate enactment of these
measures, his certification was ineffectual and void. The certification had to
be made of the version of the same revenue bill which at the moment was
being considered. Otherwise, to follow petitioners' theory, it would be
necessary for the President to certify as many bills as are presented in a
house of Congress even though the bills are merely versions of the bill he
has already certified. It is enough that he certifies the bill which, at the
time he makes the certification, is under consideration. Since on March 22,
1994 the Senate was considering S. No. 1630, it was that bill which had to
be certified. For that matter on June 1, 1993 the President had earlier
certified H. No. 9210 for immediate enactment because it was the one
which at that time was being considered by the House. This bill was later
substituted, together with other bills, by H. No.
11197.chanroblesvirtualawlibrarychanrobles virtual law library
As to what Presidential certification can accomplish, we have already
explained in the main decision that the phrase "except when the President
certifies to the necessity of its immediate enactment, etc." in Art. VI, �26
(2) qualifies not only the requirement that "printed copies [of a bill] in its
final form [must be] distributed to the members three days before its
passage" but also the requirement that before a bill can become a law it
must have passed "three readings on separate days." There is not only
textual support for such construction but historical basis as
well.chanroblesvirtualawlibrarychanrobles virtual law library
Art. VI, �21 (2) of the 1935 Constitution originally provided:
(2) No bill shall be passed by either House unless it shall have been printed
and copies thereof in its final form furnished its Members at least three
calendar days prior to its passage, except when the President shall have
certified to the necessity of its immediate enactment. Upon the last reading
of a bill, no amendment thereof shall be allowed and the question upon its
passage shall be taken immediately thereafter, and
the yeas and naysentered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, �19
(2):
(2) No bill shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been
distributed to the Members three days before its passage, except when the
Prime Minister certifies to the necessity of its immediate enactment to meet
a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal.
This provision of the 1973 document, with slight modification, was adopted
in Art. VI, �26 (2) of the present Constitution, thus:
(2) No bill passed by either House shall become a law unless it has passed
three readings on separate days, and printed copies thereof in its final form
have been distributed to its Members three days before its passage, except
when the President certifies to the necessity of its immediate enactment to
meet a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal.
The exception is based on the prudential consideration that if in all cases
three readings on separate days are required and a bill has to be printed in
final form before it can be passed, the need for a law may be rendered
academic by the occurrence of the very emergency or public calamity
which it is meant to address.chanroblesvirtualawlibrarychanrobles virtual
law library
Petitioners further contend that a "growing budget deficit" is not an
emergency, especially in a country like the Philippines where budget deficit
is a chronic condition. Even if this were the case, an enormous budget
deficit does not make the need for R.A. No. 7716 any less urgent or the
situation calling for its enactment any less an
emergency.chanroblesvirtualawlibrarychanrobles virtual law library
Apparently, the members of the Senate (including some of the petitioners
in these cases) believed that there was an urgent need for consideration of
S. No. 1630, because they responded to the call of the President by voting
on the bill on second and third readings on the same day. While the judicial
department is not bound by the Senate's acceptance of the President's
certification, the respect due coequal departments of the government in
matters committed to them by the Constitution and the absence of a clear
showing of grave abuse of discretion caution a stay of the judicial
hand.chanroblesvirtualawlibrarychanrobles virtual law library
At any rate, we are satisfied that S. No. 1630 received thorough
consideration in the Senate where it was discussed for six days. Only its
distribution in advance in its final printed form was actually dispensed with
by holding the voting on second and third readings on the same day
(March 24, 1994). Otherwise, sufficient time between the submission of the
bill on February 8, 1994 on second reading and its approval on March 24,
1994 elapsed before it was finally voted on by the Senate on third
reading.chanroblesvirtualawlibrarychanrobles virtual law library
The purpose for which three readings on separate days is required is said
to be two-fold: (1) to inform the members of Congress of what they must
vote on and (2) to give them notice that a measure is progressing through
the enacting process, thus enabling them and others interested in the
measure to prepare their positions with reference to it. (1 J. G.
SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION �10.04, p.
282 (1972)). These purposes were substantially achieved in the case of
R.A. No. 7716.chanroblesvirtualawlibrarychanrobles virtual law library
IV. Power of Conference Committee. It is contended (principally by
Kilosbayan, Inc. and the Movement of Attorneys for Brotherhood, Integrity
and Nationalism, Inc. (MABINI)) that in violation of the constitutional policy
of full public disclosure and the people's right to know (Art. II, �28 and
Art. III, �7) the Conference Committee met for two days in executive
session with only the conferees
present.chanroblesvirtualawlibrarychanrobles virtual law library
As pointed out in our main decision, even in the United States it was
customary to hold such sessions with only the conferees and their staffs in
attendance and it was only in 1975 when a new rule was adopted requiring
open sessions. Unlike its American counterpart, the Philippine Congress has
not adopted a rule prescribing open hearings for conference
committees.chanroblesvirtualawlibrarychanrobles virtual law library
It is nevertheless claimed that in the United States, before the adoption of
the rule in 1975, at least staff members were present. These were staff
members of the Senators and Congressmen, however, who may be
presumed to be their confidential men, not stenographers as in this case
who on the last two days of the conference were excluded. There is no
showing that the conferees themselves did not take notes of their
proceedings so as to give petitioner Kilosbayan basis for claiming that even
in secret diplomatic negotiations involving state interests, conferees keep
notes of their meetings. Above all, the public's right to know was fully
served because the Conference Committee in this case submitted a report
showing the changes made on the differing versions of the House and the
Senate.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners cite the rules of both houses which provide that conference
committee reports must contain "a detailed, sufficiently explicit statement
of the changes in or other amendments." These changes are shown in the
bill attached to the Conference Committee Report. The members of both
houses could thus ascertain what changes had been made in the original
bills without the need of a statement detailing the
changes.chanroblesvirtualawlibrarychanrobles virtual law library
The same question now presented was raised when the bill which became
R.A. No. 1400 (Land Reform Act of 1955) was reported by the Conference
Committee. Congressman Bengzon raised a point of order. He said:
MR. BENGZON. My point of order is that it is out of order to consider the
report of the conference committee regarding House Bill No. 2557 by
reason of the provision of Section 11, Article XII, of the Rules of this House
which provides specifically that the conference report must be accompanied
by a detailed statement of the effects of the amendment on the bill of the
House. This conference committee report is not accompanied by that
detailed statement, Mr. Speaker. Therefore it is out of order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in
connection with the point of order raised by the gentleman from
Pangasinan.chanroblesvirtualawlibrarychanrobles virtual law library
There is no question about the provision of the Rule cited by the gentleman
from Pangasinan, but this provision applies to those cases where only
portions of the bill have been amended. In this case before us an entire bill
is presented; therefore, it can be easily seen from the reading of the bill
what the provisions are. Besides, this procedure has been an established
practice.
After some interruption, he continued:
MR. TOLENTINO. As I was saying, Mr. Speaker, we have to look into the
reason for the provisions of the Rules, and the reason for the requirement
in the provision cited by the gentleman from Pangasinan is when there are
only certain words or phrases inserted in or deleted from the provisions of
the bill included in the conference report, and we cannot understand what
those words and phrases mean and their relation to the bill. In that case, it
is necessary to make a detailed statement on how those words and phrases
will affect the bill as a whole; but when the entire bill itself is copied
verbatim in the conference report, that is not necessary. So when the
reason for the Rule does not exist, the Rule does not
exist.chanroblesvirtualawlibrarychanrobles virtual law library
(2 CONG. REC. NO. 2, p. 4056. (emphasis added))
Congressman Tolentino was sustained by the chair. The record shows that
when the ruling was appealed, it was upheld by viva voce and when a
division of the House was called, it was sustained by a vote of 48 to 5.
(Id.,
p. 4058)chanrobles virtual law library
Nor is there any doubt about the power of a conference committee to insert
new provisions as long as these are germane to the subject of the
conference. As this Court held in Philippine Judges Association v. Prado,
227 SCRA 703 (1993), in an opinion written by then Justice Cruz, the
jurisdiction of the conference committee is not limited to resolving
differences between the Senate and the House. It may propose an entirely
new provision. What is important is that its report is subsequently
approved by the respective houses of Congress. This Court ruled that it
would not entertain allegations that, because new provisions had been
added by the conference committee, there was thereby a violation of the
constitutional injunction that "upon the last reading of a bill, no
amendment thereto shall be allowed."
Applying these principles, we shall decline to look into the petitioners'
charges that an amendment was made upon the last reading of the bill that
eventually became R.A. No. 7354 and that copiesthereof in its final
form were not distributed among the members of each House. Both the
enrolled bill and the legislative journals certify that the measure was duly
enacted i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution.
We are bound by such official assurances from a coordinate department of
the government, to which we owe, at the very least, a becoming
courtesy.chanroblesvirtualawlibrarychanrobles virtual law library
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference committees
in the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed. These
committees may be given instructions by their parent bodies or they may
be left without instructions. Normally the conference committees are
without instructions, and this is why they are often critically referred to as
"the little legislatures." Once bills have been sent to them, the conferees
have almost unlimited authority to change the clauses of the bills and in
fact sometimes introduce new measures that were not in the original
legislation. No minutes are kept, and members' activities on conference
committees are difficult to determine. One congressman known for his
idealism put it this way: "I killed a bill on export incentives for my interest
group [copra] in the conference committee but I could not have done so
anywhere else." The conference committee submits a report to both
houses, and usually it is accepted. If the report is not accepted, then the
committee is discharged and new members are
appointed.chanroblesvirtualawlibrarychanrobles virtual law library
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND
LEGISLATURES: A COMPARATIVE ANALYSIS 163 (J. D. LEES AND M.
SHAW, eds.)).
In citing this study, we pass no judgment on the methods of conference
committees. We cite it only to say that conference committees here are no
different from their counterparts in the United States whose vast powers
we noted in Philippine Judges Association v. Prado, supra. At all events,
under Art. VI, �16(3) each house has the power "to determine the rules of
its proceedings," including those of its committees. Any meaningful change
in the method and procedures of Congress or its committees must
therefore be sought in that body itself.chanroblesvirtualawlibrarychanrobles
virtual law library
V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No.
7716 violates Art. VI, �26 (1) of the Constitution which provides that
"Every bill passed by Congress shall embrace only one subject which shall
be expressed in the title thereof." PAL contends that the amendment of its
franchise by the withdrawal of its exemption from the VAT is not expressed
in the title of the law.chanroblesvirtualawlibrarychanrobles virtual law
library
Pursuant to �13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its
gross revenue "in lieu of all other taxes, duties, royalties, registration,
license and other fees and charges of any kind, nature, or description,
imposed, levied, established, assessed or collected by any municipal, city,
provincial or national authority or government agency, now or in the
future."chanrobles virtual law library
PAL was exempted from the payment of the VAT along with other entities
by �103 of the National Internal Revenue Code, which provides as follows:
�103. Exempt transactions. - The following shall be exempt from the
value-added tax:
xxx xxx xxxchanrobles virtual law library
(q) Transactions which are exempt under special laws or international
agreements to which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that
granted to PAL, by amending �103, as follows:
�103. Exempt transactions. - The following shall be exempt from the
value-added tax:
xxx xxx xxxchanrobles virtual law library
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of �103 is expressed in the title of R.A. No. 7716 which
reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM,
WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND
FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT
PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-
ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER
PURPOSES," Congress thereby clearly expresses its intention to amend any
provision of the NIRC which stands in the way of accomplishing the
purpose of the law.chanroblesvirtualawlibrarychanrobles virtual law library
PAL asserts that the amendment of its franchise must be reflected in the
title of the law by specific reference to P.D. No. 1590. It is unnecessary to
do this in order to comply with the constitutional requirement, since it is
already stated in the title that the law seeks to amend the pertinent
provisions of the NIRC, among which is �103(q), in order to widen the
base of the VAT. Actually, it is the bill which becomes a law that is required
to express in its title the subject of legislation. The titles of H. No. 11197
and S. No. 1630 in fact specifically referred to �103 of the NIRC as among
the provisions sought to be amended. We are satisfied that sufficient notice
had been given of the pendency of these bills in Congress before they were
enacted into what is now R.A.
No. 7716.chanroblesvirtualawlibrarychanrobles virtual law library
In Philippine Judges Association v. Prado, supra, a similar argument as that
now made by PAL was rejected. R.A. No. 7354 is entitled AN ACT
CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS
POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED
THEREWITH. It contained a provision repealing all franking privileges. It
was contended that the withdrawal of franking privileges was not
expressed in the title of the law. In holding that there was sufficient
description of the subject of the law in its title, including the repeal of
franking privileges, this Court held:
To require every end and means necessary for the accomplishment of the
general objectives of the statute to be expressed in its title would not only
be unreasonable but would actually render legislation impossible. [Cooley,
Constitutional Limitations, 8th Ed., p. 297] As has been correctly
explained:
The details of a legislative act need not be specifically stated in its title, but
matter germane to the subject as expressed in the title, and adopted to the
accomplishment of the object in view, may properly be included in the act.
Thus, it is proper to create in the same act the machinery by which the act
is to be enforced, to prescribe the penalties for its infraction, and to
remove obstacles in the way of its execution. If such matters are properly
connected with the subject as expressed in the title, it is unnecessary that
they should also have special mention in the title. (Southern Pac. Co. v.
Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that, as a
general proposition, the press is not exempt from the taxing power of the
State and that what the constitutional guarantee of free press prohibits are
laws which single out the press or target a group belonging to the press for
special treatment or which in any way discriminate against the press on the
basis of the content of the publication, and R.A. No. 7716 is none of
these.chanroblesvirtualawlibrarychanrobles virtual law library
Now it is contended by the PPI that by removing the exemption of the
press from the VAT while maintaining those granted to others, the law
discriminates against the press. At any rate, it is averred, "even
nondiscriminatory taxation of constitutionally guaranteed freedom is
unconstitutional."chanrobles virtual law library
With respect to the first contention, it would suffice to say that since the
law granted the press a privilege, the law could take back the privilege
anytime without offense to the Constitution. The reason is simple: by
granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.chanroblesvirtualawlibrarychanrobles virtual law
library
Indeed, in withdrawing the exemption, the law merely subjects the press to
the same tax burden to which other businesses have long ago been
subject. It is thus different from the tax involved in the cases invoked by
the PPI. The license tax in Grosjean v. American Press Co., 297 U.S. 233,
80 L. Ed. 660 (1936) was found to be discriminatory because it was laid on
the gross advertising receipts only of newspapers whose weekly circulation
was over 20,000, with the result that the tax applied only to 13 out of 124
publishers in Louisiana. These large papers were critical of Senator Huey
Long who controlled the state legislature which enacted the license tax.
The censorial motivation for the law was thus
evident.chanroblesvirtualawlibrarychanrobles virtual law library
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r
of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295 (1983), the tax was found to
be discriminatory because although it could have been made liable for the
sales tax or, in lieu thereof, for the use tax on the privilege of using,
storing or consuming tangible goods, the press was not. Instead, the press
was exempted from both taxes. It was, however, later made to pay
a special use tax on the cost of paper and ink which made these items "the
only items subject to the use tax that were component of goods to be sold
at retail." The U.S. Supreme Court held that the differential treatment of
the press "suggests that the goal of regulation is not related to suppression
of expression, and such goal is presumptively unconstitutional." It would
therefore appear that even a law that favors the press is constitutionally
suspect. (See the dissent of Rehnquist, J. in that case)chanrobles virtual
law library
Nor is it true that only two exemptions previously granted by E.O. No. 273
are withdrawn "absolutely and unqualifiedly" by R.A. No. 7716. Other
exemptions from the VAT, such as those previously granted to PAL,
petroleum concessionaires, enterprises registered with the Export
Processing Zone Authority, and many more are likewise totally withdrawn,
in addition to exemptions which are partially withdrawn, in an effort to
broaden the base of the tax.chanroblesvirtualawlibrarychanrobles virtual
law library
The PPI says that the discriminatory treatment of the press is highlighted
by the fact that transactions, which are profit oriented, continue to enjoy
exemption under R.A. No. 7716. An enumeration of some of these
transactions will suffice to show that by and large this is not so and that
the exemptions are granted for a purpose. As the Solicitor General says,
such exemptions are granted, in some cases, to encourage agricultural
production and, in other cases, for the personal benefit of the end-user
rather than for profit. The exempt transactions are:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original
state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and
poultry feeds) and goods or services to enhance agriculture (milling of
palay, corn, sugar cane and raw sugar, livestock, poultry feeds, fertilizer,
ingredients used for the manufacture of
feeds).chanroblesvirtualawlibrarychanrobles virtual law library
(b) Goods used for personal consumption or use (household and personal
effects of citizens returning to the Philippines) or for professional use, like
professional instruments and implements, by persons coming to the
Philippines to settle here.chanroblesvirtualawlibrarychanrobles virtual law
library
(c) Goods subject to excise tax such as petroleum products or to be used
for manufacture of petroleum products subject to excise tax and services
subject to percentage tax.chanroblesvirtualawlibrarychanrobles virtual law
library
(d) Educational services, medical, dental, hospital and veterinary services,
and services rendered under employer-employee
relationship.chanroblesvirtualawlibrarychanrobles virtual law library
(e) Works of art and similar creations sold by the artist
himself.chanroblesvirtualawlibrarychanrobles virtual law library
(f) Transactions exempted under special laws, or international
agreements.chanroblesvirtualawlibrarychanrobles virtual law library
(g) Export-sales by persons not VAT-
registered.chanroblesvirtualawlibrarychanrobles virtual law library
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.chanroblesvirtualawlibrarychanrobles virtual law
library
(Respondents' Consolidated Comment on the Motions for Reconsideration,
pp. 58-60)
The PPI asserts that it does not really matter that the law does not
discriminate against the press because "even nondiscriminatory taxation on
constitutionally guaranteed freedom is unconstitutional." PPI cites in
support of this assertion the following statement in Murdock
v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The
protection afforded by the First Amendment is not so restricted. A license
tax certainly does not acquire constitutional validity because it classifies
the privileges protected by the First Amendment along with the wares and
merchandise of hucksters and peddlers and treats them all alike. Such
equality in treatment does not save the ordinance. Freedom of press,
freedom of speech, freedom of religion are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an
ordinary tax, is mainly for regulation. Its imposition on the press is
unconstitutional because it lays a prior restraint on the exercise of its right.
Hence, although its application to others, such those selling goods, is valid,
its application to the press or to religious groups, such as the Jehovah's
Witnesses, in connection with the latter's sale of religious books and
pamphlets, is unconstitutional. As the U.S. Supreme Court put it, "it is one
thing to impose a tax on income or property of a preacher. It is quite
another thing to exact a tax on him for delivering a sermon."chanrobles
virtual law library
A similar ruling was made by this Court in American Bible Society v. City of
Manila, 101 Phil. 386 (1957) which invalidated a city ordinance requiring a
business license fee on those engaged in the sale of general merchandise.
It was held that the tax could not be imposed on the sale of bibles by the
American Bible Society without restraining the free exercise of its right to
propagate.chanroblesvirtualawlibrarychanrobles virtual law library
The VAT is, however, different. It is not a license tax. It is not a tax on the
exercise of a privilege, much less a constitutional right. It is imposed on
the sale, barter, lease or exchange of goods or properties or the sale or
exchange of services and the lease of properties purely for revenue
purposes. To subject the press to its payment is not to burden the exercise
of its right any more than to make the press pay income tax or subject it to
general regulation is not to violate its freedom under the
Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
Additionally, the Philippine Bible Society, Inc. claims that although it sells
bibles, the proceeds derived from the sales are used to subsidize the cost
of printing copies which are given free to those who cannot afford to pay so
that to tax the sales would be to increase the price, while reducing the
volume of sale. Granting that to be the case, the resulting burden on the
exercise of religious freedom is so incidental as to make it difficult to
differentiate it from any other economic imposition that might make the
right to disseminate religious doctrines costly. Otherwise, to follow the
petitioner's argument, to increase the tax on the sale of vestments would
be to lay an impermissible burden on the right of the preacher to make a
sermon.chanroblesvirtualawlibrarychanrobles virtual law library
On the other hand the registration fee of P1,000.00 imposed by �107 of
the NIRC, as amended by �7 of R.A. No. 7716, although fixed in amount,
is really just to pay for the expenses of registration and enforcement of
provisions such as those relating to accounting in �108 of the NIRC. That
the PBS distributes free bibles and therefore is not liable to pay the VAT
does not excuse it from the payment of this fee because it also sells some
copies. At any rate whether the PBS is liable for the VAT must be decided
in concrete cases, in the event it is assessed this tax by the Commissioner
of Internal Revenue.chanroblesvirtualawlibrarychanrobles virtual law library
VII. Alleged violations of the due process, equal protection and contract
clauses and the rule on taxation. CREBA asserts that R.A. No. 7716 (1)
impairs the obligations of contracts, (2) classifies transactions as covered
or exempt without reasonable basis and (3) violates the rule that taxes
should be uniform and equitable and that Congress shall "evolve a
progressive system of taxation."chanrobles virtual law library
With respect to the first contention, it is claimed that the application of the
tax to existing contracts of the sale of real property by installment or on
deferred payment basis would result in substantial increases in the monthly
amortizations to be paid because of the 10% VAT. The additional amount,
it is pointed out, is something that the buyer did not anticipate at the time
he entered into the contract.chanroblesvirtualawlibrarychanrobles virtual
law library
The short answer to this is the one given by this Court in an early case:
"Authorities from numerous sources are cited by the plaintiffs, but none of
them show that a lawful tax on a new subject, or an increased tax on an
old one, interferes with a contract or impairs its obligation, within the
meaning of the Constitution. Even though such taxation may affect
particular contracts, as it may increase the debt of one person and lessen
the security of another, or may impose additional burdens upon one class
and release the burdens of another, still the tax must be paid unless
prohibited by the Constitution, nor can it be said that it impairs the
obligation of any existing contract in its true legal sense." (La Insular v.
Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed
not only existing laws but also "the reservation of the essential attributes of
sovereignty, is . . . read into contracts as a postulate of the legal order."
(Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147
(1968)) Contracts must be understood as having been made in reference
to the possible exercise of the rightful authority of the government and no
obligation of contract can extend to the defeat of that authority. (Norman
v. Baltimore and Ohio R.R., 79 L. Ed. 885
(1935)).chanroblesvirtualawlibrarychanrobles virtual law library
It is next pointed out that while �4 of R.A. No. 7716 exempts such
transactions as the sale of agricultural products, food items, petroleum,
and medical and veterinary services, it grants no exemption on the sale of
real property which is equally essential. The sale of real property for
socialized and low-cost housing is exempted from the tax, but CREBA
claims that real estate transactions of "the less poor," i.e., the middle
class, who are equally homeless, should likewise be
exempted.chanroblesvirtualawlibrarychanrobles virtual law library
The sale of food items, petroleum, medical and veterinary services, etc.,
which are essential goods and services was already exempt under �103,
pars. (b) (d) (1) of the NIRC before the enactment of R.A. No. 7716.
Petitioner is in error in claiming that R.A. No. 7716 granted exemption to
these transactions, while subjecting those of petitioner to the payment of
the VAT. Moreover, there is a difference between the "homeless poor" and
the "homeless less poor" in the example given by petitioner, because the
second group or middle class can afford to rent houses in the meantime
that they cannot yet buy their own homes. The two social classes are thus
differently situated in life. "It is inherent in the power to tax that the State
be free to select the subjects of taxation, and it has been repeatedly held
that 'inequalities which result from a singling out of one particular class for
taxation, or exemption infringe no constitutional limitation.'" (Lutz v.
Araneta, 98 Phil. 148, 153 (1955). Accord, City of Baguio v. De Leon, 134
Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984);
Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163
SCRA 371 (1988)).chanroblesvirtualawlibrarychanrobles virtual law library
Finally, it is contended, for the reasons already noted, that R.A. No. 7716
also violates Art. VI, �28(1) which provides that "The rule of taxation shall
be uniform and equitable. The Congress shall evolve a progressive system
of taxation."chanrobles virtual law library
Equality and uniformity of taxation means that all taxable articles or kinds
of property of the same class be taxed at the same rate. The taxing power
has the authority to make reasonable and natural classifications for
purposes of taxation. To satisfy this requirement it is enough that the
statute or ordinance applies equally to all persons, forms and corporations
placed in similar situation. (City of Baguio v. De Leon, supra; Sison, Jr. v.
Ancheta, supra)chanrobles virtual law library
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No.
7716 was enacted. R.A. No. 7716 merely expands the base of the tax. The
validity of the original VAT Law was questioned in Kapatiran ng
Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988)
on grounds similar to those made in these cases, namely, that the law was
"oppressive, discriminatory, unjust and regressive in violation of Art. VI,
�28(1) of the Constitution." (At 382) Rejecting the challenge to the law,
this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It
is uniform. . . .chanroblesvirtualawlibrarychanrobles virtual law library
The sales tax adopted in EO 273 is applied similarly on all goods and
services sold to the public, which are not exempt, at the constant rate of
0% or 10%.chanroblesvirtualawlibrarychanrobles virtual law library
The disputed sales tax is also equitable. It is imposed only on sales of
goods or services by persons engaged in business with an aggregate gross
annual sales exceeding P200,000.00. Small corner sari-sari stores are
consequently exempt from its application. Likewise exempt from the tax
are sales of farm and marine products, so that the costs of basic food and
other necessities, spared as they are from the incidence of the VAT, are
expected to be relatively lower and within the reach of the general
public.chanroblesvirtualawlibrarychanrobles virtual law library
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by
the Cooperative Union of the Philippines, Inc. (CUP), while petitioner Juan
T. David argues that the law contravenes the mandate of Congress to
provide for a progressive system of taxation because the law imposes a flat
rate of 10% and thus places the tax burden on all taxpayers without regard
to their ability to pay.chanroblesvirtualawlibrarychanrobles virtual law
library
The Constitution does not really prohibit the imposition of indirect taxes
which, like the VAT, are regressive. What it simply provides is that
Congress shall "evolve a progressive system of taxation." The
constitutional provision has been interpreted to mean simply that "direct
taxes are . . . to be preferred [and] as much as possible, indirect taxes
should be minimized." (E. FERNANDO, THE CONSTITUTION OF THE
PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congress is
not to prescribe, but to evolve, a progressive tax system. Otherwise, sales
taxes, which perhaps are the oldest form of indirect taxes, would have
been prohibited with the proclamation of Art. VIII, �17(1) of the 1973
Constitution from which the present Art. VI, �28(1) was taken. Sales taxes
are also regressive.chanroblesvirtualawlibrarychanrobles virtual law library
Resort to indirect taxes should be minimized but not avoidedentirely
because it is difficult, if not impossible, to avoid them by imposing such
taxes according to the taxpayers' ability to pay. In the case of the VAT, the
law minimizes the regressive effects of this imposition by providing for zero
rating of certain transactions (R.A. No. 7716, �3, amending �102 (b) of
the NIRC), while granting exemptions to other transactions. (R.A. No.
7716, �4, amending �103 of the
NIRC).chanroblesvirtualawlibrarychanrobles virtual law library
Thus, the following transactions involving basic and essential goods and
services are exempted from the VAT:
(a) Goods for consumption or use which are in their original state
(agricultural, marine and forest products, cotton seeds in their original
state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and
poultry feeds) and goods or services to enhance agriculture (milling of
palay, corn sugar cane and raw sugar, livestock, poultry feeds, fertilizer,
ingredients used for the manufacture of
feeds).chanroblesvirtualawlibrarychanrobles virtual law library
(b) Goods used for personal consumption or use (household and personal
effects of citizens returning to the Philippines) and or professional use, like
professional instruments and implements, by persons coming to the
Philippines to settle here.chanroblesvirtualawlibrarychanrobles virtual law
library
(c) Goods subject to excise tax such as petroleum products or to be used
for manufacture of petroleum products subject to excise tax and services
subject to percentage tax.chanroblesvirtualawlibrarychanrobles virtual law
library
(d) Educational services, medical, dental, hospital and veterinary services,
and services rendered under employer-employee
relationship.chanroblesvirtualawlibrarychanrobles virtual law library
(e) Works of art and similar creations sold by the artist
himself.chanroblesvirtualawlibrarychanrobles virtual law library
(f) Transactions exempted under special laws, or international
agreements.chanroblesvirtualawlibrarychanrobles virtual law library
(g) Export-sales by persons not VAT-
registered.chanroblesvirtualawlibrarychanrobles virtual law library
(h) Goods or services with gross annual sale or receipt not
exceeding P500,000.00.chanroblesvirtualawlibrarychanrobles virtual law
library
(Respondents' Consolidated Comment on the Motions for Reconsideration,
pp. 58-60)
On the other hand, the transactions which are subject to the VAT are those
which involve goods and services which are used or availed of mainly by
higher income groups. These include real properties held primarily for sale
to customers or for lease in the ordinary course of trade or business, the
right or privilege to use patent, copyright, and other similar property or
right, the right or privilege to use industrial, commercial or scientific
equipment, motion picture films, tapes and discs, radio, television, satellite
transmission and cable television time, hotels, restaurants and similar
places, securities, lending investments, taxicabs, utility cars for rent,
tourist buses, and other common carriers, services of franchise grantees of
telephone and telegraph.chanroblesvirtualawlibrarychanrobles virtual law
library
The problem with CREBA's petition is that it presents broad claims of
constitutional violations by tendering issues not at retail but at wholesale
and in the abstract. There is no fully developed record which can impart to
adjudication the impact of actuality. There is no factual foundation to show
in the concrete the application of the law to actual contracts and exemplify
its effect on property rights. For the fact is that petitioner's members have
not even been assessed the VAT. Petitioner's case is not made concrete by
a series of hypothetical questions asked which are no different from those
dealt with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges
arbitrariness. A mere allegation, as here, does not suffice. There must be a
factual foundation of such unconstitutional taint. Considering that petitioner
here would condemn such a provision as void on its face, he has not made
out a case. This is merely to adhere to the authoritative doctrine that
where the due process and equal protection clauses are invoked,
considering that they are not fixed rules but rather broad standards, there
is a need for proof of such persuasive character as would lead to such a
conclusion. Absent such a showing, the presumption of validity must
prevail.chanroblesvirtualawlibrarychanrobles virtual law library
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a
concrete case. It may be that postponement of adjudication would result in
a multiplicity of suits. This need not be the case, however. Enforcement of
the law may give rise to such a case. A test case, provided it is an actual
case and not an abstract or hypothetical one, may thus be
presented.chanroblesvirtualawlibrarychanrobles virtual law library
Nor is hardship to taxpayers alone an adequate justification for
adjudicating abstract issues. Otherwise, adjudication would be no different
from the giving of advisory opinion that does not really settle legal
issues.chanroblesvirtualawlibrarychanrobles virtual law library
We are told that it is our duty under Art. VIII, �1, �2 to decide whenever
a claim is made that "there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government." This duty can only arise if an actual
case or controversy is before us. Under Art . VIII, �5 our jurisdiction is
defined in terms of "cases" and all that Art. VIII, �1, �2 can plausibly
mean is that in the exercise of that jurisdiction we have the judicial
power to determine questions of grave abuse of discretion by any branch
or instrumentality of the government.chanroblesvirtualawlibrarychanrobles
virtual law library
Put in another way, what is granted in Art. VIII, �1, �2 is "judicial power,"
which is "the power of a court to hear and decide cases pending between
parties who have the right to sue and be sued in the courts of law and
equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from
legislative and executive power. This power cannot be directly appropriated
until it is apportioned among several courts either by the Constitution, as in
the case of Art. VIII, �5, or by statute, as in the case of the Judiciary Act
of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P.
Blg. 129). The power thus apportioned constitutes the court's "jurisdiction,"
defined as "the power conferred by law upon a court or judge to take
cognizance of a case, to the exclusion of all others." (United States v.
Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its
jurisdiction, this Court cannot inquire into any allegation of grave abuse of
discretion by the other departments of the
government.chanroblesvirtualawlibrarychanrobles virtual law library
VIII. Alleged violation of policy towards cooperatives. On the other hand,
the Cooperative Union of the Philippines (CUP), after briefly surveying the
course of legislation, argues that it was to adopt a definite policy of
granting tax exemption to cooperatives that the present Constitution
embodies provisions on cooperatives. To subject cooperatives to the VAT
would therefore be to infringe a constitutional policy. Petitioner claims that
in 1973, P.D. No. 175 was promulgated exempting cooperatives from the
payment of income taxes and sales taxes but in 1984, because of the crisis
which menaced the national economy, this exemption was withdrawn by
P.D. No. 1955; that in 1986, P.D. No. 2008 again granted cooperatives
exemption from income and sales taxes until December 31, 1991, but, in
the same year, E.O. No. 93 revoked the exemption; and that finally in
1987 the framers of the Constitution "repudiated the previous actions of
the government adverse to the interests of the cooperatives, that is, the
repeated revocation of the tax exemption to cooperatives and instead
upheld the policy of strengthening the cooperatives by way of the grant of
tax exemptions," by providing the following in Art. XII:
�1. The goals of the national economy are a more equitable distribution of
opportunities, income, and wealth; a sustained increase in the amount of
goods and services produced by the nation for the benefit of the people;
and an expanding productivity as the key to raising the quality of life for
all, especially the underprivileged.chanroblesvirtualawlibrarychanrobles
virtual law library
The State shall promote industrialization and full employment based on
sound agricultural development and agrarian reform, through industries
that make full and efficient use of human and natural resources, and which
are competitive in both domestic and foreign markets. However, the State
shall protect Filipino enterprises against unfair foreign competition and
trade practices.chanroblesvirtualawlibrarychanrobles virtual law library
In the pursuit of these goals, all sectors of the economy and all regions of
the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar collective
organizations, shall be encouraged to broaden the base of their
ownership.chanroblesvirtualawlibrarychanrobles virtual law library
�15. The Congress shall create an agency to promote the viability and
growth of cooperatives as instruments for social justice and economic
development.
Petitioner's contention has no merit. In the first place, it is not true that
P.D. No. 1955 singled out cooperatives by withdrawing their exemption
from income and sales taxes under P.D. No. 175, �5. What P.D. No. 1955,
�1 did was to withdraw the exemptions and preferential treatments
theretofore granted to private business enterprises in general, in view of
the economic crisis which then beset the nation. It is true that after P.D.
No. 2008, �2 had restored the tax exemptions of cooperatives in 1986, the
exemption was again repealed by E.O. No. 93, �1, but then again
cooperatives were not the only ones whose exemptions were
withdrawn. The withdrawal of tax incentives applied to all, including
government and private entities. In the second place, the Constitution does
not really require that cooperatives be granted tax exemptions in order to
promote their growth and viability. Hence, there is no basis for petitioner's
assertion that the government's policy toward cooperatives had been one
of vacillation, as far as the grant of tax privileges was concerned, and that
it was to put an end to this indecision that the constitutional provisions
cited were adopted. Perhaps as a matter of policy cooperatives should be
granted tax exemptions, but that is left to the discretion of Congress. If
Congress does not grant exemption and there is no discrimination to
cooperatives, no violation of any constitutional policy can be
charged.chanroblesvirtualawlibrarychanrobles virtual law library
electric and other cooperatives (farmers cooperatives, producers
cooperatives, marketing cooperatives, etc.) apparently rests on a
congressional determination that there is greater need to provide cheaper
electric power to as many people as possible, especially those living in the
rural areas, than there is to provide them with other necessities in life. We
cannot say that such classification is
unreasonable.chanroblesvirtualawlibrarychanrobles virtual law library
We have carefully read the various arguments raised against the
constitutional validity of R.A. No. 7716. We have in fact taken the
extraordinary step of enjoining its enforcement pending resolution of these
cases. We have now come to the conclusion that the law suffers from none
of the infirmities attributed to it by petitioners and that its enactment by
the other branches of the government does not constitute a grave abuse of
discretion. Any question as to its necessity, desirability or expediency must
be addressed to Congress as the body which is electorally responsible,
remembering that, as Justice Holmes has said, "legislators are the ultimate
guardians of the liberties and welfare of the people in quite as great a
degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194
U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in
G.R. No. 115543 does in arguing that we should enforce the public
accountability of legislators, that those who took part in passing the law in
question by voting for it in Congress should later thrust to the courts the
burden of reviewing measures in the flush of enactment. This Court does
not sit as a third branch of the legislature, much less exercise a veto power
over legislation.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the motions for reconsideration are denied with finality and
the temporary restraining order previously issued is hereby
lifted.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.

Indeed, petitioner's theory amounts to saying that under the Constitution

cooperatives are exempt from taxation. Such theory is contrary to the
Constitution under which only the following are exempt from taxation:
charitable institutions, churches and parsonages, by reason of Art. VI, �28
(3), and non-stock, non-profit educational institutions by reason of Art.
XIV, �4 (3).chanroblesvirtualawlibrarychanrobles virtual law library

CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it
denies cooperatives the equal protection of the law because electric
cooperatives are exempted from the VAT. The classification between
 [G.R. No. 118303. January 31, 1996.]
SENATOR HEHERSON T. ALVAREZ, SENATOR JOSE D. LINA, JR., MR.
NICASIO B. BAUTISTA, MR. JESUS P. GONZAGA, MR. SOLOMON D.
MAYLEM, LEONORA C. MEDINA, CASIANO S. ALIPON, Petitioners, v.
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive
Secretary, HON. RAFAEL ALUNAN, in his capacity as Secretary of
Local Government, HON. SALVADOR ENRIQUEZ, in his capacity as
Secretary of Budget, THE COMMISSION ON AUDIT, HON. JOSE
MIRANDA, in his capacity as Municipal Mayor of Santiago and HON.
CHARITO MANUBAY, HON. VICTORINO MIRANDA, JR., HON.
ARTEMIO ALVAREZ, HON. DANILO VERGARA, HON. PETER DE
JESUS, HON. NELIA NATIVIDAD, HON. CELSO CALEON and HON.
ABEL MUSNGI, in their capacity as SANGGUNIANG BAYAN
MEMBERS, MR. RODRIGO L. SANTOS, in his capacity as Municipal
Treasurer, and ATTY. ALFREDO S. DIRIGE, in his capacity as
Municipal Administrator, Respondents.
Belo, Gozon, Elma, Parel, Asuncion & Lucila, for Petitioners.
Rene P. Pine, for Private Respondents.
SYLLABUS
1. ADMINISTRATIVE LAW; LOCAL GOVERNMENT CODE; LOCAL
GOVERNMENT, CONSTRUED. — A local Government Unit is a political
subdivision of the State which is constituted by law and possessed of
substantial control over its own affairs. Remaining to be an intra sovereign
subdivision of one sovereign nation, but not intended, however, to be an
emperium in emperia, the local government unit is autonomous in the
sense that it is given more powers, authority, responsibilities and
resources.
2. ID.; ID.; INCOME DEFINED. — Income is defined in the Local
Government Code to be all revenues and receipts collected or received
forming the gross accretions of funds of the local government unit.
3. ID.; ID.; INTERNAL REVENUE ALLOTMENT (IRA) ARE ITEMS OF INCOME.
— The IRAs are items of income because they form part of the gross
accretion of the funds of the local government unit. The IRAs regularly and
automatically accrue to the local treasury without need of any further
action on the part of the local government unit. They thus constitute
income which the local government can invariably rely upon as the source
of much needed funds.
4. ID.; ID.; ANNUAL INCOME DEFINED. — Department of Finance Order
No. 35-93 correctly encapsulizes the full import of the above disquisition
when it defined ANNUAL INCOME to be "revenues and receipts realized by
provinces, cities and municipalities from regular sources of the Local
General Fund including the internal revenue allotment and other shares
provided for in Sections 284, 290 and 291 of the Code, but exclusive of
n.on.-recurring receipts, such as other national aids, grants, financial
assistance, loan proceeds, sales of fixed assets, and similar others"
(Emphasis ours).
5. STATUTORY CONSTRUCTION; ORDER CONSTITUTING EXECUTIVE OR
CONTEMPORANEOUS CONSTRUCTION OF A STATUTE BY ADMINISTRATIVE
AGENCY CHARGED WITH THE TASK OF INTERPRETING THE SAME,
ENTITLED TO FULL RESPECT. — Such order, constituting executive or
contemporaneous construction of a statute by an administrative agency
charged with the task of interpreting and applying the same, is entitled to
full respect and should be accorded great weight by the courts, unless such
construction is clearly shown to be in sharp conflict with the Constitution,
the governing statute, or other laws.
6. CONSTITUTIONAL LAW; LEGISLATIVE; BILL CONVERTING
MUNICIPALITY TO CITY MUST ORIGINATE FROM THE HOUSE; PASSING OF
SUBSEQUENT BILL COVERING THE SAME MUNICIPALITY, NO ADVERSE
EFFECT. — Although a bill of local application like HB No. 8817 should, by
constitutional prescription, originate exclusively in the House of
Representatives, the claim of petitioners that Republic Act No. 7720 did not
originate exclusively in the House of Representatives because a bill of the
same import, SB No. 1243, was passed in the Senate, is untenable because
it cannot be denied that HB No. 8817 was filed in the House of
Representatives first before SB No. 1243 was filed in the Senate.
Petitioners themselves cannot disavow their own admission that HB No.
8817 was filed on April 18, 1993 while SB No. 1243 was filed on May 19,
1993. The filing of HB No. 8817 was thus precursive not only of the said
Act in question but also of SB No. 1243. Thus, HB No. 8817, was the bill
that initiated the legislative process that culminated in the enactment of
Republic Act No. 7720. No violation of Section 24, Article VI, of the 1987
Constitution is perceptible under the circumstances attending the instant
controversy.
7. ID.; ID.; FILING IN THE SENATE OF A SUBSTITUTE BILL IN
ANTICIPATION OF ITS RECEIPT OF THE HOUSE BILL WITHOUT ACTING
THEREON DOES NOT CONTRAVENE CONSTITUTIONAL REQUIREMENT. —
Petitioners themselves acknowledge that HB No. 8817 was already
approved on Third Reading and duly transmitted to the Senate when the
Senate Committee on Local Government conducted its public hearing on
HB No. 8817. HB No. 8817 was approved on the Third Reading on
December 17, 1993 and transmitted to the Senate on January 28, 1994; a
little less than a month thereafter, or on February 23, 1994, the Senate
Committee on Local Government conducted public hearings on SB No.
1243. Clearly, the Senate held in abeyance any action on SB No. 1243 until
it received HB No. 8817, already approved on the Third Reading, from the
House of Representatives. The filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, does not contravene
the constitutional requirement that a bill of local application should
originate in the House of Representatives, for as long as the Senate does
not act thereupon until it receives the House bill.
8. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; EVERY LAW IS PRESUMED
CONSTITUTIONAL; CONSTITUTIONALITY OF R.A. 7720 NOT OVERCOME IN
CASE AT BAR. — It is a well-entrenched jurisprudential rule that on the
side of every law lies the presumption of constitutionality. Consequently,
for RA No. 7720 to be nullified, it must be shown that there is a clear and
unequivocal breach of the Constitution, not merely a doubtful and
equivocal one; in other words, the grounds for nullity must be clear and
beyond reasonable doubt. Those who petition this court to declare a law to
be unconstitutional must clearly and fully establish the basis that will justify
such a declaration; otherwise, their petition must fail. Taking into
consideration the justification of our stand on the immediately preceding
ground raised by petitioners to challenge the constitutionality of RA No.
7720, the Court stands on the holding that petitioners have failed to
overcome the presumption. The dismissal of this petition is, therefore,
inevitable.
DECISION
HERMOSISIMA. JR., J.:
Of main concern to the petitioners is whether Republic Act No. 7720, just
recently passed by Congress and signed by the President into law, is
constitutionally infirm.
Indeed, in this Petition for Prohibition with prayer for Temporary
Restraining Order and Preliminary Prohibitory Injunction, petitioners assail
the validity of Republic Act No. 7720, entitled, "An Act Converting the
Municipality of Santiago, Isabela into an Independent Component City to be
known as the City of Santiago," mainly because the Act allegedly did not
originate exclusively in the House of Representatives as mandated by
Section 24, Article VI of the 1987 Constitution.chanroblesvirtuallawlibrary
Also, petitioners claim that the Municipality of Santiago has not met the
minimum average annual income required under Section 450 of the Local
Government Code of 1991 in order to be converted into a component city.
Undisputed is the following chronicle of the metamorphosis of House Bill
No. 8817 into Republic Act No. 7720:chanrob1es virtual 1aw library
On April 18, 1993, HB No. 8817, entitled "An Act Converting the
Municipality of Santiago into an Independent Component City to be known
as the City of Santiago," was filed in the House of Representatives with
Representative Antonio Abaya as principal author. Other sponsors included
Representatives Ciriaco Alfelor, Rodolfo Albano, Santiago Respicio and
Faustino Dy. The bill was referred to the House Committee on Local
Government and the House Committee on Appropriations on May 5,
1993.chanroblesvirtuallawlibrary
On May 19, 1993, June 1, 1993, November 28, 1993, and December 1,
1993, public hearings on HB No. 8817 were conducted by the House
Committee on Local Government. The committee submitted to the House a
favorable report, with amendments, on December 9, 1993.
On December 13, 1993, HB No. 8817 was passed by the House of
Representatives on Second Reading and was approved on Third Reading on
December 17, 1993. On January 28, 1994, HB No. 8817 was transmitted to
the Senate.
Meanwhile, a counterpart of HB No. 8817, Senate Bill No. 1243, entitled,
"An Act Converting the Municipality of Santiago into an Independent
Component City to be Known as the City of Santiago," was filed in the
Senate. It was introduced by Senator Vicente Sotto III, as principal
sponsor, on May 19, 1993. This was just after the House of
Representatives had conducted its first public hearing on HB No.
8817.chanroblesvirtuallawlibrary
On February 23, 1994, or a little less than a month after HB No. 8817 was
transmitted to the Senate, the Senate Committee on Local Government
conducted public hearings on SB No. 1243. On March 1, 1994, the said
committee submitted Committee Report No. 378 on HB No. 8817, with the
recommendation that it be approved without amendment, taking into
consideration the reality that H.B. No. 8817 was on all fours with SB No.
1243. Senator Heherson T. Alvarez, one of the herein petitioners, indicated
his approval thereto by signing said report as member of the Committee on
Local Government.
On March 3, 1994, Committee Report No. 378 was passed by the Senate
on Second Reading and was approved on Third Reading on March 14,
1994. On March 22, 1994, the House of Representatives, upon being
apprised of the action of the Senate, approved the amendments proposed
by the Senate.
The enrolled bill, submitted to the President on April 12, 1994, was signed
by the Chief Executive on May 5, 1994 as Republic Act No. 7720. When a
plebiscite on the Act was held on July 13, 1994, a great majority of the
registered voters of Santiago voted in favor of the conversion of Santiago
into a city.chanroblesvirtuallawlibrary
The question as to the validity of Republic Act No. 7720 hinges on the
following twin issues: (I) Whether or not the Internal Revenue Allotments
(IRAs) are to included in the computation of the average annual income of
a municipality for purposes of its conversion into an independent
component city, and (II) Whether or not, considering that the Senate
passed SB No. 1243, its own version of HB No. 8817, Republic Act No.
7720 can be said to have originated in the House of Representatives.
I. The annual income of a local government unit includes the IRAs.
Petitioners claim that Santiago could not qualify into a component city
because its average annual last two (2) consecutive years based on 1991
constant prices falls below the required annual income of Pesos
(P20,000,000.00) for its conversion into a city, petitioners having
computed Santiago’s average annual income in the following manner:
Total income (at 1991 constant prices) for 1991 P20,379,057.07
Total income (at 1991 constant prices) for 1992 P21,570,106.87
——————
Total income for 1991 and 1992 P41,949,163.94
Minus:
IRAs for 1991 and 1992 P15,730,043.00
——————
Total income for 1991 and 1992 P26,219,120.94
Average Annual Income P13,109,560.47
====================================
By dividing the total income of Santiago for calendar years 1991 and 1992,
after deducting the IRAs, the average annual income arrived at would only
be P13,109,560.47 based on the 1991 constant prices. Thus, petitioners
claim that Santiago’s income is far below the aforesaid Twenty Million
Pesos average annual income requirement.
The certification issued by the Bureau of Local Government Finance of the
Department of Finance, which indicates Santiago’s average annual income
to be P20,974,581.97, is allegedly not accurate as the Internal Revenue
Allotments were not excluded from the computation. Petitioners asseverate
that the IRAs are not actually income but transfers and/or budgetary aid
from the national government and that they fluctuate, increase or
decrease, depending on factors like population, land and equal sharing.
In this regard, we hold that petitioners’ asseverations are untenable
because Internal Revenue Allotments form part of the income of Local
Government Units.chanroblesvirtuallawlibrary
It is true that for a municipality to be converted into a component city, it
must, among others, have an average annual income of at least Twenty
Million Pesos for the last two (2) consecutive years based on 1991 constant
prices. 1 Such income must be duly certified by the Department of Finance.
2
Resolution of the controversy regarding compliance by the Municipality of
Santiago with the aforecited income requirement hinges on a correlative
and contextual explication of the meaning of internal revenue allotments
(IRAs) vis-a-vis the notion of income of a local government unit and the
principles of local autonomy and decentralization underlying the
institutionalization and intensified empowerment of the local government
system.
A Local Government Unit is a political subdivision of the State which is
constituted by law and possessed of substantial control over its own affairs.
3 Remaining to be an intra sovereign subdivision of one sovereign nation,
but not intended, however, to be an imperium in imperio, 4 the local
government unit is autonomous in the sense that it is given more powers,
authority, responsibilities and resources. 5 Power which used to be highly
centralized in Manila, is thereby deconcentrated, enabling especially the
peripheral local government units to develop not only at their own pace
and discretion but also with their own resources and assets. 6
The practical side to development through a decentralized local
government system certainly concerns the matter of financial resources.
With its broadened powers and increased responsibilities, a local
government unit must now operate on a much wider scale. More extensive
operations, in turn, entail more expenses. Understandably, the vesting of
duty, responsibility and accountability in every local government unit is
accompanied with a provision for reasonably adequate resources to
discharge its powers and effectively carry out its functions. 7 Availment of
such resources is effectuated through the vesting in every local
government unit of (1) the right to create and broaden its own source of
revenue; (2) the right to be allocated a just share in national taxes such
share being in the form of internal revenue allotments (IRAs); and (3) the
right to be given its equitable share in the proceeds of the utilization and
development of the national wealth, if any, within its territorial boundaries.
8 full respect and should be accorded great weight by the courts, unless such
The funds generated from local taxes, IRAs and national wealth utilization
proceeds accrue to the general fund of the local government and are used
to finance its operations subject to specified modes of spending the same
as provided for in the Local Government Code and its implementing rules
and regulations. For instance, not less than twenty percent (20%) of the
IRAs must be set aside for local development projects. 9 As such, for
purposes of budget preparation, which budget should reflect the estimates
of the income of the local government unit, among others, the IRAs and
the share in the national wealth utilization proceeds are considered items of
income. This is as it should be, since income is defined in the Local
Government Code to be all revenues and receipts collected or received
forming the gross accretions of funds of the local government unit. 10
The IRAs are items of income because they form part of the gross accretion
of the funds of the local government unit. The IRAs regularly and
automatically accrue to the local treasury without need of any further
action on the part of the local government unit. 11 They thus constitute
income which the local government can invariably rely upon as the source
of much needed funds. For purposes of converting the Municipality of
Santiago into a city, the Department of Finance certified, among others,
that the municipality had an average annual income of at least Twenty
Million Pesos for the last two (2) consecutive years based on 1991 constant
prices. This, the Department of Finance did after including the IRAs in its
computation of said average annual income.chanroblesvirtuallawlibrary
Furthermore, Section 450 (c) of the Local Government Code provides that
"the average annual income shall include the income accruing to the
general fund, exclusive of special funds, transfers, and non-recurring
income.’’ To reiterate, IRAs are a regular, recurring item of income; nil is
there a basis, too, to classify the same as a special fund or transfer, since
IRAs have a technical definition and meaning all its own as used in the
Local Government Code that unequivocally makes it distinct from special
funds or transfers referred to when the Code speaks of "funding support
from the national government, its instrumentalities and government-
owned- or -controlled corporations." 12
Thus, Department of Finance Order No. 35-93 13 correctly encapsulizes the
full import of the above disquisition when it defined ANNUAL INCOME to be
"revenues and receipts realized by provinces cities and municipalities from
regular sources of the Local General Fund including the internal revenue
allotment and other shares provided for in Sections 284, 290 and 291 of
the Code, but exclusive of non-recurring receipts, such as other national
aids, grants, financial assistance, loan proceeds, sales of fixed assets, and
similar others" (Underscoring ours). 14 Such order, constituting executive
or contemporaneous construction of a statute by an administrative agency
charged with the task of interpreting and applying the same, is entitled to
construction is clearly shown to be in sharp conflict with the Constitution,
the governing statute, or other laws. 15
II. In the enactment of RA No. 7720, there was compliance with Section
24, Article VI of the 1987 Constitution.
Although a bill of local application like HB No. 8817 should, by
constitutional prescription, 16 originate exclusively in the House of
Representatives, the claim of petitioners that Republic Act No. 7720 did not
originate exclusively in the House of Representatives because a bill of the
same import, SB No. 1243, was passed in the Senate, is untenable because
it cannot be denied that HB No. 8817 was filed in the House of
Representatives first before SB No. 1243 was filed in the Senate.
Petitioners themselves cannot disavow their own admission that HB No.
8817 was filed on April 18, 1993 while SB No. 1243 was filed on May 19,
1993. The filing of HB No. 8817 was thus precursive not only of the said
Act in question but also of SB No. 1243. Thus, HB No. 8817, was the bill
that initiated the legislative process that culminated in the enactment of
Republic Act No. 7720. No violation of Section 24, Article VI, of the 1987
Constitution is perceptible under the circumstances attending the instant
controversy.chanroblesvirtuallawlibrary
Furthermore, petitioners themselves acknowledge that HB No. 8817 was
already approved on Third Reading and duly transmitted to the Senate
when the Senate Committee on Local Government conducted its public
hearing on HB No. 8817. HB No. 8817 was approved on the Third Reading
on December 17, 1993 and transmitted to the Senate on January 28,
1994; a little less than a month thereafter or on February 23, 1994, the
Senate Committee on Local Government conducted public hearings on SB
No. 1243. Clearly, the Senate held in abeyance any action on SB No. 1243
until it received HB No. 8817, already approved on the Third Reading, from
the House of Representatives. The filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, does not contravene
the constitutional requirement that a bill of local application should
originate in the House of Representatives, for as long as the Senate does
not act thereupon until it receives the House bill.
We have already addressed this issue in the case of Tolentino v. Secretary
of Finance. 17 There, on the matter of the Expanded Value Added Tax
(EVAT) Law, which, as a revenue bill, is nonetheless constitutionally
required to originate exclusively in the House of Representatives, we
explained:jgc:chanrobles.com.ph
". . . To begin with, it is not the law — but the revenue bill — which is
required by the Constitution to ‘originate exclusively’ in the House of
Representatives. It is important to emphasize this, because a bill
originating in the House may undergo such extensive changes in the
Senate that the result may be a rewriting of the whole. . . . as a result of
the Senate action, a distinct bill may be produced. To insist that a revenue
statute — and not only the bill which initiated the legislative process
culminating in the enactment of the law — must substantially be the same
as the House bill would be to deny the Senate’s power not only to ‘concur
with amendments’ but also to ‘propose amendments.’ It would be to violate
the co-equality of legislative power of the two houses of Congress and in
fact make the House superior to the Senate.
must clearly and fully establish the basis that will justify such a
declaration; otherwise, their petition must fail. Taking into consideration
the justification of our stand on the immediately preceding ground raised
by petitioners to challenge the constitutionality of RA No. 7720, the Court
stands on the holding that petitioners have failed to overcome the
presumption. The dismissal of this petition is, therefore, inevitable.
WHEREFORE, the instant petition is DISMISSED for lack of merit with costs
against petitioners.

x x x SO ORDERED.chanrobles

It is insisted, however, that S. No. 1630 was passed not in substitution of

H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed and that
what the Senate did was merely to ‘take [H. No. 11197] into consideration’
in enacting S. No. 1630. There is really no difference between the Senate
preserving H. No. 11197 up to the enacting clause and then writing its own
version following the enacting clause (which, it would seem petitioners
admit is an amendment by substitution), and, on the other hand,
separately presenting a bill of its own on the same subject matter. In either
case the result are two bills on the same subject.

Indeed, what the Constitution simply means is that the initiative for filing
revenue, tariff, or tax bills, bills authorizing an increase of the public debt,
private bills and bills of local application must come from the House of
Representatives on the theory that, elected as they are from the districts,
the members of the House can be expected to be more sensitive to the
local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the
national perspective. Both views are thereby made to bear n the enactment
of such laws.

Nor does the Constitution prohibit the filing in the Senate of a substitute
bill in anticipation of its receipt of the bill from the House, so long as action
by the Senate as a body is withheld pending receipt of the House Bill. . . ."
18

III. Every law, including RA No. 7720, has in its favor the presumption of
constitutionality.

It is a well-entrenched jurisprudential rule that on the side of every law lies

the presumption of constitutionality. 19 Consequently, for RA No. 7720 to
be nullified it must be shown that there is a clear and unequivocal breach
of the Constitution, not merely a doubtful and equivocal one; in other
words, the grounds for nullity must be clear and beyond reasonable doubt.
20 Those who petition this court to declare a law to be unconstitutional
 LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP),
REPRESENTED BY ITS CHAIRMAN AND COUNSEL, CEFERINO
PADUA, MEMBERS, ALBERTO ABELEDA, JR., ELEAZAR ANGELES,
GREGELY FULTON ACOSTA, VICTOR AVECILLA, GALILEO BRION,
ANATALIA BUENAVENTURA, EFREN CARAG, PEDRO CASTILLO,
NAPOLEON CORONADO, ROMEO ECHAUZ, ALFREDO DE GUZMAN,
ROGELIO KARAGDAG, JR., MARIA LUZ ARZAGA-MENDOZA, LEO LUIS
MENDOZA, ANTONIO P. PAREDES, AQUILINO PIMENTEL III, MARIO
REYES, EMMANUEL SANTOS, TERESITA SANTOS, RUDEGELIO
TACORDA, SECRETARY GEN. ROLANDO ARZAGA, BOARD OF
CONSULTANTS, JUSTICE ABRAHAM SARMIENTO, SEN. AQUILINO
PIMENTEL, JR., AND BARTOLOME FERNANDEZ, JR., PETITIONERS,
VS. THE SECRETARY OF BUDGET AND MANAGEMENT, THE
TREASURER OF THE PHILIPPINES, THE COMMISSION ON AUDIT,
AND THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE
HOUSE OF REPRESENTATIVES IN REPRESENTATION OF THE
MEMBERS OF THE CONGRESS, RESPONDENTS.
DECISION
MENDOZA, J.:
For consideration of the Court is an original action for certiorari assailing
the constitutionality and legality of the implementation of the Priority
Development Assistance Fund (PDAF) as provided for in Republic
Act (R.A.) 9206 or the General Appropriations Act for 2004 (GAA of
2004). Petitioner Lawyers Against Monopoly and Poverty (LAMP), a group
of lawyers who have banded together with a mission of dismantling all
forms of political, economic or social monopoly in the country,1 also sought
the issuance of a writ of preliminary injunction or temporary restraining
order to enjoin respondent Secretary of the Department of Budget and
Management (DBM) from making, and, thereafter, releasing budgetary
allocations to individual members of Congress as “pork barrel” funds out of
PDAF. LAMP likewise aimed to stop the National Treasurer and the
Commission on Audit (COA) from enforcing the questioned provision.cralaw
On September 14, 2004, the Court required respondents, including the
President of the Senate and the Speaker of the House of Representatives,
to comment on the petition. On April 7, 2005, petitioner filed a Reply
thereto.2 On April 26, 2005, both parties were required to submit their
respective memoranda.
The GAA of 2004 contains the following provision subject of this petition:
PRIORITY DEVELOPMENT ASSISTANCE FUND
For fund requirements of priority development programs and projects, as
indicated hereunder - P8,327,000,000.00
Xxxxx
Special Provision
1. Use and Release of the Fund. The amount herein appropriated shall be
used to fund priority programs and projects or to fund the required
counterpart for foreign-assisted programs and projects: PROVIDED, That
such amount shall be released directly to the implementing agency or Local
Government Unit concerned: PROVIDED, FURTHER, That the allocations
authorized herein may be realigned to any expense class, if deemed
necessary: PROVIDED FURTHERMORE, That a maximum of ten percent
(10%) of the authorized allocations by district may be used for
procurement of rice and other basic commodities which shall be purchased
from the National Food Authority.
Petitioner’s Position
According to LAMP, the above provision is silent and, therefore, prohibits
an automatic or direct allocation of lump sums to individual senators and
congressmen for the funding of projects. It does not empower individual
Members of Congress to propose, select and identify programs and projects
to be funded out of PDAF. “In previous GAAs, said allocation and
identification of projects were the main features of the ‘pork barrel’ system
technically known as Countrywide Development Fund (CDF). Nothing of
the sort is now seen in the present law (R.A. No. 9206 of CY 2004).3 In its
memorandum, LAMP insists that “[t]he silence in the law of direct or even
indirect participation by members of Congress betrays a deliberate intent
on the part of the Executive and the Congress to scrap and do away with
the ‘pork barrel’ system.”4 In other words, “[t]he omission of the PDAF
provision to specify sums as ‘allocations’ to individual Members of Congress
is a ‘casus omissus’ signifying an omission intentionally made by Congress
that this Court is forbidden to supply.”5 Hence, LAMP is of the conclusion
that “the pork barrel has become legally defunct under the present state of
GAA 2004.”6
LAMP further decries the supposed flaws in the implementation of the
provision, namely: 1) the DBM illegally made and directly released
budgetary allocations out of PDAF in favor of individual Members of
Congress; and 2) the latter do not possess the power to propose, select
and identify which projects are to be actually funded by PDAF.
For LAMP, this situation runs afoul against the principle of separation of
powers because in receiving and, thereafter, spending funds for their
chosen projects, the Members of Congress in effect intrude into an
executive function. In other words, they cannot directly spend the funds, Likewise admitting that CDF and PDAF are “appropriations for substantially
the appropriation for which was made by them. In their individual similar, if not the same, beneficial purposes,” 14 the respondents
capacities, the Members of Congress cannot “virtually tell or dictate upon invoke Philconsa v. Enriquez,15 where CDF was described as an imaginative
the Executive Department how to spend taxpayer’s money.7 Further, the and innovative process or mechanism of implementing priority
authority to propose and select projects does not pertain to legislation. “It programs/projects specified in the law. In Philconsa, the Court upheld the
is, in fact, a non-legislative function devoid of constitutional authority of individual Members of Congress to propose and identify priority
sanction,”8 and, therefore, impermissible and must be considered nothing projects because this was merely recommendatory in nature. In said case,
less than malfeasance. The proposal and identification of the projects do it was also recognized that individual members of Congress far more than
not involve the making of laws or the repeal and amendment thereof, the President and their congressional colleagues were likely to be
which is the only function given to the Congress by the Constitution. Verily, knowledgeable about the needs of their respective constituents and the
the power of appropriation granted to Congress as a collegial body, “does priority to be given each project.
not include the power of the Members thereof to individually propose,
select and identify which projects are to be actually implemented and The Issues
funded - a function which essentially and exclusively pertains to the
Executive Department.”9 By allowing the Members of Congress to receive The respondents urge the Court to dismiss the petition for its failure to
direct allotment from the fund, to propose and identify projects to be establish factual and legal basis to support its claims, thereby lacking an
funded and to perform the actual spending of the fund, the implementation essential requisite of judicial review—an actual case or controversy.
of the PDAF provision becomes legally infirm and constitutionally
repugnant.
The Court’s Ruling
Respondents’ Position
To the Court, the case boils down to these issues: 1) whether or not the
10 mandatory requisites for the exercise of judicial review are met in this
For their part, the respondents contend that the petition miserably lacks
case; and 2) whether or not the implementation of PDAF by the Members
legal and factual grounds. Although they admit that PDAF traced its roots
of Congress is unconstitutional and illegal.
to CDF,11 they argue that the former should not be equated with “pork
barrel,” which has gained a derogatory meaning referring “to government
Like almost all powers conferred by the Constitution, the power of judicial
projects affording political opportunism.”12 In the petition, no proof of this
review is subject to limitations, to wit: (1) there must be an actual case or
was offered. It cannot be gainsaid then that the petition cannot stand on
controversy calling for the exercise of judicial power; (2) the person
inconclusive media reports, assumptions and conjectures alone. Without
challenging the act must have the standing to question the validity of the
probative value, media reports cited by the petitioner deserve scant
subject act or issuance; otherwise stated, he must have a personal and
consideration especially the accusation that corrupt legislators have
substantial interest in the case such that he has sustained, or will sustain,
allegedly proposed cuts or slashes from their pork barrel. Hence, the Court
direct injury as a result of its enforcement; (3) the question of
should decline the petitioner’s plea to take judicial notice of the supposed
constitutionality must be raised at the earliest opportunity; and (4) the
iniquity of PDAF because there is no concrete proof that PDAF, in the guise
issue of constitutionality must be the very lis mota of the case.16
of “pork barrel,” is a source of “dirty money” for unscrupulous lawmakers
and other officials who tend to misuse their allocations. These “facts” have
An aspect of the “case-or-controversy” requirement is the requisite of
no attributes of sufficient notoriety or general recognition accepted by the
“ripeness.” In the United States, courts are centrally concerned with
public without qualification, to be subjected to judicial notice. This applies,
whether a case involves uncertain contingent future events that may not
a fortiori, to the claim that Members of Congress are beneficiaries of
occur as anticipated, or indeed may not occur at all. Another concern is the
commissions (kickbacks) taken out of the PDAF allocations and releases
evaluation of the twofold aspect of ripeness: first, the fitness of the issues
and preferred by favored contractors representing from 20% to 50% of the
for judicial decision; and second, the hardship to the parties entailed by
approved budget for a particular project. 13 Suffice it to say, the
withholding court consideration. In our jurisdiction, the issue of ripeness is
perceptions of LAMP on the implementation of PDAF must not be based on
generally treated in terms of actual injury to the plaintiff. Hence, a
mere speculations circulated in the news media preaching the evils of pork
question is ripe for adjudication when the act being challenged has had a
barrel. Failing to present even an iota of proof that the DBM Secretary has
direct adverse effect on the individual challenging it.17
been releasing lump sums from PDAF directly or indirectly to individual
Members of Congress, the petition falls short of its cause.
In this case, the petitioner contested the implementation of an alleged
unconstitutional statute, as citizens and taxpayers. According to LAMP, the
practice of direct allocation and release of funds to the Members of
Congress and the authority given to them to propose and select projects is
the core of the law’s flawed execution resulting in a serious constitutional
transgression involving the expenditure of public funds. Undeniably, as
taxpayers, LAMP would somehow be adversely affected by this. A finding
of unconstitutionality would necessarily be tantamount to a misapplication
of public funds which, in turn, cause injury or hardship to taxpayers. This
affords “ripeness” to the present controversy.
Further, the allegations in the petition do not aim to obtain sheer legal
opinion in the nature of advice concerning legislative or executive action.
The possibility of constitutional violations in the implementation of PDAF
surely involves the interplay of legal rights susceptible of judicial
resolution. For LAMP, this is the right to recover public funds possibly
misapplied by no less than the Members of Congress. Hence, without
prejudice to other recourse against erring public officials, allegations of
illegal expenditure of public funds reflect a concrete injury that may have
been committed by other branches of government before the court
intervenes. The possibility that this injury was indeed committed cannot
be discounted. The petition complains of illegal disbursement of public
funds derived from taxation and this is sufficient reason to say that there
indeed exists a definite, concrete, real or substantial controversy before the
Court.
Anent locus standi, “the rule is that the person who impugns the validity of
a statute must have a personal and substantial interest in the case such
that he has sustained, or will sustained, direct injury as a result of its
enforcement.18 The gist of the question of standing is whether a party
alleges “such a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult
constitutional questions.”19 In public suits, the plaintiff, representing the
general public, asserts a “public right” in assailing an allegedly illegal
official action. The plaintiff may be a person who is affected no differently
from any other person, and could be suing as a “stranger,” or as a “citizen”
or “taxpayer.”20 Thus, taxpayers have been allowed to sue where there is
a claim that public funds are illegally disbursed or that public money is
being deflected to any improper purpose, or that public funds are wasted
through the enforcement of an invalid or unconstitutional law.21 Of greater
import than the damage caused by the illegal expenditure of public funds is
the mortal wound inflicted upon the fundamental law by the enforcement of
an invalid statute.22
Here, the sufficient interest preventing the illegal expenditure of money
raised by taxation required in taxpayers’ suits is established. Thus, in the
claim that PDAF funds have been illegally disbursed and wasted through
the enforcement of an invalid or unconstitutional law, LAMP should be
allowed to sue. The case of Pascual v. Secretary of Public Works23 is
authority in support of the petitioner:
In the determination of the degree of interest essential to give the requisite
standing to attack the constitutionality of a statute, the general rule is that
not only persons individually affected, but also taxpayers have sufficient
interest in preventing the illegal expenditures of moneys raised by
taxation and may therefore question the constitutionality of
statutes requiring expenditure of public moneys. [11 Am. Jur. 761,
Emphasis supplied.]
Lastly, the Court is of the view that the petition poses issues impressed
with paramount public interest. The ramification of issues involving the
unconstitutional spending of PDAF deserves the consideration of the Court,
warranting the assumption of jurisdiction over the petition.
Now, on the substantive issue.
The powers of government are generally divided into three branches: the
Legislative, the Executive and the Judiciary. Each branch is supreme within
its own sphere being independent from one another and it is this
supremacy which enables the courts to determine whether a law is
constitutional or unconstitutional.24 The Judiciary is the final arbiter on the
question of whether or not a branch of government or any of its officials
has acted without jurisdiction or in excess of jurisdiction or so capriciously
as to constitute an abuse of discretion amounting to excess of jurisdiction.
This is not only a judicial power but a duty to pass judgment on matters of
this nature.25
With these long-established precepts in mind, the Court now goes to the
crucial question: In allowing the direct allocation and release of PDAF funds
to the Members of Congress based on their own list of proposed projects,
did the implementation of the PDAF provision under the GAA of 2004
violate the Constitution or the laws?
The Court rules in the negative.
In determining whether or not a statute is unconstitutional, the Court does
not lose sight of the presumption of validity accorded to statutory acts of
Congress. In Fariñas v. The Executive Secretary,26 the Court held that:
Every statute is presumed valid. The presumption is that the legislature
intended to enact a valid, sensible and just law and one which operates no
further than may be necessary to effectuate the specific purpose of the
law. Every presumption should be indulged in favor of the
constitutionality and the burden of proof is on the party alleging
that there is a clear and unequivocal breach of the Constitution.

To justify the nullification of the law or its implementation, there must be a
clear and unequivocal, not a doubtful, breach of the Constitution. In case of
doubt in the sufficiency of proof establishing unconstitutionality, the Court
must sustain legislation because “to invalidate [a law] based on x x x
baseless supposition is an affront to the wisdom not only of the legislature
that passed it but also of the executive which approved it.”27 This
presumption of constitutionality can be overcome only by the clearest
showing that there was indeed an infraction of the Constitution, and only
when such a conclusion is reached by the required majority may the Court
pronounce, in the discharge of the duty it cannot escape, that the
challenged act must be struck down.28
The petition is miserably wanting in this regard. LAMP would have the
Court declare the unconstitutionality of the PDAF’s enforcement based on
the absence of express provision in the GAA allocating PDAF funds to the
Members of Congress and the latter’s encroachment on executive power in
proposing and selecting projects to be funded by PDAF. Regrettably, these
allegations lack substantiation. No convincing proof was presented
showing that, indeed, there were direct releases of funds to the Members
of Congress, who actually spend them according to their sole
discretion. Not even a documentation of the disbursement of funds by the
DBM in favor of the Members of Congress was presented by the petitioner
to convince the Court to probe into the truth of their claims. Devoid of any
pertinent evidentiary support that illegal misuse of PDAF in the form of
kickbacks has become a common exercise of unscrupulous Members of
Congress, the Court cannot indulge the petitioner’s request for rejection of
a law which is outwardly legal and capable of lawful enforcement. In a
case like this, the Court’s hands are tied in deference to the presumption of
constitutionality lest the Court commits unpardonable judicial legislation.
The Court is not endowed with the power of clairvoyance to divine from
scanty allegations in pleadings where justice and truth lie.29 Again,
newspaper or electronic reports showing the appalling effects of PDAF
cannot be appreciated by the Court, “not because of any issue as to their
truth, accuracy, or impartiality, but for the simple reason that facts must
be established in accordance with the rules of evidence.”30
Hence, absent a clear showing that an offense to the principle of separation
of powers was committed, much less tolerated by both the Legislative and
Executive, the Court is constrained to hold that a lawful and regular
government budgeting and appropriation process ensued during the
enactment and all throughout the implementation of the GAA of 2004. The
process was explained in this wise, in Guingona v. Carague:31
1. Budget preparation. The first step is essentially tasked upon the
Executive Branch and covers the estimation of government revenues, the
determination of budgetary priorities and activities within the constraints
imposed by available revenues and by borrowing limits, and the translation
of desired priorities and activities into expenditure levels.
Budget preparation starts with the budget call issued by the Department of
Budget and Management. Each agency is required to submit agency budget
estimates in line with the requirements consistent with the general ceilings
set by the Development Budget Coordinating Council (DBCC).
With regard to debt servicing, the DBCC staff, based on the macro-
economic projections of interest rates (e.g. LIBOR rate) and estimated
sources of domestic and foreign financing, estimates debt service levels.
Upon issuance of budget call, the Bureau of Treasury computes for the
interest and principal payments for the year for all direct national
government borrowings and other liabilities assumed by the same.
2. Legislative authorization. -- At this stage, Congress enters the picture
and deliberates or acts on the budget proposals of the President, and
Congress in the exercise of its own judgment and wisdom formulates an
appropriation act precisely following the process established by the
Constitution, which specifies that no money may be paid from the Treasury
except in accordance with an appropriation made by law.
xxx
3. Budget Execution. Tasked on the Executive, the third phase of the
budget process covers the various operational aspects of budgeting. The
establishment of obligation authority ceilings, the evaluation of work and
financial plans for individual activities, the continuing review of government
fiscal position, the regulation of funds releases, the implementation of cash
payment schedules, and other related activities comprise this phase of the
budget cycle.
4. Budget accountability. The fourth phase refers to the evaluation of
actual performance and initially approved work targets, obligations
incurred, personnel hired and work accomplished are compared with the
targets set at the time the agency budgets were approved.
Under the Constitution, the power of appropriation is vested in the
Legislature, subject to the requirement that appropriation bills originate
exclusively in the House of Representatives with the option of the Senate
to propose or concur with amendments.32 While the budgetary process
commences from the proposal submitted by the President to Congress, it is
the latter which concludes the exercise by crafting an appropriation act it
may deem beneficial to the nation, based on its own judgment, wisdom
and purposes. Like any other piece of legislation, the appropriation act
may then be susceptible to objection from the branch tasked to implement
it, by way of a Presidential veto. Thereafter, budget execution comes
under the domain of the Executive branch which deals with the operational
aspects of the cycle including the allocation and release of funds earmarked
for various projects. Simply put, from the regulation of fund releases, the
implementation of payment schedules and up to the actual spending of the
funds specified in the law, the Executive takes the wheel. “The DBM lays
down the guidelines for the disbursement of the fund. The Members of
Congress are then requested by the President to recommend projects and
programs which may be funded from the PDAF. The list submitted by the
Members of Congress is endorsed by the Speaker of the House of
Representatives to the DBM, which reviews and determines whether such
list of projects submitted are consistent with the guidelines and the
priorities set by the Executive.”33 This demonstrates the power given to
the President to execute appropriation laws and therefore, to exercise the
spending per se of the budget.

As applied to this case, the petition is seriously wanting in establishing that

individual Members of Congress receive and thereafter spend funds out of
PDAF. Although the possibility of this unscrupulous practice cannot be
entirely discounted, surmises and conjectures are not sufficient bases for
the Court to strike down the practice for being offensive to the
Constitution. Moreover, the authority granted the Members of Congress to
propose and select projects was already upheld in Philconsa. This remains
as valid case law. The Court sees no need to review or reverse the
standing pronouncements in the said case. So long as there is no showing
of a direct participation of legislators in the actual spending of the budget,
the constitutional boundaries between the Executive and the Legislative in
the budgetary process remain intact.

While the Court is not unaware of the yoke caused by graft and corruption,
the evils propagated by a piece of valid legislation cannot be used as a tool
to overstep constitutional limits and arbitrarily annul acts of
Congress. Again, “all presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging unconstitutionality
must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable basis
may be conceived which supports the statute, it will be upheld, and the
challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute; and
that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted.”34cralaw

There can be no question as to the patriotism and good motive of the

petitioner in filing this petition. Unfortunately, the petition must fail based
on the foregoing reasons.

WHEREFORE, the petition is DISMISSED without pronouncement as to

costs.
 G.R. No. L-33713 July 30, 1975
EUSEBIO B. GARCIA, petitioner-appellant, vs. HON. ERNESTO S. MATA,
Secretary of National Defense, and GENERAL MANUEL T. YAN, Chief
of Staff, Armed Forces of the Philippines, Respondents-Appellees.
This is a petition for certiorari to review the decision of the Court of First
Instance of Quezon City, Branch IX, in civil case Q-13466, entitled "Eusebio
B. Garcia, petitioner, versus Hon. Ernesto Mata (Juan Ponce Enrile), et al.,
respondents," declaring paragraph 11 of the "Special Provisions for the
Armed Forces of the Philippines" of Republic Act No. 16001unconstitutional
and therefore invalid and inoperative.chanroblesvirtualawlibrarychanrobles
virtual law library
We affirm the judgment a quo.chanroblesvirtualawlibrarychanrobles virtual
law library
The facts material to this case are embodied in the following stipulation
submitted jointly by both parties to the lower court:
Petitioner was a reserve officer on active duty with the Armed Forces of the
Philippines until his reversion to inactive status on 15 November 1960,
pursuant to the provisions of Republic Act No. 2332. At the time of
reversion, Petitioner held the rank of Captain with a monthly emolument of
P478.00, comprising his base and longevity pay, quarters and subsistence
allowances;chanrobles virtual law library
On June 18, 1955, the date when Republic Act No. 1382 took effect,
petitioner had a total of 9 years, 4 months and 12 days of accumulated
active commissioned service in the Armed Forces of the
Philippines;chanrobles virtual law library
On July 11, 1956, the date when Republic Act 1600 took effect, petitioner
had an accumulated active commissioned service of 10 years, 5 months
and 5 days in the Armed Forces of the Philippines;chanrobles virtual law
library
Petitioner's reversion to inactive status on 15 November 1960 was
pursuant to the provisions of Republic Act 2334, and such reversion was
neither for cause, at his own request, nor after court-martial
proceedings;chanrobles virtual law library
From 15 November 1960 up to the present, petitioner has been on inactive
status and as such, he has neither received any emoluments from the
Armed Forces of the Philippines, nor was he ever employed in the
Government in any capacity;chanrobles virtual law library
As a consequence of his reversion to inactive status, petitioner filed the
necessary petitions with the offices of the AFP Chief of Staff, the Secretary
of National Defense, and the President, respectively, but received reply
only from the Chief of Staff through the AFP Adjutant General.
On September 17, 1969 the petitioner brought an action for
"Mandamus and Recovery of a Sum of Money" in the court a quo to compel
the respondents Secretary of National Defense and Chief of Staff of the
Armed Forces of the Philippines 2to reinstate him in the active
commissioned service of the Armed Forces of the Philippines, to readjust
his rank, and to pay all the emoluments and allowances due to him from
the time of his reversion to inactive status. On December 2, 1970 the trial
court dismissed the petition. The court ruled that paragraph 11 of the
"Special Provisions for the Armed Forces of the Philippines" in Republic Act
1600 is "invalid, unconstitutional and inoperative."chanrobles virtual law
library
The petitioner had a total of 9 years, 4 months and 12 days of accumulated
active commissioned service in the AFP when Republic Act 1382 took effect
on June 18, 1955. Section I of this law provided:
Reserve officers with at least ten years of active accumulated
commissioned service who are still on active duty at the time of the
approval of this Act shall not be reverted into inactive status except for
cause after proper court-martial proceedings or upon their own
request: Provided, That for purposes of computing the length of service, six
months or more of active service shall be considered one year. (emphasis
supplied)
The petitioner's accumulated active commissioned service was thus short of
the minimum service requirement prescribed in the aforequoted provision
of R.A. 1382.chanroblesvirtualawlibrarychanrobles virtual law library
On July 11, 1956, 3while the petitioner was yet in the active service,
Republic Act 1600 was enacted into law. Paragraph 11 of the SPECIAL
PROVISIONS FOR THE ARMED FORCES OF THE PHILIPPINES (on page 892
of the Act) provided as follows:
11. After the approval of this Act, and when there is no emergency, no
reserve officer of the Armed Forces of the Philippines may be called to a
tour of active duty for more than two years during any period of five
consecutive years: PROVIDED, That hereafter reserve officers of the Armed
Forces of the Philippines on active duty for more than two years on the
date of the approval of this Act except those whose military and
educational training, experience and qualifications are deemed essential to
the needs of the service, shall be reverted to inactive status within one
year from the approval of this Act: PROVIDED, FURTHER, That reserve
officers with at least ten years of active accumulated commissioned service
who are still on active duty at the time of the approval of this Act shall not
be reverted to inactive status except for cause after proper court-martial
proceedings or upon their request; PROVIDED, FURTHER, That any such
reserve officer reverted to inactive status who has at least five of active
commissioned service shall be entitled to a gratuity equivalent to one
month's authorized base and longevity pay in the rank held at the time of
such reversion for every year of active commissioned service; PROVIDED,
FURTHER, That any reserve officer who receives a gratuity under the
provisions of this Act shall not except during a National emergency or
mobilization, be called to a tour of active duty within five years from the
date of reversion: PROVIDED, FURTHER, That the Secretary of National
Defense is authorized to extend the tour of active duty of reserve officers
who are qualified military pilots and doctors; PROVIDED, FURTHER, That
any savings in the appropriations authorized in this Act for the Department
of National Defense notwithstanding any provision of this Act to the
contrary and any unexpended balance of certification to accounts payable
since 1 July 1949 regardless of purpose of the appropriation shall be made
available for the purpose of this paragraph: AND PROVIDED, FINALLY, That
the Secretary of National Defense shall render a quarterly report to
Congress as to the implementation of the provisions of this paragraph.
( pp. 892-893, RA 1600) (emphasis supplied)
The petitioner consequently argues that his reversion to inactive status on
November 15, 1960 was in violation of the abovequoted provision which
prohibits the reversion to inactive status of reserve officers on active duty
with at least ten years of accumulated active commissioned
service.chanroblesvirtualawlibrarychanrobles virtual law library
On the other hand, the respondents contend that the said provision has no
relevance or pertinence whatsoever to the budget in question or to any
appropriation item contained therein, and is therefore proscribed by Art.
VI, Sec. 19, par. 24of the 1935 Constitution of the Philippines, which reads:
No provision or enactment shall be embraced in the general appropriation
bill unless it relates specifically to some particular appropriation therein;
and any such provision or enactment shall be limited in its operation to
such appropriation.
A perusal of the challenged provision of R.A. 1600 fails to disclose its
relevance or relation to any appropriation item therein, or to the
Appropriation Act as a whole. From the very first clause of paragraph 11
itself, which reads,
After the approval of this Act, and when there is no emergency, no reserve
officer of the Armed Forces of the Philippines may be called to a tour of
active duty for more than two years during any period of five consecutive
years:
the incongruity and irrelevancy are already evident. While R.A. 1600
appropriated money for the operation of the Government for the fiscal year
1956-1957, the said paragraph 11 refers to the fundamental government
policy matters of the calling to active duty and the reversion to inactive
status of reserve officers in the AFP. The incongruity and irrelevancy
continue throughout the entire
paragraph.chanroblesvirtualawlibrarychanrobles virtual law library
In the language of the respondents-appellees, "it was indeed a non-
appropriation item inserted in an appropriation measure in violation of the
constitutional inhibition against "riders" to the general appropriation act." It
was indeed a new and completely unrelated provision attached to the
Appropriation Act.chanroblesvirtualawlibrarychanrobles virtual law library
The paragraph in question also violated Art. VI, Sec. 21, par. 1 5of the
1935 Constitution of the Philippines which provided that "No bill which may
be enacted into law shall embrace more than one subject which shall be
expressed in the title of the bill." This constitutional requirement nullified
and rendered inoperative any provision contained in the body of an act that
was not fairly included in the subject expressed in the title or was not
germane to or properly connected with that
subject.chanroblesvirtualawlibrarychanrobles virtual law library
In determining whether a provision contained in an act is embraced in the
subject and is properly connected therewith, the subject to be considered is
the one expressed in the title of the act, and every fair intendment and
reasonable doubt should be indulged in favor of the validity of the
legislative enactment. But when an act contains provisions which are
clearly not embraced in the subject of the act, as expressed in the title,
such provisions are inoperative and without
effect.chanroblesvirtualawlibrarychanrobles virtual law library
We are mindful that the title of an act is not required to be an index to the
body of the act. Thus, in Sumulong vs. Comelec, 73 Phil. 288, 291, this
Court held that it is "a sufficient compliance with such requirement if the
title expresses the general subject and all the provisions of the statute are
germane to that general subject." The constitutional provision was
intended to preclude the insertion of riders in legislation, a rider being a ACCORDINGLY, the instant petition is denied, and the decision of the lower
provision not germane to the subject-matter of the bill. 6chanrobles virtual court dismissing the complaint is hereby affirmed. No pronouncement as to
law library costs.

The subject of R.A. 1600, as expressed in its title, is restricted to

"appropriating funds for the operation of the government." Any provision
contained in the body of the act that is fairly included in this restricted
subject or any matter properly connected therewith is valid and operative.
But, if a provision in the body of the act is not fairly included in this
restricted subject, like the provision relating to the policy matters of calling
to active duty and reversion to inactive duty of reserve officers of the AFP,
such provision is inoperative and of no
effect.chanroblesvirtualawlibrarychanrobles virtual law library

To quote the respondents-appellees on this point:

It is obvious that the statutory provision in question refers to security of

reserve officers from reversion to inactive status, whereas the subject or
title of the statute from which it derives its existence refers to
appropriations. Verily, it runs contrary to or is repugnant to the above-
quoted injunctive provision of the Constitution. Where a conflict arises
between a statute and the Constitution, the latter prevails. It should be
emphasized that a Constitution is superior to a statute and is precisely
called the "supreme law of the land" because it is the fundamental or
organic law which states the general principles and builds the substantial
foundation and general framework of law and government, and for that
reason a statute contrary to or in violation of the Constitution is null and
void (Talabon vs. Iloilo Provincial Warden, 78 Phil. 599). If a law, therefore,
happens to infringe upon or violate the fundamental law, courts of justice
may step in to nullify its effectiveness (Mabanag vs. Lopez Vito, 78 Phil. 1).

Upon the foregoing dissertation, we declare Paragraph 11 of the SPECIAL

PROVISIONS FOR THE ARMED FORCES OF THE PHILIPPINES as
unconstitutional, invalid and inoperative. Being unconstitutional, it confers
no right and affords no protection. In legal contemplation it is as though it
has never been passed. 7chanrobles virtual law library

Verily, not having shown a clear legal right to the position to which he
desires to be restored, the petitioner cannot compel the respondents to
reinstate and/or call him to active duty, promote or readjust his rank,
much less pay him back emoluments and
allowances.chanroblesvirtualawlibrarychanrobles virtual law library
 DEMETRIO G. DEMETRIA, M.P., AUGUSTO S. SANCHEZ, M.P.,
ORLANDO S. MERCADO, M.P., HONORATO Y. AQUINO, M.P., ZAFIRO
L. RESPICIO, M.P., DOUGLAS R. CAGAS, M.P., OSCAR F. SANTOS,
M.P., ALBERTO G. ROMULO, M.P., CIRIACO R. ALFELOR, M.P.,
ISIDORO E. REAL, M.P., EMIGDIO L. LINGAD, M.P., ROLANDO C.
MARCIAL, M.P., PEDRO M. MARCELLANA, M.P., VICTOR S. ZIGA,
M.P., and ROGELIO V. GARCIA, M.P., Petitioners, v. HON. MANUEL
ALBA in his capacity as the MINISTER OF THE BUDGET and VICTOR
MACALINGCAG in his capacity as the TREASURER OF THE
PHILIPPINES, Respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PROPER PARTY; ISSUE OF
CONSTITUTIONALITY OF STATUTES MAY BE RAISED AT THE INSTANCE OF
A TAXPAYER. — The case of Pascual v. Secretary of Public Works, Et Al.,
110 Phil. 331 is authority in support of petitioners’ locus standi. Thus:
"Again, it is well-settled that the validity of a statute may be contested only
by one who will sustain a direct injury in consequence of its enforcement.
Yet, there are many decisions nullifying at the instance of taxpayers, laws
providing for the disbursement of public funds, upon the theory that the
expenditure of public funds by an officer of the state for the purpose of
administering an unconstitutional act constitute a misapplication of such
funds’ which may be enjoined at the request of a taxpayer. Moreover, in
Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, we
said that as regards taxpayers’ suits, this Court enjoys that open discretion
to entertain the same or not.
2. CONSTITUTIONAL LAW; NATIONAL ASSEMBLY; TRANSFER TO
APPROPRIATION; LIMITATIONS. — The prohibition to transfer an
appropriation for one item to another was explicit and categorical under the
1973 Constitution. However, to afford the heads of the different branches
of the government and those of the constitutional commissions
considerable flexibility in the use of public funds and resources, the
constitution allowed the enactment of a law authorizing the transfer of
funds for the purpose of augmenting an item from savings in another item
in the appropriation of the government branch on constitutional body
concerned. The leeway granted was thus limited. Transferred were
specified, i.e. transfer may be allowed for the purpose of augmenting an
item and such transfer may be allowed for the purpose of augmenting an
item and such transfer may be made only if there are savings form another
item in the appropriation of the government branch or constitutional body.
3. ID.; PAR. 1, SEC. 44 OF PRESIDENTIAL DECREE NO. 1177
EMPOWERING THE PRESIDENT TO INDISCRIMINATELY TRANSFER FUNDS
DECLARED UNCONSTITUTIONAL. — Paragraph 1 of Section 44 of P.D. 1177
unduly over-extends the privilege granted under said Section 16 [5]. It
empowers the President to indiscriminately transfer of funds form one
department, bureau, office or agency of the Executive Department to any
program, project or activity of any department, bureau or office included in
the General Appropriations Act or approved after its enactment, without
regard as to whether or not funds to be transferred are actually savings in
the item from which the same are to be taken, or whether or not the
transfer is for the purpose of augmenting the item to which said transfer is
to be made. It does not only completely disregard the standards set in the
fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such
constitutional infirmities render the provision in question null and void.
4. ID.; SUPREME COURT; MAY ISSUE WRIT OF PROHIBITION AGAINST A
COORDINATE BRANCH ACTING BEYOND THE SCOPE OF ITS
CONSTITUTIONAL POWERS. — Another theory advanced by public
respondents is that prohibition will not lie form one branch of the
government against a coordinate branch to enjoin the performance of
duties within the latter’s sphere of responsibility. where the legislature or
the executive branch is acting within the limits of its authority, the judiciary
cannot and ought not to interfere with the former, But where the
legislature or the executive acts beyond the scope of its constitutional
power, it becomes the duty of the judiciary to declare what the other
branches of the government had assumed to do as void. This is the
essence of judicial power conferred by the Constitution "in one Supreme
Court and in such lower courts as may be established by law" [Art. VIII,
Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973
Constitution and which was adopted as part of the Freedom Constitution]
and Art. VIII, Section 1 of the 1987 Constitution] and which power this
Court has exercised in many instances. Public respondents are being
enjoined from acting under a provision of law which we have earlier
mentioned to be constitutionally infirm. The general principle relied upon
cannot therefore accord them the protection sought as they are not acting
within their "sphere of responsibility" but without it.
DECISION
FERNAN, J.:
Assailed in this petition for prohibition with prayer for a writ of preliminary
injunction is the constitutionality of the first paragraph of Section 44 of
Presidential Decree No. 1177, otherwise known as the "Budget Reform
Decree of 1977."cralaw virtua1aw library
Petitioners, who filed the instant petition as concerned citizens of this
country, as members of the National Assembly/Batasan Pambansa
representing their millions of constituents, as parties with general interest
common to all the people of the Philippines, and as taxpayers whose vital
interests may be affected by the outcome of the reliefs prayed for" 1 listed
the grounds relied upon in this petition as follows:chanrobles law library :
red
"A. SECTION 44 OF THE ‘BUDGET REFORM DECREE OF 1977’ INFRINGES
UPON THE FUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER
OF PUBLIC MONEYS.
"B. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO
THE CONSTITUTION AS IT FAILS TO SPECIFY THE OBJECTIVES AND
PURPOSES FOR WHICH THE PROPOSED TRANSFER OF FUNDS ARE TO BE
MADE.
"C. SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE
PRESIDENT TO OVERRIDE THE SAFEGUARDS, FORM AND PROCEDURE
PRESCRIBED BY THE CONSTITUTION IN APPROVING APPROPRIATIONS.
"D. SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE
DELEGATION OF LEGISLATIVE POWERS TO THE EXECUTIVE.
"E. THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE
PRESIDENT AND THE IMPLEMENTATION THEREOF BY THE BUDGET
MINISTER AND THE TREASURER OF THE PHILIPPINES ARE WITHOUT OR IN
EXCESS OF THEIR AUTHORITY AND JURISDICTION." 2
Commenting on the petition in compliance with the Court resolution dated
September 19, 1985, the Solicitor General, for the public respondents,
questioned the legal standing of petitioners, who were allegedly merely
begging an advisory opinion from the Court, there being no justiciable
controversy fit for resolution or determination. He further contended that
the provision under consideration was enacted pursuant to Section 16[5],
Article VIII of the 1973 Constitution; and that at any rate, prohibition will
not lie from one branch of the government to a coordinate branch to enjoin
the performance of duties within the latter’s sphere of responsibility.
On February 27, 1986, the Court required the petitioners to file a Reply to
the Comment. This, they did, stating, among others, that as a result of the
change in the administration, there is a need to hold the resolution of the
present case in abeyance "until developments arise to enable the parties to
concretize their respective stands." 3
Thereafter, We required public respondents to file a rejoinder. The Solicitor
General filed a rejoinder with a motion to dismiss, setting forth as grounds
therefor the abrogation of Section 16[5], Article VIII of the 1973
Constitution by the Freedom Constitution of March 25, 1986, which has
allegedly rendered the instant petition moot and academic. He likewise
cited the "seven pillars" enunciated by Justice Brandeis in Ashwander v.
TVA, 297 U.S. 288 (1936) 4 as basis for the petition’s dismissal.cralawnad
In the case of Evelio B. Javier v. The Commission on Elections and Arturo
F. Pacificador, G.R. Nos. 68379-81, September 22, 1986, We stated
that:jgc:chanrobles.com.ph
"The abolition of the Batasang Pambansa and the disappearance of the
office in dispute between the petitioner and the private respondents — both
of whom have gone their separate ways-could be a convenient justification
for dismissing the case. But there are larger issues involved that must be
resolved now, once and for all, not only to dispel the legal ambiguities here
raised. The more important purpose is to manifest in the clearest possible
terms that this Court will not disregard and in effect condone wrong on the
simplistic and tolerant pretext that the case has become moot and
academic.
"The Supreme Court is not only the highest arbiter of legal questions but
also the conscience of the government. The citizen comes to us in quest of
law but we must also give him justice. The two are not always the same.
There are times when we cannot grant the latter because the issue has
been settled and decision is no longer possible according to the law. But
there are also times when although the dispute has disappeared, as in this
case, it nevertheless cries out to be resolved. Justice demands that we act
then, not only for the vindication of the outraged right, though gone, but
also for the guidance of and as a restraint upon the future."cralaw
virtua1aw library
It is in the discharge of our role in society, as above-quoted, as well as to
avoid great disservice to national interest that We take cognizance of this
petition and thus deny public respondents’ motion to dismiss. Likewise
noteworthy is the fact that the new Constitution, ratified by the Filipino
people in the plebiscite held on February 2, 1987, carries verbatim section
16[5], Article VIII of the 1973 Constitution under Section 24[5], Article VI.
And while Congress has not officially reconvened, We see no cogent reason
for further delaying the resolution of the case at bar.
The exception taken to petitioners’ legal standing deserves scant
consideration. The case of Pascual v. Secretary of Public Works, Et Al., 110
Phil. 331, is authority in support of petitioners’ locus standi.
Thus:jgc:chanrobles.com.ph
"Again, it is well-settled that the validity of a statute may be contested only
by one who will sustain a direct injury in consequence of its enforcement.
Yet, there are many decisions nullifying at the instance of taxpayers, laws
providing for the disbursement of public funds, upon the theory that ‘the
expenditure of public funds by an officer of the state for the purpose of
administering an unconstitutional act constitutes a misapplication of such
funds which may be enjoined at the request of a taxpayer. Although there
are some decisions to the contrary, the prevailing view in the United States
is stated in the American Jurisprudence as follows:chanrob1es virtual 1aw
library
‘In the determination of the degree of interest essential to give the
requisite standing to attack the constitutionality of a statute, the general
rule is that not only persons individually affected, but also taxpayers have
sufficient interest in preventing the illegal expenditures of moneys raised
by taxation and may therefore question the constitutionality of statutes
requiring expenditure of public moneys. [11 Am. Jur. 761, Emphasis
supplied.]’"
Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73
SCRA 333. We said that as regards taxpayers’ suits, this Court enjoys that
open discretion to entertain the same or not.chanrobles law library
The conflict between paragraph 1 of Section 44 of Presidential-Decree No.
1177 and Section 16[5], Article VIII of the 1973 Constitution is readily
perceivable from a mere cursory reading thereof. Said paragraph 1 of
Section 44 provides:jgc:chanrobles.com.ph
"The President shall have the authority to transfer any fund, appropriated
for the different departments, bureaus, offices and agencies of the
Executive Department, which are included in the General Appropriations
Act, to any program, project or activity of any department, bureau, or
office included in the General Appropriations Act or approved after its
enactment."cralaw virtua1aw library
On the other hand, the constitutional provision under consideration reads
as follows:jgc:chanrobles.com.ph
"Sec. 16[5]. No law shall be passed authorizing any transfer of
appropriations, however, the President, the Prime Minister, the Speaker,
the Chief Justice of the Supreme Court, and the heads of constitutional
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."cralaw virtua1aw library
The prohibition to transfer an appropriation for one item to another was
explicit and categorical under the 1973 Constitution. However, to afford the
heads of the different branches of the government and those of the
constitutional commissions considerable flexibility in the use of public funds
and resources, the constitution allowed the enactment of a law authorizing
the transfer of funds for the purpose of augmenting an item from savings
in another item in the appropriation of the government branch or
constitutional body concerned. The leeway granted was thus limited. The
purpose and conditions for which funds may be transferred were specified,
i.e. transfer may be allowed for the purpose of augmenting an item and
such transfer may be made only if there are savings from another item in
the appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly overextends the
privilege granted under said Section 16[5]. It empowers the President to
indiscriminately transfer funds from one department, bureau, office or
agency of the Executive Department to any program, project or activity of
any department, bureau or office included in the General Appropriations
Act or approved after its enactment, without regard as to whether or not
the funds to be transferred are actually savings in the item from which the
same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only
completely disregard the standards set in the fundamental law, thereby
amounting to an undue delegation of legislative powers, but likewise goes
beyond the tenor thereof. Indeed, such constitutional infirmities render the
provision in question null and void.
"For the love of money is the root of all evil: . . ." and money belonging to
no one in particular, i.e. public funds, provide an even greater temptation
for misappropriation and embezzlement. This, evidently, was foremost in
the minds of the framers of the constitution in meticulously prescribing the
rules regarding the appropriation and disposition of public funds as
embodied in Sections 16 and 18 of Article VIII of the 1973 Constitution.
Hence, the conditions on the release of money from the treasury [Sec.
18(1)]; the restrictions on the use of public funds for public purpose [Sec.
18(2)]; the prohibition to transfer an appropriation for an item to another
[Sec. 16(5) and the requirement of specifications [Sec. 16(2)], among
others, were all safeguards designed to forestall abuses in the expenditure
of public funds. Paragraph 1 of Section 44 puts all these safeguards to
naught. For, as correctly observed by petitioners, in view of the unlimited
authority bestowed upon the President,." . . Pres. Decree No. 1177 opens
the floodgates for the enactment of unfounded appropriations, results in
uncontrolled executive expenditures, diffuses accountability for budgetary
performance and entrenches the pork barrel system as the ruling party
may well expand [sic] public money not on the basis of development
priorities but on political and personal expediency." 5 The contention of
public respondents that paragraph 1 of Section 44 of P.D. 1177 was
enacted pursuant to Section 16(5) of Article VIII of the 1973 Constitution
must perforce fall flat on its face.chanrobles virtual lawlibrary
Another theory advanced by public respondents is that prohibition will not
lie from one branch of the government against a coordinate branch to
enjoin the performance of duties within the latter’s sphere of responsibility.
Thomas M. Cooley in his "A Treatise on the Constitutional Limitations," Vol.
I, Eight Edition, Little, Brown and Company, Boston,
explained:jgc:chanrobles.com.ph The nation has not recovered from the shock, and worst, the economic
destitution brought about by the plundering of the Treasury by the deposed
". . . The legislative and judicial are coordinate departments of the dictator and his cohorts. A provision which allows even the slightest
government, of equal dignity; each is alike supreme in the exercise of its possibility of a repetition of this sad experience cannot remain written in
proper functions, and cannot directly or indirectly, while acting within the our statute books.
limits of its authority, be subjected to the control or supervision of the
other, without an unwarrantable assumption by that other of power which, WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of
by the Constitution, is not conferred upon it. The Constitution apportions Presidential Decree No. 1177 is hereby declared null and void for being
the powers of government, but it does not make any one of the three unconstitutional.ch
departments subordinate to another, when exercising the trust committed
to it. The courts may declare legislative enactments unconstitutional and
void in some cases, but not because the judicial power is superior in degree
or dignity to the legislative. Being required to declare what the law is in the
cases which come before them, they must enforce the Constitution, as the
paramount law, whenever a legislative enactment comes in conflict with it.
But the courts sit, not to review or revise the legislative action, but to
enforce the legislative will, and it is only where they find that the
legislature has failed to keep within its constitutional limits, that they are at
liberty to disregard its action; and in doing so, they only do what every
private citizen may do in respect to the mandates of the courts when the
judges assume to act and to render judgments or decrees without
jurisdiction.’In exercising this high authority, the judges claim no judicial
supremacy; they are only the administrators of the public will. If an act of
the legislature is held void, it is not because the judges have any control
over the legislative power, but because the act is forbidden by the
Constitution, and because the will of the people, which is therein declared,
is paramount to that of their representatives expressed in any law.’
[Lindsay v. Commissioners, & c., 2 Bay, 38, 61; People v. Rucker, 5 Col. 5;
Russ v. Com., 210 Pa. St. 544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am.
St. Rep. 825]" (pp. 332-334).

Indeed, where the legislature or the executive branch is acting within the
limits of its authority, the judiciary cannot and ought not to interfere with
the former. But where the legislature or the executive acts beyond the
scope of its constitutional powers, it becomes the duty of the judiciary to
declare what the other branches of the government had assumed to do as
void. This is the essence of judicial power conferred by the Constitution "in
one Supreme Court and in such lower courts as may be established by law"
[Art. VIII, Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973
Constitution and which was adopted as part of the Freedom Constitution,
and Art. VIII, Section 1 of the 1987 Constitutional and which power this
Court has exercised in many instances. **

Public respondents are being enjoined from acting under a provision of law
which We have earlier mentioned to be constitutionally infirm. The general
principle relied upon cannot therefore accord them the protection sought as
they are not acting within their "sphere of responsibility" but without it.
 PHILIPPINE CONSTITUTION ASSOCIATION, EXEQUIEL B. GARCIA
and A. GONZALES, Petitioners, v. HON. SALVADOR ENRIQUEZ, as
Secretary of Budget and Management; HON. VICENTE T. TAN, as
National Treasurer and COMMISSION ON AUDIT, Respondents.
QUIASON, J.:
Once again this Court is called upon to rule on the conflicting claims of
authority between the Legislative and the Executive in the clash of the
powers of the purse and the sword. Providing the focus for the contest
between the President and the Congress over control of the national
budget are the four cases at bench. Judicial intervention is being sought by
a group of concerned taxpayers on the claim that Congress and the
President have impermissibly exceeded their respective authorities, and by
several Senators on the claim that the President has committed grave
abuse of discretion or acted without jurisdiction in the exercise of his veto
power.
Ichanrobles virtual law library
House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of
1994), was passed and approved by both houses of Congress on December
17, 1993. As passed, it imposed conditions and limitations on certain items
of appropriations in the proposed budget previously submitted by the
President. It also authorized members of Congress to propose and identify
projects in the "pork barrels" allotted to them and to realign their
respective operating budgets.chanroblesvirtualawlibrarychanrobles virtual
law library
Pursuant to the procedure on the passage and enactment of bills as
prescribed by the Constitution, Congress presented the said bill to the
President for consideration and
approval.chanroblesvirtualawlibrarychanrobles virtual law library
On December 30, 1993, the President signed the bill into law, and declared
the same to have become Republic Act No. 7663, entitled "AN ACT
APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF
THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE,
NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER PURPOSES"
(GAA of 1994). On the same day, the President delivered his Presidential
Veto Message, specifying the provisions of the bill he vetoed and on which
he imposed certain conditions.chanroblesvirtualawlibrarychanrobles virtual
law library
No step was taken in either House of Congress to override the
vetoes.chanroblesvirtualawlibrarychanrobles virtual law library
In G.R. No. 113105, the Philippine Constitution Association, Exequiel B.
Garcia and Ramon A. Gonzales as taxpayers, prayed for a writ of
prohibition to declare as unconstitutional and void: (a) Article XLI on the
Countrywide Development Fund, the special provision in Article I entitled
Realignment of Allocation for Operational Expenses, and Article XLVIII on
the Appropriation for Debt Service or the amount appropriated under said
Article XLVIII in excess of the P37.9 Billion allocated for the Department of
Education, Culture and Sports; and (b) the veto of the President of the
Special Provision of
Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105)chanrobles
virtual law library
In G.R. No. 113174, sixteen members of the Senate led by Senate
President Edgardo J. Angara, Senator Neptali A. Gonzales, the Chairman of
the Committee on Finance, and Senator Raul S. Roco, sought the issuance
of the writs of certiorari, prohibition and mandamus against the Executive
Secretary, the Secretary of the Department of Budget and Management,
and the National Treasurer.chanroblesvirtualawlibrarychanrobles virtual law
library
Suing as members of the Senate and taxpayers, petitioners question: (1)
the constitutionality of the conditions imposed by the President in the items
of the GAA of 1994: (a) for the Supreme Court, (b) Commission on Audit
(COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e)
Citizen Armed Forces Geographical Units (CAFGU'S) and (f) State
Universities and Colleges (SUC's); and (2) the constitutionality of the veto
of the special provision in the appropriation for debt
service.chanroblesvirtualawlibrarychanrobles virtual law library
In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Tañada (a
co-petitioner in G.R. No. 113174), together with the Freedom from Debt
Coalition, a non-stock domestic corporation, sought the issuance of the
writs of prohibition and mandamus against the Executive Secretary, the
Secretary of the Department of Budget and Management, the National
Treasurer, and the COA.chanroblesvirtualawlibrarychanrobles virtual law
library
Petitioners Tañada and Romulo sued as members of the Philippine Senate
and taxpayers, while petitioner Freedom from Debt Coalition sued as a
taxpayer. They challenge the constitutionality of the Presidential veto of
the special provision in the appropriations for debt service and the
automatic appropriation of funds
therefor.chanroblesvirtualawlibrarychanrobles virtual law library
In G.R. No. 11388, Senators Tañada and Romulo sought the issuance of
the writs of prohibition and mandamus against the same respondents in
G.R. No. 113766. In this petition, petitioners contest the constitutionality
of: (1) the veto on four special provision added to items in the GAA of 1994
for the Armed Forces of the Philippines (AFP) and the Department of Public
Works and Highways (DPWH); and (2) the conditions imposed by the
President in the implementation of certain appropriations for the CAFGU's,
the DPWH, and the National Housing Authority
(NHA).chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners also sought the issuance of temporary restraining orders to
enjoin respondents Secretary of Budget and Management, National
Treasurer and COA from enforcing the questioned provisions of the GAA of
1994, but the Court declined to grant said provisional reliefs on the time-
honored principle of according the presumption of validity to statutes and
the presumption of regularity to official
acts.chanroblesvirtualawlibrarychanrobles virtual law library
In view of the importance and novelty of most of the issues raised in the
four petitions, the Court invited former Chief Justice Enrique M. Fernando
and former Associate Justice Irene Cortes to submit their respective
memoranda as Amicus curiae, which they graciously did.
II
Locus Standi
When issues of constitutionality are raised, the Court can exercise its
power of judicial review only if the following requisites are compresent: (1)
the existence of an actual and appropriate case; (2) a personal and
substantial interest of the party raising the constitutional question; (3) the
exercise of judicial review is pleaded at the earliest opportunity; and (4)
the constitutional question is the lis mota of the case (Luz Farms v.
Secretary of the Department of Agrarian Reform, 192 SCRA 51 [1990];
Dumlao v. Commission on Elections, 95 SCRA 392 [1980]; People v. Vera,
65 Phil. 56 [1937]).chanroblesvirtualawlibrarychanrobles virtual law library
While the Solicitor General did not question the locus standiof petitioners in
G.R. No. 113105, he claimed that the remedy of the Senators in the other
petitions is political (i.e., to override the vetoes) in effect saying that they
do not have the requisite legal standing to bring the
suits.chanroblesvirtualawlibrarychanrobles virtual law library
The legal standing of the Senate, as an institution, was recognized
in Gonzales v. Macaraig, Jr., 191 SCRA 452 (1990). In said case, 23
Senators, comprising the entire membership of the Upper House of
Congress, filed a petition to nullify the presidential veto of Section 55 of the
GAA of 1989. The filing of the suit was authorized by Senate Resolution No.
381, adopted on February 2, 1989, and which reads as follows:
Authorizing and Directing the Committee on Finance to Bring in the Name
of the Senate of the Philippines the Proper Suit with the Supreme Court of
the Philippines contesting the Constitutionality of the Veto by the President
of Special and General Provisions, particularly Section 55, of the General
Appropriation Bill of 1989 (H.B. No. 19186) and For Other Purposes.
In the United States, the legal standing of a House of Congress to sue has
been recognized (United States v. American Tel. & Tel. Co., 551 F. 2d 384,
391 [1976]; Notes: Congressional Access To The Federal Courts, 90
Harvard Law Review 1632 [1977]).chanroblesvirtualawlibrarychanrobles
virtual law library
While the petition in G.R. No. 113174 was filed by 16 Senators, including
the Senate President and the Chairman of the Committee on Finance, the
suit was not authorized by the Senate itself. Likewise, the petitions in
G.R. Nos. 113766 and 113888 were filed without an enabling resolution for
the purpose.chanroblesvirtualawlibrarychanrobles virtual law library
Therefore, the question of the legal standing of petitioners in the three
cases becomes a preliminary issue before this Court can inquire into the
validity of the presidential veto and the conditions for the implementation
of some items in the GAA of 1994.chanroblesvirtualawlibrarychanrobles
virtual law library
We rule that a member of the Senate, and of the House of Representatives
for that matter, has the legal standing to question the validity of a
presidential veto or a condition imposed on an item in an appropriation
bill.chanroblesvirtualawlibrarychanrobles virtual law library
Where the veto is claimed to have been made without or in excess of the
authority vested on the President by the Constitution, the issue of an
impermissible intrusion of the Executive into the domain of the Legislature
arises (Notes: Congressional Standing To Challenge Executive Action, 122
University of Pennsylvania Law Review 1366
[1974]).chanroblesvirtualawlibrarychanrobles virtual law library
To the extent the power of Congress are impaired, so is the power of each
member thereof, since his office confers a right to participate in the
exercise of the powers of that institution (Coleman v. Miller, 307 U.S. 433
[1939]; Holtzman v. Schlesinger, 484 F. 2d 1307
[1973]).chanroblesvirtualawlibrarychanrobles virtual law library
An act of the Executive which injures the institution of Congress causes a
derivative but nonetheless substantial injury, which can be questioned by a
member of Congress (Kennedy v. Jones, 412 F. Supp. 353 [1976]). In such
a case, any member of Congress can have a resort to the
courts.chanroblesvirtualawlibrarychanrobles virtual law library
Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted:
This is, then, the clearest case of the Senate as a whole or individual
Senators as such having a substantial interest in the question at issue. It
could likewise be said that there was the requisite injury to their rights as
Senators. It would then be futile to raise any locus standi issue. Any
intrusion into the domain appertaining to the Senate is to be resisted.
Similarly, if the situation were reversed, and it is the Executive Branch that
could allege a transgression, its officials could likewise file the
corresponding action. What cannot be denied is that a Senator has
standing to maintain inviolate the prerogatives, powers and privileges
vested by the Constitution in his office (Memorandum, p. 14).
It is true that the Constitution provides a mechanism for overriding a veto
(Art. VI, Sec. 27 [1]). Said remedy, however, is available only when the
presidential veto is based on policy or political considerations but not when
the veto is claimed to be ultra vires. In the latter case, it becomes the duty
of the Court to draw the dividing line where the exercise of executive
power ends and the bounds of legislative jurisdiction begin.
III
G.R. No. 113105
1. Countrywide Development Fund
Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of
P2,977,000,000.00 to "be used for infrastructure, purchase of ambulances
and computers and other priority projects and activities and credit facilities
to qualified beneficiaries." Said Article provides:
COUNTRYWIDE DEVELOPMENT FUND
For Fund requirements of countrywide
development projects P 2,977,000,000
-------
New Appropriations, by Purpose
Current Operating Expenditures
A. PURPOSE
Personal Maintenance Capital Total
Services and Other Outlays
Operating
Expenses
1. For Countrywide
Developments Projects P250,000,000 P2,727,000,000 P2,977,000,000
TOTAL NEW
APPROPRIATIONS P250,000,000 P2,727,000,000 P2,977,000,000
Special Provisionschanrobles virtual law library
1. Use and Release of Funds. The amount herein appropriated shall be used
for infrastructure, purchase of ambulances and computers and other
priority projects and activities, and credit facilities to qualified beneficiaries
as proposed and identified by officials concerned according to the following
allocations: Representatives, P12,500,000 each; Senators, P18,000,000
each; Vice-President, P20,000,000; PROVIDED, That, the said credit
facilities shall be constituted as a revolving fund to be administered by a
government financial institution (GFI) as a trust fund for lending
operations. Prior years releases to local government units and national
government agencies for this purpose shall be turned over to the
government financial institution which shall be the sole administrator of
credit facilities released from this
fund.chanroblesvirtualawlibrarychanrobles virtual law library
The fund shall be automatically released quarterly by way of Advice of
Allotments and Notice of Cash Allocation directly to the assigned
implementing agency not later than five (5) days after the beginning of
each quarter upon submission of the list of projects and activities by the
officials concerned.chanroblesvirtualawlibrarychanrobles virtual law library
2. Submission of Quarterly Reports. The Department of Budget and
Management shall submit within thirty (30) days after the end of each
quarter a report to the Senate Committee on Finance and the House
Committee on Appropriations on the releases made from this Fund. The
report shall include the listing of the projects, locations, implementing
agencies and the endorsing officials (GAA of 1994, p. 1245).
Petitioners claim that the power given to the members of Congress to
propose and identify the projects and activities to be funded by the
Countrywide Development Fund is an encroachment by the legislature on
executive power, since said power in an appropriation act in
implementation of a law. They argue that the proposal and identification of
the projects do not involve the making of laws or the repeal and
amendment thereof, the only function given to the Congress by the
Constitution (Rollo, pp. 78- 86).chanroblesvirtualawlibrarychanrobles
virtual law library
Under the Constitution, the spending power called by James Madison as
"the power of the purse," belongs to Congress, subject only to the veto
power of the President. The President may propose the budget, but still the
final say on the matter of appropriations is lodged in the
Congress.chanroblesvirtualawlibrarychanrobles virtual law library
The power of appropriation carries with it the power to specify the project
or activity to be funded under the appropriation law. It can be as detailed
and as broad as Congress wants it to
be.chanroblesvirtualawlibrarychanrobles virtual law library
The Countrywide Development Fund is explicit that it shall be used "for
infrastructure, purchase of ambulances and computers and other priority
projects and activities and credit facilities to qualified beneficiaries . . ." It
was Congress itself that determined the purposes for the
appropriation.chanroblesvirtualawlibrarychanrobles virtual law library
Executive function under the Countrywide Development Fund involves
implementation of the priority projects specified in the
law.chanroblesvirtualawlibrarychanrobles virtual law library
The authority given to the members of Congress is only to propose and
identify projects to be implemented by the President. Under Article XLI of
the GAA of 1994, the President must perforce examine whether the
proposals submitted by the members of Congress fall within the specific
items of expenditures for which the Fund was set up, and if qualified, he
next determines whether they are in line with other projects planned for
the locality. Thereafter, if the proposed projects qualify for funding under
the Funds, it is the President who shall implement them. In short, the
proposals and identifications made by the members of Congress are merely
recommendatory.chanroblesvirtualawlibrarychanrobles virtual law library
The procedure of proposing and identifying by members of Congress of
particular projects or activities under Article XLI of the GAA of 1994 is
imaginative as it is innovative.chanroblesvirtualawlibrarychanrobles virtual
law library
The Constitution is a framework of a workable government and its
interpretation must take into account the complexities, realities and politics
attendant to the operation of the political branches of government. Prior to
the GAA of 1991, there was an uneven allocation of appropriations for the
constituents of the members of Congress, with the members close to the
Congressional leadership or who hold cards for "horse-trading," getting
more than their less favored colleagues. The members of Congress also
had to reckon with an unsympathetic President, who could exercise his
veto power to cancel from the appropriation bill a pet project of a
Representative or Senator.chanroblesvirtualawlibrarychanrobles virtual law
library
The Countrywide Development Fund attempts to make equal the unequal.
It is also a recognition that individual members of Congress, far more than
the President and their congressional colleagues are likely to be
knowledgeable about the needs of their respective constituents and the
priority to be given each project.
2. Realignment of Operating Expenses
Under the GAA of 1994, the appropriation for the Senate is
P472,000,000.00 of which P464,447,000.00 is appropriated for current
operating expenditures, while the appropriation for the House of
Representatives is P1,171,924,000.00 of which P1,165,297,000.00 is
appropriated for current operating expenditures (GAA of 1994, pp. 2, 4, 9,
12).chanroblesvirtualawlibrarychanrobles virtual law library
The 1994 operating expenditures for the Senate are as follows:
Personal Serviceschanrobles virtual law library
Salaries, Permanent 153,347
Salaries/Wage, Contractual/Emergency 6,870
----
Total Salaries and Wages 160,217
=======chanrobles virtual law library
Other Compensationchanrobles virtual law library Personal Services

Step Increments 1,073 Salaries, Permanent 261,557

Honoraria and Commutable Allowances 3,731 Salaries/Wages, Contractual/Emergency 143,643
Compensation Insurance Premiums 1,579 ----
Pag-I.B.I.G. Contributions 1,184 Total Salaries and Wages 405,200
Medicare Premiums 888 =======
Bonus and Cash Gift 14,791
Terminal Leave Benefits 2,000
Other Compensation
Personnel Economic Relief Allowance 10,266
Additional Compensation of P500 under A.O. 53 11,130
Others 57,173 Step Increments 4,312
---- Honoraria and Commutable
Total Other Compensation 103,815 Allowances 4,764
---- Compensation Insurance
01 Total Personal Services 264,032 Premiums 1,159
======= Pag-I.B.I.G. Contributions 5,231
Medicare Premiums 2,281
Maintenance and Other Operating Expenses
Bonus and Cash Gift 35,669
Terminal Leave Benefits 29
02 Traveling Expenses 32,841 Personnel Economic Relief
03 Communication Services 7,666 Allowance 21,150
04 Repair and Maintenance of Government Facilities 1,220 Additional Compensation of P500 under A.O. 53
05 Repair and Maintenance of Government Vehicles 318 Others 106,140
06 Transportation Services 128 ----
07 Supplies and Materials 20,189 Total Other Compensation 202,863
08 Rents 24,584 ----
14 Water/Illumination and Power 6,561 01 Total Personal Services 608,063
15 Social Security Benefits and Other Claims 3,270 =======
17 Training and Seminars Expenses 2,225
18 Extraordinary and Miscellaneous Expenses 9,360
Maintenance and Other Operating Expenses
23 Advertising and Publication
24 Fidelity Bonds and Insurance Premiums 1,325
29 Other Services 89,778 02 Traveling Expenses 139,611
---- 03 Communication Services 22,514
Total Maintenance and Other Operating Expenditures 200,415 04 Repair and Maintenance of Government Facilities 5,116
---- 05 Repair and Maintenance of Government Vehicles 1,863
Total Current Operating Expenditures 464,447 06 Transportation Services 178
======= 07 Supplies and Materials 55,248
10 Grants/Subsidies/Contributions 940
14 Water/Illumination and Power 14,458
(GAA of 1994, pp. 3-4)
15 Social Security Benefits and Other Claims 325
17 Training and Seminars Expenses 7,236
The 1994 operating expenditures for the House of Representatives are as 18 Extraordinary and Miscellaneous Expenses 14,474
follows: 20 Anti-Insurgency/Contingency Emergency Expenses 9,400
23 Advertising and Publication 242
24 Fidelity Bonds and Insurance Premiums 1,420
29 Other Services 284,209
----
Total Maintenance and Other Operating Expenditures 557,234
----
Total Current Operating Expenditures 1,165,297
=======
(GAA of 1994, pp. 11-12)
The Special Provision Applicable to the Congress of the Philippines
provides:
4. Realignment of Allocation for Operational Expenses. A member of
Congress may realign his allocation for operational expenses to any other
expenses category provide the total of said allocation is not exceeded.
(GAA of 1994, p. 14).
The appropriation for operating expenditures for each House is further
divided into expenditures for salaries, personal services, other
compensation benefits, maintenance expenses and other operating
expenses. In turn, each member of Congress is allotted for his own
operating expenditure a proportionate share of the appropriation for the
House to which he belongs. If he does not spend for one items of expense,
the provision in question allows him to transfer his allocation in said item to
another item of expense.chanroblesvirtualawlibrarychanrobles virtual law
library
Petitioners assail the special provision allowing a member of Congress to
realign his allocation for operational expenses to any other expense
category (Rollo, pp. 82-92), claiming that this practice is prohibited by
Section 25(5), Article VI of the Constitution. Said section provides:
No law shall be passed authorizing any transfer of appropriations: however,
the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions may, by law, be authorized to augment any
item in the general appropriations law for their respective offices from
savings in other items of their respective appropriations.
The proviso of said Article of the Constitution grants the President of the
Senate and the Speaker of the House of Representatives the power to
augment items in an appropriation act for their respective offices from
savings in other items of their appropriations, whenever there is a law
authorizing such augmentation.chanroblesvirtualawlibrarychanrobles virtual
law library
The special provision on realignment of the operating expenses of
members of Congress is authorized by Section 16 of the General Provisions
of the GAA of 1994, which provides:
Expenditure Components. Except by act of the Congress of the Philippines,
no change or modification shall be made in the expenditure items
authorized in this Act and other appropriation laws unless in cases
of augmentations from savings in appropriations as authorized under
Section 25(5) of Article VI of the Constitution (GAA of 1994, p. 1273).
Petitioners argue that the Senate President and the Speaker of the House
of Representatives, but not the individual members of Congress are the
ones authorized to realign the savings as
appropriated.chanroblesvirtualawlibrarychanrobles virtual law library
Under the Special Provisions applicable to the Congress of the Philippines,
the members of Congress only determine the necessity of the realignment
of the savings in the allotments for their operating expenses. They are in
the best position to do so because they are the ones who know whether
there are savings available in some items and whether there are
deficiencies in other items of their operating expenses that need
augmentation. However, it is the Senate President and the Speaker of the
House of Representatives, as the case may be, who shall approve the
realignment. Before giving their stamp of approval, these two officials will
have to see to it that:chanrobles virtual law library
(1) The funds to be realigned or transferred are actually savings in the
items of expenditures from which the same are to be taken;
and chanrobles virtual law library
(2) The transfer or realignment is for the purposes of augmenting the
items of expenditure to which said transfer or realignment is to be made.
3. Highest Priority for Debt Service
While Congress appropriated P86,323,438,000.00 for debt service (Article
XLVII of the GAA of 1994), it appropriated only P37,780,450,000.00 for the
Department of Education Culture and Sports. Petitioners urged that
Congress cannot give debt service the highest priority in the GAA of 1994
(Rollo, pp. 93-94) because under the Constitution it should be education
that is entitled to the highest funding. They invoke Section 5(5), Article XIV
thereof, which provides:
(5) The State shall assign the highest budgetary priority to education and
ensure that teaching will attract and retain its rightful share of the best
available talents through adequate remuneration and other means of job
satisfaction and fulfillment.
This issue was raised in Guingona, Jr. v. Carague, 196 SCRA 221 (1991),
where this Court held that Section 5(5), Article XIV of the Constitution, is
merely directory, thus:
While it is true that under Section 5(5), Article XIV of the Constitution,
Congress is mandated to "assign the highest budgetary priority to
education" in order to "insure that teaching will attract and retain its
rightful share of the best available talents through adequate remuneration
and other means of job satisfaction and fulfillment," it does not thereby
follow that the hands of Congress are so hamstrung as to deprive it the
power to respond to the imperatives of the national interest and for the
attainment of other state policies or
objectives.chanroblesvirtualawlibrarychanrobles virtual law library
As aptly observed by respondents, since 1985, the budget for education
has tripled to upgrade and improve the facility of the public school system.
The compensation of teachers has been doubled. The amount of
P29,740,611,000.00 set aside for the Department of Education, Culture
and Sports under the General Appropriations Act (R.A. No. 6381), is the
highest budgetary allocation among all department budgets. This is a clear
compliance with the aforesaid constitutional mandate according highest
priority to education.chanroblesvirtualawlibrarychanrobles virtual law
library
Having faithfully complied therewith, Congress is certainly not without any
power, guided only by its good judgment, to provide an appropriation, that
can reasonably service our enormous debt, the greater portion of which
was inherited from the previous administration. It is not only a matter of
honor and to protect the credit standing of the country. More especially,
the very survival of our economy is at stake. Thus, if in the process
Congress appropriated an amount for debt service bigger than the share
allocated to education, the Court finds and so holds that said appropriation
cannot be thereby assailed as unconstitutional.
G.R. No. 113105
G.R. No. 113174chanrobles virtual law library
Veto of Provision on Debt Ceiling
The Congress added a Special Provision to Article XLVIII (Appropriations for
Debt Service) of the GAA of 1994 which provides:
Special Provisionschanrobles virtual law library
1. Use of the Fund. The appropriation authorized herein shall be used for
payment of principal and interest of foreign and domestic
indebtedness; PROVIDED, That any payment in excess of the amount
herein appropriated shall be subject to the approval of the President of the
Philippines with the concurrence of the Congress of the
Philippines; PROVIDED, FURTHER, That in no case shall this fund be used
to pay for the liabilities of the Central Bank Board of
Liquidators.chanroblesvirtualawlibrarychanrobles virtual law library
2. Reporting Requirement. The Bangko Sentral ng Pilipinas and the
Department of Finance shall submit a quarterly report of actual foreign and
domestic debt service payments to the House Committee on Appropriations
and Senate Finance Committee within one (1) month after each quarter
(GAA of 1944, pp. 1266).
The President vetoed the first Special Provision, without vetoing the
P86,323,438,000.00 appropriation for debt service in said Article.
According to the President's Veto Message:
IV. APPROPRIATIONS FOR DEBT SERVICEchanrobles virtual law library
I would like to emphasize that I concur fully with the desire of Congress to
reduce the debt burden by decreasing the appropriation for debt service as
well as the inclusion of the Special Provision quoted below. Nevertheless, I
believe that this debt reduction scheme cannot be validly done through the
1994 GAA. This must be addressed by revising our debt policy by way of
innovative and comprehensive debt reduction programs conceptualized
within the ambit of the Medium-Term Philippine Development
Plan.chanroblesvirtualawlibrarychanrobles virtual law library
Appropriations for payment of public debt, whether foreign or domestic, are
automatically appropriated pursuant to the Foreign Borrowing Act and
Section 31 of P.D. No. 1177 as reiterated under Section 26, Chapter 4,
Book VI of E.O. No. 292, the Administrative Code of 1987. I wish to
emphasize that the constitutionality of such automatic provisions on debt
servicing has been upheld by the Supreme Court in the case of "Teofisto T.
Guingona, Jr., and Aquilino Q. Pimentel, Jr. v. Hon. Guillermo N. Carague,
in his capacity as Secretary of Budget and Management, et al.," G.R. No.
94571, dated April 22, 1991.chanroblesvirtualawlibrarychanrobles virtual
law library
I am, therefore vetoing the following special provision for the reason that
the GAA is not the appropriate legislative measure to amend the provisions
of the Foreign Borrowing Act, P.D. No. 1177 and E.O. No. 292:
Use of the Fund. The appropriation authorized herein shall be used for
payment of principal and interest of foreign and domestic
indebtedness: PROVIDED, That any payment in excess of the amount
herein appropriated shall be subject to the approval of the President of the
Philippines with the concurrence of the Congress of the
Philippines: PROVIDED, FURTHER, That in no case shall this fund be used
to pay for the liabilities of the Central Bank Board of Liquidators (GAA of
1994, p. 1290).
Petitioners claim that the President cannot veto the Special Provision on
the appropriation for debt service without vetoing the entire amount of
P86,323,438.00 for said purpose (Rollo, G.R. No. 113105, pp. 93-98; Rollo,
G.R. No. 113174, pp. 16-18). The Solicitor General counterposed that the
Special Provision did not relate to the item of appropriation for debt service
and could therefore be the subject of an item veto (Rollo, G.R. No. 113105,
pp. 54-60; Rollo, G.R. No. 113174, pp. 72-
82).chanroblesvirtualawlibrarychanrobles virtual law library
This issue is a mere rehash of the one put to rest in Gonzales v. Macaraig,
Jr., 191 SCRA 452 (1990). In that case, the issue was stated by the Court,
thus:
The fundamental issue raised is whether or not the veto by the President of
Section 55 of the 1989 Appropriations Bill (Section 55
FY '89), and subsequently of its counterpart Section 16 of the 1990
Appropriations Bill (Section 16 FY '90), is unconstitutional and without
effect.
The Court re-stated the issue, just so there would not be any
misunderstanding about it, thus:
The focal issue for resolution is whether or not the President exceeded the
item-veto power accorded by the Constitution. Or differently put, has the
President the power to veto "provisions" of an Appropriations Bill?
The bases of the petition in Gonzales, which are similar to those invoked in
the present case, are stated as follows:
In essence, petitioners' cause is anchored on the following grounds: (1) the
President's line-veto power as regards appropriation bills is limited to
item/s and does not cover provision/s; therefore, she exceeded her
authority when she vetoed Section 55 (FY '89) and Section 16 (FY '90)
which are provisions; (2) when the President objects to a provision of an
appropriation bill, she cannot exercise the item-veto power but should veto
the entire bill; (3) the item-veto power does not carry with it the power to
strike out conditions or restrictions for that would be legislation, in violation
of the doctrine of separation of powers; and (4) the power of augmentation
in Article VI, Section 25 [5] of the 1987 Constitution, has to be provided for
by law and, therefore, Congress is also vested with the prerogative to
impose restrictions on the exercise of that
power.chanroblesvirtualawlibrarychanrobles virtual law library
The restrictive interpretation urged by petitioners that the President may
not veto a provision without vetoing the entire bill not only disregards the
basic principle that a distinct and severable part of a bill may be the
subject of a separate veto but also overlooks the Constitutional mandate
that any provision in the general appropriations bill shall relate specifically
to some particular appropriation therein and that any such provision shall
be limited in its operation to the appropriation to which it relates (1987
Constitution, Article VI, Section 25 [2]). In other words, in the true sense
of the term, a provision in an Appropriations Bill is limited in its operation
to some particular appropriation to which it relates, and does not relate to
the entire bill.
The Court went one step further and ruled that even
assuming arguendo that "provisions" are beyond the executive power to
veto, and Section 55
(FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary
sense of the term, they are "inappropriate provisions" that should be
treated as "items" for the purpose of the President's veto
power.chanroblesvirtualawlibrarychanrobles virtual law library
The Court, citing Henry v. Edwards, La., 346 So. 2d 153 (1977), said that
Congress cannot include in a general appropriations bill matters that should
be more properly enacted in separate legislation, and if it does that, the
inappropriate provisions inserted by it must be treated as "item", which can
be vetoed by the President in the exercise of his item-veto
power.chanroblesvirtualawlibrarychanrobles virtual law library
It is readily apparent that the Special Provision applicable to the
appropriation for debt service insofar as it refers to funds in excess of the
amount appropriated in the bill, is an "inappropriate" provision referring to
funds other than the P86,323,438,000.00 appropriated in the General
Appropriations Act of 1991.chanroblesvirtualawlibrarychanrobles virtual law
library
Likewise the vetoed provision is clearly an attempt to repeal Section 31 of
P.D. No. 1177 (Foreign Borrowing Act) and E.O. No. 292, and to reverse
the debt payment policy. As held by the Court in Gonzales, the repeal of
these laws should be done in a separate law, not in the appropriations
law.chanroblesvirtualawlibrarychanrobles virtual law library
The Court will indulge every intendment in favor of the constitutionality of
a veto, the same as it will presume the constitutionality of an act of
Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz, 485, 53 A.L.R. 258
[1927]).chanroblesvirtualawlibrarychanrobles virtual law library
The veto power, while exercisable by the President, is actually a part of the
legislative process (Memorandum of Justice Irene Cortes
as Amicus Curiae, pp. 3-7). That is why it is found in Article VI on the
Legislative Department rather than in Article VII on the Executive
Department in the Constitution. There is, therefore, sound basis to indulge
in the presumption of validity of a veto. The burden shifts on those
questioning the validity thereof to show that its use is a violation of the
Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
Under his general veto power, the President has to veto the entire bill, not
merely parts thereof (1987 Constitution, Art. VI, Sec. 27[1]). The
exception to the general veto power is the power given to the President to
veto any particular item or items in a general appropriations bill (1987
Constitution, Art. VI,
Sec. 27[2]). In so doing, the President must veto the entire
item.chanroblesvirtualawlibrarychanrobles virtual law library
A general appropriations bill is a special type of legislation, whose content
is limited to specified sums of money dedicated to a specific purpose or a
separate fiscal unit (Beckman, The Item Veto Power of the Executive,
31 Temple Law Quarterly 27 [1957]).chanroblesvirtualawlibrarychanrobles
virtual law library
The item veto was first introduced by the Organic Act of the Philippines
passed by the U.S. Congress on August 29, 1916. The concept was
adopted from some State
Constitutions.chanroblesvirtualawlibrarychanrobles virtual law library
Cognizant of the legislative practice of inserting provisions, including
conditions, restrictions and limitations, to items in appropriations bills, the
Constitutional Convention added the following sentence to Section 20(2),
Article VI of the 1935 Constitution:
. . . When a provision of an appropriation bill affect one or more items of
the same, the President cannot veto the provision without at the same time
vetoing the particular item or items to which it relates . . . .
In short, under the 1935 Constitution, the President was empowered to
veto separately not only items in an appropriations bill but also
"provisions".chanroblesvirtualawlibrarychanrobles virtual law library
While the 1987 Constitution did not retain the aforementioned sentence
added to Section 11(2) of Article VI of the 1935 Constitution, it included
the following provision:
No provision or enactment shall be embraced in the general appropriations
bill unless it relates specifically to some particular appropriation therein.
Any such provision or enactment shall be limited in its operation to the
appropriation to which it relates (Art. VI, Sec. 25[2]).
In Gonzales, we made it clear that the omission of that sentence of Section
16(2) of the 1935 Constitution in the 1987 Constitution should not be
interpreted to mean the disallowance of the power of the President to veto
a "provision".chanroblesvirtualawlibrarychanrobles virtual law library
As the Constitution is explicit that the provision which Congress can include
in an appropriations bill must "relate specifically to some particular
appropriation therein" and "be limited in its operation to the appropriation
to which it relates," it follows that any provision which does not relate to
any particular item, or which extends in its operation beyond an item of
appropriation, is considered "an inappropriate provision" which can be
vetoed separately from an item. Also to be included in the category of
"inappropriate provisions" are unconstitutional provisions and provisions
which are intended to amend other laws, because clearly these kind of laws
have no place in an appropriations bill. These are matters of general
legislation more appropriately dealt with in separate enactments. Former
Justice Irene Cortes, as Amicus Curiae, commented that Congress cannot
by law establish conditions for and regulate the exercise of powers of the
President given by the Constitution for that would be an unconstitutional
intrusion into executive prerogative.chanroblesvirtualawlibrarychanrobles
virtual law library
The doctrine of "inappropriate provision" was well elucidated in Henry
v. Edwards, supra., thus:
Just as the President may not use his item-veto to usurp constitutional
powers conferred on the legislature, neither can the legislature deprive the
Governor of the constitutional powers conferred on him as chief executive
officer of the state by including in a general appropriation bill matters more
properly enacted in separate legislation. The Governor's constitutional
power to veto bills of general legislation . . . cannot be abridged by the
careful placement of such measures in a general appropriation bill, thereby
forcing the Governor to choose between approving unacceptable
substantive legislation or vetoing "items" of expenditures essential to the
operation of government. The legislature cannot by location of a bill give it
immunity from executive veto. Nor can it circumvent the Governor's veto
power over substantive legislation by artfully drafting general law
measures so that they appear to be true conditions or limitations on an
item of appropriation. Otherwise, the legislature would be permitted to
impair the constitutional responsibilities and functions of a co-equal branch
of government in contravention of the separation of powers doctrine . . .
We are no more willing to allow the legislature to use its appropriation
power to infringe on the Governor's constitutional right to veto matters of
substantive legislation than we are to allow the Governor to encroach on
the Constitutional powers of the legislature. In order to avoid this result,
we hold that, when the legislature inserts inappropriate provisions in a
general appropriation bill, such provisions must be treated as "items" for
purposes of the Governor's item veto power over general appropriation
bills.
xxx xxx xxxchanrobles virtual law library
. . . Legislative control cannot be exercised in such a manner as to
encumber the general appropriation bill with veto-proof "logrolling
measures", special interest provisions which could not succeed if separately
enacted, or "riders", substantive pieces of legislation incorporated in a bill
to insure passage without veto . . . (Emphasis supplied).
Petitioners contend that granting arguendo that the veto of the Special
Provision on the ceiling for debt payment is valid, the President cannot
automatically appropriate funds for debt payment without complying with
the conditions for automatic appropriation under the provisions of R.A. No.
4860 as amended by P.D. No. 81 and the provisions of P.D. No. 1177 as
amended by the Administrative Code of 1987 and P.D. No. 1967 (Rollo,
G.R. No. 113766, pp. 9-15).chanroblesvirtualawlibrarychanrobles virtual
law library
Petitioners cannot anticipate that the President will not faithfully execute
the laws. The writ of prohibition will not issue on the fear that official
actions will be done in contravention of the
laws.chanroblesvirtualawlibrarychanrobles virtual law library
The President vetoed the entire paragraph one of the Special Provision of
the item on debt service, including the provisions that the appropriation
authorized in said item "shall be used for payment of the principal and
interest of foreign and domestic indebtedness" and that "in no case shall
this fund be used to pay for the liabilities of the Central Bank Board of
Liquidators." These provisions are germane to and have a direct connection
with the item on debt service. Inherent in the power of appropriation is the
power to specify how the money shall be spent (Henry v. Edwards, LA, 346
So., 2d., 153). The said provisos, being appropriate provisions, cannot be
vetoed separately. Hence the item veto of said provisions is
void.chanroblesvirtualawlibrarychanrobles virtual law library
We reiterate, in order to obviate any misunderstanding, that we are
sustaining the veto of the Special Provision of the item on debt service only
with respect to the proviso therein requiring that "any payment in excess of
the amount herein, appropriated shall be subject to the approval of the
President of the Philippines with the concurrence of the Congress of the
Philippines . . ."
G.R. NO. 113174
G.R. NO. 113766
G.R. NO. 11388
1. Veto of provisions for revolving funds of SUC's.
In the appropriation for State Universities and Colleges (SUC's), the
President vetoed special provisions which authorize the use of income and
the creation, operation and maintenance of revolving funds. The Special
Provisions vetoed are the following:
(H. 7) West Visayas State Universitychanrobles virtual law library
Equal Sharing of Income. Income earned by the University subject to
Section 13 of the special provisions applicable to all State Universities and
Colleges shall be equally shared by the University and the University
Hospital (GAA of 1994, p. 395).
xxx xxx xxxchanrobles virtual law library
(J. 3) Leyte State Collegechanrobles virtual law library All collections of the State Universities and Colleges for fees, charges and
receipts intended for private recipient units, including private foundations
affiliated with these institutions shall be duly acknowledged with official
Revolving Fund for the Operation of LSC House and Human Resources
receipts and deposited as a trust receipt before said income shall be
Development Center (HRDC). The income of Leyte State College derived
subject to Section 35, Chapter 5, Book VI of E.O. No. 292
from the operation of its LSC House and HRDC shall be constituted into a
(GAA of 1994, p. 490).
Revolving Fund to be deposited in an authorized government depository
bank for the operational expenses of these projects/services. The net
income of the Revolving Fund at the end of the year shall be remitted to The President gave his reason for the veto thus:
the National Treasury and shall accrue to the General Fund. The
implementing guidelines shall be issued by the Department of Budget and
Pursuant to Section 65 of the Government Auditing Code of the Philippines,
Management (GAA of 1994, p. 415).
Section 44, Chapter 5, Book VI of E.O. No. 292, s. 1987 and Section 22,
Article VII of the Constitution, all income earned by all Government offices
The vetoed Special Provisions applicable to all SUC's are the following: and agencies shall accrue to the General Fund of the Government in line
with the One Fund Policy enunciated by Section 29 (1), Article VI and
Section 22, Article VII of the Constitution. Likewise, the creation and
12. Use of Income from Extension Services. State Universities and Colleges
establishment of revolving funds shall be authorized by substantive law
are authorized to use their income from their extension services. Subject to
pursuant to Section 66 of the Government Auditing Code of the Philippines
the approval of the Board of Regents and the approval of a special budget
and Section 45, Chapter 5, Book VI of E.O. No.
pursuant to Sec. 35, Chapter 5, Book VI of E.O.
292.chanroblesvirtualawlibrarychanrobles virtual law library
No. 292, such income shall be utilized solely for faculty development,
instructional materials and work study program (GAA of 1994, p. 490).
Notwithstanding the aforementioned provisions of the Constitution and
existing law, I have noted the proliferation of special provisions authorizing
xxx xxx xxxchanrobles virtual law library
the use of agency income as well as the creation, operation and
maintenance of revolving funds.chanroblesvirtualawlibrarychanrobles
13. Income of State Universities and Colleges. The income of State virtual law library
Universities and Colleges derived from tuition fees and other sources as
may be imposed by governing boards other than those accruing to
I would like to underscore the facts that such income were already
revolving funds created under LOI Nos. 872 and 1026 and those authorized
considered as integral part of the revenue and financing sources of the
to be recorded as trust receipts pursuant to Section 40, Chapter 5, Book VI
National Expenditure Program which I previously submitted to Congress.
of E.O. No. 292 shall be deposited with the National Treasury and recorded
Hence, the grant of new special provisions authorizing the use of agency
as a Special Account in the General Fund pursuant to P.D. No. 1234 and
income and the establishment of revolving funds over and above the
P.D. No. 1437 for the use of the institution, subject to Section 35, Chapter
agency appropriations authorized in this Act shall effectively reduce the
5, Book VI of E.O. No. 292L PROVIDED, That disbursements from the
financing sources of the 1994 GAA and, at the same time, increase the
Special Account shall not exceed the amount actually earned and
level of expenditures of some agencies beyond the well-coordinated,
deposited: PROVIDED,FURTHER, That a cash advance on such income may
rationalized levels for such agencies. This corresponding increases the
be allowed State half of income actually realized during the preceding year
overall deficit of the National Government (Veto Message, p. 3).
and this cash advance shall be charged against income actually earned
during the budget year: AND PROVIDED, FINALLY, That in no case shall
such funds be used to create positions, nor for payment of salaries, wages Petitioners claim that the President acted with grave abuse of discretion
or allowances, except as may be specifically approved by the Department when he disallowed by his veto the "use of income" and the creation of
of Budge and Management for income-producing activities, or to purchase "revolving fund" by the Western Visayas State University and Leyte State
equipment or books, without the prior approval of the President of the Colleges when he allowed other government offices, like the National Stud
Philippines pursuant to Letter of Implementation No. Farm, to use their income for their operating expenses (Rollo, G.R. No.
29.chanroblesvirtualawlibrarychanrobles virtual law library 113174, pp. 15-16).chanroblesvirtualawlibrarychanrobles virtual law library
There was no undue discrimination when the President vetoed said special
provisions while allowing similar provisions in other government agencies.
If some government agencies were allowed to use their income and
maintain a revolving fund for that purpose, it is because these agencies
have been enjoying such privilege before by virtue of the special laws
authorizing such practices as exceptions to the "one-fund policy" (e.g., R.A.
No. 4618 for the National Stud Farm, P.D. No. 902-A for the Securities and
Exchange Commission; E.O. No. 359 for the Department of Budget and
Management's Procurement Service).
2. Veto of provision on 70% (administrative)/30% (contract) ratio for road
maintenance.
In the appropriation for the Department of Public Works and Highways, the
President vetoed the second paragraph of Special Provision No. 2,
specifying the 30% maximum ration of works to be contracted for the
maintenance of national roads and bridges. The said paragraph reads as
follows:
2. Release and Use of Road Maintenance Funds. Funds allotted for the
maintenance and repair of roads which are provided in this Act for the
Department of Public Works and Highways shall be released to the
respective Engineering District, subject to such rules and regulations as
may be prescribed by the Department of Budget and Management.
Maintenance funds for roads and bridges shall be exempt from budgetary
reserve.
Of the amount herein appropriated for the maintenance of national roads
and bridges, a maximum of thirty percent (30%) shall be contracted out in
accordance with guidelines to be issued by the Department of Public Works
and Highways. The balance shall be used for maintenance by force
account.chanroblesvirtualawlibrarychanrobles virtual law library
Five percent (5%) of the total road maintenance fund appropriated herein
to be applied across the board to the allocation of each region shall be set
aside for the maintenance of roads which may be converted to or taken
over as national roads during the current year and the same shall be
released to the central office of the said department for eventual
sub-allotment to the concerned region and district: PROVIDED, That any
balance of the said five percent (5%) shall be restored to the regions on
a pro-rata basis for the maintenance of existing national
roads.chanroblesvirtualawlibrary chanrobles virtual law library
No retention or deduction as reserves or overhead expenses shall be made,
except as authorized by law or upon direction of the President
(GAA of 1994, pp. 785-786; Emphasis supplied).
The President gave the following reason for the veto:
While I am cognizant of the well-intended desire of Congress to impose
certain restrictions contained in some special provisions, I am equally
aware that many programs, projects and activities of agencies would
require some degree of flexibility to ensure their successful implementation
and therefore risk their completion. Furthermore, not only could these
restrictions and limitations derail and impede program implementation but
they may also result in a breach of contractual
obligations.chanroblesvirtualawlibrarychanrobles virtual law library
D.1.a. A study conducted by the Infrastructure Agencies show that for
practical intent and purposes, maintenance by contract could be
undertaken to an optimum of seventy percent (70%) and the remaining
thirty percent (30%) by force account. Moreover, the policy of maximizing
implementation through contract maintenance is a covenant of the Road
and Road Transport Program Loan from the Asian Development Bank (ADB
Loan No. 1047-PHI-1990) and Overseas Economic Cooperation Fund (OECF
Loan No. PH-C17-199). The same is a covenant under the World Bank
(IBRD) Loan for the Highway Management Project (IBRD Loan
No. PH-3430) obtained in 1992.chanroblesvirtualawlibrarychanrobles
virtual law library
In the light of the foregoing and considering the policy of the government
to encourage and maximize private sector participation in the regular
repair and maintenance of infrastructure facilities, I am directly vetoing the
underlined second paragraph of Special Provision No. 2 of the Department
of Public Works and Highways (Veto Message, p. 11).
The second paragraph of Special Provision No. 2 brings to fore the
divergence in policy of Congress and the President. While Congress
expressly laid down the condition that only 30% of the total appropriation
for road maintenance should be contracted out, the President, on the basis
of a comprehensive study, believed that contracting out road maintenance
projects at an option of 70% would be more efficient, economical and
practical.chanroblesvirtualawlibrarychanrobles virtual law library
The Special Provision in question is not an inappropriate provision which
can be the subject of a veto. It is not alien to the appropriation for road
maintenance, and on the other hand, it specified how the said item shall be
expended - 70% by administrative and 30% by
contract.chanroblesvirtualawlibrarychanrobles virtual law library
The 1987 Constitution allows the addition by Congress of special
provisions, conditions to items in an expenditure bill, which cannot be
vetoed separately from the items to which they relate so long as they are
"appropriate" in the budgetary sense (Art. VII, Sec.
25[2]).chanroblesvirtualawlibrarychanrobles virtual law library
The Solicitor General was hard put in justifying the veto of this special
provision. He merely argued that the provision is a complete turnabout
from an entrenched practice of the government to maximize contract
maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to
veto a provision separate from the item to which it
refers.chanroblesvirtualawlibrarychanrobles virtual law library
The veto of the second paragraph of Special Provision No. 2 of the item for
the DPWH is therefore unconstitutional.
3. Veto of provision on purchase of medicines by AFP.
In the appropriation for the Armed Forces of the Philippines (AFP), the
President vetoed the special provision on the purchase by the AFP of
medicines in compliance with the Generics Drugs Law (R.A. No. 6675). The
vetoed provision reads:
12. Purchase of Medicines. The purchase of medicines by all Armed Forces
of the Philippines units, hospitals and clinics shall strictly comply with the
formulary embodied in the National Drug Policy of the Department of
Health (GAA of 1994, p. 748).
According to the President, while it is desirable to subject the purchase of
medicines to a standard formulary, "it is believed more prudent to provide
for a transition period for its adoption and smooth implementation in the
Armed Forces of the Philippines" (Veto Message, p.
12).chanroblesvirtualawlibrarychanrobles virtual law library
The Special Provision which requires that all purchases of medicines by the
AFP should strictly comply with the formulary embodied in the National
Drug Policy of the Department of Health is an "appropriate" provision. it is
a mere advertence by Congress to the fact that there is an existing law,
the Generics Act of 1988, that requires "the extensive use of drugs with
generic names through a rational system of procurement and distribution."
The President believes that it is more prudent to provide for a transition
period for the smooth implementation of the law in the case of purchases
by the Armed Forces of the Philippines, as implied by Section 11 (Education
Drive) of the law itself. This belief, however, cannot justify his veto of the
provision on the purchase of medicines by the
AFP.chanroblesvirtualawlibrarychanrobles virtual law library
Being directly related to and inseparable from the appropriation item on
purchases of medicines by the AFP, the special provision cannot be vetoed
by the President without also vetoing the said item (Bolinao Electronics
Corporation v. Valencia, 11 SCRA 486 [1964]).
4. Veto of provision on prior approval of Congress for purchase of military
equipment.
In the appropriation for the modernization of the AFP, the President vetoed
the underlined proviso of Special Provision No. 2 on the "Use of Fund,"
which requires the prior approval of Congress for the release of the
corresponding modernization funds, as well as the entire Special
Provisions
No. 3 on the "Specific Prohibition":
2. Use of the Fund. Of the amount herein appropriated, priority shall be
given for the acquisition of AFP assets necessary for protecting marine,
mineral, forest and other resources within Philippine territorial borders and
its economic zone, detection, prevention or deterrence of air or surface
intrusions and to support diplomatic moves aimed at preserving national
dignity, sovereignty and patrimony: PROVIDED, That the said
modernization fund shall not be released until a Table of Organization and
Equipment for FY 1994-2000 is submitted to and approved by
Congress.chanroblesvirtualawlibrarychanrobles virtual law library
3. Specific Prohibition. The said Modernization Fund shall not be used for
payment of six (6) additional S-211 Trainer planes, 18 SF-260 Trainer
planes and 150 armored personnel carriers (GAA of 1994, p. 747).
As reason for the veto, the President stated that the said condition and
prohibition violate the Constitutional mandate of non-impairment of
contractual obligations, and if allowed, "shall effectively alter the original
intent of the AFP Modernization Fund to cover all military equipment
deemed necessary to modernize the Armed Forces of the Philippines" (Veto
Message, p. 12).chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners claim that Special Provision No. 2 on the "Use of Fund" and
Special Provision No. 3 are conditions or limitations related to the item on
the AFP modernization plan.chanroblesvirtualawlibrarychanrobles virtual
law library
The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP
modernization program that the President must submit all purchases of
military equipment to Congress for its approval, is an exercise of the
"congressional or legislative veto." By way of definition, a congressional
veto is a means whereby the legislature can block or modify administrative
action taken under a statute. It is a form of legislative control in the
implementation of particular executive actions. The form may be either
negative, that is requiring disapproval of the executive action, or
affirmative, requiring approval of the executive action. This device
represents a significant attempt by Congress to move from oversight of the
executive to shared administration (Dixon, The Congressional Veto and
Separation of Powers: The Executive on a Leash,
56 North Carolina Law Review, 423
[1978]).chanroblesvirtualawlibrarychanrobles virtual law library
A congressional veto is subject to serious questions involving the principle
of separation of powers.chanroblesvirtualawlibrarychanrobles virtual law
library
However the case at bench is not the proper occasion to resolve the issues
of the validity of the legislative veto as provided in Special Provisions Nos.
2 and 3 because the issues at hand can be disposed of on other grounds.
Any provision blocking an administrative action in implementing a law or
requiring legislative approval of executive acts must be incorporated in a
separate and substantive bill. Therefore, being "inappropriate" provisions,
Special Provisions Nos. 2 and 3 were properly
vetoed.chanroblesvirtualawlibrarychanrobles virtual law library
As commented by Justice Irene Cortes in her memorandum as Amicus
Curiae: "What Congress cannot do directly by law it cannot do indirectly by
attaching conditions to the exercise of that power (of the President as
Commander-in-Chief) through provisions in the appropriation
law."chanrobles virtual law library
Furthermore, Special Provision No. 3, prohibiting the use of the
Modernization Funds for payment of the trainer planes and armored
personnel carriers, which have been contracted for by the AFP, is violative
of the Constitutional prohibition on the passage of laws that impair the
obligation of contracts (Art. III, Sec. 10), more so, contracts entered into
by the Government itself.chanroblesvirtualawlibrarychanrobles virtual law
library
The veto of said special provision is therefore valid.
5. Veto of provision on use of savings to augment AFP pension funds.
In the appropriation for the AFP Pension and Gratuity Fund, the President
vetoed the new provision authorizing the Chief of Staff to use savings in
the AFP to augment pension and gratuity funds. The vetoed provision
reads:
2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the
approval of the Secretary of National Defense, to use savings in the
appropriations provided herein to augment the pension fund being
managed by the AFP Retirement and Separation Benefits System as
provided under Sections 2(a) and 3 of P.D. No. 361 (GAA of 1994,
p. 746).
According to the President, the grant of retirement and separation benefits
should be covered by direct appropriations specifically approved for the
purpose pursuant to Section 29(1) of Article VI of the Constitution.
Moreover, he stated that the authority to use savings is lodged in the
officials enumerated in Section 25(5) of Article VI of the Constitution (Veto
Message, pp. 7-8).chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners claim that the Special Provision on AFP Pension and Gratuity
Fund is a condition or limitation which is so intertwined with the item of
appropriation that it could not be separated
therefrom.chanroblesvirtualawlibrarychanrobles virtual law library
The Special Provision, which allows the Chief of Staff to use savings to
augment the pension fund for the AFP being managed by the AFP
Retirement and Separation Benefits System is violative of Sections 25(5)
and 29(1) of the Article VI of the
Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
Under Section 25(5), no law shall be passed authorizing any transfer of
appropriations, and under Section 29(1), no money shall be paid out of
the Treasury except in pursuance of an appropriation made by law. While
Section 25(5) allows as an exception the realignment of savings to
augment items in the general appropriations law for the executive branch,
such right must and can be exercised only by the President pursuant to a
specific law.
6. Condition on the deactivation of the CAFGU's.
Congress appropriated compensation for the CAFGU's, including the
payment of separation benefits but it added the following Special Provision:
1. CAFGU Compensation and Separation Benefit. The appropriation
authorized herein shall be used for the compensation of CAFGU's including
the payment of their separation benefit not exceeding one (1) year
subsistence allowance for the 11,000 members who will be deactivated in
1994. The Chief of Staff, AFP, shall, subject to the approval of the
Secretary of National Defense, promulgate policies and procedures for the
payment of separation benefit (GAA of 1994, p. 740).
The President declared in his Veto Message that the implementation of this
Special Provision to the item on the CAFGU's shall be subject to prior
Presidential approval pursuant to P.D. No. 1597 and R.A.. No. 6758. He
gave the following reasons for imposing the condition:
I am well cognizant of the laudable intention of Congress in proposing the
amendment of Special Provision No. 1 of the CAFGU. However, it is
premature at this point in time of our peace process to earmark and
declare through special provision the actual number of CAFGU members to
be deactivated in CY 1994. I understand that the number to be deactivated
would largely depend on the result or degree of success of the on-going
peace initiatives which are not yet precisely determinable today. I have
desisted, therefore, to directly veto said provisions because this would
mean the loss of the entire special provision to the prejudice of its
beneficient provisions. I therefore declare that the actual implementation of
this special provision shall be subject to prior Presidential approval
pursuant to the provisions of P.D. No. 1597 and
R.A. No. 6758 (Veto Message, p. 13).
Petitioners claim that the Congress has required the deactivation of the
CAFGU's when it appropriated the money for payment of the separation
pay of the members of thereof. The President, however, directed that the
deactivation should be done in accordance to his timetable, taking into
consideration the peace and order situation in the affected
localities.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioners complain that the directive of the President was tantamount to
an administrative embargo of the congressional will to implement the
Constitution's command to dissolve the CAFGU's (Rollo, G.R. No. 113174,
p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President
cannot impair or withhold expenditures authorized and appropriated by
Congress when neither the Appropriations Act nor other legislation
authorize such impounding (Rollo, G.R. No. 113888, pp. 15-
16).chanroblesvirtualawlibrarychanrobles virtual law library
The Solicitor General contends that it is the President, as Commander-in-
Chief of the Armed Forces of the Philippines, who should determine when
the services of the CAFGU's are no longer needed (Rollo, G.R. No. 113888,
pp. 92-95.).chanroblesvirtualawlibrarychanrobles virtual law library
This is the first case before this Court where the power of the President to
impound is put in issue. Impoundment refers to a refusal by the President,
for whatever reason, to spend funds made available by Congress. It is the
failure to spend or obligate budget authority of any type
(Notes: Impoundment of Funds, 86 Harvard Law Review 1505
[1973]).chanroblesvirtualawlibrarychanrobles virtual law library
Those who deny to the President the power to impound argue that once
Congress has set aside the fund for a specific purpose in an appropriations
act, it becomes mandatory on the part of the President to implement the
project and to spend the money appropriated therefor. The President has
no discretion on the matter, for the Constitution imposes on him the duty
to faithfully execute the laws.chanroblesvirtualawlibrarychanrobles virtual
law library
In refusing or deferring the implementation of an appropriation item, the
President in effect exercises a veto power that is not expressly granted by
the Constitution. As a matter of fact, the Constitution does not say
anything about impounding. The source of the Executive authority must be
found elsewhere.chanroblesvirtualawlibrarychanrobles virtual law library
Proponents of impoundment have invoked at least three principal sources
of the authority of the President. Foremost is the authority to impound
given to him either expressly or impliedly by Congress. Second is the
executive power drawn from the President's role as Commander-in-Chief.
Third is the Faithful Execution Clause which ironically is the same provision
invoked by petitioners herein.chanroblesvirtualawlibrarychanrobles virtual
law library
The proponents insist that a faithful execution of the laws requires that the
President desist from implementing the law if doing so would prejudice
public interest. An example given is when through efficient and prudent
management of a project, substantial savings are made. In such a case, it
is sheer folly to expect the President to spend the entire amount budgeted
in the law (Notes: Presidential Impoundment: Constitutional Theories and
Political Realities, 61 Georgetown Law Journal 1295 [1973];
Notes; Protecting the Fisc: Executive Impoundment and Congressional
Power, 82 Yale Law Journal 1686
[1973).chanroblesvirtualawlibrarychanrobles virtual law library
We do not find anything in the language used in the challenged Special
Provision that would imply that Congress intended to deny to the President
the right to defer or reduce the spending, much less to deactivate 11,000
CAFGU members all at once in 1994. But even if such is the intention, the
appropriation law is not the proper vehicle for such purpose. Such intention
must be embodied and manifested in another law considering that it
abrades the powers of the Commander-in-Chief and there are existing laws
on the creation of the CAFGU's to be amended. Again we state: a provision
in an appropriations act cannot
be used to repeal or amend other laws, in this case, P.D. No. 1597 and
R.A. No. 6758.
7. Condition on the appropriation for the Supreme Court, etc.
(a) In the appropriations for the Supreme Court, Ombudsman, COA, and
CHR, the Congress added the following provisions:
The Judiciary
xxx xxx xxxchanrobles virtual law library
Special Provisionschanrobles virtual law library
1. Augmentation of any Item in the Court's Appropriations. Any savings in
the appropriations for the Supreme Court and the Lower Courts may be
utilized by the Chief Justice of the Supreme Court to augment any item of
the Court's appropriations for (a) printing of decisions and publication of
"Philippine Reports"; (b) Commutable terminal leaves of Justices and other
personnel of the Supreme Court and payment of adjusted pension rates to
retired Justices entitled thereto pursuant to Administrative Matter No. 91-
8-225-C.A.; (c) repair, maintenance, improvement and other operating
expenses of the courts' libraries, including purchase of books and
periodicals; (d) purchase, maintenance and improvement of printing
equipment; (e) necessary expenses for the employment of temporary
employees, contractual and casual employees, for judicial administration;
(f) maintenance and improvement of the Court's Electronic Data
Processing System; (g) extraordinary expenses of the Chief Justice,
attendance in international conferences and conduct of training programs;
(h) commutable transportation and representation allowances and fringe
benefits for Justices, Clerks of Court, Court Administrator, Chiefs of Offices
and other Court personnel in accordance with the rates prescribed by law;
and (i) compensation of attorney-de-officio: PROVIDED, That as mandated
by LOI No. 489 any increase in salary and allowances shall be subject to
the usual procedures and policies as provided for under
P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis
supplied).
xxx xxx xxxchanrobles virtual law library
Commission on Audit
xxx xxx xxxchanrobles virtual law library
5. Use of Savings. The Chairman of the Commission on Audit is hereby
authorized, subject to appropriate accounting and auditing rules and
regulations, to use savings for the payment of fringe benefits as may be
authorized by law for officials and personnel of the Commission (GAA of
1994, p. 1161; Emphasis supplied).
xxx xxx xxxchanrobles virtual law library
Office of the Ombudsman
xxx xxx xxxchanrobles virtual law library
6. Augmentation of Items in the appropriation of the Office of the
Ombudsman. The Ombudsman is hereby authorized, subject to appropriate
accounting and auditing rules and regulations to augment items of
appropriation in the Office of the Ombudsman from savings in other items
of appropriation actually released, for: (a) printing and/or publication of
decisions, resolutions, training and information materials; (b) repair,
maintenance and improvement of OMB Central and Area/Sectoral facilities;
(c) purchase of books, journals, periodicals and equipment;
(d) payment of commutable representation and transportation allowances
of officials and employees who by reason of their positions are entitled
thereto and fringe benefits as may be authorized specifically by law for
officials and personnel of OMB pursuant to Section 8 of Article IX-B of the
Constitution; and (e) for other official purposes subject to accounting and
auditing rules and regulations (GAA of 1994, p. 1174; Emphasis supplied).
xxx xxx xxxchanrobles virtual law library
Commission on Human Rights
xxx xxx xxxchanrobles virtual law library
1. Use of Savings. The Chairman of the Commission on Human Rights
(CHR) is hereby authorized, subject to appropriate accounting and auditing
rules and regulations, to augment any item of appropriation in the office of
the CHR from savings in other items of appropriations actually released,
for: (a) printing and/or publication of decisions, resolutions, training
materials and educational publications; (b) repair, maintenance and
improvement of Commission's central and regional facilities; (c) purchase
of books, journals, periodicals and equipment, (d) payment of commutable
representation and transportation allowances of officials and employees
who by reason of their positions are entitled thereto and fringe benefits, as
may be authorized by law for officials and personnel of CHR, subject to
accounting and auditing rules and regulations (GAA of 1994, p. 1178;
Emphasis supplied).
In his Veto Message, the President expressed his approval of the conditions
included in the GAA of 1994. He noted that:
The said condition is consistent with the Constitutional injunction
prescribed under Section 8, Article IX-B of the Constitution which states
that "no elective or appointive public officer or employee shall receive
additional, double, or indirect compensation unless specifically authorized
by law." I am, therefore, confident that the heads of the said offices shall
maintain fidelity to the law and faithfully adhere to the well-established
principle on compensation standardization (Veto Message, p. 10).
Petitioners claim that the conditions imposed by the President violated the
independence and fiscal autonomy of the Supreme Court, the Ombudsman,
the COA and the CHR.chanroblesvirtualawlibrarychanrobles virtual law
library
In the first place, the conditions questioned by petitioners were placed in
the GAB by Congress itself, not by the President. The Veto Message merely
highlighted the Constitutional mandate that additional or indirect
compensation can only be given pursuant to
law.chanroblesvirtualawlibrarychanrobles virtual law library
In the second place, such statements are mere reminders that the
disbursements of appropriations must be made in accordance with law.
Such statements may, at worse, be treated as
superfluities.chanroblesvirtualawlibrary chanrobles virtual law library
(b) In the appropriation for the COA, the President imposed the condition
that the implementation of the budget of the COA be subject to "the
guidelines to be issued by the President."chanrobles virtual law library
The provisions subject to said condition reads:
xxx xxx xxxchanrobles virtual law library
3. Revolving Fund. The income of the Commission on Audit derived from
sources authorized by the Government Auditing Code of the Philippines
(P.D. No. 1445) not exceeding Ten Million Pesos (P10,000,000) shall be
constituted into a revolving fund which shall be used for maintenance,
operating and other incidental expenses to enhance audit services and
audit-related activities. The fund shall be deposited in an authorized
government depository ban, and withdrawals therefrom shall be made in
accordance with the procedure prescribed by law and implementing rules
and regulations: PROVIDED, That any interests earned on such deposit
shall be remitted at the end of each quarter to the national Treasury and
shall accrue to the General Fund: PROVIDED FURTHER, That the
Commission on Audit shall submit to the Department of Budget and
Management a quarterly report of income and expenditures of said
revolving fund (GAA of 1994, pp. 1160-1161).
The President cited the "imperative need to rationalize" the
implementation, applicability and operation of use of income and revolving
funds. The Veto Message stated:
. . . I have observed that there are old and long existing special provisions
authorizing the use of income and the creation of revolving funds. As a
rule, such authorizations should be discouraged. However, I take it that
these authorizations have legal/statutory basis aside from being already a
vested right to the agencies concerned which should not be jeopardized
through the Veto Message. There is, however, imperative need to
rationalize their implementation, applicability and operation. Thus, in order
to substantiate the purpose and intention of said provisions, I hereby
declare that the operationalization of the following provisions during budget
implementation shall be subject to the guidelines to be issued by the
President pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292 and
Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the
General Provisions of this Act (Veto Message, p. 6; Emphasis Supplied.)
(c) In the appropriation for the DPWH, the President imposed the condition
that in the implementation of DPWH projects, the administrative and
engineering overhead of 5% and 3% "shall be subject to the necessary
administrative guidelines to be formulated by the Executive pursuant to
existing laws." The condition was imposed because the provision "needs
further study" according to the
President.chanroblesvirtualawlibrarychanrobles virtual law library
The following provision was made subject to said condition:
9. Engineering and Administrative Overhead. Not more than five percent
(5%) of the amount for infrastructure project released by the Department
of Budget and Management shall be deducted by DPWH for administrative
overhead, detailed engineering and construction supervision, testing and
quality control, and the like, thus insuring that at least ninety-five percent
(95%) of the released fund is available for direct implementation of the
project. PROVIDED, HOWEVER, That for school buildings, health centers,
day-care centers and barangay halls, the deductible amount shall not
exceed three percent (3%).chanroblesvirtualawlibrarychanrobles virtual
law library
Violation of, or non-compliance with, this provision shall subject the
government official or employee concerned to administrative, civil and/or
criminal sanction under Sections 43 and 80, Book VI of E.O.
No. 292 (GAA of 1994, p. 786).
(d) In the appropriation for the National Housing Authority (NHA), the
President imposed the condition that allocations for specific projects shall
be released and disbursed "in accordance with the housing program of the
government, subject to prior Executive approval."chanrobles virtual law
library
The provision subject to the said condition reads:
3. Allocations for Specified Projects. The following allocations for the
specified projects shall be set aside for corollary works and used
exclusively for the repair, rehabilitation and construction of buildings,
roads, pathwalks, drainage, waterworks systems, facilities and amenities in
the area: PROVIDED, That any road to be constructed or rehabilitated shall
conform with the specifications and standards set by the Department of
Public Works and Highways for such kind of
road: PROVIDED, FURTHER, That savings that may be available in the
future shall be used for road repair, rehabilitation and construction:
(1) Maharlika Village Road - Not less than P5,000,000chanrobles virtual law
library
(2) Tenement Housing Project (Taguig) - Not less than
P3,000,000chanrobles virtual law library
(3) Bagong Lipunan Condominium Project (Taguig) - Not less than
P2,000,000
4. Allocation of Funds. Out of the amount appropriated for the
implementation of various projects in resettlement areas, Seven Million
Five Hundred Thousand Pesos (P7,500,000) shall be allocated to the
Dasmariñas Bagong Bayan resettlement area, Eighteen Million Pesos
(P18,000,000) to the Carmona Relocation Center Area (Gen. Mariano
Alvarez) and Three Million Pesos (P3,000,000) to the Bulihan Sites and
Services, all of which will be for the cementing of roads in accordance with
DPWH standards.chanroblesvirtualawlibrarychanrobles virtual law library
5. Allocation for Sapang Palay. An allocation of Eight Million Pesos
(P8,000,000) shall be set aside for the asphalting of seven (7) kilometer
main road of Sapang Palay, San Jose Del Monte, Bulacan
(GAA of 1994, p. 1216).
The President imposed the conditions: (a) that the "operationalization" of
the special provision on revolving funds of the COA "shall be subject to
guidelines to be issued by the President pursuant to Section 35, Chapter
5,
Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to
Sections 2 and 3 of the General Provisions of this Act" (Rollo, G.R.
No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision
No. 9 of the DPWH on the mandatory retention of 5% and 3% of the
amounts released by said Department "be subject to the necessary
administrative guidelines to be formulated by the Executive pursuant to
existing law" (Rollo, G.R. No. 113888; pp. 10, 14-16); and (c) that the
appropriations authorized for the NHA can be released only "in accordance
with the housing program of the government subject to prior Executive
approval" (Rollo, G.R. No. 113888, pp. 10-11;
14-16).chanroblesvirtualawlibrarychanrobles virtual law library
The conditions objected to by petitioners are mere reminders that the
implementation of the items on which the said conditions were imposed,
should be done in accordance with existing laws, regulations or policies.
They did not add anything to what was already in place at the time of the
approval of the GAA of 1994.chanroblesvirtualawlibrarychanrobles virtual
law library
There is less basis to complain when the President said that the
expenditures shall be subject to guidelines he will issue. Until the
guidelines are issued, it cannot be determined whether they are proper or
inappropriate. The issuance of administrative guidelines on the use of
public funds authorized by Congress is simply an exercise by the President
of his constitutional duty to see that the laws are faithfully executed (1987
Constitution, Art. VII, Sec. 17; Planas v. Gil 67 Phil. 62 [1939]). Under the
Faithful Execution Clause, the President has the power to take "necessary
and proper steps" to carry into execution the law (Schwartz, On
Constitutional Law, p. 147 [1977]). These steps are the ones to be SO ORDERED.
embodied in the guidelines.
Narvasa, C.J., Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo,
IVchanrobles virtual law library Melo, Puno, Kapunan and Mendoza, JJ., concur.

Petitioners chose to avail of the special civil actions but those remedies can
be used only when respondents have acted "without or in excess" of
jurisdiction, or "with grave abuse of discretion," (Revised Rules of Court,
Rule 65, Section 2). How can we begrudge the President for vetoing the
Special Provision on the appropriation for debt payment when he merely
followed our decision in Gonzales? How can we say that Congress has
abused its discretion when it appropriated a bigger sum for debt payment
than the amount appropriated for education, when it merely followed our
dictum in Guingona?chanrobles virtual law library

Article 8 of the Civil Code of Philippines, provides:

Judicial decisions applying or interpreting the laws or the constitution shall

from a part of the legal system of the Philippines.

The Court's interpretation of the law is part of that law as of the date of its
enactment since the court's interpretation merely establishes the
contemporary legislative intent that the construed law purports to carry
into effect (People v. Licera, 65 SCRA 270 [1975]). Decisions of the
Supreme Court assume the same authority as statutes (Floresca v. Philex
Mining Corporation, 136 SCRA 141
[1985]).chanroblesvirtualawlibrarychanrobles virtual law library

Even if Guingona and Gonzales are considered hard cases that make bad
laws and should be reversed, such reversal cannot nullify prior acts done in
reliance thereof.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the petitions are DISMISSED, except with respect to

(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the
annulment of the veto of the special provision on debt service specifying
that the fund therein appropriated "shall be used for payment of the
principal and interest of foreign and domestic indebtedness" prohibiting the
use of the said funds "to pay for the liabilities of the Central Bank Board of
Liquidators", and (2) G.R. No. 113888 only insofar as it prays for the
annulment of the veto of: (a) the second paragraph of Special Provision
No. 2 of the item of appropriation for the Department of Public Works and
Highways (GAA of 1994, pp. 785-786); and (b) Special Provision No. 12 on
the purchase of medicines by the Armed Forces of the Philippines (GAA of
1994, p. 748), which is GRANTED.chanroblesvirtualawlibrarychanrobles
virtual law library
 G.R. No. 208566, November 19, 2013
GRECO ANTONIOUS BEDA B. BELGICA, JOSE M. VILLEGAS, JR., JOSE
L. GONZALEZ, REUBEN M. ABANTE, AND QUINTIN PAREDES SAN
DIEGO, Petitioners, v. HONORABLE EXECUTIVE SECRETARY PAQUITO
N. OCHOA, JR., SECRETARY OF BUDGET AND MANAGEMENT
FLORENCIO B. ABAD, NATIONAL TREASURER ROSALIA V. DE LEON,
SENATE OF THE PHILIPPINES, REPRESENTED BY FRANKLIN M.
DRILON IN HIS CAPACITY AS SENATE PRESIDENT, AND HOUSE OF
REPRESENTATIVES, REPRESENTED BY FELICIANO S. BELMONTE, JR.
IN HIS CAPACITY AS SPEAKER OF THE HOUSE, Respondents.
[G.R. NO. 208493]
SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT SAMSON S.
ALCANTARA, Petitioner, v. HONORABLE FRANKLIN M. DRILON, IN
HIS CAPACITY AS SENATE PRESIDENT, AND HONORABLE
FELICIANO S. BELMONTE, JR., IN HIS CAPACITY AS SPEAKER OF
THE HOUSE OF REPRESENTATIVES, Respondents.
[G.R. NO. 209251]
PEDRITO M. NEPOMUCENO, FORMER MAYOR–BOAC, MARINDUQUE
FORMER PROVINCIAL BOARD MEMBER – PROVINCE OF
MARINDUQUE, Petitioner, v. PRESIDENT BENIGNO SIMEON C.
AQUINO III* AND SECRETARY FLORENCIO “BUTCH” ABAD,
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.
DECISION
PERLAS–BERNABE, J.:
“Experience is the oracle of truth.”1
– James Madison
Before the Court are consolidated petitions2 taken under Rule 65 of the
Rules of Court, all of which assail the constitutionality of the Pork Barrel
System. Due to the complexity of the subject matter, the Court shall
heretofore discuss the system’s conceptual underpinnings before detailing
the particulars of the constitutional challenge.
The Facts
I. Pork Barrel: General Concept.
"Pork Barrel” is political parlance of American–English origin.3 Historically,
its usage may be traced to the degrading ritual of rolling out a barrel
stuffed with pork to a multitude of black slaves who would cast their
famished bodies into the porcine feast to assuage their hunger with
morsels coming from the generosity of their well–fed master.4 This practice
was later compared to the actions of American legislators in trying to direct
federal budgets in favor of their districts.5 While the advent of refrigeration
has made the actual pork barrel obsolete, it persists in reference to political
bills that “bring home the bacon” to a legislator’s district and
constituents.6 In a more technical sense, “Pork Barrel” refers to an
appropriation of government spending meant for localized
projects and secured solely or primarily to bring money to a
representative’s district.7 Some scholars on the subject further use it to
refer to legislative control of local appropriations.8cralawlawlibrary
In the Philippines, “Pork Barrel” has been commonly referred to as lump–
sum, discretionary funds of Members of the Legislature,9 although, as will
be later discussed, its usage would evolve in reference to certain funds of
the Executive.
II. History of Congressional Pork Barrel in the Philippines.
A. Pre–Martial Law Era (1922–1972).
Act 3044,10 or the Public Works Act of 1922, is considered11 as the earliest
form of “Congressional Pork Barrel” in the Philippines since the utilization of
the funds appropriated therein were subjected to post– enactment
legislator approval. Particularly, in the area of fund release, Section
312 provides that the sums appropriated for certain public works
projects13 “shall be distributed x x x subject to the approval of a joint
committee elected by the Senate and the House of
Representatives.” “[T]he committee from each House may [also]
authorize one of its members to approve the distribution made by the
Secretary of Commerce and Communications.”14 Also, in the area of fund
realignment, the same section provides that the said secretary, “with the
approval of said joint committee, or of the authorized members
thereof, may, for the purposes of said distribution, transfer unexpended
portions of any item of appropriation under this Act to any other item
hereunder.”
In 1950, it has been documented15 that post–enactment legislator
participation broadened from the areas of fund release and realignment to
the area of project identification. During that year, the mechanics of the
public works act was modified to the extent that the discretion of choosing
projects was transferred from the Secretary of Commerce and
Communications to legislators. “For the first time, the law carried a list of
projects selected by Members of Congress, they ‘being the representatives
of the people, either on their own account or by consultation with local
officials or civil leaders.’ “16 During this period, the pork barrel process
commenced with local government councils, civil groups, and individuals
appealing to Congressmen or Senators for projects. Petitions that were
accommodated formed part of a legislator’s allocation, and the amount
each legislator would eventually get is determined in a caucus convened by
the majority. The amount was then integrated into the administration bill
prepared by the Department of Public Works and Communications.
Thereafter, the Senate and the House of Representatives added their own
provisions to the bill until it was signed into law by the President – the
Public Works Act.17 In the 1960’s , however, pork barrel legislation
reportedly ceased in view of the stalemate between the House of
Representatives and the Senate.18
B. Martial Law Era (1972–1986).
While the previous “Congressional Pork Barrel” was apparently discontinued
in 1972 after Martial Law was declared, an era when “one man controlled
the legislature,”19 the reprieve was only temporary. By 1982, the Batasang
Pambansa had already introduced a new item in the General Appropriations
Act (GAA) called the “Support for Local Development Projects” (SLDP)
under the article on “National Aid to Local Government Units”. Based on
reports,20 it was under the SLDP that the practice of giving lump–sum
allocations to individual legislators began, with each assemblyman
receiving P500,000.00. Thereafter, assemblymen would communicate
their project preferences to the Ministry of Budget and Management for
approval. Then, the said ministry would release the allocation papers to the
Ministry of Local Governments, which would, in turn, issue the checks to
the city or municipal treasurers in the assemblyman’s locality. It has been
further reported that “Congressional Pork Barrel” projects under the SLDP
also began to cover not only public works projects, or so–called “hard
projects”, but also “soft projects”,21 or non–public works projects such as
those which would fall under the categories of, among others, education,
health and livelihood.22
C. Post–Martial Law Era:
Corazon Cojuangco Aquino Administration (1986–1992).
After the EDSA People Power Revolution in 1986 and the restoration of
Philippine democracy, “Congressional Pork Barrel” was revived in the form
of the “Mindanao Development Fund” and the “Visayas Development
Fund” which were created with lump–sum appropriations of P480 Million
and P240 Million, respectively, for the funding of development projects in
the Mindanao and Visayas areas in 1989. It has been documented23 that
the clamor raised by the Senators and the Luzon legislators for a similar
funding, prompted the creation of the “Countrywide Development
Fund” (CDF) which was integrated into the 1990 GAA24 with an initial
funding of P2.3 Billion to cover “small local infrastructure and other priority
community projects.”
Under the GAAs for the years 1991 and 1992,25 CDF funds were, with the
approval of the President, to be released directly to the implementing
agencies but “subject to the submission of the required list of
projects and activities.” Although the GAAs from 1990 to 1992 were
silent as to the amounts of allocations of the individual legislators, as well
as their participation in the identification of projects, it has been
reported26 that by 1992, Representatives were receiving P12.5 Million each
in CDF funds, while Senators were receiving P18 Million each, without any
limitation or qualification, and that they could identify any kind of
project, from hard or infrastructure projects such as roads, bridges, and
buildings to “soft projects” such as textbooks, medicines, and
scholarships.27
D. Fidel Valdez Ramos (Ramos) Administration (1992–1998).
The following year, or in 1993,28 the GAA explicitly stated that the release
of CDF funds was to be made upon the submission of the list of
projects and activities identified by, among others, individual
legislators. For the first time, the 1993 CDF Article included an
allocation for the Vice–President.29 As such, Representatives were
allocated P12.5 Million each in CDF funds, Senators, P18 Million each, and
the Vice– President, P20 Million.
In 1994,301995,31 and 1996,32 the GAAs contained the same provisions on
project identification and fund release as found in the 1993 CDF Article. In
addition, however, the Department of Budget and Management (DBM) was
directed to submit reports to the Senate Committee on Finance and
the House Committee on Appropriations on the releases made from
the funds.33
Under the 199734 CDF Article, Members of Congress and the Vice–
President, in consultation with the implementing agency concerned,
were directed to submit to the DBM the list of 50% of projects to be funded
from their respective CDF allocations which shall be duly endorsed by (a)
the Senate President and the Chairman of the Committee on Finance, in
the case of the Senate, and (b) the Speaker of the House of
Representatives and the Chairman of the Committee on Appropriations, in
the case of the House of Representatives; while the list for the remaining
50% was to be submitted within six (6) months thereafter. The same
article also stated that the project list, which would be published by the
DBM,35 “shall be the basis for the release of funds” and that “[n]o
funds appropriated herein shall be disbursed for projects not
included in the list herein required.”
The following year, or in 1998,36 the foregoing provisions regarding the
required lists and endorsements were reproduced, except that the
publication of the project list was no longer required as the list itself
sufficed for the release of CDF Funds.
The CDF was not, however, the lone form of “Congressional Pork Barrel” at
that time. Other forms of “Congressional Pork Barrel” were reportedly
fashioned and inserted into the GAA (called “Congressional Insertions”
or “CIs”) in order to perpetuate the administration’s political agenda.37 It
has been articulated that since CIs “formed part and parcel of the
budgets of executive departments, they were not easily identifiable
and were thus harder to monitor.” Nonetheless, the lawmakers
themselves as well as the finance and budget officials of the implementing
agencies, as well as the DBM, purportedly knew about the
insertions.38 Examples of these CIs are the Department of Education
(DepEd) School Building Fund, the Congressional Initiative Allocations, the
Public Works Fund, the El Niño Fund, and the Poverty Alleviation
Fund.39 The allocations for the School Building Fund, particularly, “shall be
made upon prior consultation with the representative of the
legislative district concerned.”40Similarly, the legislators had the
power to direct how, where and when these appropriations were to be
spent.41
E. Joseph Ejercito Estrada (Estrada) Administration (1998–2001).
In 1999,42 the CDF was removed in the GAA and replaced by three (3)
separate forms of CIs, namely, the “Food Security Program Fund,”43 the
“Lingap Para Sa Mahihirap Program Fund,”44 and the “Rural/Urban
Development Infrastructure Program Fund,”45 all of which contained a
special provision requiring “prior consultation” with the Members of
Congress for the release of the funds.
It was in the year 200046 that the “Priority Development Assistance
Fund” (PDAF) appeared in the GAA. The requirement of “prior consultation
with the respective Representative of the District” before PDAF funds were
directly released to the implementing agency concerned was explicitly
stated in the 2000 PDAF Article. Moreover, realignment of funds to any
expense category was expressly allowed, with the sole condition that no
amount shall be used to fund personal services and other personnel
benefits.47 The succeeding PDAF provisions remained the same in view of
the re–enactment48 of the 2000 GAA for the year 2001.
F. Gloria Macapagal–Arroyo (Arroyo) Administration (2001–2010).
The 200249 PDAF Article was brief and straightforward as it merely
contained a single special provision ordering the release of the funds
directly to the implementing agency or local government unit concerned,
without further qualifications. The following year, 2003,50 the same single
provision was present, with simply an expansion of purpose and express
authority to realign. Nevertheless, the provisions in the 2003 budgets of
the Department of Public Works and Highways51 (DPWH) and the
DepEd52required prior consultation with Members of Congress on the
aspects of implementation delegation and project list submission,
respectively. In 2004, the 2003 GAA was re–enacted.53
In 2005, 54 the PDAF Article provided that the PDAF shall be used “to fund
priority programs and projects under the ten point agenda of the national
government and shall be released directly to the implementing agencies.”
It also introduced the program menu concept,55 which is essentially a list
of general programs and implementing agencies from which a
particular PDAF project may be subsequently chosen by the
identifying authority. The 2005 GAA was re–enacted56 in 2006 and
hence, operated on the same bases. In similar regard, the program menu
concept was consistently integrated into the 2007,572008,582009,59 and
201060 GAAs.
Textually, the PDAF Articles from 2002 to 2010 were silent with respect
to the specific amounts allocated for the individual legislators, as well as
their participation in the proposal and identification of PDAF projects to be
funded. In contrast to the PDAF Articles, however, the provisions under the
DepEd School Building Program and the DPWH budget, similar to its
predecessors, explicitly required prior consultation with the concerned
Member of Congress61 anent certain aspects of project implementation.
Significantly, it was during this era that provisions which allowed formal
participation of non–governmental organizations (NGO) in the
implementation of government projects were introduced. In the
Supplemental Budget for 2006, with respect to the appropriation for school
buildings, NGOs were, by law, encouraged to participate. For such purpose,
the law stated that “the amount of at least P250 Million of the P500 Million
allotted for the construction and completion of school buildings shall be
made available to NGOs including the Federation of Filipino–Chinese
Chambers of Commerce and Industry, Inc. for its “Operation Barrio School”
program[,] with capability and proven track records in the construction of
public school buildings x x x.”62 The same allocation was made available to
NGOs in the 2007 and 2009 GAAs under the DepEd Budget.63 Also, it was
in 2007 that the Government Procurement Policy Board64 (GPPB)
issued Resolution No. 12–2007 dated June 29, 2007 (GPPB Resolution
12–2007), amending the implementing rules and regulations65 of RA
9184,66 the Government Procurement Reform Act, to include, as a form of
negotiated procurement,67 the procedure whereby the Procuring
Entity68 (the implementing agency) may enter into a memorandum of
agreement with an NGO, provided that “an appropriation law or
ordinance earmarks an amount to be specifically contracted out to NGOs.”69
G. Present Administration (2010–Present).
Differing from previous PDAF Articles but similar to the CDF Articles,
the 201170 PDAF Article included an express statement on lump– sum
amounts allocated for individual legislators and the Vice–President:
Representatives were given P70 Million each, broken down into P40 Million
for “hard projects” and P30 Million for “soft projects”; while P200 Million
was given to each Senator as well as the Vice–President, with a P100
Million allocation each for “hard” and “soft projects.” Likewise, a provision
on realignment of funds was included, but with the qualification that it may
be allowed only once. The same provision also allowed the Secretaries of
Education, Health, Social Welfare and Development, Interior and Local
Government, Environment and Natural Resources, Energy, and Public
Works and Highways to realign PDAF Funds, with the further conditions
that: (a) realignment is within the same implementing unit and same
project category as the original project, for infrastructure projects; (b)
allotment released has not yet been obligated for the original scope of
work, and (c) the request for realignment is with the concurrence of the
legislator concerned.71
In the 201272 and 201373 PDAF Articles, it is stated that the
“[i]dentification of projects and/or designation of beneficiaries shall
conform to the priority list, standard or design prepared by each
implementing agency [(priority list requirement)] x x x.” However, as
practiced, it would still be the individual legislator who would choose and
identify the project from the said priority list.74
Provisions on legislator allocations75 as well as fund realignment76 were
included in the 2012 and 2013 PDAF Articles; but the allocation for the
Vice–President, which was pegged at P200 Million in the 2011 GAA, had
been deleted. In addition, the 2013 PDAF Article now allowed LGUs to be
identified as implementing agencies if they have the technical
capability to implement the projects.77 Legislators were also allowed to
identify programs/projects, except for assistance to indigent patients and
scholarships, outside of his legislative district provided that he secures
the written concurrence of the legislator of the intended outside–district,
endorsed by the Speaker of the House.78 Finally, any realignment of
PDAF funds, modification and revision of project identification, as
well as requests for release of funds, were all required to be
favorably endorsed by the House Committee on Appropriations and
the Senate Committee on Finance, as the case may be.79
III. History of Presidential Pork Barrel in the Philippines.
While the term “Pork Barrel” has been typically associated with lump– sum,
discretionary funds of Members of Congress, the present cases and the
recent controversies on the matter have, however, shown that the term’s
usage has expanded to include certain funds of the President such as the
Malampaya Funds and the Presidential Social Fund.
On the one hand, the Malampaya Funds was created as a special fund
under Section 880 of Presidential Decree No. (PD) 910,81 issued by then
President Ferdinand E. Marcos (Marcos) on March 22, 1976. In enacting the
said law, Marcos recognized the need to set up a special fund to help
intensify, strengthen, and consolidate government efforts relating to the
exploration, exploitation, and development of indigenous energy resources
vital to economic growth.82 Due to the energy–related activities of the
government in the Malampaya natural gas field in Palawan, or the
“Malampaya Deep Water Gas–to–Power Project”,83 the special fund created
under PD 910 has been currently labeled as Malampaya Funds.
On the other hand the Presidential Social Fund was created under Section
12, Title IV84 of PD 1869,85 or the Charter of the Philippine Amusement and
Gaming Corporation (PAGCOR). PD 1869 was similarly issued by Marcos on
July 11, 1983. More than two (2) years after, he amended PD 1869
and accordingly issued PD 1993 on October 31, 1985,86 amending
Section 1287 of the former law. As it stands, the Presidential Social
Fund has been described as a special funding facility managed and
administered by the Presidential Management Staff through which the
President provides direct assistance to priority programs and projects not
funded under the regular budget. It is sourced from the share of the
government in the aggregate gross earnings of PAGCOR.88
IV. Controversies in the Philippines.
Over the decades, “pork” funds in the Philippines have increased
tremendously,89 owing in no small part to previous Presidents who
reportedly used the “Pork Barrel” in order to gain congressional
support.90 It was in 1996 when the first controversy surrounding the “Pork
Barrel” erupted. Former Marikina City Representative Romeo Candazo
(Candazo), then an anonymous source, “blew the lid on the huge sums of
government money that regularly went into the pockets of legislators in the
form of kickbacks.”91 He said that the kickbacks were ‘SOP’ (standard
operating procedure) among legislators and ranged from a low 19 percent
to a high 52 percent of the cost of each project, which could be anything
from dredging, rip rapping, asphalting, concreting, and construction of
school buildings.”92 “Other sources of kickbacks that Candazo identified
were public funds intended for medicines and textbooks. A few days later,
the tale of the money trail became the banner story of the [Philippine
Daily] Inquirer issue of [August] 13, 1996, accompanied by an illustration
of a roasted pig.”93 “The publication of the stories, including those about
congressional initiative allocations of certain lawmakers, including P3.6
[B]illion for a [C]ongressman, sparked public outrage.”94
Thereafter, or in 2004, several concerned citizens sought the nullification of
the PDAF as enacted in the 2004 GAA for being unconstitutional.
Unfortunately, for lack of “any pertinent evidentiary support that illegal
misuse of PDAF in the form of kickbacks has become a common exercise of
unscrupulous Members of Congress,” the petition was dismissed.95
Recently, or in July of the present year, the National Bureau of
Investigation (NBI) began its probe into allegations that “the government
has been defrauded of some P10 Billion over the past 10 years by a
syndicate using funds from the pork barrel of lawmakers and various
government agencies for scores of ghost projects.”96 The investigation was
spawned by sworn affidavits of six (6) whistle–blowers who declared that
JLN Corporation – “JLN” standing for Janet Lim Napoles (Napoles) – had
swindled billions of pesos from the public coffers for “ghost projects” using
no fewer than 20 dummy NGOs for an entire decade. While the NGOs were
supposedly the ultimate recipients of PDAF funds, the whistle–blowers
declared that the money was diverted into Napoles’ private
accounts.97 Thus, after its investigation on the Napoles controversy,
criminal complaints were filed before the Office of the Ombudsman,
charging five (5) lawmakers for Plunder, and three (3) other lawmakers for
Malversation, Direct Bribery, and Violation of the Anti–Graft and Corrupt
Practices Act. Also recommended to be charged in the complaints are some
of the lawmakers’ chiefs–of–staff or representatives, the heads and other
officials of three (3) implementing agencies, and the several presidents of
the NGOs set up by Napoles.98
On August 16, 2013, the Commission on Audit (CoA) released the results
of a three–year audit investigation99 covering the use of legislators’ PDAF
from 2007 to 2009, or during the last three (3) years of the Arroyo
administration. The purpose of the audit was to determine the propriety of
releases of funds under PDAF and the Various Infrastructures including
Local Projects (VILP)100 by the DBM, the application of these funds and the
implementation of projects by the appropriate implementing agencies and
several government–owned–and–controlled corporations (GOCCs).101 The
total releases covered by the audit amounted to P8.374 Billion in PDAF and
P32.664 Billion in VILP, representing 58% and 32%, respectively, of the
total PDAF and VILP releases that were found to have been made
nationwide during the audit period.102 Accordingly, the CoA’s findings
contained in its Report No. 2012–03 (CoA Report), entitled “Priority
Development Assistance Fund (PDAF) and Various Infrastructures including
Local Projects (VILP),” were made public, the highlights of which are as
follows:103
• Amounts released for projects identified by a
considerable number of legislators significantly exceeded
their respective allocations.
• Amounts were released for projects outside of legislative
districts of sponsoring members of the Lower House.
• Total VILP releases for the period exceeded the total
amount appropriated under the 2007 to 2009 GAAs.
• Infrastructure projects were constructed on private lots
without these having been turned over to the
government.
• Significant amounts were released to [implementing
agencies] without the latter’s endorsement and without
considering their mandated functions, administrative and
technical capabilities to implement projects.
• Implementation of most livelihood projects was not
undertaken by the [implementing agencies] themselves
but by [NGOs] endorsed by the proponent legislators to
which the Funds were transferred. • The funds were
transferred to the NGOs in spite of the absence of any
appropriation law or ordinance.
• Selection of the NGOs were not compliant with law and
regulations.
• Eighty–Two (82) NGOs entrusted with implementation of
seven hundred seventy two (772) projects amount to
[P]6.156 Billion were either found questionable, or
submitted questionable/spurious documents, or failed to
liquidate in whole or in part their utilization of the Funds.
• Procurement by the NGOs, as well as some implementing
agencies, of goods and services reportedly used in the
projects were not compliant with law.
As for the “Presidential Pork Barrel”, whistle–blowers alleged that “[a]t
least P900 Million from royalties in the operation of the Malampaya gas
project off Palawan province intended for agrarian reform beneficiaries has
gone into a dummy [NGO].”104 According to incumbent CoA Chairperson
Maria Gracia Pulido Tan (CoA Chairperson), the CoA is, as of this writing, in
the process of preparing “one consolidated report” on the Malampaya
Funds.105
V. The Procedural Antecedents.
Spurred in large part by the findings contained in the CoA Report and the
Napoles controversy, several petitions were lodged before the Court
similarly seeking that the “Pork Barrel System” be declared
unconstitutional. To recount, the relevant procedural antecedents in these
cases are as follows:
On August 28, 2013, petitioner Samson S. Alcantara (Alcantara), President
of the Social Justice Society, filed a Petition for Prohibition of even date
under Rule 65 of the Rules of Court (Alcantara Petition), seeking that the
“Pork Barrel System” be declared unconstitutional, and a writ of prohibition
be issued permanently restraining respondents Franklin M. Drilon and
Feliciano S. Belmonte, Jr., in their respective capacities as the incumbent
Senate President and Speaker of the House of Representatives, from
further taking any steps to enact legislation appropriating funds for the
“Pork Barrel System,” in whatever form and by whatever name it may be
called, and from approving further releases pursuant thereto.106 The
Alcantara Petition was docketed as G.R. No. 208493.
On September 3, 2013, petitioners Greco Antonious Beda B. Belgica, Jose
L. Gonzalez, Reuben M. Abante, Quintin Paredes San Diego (Belgica, et
al.), and Jose M. Villegas, Jr. (Villegas) filed an Urgent Petition
For Certiorari and Prohibition With Prayer For The Immediate Issuance of
Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction
dated August 27, 2013 under Rule 65 of the Rules of Court (Belgica
Petition), seeking that the annual “Pork Barrel System,” presently
embodied in the provisions of the GAA of 2013 which provided for the 2013
PDAF, and the Executive’s lump–sum, discretionary funds, such as the
Malampaya Funds and the Presidential Social Fund,107 be declared
unconstitutional and null and void for being acts constituting grave abuse
of discretion. Also, they pray that the Court issue a TRO against
respondents Paquito N. Ochoa, Jr., Florencio B. Abad (Secretary Abad) and
Rosalia V. De Leon, in their respective capacities as the incumbent
Executive Secretary, Secretary of the Department of Budget and
Management (DBM), and National Treasurer, or their agents, for them to
immediately cease any expenditure under the aforesaid funds. Further,
they pray that the Court order the foregoing respondents to release to the
CoA and to the public: (a) “the complete schedule/list of legislators who
have availed of their PDAF and VILP from the years 2003 to 2013,
specifying the use of the funds, the project or activity and the recipient
entities or individuals, and all pertinent data thereto”; and (b) “the use of
the Executive’s [lump–sum, discretionary] funds, including the proceeds
from the x x x Malampaya Fund[s] [and] remittances from the [PAGCOR] x
x x from 2003 to 2013, specifying the x x x project or activity and the
recipient entities or individuals, and all pertinent data thereto.”108 Also,
they pray for the “inclusion in budgetary deliberations with the Congress of
all presently off–budget, [lump–sum], discretionary funds including, but
not limited to, proceeds from the Malampaya Fund[s] [and] remittances
from the [PAGCOR].”109 The Belgica Petition was docketed as G.R. No.
208566.110
Lastly, on September 5, 2013, petitioner Pedrito M. Nepomuceno
(Nepomuceno), filed a Petition dated August 23, 2012 (Nepomuceno
Petition), seeking that the PDAF be declared unconstitutional, and a cease
and desist order be issued restraining President Benigno Simeon S. Aquino
III (President Aquino) and Secretary Abad from releasing such funds to
Members of Congress and, instead, allow their release to fund priority
projects identified and approved by the Local Development Councils in
consultation with the executive departments, such as the DPWH, the
Department of Tourism, the Department of Health, the Department of
Transportation, and Communication and the National Economic
Development Authority.111The Nepomuceno Petition was docketed as UDK–
14951.112
On September 10, 2013, the Court issued a Resolution of even date (a)
consolidating all cases; (b) requiring public respondents to comment on the
consolidated petitions; (c) issuing a TRO (September 10, 2013 TRO)
enjoining the DBM, National Treasurer, the Executive Secretary, or any of
the persons acting under their authority from releasing (1) the remaining
PDAF allocated to Members of Congress under the GAA of 2013, and (2)
Malampaya Funds under the phrase “for such other purposes as may be
hereafter directed by the President” pursuant to Section 8 of PD 910 but
not for the purpose of “financ[ing] energy resource development and
exploitation programs and projects of the government” under the same
provision; and (d) setting the consolidated cases for Oral Arguments on
October 8, 2013.
On September 23, 2013, the Office of the Solicitor General (OSG) filed a
Consolidated Comment (Comment) of even date before the Court, seeking
the lifting, or in the alternative, the partial lifting with respect to
educational and medical assistance purposes, of the Court’s September 10,
2013 TRO, and that the consolidated petitions be dismissed for lack of
merit.113
On September 24, 2013, the Court issued a Resolution of even date
directing petitioners to reply to the Comment.
Petitioners, with the exception of Nepomuceno, filed their respective replies
to the Comment: (a) on September 30, 2013, Villegas filed a separate
Reply dated September 27, 2013 (Villegas Reply); (b) on October 1, 2013,
Belgica, et al. filed a Reply dated September 30, 2013 (Belgica Reply); and
(c) on October 2, 2013, Alcantara filed a Reply dated October 1, 2013.
On October 1, 2013, the Court issued an Advisory providing for the
guidelines to be observed by the parties for the Oral Arguments scheduled
on October 8, 2013. In view of the technicality of the issues material to the
present cases, incumbent Solicitor General Francis H. Jardeleza (Solicitor
General) was directed to bring with him during the Oral Arguments
representative/s from the DBM and Congress who would be able to
competently and completely answer questions related to, among others,
the budgeting process and its implementation. Further, the CoA
Chairperson was appointed as amicus curiae and thereby requested to
appear before the Court during the Oral Arguments.
On October 8 and 10, 2013, the Oral Arguments were conducted.
Thereafter, the Court directed the parties to submit their respective
memoranda within a period of seven (7) days, or until October 17, 2013,
which the parties subsequently did.
 The Issues Before the Court
Based on the pleadings, and as refined during the Oral Arguments, the
following are the main issues for the Court’s resolution:
I. Procedural Issues.
Whether or not (a) the issues raised in the consolidated petitions involve
an actual and justiciable controversy; (b) the issues raised in the
consolidated petitions are matters of policy not subject to judicial review;
(c) petitioners have legal standing to sue; and (d) the Court’s Decision
dated August 19, 1994 in G.R. Nos. 113105, 113174, 113766, and 113888,
entitled “Philippine Constitution Association v. Enriquez”114 (Philconsa) and
Decision dated April 24, 2012 in G.R. No. 164987, entitled “Lawyers
Against Monopoly and Poverty v. Secretary of Budget and
Management”115 (LAMP) bar the re– litigation of the issue of
constitutionality of the “Pork Barrel System” under the principles of res
judicataand stare decisis.
II. Substantive Issues on the “Congressional Pork Barrel.”
Whether or not the 2013 PDAF Article and all other Congressional Pork
Barrel Laws similar thereto are unconstitutional considering that they
violate the principles of/constitutional provisions on (a) separation of
powers; (b) non–delegability of legislative power; (c) checks and balances;
(d) accountability; (e) political dynasties; and (f) local autonomy.
III. Substantive Issues on the “Presidential Pork Barrel.”
Whether or not the phrases (a) “and for such other purposes as may be
hereafter directed by the President” under Section 8 of PD 910,116 relating
to the Malampaya Funds, and (b) “to finance the priority infrastructure
development projects and to finance the restoration of damaged or
destroyed facilities due to calamities, as may be directed and authorized by
the Office of the President of the Philippines” under Section 12 of PD 1869,
as amended by PD 1993, relating to the Presidential Social Fund, are
unconstitutional insofar as they constitute undue delegations of legislative
power.
These main issues shall be resolved in the order that they have been
stated. In addition, the Court shall also tackle certain ancillary issues as
prompted by the present cases.
The Court’s Ruling
The petitions are partly granted.
I. Procedural Issues.
The prevailing rule in constitutional litigation is that no question involving
the constitutionality or validity of a law or governmental act may be heard
and decided by the Court unless there is compliance with the legal
requisites for judicial inquiry,117 namely: (a) there must be an actual case
or controversy calling for the exercise of judicial power; (b) the person
challenging the act must have the standing to question the validity of the
subject act or issuance; (c) the question of constitutionality must be raised
at the earliest opportunity; and (d) the issue of constitutionality must be
the very lis mota of the case.118 Of these requisites, case law states that
the first two are the most important119 and, therefore, shall be discussed
forthwith.
A. Existence of an Actual Case or Controversy.
By constitutional fiat, judicial power operates only when there is an actual
case or controversy.120 This is embodied in Section 1, Article VIII of the
1987 Constitution which pertinently states that “[j]udicial power includes
the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable x x x.”
Jurisprudence provides that an actual case or controversy is one which
“involves a conflict of legal rights, an assertion of opposite legal claims,
susceptible of judicial resolution as distinguished from a hypothetical or
abstract difference or dispute.”121 In other words, “[t]here must be
a contrariety of legal rights that can be interpreted and enforced on
the basis of existing law and jurisprudence.”122 Related to the
requirement of an actual case or controversy is the requirement of
“ripeness,” meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. “A question is ripe for adjudication when the
act being challenged has had a direct adverse effect on the individual
challenging it. It is a prerequisite that something had then been
accomplished or performed by either branch before a court may come into
the picture, and the petitioner must allege the existence of an
immediate or threatened injury to itself as a result of the
challenged action.”123 “Withal, courts will decline to pass upon
constitutional issues through advisory opinions, bereft as they are of
authority to resolve hypothetical or moot questions.”124
Based on these principles, the Court finds that there exists an actual and
justiciable controversy in these cases.
The requirement of contrariety of legal rights is clearly satisfied by the
antagonistic positions of the parties on the constitutionality of the “Pork
Barrel System.” Also, the questions in these consolidated cases are ripe for
adjudication since the challenged funds and the provisions allowing for
their utilization – such as the 2013 GAA for the PDAF, PD 910 for the
Malampaya Funds and PD 1869, as amended by PD 1993, for the
Presidential Social Fund – are currently existing and operational; hence,
there exists an immediate or threatened injury to petitioners as a result of
the unconstitutional use of these public funds.
As for the PDAF, the Court must dispel the notion that the issues related
thereto had been rendered moot and academic by the reforms undertaken
by respondents. A case becomes moot when there is no more actual
controversy between the parties or no useful purpose can be served in
passing upon the merits.125Differing from this description, the Court
observes that respondents’ proposed line–item budgeting scheme would
not terminate the controversy nor diminish the useful purpose for its
resolution since said reform is geared towards the 2014 budget, and not
the 2013 PDAF Article which, being a distinct subject matter, remains
legally effective and existing. Neither will the President’s declaration that
he had already “abolished the PDAF” render the issues on PDAF moot
precisely because the Executive branch of government has no
constitutional authority to nullify or annul its legal existence. By
constitutional design, the annulment or nullification of a law may be done
either by Congress, through the passage of a repealing law, or by the
Court, through a declaration of unconstitutionality. Instructive on this point
is the following exchange between Associate Justice Antonio T. Carpio
(Justice Carpio) and the Solicitor General during the Oral Arguments:126
Justice Carpio: [T]he President has taken an oath to faithfully
execute the law,127correct?
Solicitor General Jardeleza: Yes, Your Honor.
Justice Carpio: And so the President cannot refuse to implement the
General Appropriations Act, correct?
Solicitor General Jardeleza: Well, that is our answer, Your Honor. In the
case, for example of the PDAF, the President has a duty to execute the
laws but in the face of the outrage over PDAF, the President was saying, “I
am not sure that I will continue the release of the soft projects,” and that
started, Your Honor. Now, whether or not that … (interrupted)
Justice Carpio: Yeah. I will grant the President if there are anomalies in the
project, he has the power to stop the releases in the meantime, to
investigate, and that is Section [38] of Chapter 5 of Book 6 of the Revised
Administrative Code128 x x x. So at most the President can suspend, now if
the President believes that the PDAF is unconstitutional, can he just refuse
to implement it?
Solicitor General Jardeleza: No, Your Honor, as we were trying to say in the
specific case of the PDAF because of the CoA Report, because of the
reported irregularities and this Court can take judicial notice, even outside,
outside of the COA Report, you have the report of the whistle–blowers, the
President was just exercising precisely the duty ….
xxx
Justice Carpio: Yes, and that is correct. You‘ve seen the CoA Report, there
are anomalies, you stop and investigate, and prosecute, he has done
that. But, does that mean that PDAF has been repealed?
Solicitor General Jardeleza: No, Your Honor x x x.
xxx
Justice Carpio: So that PDAF can be legally abolished only in two (2)
cases. Congress passes a law to repeal it, or this Court declares it
unconstitutional, correct?
Solictor General Jardeleza: Yes, Your Honor.
Justice Carpio: The President has no power to legally abolish PDAF.
(Emphases supplied)
Even on the assumption of mootness, jurisprudence, nevertheless, dictates
that “the ‘moot and academic’ principle is not a magical formula that can
automatically dissuade the Court in resolving a case.” The Court will decide
cases, otherwise moot, if: first, there is a grave violation of the
Constitution; second, the exceptional character of the situation and the
paramount public interest is involved; third, when the constitutional issue
raised requires formulation of controlling principles to guide the bench, the
bar, and the public; and fourth, the case is capable of repetition yet
evading review.129
The applicability of the first exception is clear from the fundamental
posture of petitioners – they essentially allege grave violations of the
Constitution with respect to, inter alia, the principles of separation of
powers, non–delegability of legislative power, checks and balances,
accountability and local autonomy.
The applicability of the second exception is also apparent from the nature
of the interests involved – the constitutionality of the very system within
which significant amounts of public funds have been and continue to be
utilized and expended undoubtedly presents a situation of exceptional
character as well as a matter of paramount public interest. The present
petitions, in fact, have been lodged at a time when the system’s flaws have
never before been magnified. To the Court’s mind, the coalescence of the
CoA Report, the accounts of numerous whistle–blowers, and the
government’s own recognition that reforms are needed “to address the
reported abuses of the PDAF”130demonstrates a prima facie pattern of
abuse which only underscores the importance of the matter. It is also by
this finding that the Court finds petitioners’ claims as not merely theorized,
speculative or hypothetical. Of note is the weight accorded by the Court to
the findings made by the CoA which is the constitutionally–mandated audit
arm of the government. In Delos Santos v. CoA,131 a recent case wherein
the Court upheld the CoA’s disallowance of irregularly disbursed PDAF
funds, it was emphasized that:
[T]he CoA is endowed with enough latitude to determine, prevent,
and disallow irregular, unnecessary, excessive, extravagant or
unconscionable expenditures of government funds. It is tasked to be
vigilant and conscientious in safeguarding the proper use of the
government’s, and ultimately the people’s, property. The exercise of its
general audit power is among the constitutional mechanisms that
gives life to the check and balance system inherent in our form of
government.
[I]t is the general policy of the Court to sustain the decisions of
administrative authorities, especially one which is constitutionally–created,
such as the CoA, not only on the basis of the doctrine of separation
of powers but also for their presumed expertise in the laws they
are entrusted to enforce. Findings of administrative agencies are
accorded not only respect but also finality when the decision and order are
not tainted with unfairness or arbitrariness that would amount to grave
abuse of discretion. It is only when the CoA has acted without or in excess
of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, that this Court entertains a petition questioning its
rulings. x x x. (Emphases supplied)
Thus, if only for the purpose of validating the existence of an actual
and justiciable controversy in these cases, the Court deems the
findings under the CoA Report to be sufficient.
The Court also finds the third exception to be applicable largely due to
the practical need for a definitive ruling on the system’s constitutionality.
As disclosed during the Oral Arguments, the CoA Chairperson estimates
that thousands of notices of disallowances will be issued by her office in
connection with the findings made in the CoA Report. In this relation,
Associate Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed
out that all of these would eventually find their way to the
courts.132 Accordingly, there is a compelling need to formulate controlling
principles relative to the issues raised herein in order to guide the bench,
the bar, and the public, not just for the expeditious resolution of the
anticipated disallowance cases, but more importantly, so that the
government may be guided on how public funds should be utilized in
accordance with constitutional principles.
Finally, the application of the fourth exception is called for by the
recognition that the preparation and passage of the national budget is, by
constitutional imprimatur, an affair of annual occurrence.133 The relevance
of the issues before the Court does not cease with the passage of a “PDAF–
free budget for 2014.”134 The evolution of the “Pork Barrel System,” by its
multifarious iterations throughout the course of history, lends a semblance
of truth to petitioners’ claim that “the same dog will just resurface wearing
a different collar.”135 In Sanlakas v. Executive Secretary,136 the government
had already backtracked on a previous course of action yet the Court used
the “capable of repetition but evading review” exception in order “[t]o
prevent similar questions from re–emerging.”137 The situation similarly
holds true to these cases. Indeed, the myriad of issues underlying the
manner in which certain public funds are spent, if not resolved at this most
opportune time, are capable of repetition and hence, must not evade
judicial review.
B. Matters of Policy: the Political Question Doctrine.
The “limitation on the power of judicial review to actual cases and
controversies” carries the assurance that “the courts will not intrude into
areas committed to the other branches of government.”138Essentially, the
foregoing limitation is a restatement of the political question doctrine
which, under the classic formulation of Baker v. Carr,139 applies when there
is found, among others, “a textually demonstrable constitutional
commitment of the issue to a coordinate political department,” “a lack of
judicially discoverable and manageable standards for resolving it” or “the
impossibility of deciding without an initial policy determination of a kind
clearly for non–judicial discretion.” Cast against this light, respondents
submit that the “[t]he political branches are in the best position not only to
perform budget–related reforms but also to do them in response to the
specific demands of their constituents” and, as such, “urge [the Court] not
to impose a solution at this stage.”140
The Court must deny respondents’ submission.
Suffice it to state that the issues raised before the Court do not present
political but legal questions which are within its province to resolve. A
political question refers to “those questions which, under the Constitution,
are to be decided by the people in their sovereign capacity, or in regard to
which full discretionary authority has been delegated to the Legislature or
executive branch of the Government. It is concerned with issues dependent
upon the wisdom, not legality, of a particular measure.”141The intrinsic
constitutionality of the “Pork Barrel System” is not an issue
dependent upon the wisdom of the political branches of
government but rather a legal one which the Constitution itself has
commanded the Court to act upon. Scrutinizing the contours of the
system along constitutional lines is a task that the political branches of
government are incapable of rendering precisely because it is an exercise
of judicial power. More importantly, the present Constitution has not only
vested the Judiciary the right to exercise judicial power but essentially
makes it a duty to proceed therewith. Section 1, Article VIII of the 1987
Constitution cannot be any clearer: “The judicial power shall be vested in
one Supreme Court and in such lower courts as may be established by law.
[It] includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.” In Estrada v. Desierto,142 the
expanded concept of judicial power under the 1987 Constitution and its
effect on the political question doctrine was explained as follows:143
To a great degree, the 1987 Constitution has narrowed the reach of the
political question doctrine when it expanded the power of judicial review
of this court not only to settle actual controversies involving rights which
are legally demandable and enforceable but also to determine whether
or not there has been a grave abuse of discretion amounting to lack
or excess of jurisdiction on the part of any branch or
instrumentality of government. Heretofore, the judiciary has focused on
the “thou shalt not’s” of the Constitution directed against the exercise of its
jurisdiction. With the new provision, however, courts are given a greater
prerogative to determine what it can do to prevent grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of government. Clearly, the new provision did
not just grant the Court power of doing nothing. x x x (Emphases
supplied)
It must also be borne in mind that “when the judiciary mediates to allocate
constitutional boundaries, it does not assert any superiority over the other
departments; does not in reality nullify or invalidate an act of the
legislature [or the executive], but only asserts the solemn and sacred
obligation assigned to it by the Constitution.”144 To a great extent, the
Court is laudably cognizant of the reforms undertaken by its co–equal
branches of government. But it is by constitutional force that the Court
must faithfully perform its duty. Ultimately, it is the Court’s avowed
intention that a resolution of these cases would not arrest or in any manner
impede the endeavors of the two other branches but, in fact, help ensure
that the pillars of change are erected on firm constitutional grounds. After
all, it is in the best interest of the people that each great branch of
government, within its own sphere, contributes its share towards achieving
a holistic and genuine solution to the problems of society. For all these
reasons, the Court cannot heed respondents’ plea for judicial restraint.
C. Locus Standi.
"The gist of the question of standing is whether a party alleges such
personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon
which the court depends for illumination of difficult constitutional questions.
Unless a person is injuriously affected in any of his constitutional rights by
the operation of statute or ordinance, he has no standing.”145
Petitioners have come before the Court in their respective capacities as
citizen–taxpayers and accordingly, assert that they “dutifully contribute to
the coffers of the National Treasury.”146 Clearly, as taxpayers, they possess
the requisite standing to question the validity of the existing “Pork Barrel
System” under which the taxes they pay have been and continue to be
utilized. It is undeniable that petitioners, as taxpayers, are bound to suffer
from the unconstitutional usage of public funds, if the Court so rules.
Invariably, taxpayers have been allowed to sue where there is a claim that
public funds are illegally disbursed or that public money is being deflected
to any improper purpose, or that public funds are wasted through the
enforcement of an invalid or unconstitutional law,147 as in these cases.
Moreover, as citizens, petitioners have equally fulfilled the standing
requirement given that the issues they have raised may be classified as
matters “of transcendental importance, of overreaching significance to
society, or of paramount public interest.”148 The CoA Chairperson’s
statement during the Oral Arguments that the present controversy involves
“not [merely] a systems failure” but a “complete breakdown of
controls”149 amplifies, in addition to the matters above–discussed, the
seriousness of the issues involved herein. Indeed, of greater import than
the damage caused by the illegal expenditure of public funds is the mortal
wound inflicted upon the fundamental law by the enforcement of an invalid
statute.150 All told, petitioners have sufficient locus standi to file the instant
cases.
D. Res Judicata and Stare Decisis.
Res judicata (which means a “matter adjudged”) and stare decisisnon
quieta et movere ([or simply, stare decisis] which means “follow past
precedents and do not disturb what has been settled”) are general
procedural law principles which both deal with the effects of previous but
factually similar dispositions to subsequent cases. For the cases at bar, the
Court examines the applicability of these principles in relation to its prior
rulings in Philconsa and LAMP.
The focal point of res judicata is the judgment. The principle states
that a judgment on the merits in a previous case rendered by a court of
competent jurisdiction would bind a subsequent case if, between the first
and second actions, there exists an identity of parties, of subject
matter, and of causes of action.151 This required identity is not,
however, attendant hereto since Philconsa and LAMP, respectively involved
constitutional challenges against the 1994 CDF Article and 2004 PDAF
Article, whereas the cases at bar call for a broader constitutional scrutiny
of the entire “Pork Barrel System.”Also, the ruling in LAMP is essentially
a dismissal based on a procedural technicality – and, thus, hardly a
judgment on the merits – in that petitioners therein failed to present any
“convincing proof x x x showing that, indeed, there were direct releases
of funds to the Members of Congress, who actually spend them according
to their sole discretion” or “pertinent evidentiary support [to demonstrate
the] illegal misuse of PDAF in the form of kickbacks [and] has become a
common exercise of unscrupulous Members of Congress.” As such, the
Court upheld, in view of the presumption of constitutionality accorded to
every law, the 2004 PDAF Article, and saw “no need to review or reverse
the standing pronouncements in the said case.” Hence, for the foregoing
reasons, the res judicata principle, insofar as the Philconsa and LAMP cases
are concerned, cannot apply.
On the other hand, the focal point of stare decisis is the doctrine
created. The principle, entrenched under Article 8152 of the Civil Code,
evokes the general rule that, for the sake of certainty, a conclusion
reached in one case should be doctrinally applied to those that follow if the
facts are substantially the same, even though the parties may be different.
It proceeds from the first principle of justice that, absent any powerful
countervailing considerations, like cases ought to be decided alike.
Thus, where the same questions relating to the same event have been
put forward by the parties similarly situated as in a previous case litigated
and decided by a competent court, the rule of stare decisis is a bar to any
attempt to re–litigate the same issue.153
Philconsa was the first case where a constitutional challenge against a Pork
Barrel provision, i.e., the 1994 CDF Article, was resolved by the Court. To
properly understand its context, petitioners’ posturing was that “the power
given to the [M]embers of Congress to propose and identify projects and
activities to be funded by the [CDF] is an encroachment by the legislature
on executive power, since said power in an appropriation act is in
implementation of the law” and that “the proposal and identification of the
projects do not involve the making of laws or the repeal and amendment
thereof, the only function given to the Congress by the Constitution.”154 In
deference to the foregoing submissions, the Court reached the following
main conclusions: one, under the Constitution, the power of appropriation,
or the “power of the purse,” belongs to Congress; two, the power of
appropriation carries with it the power to specify the project or activity to
be funded under the appropriation law and it can be detailed and as broad
as Congress wants it to be; and, three, the proposals and identifications
made by Members of Congress are merely recommendatory. At once, it is
apparent that the Philconsa resolution was a limited response to a
separation of powers problem, specifically on the propriety of
conferring post–enactment identification authority to Members of
Congress. On the contrary, the present cases call for a more holistic
examination of (a) the inter–relation between the CDF and PDAF Articles
with each other, formative as they are of the entire “Pork Barrel System”
as well as (b) the intra–relation of post–enactment measures contained
within a particular CDF or PDAF Article, including not only those related to
the area of project identification but also to the areas of fund release and
realignment. The complexity of the issues and the broader legal analyses
herein warranted may be, therefore, considered as a powerful
countervailing reason against a wholesale application of the stare
decisis principle.
In addition, the Court observes that the Philconsa ruling was actually
riddled with inherent constitutional inconsistencies which similarly
countervail against a full resort to stare decisis. As may be deduced from
the main conclusions of the case, Philconsa’ s fundamental premise in
allowing Members of Congress to propose and identify of projects would be
that the said identification authority is but an aspect of the power of
appropriation which has been constitutionally lodged in Congress. From this
premise, the contradictions may be easily seen. If the authority to identify
projects is an aspect of appropriationand the power of appropriation is a
form of legislative power thereby lodged in Congress, then it follows
that: (a) it is Congress which should exercise such authority, and not its
individual Members; (b)such authority must be exercised within the
prescribed procedure of law passage and, hence, should not be exercised
after the GAA has already been passed; and (c) such authority, as
embodied in the GAA, has the force of law and, hence, cannot be merely
recommendatory. Justice Vitug’s Concurring Opinion in the same case
sums up the Philconsa quandary in this wise: Neither would it be
objectionable for Congress, by law, to appropriate funds for such specific
projects as it may be minded; to give that authority, however, to the
individual members of Congress in whatever guise, I am afraid, would be
constitutionally impermissible.” As the Court now largely benefits from
hindsight and current findings on the matter, among others, the CoA
Report, the Court must partially abandon its previous ruling
in Philconsa insofar as it validated the post–enactment identification
authority of Members of Congress on the guise that the same was
merely recommendatory. This postulate raises serious constitutional
inconsistencies which cannot be simply excused on the ground that such
mechanism is “imaginative as it is innovative.” Moreover, it must be
pointed out that the recent case of Abakada Guro Party List v.
Purisima155 (Abakada) has effectively overturned Philconsa’ s allowance of
post–enactment legislator participation in view of the separation of powers
principle. These constitutional inconsistencies and the Abakada rule will be
discussed in greater detail in the ensuing section of this Decision.
As for LAMP, suffice it to restate that the said case was dismissed on a
procedural technicality and, hence, has not set any controlling doctrine
susceptible of current application to the substantive issues in these cases.
In fine, stare decisis would not apply.

II. Substantive Issues.
A. Definition of Terms.
Before the Court proceeds to resolve the substantive issues of these cases,
it must first define the terms “Pork Barrel System,” “Congressional Pork
Barrel,” and “Presidential Pork Barrel” as they are essential to the ensuing
discourse.
Petitioners define the term “Pork Barrel System” as the “collusion between
the Legislative and Executive branches of government to accumulate lump–
sum public funds in their offices with unchecked discretionary powers to
determine its distribution as political largesse.”156 They assert that the
following elements make up the Pork Barrel System: (a) lump–sum funds
are allocated through the appropriations process to an individual officer;
(b) the officer is given sole and broad discretion in determining how the
funds will be used or expended; (c) the guidelines on how to spend or use
the funds in the appropriation are either vague, overbroad or inexistent;
and (d) projects funded are intended to benefit a definite constituency in a
particular part of the country and to help the political careers of the
disbursing official by yielding rich patronage benefits.157 They further state
that the Pork Barrel System is comprised of two (2) kinds of discretionary
public funds: first, the Congressional (or Legislative) Pork Barrel, currently
known as the PDAF;158 and, second, the Presidential (or Executive) Pork
Barrel, specifically, the Malampaya Funds under PD 910 and the
Presidential Social Fund under PD 1869, as amended by PD 1993.159
Considering petitioners’ submission and in reference to its local concept
and legal history, the Court defines the Pork Barrel System as the
collective body of rules and practices that govern the manner by
which lump–sum, discretionary funds, primarily intended for local
projects, are utilized through the respective participations of the
Legislative and Executive branches of government, including its
members. The Pork Barrel System involves two (2) kinds of lump–sum
discretionary funds:
First, there is the Congressional Pork Barrel which is herein defined
as a kind of lump–sum, discretionary fund wherein legislators,
either individually or collectively organized into committees, are
able to effectively control certain aspects of the fund’s utilization
through various post–enactment measures and/or practices. In
particular, petitioners consider the PDAF, as it appears under the 2013
GAA, as Congressional Pork Barrel since it is, inter alia, a post–enactment
measure that allows individual legislators to wield a collective
power;160 and
Second, there is the Presidential Pork Barrel which is herein defined
as a kind of lump–sum, discretionary fund which allows the
President to determine the manner of its utilization. For reasons
earlier stated,161 the Court shall delimit the use of such term to refer only
to the Malampaya Funds and the Presidential Social Fund.
With these definitions in mind, the Court shall now proceed to discuss the
substantive issues of these cases.
B. Substantive Issues on the Congressional Pork Barrel.
1. Separation of Powers.
a. Statement of Principle.
The principle of separation of powers refers to the constitutional
demarcation of the three fundamental powers of government. In the
celebrated words of Justice Laurel in Angara v. Electoral Commission, 162 it
means that the “Constitution has blocked out with deft strokes and in bold
lines, allotment of power to the executive, the legislative and the judicial
departments of the government.”163 To the legislative branch of
government, through Congress,164 belongs the power to make laws; to the
executive branch of government, through the President,165 belongs the
power to enforce laws; and to the judicial branch of government, through
the Court,166 belongs the power to interpret laws. Because the three great
powers have been, by constitutional design, ordained in this respect,
“[e]ach department of the government has exclusive cognizance of matters
within its jurisdiction, and is supreme within its own sphere.”167 Thus, “the
legislature has no authority to execute or construe the law, the executive
has no authority to make or construe the law, and the judiciary has no
power to make or execute the law.”168 The principle of separation of powers
and its concepts of autonomy and independence stem from the notion that
the powers of government must be divided to avoid concentration of these
powers in any one branch; the division, it is hoped, would avoid any single
branch from lording its power over the other branches or the
citizenry.169 To achieve this purpose, the divided power must be wielded by
co–equal branches of government that are equally capable of independent
action in exercising their respective mandates. Lack of independence would
result in the inability of one branch of government to check the arbitrary or
self– interest assertions of another or others.170
Broadly speaking, there is a violation of the separation of powers principle
when one branch of government unduly encroaches on the domain of
another. US Supreme Court decisions instruct that the principle of
separation of powers may be violated in two (2) ways: firstly, “[o]ne
branch may interfere impermissibly with the other’s performance
of its constitutionally assigned function”;171 and “[a]lternatively, the
doctrine may be violated when one branch assumes a function that more
properly is entrusted to another.”172 In other words, there is a violation of
the principle when there is impermissible (a) interference with and/or
(b) assumption of another department’s functions.
The enforcement of the national budget, as primarily contained in the GAA,
is indisputably a function both constitutionally assigned and properly
entrusted to the Executive branch of government. In Guingona, Jr. v. Hon.
Carague173 (Guingona, Jr.), the Court explained that the phase of budget
execution “covers the various operational aspects of budgeting” and
accordingly includes “the evaluation of work and financial plans for
individual activities,” the “regulation and release of funds” as well as
all “other related activities” that comprise the budget execution
cycle.174 This is rooted in the principle that the allocation of power in the
three principal branches of government is a grant of all powers inherent in
them.175 Thus, unless the Constitution provides otherwise, the Executive
department should exclusively exercise all roles and prerogatives which go
into the implementation of the national budget as provided under the GAA
as well as any other appropriation law.
In view of the foregoing, the Legislative branch of government, much more
any of its members, should not cross over the field of implementing the
national budget since, as earlier stated, the same is properly the domain of
the Executive. Again, in Guingona, Jr., the Court stated that “Congress
enters the picture [when it] deliberates or acts on the budget proposals of
the President. Thereafter, Congress, “in the exercise of its own judgment
and wisdom, formulates an appropriation act precisely following the
process established by the Constitution, which specifies that no money may
be paid from the Treasury except in accordance with an appropriation
made by law.” Upon approval and passage of the GAA, Congress’ law–
making role necessarily comes to an end and from there the Executive’s
role of implementing the national budget begins. So as not to blur the
constitutional boundaries between them, Congress must “not concern itself
with details for implementation by the Executive.”176
The foregoing cardinal postulates were definitively enunciated
in Abakada where the Court held that “[f]rom the moment the law
becomes effective, any provision of law that empowers Congress or
any of its members to play any role in the implementation or
enforcement of the lawviolates the principle of separation of
powers and is thus unconstitutional.”177 It must be clarified, however,
that since the restriction only pertains to “any role in the implementation or
enforcement of the law,” Congress may still exercise its oversight function
which is a mechanism of checks and balances that the Constitution itself
allows. But it must be made clear that Congress’ role must be confined to
mere oversight. Any post– enactment–measure allowing legislator
participation beyond oversight is bereft of any constitutional basis and
hence, tantamount to impermissible interference and/or assumption of
executive functions. As the Court ruled in Abakada:178
[A]ny post–enactment congressional measure x x x should be
limited to scrutiny and investigation. In particular, congressional
oversight must be confined to the following:chanRoblesvirtualLawlibrary
(1) scrutiny based primarily on Congress’ power of appropriation and the
budget hearings conducted in connection with it, its power to ask heads of
departments to appear before and be heard by either of its Houses on any
matter pertaining to their departments and its power of confirmation; and
(2) investigation and monitoring of the implementation of laws pursuant to
the power of Congress to conduct inquiries in aid of legislation.
Any action or step beyond that will undermine the separation of
powers guaranteed by the Constitution. (Emphases supplied)
b. Application.
In these cases, petitioners submit that the Congressional Pork Barrel –
among others, the 2013 PDAF Article – “wrecks the assignment of
responsibilities between the political branches” as it is designed to allow
individual legislators to interfere “way past the time it should have ceased”
or, particularly, “after the GAA is passed.”179 They state that the findings
and recommendations in the CoA Report provide ?an illustration of how
absolute and definitive the power of legislators wield over project
implementation in complete violation of the constitutional [principle of
separation of powers.]”180 Further, they point out that the Court in
the Philconsa case only allowed the CDF to exist on the condition that
individual legislators limited their role to recommending projects and not if
they actually dictate their implementation.181
For their part, respondents counter that the separations of powers principle
has not been violated since the President maintains “ultimate authority to
control the execution of the GAA” and that he “retains the final discretion
to reject” the legislators’ proposals.182 They maintain that the Court,
in Philconsa, “upheld the constitutionality of the power of members of
Congress to propose and identify projects so long as such proposal and
identification are recommendatory.”183 As such, they claim that
“[e]verything in the Special Provisions [of the 2013 PDAF Article] follows
the Philconsa framework, and hence, remains constitutional.”184
The Court rules in favor of petitioners.
As may be observed from its legal history, the defining feature of all forms
of Congressional Pork Barrel would be the authority of legislators to
participate in the post–enactment phases of project implementation.
At its core, legislators – may it be through project lists,185 prior
consultations186 or program menus187 – have been consistently accorded
post–enactment authority to identify the projects they desire to be
funded through various Congressional Pork Barrel allocations. Under the
2013 PDAF Article, the statutory authority of legislators to identify projects
post– GAA may be construed from the import of Special Provisions 1 to 3
as well as the second paragraph of Special Provision 4. To elucidate,
Special Provision 1 embodies the program menu feature which, as evinced
from past PDAF Articles, allows individual legislators to identify PDAF
projects for as long as the identified project falls under a general program
listed in the said menu. Relatedly, Special Provision 2 provides that the
implementing agencies shall, within 90 days from the GAA is passed,
submit to Congress a more detailed priority list, standard or design
prepared and submitted by implementing agencies from which the
legislator may make his choice. The same provision further authorizes
legislators to identify PDAF projects outside his district for as long as the
representative of the district concerned concurs in writing. Meanwhile,
Special Provision 3 clarifies that PDAF projects refer to “projects to be
identified by legislators”188 and thereunder provides the allocation limit for
the total amount of projects identified by each legislator. Finally, paragraph
2 of Special Provision 4 requires that any modification and revision of the
project identification “shall be submitted to the House Committee on
Appropriations and the Senate Committee on Finance for favorable
endorsement to the DBM or the implementing agency, as the case may
be.” From the foregoing special provisions, it cannot be seriously doubted
that legislators have been accorded post–enactment authority to identify
PDAF projects.
Aside from the area of project identification, legislators have also been
accorded post–enactment authority in the areas of fund release and
realignment. Under the 2013 PDAF Article, the statutory authority of
legislators to participate in the area of fund release through congressional
committees is contained in Special Provision 5 which explicitly states that
“[a]ll request for release of funds shall be supported by the documents
prescribed under Special Provision No. 1 and favorably endorsed by House
Committee on Appropriations and the Senate Committee on Finance, as the
case may be”; while their statutory authority to participate in the area
of fund realignment is contained in: first, paragraph 2, Special Provision
4189 which explicitly states, among others, that “[a]ny realignment [of
funds] shall be submitted to the House Committee on Appropriations and
the Senate Committee on Finance for favorable endorsement to the DBM or
the implementing agency, as the case may be”; and, second, paragraph 1,
also of Special Provision 4 which authorizes the “Secretaries of Agriculture,
Education, Energy, Interior and Local Government, Labor and Employment,
Public Works and Highways, Social Welfare and Development and Trade
and Industry190 x x x to approve realignment from one project/scope to
another within the allotment received from this Fund, subject to [among
others] (iii) the request is with the concurrence of the legislator
concerned.”
Clearly, these post–enactment measures which govern the areas of project
identification, fund release and fund realignment are not related to
functions of congressional oversight and, hence, allow legislators to
intervene and/or assume duties that properly belong to the sphere of
budget execution. Indeed, by virtue of the foregoing, legislators have been,
in one form or another, authorized to participate in – as Guingona, Jr. puts
it – “the various operational aspects of budgeting,” including “the
evaluation of work and financial plans for individual activities” and
the “regulation and release of funds” in violation of the separation of
powers principle. The fundamental rule, as categorically articulated
in Abakada, cannot be overstated – from the moment the law becomes
effective, any provision of law that empowers Congress or any of
its members to play any role in the implementation or enforcement
of the law violates the principle of separation of powers and is thus
unconstitutional.191 That the said authority is treated as merely
recommendatory in nature does not alter its unconstitutional tenor since
the prohibition, to repeat, covers any role in the implementation or
enforcement of the law. Towards this end, the Court must therefore
abandon its ruling in Philconsawhich sanctioned the conduct of legislator
identification on the guise that the same is merely recommendatory and,
as such, respondents’ reliance on the same falters altogether.
Besides, it must be pointed out that respondents have nonetheless failed to
substantiate their position that the identification authority of legislators is
only of recommendatory import. Quite the contrary, respondents – through
the statements of the Solicitor General during the Oral Arguments – have
admitted that the identification of the legislator constitutes a mandatory
requirement before his PDAF can be tapped as a funding source, thereby
highlighting the indispensability of the said act to the entire budget
execution process:192
Justice Bernabe: Now, without the individual legislator’s
identification of the project, can the PDAF of the legislator be
utilized?
Solicitor General Jardeleza: No, Your Honor.
Justice Bernabe: It cannot?
Solicitor General Jardeleza: It cannot… (interrupted)
Justice Bernabe: So meaning you should have the identification of
the project by the individual legislator?
Solicitor General Jardeleza: Yes, Your Honor.
xxx
Justice Bernabe: In short, the act of identification is mandatory?
Solictor General Jardeleza: Yes, Your Honor. In the sense that if it is
not done and then there is no identification.
xxx

Justice Bernabe: Now, would you know of specific instances when a project
was implemented without the identification by the individual legislator?
Solicitor General Jardeleza: I do not know, Your Honor; I do not think so
but I have no specific examples. I would doubt very much, Your Honor,
because to implement, there is a need [for] a SARO and the NCA. And the
SARO and the NCA are triggered by an identification from the
legislator.
xxx
Solictor General Jardeleza: What we mean by mandatory, Your Honor, is
we were replying to a question, “How can a legislator make sure that he is
able to get PDAF Funds?” It is mandatory in the sense that he must
identify, in that sense, Your Honor. Otherwise, if he does not identify, he
cannot avail of the PDAF Funds and his district would not be able to have
PDAF Funds, only in that sense, Your Honor. (Emphases supplied)
Thus, for all the foregoing reasons, the Court hereby declares the 2013
PDAF Article as well as all other provisions of law which similarly allow
legislators to wield any form of post–enactment authority in the
implementation or enforcement of the budget, unrelated to
congressional oversight, as violative of the separation of powers principle
and thus unconstitutional. Corollary thereto, informal practices, through
which legislators have effectively intruded into the proper phases of budget
execution, must be deemed as acts of grave abuse of
discretion amounting to lack or excess of jurisdiction and, hence,
accorded the same unconstitutional treatment. That such informal practices
do exist and have, in fact, been constantly observed throughout the years
has not been substantially disputed here. As pointed out by Chief Justice
Maria Lourdes P.A. Sereno (Chief Justice Sereno) during the Oral
Arguments of these cases:193
Chief Justice Sereno:
Now, from the responses of the representative of both, the DBM and two
(2) Houses of Congress, if we enforces the initial thought that I have, after
I had seen the extent of this research made by my staff, that neither the
Executive nor Congress frontally faced the question of constitutional
compatibility of how they were engineering the budget process. In fact, the
words you have been using, as the three lawyers [of the DBM, and both
Houses of Congress] has also been using is surprise; surprised that all of
these things are now surfacing. In fact, I thought that what the 2013
PDAF provisions did was to codify in one section all the past
practice that [had] been done since 1991. In a certain sense, we
should be thankful that they are all now in the PDAF Special Provisions. x x
x (Emphasis and underscoring supplied)
Ultimately, legislators cannot exercise powers which they do not have,
whether through formal measures written into the law or informal practices
institutionalized in government agencies, else the Executive department be
deprived of what the Constitution has vested as its own.
2. Non–delegability of Legislative Power.
a. Statement of Principle.
As an adjunct to the separation of powers principle,194 legislative power
shall be exclusively exercised by the body to which the Constitution has
conferred the same. In particular, Section 1, Article VI of the 1987
Constitution states that such power shall be vested in the Congress of the
Philippines which shall consist of a Senate and a House of Representatives,
except to the extent reserved to the people by the provision on initiative
and referendum.195 Based on this provision, it is clear that only Congress,
acting as a bicameral body, and the people, through the process of
initiative and referendum, may constitutionally wield legislative power and
no other. This premise embodies the principle of non–delegability of
legislative power, and the only recognized exceptions thereto would be: (a)
delegated legislative power to local governments which, by immemorial
practice, are allowed to legislate on purely local matters;196and (b)
constitutionally–grafted exceptions such as the authority of the President
to, by law, exercise powers necessary and proper to carry out a declared
national policy in times of war or other national emergency,197 or fix within
specified limits, and subject to such limitations and restrictions as Congress
may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national
development program of the Government.198
Notably, the principle of non–delegability should not be confused as a
restriction to delegate rule–making authority to implementing agencies
for the limited purpose of either filling up the details of the law for its
enforcement (supplementary rule–making) or ascertaining facts to bring
the law into actual operation (contingent rule–making).199 The
conceptual treatment and limitations of delegated rule–making were
explained in the case of People v. Maceren200 as follows:
The grant of the rule–making power to administrative agencies is
a relaxation of the principle of separation of powers and is an
exception to the nondelegation of legislative powers. Administrative
regulations or “subordinate legislation” calculated to promote the public
interest are necessary because of “the growing complexity of modern life,
the multiplication of the subjects of governmental regulations, and the
increased difficulty of administering the law.”
xxx

[Nevertheless, it must be emphasized that] [t]he rule–making
power must be confined to details for regulating the mode or
proceeding to carry into effect the law as it has been enacted. The
power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules that
subvert the statute cannot be sanctioned. (Emphases
supplied)chanroblesvirtualawlibrary
b. Application.
In the cases at bar, the Court observes that the 2013 PDAF Article, insofar
as it confers post–enactment identification authority to individual
legislators, violates the principle of non–delegability since said legislators
are effectively allowed to individually exercise the power of
appropriation, which – as settled in Philconsa – is lodged in
Congress.201 That the power to appropriate must be exercised only
through legislation is clear from Section 29(1), Article VI of the 1987
Constitution which states that: “No money shall be paid out of the Treasury
except in pursuance of an appropriation made by law.” To understand
what constitutes an act of appropriation, the Court, in Bengzon v.
Secretary of Justice and Insular Auditor202 (Bengzon), held that the power
of appropriation involves (a) the setting apart by law of a certain
sum from the public revenue for (b) a specified purpose. Essentially,
under the 2013 PDAF Article, individual legislators are given a personal
lump–sum fund from which they are able to dictate (a) how much from
such fund would go to (b) a specific project or beneficiary that they
themselves also determine. As these two (2) acts comprise the exercise of
the power of appropriation as described in Bengzon, and given that the
2013 PDAF Article authorizes individual legislators to perform the same,
undoubtedly, said legislators have been conferred the power to legislate
which the Constitution does not, however, allow. Thus, keeping with the
principle of non–delegability of legislative power, the Court hereby declares
the 2013 PDAF Article, as well as all other forms of Congressional Pork
Barrel which contain the similar legislative identification feature as herein
discussed, as unconstitutional.
3. Checks and Balances.
a. Statement of Principle; Item–Veto Power.
The fact that the three great powers of government are intended to be kept
separate and distinct does not mean that they are absolutely unrestrained
and independent of each other. The Constitution has also provided for an
elaborate system of checks and balances to secure coordination in the
workings of the various departments of the government.203
A prime example of a constitutional check and balance would be
the President’s power to veto an item written into an appropriation,
revenue or tariff bill submitted to him by Congress for approval through
a process known as “bill presentment.” The President’s item–veto power is
found in Section 27(2), Article VI of the 1987 Constitution which reads as
follows:
Sec. 27. x x x.
xxx
(2) The President shall have the power to veto any particular item or items
in an appropriation, revenue, or tariff bill, but the veto shall not affect the
item or items to which he does not object.
The presentment of appropriation, revenue or tariff bills to the President,
wherein he may exercise his power of item–veto, forms part of the “single,
finely wrought and exhaustively considered, procedures” for law–
passage as specified under the Constitution.204 As stated in Abakada, the
final step in the law–making process is the “submission [of the bill] to the
President for approval. Once approved, it takes effect as law after the
required publication.”205 Elaborating on the President’s item–veto power
and its relevance as a check on the legislature, the Court, in Bengzon,
explained that:206
The former Organic Act and the present Constitution of the Philippines
make the Chief Executive an integral part of the law–making power. His
disapproval of a bill, commonly known as a veto, is essentially a
legislative act. The questions presented to the mind of the Chief
Executive are precisely the same as those the legislature must determine
in passing a bill, except that his will be a broader point of view.
The Constitution is a limitation upon the power of the legislative
department of the government, but in this respect it is a grant of
power to the executive department. The Legislature has the affirmative
power to enact laws; the Chief Executive has the negative power by
the constitutional exercise of which he may defeat the will of the
Legislature. It follows that the Chief Executive must find his authority in
the Constitution. But in exercising that authority he may not be confined to
rules of strict construction or hampered by the unwise interference of the
judiciary. The courts will indulge every intendment in favor of the
constitutionality of a veto [in the same manner] as they will presume the
constitutionality of an act as originally passed by the Legislature.
(Emphases supplied)
The justification for the President’s item–veto power rests on a variety of
policy goals such as to prevent log–rolling legislation,207 impose fiscal
restrictions on the legislature, as well as to fortify the executive branch’s
role in the budgetary process.208 In Immigration and Naturalization Service
v. Chadha, the US Supreme Court characterized the President’s item–
power as “a salutary check upon the legislative body, calculated to guard
the community against the effects of factions, precipitancy, or of any
impulse unfriendly to the public good, which may happen to influence a
majority of that body”; phrased differently, it is meant to “increase the
chances in favor of the community against the passing of bad laws,
through haste, inadvertence, or design.”209
For the President to exercise his item–veto power, it necessarily
follows that there exists a proper “item” which may be the object
of the veto. An item, as defined in the field of appropriations, pertains to
“the particulars, the details, the distinct and severable parts of the
appropriation or of the bill.” In the case of Bengzon v. Secretary of Justice
of the Philippine Islands,210the US Supreme Court characterized an item of
appropriation as follows:
An item of an appropriation bill obviously means an item which, in itself, is
a specific appropriation of money, not some general provision of
law which happens to be put into an appropriation bill. (Emphases
supplied)
On this premise, it may be concluded that an appropriation bill, to ensure
that the President may be able to exercise his power of item veto,
must contain “specific appropriations of money” and not only “general
provisions” which provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be
an item characterized by singular correspondence – meaning an
allocation of a specified singular amount for a specified singular
purpose, otherwise known as a “line–item.”211 This treatment not only
allows the item to be consistent with its definition as a “specific
appropriation of money” but also ensures that the President may
discernibly veto the same. Based on the foregoing formulation, the existing
Calamity Fund, Contingent Fund and the Intelligence Fund, being
appropriations which state a specified amount for a specific purpose, would
then be considered as “line–item” appropriations which are rightfully
subject to item veto. Likewise, it must be observed that an
appropriation may be validly apportioned into component
percentages or values; however, it is crucial that each percentage or
value must be allocated for its own corresponding purpose for such
component to be considered as a proper line–item. Moreover, as Justice
Carpio correctly pointed out, a valid appropriation may even have several
related purposes that are by accounting and budgeting practice considered
as one purpose, e.g., MOOE (maintenance and other operating expenses),
in which case the related purposes shall be deemed sufficiently specific for
the exercise of the President’s item veto power. Finally, special purpose
funds and discretionary funds would equally square with the constitutional
mechanism of item–veto for as long as they follow the rule on
singular correspondence as herein discussed. Anent special purpose
funds, it must be added that Section 25(4), Article VI of the 1987
Constitution requires that the “‘special appropriations bill shall specify the
purpose for which it is intended, and shall be supported by funds
actually available as certified by the National Treasurer, or to be
raised by a corresponding revenue proposal therein.” Meanwhile,
with respect to discretionary funds, Section 25(6), Article VI of the 1987
Constitution requires that said funds “shall be disbursed only for public
purposes to be supported by appropriate vouchers and subject to
such guidelines as may be prescribed by law.”
In contrast, what beckons constitutional infirmity are appropriations which
merely provide for a singular lump–sum amount to be tapped as a
source of funding for multiple purposes. Since such appropriation type
necessitates the further determination of both the actual amount to be
expended and the actual purpose of the appropriation which must still be
chosen from the multiple purposes stated in the law, it cannot be said that
the appropriation law already indicates a “specific appropriation of money”
and hence, without a proper line–item which the President may veto. As a
practical result, the President would then be faced with the predicament of
either vetoing the entire appropriation if he finds some of its purposes
wasteful or undesirable, or approving the entire appropriation so as not to
hinder some of its legitimate purposes. Finally, it may not be amiss to state
that such arrangement also raises non–delegability issues considering that
the implementing authority would still have to determine, again, both the
actual amount to be expended and the actual purpose of the appropriation.
Since the foregoing determinations constitute the integral aspects of the
power to appropriate, the implementing authority would, in effect, be
exercising legislative prerogatives in violation of the principle of non–
delegability.
b. Application.
In these cases, petitioners claim that “[i]n the current x x x system where
the PDAF is a lump–sum appropriation, the legislator’s identification of the
projects after the passage of the GAA denies the President the chance to
veto that item later on.”212 Accordingly, they submit that the “item veto
power of the President mandates that appropriations bills adopt line–item
budgeting” and that “Congress cannot choose a mode of budgeting [which]
effectively renders the constitutionally–given power of the President
useless.”213
On the other hand, respondents maintain that the text of the Constitution
envisions a process which is intended to meet the demands of a
modernizing economy and, as such, lump–sum appropriations are essential
to financially address situations which are barely foreseen when a GAA is
enacted. They argue that the decision of the Congress to create some
lump– sum appropriations is constitutionally allowed and textually–
grounded.214
The Court agrees with petitioners.
Under the 2013 PDAF Article, the amount of P24.79 Billion only appears as
a collective allocation limit since the said amount would be further divided
among individual legislators who would then receive personal lump–sum
allocations and could, after the GAA is passed, effectively appropriate PDAF
funds based on their own discretion. As these intermediate appropriations
are made by legislators only after the GAA is passed and hence, outside of
the law, it necessarily means that the actual items of PDAF appropriation
would not have been written into the General Appropriations Bill and thus
effectuated without veto consideration. This kind of lump–sum/post–
enactment legislative identification budgeting system fosters the
creation of a “budget within a budget” which subverts the prescribed
procedure of presentment and consequently impairs the President’s power
of item veto. As petitioners aptly point out, the above– described system
forces the President to decide between (a) accepting the entire P24.79
Billion PDAF allocation without knowing the specific projects of the
legislators, which may or may not be consistent with his national agenda
and (b) rejecting the whole PDAF to the detriment of all other legislators
with legitimate projects.215
Moreover, even without its post–enactment legislative identification
feature, the 2013 PDAF Article would remain constitutionally flawed since it
would then operate as a prohibited form of lump–sum appropriation as
above–characterized. In particular, the lump–sum amount of P24.79 Billion
would be treated as a mere funding source allotted for multiple purposes of
spending, i.e., scholarships, medical missions, assistance to indigents,
preservation of historical materials, construction of roads, flood control,
etc. This setup connotes that the appropriation law leaves the actual
amounts and purposes of the appropriation for further determination and,
therefore, does not readily indicate a discernible item which may be subject
to the President’s power of item veto.
In fact, on the accountability side, the same lump–sum budgeting scheme
has, as the CoA Chairperson relays, “limit[ed] state auditors from obtaining
relevant data and information that would aid in more stringently auditing
the utilization of said Funds.”216 Accordingly, she recommends the adoption
of a “line by line budget or amount per proposed program, activity or
project, and per implementing agency.”217
Hence, in view of the reasons above–stated, the Court finds the 2013 PDAF
Article, as well as all Congressional Pork Barrel Laws of similar operation, to
be unconstitutional. That such budgeting system provides for a greater
degree of flexibility to account for future contingencies cannot be an excuse
to defeat what the Constitution requires. Clearly, the first and essential
truth of the matter is that unconstitutional means do not justify even
commendable ends.218
c. Accountability.
Petitioners further relate that the system under which various forms of
Congressional Pork Barrel operate defies public accountability as it renders
Congress incapable of checking itself or its Members. In particular, they
point out that the Congressional Pork Barrel “gives each legislator a direct,
financial interest in the smooth, speedy passing of the yearly budget”
which turns them “from fiscalizers” into “financially–interested
partners.”219 They also claim that the system has an effect on re–election
as “the PDAF excels in self–perpetuation of elective officials.” Finally, they
add that the “PDAF impairs the power of impeachment” as such “funds are
indeed quite useful, ‘to well, accelerate the decisions of senators.’ “220
The Court agrees in part.
The aphorism forged under Section 1, Article XI of the 1987 Constitution,
which states that “public office is a public trust,” is an overarching
reminder that every instrumentality of government should exercise their
official functions only in accordance with the principles of the Constitution
which embodies the parameters of the people’s trust. The notion of a public
trust connotes accountability,221 hence, the various mechanisms in the
Constitution which are designed to exact accountability from public officers.
Among others, an accountability mechanism with which the proper
expenditure of public funds may be checked is the power of congressional
oversight. As mentioned in Abakada,222 congressional oversight may be
performed either through: (a) scrutiny based primarily on Congress’
power of appropriation and the budget hearings conducted in connection
with it, its power to ask heads of departments to appear before and be
heard by either of its Houses on any matter pertaining to their departments
and its power of confirmation;223 or (b) investigation and monitoring of
the implementation of laws pursuant to the power of Congress to
conduct inquiries in aid of legislation.224
The Court agrees with petitioners that certain features embedded in some
forms of Congressional Pork Barrel, among others the 2013 PDAF Article,
has an effect on congressional oversight. The fact that individual legislators
are given post–enactment roles in the implementation of the budget makes
it difficult for them to become disinterested “observers” when scrutinizing,
investigating or monitoring the implementation of the appropriation law. To
a certain extent, the conduct of oversight would be tainted as said
legislators, who are vested with post–enactment authority, would, in effect,
be checking on activities in which they themselves participate. Also, it must
be pointed out that this very same concept of post– enactment
authorization runs afoul of Section 14, Article VI of the 1987 Constitution
which provides that:
Sec. 14. No Senator or Member of the House of Representatives may
personally appear as counsel before any court of justice or before the
Electoral Tribunals, or quasi–judicial and other administrative bodies.
Neither shall he, directly or indirectly, be interested financially in any
contract with, or in any franchise or special privilege granted by the
Government, or any subdivision, agency, or instrumentality thereof,
including any government–owned or controlled corporation, or its
subsidiary, during his term of office. He shall not intervene in any
matter before any office of the Government for his pecuniary
benefit or where he may be called upon to act on account of his
office. (Emphasis supplied)
Clearly, allowing legislators to intervene in the various phases of project
implementation – a matter before another office of government – renders
them susceptible to taking undue advantage of their own office.
In any event, the Court finds the above–stated argument on this score to
be largely speculative since it has not been properly demonstrated how the
Pork Barrel System would be able to propagate political dynasties.
5. Local Autonomy.
The State’s policy on local autonomy is principally stated in Section 25,
Article II and Sections 2 and 3, Article X of the 1987 Constitution which
read as follows:
ARTICLE II

The Court, however, cannot completely agree that the same post– Sec. 25. The State shall ensure the autonomy of local governments.
enactment authority and/or the individual legislator’s control of his PDAF
per se would allow him to perpetuate himself in office. Indeed, while the
ARTICLE X
Congressional Pork Barrel and a legislator’s use thereof may be linked to
this area of interest, the use of his PDAF for re–election purposes is a
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
matter which must be analyzed based on particular facts and on a case–to–
case basis.
Sec. 3. The Congress shall enact a local government code which shall
provide for a more responsive and accountable local government structure
Finally, while the Court accounts for the possibility that the close
instituted through a system of decentralization with effective mechanisms
operational proximity between legislators and the Executive department,
of recall, initiative, and referendum, allocate among the different local
through the former’s post–enactment participation, may affect the process
government units their powers, responsibilities, and resources, and provide
of impeachment, this matter largely borders on the domain of politics and
for the qualifications, election, appointment and removal, term, salaries,
does not strictly concern the Pork Barrel System’s intrinsic constitutionality.
powers and functions and duties of local officials, and all other matters
As such, it is an improper subject of judicial assessment.
relating to the organization and operation of the local units.
In sum, insofar as its post–enactment features dilute congressional
Pursuant thereto, Congress enacted RA 7160,227 otherwise known as the
oversight and violate Section 14, Article VI of the 1987 Constitution, thus
“Local Government Code of 1991” (LGC), wherein the policy on local
impairing public accountability, the 2013 PDAF Article and other forms of
autonomy had been more specifically explicated as follows:
Congressional Pork Barrel of similar nature are deemed as unconstitutional.
4. Political Dynasties.
One of the petitioners submits that the Pork Barrel System enables Sec. 2. Declaration of Policy. – (a) It is hereby declared the policy of the
politicians who are members of political dynasties to accumulate funds to State that the territorial and political subdivisions of the State shall enjoy
perpetuate themselves in power, in contravention of Section 26, Article II genuine and meaningful local autonomy to enable them to attain
of the 1987 Constitution225 which states that: their fullest development as self–reliant communities and make
them more effective partners in the attainment of national goals.
Toward this end, the State shall provide for a more responsive and
Sec. 26. The State shall guarantee equal access to opportunities for public
accountable local government structure instituted through a system of
service, and prohibit political dynasties as may be defined by law.
decentralization whereby local government units shall be given more
(Emphasis and underscoring supplied)
powers, authority, responsibilities, and resources. The process of
decentralization shall proceed from the National Government to the local
At the outset, suffice it to state that the foregoing provision is considered
government units.
as not self–executing due to the qualifying phrase “as may be
defined by law.” In this respect, said provision does not, by and of itself,
xxx
provide a judicially enforceable constitutional right but merely specifies a
guideline for legislative or executive action.226 Therefore, since there
(c) It is likewise the policy of the State to require all national agencies
appears to be no standing law which crystallizes the policy on political
and offices to conduct periodic consultations with appropriate local
dynasties for enforcement, the Court must defer from ruling on this issue.
government units, nongovernmental and people’s organizations, and
other concerned sectors of the community before any project or
program is implemented in their respective jurisdictions. (Emphases
and underscoring supplied)
The above–quoted provisions of the Constitution and the LGC reveal the
policy of the State to empower local government units (LGUs) to develop
and ultimately, become self–sustaining and effective contributors to the
national economy. As explained by the Court in Philippine Gamefowl
Commission v. Intermediate Appellate Court:228
This is as good an occasion as any to stress the commitment of the
Constitution to the policy of local autonomy which is intended to
provide the needed impetus and encouragement to the
development of our local political subdivisions as “self–reliant
communities.” In the words of Jefferson, ?Municipal corporations are the
small republics from which the great one derives its strength.” The
vitalization of local governments will enable their inhabitants to fully exploit
their resources and more important, imbue them with a deepened sense of
involvement in public affairs as members of the body politic. This
objective could be blunted by undue interference by the national
government in purely local affairs which are best resolved by the
officials and inhabitants of such political units. The decision we reach
today conforms not only to the letter of the pertinent laws but also to the
spirit of the Constitution.229(Emphases and underscoring supplied)
In the cases at bar, petitioners contend that the Congressional Pork Barrel
goes against the constitutional principles on local autonomy since it allows
district representatives, who are national officers, to substitute their
judgments in utilizing public funds for local development.230
The Court agrees with petitioners.
Philconsa described the 1994 CDF as an attempt “to make equal the
unequal” and that ?[i]t is also a recognition that individual members of
Congress, far more than the President and their congressional colleagues,
are likely to be knowledgeable about the needs of their respective
constituents and the priority to be given each project.”231 Drawing strength
from this pronouncement, previous legislators justified its existence by
stating that ?the relatively small projects implemented under [the
Congressional Pork Barrel] complement and link the national development
goals to the countryside and grassroots as well as to depressed areas
which are overlooked by central agencies which are preoccupied with
mega–projects.232 Similarly, in his August 23, 2013 speech on the
“abolition” of PDAF and budgetary reforms, President Aquino mentioned
that the Congressional Pork Barrel was originally established for a worthy
goal, which is to enable the representatives to identify projects for
communities that the LGU concerned cannot afford.233
Notwithstanding these declarations, the Court, however, finds an inherent
defect in the system which actually belies the avowed intention of “making
equal the unequal.” In particular, the Court observes that the gauge of
PDAF and CDF allocation/division is based solely on the fact of
office, without taking into account the specific interests and
peculiarities of the district the legislator represents. In this regard,
the allocation/division limits are clearly not based on genuine parameters
of equality, wherein economic or geographic indicators have been taken
into consideration. As a result, a district representative of a highly–
urbanized metropolis gets the same amount of funding as a district
representative of a far–flung rural province which would be relatively
“underdeveloped” compared to the former. To add, what rouses graver
scrutiny is that even Senators and Party–List Representatives – and in
some years, even the Vice– President – who do not represent any locality,
receive funding from the Congressional Pork Barrel as well. These certainly
are anathema to the Congressional Pork Barrel’s original intent which is “to
make equal the unequal.” Ultimately, the PDAF and CDF had become
personal funds under the effective control of each legislator and given unto
them on the sole account of their office.
The Court also observes that this concept of legislator control underlying
the CDF and PDAF conflicts with the functions of the various Local
Development Councils (LDCs) which are already legally mandated to “assist
the corresponding sanggunian in setting the direction of economic and
social development, and coordinating development efforts within its
territorial jurisdiction.”234 Considering that LDCs are instrumentalities
whose functions are essentially geared towards managing local
affairs,235 their programs, policies and resolutions should not be overridden
nor duplicated by individual legislators, who are national officers that have
no law–making authority except only when acting as a body. The
undermining effect on local autonomy caused by the post–enactment
authority conferred to the latter was succinctly put by petitioners in the
following wise:236
With PDAF, a Congressman can simply bypass the local development
council and initiate projects on his own, and even take sole credit for its
execution. Indeed, this type of personality–driven project identification has
not only contributed little to the overall development of the district, but has
even contributed to ?further weakening infrastructure planning and
coordination efforts of the government.”
Thus, insofar as individual legislators are authorized to intervene in purely
local matters and thereby subvert genuine local autonomy, the 2013 PDAF
Article as well as all other similar forms of Congressional Pork Barrel is
deemed unconstitutional.
With this final issue on the Congressional Pork Barrel resolved, the Court
now turns to the substantive issues involving the Presidential Pork Barrel.
C. Substantive Issues on the Presidential Pork Barrel.
1. Validity of Appropriation.
Petitioners preliminarily assail Section 8 of PD 910 and Section 12 of
PD1869 (now, amended by PD 1993), which respectively provide for the
Malampaya Funds and the Presidential Social Fund, as invalid
appropriations laws since they do not have the “primary and specific”
purpose of authorizing the release of public funds from the National
Treasury. Petitioners submit that Section 8 of PD 910 is not an
appropriation law since the “primary and specific” purpose of PD 910 is the
creation of an Energy Development Board and Section 8 thereof only
created a Special Fund incidental thereto.237 In similar regard, petitioners
argue that Section 12 of PD 1869 is neither a valid appropriations law since
the allocation of the Presidential Social Fund is merely incidental to the
“primary and specific” purpose of PD 1869 which is the amendment of the
Franchise and Powers of PAGCOR.238 In view of the foregoing, petitioners
suppose that such funds are being used without any valid law allowing for
their proper appropriation in violation of Section 29(1), Article VI of the
1987 Constitution which states that: “No money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.”239
The Court disagrees.
"An appropriation made by law” under the contemplation of Section 29(1),
Article VI of the 1987 Constitution exists when a provision of law (a) sets
apart a determinate or determinable240amountof money and (b)
allocates the same for a particular public purpose. These two minimum
designations of amount and purpose stem from the very definition of the
word “appropriation,” which means “to allot, assign, set apart or apply to a
particular use or purpose,” and hence, if written into the
law, demonstrate that the legislative intent to appropriate exists. As
the Constitution “does not provide or prescribe any particular form of words
or religious recitals in which an authorization or appropriation by Congress
shall be made, except that it be ‘made by law,’ “ an appropriation law may
– according to Philconsa – be “detailed and as broad as Congress wants it
to be” for as long as the intent to appropriate may be gleaned from the
same. As held in the case of Guingona, Jr.: 241
[T]here is no provision in our Constitution that provides or
prescribes any particular form of words or religious recitals in
which an authorization or appropriation by Congress shall be made,
except that it be “made by law,” such as precisely the authorization or
appropriation under the questioned presidential decrees. In other words, in
terms of time horizons, an appropriation may be made impliedly (as by
past but subsisting legislations) as well as expressly for the current fiscal
year (as by enactment of laws by the present Congress), just as said
appropriation may be made in general as well as in specific terms. The
Congressional authorization may be embodied in annual laws, such as a
general appropriations act or in special provisions of laws of general or
special application which appropriate public funds for specific public
purposes, such as the questioned decrees. An appropriation measure is
sufficient if the legislative intention clearly and certainly appears
from the language employed (In re Continuing Appropriations, 32
P. 272), whether in the past or in the present.(Emphases and
underscoring supplied)
Likewise, as ruled by the US Supreme Court in State of Nevada v. La
Grave:242
To constitute an appropriation there must be money placed in a fund
applicable to the designated purpose. The word appropriate means to
allot, assign, set apart or apply to a particular use or purpose. An
appropriation in the sense of the constitution means the setting apart a
portion of the public funds for a public purpose. No particular form
of words is necessary for the purpose, if the intention to
appropriate is plainly manifested. (Emphases supplied)
Thus, based on the foregoing, the Court cannot sustain the argument that
the appropriation must be the “primary and specific” purpose of the law in
order for a valid appropriation law to exist. To reiterate, if a legal provision
designates a determinate or determinable amount of money and allocates
the same for a particular public purpose, then the legislative intent to
appropriate becomes apparent and, hence, already sufficient to satisfy the
requirement of an “appropriation made by law” under contemplation of the
Constitution.
Section 8 of PD 910 pertinently provides:chanRoblesvirtualLawlibrary
Section 8. Appropriations. x x x
All fees, revenues and receipts of the Board from any and all
sources including receipts from service contracts and agreements such as
application and processing fees, signature bonus, discovery bonus,
production bonus; all money collected from concessionaires, representing
unspent work obligations, fines and penalties under the Petroleum Act of
1949; as well as the government share representing royalties, rentals,
production share on service contracts and similar payments on the
exploration, development and exploitation of energy resources, shall form
part of a Special Fund to be used to finance energy resource
development and exploitation programs and projects of the
government and for such other purposes as may be hereafter
directed by the President. (Emphases supplied)
Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
Sec. 12. Special Condition of Franchise. — After deducting five (5%)
percent as Franchise Tax, the Fifty (50%) percent share of the
Government in the aggregate gross earnings of the Corporation
from this Franchise, or 60% if the aggregate gross earnings be less
than P150,000,000.00 shall be set aside and shall accrue to the General
Fund to finance the priority infrastructure development projects and
to finance the restoration of damaged or destroyed facilities due to
calamities, as may be directed and authorized by the Office of the
President of the Philippines.(Emphases supplied)
Analyzing the legal text vis–à–vis the above–mentioned principles, it may
then be concluded that (a) Section 8 of PD 910, which creates a Special
Fund comprised of “all fees, revenues, and receipts of the [Energy
Development] Board from any and all sources” (a determinable amount)
“to be used to finance energy resource development and exploitation
programs and projects of the government and for such other purposes as
may be hereafter directed by the President” (a specified public
purpose), and (b) Section 12 of PD 1869, as amended by PD 1993, which
similarly sets aside, “[a]fter deducting five (5%) percent as Franchise Tax,
the Fifty (50%) percent share of the Government in the aggregate gross
earnings of [PAGCOR], or 60%[,] if the aggregate gross earnings be less
than P150,000,000.00” (also a determinable amount) “to finance the
priority infrastructure development projects and x x x the restoration of
damaged or destroyed facilities due to calamities, as may be directed and
authorized by the Office of the President of the Philippines” (also a
specified public purpose), are legal appropriations under Section 29(1),
Article VI of the 1987 Constitution.
In this relation, it is apropos to note that the 2013 PDAF Article cannot be
properly deemed as a legal appropriation under the said constitutional
provision precisely because, as earlier stated, it contains post– enactment
measures which effectively create a system of intermediate appropriations.
These intermediate appropriations are the actual appropriations meant for
enforcement and since they are made by individual legislators after the
GAA is passed, they occur outside the law. As such, the Court observes
that the real appropriation made under the 2013 PDAF Article is not the
P24.79 Billion allocated for the entire PDAF, but rather the post–enactment
determinations made by the individual legislators which are, to repeat,
occurrences outside of the law. Irrefragably, the 2013 PDAF Article does
not constitute an “appropriation made by law” since it, in its truest sense,
only authorizes individual legislators to appropriate in violation of the
non–delegability principle as afore–discussed.
2. Undue Delegation.
On a related matter, petitioners contend that Section 8 of PD 910
constitutes an undue delegation of legislative power since the phrase “and
for such other purposes as may be hereafter directed by the President”
gives the President “unbridled discretion to determine for what purpose the
funds will be used.”243 Respondents, on the other hand, urged the Court to
apply the principle of ejusdem generis to the same section and thus,
construe the phrase “and for such other purposes as may be hereafter
directed by the President” to refer only to other purposes related “to
energy resource development and exploitation programs and projects of
the government.”244
The Court agrees with petitioners’ submissions.
While the designation of a determinate or determinable amount for a
particular public purpose is sufficient for a legal appropriation to exist, the
appropriation law must contain adequate legislative guidelines if the
same law delegates rule–making authority to the Executive245 either for
the purpose of (a) filling up the details of the law for its enforcement,
known as supplementary rule–making, or (b) ascertaining facts to bring
the law into actual operation, referred to as contingent rule–
making.246There are two (2) fundamental tests to ensure that the
legislative guidelines for delegated rule– making are indeed adequate. The
first test is called the “completeness test.” Case law states that a law is
complete when it sets forth therein the policy to be executed, carried out,
or implemented by the delegate. On the other hand, the second test is
called the “sufficient standard test.” Jurisprudence holds that a law lays
down a sufficient standard when it provides adequate guidelines or
limitations in the law to map out the boundaries of the delegate’s authority
and prevent the delegation from running riot.247 To be sufficient, the
standard must specify the limits of the delegate’s authority, announce the
legislative policy, and identify the conditions under which it is to be
implemented.248
In view of the foregoing, the Court agrees with petitioners that the phrase
“and for such other purposes as may be hereafter directed by the
President” under Section 8 of PD 910 constitutes an undue delegation of
legislative power insofar as it does not lay down a sufficient standard to
adequately determine the limits of the President’s authority with respect to
the purpose for which the Malampaya Funds may be used. As it reads,
the said phrase gives the President wide latitude to use the
Malampaya Funds for any other purpose he may direct and, in
effect, allows him to unilaterally appropriate public funds beyond
the purview of the law. That the subject phrase may be confined only to
“energy resource development and exploitation programs and projects of
the government” under the principle of ejusdem generis, meaning that the
general word or phrase is to be construed to include – or be restricted to –
things akin to, resembling, or of the same kind or class as those specifically
mentioned,249 is belied by three (3) reasons: first, the phrase “energy
resource development and exploitation programs and projects of the
government” states a singular and general class and hence, cannot be
treated as a statutory reference of specific things from which the general
phrase “for such other purposes” may be limited; second, the said phrase
also exhausts the class it represents, namely energy development
programs of the government;250 and, third, the Executive department has,
in fact, used the Malampaya Funds for non–energy related purposes under
the subject phrase, thereby contradicting respondents’ own position that it
is limited only to “energy resource development and exploitation programs
and projects of the government.”251 Thus, while Section 8 of PD 910 may
have passed the completeness test since the policy of energy development
is clearly deducible from its text, the phrase “and for such other purposes
as may be hereafter directed by the President” under the same provision of
law should nonetheless be stricken down as unconstitutional as it lies
independently unfettered by any sufficient standard of the delegating law.
This notwithstanding, it must be underscored that the rest of Section 8,
insofar as it allows for the use of the Malampaya Funds “to finance energy
resource development and exploitation programs and projects of the
government,” remains legally effective and subsisting. Truth be told, the
declared unconstitutionality of the aforementioned phrase is but an
assurance that the Malampaya Funds would be used – as it should be used
– only in accordance with the avowed purpose and intention of PD 910.
As for the Presidential Social Fund, the Court takes judicial notice of the
fact that Section 12 of PD 1869 has already been amended by PD 1993
which thus moots the parties’ submissions on the same.252Nevertheless,
since the amendatory provision may be readily examined under the current
parameters of discussion, the Court proceeds to resolve its
constitutionality.
Primarily, Section 12 of PD 1869, as amended by PD 1993, indicates that
the Presidential Social Fund may be used “to [first,] finance the priority
infrastructure development projects and [second,] to finance the
restoration of damaged or destroyed facilities due to calamities, as may be
directed and authorized by the Office of the President of the Philippines.”
The Court finds that while the second indicated purpose adequately curtails
the authority of the President to spend the Presidential Social Fund only for
restoration purposes which arise from calamities, the first indicated
purpose, however, gives him carte blanche authority to use the same fund
for any infrastructure project he may so determine as a “priority”. Verily,
the law does not supply a definition of “priority infrastructure development
projects” and hence, leaves the President without any guideline to construe
the same. To note, the delimitation of a project as one of “infrastructure” is
too broad of a classification since the said term could pertain to any kind of
facility. This may be deduced from its lexicographic definition as follows:
“[t]he underlying framework of a system, [especially] public services and
facilities (such as highways, schools, bridges, sewers, and water–systems)
needed to support commerce as well as economic and residential
development.”253 In fine, the phrase “to finance the priority infrastructure
development projects” must be stricken down as unconstitutional since –
similar to the above– assailed provision under Section 8 of PD 910 – it lies
independently unfettered by any sufficient standard of the delegating law.
As they are severable, all other provisions of Section 12 of PD 1869, as
amended by PD 1993, remains legally effective and subsisting.
D. Ancillary Prayers.
1. Petitioners’ Prayer to be Furnished Lists and Detailed Reports.
Aside from seeking the Court to declare the Pork Barrel System
unconstitutional – as the Court did so in the context of its pronouncements
made in this Decision – petitioners equally pray that the Executive
Secretary and/or the DBM be ordered to release to the CoA and to the
public: (a) “the complete schedule/list of legislators who have availed of
their PDAF and VILP from the years 2003 to 2013, specifying the use of the
funds, the project or activity and the recipient entities or individuals, and
all pertinent data thereto” (PDAF Use Schedule/List);254 and (b) “the use of
the Executive’s [lump–sum, discretionary] funds, including the proceeds
from the x x x Malampaya Fund[s] [and] remittances from the [PAGCOR] x
x x from 2003 to 2013, specifying the x x x project or activity and the
recipient entities or individuals, and all pertinent data
thereto”255 (Presidential Pork Use Report). Petitioners’ prayer is grounded
on Section 28, Article II and Section 7, Article III of the 1987 Constitution
which read as follows:
ARTICLE II
Sec. 28. Subject to reasonable conditions prescribed by law, the State
adopts and implements a policy of full public disclosure of all its
transactions involving public interest.
ARTICLE III
Sec. 7. The right of the people to information on matters of public concern
shall be recognized. Access to official records, and to documents and
papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by law.
The Court denies petitioners’ submission.
Case law instructs that the proper remedy to invoke the right to
information is to file a petition for mandamus. As explained in the case
of Legaspi v. Civil Service Commission:256
[W]hile the manner of examining public records may be subject to
reasonable regulation by the government agency in custody thereof, the
duty to disclose the information of public concern, and to afford access to
public records cannot be discretionary on the part of said agencies.
Certainly, its performance cannot be made contingent upon the discretion
of such agencies. Otherwise, the enjoyment of the constitutional right may
be rendered nugatory by any whimsical exercise of agency discretion. The
constitutional duty, not being discretionary, its performance may be
compelled by a writ of mandamus in a proper case.
But what is a proper case for Mandamus to issue? In the case before Us,
the public right to be enforced and the concomitant duty of the State are
unequivocably set forth in the Constitution. The decisive question on the
propriety of the issuance of the writ of mandamus in this case is,
whether the information sought by the petitioner is within the
ambit of the constitutional guarantee. (Emphases
supplied)chanroblesvirtualawlibrary
Corollarily, in the case of Valmonte v. Belmonte Jr.257 (Valmonte), it has
been clarified that the right to information does not include the right to
compel the preparation of “lists, abstracts, summaries and the like.” In the
same case, it was stressed that it is essential that the “applicant has a
well– defined, clear and certain legal right to the thing demanded and that
it is the imperative duty of defendant to perform the act required.” Hence,
without the foregoing substantiations, the Court cannot grant a particular
request for information. The pertinent portions of Valmonte are hereunder
quoted:258
Although citizens are afforded the right to information and, pursuant
thereto, are entitled to “access to official records,” the Constitution does
not accord them a right to compel custodians of official records to
prepare lists, abstracts, summaries and the like in their desire to
acquire information on matters of public concern.
It must be stressed that it is essential for a writ of mandamus to issue
that the applicant has a well–defined, clear and certain legal right
to the thing demanded and that it is the imperative duty of
defendant to perform the act required. The corresponding duty of the
respondent to perform the required act must be clear and specific [Lemi v.
Valencia, G.R. No. L–20768, November 29,1968,126 SCRA 203; Ocampo v.
Subido, G.R. No. L–28344, August 27, 1976, 72 SCRA 443.] The request
of the petitioners fails to meet this standard, there being no duty
on the part of respondent to prepare the list requested. (Emphases
supplied)
In these cases, aside from the fact that none of the petitions are in the
nature of mandamus actions, the Court finds that petitioners have failed to
establish a “a well–defined, clear and certain legal right” to be furnished by
the Executive Secretary and/or the DBM of their requested PDAF Use
Schedule/List and Presidential Pork Use Report. Neither did petitioners
assert any law or administrative issuance which would form the bases of
the latter’s duty to furnish them with the documents requested. While
petitioners pray that said information be equally released to the CoA, it
must be pointed out that the CoA has not been impleaded as a party to
these cases nor has it filed any petition before the Court to be allowed
access to or to compel the release of any official document relevant to the
conduct of its audit investigations. While the Court recognizes that the
information requested is a matter of significant public concern, however, if
only to ensure that the parameters of disclosure are properly foisted and so
as not to unduly hamper the equally important interests of the
government, it is constrained to deny petitioners’ prayer on this score,
without prejudice to a proper mandamus case which they, or even the CoA,
may choose to pursue through a separate petition.
It bears clarification that the Court’s denial herein should only cover
petitioners’ plea to be furnished with such schedule/list and report and not
in any way deny them, or the general public, access to official documents
which are already existing and of public record. Subject to reasonable
regulation and absent any valid statutory prohibition, access to
these documents should not be proscribed. Thus, in Valmonte, while
the Court denied the application for mandamus towards the preparation of
the list requested by petitioners therein, it nonetheless allowed access to
the documents sought for by the latter, subject, however, to the
custodian’s reasonable regulations, viz.:259
In fine, petitioners are entitled to access to the documents evidencing
loans granted by the GSIS, subject to reasonable regulations that the latter
may promulgate relating to the manner and hours of examination, to the
end that damage to or loss of the records may be avoided, that undue
interference with the duties of the custodian of the records may be
prevented and that the right of other persons entitled to inspect the
records may be insured [Legaspi v. Civil Service Commission, supra at p.
538, quoting Subido v. Ozaeta,80 Phil. 383, 387.] The petition, as to the
second and third alternative acts sought to be done by petitioners, is
meritorious.
However, the same cannot be said with regard to the first act sought by
petitioners, i.e., “to furnish petitioners the list of the names of the
Batasang Pambansa members belonging to the UNIDO and PDP– Laban
who were able to secure clean loans immediately before the February 7
election thru the intercession/marginal note of the then First Lady Imelda
Marcos.”
The Court, therefore, applies the same treatment here.
2. Petitioners’ Prayer to Include Matters in Congressional
Deliberations.
Petitioners further seek that the Court “[order] the inclusion in budgetary
deliberations with the Congress of all presently, off–budget, lump sum,
discretionary funds including but not limited to, proceeds from the x x x
Malampaya Fund, remittances from the [PAGCOR] and the [PCSO] or the
Executive’s Social Funds[.]”260
Suffice it to state that the above–stated relief sought by petitioners covers
a matter which is generally left to the prerogative of the political branches
of government. Hence, lest the Court itself overreach, it must equally deny
their prayer on this score.
3. Respondents’ Prayer to Lift TRO; Consequential Effects of
Decision.
The final issue to be resolved stems from the interpretation accorded by
the DBM to the concept of released funds. In response to the Court’s
September 10, 2013 TRO that enjoined the release of the remaining PDAF
allocated for the year 2013, the DBM issued Circular Letter No. 2013–8
dated September 27, 2013 (DBM Circular 2013–8) which pertinently reads
as follows:
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, where a
Special Allotment Release Order (SARO) has been issued by the DBM and
such SARO has been obligated by the implementing agencies prior to the
issuance of the TRO, may continually be implemented and disbursements
thereto effected by the agencies concerned.
Based on the text of the foregoing, the DBM authorized the continued
implementation and disbursement of PDAF funds as long as they are: first,
covered by a SARO; and, second, that said SARO had been obligated by
the implementing agency concerned prior to the issuance of the Court’s
September 10, 2013 TRO.
Petitioners take issue with the foregoing circular, arguing that ?the
issuance of the SARO does not yet involve the release of funds under the
PDAF, as release is only triggered by the issuance of a Notice of Cash
Allocation [(NCA)].”261 As such, PDAF disbursements, even if covered by an
obligated SARO, should remain enjoined.
For their part, respondents espouse that the subject TRO only covers
“unreleased and unobligated allotments.” They explain that once a SARO
has been issued and obligated by the implementing agency concerned, the
PDAF funds covered by the same are already “beyond the reach of the TRO
because they cannot be considered as ‘remaining PDAF.’ “ They conclude
that this is a reasonable interpretation of the TRO by the DBM.262
The Court agrees with petitioners in part.
At the outset, it must be observed that the issue of whether or not the
Court’s September 10, 2013 TRO should be lifted is a matter rendered
moot by the present Decision. The unconstitutionality of the 2013 PDAF
Article as declared herein has the consequential effect of converting the
temporary injunction into a permanent one. Hence, from the
promulgation of this Decision, the release of the remaining PDAF
funds for 2013, among others, is now permanently enjoined.
The propriety of the DBM’s interpretation of the concept of “release” must,
nevertheless, be resolved as it has a practical impact on the execution of
the current Decision. In particular, the Court must resolve the issue of
whether or not PDAF funds covered by obligated SAROs, at the time this
Decision is promulgated, may still be disbursed following the DBM’s
interpretation in DBM Circular 2013–8.
On this score, the Court agrees with petitioners’ posturing for the
fundamental reason that funds covered by an obligated SARO are yet to be
“released” under legal contemplation. A SARO, as defined by the DBM itself
in its website, is “[a]specific authority issued to identified agencies to
incur obligations not exceeding a given amount during a specified period
for the purpose indicated. It shall cover expenditures the release of
which is subject to compliance with specific laws or regulations, or
is subject to separate approval or clearance by competent
authority.”263 Based on this definition, it may be gleaned that a SARO only
evinces the existence of an obligation and not the directive to pay.
Practically speaking, the SARO does not have the direct and immediate
effect of placing public funds beyond the control of the disbursing
authority. In fact, a SARO may even be withdrawn under certain
circumstances which will prevent the actual release of funds. On the other
hand, the actual release of funds is brought about by the issuance of the
NCA,264 which is subsequent to the issuance of a SARO. As may be
determined from the statements of the DBM representative during the Oral
Arguments:265
Justice Bernabe: Is the notice of allocation issued simultaneously with the
SARO?
xxx
Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go signal
for the agencies to obligate or to enter into commitments. The NCA,
Your Honor, is already the go signal to the treasury for us to be
able to pay or to liquidate the amounts obligated in the SARO; so it
comes after. x x x The NCA, Your Honor, is the go signal for the MDS for
the authorized government–disbursing banks to, therefore, pay the payees
depending on the projects or projects covered by the SARO and the NCA.
Justice Bernabe: Are there instances that SAROs are cancelled or revoked?
Atty. Ruiz: Your Honor, I would like to instead submit that there are
instances that the SAROs issued are withdrawn by the DBM.
Justice Bernabe: They are withdrawn?
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring supplied)
Thus, unless an NCA has been issued, public funds should not be treated as
funds which have been “released.” In this respect, therefore, the
disbursement of 2013 PDAF funds which are only covered by obligated
SAROs, and without any corresponding NCAs issued, must, at the time of
this Decision’s promulgation, be enjoined and consequently reverted
to the unappropriated surplus of the general fund. Verily, in view of
the declared unconstitutionality of the 2013 PDAF Article, the funds
appropriated pursuant thereto cannot be disbursed even though already
obligated, else the Court sanctions the dealing of funds coming from an
unconstitutional source.
This same pronouncement must be equally applied to (a) the Malampaya
Funds which have been obligated but not released – meaning, those merely
covered by a SARO – under the phrase “and for such other purposes as
may be hereafter directed by the President” pursuant to Section 8 of PD
910; and (b) funds sourced from the Presidential Social Fund under the
phrase “to finance the priority infrastructure development projects”
pursuant to Section 12 of PD 1869, as amended by PD 1993, which were
altogether declared by the Court as unconstitutional. However, these funds
should not be reverted to the general fund as afore–stated but instead,
respectively remain under the Malampaya Funds and the Presidential Social
Fund to be utilized for their corresponding special purposes not otherwise
declared as unconstitutional.
E. Consequential Effects of Decision.
As a final point, it must be stressed that the Court’s pronouncement anent
the unconstitutionality of (a) the 2013 PDAF Article and its Special
Provisions, (b) all other Congressional Pork Barrel provisions similar
thereto, and (c) the phrases (1) ?and for such other purposes as may be
hereafter directed by the President” under Section 8 of PD 910, and (2) “to
finance the priority infrastructure development projects” under Section 12
of PD 1869, as amended by PD 1993, must only be treated as prospective
in effect in view of the operative fact doctrine.
To explain, the operative fact doctrine exhorts the recognition that until the
judiciary, in an appropriate case, declares the invalidity of a certain
legislative or executive act, such act is presumed constitutional and thus,
entitled to obedience and respect and should be properly enforced and
complied with. As explained in the recent case of Commissioner of Internal
Revenue v. San Roque Power Corporation,266the doctrine merely “reflect[s]
awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise
the power of judicial review that may lead to a declaration of nullity. It
would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such
adjudication.”267 “In the language of an American Supreme Court decision:
‘The actual existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have consequences
which cannot justly be ignored.’ “268
For these reasons, this Decision should be heretofore applied prospectively.
Conclusion
The Court renders this Decision to rectify an error which has persisted in
the chronicles of our history. In the final analysis, the Court must strike
down the Pork Barrel System as unconstitutional in view of the inherent
defects in the rules within which it operates. To recount, insofar as it has
allowed legislators to wield, in varying gradations, non–oversight, post–
enactment authority in vital areas of budget execution, the system has
violated the principle of separation of powers; insofar as it has
conferred unto legislators the power of appropriation by giving them
personal, discretionary funds from which they are able to fund specific
projects which they themselves determine, it has similarly violated
the principle of non– delegability of legislative power; insofar as it
has created a system of budgeting wherein items are not textualized into
the appropriations bill, it has flouted the prescribed procedure of
presentment and, in the process, denied the President the power to
veto items; insofar as it has diluted the effectiveness of congressional
oversight by giving legislators a stake in the affairs of budget execution, an
aspect of governance which they may be called to monitor and scrutinize,
the system has equally impaired public accountability; insofar as it has
authorized legislators, who are national officers, to intervene in affairs of
purely local nature, despite the existence of capable local institutions, it
has likewise subverted genuine local autonomy; and again, insofar as it
has conferred to the President the power to appropriate funds intended by
law for energy–related purposes only to other purposes he may deem fit as
well as other public funds under the broad classification of “priority
infrastructure development projects,” it has once more transgressed the
principle of non–delegability.
For as long as this nation adheres to the rule of law, any of the multifarious
unconstitutional methods and mechanisms the Court has herein pointed
out should never again be adopted in any system of governance, by any
name or form, by any semblance or similarity, by any influence or effect.
Disconcerting as it is to think that a system so constitutionally unsound has
monumentally endured, the Court urges the people and its co– stewards in
government to look forward with the optimism of change and the
awareness of the past. At a time of great civic unrest and vociferous public
debate, the Court fervently hopes that its Decision today, while it may not
purge all the wrongs of society nor bring back what has been lost, guides
this nation to the path forged by the Constitution so that no one may
heretofore detract from its cause nor stray from its course. After all, this is
the Court’s bounden duty and no other’s .
WHEREFORE, the petitions are PARTLY GRANTED. In view of the
constitutional violations discussed in this Decision, the Court hereby
declares as UNCONSTITUTIONAL: (a) the entire 2013 PDAF Article; (b)
all legal provisions of past and present Congressional Pork Barrel Laws,
such as the previous PDAF and CDF Articles and the various Congressional
Insertions, which authorize/d legislators – whether individually or
collectively organized into committees – to intervene, assume or
participate in any of the various post–enactment stages of the budget
execution, such as but not limited to the areas of project identification,
modification and revision of project identification, fund release and/or fund
realignment, unrelated to the power of congressional oversight; (c) all
legal provisions of past and present Congressional Pork Barrel Laws, such
as the previous PDAF and CDF Articles and the various Congressional
Insertions, which confer/red personal, lump–sum allocations to legislators
from which they are able to fund specific projects which they themselves
determine; (d) all informal practices of similar import and effect, which the
Court similarly deems to be acts of grave abuse of discretion amounting to
lack or excess of jurisdiction; and (e) the phrases (1) ?and for such other
purposes as may be hereafter directed by the President” under Section 8 of
Presidential Decree No. 910 and (2) “to finance the priority infrastructure
development projects” under Section 12 of Presidential Decree No. 1869,
as amended by Presidential Decree No. 1993, for both failing the sufficient
standard test in violation of the principle of non–delegability of legislative
power.
remaining PDAF funds covered by this permanent injunction shall not be
disbursed/released but instead reverted to the unappropriated surplus of
the general fund, while the funds under the Malampaya Funds and the
Presidential Social Fund shall remain therein to be utilized for their
respective special purposes not otherwise declared as unconstitutional.
On the other hand, due to improper recourse and lack of proper
substantiation, the Court hereby DENIES petitioners’ prayer seeking that
the Executive Secretary and/or the Department of Budget and Management
be ordered to provide the public and the Commission on Audit complete
lists/schedules or detailed reports related to the availments and utilization
of the funds subject of these cases. Petitioners’ access to official documents
already available and of public record which are related to these funds
must, however, not be prohibited but merely subjected to the custodian’s
reasonable regulations or any valid statutory prohibition on the same. This
denial is without prejudice to a proper mandamus case which they or the
Commission on Audit may choose to pursue through a separate petition.
The Court also DENIES petitioners’ prayer to order the inclusion of the
funds subject of these cases in the budgetary deliberations of Congress as
the same is a matter left to the prerogative of the political branches of
government.
Finally, the Court hereby DIRECTS all prosecutorial organs of the
government to, within the bounds of reasonable dispatch, investigate and
accordingly prosecute all government officials and/or private individuals for
possible criminal offenses related to the irregular, improper and/or unlawful
disbursement/utilization of all funds under the Pork Barrel System.
This Decision is immediately executory but prospective in
effect.ChanRoblesVirtualawlibrary
SO ORDERED.

Accordingly, the Court’s temporary injunction dated September 10, 2013 is

hereby declared to be PERMANENT. Thus, the disbursement/release of
the remaining PDAF funds allocated for the year 2013, as well as for all
previous years, and the funds sourced from (1) the Malampaya Funds
under the phrase “and for such other purposes as may be hereafter
directed by the President” pursuant to Section 8 of Presidential Decree No.
910, and (2) the Presidential Social Fund under the phrase ?to finance the
priority infrastructure development projects” pursuant to Section 12 of
Presidential Decree No. 1869, as amended by Presidential Decree No.
1993, which are, at the time this Decision is promulgated, not covered by
Notice of Cash Allocations (NCAs) but only by Special Allotment Release
Orders (SAROs), whether obligated or not, are hereby ENJOINED. The
x-----------------------x
G.R. No. 209135
AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,
vs.
FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF
DEPARTMENT OF BUDGET AND MANAGEMENT; AND HON. FRANKLIN
MAGTUNAO DRILON, IN HIS CAP A CITY AS THE SENATE
PRESIDENT OF THE PHILIPPINES, Respondents.
x-----------------------x
DECISION
BERSAMIN, J.:
For resolution are the consolidated petitions assailing the constitutionality
of the Disbursement Acceleration Program(DAP), National Budget Circular
(NBC) No. 541, and related issuances of the Department of Budget and
Management (DBM) implementing the DAP.
At the core of the controversy is Section 29(1) of Article VI of the 1987
Constitution, a provision of the fundamental law that firmly ordains that
"[n]o money shall be paid out of the Treasury except in pursuance of an
appropriation made by law." The tenor and context of the challenges posed
by the petitioners against the DAP indicate that the DAP contravened this
provision by allowing the Executive to allocate public money pooled from
programmed and unprogrammed funds of its various agencies in the guise
of the President exercising his constitutional authority under Section 25(5)
of the 1987 Constitution to transfer funds out of savings to augment the
appropriations of offices within the Executive Branch of the Government.
But the challenges are further complicated by the interjection of allegations
of transfer of funds to agencies or offices outside of the Executive.
Antecedents
What has precipitated the controversy?
On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege
speech in the Senate of the Philippines to reveal that some Senators,
including himself, had been allotted an additional ₱50 Million each as
"incentive" for voting in favor of the impeachment of Chief Justice Renato
C. Corona.
Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the
DBM issued a public statement entitled Abad: Releases to Senators Part of
Spending Acceleration Program,1 explaining that the funds released to the
Senators had been part of the DAP, a program designed by the DBM to
ramp up spending to accelerate economic expansion. He clarified that the
funds had been released to the Senators based on their letters of request
for funding; and that it was not the first time that releases from the DAP
had been made because the DAP had already been instituted in 2011 to
ramp up spending after sluggish disbursements had caused the growth of
the gross domestic product (GDP) to slow down. He explained that the
funds under the DAP were usually taken from (1) unreleased appropriations
under Personnel Services;2 (2) unprogrammed funds; (3) carry-over
appropriations unreleased from the previous year; and (4) budgets for
slow-moving items or projects that had been realigned to support faster-
disbursing projects.
The DBM soon came out to claim in its website3 that the DAP releases had
been sourced from savings generated by the Government, and from
unprogrammed funds; and that the savings had been derived from (1) the
pooling of unreleased appropriations, like unreleased Personnel
Services4 appropriations that would lapse at the end of the year,
unreleased appropriations of slow-moving projects and discontinued
projects per zero based budgeting findings;5 and (2) the withdrawal of
unobligated allotments also for slow-moving programs and projects that
had been earlier released to the agencies of the National Government.
The DBM listed the following as the legal bases for the DAP’s use of
savings,6 namely: (1) Section 25(5), Article VI of the 1987 Constitution,
which granted to the President the authority to augment an item for his
office in the general appropriations law; (2) Section 49 (Authority to Use
Savings for Certain Purposes) and Section 38 (Suspension of Expenditure
Appropriations), Chapter 5, Book VI of Executive Order (EO) No. 292
(Administrative Code of 1987); and (3) the General Appropriations Acts
(GAAs) of 2011, 2012 and 2013, particularly their provisions on the (a) use
of savings; (b) meanings of savings and augmentation; and (c) priority in
the use of savings.
As for the use of unprogrammed funds under the DAP, the DBM cited as
legal bases the special provisions on unprogrammed fund contained in the
GAAs of 2011, 2012 and 2013.
The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM
brought the DAP to the consciousness of the Nation for the first time, and
made this present controversy inevitable. That the issues against the DAP
came at a time when the Nation was still seething in anger over
Congressional pork barrel – "an appropriation of government spending
meant for localized projects and secured solely or primarily to bring money
to a representative’s district"7 – excited the Nation as heatedly as the pork
barrel controversy.
Nine petitions assailing the constitutionality of the DAP and the issuances
relating to the DAP were filed within days of each other, as follows: G.R.
No. 209135 (Syjuco), on October 7, 2013; G.R. No. 209136 (Luna), on
October 7, 2013; G.R. No. 209155 (Villegas),8 on October 16, 2013; G.R.
No. 209164 (PHILCONSA), on October 8, 2013; G.R. No. 209260 (IBP), on
October 16, 2013; G.R. No. 209287 (Araullo), on October 17, 2013; G.R.
No. 209442 (Belgica), on October 29, 2013; G.R. No. 209517 (COURAGE),
on November6, 2013; and G.R. No. 209569 (VACC), on November 8, 2013.
In G.R. No. 209287 (Araullo), the petitioners brought to the Court’s
attention NBC No. 541 (Adoption of Operational Efficiency Measure –
Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012),
alleging that NBC No. 541, which was issued to implement the DAP,
directed the withdrawal of unobligated allotments as of June 30, 2012 of
government agencies and offices with low levels of obligations, both for
continuing and current allotments.
In due time, the respondents filed their Consolidated Comment through the
Office of the Solicitor General (OSG).
The Court directed the holding of oral arguments on the significant issues
raised and joined.
Issues
Under the Advisory issued on November 14, 2013, the presentations of the
parties during the oral arguments were limited to the following, to wit:
Procedural Issue:
A. Whether or not certiorari, prohibition, and mandamus are proper
remedies to assail the constitutionality and validity of the Disbursement
Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and
all other executive issuances allegedly implementing the DAP. Subsumed in
this issue are whether there is a controversy ripe for judicial determination,
and the standing of petitioners.
Substantive Issues:
B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987
Constitution, which provides: "No money shall be paid out of the Treasury
except in pursuance of an appropriation made by law."
C. Whether or not the DAP, NBC No. 541, and all other executive issuances
allegedly implementing the DAP violate Sec. 25(5), Art. VI of the 1987
Constitution insofar as:
(a)They treat the unreleased appropriations and
unobligated allotments withdrawn from government
agencies as "savings" as the term is used in Sec. 25(5),
in relation to the provisions of the GAAs of 2011, 2012
and 2013;
(b)They authorize the disbursement of funds for projects
or programs not provided in the GAAs for the Executive
Department; and
(c)They "augment" discretionary lump sum
appropriations in the GAAs.
D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2)
the system of checks and balances, and (3) the principle of public
accountability enshrined in the 1987 Constitution considering that it
authorizes the release of funds upon the request of legislators.
E. Whether or not factual and legal justification exists to issue a temporary
restraining order to restrain the implementation of the DAP, NBC No. 541,
and all other executive issuances allegedly implementing the DAP.
In its Consolidated Comment, the OSG raised the matter of unprogrammed
funds in order to support its argument regarding the President’s power to
spend. During the oral arguments, the propriety of releasing
unprogrammed funds to support projects under the DAP was considerably
discussed. The petitioners in G.R. No. 209287 (Araullo) and G.R. No.
209442 (Belgica) dwelled on unprogrammed funds in their respective
memoranda. Hence, an additional issue for the oral arguments is stated as
follows:
F. Whether or not the release of unprogrammed funds under the DAP was
in accord with the GAAs.
During the oral arguments held on November 19, 2013, the Court directed
Sec. Abad to submit a list of savings brought under the DAP that had been
sourced from (a) completed programs; (b) discontinued or abandoned
programs; (c) unpaid appropriations for compensation; (d) a certified copy
of the President’s directive dated June 27, 2012 referred to in NBC No.
541; and (e) all circulars or orders issued in relation to the DAP.9
In compliance, the OSG submitted several documents, as follows:
(1) A certified copy of the Memorandum for the President dated
June 25, 2012 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment);10
(2) Circulars and orders, which the respondents identified as
related to the DAP, namely:
a. NBC No. 528 dated January 3, 2011 (Guidelines on the
Release of Funds for FY 2011);
b. NBC No. 535 dated December 29, 2011 (Guidelines on
the Release of Funds for FY 2012);
c. NBC No. 541 dated July 18, 2012 (Adoption of
Operational Efficiency Measure – Withdrawal of Agencies’
Unobligated Allotments as of June 30, 2012);
d. NBC No. 545 dated January 2, 2013 (Guidelines on the
Release of Funds for FY 2013);
e. DBM Circular Letter No. 2004-2 dated January 26,
2004 (Budgetary Treatment of Commitments/Obligations
of the National Government);
f. COA-DBM Joint Circular No. 2013-1 dated March 15,
2013 (Revised Guidelines on the Submission of Quarterly
Accountability Reports on Appropriations, Allotments,
Obligations and Disbursements);
g. NBC No. 440 dated January 30, 1995 (Adoption of a
Simplified Fund Release System in the Government).
(3) A breakdown of the sources of savings, including savings from
discontinued projects and unpaid appropriations for compensation
from 2011 to 2013
On January 28, 2014, the OSG, to comply with the Resolution issued on
January 21, 2014 directing the respondents to submit the documents not
yet submitted in compliance with the directives of the Court or its
Members, submitted several evidence packets to aid the Court in
understanding the factual bases of the DAP, to wit:
(1) First Evidence Packet11 – containing seven memoranda issued
by the DBM through Sec. Abad, inclusive of annexes, listing in
detail the 116 DAP identified projects approved and duly signed by
the President, as follows:
a. Memorandum for the President dated October 12,
2011 (FY 2011 Proposed Disbursement Acceleration
Program (Projects and Sources of Funds);
b. Memorandum for the President dated December 12,
2011 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and its Realignment);
c. Memorandum for the President dated June 25, 2012
(Omnibus Authority to Consolidate Savings/Unutilized
Balances and their Realignment);
d. Memorandum for the President dated September 4,
2012 (Release of funds for other priority projects and
expenditures of the Government);
e. Memorandum for the President dated December 19,
2012 (Proposed Priority Projects and Expenditures of the
Government);
f. Memorandum for the President dated May 20, 2013
(Omnibus Authority to Consolidate Savings/Unutilized
Balances and their Realignment to Fund the Quarterly
Disbursement Acceleration Program); and
g. Memorandum for the President dated September 25,
2013 (Funding for the Task Force Pablo Rehabilitation
Plan).
 (2) Second Evidence Packet12 – consisting of 15 applications of the
DAP, with their corresponding Special Allotment Release Orders
(SAROs) and appropriation covers;
(3) Third Evidence Packet13 – containing a list and descriptions of
12 projects under the DAP;
a) The petitions under Rule 65 are proper remedies
All the petitions are filed under Rule 65 of the Rules of Court, and include
applications for the issuance of writs of preliminary prohibitory injunction or
temporary restraining orders. More specifically, the nature of the petitions
is individually set forth hereunder, to wit:

(4) Fourth Evidence Packet14 – identifying the DAP-related

portions of the Annual Financial Report (AFR) of the Commission Certiorari, Prohibition and
G.R. No. 209135 (Syjuco)
on Audit for 2011 and 2012; Mandamus

G.R. No. 209136 (Luna) Certiorariand Prohibition

(5) Fifth Evidence Packet15 – containing a letter of Department of
Transportation and Communications(DOTC) Sec. Joseph Abaya
G.R. No. 209155 (Villegas) Certiorariand Prohibition
addressed to Sec. Abad recommending the withdrawal of funds
from his agency, inclusive of annexes; and
G.R. No. 209164
Certiorariand Prohibition
16
(PHILCONSA)
(6) Sixth Evidence Packet – a print-out of the Solicitor General’s
visual presentation for the January 28, 2014 oral arguments.
G.R. No. 209260 (IBP) Prohibition
17
On February 5, 2014, the OSG forwarded the Seventh Evidence G.R. No. 209287 (Araullo) Certiorariand Prohibition
Packet,18 which listed the sources of funds brought under the DAP, the uses
of such funds per project or activity pursuant to DAP, and the legal bases
G.R. No. 209442 (Belgica) Certiorari
thereof.

G.R. No. 209517

On February 14, 2014, the OSG submitted another set of documents in
further compliance with the Resolution dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to
the effect that the revenue collections exceeded the original revenue
targets for the years 2011, 2012 and 2013, including collections arising
from sources not considered in the original revenue targets, which
certifications were required for the release of the unprogrammed funds as
provided in Special Provision No. 1 of Article XLV, Article XVI, and Article
XLV of the 2011, 2012 and 2013 GAAs; and (2) A report on releases of
savings of the Executive Department for the use of the Constitutional
Commissions and other branches of the Government, as well as the fund
releases to the Senate and the Commission on Elections (COMELEC).
RULING
I.
Certiorari and Prohibition
(COURAGE)
G.R. No. 209569 (VACC) Certiorari and Prohibition
The respondents submit that there is no actual controversy that is ripe for
adjudication in the absence of adverse claims between the parties;19 that
the petitioners lacked legal standing to sue because no allegations were
made to the effect that they had suffered any injury as a result of the
adoption of the DAP and issuance of NBC No. 541; that their being
taxpayers did not immediately confer upon the petitioners the legal
standing to sue considering that the adoption and implementation of the
DAP and the issuance of NBC No. 541 were not in the exercise of the taxing
or spending power of Congress;20 and that even if the petitioners had
suffered injury, there were plain, speedy and adequate remedies in the
ordinary course of law available to them, like assailing the regularity of the
DAP and related issuances before the Commission on Audit (COA) or in the
trial courts.21

Procedural Issue:
The respondents aver that the special civil actions of certiorari and
prohibition are not proper actions for directly assailing the constitutionality
and validity of the DAP, NBC No. 541, and the other executive issuances
implementing the DAP.22
In their memorandum, the respondents further contend that there is no
authorized proceeding under the Constitution and the Rules of Court for
questioning the validity of any law unless there is an actual case or
controversy the resolution of which requires the determination of the
constitutional question; that the jurisdiction of the Court is largely
appellate; that for a court of law to pass upon the constitutionality of a law
or any act of the Government when there is no case or controversy is for
that court to set itself up as a reviewer of the acts of Congress and of the
President in violation of the principle of separation of powers; and that, in
the absence of a pending case or controversy involving the DAP and NBC
No. 541, any decision herein could amount to a mere advisory opinion that
no court can validly render.23
The respondents argue that it is the application of the DAP to actual
situations that the petitioners can question either in the trial courts or in
the COA; that if the petitioners are dissatisfied with the ruling either of the
trial courts or of the COA, they can appeal the decision of the trial courts
by petition for review on certiorari, or assail the decision or final order of
the COA by special civil action for certiorari under Rule 64 of the Rules of
Court.24
The respondents’ arguments and submissions on the procedural issue are
bereft of merit.
Section 1, Article VIII of the 1987 Constitution expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in
such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.
Thus, the Constitution vests judicial power in the Court and in such lower
courts as may be established by law. In creating a lower court, Congress
concomitantly determines the jurisdiction of that court, and that court,
upon its creation, becomes by operation of the Constitution one of the
repositories of judicial power.25 However, only the Court is a
constitutionally created court, the rest being created by Congress in its
exercise of the legislative power.
The Constitution states that judicial power includes the duty of the courts
of justice not only "to settle actual controversies involving rights which are
legally demandable and enforceable" but also "to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government." It has thereby expanded the concept of judicial power, which
up to then was confined to its traditional ambit of settling actual
controversies involving rights that were legally demandable and
enforceable.
The background and rationale of the expansion of judicial power under the
1987 Constitution were laid out during the deliberations of the 1986
Constitutional Commission by Commissioner Roberto R. Concepcion (a
former Chief Justice of the Philippines) in his sponsorship of the proposed
provisions on the Judiciary, where he said:–
The Supreme Court, like all other courts, has one main function: to settle
actual controversies involving conflicts of rights which are demandable and
enforceable. There are rights which are guaranteed by law but cannot be
enforced by a judicial party. In a decided case, a husband complained that
his wife was unwilling to perform her duties as a wife. The Court said: "We
can tell your wife what her duties as such are and that she is bound to
comply with them, but we cannot force her physically to discharge her
main marital duty to her husband. There are some rights guaranteed by
law, but they are so personal that to enforce them by actual compulsion
would be highly derogatory to human dignity." This is why the first part of
the second paragraph of Section 1 provides that: Judicial power includes
the duty of courts to settle actual controversies involving rights which are
legally demandable or enforceable…
The courts, therefore, cannot entertain, much less decide, hypothetical
questions. In a presidential system of government, the Supreme Court has,
also, another important function. The powers of government are generally
considered divided into three branches: the Legislative, the Executive and
the Judiciary. Each one is supreme within its own sphere and independent
of the others. Because of that supremacy power to determine whether a
given law is valid or not is vested in courts of justice.
Briefly stated, courts of justice determine the limits of power of the
agencies and offices of the government as well as those of its officers. In
other words, the judiciary is the final arbiter on the question whether or
not a branch of government or any of its officials has acted without
jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an
abuse of discretion amounting to excess of jurisdiction or lack of
jurisdiction. This is not only a judicial power but a duty to pass judgmenton
matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the
courts cannot hereafter evade the duty to settle matters of this nature, by
claiming that such matters constitute a political question. (Bold emphasis
supplied)26
Upon interpellation by Commissioner Nolledo, Commissioner Concepcion
clarified the scope of judicial power in the following manner:–
MR. NOLLEDO. x x x
The second paragraph of Section 1 states: "Judicial power includes the duty
of courts of justice to settle actual controversies…" The term "actual
controversies" according to the Commissioner should refer to questions
which are political in nature and, therefore, the courts should not refuse to
decide those political questions. But do I understand it right that this is
restrictive or only an example? I know there are cases which are not actual
yet the court can assume jurisdiction. An example is the petition for
declaratory relief.
May I ask the Commissioner’s opinion about that?
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant
declaratory judgments.
MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial
power is not vested in the Supreme Court alone but also in other lower
courts as may be created by law.
MR. CONCEPCION. Yes.
MR. NOLLEDO. And so, is this only an example?
MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify
political questions with jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases
but where there is a question as to whether the government had authority
or had abused its authority to the extent of lacking jurisdiction or excess of
jurisdiction, that is not a political question. Therefore, the court has the
duty to decide.27
Our previous Constitutions equally recognized the extent of the power of
judicial review and the great responsibility of the Judiciary in maintaining
the allocation of powers among the three great branches of Government.
Speaking for the Court in Angara v. Electoral Commission,28 Justice Jose P.
Laurel intoned:
x x x In times of social disquietude or political excitement, the great
landmarks of the Constitution are apt to be forgotten or marred, if not
entirely obliterated. In cases of conflict, the judicial department is the only
constitutional organ which can be called upon to determine the proper
allocation of powers between the several department and among the
integral or constituent units thereof.
xxxx
The Constitution is a definition of the powers of government. Who is to
determine the nature, scope and extent of such powers? The Constitution
itself has provided for the instrumentality of the judiciary as the rational
way. And when the judiciary mediates to allocate constitutional boundaries,
it does not assert any superiority over the other department; it does not in
reality nullify or invalidate an act of the legislature, but only asserts the
solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is
involved in what is termed "judicial supremacy" which properly is the
power of judicial review under the Constitution. x x x29
What are the remedies by which the grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government may be determined under the Constitution?
The present Rules of Court uses two special civil actions for determining
and correcting grave abuse of discretion amounting to lack or excess of
jurisdiction. These are the special civil actions for certiorari and prohibition,
and both are governed by Rule 65. A similar remedy of certiorari exists
under Rule 64, but the remedy is expressly applicable only to the
judgments and final orders or resolutions of the Commission on Elections
and the Commission on Audit.
The ordinary nature and function of the writ of certiorari in our present
system are aptly explained in Delos Santos v. Metropolitan Bank and Trust
Company:30
In the common law, from which the remedy of certiorari evolved, the writ
of certiorari was issued out of Chancery, or the King’s Bench, commanding
agents or officers of the inferior courts to return the record of a cause
pending before them, so as to give the party more sure and speedy justice,
for the writ would enable the superior court to determine from an
inspection of the record whether the inferior court’s judgment was
rendered without authority. The errors were of such a nature that, if
allowed to stand, they would result in a substantial injury to the petitioner
to whom no other remedy was available. If the inferior court acted without
authority, the record was then revised and corrected in matters of law. The
writ of certiorari was limited to cases in which the inferior court was said to
be exceeding its jurisdiction or was not proceeding according to essential
requirements of law and would lie only to review judicial or quasi-judicial
acts.
The concept of the remedy of certiorari in our judicial system remains
much the same as it has been in the common law. In this jurisdiction,
however, the exercise of the power to issue the writ of certiorari is largely
regulated by laying down the instances or situations in the Rules of Court
in which a superior court may issue the writ of certiorari to an inferior court
or officer. Section 1, Rule 65 of the Rules of Court compellingly provides
the requirements for that purpose, viz:
xxxx
The sole office of the writ of certiorari is the correction of errors of
jurisdiction, which includes the commission of grave abuse of discretion
amounting to lack of jurisdiction. In this regard, mere abuse of discretion is
not enough to warrant the issuance of the writ. The abuse of discretion
must be grave, which means either that the judicial or quasi-judicial power
was exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, or that the respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board
exercising judicial or quasi-judicial powers acted in a capricious or
whimsical manner as to be equivalent to lack of jurisdiction.31
Although similar to prohibition in that it will lie for want or excess of
jurisdiction, certiorari is to be distinguished from prohibition by the fact
that it is a corrective remedy used for the re-examination of some action of
an inferior tribunal, and is directed to the cause or proceeding in the lower
court and not to the court itself, while prohibition is a preventative remedy
issuing to restrain future action, and is directed to the court itself.32 The
Court expounded on the nature and function of the writ of prohibition in
Holy Spirit Homeowners Association, Inc. v. Defensor:33
A petition for prohibition is also not the proper remedy to assail an IRR
issued in the exercise of a quasi-legislative function. Prohibition is an
extraordinary writ directed against any tribunal, corporation, board, officer
or person, whether exercising judicial, quasi-judicial or ministerial
functions, ordering said entity or person to desist from further proceedings
when said proceedings are without or in excess of said entity’s or person’s
jurisdiction, or are accompanied with grave abuse of discretion, and there
is no appeal or any other plain, speedy and adequate remedy in the
ordinary course of law. Prohibition lies against judicial or ministerial
functions, but not against legislative or quasi-legislative functions.
Generally, the purpose of a writ of prohibition is to keep a lower court
within the limits of its jurisdiction in order to maintain the administration of
justice in orderly channels. Prohibition is the proper remedy to afford relief
against usurpation of jurisdiction or power by an inferior court, or when, in
the exercise of jurisdiction in handling matters clearly within its cognizance
the inferior court transgresses the bounds prescribed to it by the law, or
where there is no adequate remedy available in the ordinary course of law
by which such relief can be obtained. Where the principal relief sought is to
invalidate an IRR, petitioners’ remedy is an ordinary action for its
nullification, an action which properly falls under the jurisdiction of the
Regional Trial Court. In any case, petitioners’ allegation that "respondents
are performing or threatening to perform functions without or in excess of
their jurisdiction" may appropriately be enjoined by the trial court through
a writ of injunction or a temporary restraining order.
With respect to the Court, however, the remedies of certiorari and
prohibition are necessarily broader in scope and reach, and the writ of
certiorari or prohibition may be issued to correct errors of jurisdiction
committed not only by a tribunal, corporation, board or officer exercising
judicial, quasi-judicial or ministerial functions but also to set right, undo
and restrain any act of grave abuse of discretion amounting to lack or
excess of jurisdiction by any branch or instrumentality of the Government,
even if the latter does not exercise judicial, quasi-judicial or ministerial
functions. This application is expressly authorized by the text of the second
paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to
raise constitutional issues and to review and/or prohibit or nullify the acts
of legislative and executive officials.34
Necessarily, in discharging its duty under Section 1, supra, to set right and
undo any act of grave abuse of discretion amounting to lack or excess of
jurisdiction by any branch or instrumentality of the Government, the Court
is not at all precluded from making the inquiry provided the challenge was
properly brought by interested or affected parties. The Court has been
thereby entrusted expressly or by necessary implication with both the duty
and the obligation of determining, in appropriate cases, the validity of any
assailed legislative or executive action. This entrustment is consistent with
the republican system of checks and balances.35
Following our recent dispositions concerning the congressional pork barrel,
the Court has become more alert to discharge its constitutional duty. We
will not now refrain from exercising our expanded judicial power in order to
review and determine, with authority, the limitations on the Chief
Executive’s spending power.
b) Requisites for the exercise of the
power of judicial review were
complied with
The requisites for the exercise of the power of judicial review are the
following, namely: (1) there must bean actual case or justiciable
controversy before the Court; (2) the question before the Court must be
ripe for adjudication; (3) the person challenging the act must be a proper
party; and (4) the issue of constitutionality must be raised at the earliest
opportunity and must be the very litis mota of the case.36
The first requisite demands that there be an actual case calling for the
exercise of judicial power by the Court.37 An actual case or controversy, in
the words of Belgica v. Executive Secretary Ochoa:38
x x x is one which involves a conflict of legal rights, an assertion of
opposite legal claims, susceptible of judicial resolution as distinguished
from a hypothetical or abstract difference or dispute. In other words,
"[t]here must be a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudence." Related to the
requirement of an actual case or controversy is the requirement of
"ripeness," meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. "A question is ripe for adjudication when the
act being challenged has had a direct adverse effect on the individual
challenging it. It is a prerequisite that something had then been
accomplished or performed by either branch before a court may come into
the picture, and the petitioner must allege the existence of an immediate
or threatened injury to itself as a result of the challenged action." "Withal,
courts will decline to pass upon constitutional issues through advisory
opinions, bereft as they are of authority to resolve hypothetical or moot
questions."
An actual and justiciable controversy exists in these consolidated cases.
The incompatibility of the perspectives of the parties on the
constitutionality of the DAP and its relevant issuances satisfy the
requirement for a conflict between legal rights. The issues being raised
herein meet the requisite ripeness considering that the challenged
executive acts were already being implemented by the DBM, and there are
averments by the petitioners that such implementation was repugnant to
the letter and spirit of the Constitution. Moreover, the implementation of
the DAP entailed the allocation and expenditure of huge sums of public
funds. The fact that public funds have been allocated, disbursed or utilized
by reason or on account of such challenged executive acts gave rise,
therefore, to an actual controversy that is ripe for adjudication by the
Court.
It is true that Sec. Abad manifested during the January 28, 2014 oral
arguments that the DAP as a program had been meanwhile discontinued
because it had fully served its purpose, saying: "In conclusion, Your
Honors, may I inform the Court that because the DAP has already fully
served its purpose, the Administration’s economic managers have
recommended its termination to the President. x x x."39
The Solicitor General then quickly confirmed the termination of the DAP as
a program, and urged that its termination had already mooted the
challenges to the DAP’s constitutionality, viz:
DAP as a program, no longer exists, thereby mooting these present cases
brought to challenge its constitutionality. Any constitutional challenge
should no longer be at the level of the program, which is now extinct, but
at the level of its prior applications or the specific disbursements under the
now defunct policy. We challenge the petitioners to pick and choose which
among the 116 DAP projects they wish to nullify, the full details we will
have provided by February 5. We urge this Court to be cautious in limiting
the constitutional authority of the President and the Legislature to respond
to the dynamic needs of the country and the evolving demands of
governance, lest we end up straight jacketing our elected representatives
in ways not consistent with our constitutional structure and democratic
principles.40
A moot and academic case is one that ceases to present a justiciable
controversy by virtue of supervening events, so that a declaration thereon
would be of no practical use or value.41
The Court cannot agree that the termination of the DAP as a program was
a supervening event that effectively mooted these consolidated cases.
Verily, the Court had in the past exercised its power of judicial review
despite the cases being rendered moot and academic by supervening
events, like: (1) when there was a grave violation of the Constitution; (2)
when the case involved a situation of exceptional character and was of
paramount public interest; (3) when the constitutional issue raised required
the formulation of controlling principles to guide the Bench, the Bar and the
public; and (4) when the case was capable of repetition yet evading
review.42
Assuming that the petitioners’ several submissions against the DAP were
ultimately sustained by the Court here, these cases would definitely come
under all the exceptions. Hence, the Court should not abstain from
exercising its power of judicial review.
Did the petitioners have the legal standing to sue?
Legal standing, as a requisite for the exercise of judicial review, refers to "a
right of appearance in a court of justice on a given question."43 The concept
of legal standing, or locus standi, was particularly discussed in De Castro v.
Judicial and Bar Council,44 where the Court said:
In public or constitutional litigations, the Court is often burdened with the
determination of the locus standi of the petitioners due to the ever-present
need to regulate the invocation of the intervention of the Court to correct
any official action or policy in order to avoid obstructing the efficient
functioning of public officials and offices involved in public service. It is
required, therefore, that the petitioner must have a personal stake in the
outcome of the controversy, for, as indicated in Agan, Jr. v. Philippine
International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a
personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional
questions." Accordingly, it has been held that the interest of a person
assailing the constitutionality of a statute must be direct and personal. He
must be able to show, not only that the law or any government act is
invalid, but also that he sustained or is in imminent danger of sustaining
some direct injury as a result of its enforcement, and not merely that he
suffers thereby in some indefinite way. It must appear that the person
complaining has been or is about to be denied some right or privilege to
which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the
direct injury test for determining whether a petitioner in a public action had
locus standi. There, the Court held that the person who would assail the
validity of a statute must have "a personal and substantial interest in the
case such that he has sustained, or will sustain direct injury as a result."
Vera was followed in Custodio v. President of the Senate, Manila Race
Horse Trainers’ Association v. De la Fuente, Anti-Chinese League of the
Philippines v. Felix, and Pascual v. Secretary of Public Works.
Yet, the Court has also held that the requirement of locus standi, being a
mere procedural technicality, can be waived by the Court in the exercise of
its discretion. For instance, in 1949, in Araneta v. Dinglasan, the Court
liberalized the approach when the cases had "transcendental importance."
Some notable controversies whose petitioners did not pass the direct injury
test were allowed to be treated in the same way as in Araneta v.
Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court
decided to resolve the issues raised by the petition due to their "far
reaching implications," even if the petitioner had no personality to file the
suit. The liberal approach of Aquino v. Commission on Elections has been
adopted in several notable cases, permitting ordinary citizens, legislators,
and civic organizations to bring their suits involving the constitutionality or
validity of laws, regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a
supposedly illegal or unconstitutional executive or legislative action rests
on the theory that the petitioner represents the public in general. Although
such petitioner may not be as adversely affected by the action complained
against as are others, it is enough that he sufficiently demonstrates in his
petition that he is entitled to protection or relief from the Court in the
vindication of a public right.
Quite often, as here, the petitioner in a public action sues as a citizen or
taxpayer to gain locus standi. That is not surprising, for even if the issue
may appear to concern only the public in general, such capacities
nonetheless equip the petitioner with adequate interest to sue. In David v.
Macapagal-Arroyo, the Court aptly explains why:
Case law in most jurisdiction snow allows both "citizen" and "taxpayer"
standing in public actions. The distinction was first laid down in Beauchamp
v. Silk, where it was held that the plaintiff in a taxpayer’s suit is in a
different category from the plaintiff in a citizen’s suit. In the former, the
plaintiff is affected by the expenditure of public funds, while in the latter,
he is but the mere instrument of the public concern. As held by the New
York Supreme Court in People ex rel Case v. Collins: "In matter of mere
public right, however…the people are the real parties…It is at least the
right, if not the duty, of every citizen to interfere and see that a public
offence be properly pursued and punished, and that a public grievance be
remedied." With respect to taxpayer’s suits, Terr v. Jordan held that "the
right of a citizen and a taxpayer to maintain an action in courts to restrain
the unlawful use of public funds to his injury cannot be denied."45
The Court has cogently observed in Agan, Jr. v. Philippine International Air
Terminals Co., Inc.46 that "[s]tanding is a peculiar concept in constitutional
law because in some cases, suits are not brought by parties who have been
personally injured by the operation of a law or any other government act
but by concerned citizens, taxpayers or voters who actually sue in the
public interest."
Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners
have invoked their capacities as taxpayers who, by averring that the
issuance and implementation of the DAP and its relevant issuances
involved the illegal disbursements of public funds, have an interest in
preventing the further dissipation of public funds. The petitioners in G.R.
No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert their right
as citizens to sue for the enforcement and observance of the constitutional
limitations on the political branches of the Government.47
On its part, PHILCONSA simply reminds that the Court has long recognized
its legal standing to bring cases upon constitutional issues.48 Luna, the
petitioner in G.R. No. 209136, cites his additional capacity as a lawyer. The
IBP, the petitioner in G.R. No. 209260, stands by "its avowed duty to work
for the rule of law and of paramount importance of the question in this
action, not to mention its civic duty as the official association of all lawyers
in this country."49
Under their respective circumstances, each of the petitioners has
established sufficient interest in the outcome of the controversy as to
confer locus standi on each of them.
In addition, considering that the issues center on the extent of the power
of the Chief Executive to disburse and allocate public funds, whether
appropriated by Congress or not, these cases pose issues that are of
transcendental importance to the entire Nation, the petitioners included. As
such, the determination of such important issues call for the Court’s
exercise of its broad and wise discretion "to waive the requirement and so
remove the impediment to its addressing and resolving the serious
constitutional questions raised."50
II.
Substantive Issues
1.
Overview of the Budget System
An understanding of the Budget System of the Philippines will aid the Court
in properly appreciating and justly resolving the substantive issues.
a) Origin of the Budget System
The term "budget" originated from the Middle English word bouget that had
derived from the Latin word bulga (which means bag or purse).51
In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act)
defined "budget" as the financial program of the National Government for a
designated fiscal year, consisting of the statements of estimated receipts
and expenditures for the fiscal year for which it was intended to be
effective based on the results of operations during the preceding fiscal
years. The term was given a different meaning under Republic Act No. 992
(Revised Budget Act) by describing the budget as the delineation of the
services and products, or benefits that would accrue to the public together
with the estimated unit cost of each type of service, product or
benefit.52 For a forthright definition, budget should simply be identified as
the financial plan of the Government,53 or "the master plan of
government."54
The concept of budgeting has not been the product of recent economies. In
reality, financing public goals and activities was an idea that existed from
the creation of the State.55 To protect the people, the territory and
sovereignty of the State, its government must perform vital functions that
required public expenditures. At the beginning, enormous public
expenditures were spent for war activities, preservation of peace and
order, security, administration of justice, religion, and supply of limited
goods and services.56 In order to finance those expenditures, the State
raised revenues through taxes and impositions.57 Thus, budgeting became
necessary to allocate public revenues for specific government
functions.58 The State’s budgeting mechanism eventually developed
through the years with the growing functions of its government and
changes in its market economy.
The Philippine Budget System has been greatly influenced by western
public financial institutions. This is because of the country’s past as a
colony successively of Spain and the United States for a long period of
time. Many aspects of the country’s public fiscal administration, including
its Budget System, have been naturally patterned after the practices and
experiences of the western public financial institutions. At any rate, the
Philippine Budget System is presently guided by two principal objectives
that are vital to the development of a progressive democratic government,
namely: (1) to carry on all government activities under a comprehensive
fiscal plan developed, authorized and executed in accordance with the
Constitution, prevailing statutes and the principles of sound public
management; and (2) to provide for the periodic review and disclosure of
the budgetary status of the Government in such detail so that persons
entrusted by law with the responsibility as well as the enlightened citizenry
can determine the adequacy of the budget actions taken, authorized or
proposed, as well as the true financial position of the Government.59
b) Evolution of the Philippine Budget System
The budget process in the Philippines evolved from the early years of the
American Regime up to the passage of the Jones Law in 1916. A Budget
Office was created within the Department of Finance by the Jones Law to
discharge the budgeting function, and was given the responsibility to assist
in the preparation of an executive budget for submission to the Philippine
Legislature.60
As early as under the 1935 Constitution, a budget policy and a budget
procedure were established, and subsequently strengthened through the
enactment of laws and executive acts.61 EO No. 25, issued by President
Manuel L. Quezon on April 25, 1936, created the Budget Commission to
serve as the agency that carried out the President’s responsibility of
preparing the budget.62 CA No. 246, the first budget law, went into effect
on January 1, 1938 and established the Philippine budget process. The law
also provided a line-item budget as the framework of the Government’s
budgeting system,63 with emphasis on the observance of a "balanced
budget" to tie up proposed expenditures with existing revenues.
CA No. 246 governed the budget process until the passage on June 4, 1954
of Republic Act (RA) No. 992,whereby Congress introduced performance-
budgeting to give importance to functions, projects and activities in terms
of expected results.64 RA No. 992 also enhanced the role of the Budget
Commission as the fiscal arm of the Government.65
The 1973 Constitution and various presidential decrees directed a series of
budgetary reforms that culminated in the enactment of PD No. 1177 that
President Marcos issued on July30, 1977, and of PD No. 1405, issued on
June 11, 1978. The latter decree converted the Budget Commission into
the Ministry of Budget, and gave its head the rank of a Cabinet member.
The Ministry of Budget was later renamed the Office of Budget and
Management (OBM) under EO No. 711. The OBM became the DBM
pursuant to EO No. 292 effective on November 24, 1989.
c) The Philippine Budget Cycle66
Four phases comprise the Philippine budget process, specifically: (1)
Budget Preparation; (2) Budget Legislation; (3) Budget Execution; and (4)
Accountability. Each phase is distinctly separate from the others but they
overlap in the implementation of the budget during the budget year.
c.1.Budget Preparation67
The budget preparation phase is commenced through the issuance of a
Budget Call by the DBM. The Budget Call contains budget parameters
earlier set by the Development Budget Coordination Committee (DBCC) as
well as policy guidelines and procedures to aid government agencies in the
preparation and submission of their budget proposals. The Budget Call is of
two kinds, namely: (1) a National Budget Call, which is addressed to all
agencies, including state universities and colleges; and (2) a Corporate
Budget Call, which is addressed to all government-owned and -controlled
corporations (GOCCs) and government financial institutions (GFIs).
Following the issuance of the Budget Call, the various departments and
agencies submit their respective Agency Budget Proposals to the DBM. To
boost citizen participation, the current administration has tasked the
various departments and agencies to partner with civil society
organizations and other citizen-stakeholders in the preparation of the
Agency Budget Proposals, which proposals are then presented before a
technical panel of the DBM in scheduled budget hearings wherein the
various departments and agencies are given the opportunity to defend their
budget proposals. DBM bureaus thereafter review the Agency Budget
Proposals and come up with recommendations for the Executive Review
Board, comprised by the DBM Secretary and the DBM’s senior officials. The
discussions of the Executive Review Board cover the prioritization of
programs and their corresponding support vis-à-vis the priority agenda of
the National Government, and their implementation.
The DBM next consolidates the recommended agency budgets into the
National Expenditure Program (NEP)and a Budget of Expenditures and
Sources of Financing (BESF). The NEP provides the details of spending for
each department and agency by program, activity or project (PAP), and is
submitted in the form of a proposed GAA. The Details of Selected Programs
and Projects is the more detailed disaggregation of key PAPs in the NEP,
especially those in line with the National Government’s development plan.
The Staffing Summary provides the staffing complement of each
department and agency, including the number of positions and amounts
allocated.
The NEP and BESF are thereafter presented by the DBM and the DBCC to
the President and the Cabinet for further refinements or reprioritization.
Once the NEP and the BESF are approved by the President and the Cabinet,
the DBM prepares the budget documents for submission to Congress. The
budget documents consist of: (1) the President’s Budget Message, through
which the President explains the policy framework and budget priorities;
(2) the BESF, mandated by Section 22, Article VII of the
Constitution,68 which contains the macroeconomic assumptions, public
sector context, breakdown of the expenditures and funding sources for the
fiscal year and the two previous years; and (3) the NEP.
Public or government expenditures are generally classified into two
categories, specifically: (1) capital expenditures or outlays; and (2) current
operating expenditures. Capital expenditures are the expenses whose
usefulness lasts for more than one year, and which add to the assets of the
Government, including investments in the capital of government-owned or
controlled corporations and their subsidiaries.69 Current operating
expenditures are the purchases of goods and services in current
consumption the benefit of which does not extend beyond the fiscal
year.70 The two components of current expenditures are those for personal
services (PS), and those for maintenance and other operating
expenses(MOOE).
Public expenditures are also broadly grouped according to their functions
into: (1) economic development expenditures (i.e., expenditures on
agriculture and natural resources, transportation and communications,
commerce and industry, and other economic development efforts);71 (2)
social services or social development expenditures (i.e., government outlay
on education, public health and medicare, labor and welfare and
others);72 (3) general government or general public services expenditures
(i.e., expenditures for the general government, legislative services, the
administration of justice, and for pensions and gratuities);73 (4) national
defense expenditures (i.e., sub-divided into national security expenditures
and expenditures for the maintenance of peace and order);74 and (5) public
debt.75
1.
Public expenditures may further be classified according to the nature of
funds, i.e., general fund, special fund or bond fund.76
2.
3.
On the other hand, public revenues complement public expenditures and
cover all income or receipts of the government treasury used to support
government expenditures.77
Classical economist Adam Smith categorized public revenues based on two
principal sources, stating: "The revenue which must defray…the necessary
expenses of government may be drawn either, first from some fund which
peculiarly belongs to the sovereign or commonwealth, and which is
independent of the revenue of the people, or, secondly, from the revenue
of the people."78 Adam Smith’s classification relied on the two aspects of
the nature of the State: first, the State as a juristic person with an artificial
personality, and, second, the State as a sovereign or entity possessing
supreme power. Under the first aspect, the State could hold property and
engage in trade, thereby deriving what is called its quasi private income or
revenues, and which "peculiarly belonged to the sovereign." Under the
second aspect, the State could collect by imposing charges on the revenues
of its subjects in the form of taxes.79
In the Philippines, public revenues are generally derived from the following
sources, to wit: (1) tax revenues(i.e., compulsory contributions to finance
government activities); 80 (2) capital revenues(i.e., proceeds from sales of
fixed capital assets or scrap thereof and public domain, and gains on such
sales like sale of public lands, buildings and other structures, equipment,
and other properties recorded as fixed assets); 81 (3) grants(i.e.,
voluntary contributions and aids given to the Government for its operation
on specific purposes in the form of money and/or materials, and do not
require any monetary commitment on the part of the recipient);82 (4)
extraordinary income(i.e., repayment of loans and advances made by
government corporations and local governments and the receipts and
shares in income of the Banko Sentral ng Pilipinas, and other
receipts);83 and (5) public borrowings(i.e., proceeds of repayable
obligations generally with interest from domestic and foreign creditors of
the Government in general, including the National Government and its
political subdivisions).84
More specifically, public revenues are classified as follows:85
General Income Specific Income
Subsidy Income from National 1. Income Taxes
Government
2. Property Taxes
Subsidy from Central Office
3. Taxes on Goods and Services
Subsidy from Regional
4. Taxes on International Trade and
Office/Staff Bureaus
Transactions
 session. As with other laws, the GAB is approved on Third Reading before
4. Income from Government 5. Other Taxes 6.Fines and Penalties-Tax Revenue
the House of Representatives’ version is transmitted to the Senate.88
Services
7. Other Specific Income
5. Income from Government After transmission, the Senate conducts its own committee hearings on the
Business Operations GAB. To expedite proceedings, the Senate may conduct its committee
6. Sales Revenue hearings simultaneously with the House of Representatives’ deliberations.
The Senate’s Finance Committee and its Sub-Committees may submit the
7. Rent Income proposed amendments to the GAB to the plenary of the Senate only after
8. Insurance Income the House of Representatives has formally transmitted its version to the
Senate. The Senate version of the GAB is likewise approved on Third
9. Dividend Income Reading.89
10. Interest Income
The House of Representatives and the Senate then constitute a panel each
11. Sale of Confiscated Goods and
to sit in the Bicameral Conference Committee for the purpose of discussing
Properties
and harmonizing the conflicting provisions of their versions of the GAB. The
12. Foreign Exchange (FOREX) "harmonized" version of the GAB is next presented to the President for
Gains approval.90 The President reviews the GAB, and prepares the Veto Message
where budget items are subjected to direct veto,91 or are identified for
13. Miscellaneous Operating and conditional implementation.
Service Income
14. Fines and Penalties-Government If, by the end of any fiscal year, the Congress shall have failed to pass the
Services and Business Operations GAB for the ensuing fiscal year, the GAA for the preceding fiscal year shall
15. Income from Grants and be deemed re-enacted and shall remain in force and effect until the GAB is
Donations passed by the Congress.92

c.3. Budget Execution93

c.2. Budget Legislation86
The Budget Legislation Phase covers the period commencing from the time
Congress receives the President’s Budget, which is inclusive of the NEPand
the BESF, up to the President’s approval of the GAA. This phase is also
known as the Budget Authorization Phase, and involves the significant
participation of the Legislative through its deliberations.
Initially, the President’s Budget is assigned to the House of
Representatives’ Appropriations Committee on First Reading. The
Appropriations Committee and its various Sub-Committees schedule and
conduct budget hearings to examine the PAPs of the departments and
agencies. Thereafter, the House of Representatives drafts the General
Appropriations Bill (GAB).87
The GABis sponsored, presented and defended by the House of
Representatives’ Appropriations Committee and Sub-Committees in plenary
With the GAA now in full force and effect, the next step is the
implementation of the budget. The Budget Execution Phase is primarily the
function of the DBM, which is tasked to perform the following procedures,
namely: (1) to issue the programs and guidelines for the release of funds;
(2) to prepare an Allotment and Cash Release Program; (3) to release
allotments; and (4) to issue disbursement authorities.
The implementation of the GAA is directed by the guidelines issued by the
DBM. Prior to this, the various departments and agencies are required to
submit Budget Execution Documents(BED) to outline their plans and
performance targets by laying down the physical and financial plan, the
monthly cash program, the estimate of monthly income, and the list of
obligations that are not yet due and demandable.
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a
Cash Release Program (CRP).The ARP sets a limit for allotments issued in
general and to a specific agency. The CRP fixes the monthly, quarterly and
annual disbursement levels.
Allotments, which authorize an agency to enter into obligations, are issued Nature of the DAP as a fiscal plan
by the DBM. Allotments are lesser in scope than appropriations, in that the
latter embrace the general legislative authority to spend. Allotments may
a. DAP was a program designed to
be released in two forms – through a comprehensive Agency Budget Matrix
promote economic growth
(ABM),94 or, individually, by SARO.95

Policy is always a part of every budget and fiscal decision of any

Armed with either the ABM or the SARO, agencies become authorized to
Administration.99 The national budget the Executive prepares and presents
incur obligations96 on behalf of the Government in order to implement their
to Congress represents the Administration’s "blueprint for public policy"
PAPs. Obligations may be incurred in various ways, like hiring of personnel,
and reflects the Government’s goals and strategies.100 As such, the national
entering into contracts for the supply of goods and services, and using
budget becomes a tangible representation of the programs of the
utilities.
Government in monetary terms, specifying therein the PAPs and services
for which specific amounts of public funds are proposed and
In order to settle the obligations incurred by the agencies, the DBM issues allocated.101 Embodied in every national budget is government spending.102
a disbursement authority so that cash may be allocated in payment of the
obligations. A cash or disbursement authority that is periodically issued is
When he assumed office in the middle of 2010, President Aquino made
referred to as a Notice of Cash Allocation (NCA),97 which issuance is based
efficiency and transparency in government spending a significant focus of
upon an agency’s submission of its Monthly Cash Program and other
his Administration. Yet, although such focus resulted in an improved fiscal
required documents. The NCA specifies the maximum amount of cash that
deficit of 0.5% in the gross domestic product (GDP) from January to July of
can be withdrawn from a government servicing bank for the period
2011, it also unfortunately decelerated government project implementation
indicated. Apart from the NCA, the DBM may issue a Non-Cash Availment
and payment schedules.103 The World Bank observed that the Philippines’
Authority(NCAA) to authorize non-cash disbursements, or a Cash
economic growth could be reduced, and potential growth could be
Disbursement Ceiling(CDC) for departments with overseas operations to
weakened should the Government continue with its underspending and fail
allow the use of income collected by their foreign posts for their operating
to address the large deficiencies in infrastructure.104 The economic situation
requirements.
prevailing in the middle of 2011 thus paved the way for the development
and implementation of the DAP as a stimulus package intended to fast-
Actual disbursement or spending of government funds terminates the track public spending and to push economic growth by investing on high-
Budget Execution Phase and is usually accomplished through the Modified impact budgetary PAPs to be funded from the "savings" generated during
Disbursement Scheme under which disbursements chargeable against the the year as well as from unprogrammed funds.105 In that respect, the DAP
National Treasury are coursed through the government servicing banks. was the product of "plain executive policy-making" to stimulate the
economy by way of accelerated spending.106The Administration would
thereby accelerate government spending by: (1) streamlining the
c.4. Accountability98
implementation process through the clustering of infrastructure projects of
the Department of Public Works and Highways (DPWH) and the
Accountability is a significant phase of the budget cycle because it ensures Department of Education (DepEd),and (2) front loading PPP-related
that the government funds have been effectively and efficiently utilized to projects107 due for implementation in the following year.108
achieve the State’s socio-economic goals. It also allows the DBM to assess
the performance of agencies during the fiscal year for the purpose of
Did the stimulus package work?
implementing reforms and establishing new policies.

An agency’s accountability may be examined and evaluated through (1)
performance targets and outcomes; (2) budget accountability reports; (3)
review of agency performance; and (4) audit conducted by the Commission
on Audit(COA).
2.
The March 2012 report of the World Bank,109 released after the initial
implementation of the DAP, revealed that the DAP was partially successful.
The disbursements under the DAP contributed 1.3 percentage points to
GDP growth by the fourth quarter of 2011.110 The continued
implementation of the DAP strengthened growth by 11.8% year on year
while infrastructure spending rebounded from a 29% contraction to a 34%
growth as of September 2013.111
The DAP thus proved to be a demonstration that expenditure was a policy
instrument that the Government could use to direct the economies towards million
growth and development.112 The Government, by spending on public Php)
infrastructure, would signify its commitment of ensuring profitability for
prospective investors.113 The PAPs funded under the DAP were chosen for
FY 2011 30,000 Unreleased Personnel Declare as
this reason based on their: (1) multiplier impact on the economy and
Unreleased Services (PS) savings and
infrastructure development; (2) beneficial effect on the poor; and (3)
Personal appropriations which approve/
translation into disbursements.114
Services (PS) will lapse at the end of authorize its
Appropriations FY 2011 but may be use
b. History of the implementation of pooled as savings and for the 2011
the DAP, and sources of funds realigned for priority Disbursement
under the DAP programs that require Acceleration
immediate funding Program
How the Administration’s economic managers conceptualized and
developed the DAP, and finally presented it to the President remains FY 2011 482 Unreleased
unknown because the relevant documents appear to be scarce. Unreleased appropriations (slow
Appropriations moving projects and
The earliest available document relating to the genesis of the DAP was the programs for
memorandum of October 12,2011 from Sec. Abad seeking the approval of discontinuance)
the President to implement the proposed DAP. The memorandum, which
contained a list of the funding sources for ₱72.11 billion and of the FY 2010 12,336 Supported by the GFI Approve and
proposed priority projects to be funded,115 reads: Unprogrammed Dividends authorize its
Fund use
MEMORANDUM FOR THE PRESIDENT for the 2011
Disbursement
Acceleration
xxxx
Program

SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM

(PROJECTS AND SOURCES OF FUNDS) FY 2010 21,544 Unreleased With prior
Carryover appropriations (slow approval from
Appropriation moving projects and the President
DATE: OCTOBER 12, 2011 programs for in
discontinuance) and November
Mr. President, this is to formally confirm your approval of the Disbursement savings from Zero- 2010
Acceleration Program totaling ₱72.11 billion. We are already working with based Budgeting to declare as
all the agencies concerned for the immediate execution of the projects Initiative savings and
therein. with
authority to
use
A. Fund Sources for the Acceleration Program for priority
projects

Amount Action
Fund Sources Description FY 2011 7,748 FY 2011 Agency For information
(In Requested
Budget Budget items that can
items for be realigned within the 6. HGC: Equity infusion for credit insurance 400
realignment agency to fund new fast and mortgage guaranty operations of HGC
disbursing projects
DPWH-3.981 Billion 7. PHIC: Obligations incurred (premium 1,496
DA – 2.497 Billion subsidy for indigent families) in January-June
DOT – 1.000 Billion 2010, booked for payment in Jul[y] – Dec
DepEd – 270 Million 2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
TOTAL 72.110 pay the full amount.

8. Philpost: Purchase of foreclosed property. 644

B. Projects in the Disbursement Acceleration Program Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege
(Descriptions of projects attached as Annex A)
9. BSP: First equity infusion out of Php 40B 10,000
capitalization under the BSP Law
GOCCs and GFIs
10. PCMC: Capital and Equipment Renovation 280
Agency/Project Allotment
(SARO and NCA Release) (in Million Php) 11. LCOP: 105
a. Pediatric Pulmonary Program
1. LRTA: Rehabilitation of LRT 1 and 2 1,868 b. Bio-regenerative Technology Program 35
(Stem-Cell Research – subject to legal
2. NHA: 11,050 review and presentation) 70

a. Resettlement of North Triangle residents to 450 12. TIDCORP: NG Equity infusion 570
Camarin A7
b. Housing for BFP/BJMP 500 TOTAL 26,945
c. On-site development for families living 10,000
along dangerous
d. Relocation sites for informal settlers 100
along Iloilo River and its tributaries NGAs/LGUs

3. PHIL. HEART CENTER: Upgrading of 357 Agency/Project Allotment

ageing physical plant and medical equipment (SARO) Cash
(In Million Requirement
4. CREDIT INFO CORP: Establishment of 75 Php) (NCA)
centralized credit information system
13. DOF-BIR: NPSTAR
5. PIDS: purchase of land to relocate the PIDS 100 centralization of data
processing and others (To be
office and building construction
synchronized with GFMIS
activities) 758 758
14. COA: IT infrastructure Meterological and Climate
program and hiring of Center 275 275
additional litigational experts 144 144 b. Enhancement of Doppler
Radar Network for National
15. DND-PAF: On Base Housing Weather Watch, Accurate
Facilities and Communication Forecasting and Flood Early
Equipment 30 30 Warning 190 190

16. DA: 2,959 2,223 23. DOF-BOC: To settle the

a. Irrigation, FMRs and principal obligations with
Integrated Community Based Multi- PDIC consistent with the
Species agreement with the CISS and
Hatchery and Aquasilvi 1,629 1,629 SGS 2,800 2,800
Farming
b. Mindanao Rural 919 183 24. OEO-FDCP: Establishment of
Development Project the National Film Archive and
local cinematheques, and other
c. NIA Agno River Integrated local activities 20 20
Irrigation Project 411 411
25. DPWH: Various infrastructure
17. DAR: 1,293 1,293 projects 5,500 5,500
a. Agrarian Reform
Communities Project 2 1,293 132 26. DepEd/ERDT/DOST: Thin
b. Landowners Compensation 5,432 Client Cloud Computing
Project 270 270
18. DBM: Conduct of National
Survey of 27. DOH: Hiring of nurses and
Farmers/Fisherfolks/Ips 625 625 midwives 294 294

19. DOJ: Operating requirements 28. TESDA: Training Program in

of 50 investigation agents and partnership with BPO industry
15 state attorneys 11 11 and other sectors 1,100 1,100

20. DOT: Preservation of the Cine 29. DILG: Performance Challenge

Corregidor Complex 25 25 Fund (People Empowered
Community Driven
21. OPAPP: Activities for Peace Development with DSWD and
Process (PAMANA- Project NAPC) 250 50
details: budget breakdown,
implementation plan, and 30. ARMM: Comprehensive Peace
conditions on fund release and Development Intervention 8,592 8,592
attached as Annex B) 1,819 1,819
31. DOTC-MRT: Purchase of
22. DOST 425 425 additional MRT cars 4,500 -
a. Establishment of National
 MEMORANDUM FOR THE PRESIDENT
32. LGU Support Fund 6,500 6,500

33. Various Other Local Projects 6,500 6,500 xxxx

34. Development Assistance to the SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances
Province of Quezon 750 750 and its Realignment

TOTAL 45,165 44,000 DATE: December 12, 2011

This is to respectfully request for the grant of Omnibus Authority to

C. Summary
consolidate savings/unutilized balances in FY 2011 corresponding to
completed or discontinued projects which may be pooled to fund additional
projects or expenditures.
Fund Sources
Identified for Allotments Cash
Approval for Release Requirements for In addition, Mr. President, this measure will allow us to undertake projects
(In Million Release in FY even if their implementation carries over to 2012 without necessarily
Php) 2011 impacting on our budget deficit cap next year.

Total 72,110 72,110 70,895 BACKGROUND

GOCCs 26,895 26,895 1.0 The DBM, during the course of performance reviews
conducted on the agencies’ operations, particularly on the
NGAs/LGUs 45,165 44,000 implementation of their projects/activities, including
expenses incurred in undertaking the same, have
identified savings out of the 2011 General Appropriations
For His Excellency’s Consideration Act. Said savings correspond to completed or
discontinued projects under certain
departments/agencies which may be pooled, for the
(Sgd.) FLORENCIO B. ABAD
following:

[/] APPROVED
1.1 to provide for new activities which have not
been anticipated during preparation of the
[ ] DISAPPROVED budget;

(Sgd.) H.E. BENIGNO S. AQUINO, III 1.2 to augment additional requirements of on-
going priority projects; and
OCT 12, 2011
1.3 to provide for deficiencies under the Special
The memorandum of October 12, 2011 was followed by another Purpose Funds, e.g., PDAF, Calamity Fund,
memorandum for the President dated December 12, 2011116 requesting Contingent Fund
omnibus authority to consolidate the savings and unutilized balances for
fiscal year 2011. Pertinent portions of the memorandum of December 12, 1.4 to cover for the modifications of the original
2011 read: allotment class allocation as a result of on-going
 priority projects and implementation of new development, their beneficial effect on the poor, and their
activities translation into disbursements. Please note that we have
classified the list of proposed projects as follows:
2.0 x x x x
7.0 x x x
2.1 x x x
FOR THE PRESIDENT’S APPROVAL
2.2 x x x
8.0 Foregoing considered, may we respectfully request
for the President’s approval for the following:
ON THE UTILIZATION OF POOLED SAVINGS

8.1 Grant of omnibus authority to consolidate FY

3.0 It may be recalled that the President approved our
2011 savings/unutilized balances and its
request for omnibus authority to pool savings/unutilized
realignment; and
balances in FY 2010 last November 25, 2010.

8.2 The proposed additional projects identified

4.0 It is understood that in the utilization of the pooled
for funding.
savings, the DBM shall secure the corresponding
approval/confirmation of the President. Furthermore, it is
assured that the proposed realignments shall be within For His Excellency’s consideration and approval.
the authorized Expenditure level.
(Sgd.)
5.0 Relative thereto, we have identified some expenditure
items that may be sourced from the said pooled
[/] APPROVED
appropriations in FY 2010 that will expire on December
31, 2011 and appropriations in FY 2011 that may be
declared as savings to fund additional expenditures. [ ] DISAPPROVED

5.1 The 2010 Continuing Appropriations (pooled
savings) is proposed to be spent for the projects
that we have identified to be immediate actual
disbursements considering that this same fund
source will expire on December 31, 2011.
5.2 With respect to the proposed expenditure
items to be funded from the FY 2011 Unreleased
Appropriations, most of these are the same
projects for which the DBM is directed by the
Office of the President, thru the Executive
Secretary, to source funds.
(Sgd.) H.E. BENIGNO S. AQUINO, III
DEC 21, 2011
Substantially identical requests for authority to pool savings and to fund
proposed projects were contained in various other memoranda from Sec.
Abad dated June 25, 2012,117 September 4, 2012,118 December 19,
2012,119 May 20, 2013,120 and September 25, 2013.121 The President
apparently approved all the requests, withholding approval only of the
proposed projects contained in the June 25, 2012 memorandum, as borne
out by his marginal note therein to the effect that the proposed projects
should still be "subject to further discussions."122

6.0 Among others, the following are such proposed In order to implement the June25, 2012 memorandum, Sec. Abad issued
additional projects that have been chosen given their NBC No. 541 (Adoption of Operational Efficiency Measure – Withdrawal of
multiplier impact on economy and infrastructure
Agencies’ Unobligated Allotments as of June 30, 2012),123 reproduced
herein as follows:
NATIONAL BUDGET CIRCULAR No. 541
July 18, 2012
TO: All Heads of Departments/Agencies/State Universities and Colleges and
other Offices of the National Government, Budget and Planning Officers;
Heads of Accounting Units and All Others Concerned
SUBJECT : Adoption of Operational Efficiency Measure – Withdrawal of
Agencies’ Unobligated Allotments as of June 30, 2012
1.0 Rationale
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative
Code of 1987), periodically reviews and evaluates the
departments/agencies’ efficiency and effectiveness in utilizing budgeted
funds for the delivery of services and production of goods, consistent with
the government priorities.
In the event that a measure is necessary to further improve the operational
efficiency of the government, the President is authorized to suspend or
stop further use of funds allotted for any agency or expenditure authorized
in the General Appropriations Act. Withdrawal and pooling of unutilized
allotment releases can be effected by DBM based on authority of the
President, as mandated under Sections 38 and 39, Chapter 5, Book VI of
EO 292.
For the first five months of 2012, the National Government has not met its
spending targets. In order to accelerate spending and sustain the fiscal
targets during the year, expenditure measures have to be implemented to
optimize the utilization of available resources.
Departments/agencies have registered low spending levels, in terms of
obligations and disbursements per initial review of their 2012 performance.
To enhance agencies’ performance, the DBM conducts continuous
consultation meetings and/or send call-up letters, requesting them to
identify slow-moving programs/projects and the factors/issues affecting
their performance (both pertaining to internal systems and those which are
outside the agencies’ spheres of control). Also, they are asked to formulate
strategies and improvement plans for the rest of 2012.
Notwithstanding these initiatives, some departments/agencies have
continued to post low obligation levels as of end of first semester, thus
resulting to substantial unobligated allotments.
In line with this, the President, per directive dated June 27, 2012
authorized the withdrawal of unobligated allotments of agencies with low
levels of obligations as of June 30, 2012, both for continuing and current
allotments. This measure will allow the maximum utilization of available
allotments to fund and undertake other priority expenditures of the
national government.
2.0 Purpose
2.1 To provide the conditions and parameters on the
withdrawal of unobligated allotments of agencies as of
June 30, 2012 to fund priority and/or fast-moving
programs/projects of the national government;
2.2 To prescribe the reports and documents to be used as
bases on the withdrawal of said unobligated allotments;
and
2.3 To provide guidelines in the utilization or reallocation
of the withdrawn allotments.
3.0 Coverage
3.1 These guidelines shall cover the withdrawal of
unobligated allotments as of June 30, 2012 of all national
government agencies (NGAs) charged against FY 2011
Continuing Appropriation (R.A. No.10147) and FY 2012
Current Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating
Expenses (MOOE) related to the implementation
of programs and projects, as well as capitalized
MOOE; and
3.1.3 Personal Services corresponding to
unutilized pension benefits declared as savings
 by the agencies concerned based on their
updated/validated list of pensioners.
3.2 The withdrawal of unobligated allotments may cover
the identified programs, projects and activities of the
departments/agencies reflected in the DBM list shown as
Annex A or specific programs and projects as may be
identified by the agencies.
4.0 Exemption
These guidelines shall not apply to the following:
4.1 NGAs
4.1.1 Constitutional Offices/Fiscal Autonomy
Group, granted fiscal autonomy under the
Philippine Constitution; and
4.1.2 State Universities and Colleges, adopting
the Normative Funding allocation scheme i.e.,
distribution of a predetermined budget ceiling.
4.2 Fund Sources
4.2.1 Personal Services other than pension
benefits;
4.2.2 MOOE items earmarked for specific
purposes or subject to realignment conditions
per General Provisions of the GAA:
• Confidential and Intelligence Fund;
• Savings from Traveling,
Communication, Transportation and
Delivery, Repair and Maintenance,
Supplies and Materials and Utility which
shall be used for the grant of Collective
Negotiation Agreement incentive
benefit;
• Savings from mandatory expenditures
which can be realigned only in the last
quarter after taking into consideration
the agency’s full year requirements,
i.e., Petroleum, Oil and Lubricants,
Water, Illumination, Power Services,
Telephone, other Communication
Services and Rent.
4.2.3 Foreign-Assisted Projects (loan proceeds
and peso counterpart);
4.2.4 Special Purpose Funds such as: E-
Government Fund, International Commitments
Fund, PAMANA, Priority Development Assistance
Fund, Calamity Fund, Budgetary Support to
GOCCs and Allocation to LGUs, among others;
4.2.5 Quick Response Funds; and
4.2.6 Automatic Appropriations i.e., Retirement
Life Insurance Premium and Special Accounts in
the General Fund.
5.0 Guidelines
5.1 National government agencies shall continue to
undertake procurement activities notwithstanding the
implementation of the policy of withdrawal of unobligated
allotments until the end of the third quarter, FY 2012.
Even without the allotments, the agency shall proceed in
undertaking the procurement processes (i.e.,
procurement planning up to the conduct of bidding but
short of awarding of contract) pursuant to GPPB Circular
Nos. 02-2008 and 01-2009 and DBM Circular Letter No.
2010-9.
5.2 For the purpose of determining the amount of
unobligated allotments that shall be withdrawn, all
departments/agencies/operating units (OUs) shall submit
to DBM not later than July 30, 2012, the following budget
accountability reports as of June 30, 2012;
 • Statement of Allotments, Obligations and
Balances (SAOB);
• Financial Report of Operations (FRO); and
• Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited
under item 5.2 of this Circular, the agency’s latest report
available shall be used by DBM as basis for withdrawal of
allotment. The DBM shall compute/approximate the
agency’s obligation level as of June 30 to derive its
unobligated allotments as of same period. Example: If
the March 31 SAOB or FRO reflects actual obligations of P
800M then the June 30 obligation level shall approximate
to ₱1,600 M (i.e., ₱800 M x 2 quarters).
5.4 All released allotments in FY 2011 charged against
R.A. No. 10147 which remained unobligated as of June
30, 2012 shall be immediately considered for withdrawal.
This policy is based on the following considerations:
5.4.1 The departments/agencies’ approved
priority programs and projects are assumed to
be implementation-ready and doable during the
given fiscal year; and
5.4.2 The practice of having substantial
carryover appropriations may imply that the
agency has a slower-than-programmed
implementation capacity or agency tends to
implement projects within a two-year
timeframe.
5.5. Consistent with the President’s directive, the DBM
shall, based on evaluation of the reports cited above and
results of consultations with the departments/agencies,
withdraw the unobligated allotments as of June 30, 2012
through issuance of negative Special Allotment Release
Orders (SAROs).
5.6 DBM shall prepare and submit to the President, a
report on the magnitude of withdrawn allotments. The
report shall highlight the agencies which failed to submit
the June 30 reports required under this Circular.
5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and
projects of the agencies/OUs concerned, from
which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for
other existing programs and projects of the
agency/OU; or
5.7.3 Used to augment existing programs and
projects of any agency and to fund priority
programs and projects not considered in the
2012 budget but expected to be started or
implemented during the current year.
5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs
concerned may submit to DBM a Special Budget Request
(SBR), supported with the following:
5.8.1 Physical and Financial Plan (PFP);
5.8.2 Monthly Cash Program (MCP); and
5.8.3 Proof that the project/activity has started
the procurement processes i.e., Proof of Posting
and/or Advertisement of the Invitation to Bid.
5.9 The deadline for submission of request/s pertaining to
these categories shall be until the end of the third quarter
i.e., September 30, 2012. After said cut-off date, the
withdrawn allotments shall be pooled and form part of
the overall savings of the national government.
5.10 Utilization of the consolidated withdrawn allotments
for other priority programs and projects as cited under
item 5.7.3 of this Circular, shall be subject to approval of
the President. Based on the approval of the President,
DBM shall issue the SARO to cover the approved priority
 expenditures subject to submission by the agency/OU
concerned of the SBR and supported with PFP and MCP.
5.11 It is understood that all releases to be made out of
the withdrawn allotments (both 2011 and 2012
unobligated allotments) shall be within the approved
Expenditure Program level of the national government for
the current year. The SAROs to be issued shall properly
disclose the appropriation source of the release to
determine the extent of allotment validity, as follows:
• For charges under R.A. 10147 – allotments
shall be valid up to December 31, 2012; and
• For charges under R.A. 10155 – allotments
shall be valid up to December 31, 2013.
5.12 Timely compliance with the submission of existing
BARs and other reportorial requirements is reiterated for
monitoring purposes.
6.0 Effectivity
This circular shall take effect immediately.
(Sgd.) FLORENCIO B. ABAD
Secretary
As can be seen, NBC No. 541 specified that the unobligated allotments of
all agencies and departments as of June 30, 2012 that were charged
against the continuing appropriations for fiscal year 2011 and the 2012
GAA (R.A. No. 10155) were subject to withdrawal through the issuance of
negative SAROs, but such allotments could be either: (1) reissued for the
original PAPs of the concerned agencies from which they were withdrawn;
or (2) realigned to cover additional funding for other existing PAPs of the
concerned agencies; or (3) used to augment existing PAPs of any agency
and to fund priority PAPs not considered in the 2012 budget but expected
to be started or implemented in 2012. Financing the other priority PAPs
was made subject to the approval of the President. Note here that NBC No.
541 used terminologies like "realignment" and "augmentation" in the
application of the withdrawn unobligated allotments.
Taken together, all the issuances showed how the DAP was to be
implemented and funded, that is — (1) by declaring "savings" coming from
the various departments and agencies derived from pooling unobligated
allotments and withdrawing unreleased appropriations; (2) releasing
unprogrammed funds; and (3) applying the "savings" and unprogrammed
funds to augment existing PAPs or to support other priority PAPs.
c. DAP was not an appropriation
measure; hence, no appropriation
law was required to adopt or to
implement it
Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did
not enact a law to establish the DAP, or to authorize the disbursement and
release of public funds to implement the DAP. Villegas, PHILCONSA, IBP,
Araullo, and COURAGE observe that the appropriations funded under the
DAP were not included in the 2011, 2012 and 2013 GAAs. To petitioners
IBP, Araullo, and COURAGE, the DAP, being actually an appropriation that
set aside public funds for public use, should require an enabling law for its
validity. VACC maintains that the DAP, because it involved huge allocations
that were separate and distinct from the GAAs, circumvented and
duplicated the GAAs without congressional authorization and control.
The petitioners contend in unison that based on how it was developed and
implemented the DAP violated the mandate of Section 29(1), Article VI of
the 1987 Constitution that "[n]o money shall be paid out of the Treasury
except in pursuance of an appropriation made by law."
The OSG posits, however, that no law was necessary for the adoption and
implementation of the DAP because of its being neither a fund nor an
appropriation, but a program or an administrative system of prioritizing
spending; and that the adoption of the DAP was by virtue of the authority
of the President as the Chief Executive to ensure that laws were faithfully
executed.
We agree with the OSG’s position.
The DAP was a government policy or strategy designed to stimulate the
economy through accelerated spending. In the context of the DAP’s
adoption and implementation being a function pertaining to the Executive
as the main actor during the Budget Execution Stage under its
constitutional mandate to faithfully execute the laws, including the GAAs,
Congress did not need to legislate to adopt or to implement the DAP.
Congress could appropriate but would have nothing more to do during the
Budget Execution Stage. Indeed, appropriation was the act by which
Congress "designates a particular fund, or sets apart a specified portion of
the public revenue or of the money in the public treasury, to be applied to
some general object of governmental expenditure, or to some individual
purchase or expense."124 As pointed out in Gonzales v. Raquiza:125 ‘"In a
strict sense, appropriation has been defined ‘as nothing more than the
legislative authorization prescribed by the Constitution that money may be
paid out of the Treasury,’ while appropriation made by law refers to ‘the act
of the legislature setting apart or assigning to a particular use a certain
sum to be used in the payment of debt or dues from the State to its
creditors.’"126
On the other hand, the President, in keeping with his duty to faithfully
execute the laws, had sufficient discretion during the execution of the
budget to adapt the budget to changes in the country’s economic
situation.127 He could adopt a plan like the DAP for the purpose. He could
pool the savings and identify the PAPs to be funded under the DAP. The
pooling of savings pursuant to the DAP, and the identification of the PAPs
to be funded under the DAP did not involve appropriation in the strict sense
because the money had been already set apart from the public treasury by
Congress through the GAAs. In such actions, the Executive did not usurp
the power vested in Congress under Section 29(1), Article VI of the
Constitution.
3.
Unreleased appropriations and withdrawn
unobligated allotments under the DAP
were not savings, and the use of such
appropriations contravened Section 25(5),
Article VI of the 1987 Constitution.
Notwithstanding our appreciation of the DAP as a plan or strategy validly
adopted by the Executive to ramp up spending to accelerate economic
growth, the challenges posed by the petitioners constrain us to dissect the
mechanics of the actual execution of the DAP. The management and
utilization of the public wealth inevitably demands a most careful scrutiny
of whether the Executive’s implementation of the DAP was consistent with
the Constitution, the relevant GAAs and other existing laws.
a. Although executive discretion
and flexibility are necessary in
the execution of the budget, any
transfer of appropriated funds
should conform to Section 25(5),
Article VI of the Constitution
We begin this dissection by reiterating that Congress cannot anticipate all
issues and needs that may come into play once the budget reaches its
execution stage. Executive discretion is necessary at that stage to achieve
a sound fiscal administration and assure effective budget implementation.
The heads of offices, particularly the President, require flexibility in their
operations under performance budgeting to enable them to make whatever
adjustments are needed to meet established work goals under changing
conditions.128 In particular, the power to transfer funds can give the
President the flexibility to meet unforeseen events that may otherwise
impede the efficient implementation of the PAPs set by Congress in the
GAA.
Congress has traditionally allowed much flexibility to the President in
allocating funds pursuant to the GAAs,129particularly when the funds are
grouped to form lump sum accounts.130 It is assumed that the agencies of
the Government enjoy more flexibility when the GAAs provide broader
appropriation items.131 This flexibility comes in the form of policies that the
Executive may adopt during the budget execution phase. The DAP – as a
strategy to improve the country’s economic position – was one policy that
the President decided to carry out in order to fulfill his mandate under the
GAAs.
Denying to the Executive flexibility in the expenditure process would be
counterproductive. In Presidential Spending Power,132 Prof. Louis Fisher, an
American constitutional scholar whose specialties have included budget
policy, has justified extending discretionary authority to the Executive
thusly:
[T]he impulse to deny discretionary authority altogether should be resisted.
There are many number of reasons why obligations and outlays by
administrators may have to differ from appropriations by legislators.
Appropriations are made many months, and sometimes years, in advance
of expenditures. Congress acts with imperfect knowledge in trying to
legislate in fields that are highly technical and constantly undergoing
change. New circumstances will develop to make obsolete and mistaken
the decisions reached by Congress at the appropriation stage. It is not
practicable for Congress to adjust to each new development by passing
separate supplemental appropriation bills. Were Congress to control
expenditures by confining administrators to narrow statutory details, it
would perhaps protect its power of the purse but it would not protect the
purse itself. The realities and complexities of public policy require executive
discretion for the sound management of public funds.
xxxx
x x x The expenditure process, by its very nature, requires substantial
discretion for administrators. They need to exercise judgment and take
responsibility for their actions, but those actions ought to be directed
toward executing congressional, not administrative policy. Let there be
discretion, but channel it and use it to satisfy the programs and priorities
established by Congress.
In contrast, by allowing to the heads of offices some power to transfer
funds within their respective offices, the Constitution itself ensures the
fiscal autonomy of their offices, and at the same time maintains the
separation of powers among the three main branches of the Government.
The Court has recognized this, and emphasized so in Bengzon v.
Drilon,133 viz:
The Judiciary, the Constitutional Commissions, and the Ombudsman must
have the independence and flexibility needed in the discharge of their
constitutional duties. The imposition of restrictions and constraints on the
manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and
violative not only of the express mandate of the Constitution but especially
as regards the Supreme Court, of the independence and separation of
powers upon which the entire fabric of our constitutional system is based.
In the case of the President, the power to transfer funds from one item to
another within the Executive has not been the mere offshoot of established
usage, but has emanated from law itself. It has existed since the time of
the American Governors-General.134 Act No. 1902 (An Act authorizing the
Governor-General to direct any unexpended balances of appropriations be
returned to the general fund of the Insular Treasury and to transfer from
the general fund moneys which have been returned thereto), passed on
May 18, 1909 by the First Philippine Legislature,135 was the first enabling
law that granted statutory authority to the President to transfer funds. The
authority was without any limitation, for the Act explicitly empowered the
Governor-General to transfer any unexpended balance of appropriations for
any bureau or office to another, and to spend such balance as if it had
originally been appropriated for that bureau or office.
From 1916 until 1920, the appropriations laws set a cap on the amounts of
funds that could be transferred, thereby limiting the power to transfer
funds. Only 10% of the amounts appropriated for contingent or
miscellaneous expenses could be transferred to a bureau or office, and the
transferred funds were to be used to cover deficiencies in the
appropriations also for miscellaneous expenses of said bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items
under miscellaneous expenses to any other item of a certain bureau or
office was removed.
During the Commonwealth period, the power of the President to transfer
funds continued to be governed by the GAAs despite the enactment of the
Constitution in 1935. It is notable that the 1935 Constitution did not
include a provision on the power to transfer funds. At any rate, a shift in
the extent of the President’s power to transfer funds was again experienced
during this era, with the President being given more flexibility in
implementing the budget. The GAAs provided that the power to transfer all
or portions of the appropriations in the Executive Department could be
made in the "interest of the public, as the President may determine."136
In its time, the 1971 Constitutional Convention wanted to curtail the
President’s seemingly unbounded discretion in transferring funds.137 Its
Committee on the Budget and Appropriation proposed to prohibit the
transfer of funds among the separate branches of the Government and the
independent constitutional bodies, but to allow instead their respective
heads to augment items of appropriations from savings in their respective
budgets under certain limitations.138 The clear intention of the Convention
was to further restrict, not to liberalize, the power to transfer
appropriations.139 Thus, the Committee on the Budget and Appropriation
initially considered setting stringent limitations on the power to augment,
and suggested that the augmentation of an item of appropriation could be
made "by not more than ten percent if the original item of appropriation to
be augmented does not exceed one million pesos, or by not more than five
percent if the original item of appropriation to be augmented exceeds one
million pesos."140 But two members of the Committee objected to the
₱1,000,000.00 threshold, saying that the amount was arbitrary and might
not be reasonable in the future. The Committee agreed to eliminate the
₱1,000,000.00 threshold, and settled on the ten percent limitation.141
In the end, the ten percent limitation was discarded during the plenary of
the Convention, which adopted the following final version under Section 16,
Article VIII of the 1973 Constitution, to wit:
(5) No law shall be passed authorizing any transfer of appropriations;
however, the President, the Prime Minister, the Speaker, the Chief Justice
of the Supreme Court, and the heads of Constitutional Commissions may
by law be authorized to augment any item in the general appropriations
law for their respective offices from savings in other items of their
respective appropriations.
The 1973 Constitution explicitly and categorically prohibited the transfer of
funds from one item to another, unless Congress enacted a law authorizing
the President, the Prime Minister, the Speaker, the Chief Justice of the
Supreme Court, and the heads of the Constitutional omissions to transfer
funds for the purpose of augmenting any item from savings in another item
in the GAA of their respective offices. The leeway was limited to
augmentation only, and was further constricted by the condition that the
funds to be transferred should come from savings from another item in the
appropriation of the office.142
On July 30, 1977, President Marcos issued PD No. 1177, providing in its
Section 44 that:
Section 44. Authority to Approve Fund Transfers. The President shall have
the authority to transfer any fund appropriated for the different
departments, bureaus, offices and agencies of the Executive Department
which are included in the General Appropriations Act, to any program,
project, or activity of any department, bureau or office included in the
General Appropriations Act or approved after its enactment.
The President shall, likewise, have the authority to augment any
appropriation of the Executive Department in the General Appropriations
Act, from savings in the appropriations of another department, bureau,
office or agency within the Executive Branch, pursuant to the provisions of
Article VIII, Section 16 (5) of the Constitution.
In Demetria v. Alba, however, the Court struck down the first paragraph of
Section 44 for contravening Section 16(5)of the 1973 Constitution, ruling:
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the
privilege granted under said Section 16. It empowers the President to
indiscriminately transfer funds from one department, bureau, office or
agency of the Executive Department to any program, project or activity of
any department, bureau or office included in the General Appropriations
Act or approved after its enactment, without regard as to whether or not
the funds to be transferred are actually savings in the item from which the
same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only
completely disregard the standards set in the fundamental law, thereby
amounting to an undue delegation of legislative powers, but likewise goes
beyond the tenor thereof. Indeed, such constitutional infirmities render the
provision in question null and void.143
It is significant that Demetria was promulgated 25 days after the
ratification by the people of the 1987 Constitution, whose Section 25(5) of
Article VI is identical to Section 16(5), Article VIII of the 1973 Constitution,
to wit:
Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations;
however, the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the
heads of Constitutional Commissions may, by law, be authorized to
augment any item in the general appropriations law for their respective
offices from savings in other items of their respective appropriations.
xxxx
The foregoing history makes it evident that the Constitutional Commission
included Section 25(5), supra, to keep a tight rein on the exercise of the
power to transfer funds appropriated by Congress by the President and the
other high officials of the Government named therein. The Court stated in
Nazareth v. Villar:144
In the funding of current activities, projects, and programs, the general
rule should still be that the budgetary amount contained in the
appropriations bill is the extent Congress will determine as sufficient for the
budgetary allocation for the proponent agency. The only exception is found
in Section 25 (5), Article VI of the Constitution, by which the President, the
President of the Senate, the Speaker of the House of Representatives, the
Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions are authorized to transfer appropriations to augmentany item
in the GAA for their respective offices from the savings in other items of
their respective appropriations. The plain language of the constitutional
restriction leaves no room for the petitioner’s posture, which we should
now dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named
in Section 25(5), Article VI of the Constitution limiting the authority to
transfer savings only to augment another item in the GAA is strictly but
reasonably construed as exclusive. As the Court has expounded in Lokin,
Jr. v. Commission on Elections:
When the statute itself enumerates the exceptions to the application of the
general rule, the exceptions are strictly but reasonably construed. The
exceptions extend only as far as their language fairly warrants, and all
doubts should be resolved in favor of the general provision rather than the
exceptions. Where the general rule is established by a statute with
exceptions, none but the enacting authority can curtail the former. Not
even the courts may add to the latter by implication, and it is a rule that an
express exception excludes all others, although it is always proper in
determining the applicability of the rule to inquire whether, in a particular law, generally, is the GAA of a given fiscal year. To comply with the first
case, it accords with reason and justice. requisite, the GAAs should expressly authorize the transfer of funds.

The appropriate and natural office of the exception is to exempt something Did the GAAs expressly authorize the transfer of funds?
from the scope of the general words of a statute, which is otherwise within
the scope and meaning of such general words. Consequently, the existence
In the 2011 GAA, the provision that gave the President and the other high
of an exception in a statute clarifies the intent that the statute shall apply
officials the authority to transfer funds was Section 59, as follows:
to all cases not excepted. Exceptions are subject to the rule of strict
construction; hence, any doubt will be resolved in favor of the general
provision and against the exception. Indeed, the liberal construction of a Section 59. Use of Savings. The President of the Philippines, the Senate
statute will seem to require in many circumstances that the exception, by President, the Speaker of the House of Representatives, the Chief Justice of
which the operation of the statute is limited or abridged, should receive a the Supreme Court, the Heads of Constitutional Commissions enjoying
restricted construction. fiscal autonomy, and the Ombudsman are hereby authorized to augment
any item in this Act from savings in other items of their respective
appropriations.
Accordingly, we should interpret Section 25(5), supra, in the context of a
limitation on the President’s discretion over the appropriations during the
Budget Execution Phase. In the 2012 GAA, the empowering provision was Section 53, to wit:

b. Requisites for the valid transfer of Section 53. Use of Savings. The President of the Philippines, the Senate
appropriated funds under Section President, the Speaker of the House of Representatives, the Chief Justice of
25(5), Article VI of the 1987 the Supreme Court, the Heads of Constitutional Commissions enjoying
Constitution fiscal autonomy, and the Ombudsman are hereby authorized to augment
any item in this Act from savings in other items of their respective
appropriations.
The transfer of appropriated funds, to be valid under Section 25(5), supra,
must be made upon a concurrence of the following requisites, namely:
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by
the DBM as justification for the use of savings under the DAP.145
(1) There is a law authorizing the President, the President of the
Senate, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, and the heads of the Constitutional A reading shows, however, that the aforequoted provisions of the GAAs of
Commissions to transfer funds within their respective offices; 2011 and 2012 were textually unfaithful to the Constitution for not carrying
the phrase "for their respective offices" contained in Section 25(5), supra.
The impact of the phrase "for their respective offices" was to authorize only
(2) The funds to be transferred are savings generated from the
transfers of funds within their offices (i.e., in the case of the President, the
appropriations for their respective offices; and (3) The purpose of
transfer was to an item of appropriation within the Executive). The
the transfer is to augment an item in the general appropriations
provisions carried a different phrase ("to augment any item in this Act"),
law for their respective offices.
and the effect was that the 2011 and 2012 GAAs thereby literally allowed
the transfer of funds from savings to augment any item in the GAAs even if
b.1. First Requisite–GAAs of 2011 and the item belonged to an office outside the Executive. To that extent did the
2012 lacked valid provisions to 2011 and 2012 GAAs contravene the Constitution. At the very least, the
authorize transfers of funds under aforequoted provisions cannot be used to claim authority to transfer
the DAP; hence, transfers under the appropriations from the Executive to another branch, or to a constitutional
DAP were unconstitutional commission.

Section 25(5), supra, not being a self-executing provision of the Apparently realizing the problem, Congress inserted the omitted phrase in
Constitution, must have an implementing law for it to be operative. That the counterpart provision in the 2013 GAA, to wit:
Section 52. Use of Savings. The President of the Philippines, the Senate
President, the Speaker of the House of Representatives, the Chief Justice of
the Supreme Court, the Heads of Constitutional Commissions enjoying
fiscal autonomy, and the Ombudsman are hereby authorized to use savings
in their respective appropriations to augment actual deficiencies incurred
for the current year in any item of their respective appropriations.
Even had a valid law authorizing the transfer of funds pursuant to Section
25(5), supra, existed, there still remained two other requisites to be met,
namely: that the source of funds to be transferred were savings from
appropriations within the respective offices; and that the transfer must be
for the purpose of augmenting an item of appropriation within the
respective offices.
b.2. Second Requisite – There were
no savings from which funds
could be sourced for the DAP
Were the funds used in the DAP actually savings?
The petitioners claim that the funds used in the DAP — the unreleased
appropriations and withdrawn unobligated allotments — were not actual
savings within the context of Section 25(5), supra, and the relevant
provisions of the GAAs. Belgica argues that "savings" should be understood
to refer to the excess money after the items that needed to be funded have
been funded, or those that needed to be paid have been paid pursuant to
the budget.146 The petitioners posit that there could be savings only when
the PAPs for which the funds had been appropriated were actually
implemented and completed, or finally discontinued or abandoned. They
insist that savings could not be realized with certainty in the middle of the
fiscal year; and that the funds for "slow-moving" PAPs could not be
considered as savings because such PAPs had not actually been abandoned
or discontinued yet.147 They stress that NBC No. 541, by allowing the
withdrawn funds to be reissued to the "original program or project from
which it was withdrawn," conceded that the PAPs from which the supposed
savings were taken had not been completed, abandoned or discontinued.148
The OSG represents that "savings" were "appropriations balances," being
the difference between the appropriation authorized by Congress and the
actual amount allotted for the appropriation; that the definition of "savings"
in the GAAs set only the parameters for determining when savings
occurred; that it was still the President (as well as the other officers vested
by the Constitution with the authority to augment) who ultimately
determined when savings actually existed because savings could be
determined only during the stage of budget execution; that the President
must be given a wide discretion to accomplish his tasks; and that the
withdrawn unobligated allotments were savings inasmuch as they were
clearly "portions or balances of any programmed appropriation…free from
any obligation or encumbrances which are (i) still available after the
completion or final discontinuance or abandonment of the work, activity or
purpose for which the appropriation is authorized…"
We partially find for the petitioners.
In ascertaining the meaning of savings, certain principles should be borne
in mind. The first principle is that Congress wields the power of the purse.
Congress decides how the budget will be spent; what PAPs to fund; and the
amounts of money to be spent for each PAP. The second principle is that
the Executive, as the department of the Government tasked to enforce the
laws, is expected to faithfully execute the GAA and to spend the budget in
accordance with the provisions of the GAA.149 The Executive is expected to
faithfully implement the PAPs for which Congress allocated funds, and to
limit the expenditures within the allocations, unless exigencies result to
deficiencies for which augmentation is authorized, subject to the conditions
provided by law. The third principle is that in making the President’s power
to augment operative under the GAA, Congress recognizes the need for
flexibility in budget execution. In so doing, Congress diminishes its own
power of the purse, for it delegates a fraction of its power to the Executive.
But Congress does not thereby allow the Executive to override its authority
over the purse as to let the Executive exceed its delegated authority. And
the fourth principle is that savings should be actual. "Actual" denotes
something that is real or substantial, or something that exists presently in
fact, as opposed to something that is merely theoretical, possible, potential
or hypothetical.150
The foregoing principles caution us to construe savings strictly against
expanding the scope of the power to augment. It is then indubitable that
the power to augment was to be used only when the purpose for which the
funds had been allocated were already satisfied, or the need for such funds
had ceased to exist, for only then could savings be properly realized. This
interpretation prevents the Executive from unduly transgressing Congress’
power of the purse.
The definition of "savings" in the GAAs, particularly for 2011, 2012 and
2013, reflected this interpretation and made it operational, viz:
Savings refer to portions or balances of any programmed appropriation in
this Act free from any obligation or encumbrance which are: (i) still
available after the completion or final discontinuance or abandonment of
the work, activity or purpose for which the appropriation is authorized; (ii)
from appropriations balances arising from unpaid compensation and related
costs pertaining to vacant positions and leaves of absence without pay; and
(iii) from appropriations balances realized from the implementation of
measures resulting in improved systems and efficiencies and thus enabled
agencies to meet and deliver the required or planned targets, programs
and services approved in this Act at a lesser cost.
The three instances listed in the GAAs’ aforequoted definition were a sure
indication that savings could be generated only upon the purpose of the
appropriation being fulfilled, or upon the need for the appropriation being
no longer existent.
The phrase "free from any obligation or encumbrance" in the definition of
savings in the GAAs conveyed the notion that the appropriation was at that
stage when the appropriation was already obligated and the appropriation
was already released. This interpretation was reinforced by the
enumeration of the three instances for savings to arise, which showed that
the appropriation referred to had reached the agency level. It could not be
otherwise, considering that only when the appropriation had reached the
agency level could it be determined whether (a) the PAP for which the
appropriation had been authorized was completed, finally discontinued, or
abandoned; or (b) there were vacant positions and leaves of absence
without pay; or (c) the required or planned targets, programs and services
were realized at a lesser cost because of the implementation of measures
resulting in improved systems and efficiencies.
The DBM declares that part of the savings brought under the DAP came
from "pooling of unreleased appropriations such as unreleased Personnel
Services appropriations which will lapse at the end of the year, unreleased
appropriations of slow moving projects and discontinued projects per Zero-
Based Budgeting findings."
The declaration of the DBM by itself does not state the clear legal basis for
the treatment of unreleased or unalloted appropriations as savings.
The fact alone that the appropriations are unreleased or unalloted is a
mere description of the status of the items as unalloted or unreleased.
They have not yet ripened into categories of items from which savings can
be generated. Appropriations have been considered "released" if there has
already been an allotment or authorization to incur obligations and
disbursement authority. This means that the DBM has issued either an ABM
(for those not needing clearance), or a SARO (for those needing
clearance), and consequently an NCA, NCAA or CDC, as the case may be.
Appropriations remain unreleased, for instance, because of noncompliance
with documentary requirements (like the Special Budget Request), or
simply because of the unavailability of funds. But the appropriations do not
actually reach the agencies to which they were allocated under the GAAs,
and have remained with the DBM technically speaking. Ergo, unreleased
appropriations refer to appropriations with allotments but without
disbursement authority.
For us to consider unreleased appropriations as savings, unless these met
the statutory definition of savings, would seriously undercut the
congressional power of the purse, because such appropriations had not
even reached and been used by the agency concerned vis-à-vis the PAPs
for which Congress had allocated them. However, if an agency has unfilled
positions in its plantilla and did not receive an allotment and NCA for such
vacancies, appropriations for such positions, although unreleased, may
already constitute savings for that agency under the second instance.
Unobligated allotments, on the other hand, were encompassed by the first
part of the definition of "savings" in the GAA, that is, as "portions or
balances of any programmed appropriation in this Act free from any
obligation or encumbrance." But the first part of the definition was further
qualified by the three enumerated instances of when savings would be
realized. As such, unobligated allotments could not be indiscriminately
declared as savings without first determining whether any of the three
instances existed. This signified that the DBM’s withdrawal of unobligated
allotments had disregarded the definition of savings under the GAAs.
Justice Carpio has validly observed in his Separate Concurring Opinion that
MOOE appropriations are deemed divided into twelve monthly allocations
within the fiscal year; hence, savings could be generated monthly from the
excess or unused MOOE appropriations other than the Mandatory
Expenditures and Expenditures for Business-type Activities because of the
physical impossibility to obligate and spend such funds as MOOE for a
period that already lapsed. Following this observation, MOOE for future
months are not savings and cannot be transferred.
The DBM’s Memorandum for the President dated June 25, 2012 (which
became the basis of NBC No. 541) stated:
ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS
5.0 The DBM, during the course of performance reviews conducted
on the agencies’ operations, particularly on the implementation of
their projects/activities, including expenses incurred in
undertaking the same, have been continuously calling the
attention of all National Government agencies (NGAs) with low
levels of obligations as of end of the first quarter to speedup the
implementation of their programs and projects in the second
quarter.
 6.0 Said reminders were made in a series of consultation meetings
with the concerned agencies and with call-up letters sent.
7.0 Despite said reminders and the availability of funds at the
department’s disposal, the level of financial performance of some
departments registered below program, with the targeted
obligations/disbursements for the first semester still not being
met.
8.0 In order to maximize the use of the available allotment, all
unobligated balances as of June 30, 2012, both for continuing and
current allotments shall be withdrawn and pooled to fund fast
moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will
be based on the list of slow moving projects to be identified by the
agencies and their catch up plans to be evaluated by the DBM.
It is apparent from the foregoing text that the withdrawal of unobligated
allotments would be based on whether the allotments pertained to slow-
moving projects, or not. However, NBC No. 541 did not set in clear terms
the criteria for the withdrawal of unobligated allotments, viz:
3.1. These guidelines shall cover the withdrawal of unobligated
allotments as of June 30, 2012 ofall national government agencies
(NGAs) charged against FY 2011 Continuing Appropriation (R.A.
No. 10147) and FY 2012 Current Appropriation (R.A. No. 10155),
pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses
(MOOE) related to the implementation of programs and
projects, as well as capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized
pension benefits declared as savings by the agencies
concerned based on their undated/validated list of
pensioners.
A perusal of its various provisions reveals that NBC No. 541 targeted the
"withdrawal of unobligated allotments of agencies with low levels of
obligations"151 "to fund priority and/or fast-moving
programs/projects."152 But the fact that the withdrawn allotments could be
"[r]eissued for the original programs and projects of the agencies/OUs
concerned, from which the allotments were withdrawn"153 supported the
conclusion that the PAPs had not yet been finally discontinued or
abandoned. Thus, the purpose for which the withdrawn funds had been
appropriated was not yet fulfilled, or did not yet cease to exist, rendering
the declaration of the funds as savings impossible.
Worse, NBC No. 541 immediately considered for withdrawal all released
allotments in 2011 charged against the 2011 GAA that had remained
unobligated based on the following considerations, to wit:
5.4.1 The departments/agencies’ approved priority programs and
projects are assumed to be implementation-ready and doable
during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations
may imply that the agency has a slower-than-programmed
implementation capacity or agency tends to implement projects
within a two-year timeframe.
Such withdrawals pursuant to NBC No. 541, the circular that affected the
unobligated allotments for continuing and current appropriations as of June
30, 2012, disregarded the 2-year period of availability of the appropriations
for MOOE and capital outlay extended under Section 65, General Provisions
of the 2011 GAA, viz:
Section 65. Availability of Appropriations. — Appropriations for MOOE and
capital outlays authorized in this Act shall be available for release and
obligation for the purpose specified, and under the same special provisions
applicable thereto, for a period extending to one fiscal year after the end of
the year in which such items were appropriated: PROVIDED, That
appropriations for MOOE and capital outlays under R.A. No. 9970 shall be
made available up to the end of FY 2011: PROVIDED, FURTHER, That a
report on these releases and obligations shall be submitted to the Senate
Committee on Finance and the House Committee on Appropriations.
and Section 63 General Provisions of the 2012 GAA, viz:
Section 63. Availability of Appropriations. — Appropriations for MOOE and
capital outlays authorized in this Act shall be available for release and
obligation for the purpose specified, and under the same special provisions
applicable thereto, for a period extending to one fiscal year after the end of
the year in which such items were appropriated: PROVIDED, That a report
on these releases and obligations shall be submitted to the Senate
Committee on Finance and the House Committee on Appropriations, either
in printed form or by way of electronic document.154
Thus, another alleged area of constitutional infirmity was that the DAP and
its relevant issuances shortened the period of availability of the
appropriations for MOOE and capital outlays.
Congress provided a one-year period of availability of the funds for all
allotment classes in the 2013 GAA (R.A. No. 10352), to wit:
Section 63. Availability of Appropriations.— All appropriations authorized in
this Act shall be available for release and obligation for the purposes
specified, and under the same special provisions applicable thereto, until
the end of FY 2013: PROVIDED, That a report on these releases and
obligations shall be submitted to the Senate Committee on Finance and
House Committee on Appropriations, either in printed form or by way of
electronic document.
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad
sought omnibus authority to consolidate savings and unutilized balances to
fund the DAP on a quarterly basis, viz:
7.0 If the level of financial performance of some department will
register below program, even with the availability of funds at their
disposal, the targeted obligations/disbursements for each quarter
will not be met. It is important to note that these funds will lapse
at the end of the fiscal year if these remain unobligated.
8.0 To maximize the use of the available allotment, all unobligated
balances at the end of every quarter, both for continuing and
current allotments shall be withdrawn and pooled to fund fast
moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will
be based on the list of slow moving projects to be identified by the
agencies and their catch up plans to be evaluated by the DBM.
The validity period of the affected appropriations, already given the brief
Lifes pan of one year, was further shortened to only a quarter of a year
under the DBM’s memorandum dated May 20, 2013.
The petitioners accuse the respondents of forcing the generation of savings
in order to have a larger fund available for discretionary spending. They
aver that the respondents, by withdrawing unobligated allotments in the
middle of the fiscal year, in effect deprived funding for PAPs with existing
appropriations under the GAAs.155
The respondents belie the accusation, insisting that the unobligated
allotments were being withdrawn upon the instance of the implementing
agencies based on their own assessment that they could not obligate those
allotments pursuant to the President’s directive for them to spend their
appropriations as quickly as they could in order to ramp up the economy.156
We agree with the petitioners.
Contrary to the respondents’ insistence, the withdrawals were upon the
initiative of the DBM itself. The text of NBC No. 541 bears this out, to wit:
5.2 For the purpose of determining the amount of unobligated allotments
that shall be withdrawn, all departments/agencies/operating units (OUs)
shall submit to DBM not later than July 30, 2012, the following budget
accountability reports as of June 30, 2012;
• Statement of Allotments, Obligation and Balances (SAOB);
• Financial Report of Operations (FRO); and
• Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of
this Circular, the agency’s latest report available shall be used by DBM as
basis for withdrawal of allotment. The DBM shall compute/approximate the
agency’s obligation level as of June 30 to derive its unobligated allotments
as of same period. Example: If the March 31 SAOB or FRO reflects actual
obligations of P 800M then the June 30 obligation level shall approximate to
₱1,600 M (i.e., ₱800 M x 2 quarters).
The petitioners assert that no law had authorized the withdrawal and
transfer of unobligated allotments and the pooling of unreleased
appropriations; and that the unbridled withdrawal of unobligated allotments
and the retention of appropriated funds were akin to the impoundment of
appropriations that could be allowed only in case of "unmanageable
national government budget deficit" under the GAAs,157 thus violating the
provisions of the GAAs of 2011, 2012 and 2013 prohibiting the retention or
deduction of allotments.158
In contrast, the respondents emphasize that NBC No. 541 adopted a
spending, not saving, policy as a last-ditch effort of the Executive to push
agencies into actually spending their appropriations; that such policy did
not amount to an impoundment scheme, because impoundment referred to
the decision of the Executive to refuse to spend funds for political or
ideological reasons; and that the withdrawal of allotments under NBC No.
541 was made pursuant to Section 38, Chapter 5, Book VI of the
Administrative Code, by which the President was granted the authority to
suspend or otherwise stop further expenditure of funds allotted to any
agency whenever in his judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of
unobligated allotments and the pooling of unreleased appropriations were
invalid for being bereft of legal support. Nonetheless, such withdrawal of
unobligated allotments and the retention of appropriated funds cannot be
considered as impoundment.
According to Philippine Constitution Association v.
Enriquez:159 "Impoundment refers to a refusal by the President, for
whatever reason, to spend funds made available by Congress. It is the
failure to spend or obligate budget authority of any type." Impoundment
under the GAA is understood to mean the retention or deduction of
appropriations. The 2011 GAA authorized impoundment only in case of
unmanageable National Government budget deficit, to wit:
Section 66. Prohibition Against Impoundment of Appropriations. No
appropriations authorized under this Act shall be impounded through
retention or deduction, unless in accordance with the rules and regulations
to be issued by the DBM: PROVIDED, That all the funds appropriated for
the purposes, programs, projects and activities authorized under this Act,
except those covered under the Unprogrammed Fund, shall be released
pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.
Section 67. Unmanageable National Government Budget Deficit. Retention
or deduction of appropriations authorized in this Act shall be effected only
in cases where there is an unmanageable national government budget
deficit.
Unmanageable national government budget deficit as used in this section
shall be construed to mean that (i) the actual national government budget
deficit has exceeded the quarterly budget deficit targets consistent with the
full-year target deficit as indicated in the FY 2011 Budget of
Expenditures and Sources of Financing submitted by the President and
approved by Congress pursuant to Section 22, Article VII of the
Constitution, or (ii) there are clear economic indications of an impending
occurrence of such condition, as determined by the Development Budget
Coordinating Committee and approved by the President.
The 2012 and 2013 GAAs contained similar provisions.
The withdrawal of unobligated allotments under the DAP should not be
regarded as impoundment because it entailed only the transfer of funds,
not the retention or deduction of appropriations.
Nor could Section 68 of the 2011 GAA (and the similar provisions of the
2012 and 2013 GAAs) be applicable. They uniformly stated:
Section 68. Prohibition Against Retention/Deduction of Allotment. Fund
releases from appropriations provided in this Act shall be transmitted intact
or in full to the office or agency concerned. No retention or deduction as
reserves or overhead shall be made, except as authorized by law, or upon
direction of the President of the Philippines. The COA shall ensure
compliance with this provision to the extent that sub-allotments by
agencies to their subordinate offices are in conformity with the release
documents issued by the DBM.
The provision obviously pertained to the retention or deduction of
allotments upon their release from the DBM, which was a different matter
altogether. The Court should not expand the meaning of the provision by
applying it to the withdrawal of allotments.
The respondents rely on Section 38, Chapter 5, Book VI of the
Administrative Code of 1987 to justify the withdrawal of unobligated
allotments. But the provision authorized only the suspension or stoppage of
further expenditures, not the withdrawal of unobligated allotments, to wit:
Section 38. Suspension of Expenditure of Appropriations.- Except as
otherwise provided in the General Appropriations Act and whenever in his
judgment the public interest so requires, the President, upon notice to the
head of office concerned, is authorized to suspend or otherwise stop further
expenditure of funds allotted for any agency, or any other expenditure
authorized in the General Appropriations Act, except for personal services
appropriations used for permanent officials and employees.
Moreover, the DBM did not suspend or stop further expenditures in
accordance with Section 38, supra, but instead transferred the funds to
other PAPs.
It is relevant to remind at this juncture that the balances of appropriations subsequent evaluation of needed resources, is determined to be deficient.
that remained unexpended at the end of the fiscal year were to be reverted In no case shall a non-existent program, activity, or project, be funded by
to the General Fund.1âwphi1 This was the mandate of Section 28, Chapter augmentation from savings or by the use of appropriations otherwise
IV, Book VI of the Administrative Code, to wit: authorized in this Act.

Section 28. Reversion of Unexpended Balances of Appropriations, In other words, an appropriation for any PAP must first be determined to
Continuing Appropriations.- Unexpended balances of appropriations be deficient before it could be augmented from savings. Note is taken of
authorized in the General Appropriation Act shall revert to the the fact that the 2013 GAA already made this quite clear, thus:
unappropriated surplus of the General Fund at the end of the fiscal year
and shall not thereafter be available for expenditure except by subsequent
Section 52. Use of Savings. The President of the Philippines, the Senate
legislative enactment: Provided, that appropriations for capital outlays shall
President, the Speaker of the House of Representatives, the Chief Justice of
remain valid until fully spent or reverted: provided, further, that continuing
the Supreme Court, the Heads of Constitutional Commissions enjoying
appropriations for current operating expenditures may be specifically
fiscal autonomy, and the Ombudsman are hereby authorized to use savings
recommended and approved as such in support of projects whose effective
in their respective appropriations to augment actual deficiencies incurred
implementation calls for multi-year expenditure commitments: provided,
for the current year in any item of their respective appropriations.
finally, that the President may authorize the use of savings realized by an
agency during given year to meet non-recurring expenditures in a
subsequent year. As of 2013, a total of ₱144.4 billion worth of PAPs were implemented
through the DAP.161
The balances of continuing appropriations shall be reviewed as part of the
annual budget preparation process and the preparation process and the Of this amount ₱82.5 billion were released in 2011 and ₱54.8 billion in
President may approve upon recommendation of the Secretary, the 2012.162 Sec. Abad has reported that 9% of the total DAP releases were
reversion of funds no longer needed in connection with the activities applied to the PAPs identified by the legislators.163
funded by said continuing appropriations.
The petitioners disagree, however, and insist that the DAP supported the
The Executive could not circumvent this provision by declaring unreleased following PAPs that had not been covered with appropriations in the
appropriations and unobligated allotments as savings prior to the end of respective GAAs, namely:
the fiscal year.
(i) ₱1.5 billion for the Cordillera People’s Liberation Army;
b.3. Third Requisite – No funds from
savings could be transferred under (ii) ₱1.8 billion for the Moro National Liberation Front;
the DAP to augment deficient items
not provided in the GAA
(iii) ₱700 million for assistance to Quezon Province;164

The third requisite for a valid transfer of funds is that the purpose of the
transfer should be "to augment an item in the general appropriations law
for the respective offices." The term "augment" means to enlarge or
increase in size, amount, or degree.160
The GAAs for 2011, 2012 and 2013 set as a condition for augmentation
that the appropriation for the PAP item to be augmented must be deficient,
to wit: –
(iv) ₱50 million to ₱100 (million) each to certain senators;165
(v) ₱10 billion for the relocation of families living along dangerous
zones under the National Housing Authority;
(vi) ₱10 billion and ₱20 billion equity infusion under the Bangko
Sentral;

x x x Augmentation implies the existence in this Act of a program, activity,

or project with an appropriation, which upon implementation, or
 (vii) ₱5.4 billion landowners’ compensation under the Department
of Agrarian Reform; and research capability
building in priority areas
identified as strategic to P 43,504,024
(viii) ₱8.6 billion for the ARMM comprehensive peace and National Development 1,164,517,589
development program; Personnel Services 391,978,387
Maintenance and Other P 1,600,000,000
(ix) ₱6.5 billion augmentation of LGU internal revenue allotments Operating Expenses
Capital Outlays

(x) ₱5 billion for crucial projects like tourism road construction

under the Department of Tourism and the Department of Public
the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that
Works and Highways;
Congress had appropriated only ₱537,910,000 for MOOE, but nothing for
personnel services and capital outlays, to wit:
(xi) ₱1.8 billion for the DAR-DPWH Tulay ng Pangulo;

(xii) ₱1.96 billion for the DOH-DPWH rehabilitation of regional Personn Maintena Capital TOTAL
health units; and el nce Outlays
Services and Other
Operating
(xiii) ₱4 billion for the DepEd-PPP school infrastructure projects.166 Expenditu
res
In refutation, the OSG argues that a total of 116 DAP-financed PAPs were
implemented, had appropriation covers, and could properly be accounted II Operations
for because the funds were released following and pursuant to the standard I.
practices adopted by the DBM.167 In support of its argument, the OSG has a Funding 177,406 1,887,365 49,090, 2,113,861
submitted seven evidence packets containing memoranda, SAROs, and . Assistance to ,000 ,000 000 ,000
other pertinent documents relative to the implementation and fund Science
transfers under the DAP.168 and
Technology
Upon careful review of the documents contained in the seven evidence Activities
packets, we conclude that the "savings" pooled under the DAP were
allocated to PAPs that were not covered by any appropriations in the 1 Central Office 1,554,238 1,554,238
pertinent GAAs. . ,000 ,000

For example, the SARO issued on December 22, 2011 for the highly a.
vaunted Disaster Risk, Exposure, Assessment and Mitigation (DREAM) Generati
project under the Department of Science and Technology (DOST) covered on of
the amount of ₱1.6 Billion,169 broken down as follows: new
knowled
ge and
technolo
APPROPRIATION PARTICULARS AMOUNT
gies and
CODE AUTHORIZED
research
capabilit 537,910,0 537,910,0
A.03.a.01.a Generation of new y 00 00
knowledge and technologies

building
in
priority
areas
identifie
d as
strategic
to
National
Develop
ment
Aside from this transfer under the DAP to the DREAM project exceeding by
almost 300% the appropriation by Congress for the program Generation of
new knowledge and technologies and research capability building in priority
areas identified as strategic to National Development, the Executive
allotted funds for personnel services and capital outlays. The Executive
thereby substituted its will to that of Congress. Worse, the Executive had
not earlier proposed any amount for personnel services and capital outlays
in the NEP that became the basis of the 2011 GAA.170
It is worth stressing in this connection that the failure of the GAAs to set
aside any amounts for an expense category sufficiently indicated that
Congress purposely did not see fit to fund, much less implement, the PAP
concerned. This indication becomes clearer when even the President
himself did not recommend in the NEP to fund the PAP. The consequence
was that any PAP requiring expenditure that did not receive any
appropriation under the GAAs could only be a new PAP, any funding for
which would go beyond the authority laid down by Congress in enacting the
GAAs. That happened in some instances under the DAP.
In relation to the December 22, 2011 SARO issued to the Philippine Council
for Industry, Energy and Emerging Technology Research and Development
(DOST-PCIEETRD)171 for Establishment of the Advanced Failure Analysis
Laboratory, which reads:
APPROPRIATION PARTICULARS
AMOUNT
CODE
AUTHORIZED
Development, integration and coordination of the National
Research System for Industry, Energy and Emerging Technology
A.02.a
and Related Fields
Capital Outlays P 300,000,000
the appropriation code and the particulars appearing in the SARO did not
correspond to the program specified in the GAA, whose particulars were
Research and Management Services(inclusive of the following activities: (1)
Technological and Economic Assessment for Industry, Energy and Utilities;
(2) Dissemination of Science and Technology Information; and (3)
Management of PCIERD Information System for Industry, Energy and
Utilities. Even assuming that Development, integration and coordination of
the National Research System for Industry, Energy and Emerging
Technology and Related Fields– the particulars stated in the SARO – could
fall under the broad program description of Research and Management
Services– as appearing in the SARO, it would nonetheless remain a new
activity by reason of its not being specifically stated in the GAA. As such,
the DBM, sans legislative authorization, could not validly fund and
implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the
Executive enjoyed sound discretion in implementing the budget given the
generality in the language and the broad policy objectives identified under
the GAAs;172 and that the President enjoyed unlimited authority to spend
the initial appropriations under his authority to declare and utilize
savings,173 and in keeping with his duty to faithfully execute the laws.
Although the OSG rightly contends that the Executive was authorized to
spend in line with its mandate to faithfully execute the laws (which included
the GAAs), such authority did not translate to unfettered discretion that
allowed the President to substitute his own will for that of Congress. He
was still required to remain faithful to the provisions of the GAAs, given
that his power to spend pursuant to the GAAs was but a delegation to him
from Congress. Verily, the power to spend the public wealth resided in
Congress, not in the Executive.174 Moreover, leaving the spending power of
the Executive unrestricted would threaten to undo the principle of
separation of powers.175
Congress acts as the guardian of the public treasury in faithful discharge of
its power of the purse whenever it deliberates and acts on the budget
proposal submitted by the Executive.176 Its power of the purse is touted as
the very foundation of its institutional strength,177 and underpins "all other
legislative decisions and regulating the balance of influence between the
legislative and executive branches of government."178 Such enormous
power encompasses the capacity to generate money for the Government,
to appropriate public funds, and to spend the money.179 Pertinently, when
it exercises its power of the purse, Congress wields control by specifying
the PAPs for which public money should be spent.
It is the President who proposes the budget but it is Congress that has the
final say on matters of appropriations.180For this purpose, appropriation
involves two governing principles, namely: (1) "a Principle of the Public
Fisc, asserting that all monies received from whatever source by any part
of the government are public funds;" and (2) "a Principle of Appropriations
Control, prohibiting expenditure of any public money without legislative
authorization."181To conform with the governing principles, the Executive
cannot circumvent the prohibition by Congress of an expenditure for a PAP
by resorting to either public or private funds.182 Nor could the Executive
transfer appropriated funds resulting in an increase in the budget for one
PAP, for by so doing the appropriation for another PAP is necessarily
decreased. The terms of both appropriations will thereby be violated.
b.4 Third Requisite – Cross-border
augmentations from savings were
prohibited by the Constitution
By providing that the President, the President of the Senate, the Speaker of
the House of Representatives, the Chief Justice of the Supreme Court, and
the Heads of the Constitutional Commissions may be authorized to
augment any item in the GAA "for their respective offices," Section 25(5),
supra, has delineated borders between their offices, such that funds
appropriated for one office are prohibited from crossing over to another
office even in the guise of augmentation of a deficient item or items. Thus,
we call such transfers of funds cross-border transfers or cross-border
augmentations.
To be sure, the phrase "respective offices" used in Section 25(5), supra,
refers to the entire Executive, with respect to the President; the Senate,
with respect to the Senate President; the House of Representatives, with
respect to the Speaker; the Judiciary, with respect to the Chief Justice; the
Constitutional Commissions, with respect to their respective Chairpersons.
Did any cross-border transfers or augmentations transpire?
During the oral arguments on January 28, 2014, Sec. Abad admitted
making some cross-border augmentations, to wit:
JUSTICE BERSAMIN:
Alright, the whole time that you have been Secretary of Department of
Budget and Management, did the Executive Department ever redirect any
part of savings of the National Government under your control cross border
to another department?
SECRETARY ABAD:
Well, in the Memos that we submitted to you, such an instance, Your Honor
JUSTICE BERSAMIN:
Can you tell me two instances? I don’t recall having read your material.
SECRETARY ABAD:
Well, the first instance had to do with a request from the House of
Representatives. They started building their e-library in 2010 and they had
a budget for about 207 Million but they lack about 43 Million to complete its
250 Million requirements. Prior to that, the COA, in an audit observation
informed the Speaker that they had to continue with that construction
otherwise the whole building, as well as the equipments therein may suffer
from serious deterioration. And at that time, since the budget of the House
of Representatives was not enough to complete 250 Million, they wrote to
the President requesting for an augmentation of that particular item, which
was granted, Your Honor. The second instance in the Memos is a request
from the Commission on Audit. At the time they were pushing very
strongly the good governance programs of the government and therefore,
part of that is a requirement to conduct audits as well as review financial
reports of many agencies. And in the performance of that function, the
Commission on Audit needed information technology equipment as well as
hire consultants and litigators to help them with their audit work and for
that they requested funds from the Executive and the President saw that it
was important for the Commission to be provided with those IT equipments
and litigators and consultants and the request was granted, Your Honor.
JUSTICE BERSAMIN:
These cross border examples, cross border augmentations were not
supported by appropriations…
SECRETARY ABAD:
They were, we were augmenting existing items within their… (interrupted)
JUSTICE BERSAMIN:
No, appropriations before you augmented because this is a cross border
and the tenor or text of the Constitution is quite clear as far as I am
concerned. It says here, "The power to augment may only be made to
increase any item in the General Appropriations Law for their respective
AMOUNT
offices." Did you not feel constricted by this provision?
(In thousand pesos)
DATE
OFFICE PURPOSE
RELEASED
SECRETARY ABAD: Reserve Releases
Imposed
Well, as the Constitution provides, the prohibition we felt was on the
transfer of appropriations, Your Honor. What we thought we did was to Commission on IT Infrastructure 11/11/11 143,700
transfer savings which was needed by the Commission to address Audit Program and hiring of
deficiency in an existing item in both the Commission as well as in the additional litigation
House of Representatives; that’s how we saw…(interrupted) experts

Congress – Completion of the 07/23/12 207,034 250,000

JUSTICE BERSAMIN: House of construction of the (Savings of
Representatives Legislative Library and HOR)
So your position as Secretary of Budget is that you could do that? Archives
Building/Congressional
e-library
SECRETARY ABAD:

In an extreme instances because…(interrupted) The respondents further stated in their memorandum that the President
"made available" to the "Commission on Elections the savings of his
department upon [its] request for funds…"187 This was another instance of
JUSTICE BERSAMIN:
a cross-border augmentation.

No, no, in all instances, extreme or not extreme, you could do that, that’s
The respondents justified all the cross-border transfers thusly:
your feeling.

SECRETARY ABAD:
Well, in that particular situation when the request was made by the
Commission and the House of Representatives, we felt that we needed to
respond because we felt…(interrupted).183
The records show, indeed, that funds amounting to ₱143,700,000.00 and
₱250,000,000.00 were transferred under the DAP respectively to the
COA184 and the House of Representatives.185 Those transfers of funds,
which constituted cross-border augmentations for being from the Executive
to the COA and the House of Representatives, are graphed as follows:186
99. 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.188
In the oral arguments held on February 18, 2014, Justice Vicente V.
Mendoza, representing Congress, announced a different characterization of
the cross-border transfers of funds as in the nature of "aid" instead of
"augmentation," viz:

HONORABLE MENDOZA:

The cross-border transfers, if Your Honors please, is not an application of

the DAP. What were these cross-border transfers? They are transfers of
savings as defined in the various General Appropriations Act. So, that
makes it similar to the DAP, the use of savings. There was a cross-border
which appears to be in violation of Section 25, paragraph 5 of Article VI, in So, the residual powers labelled in Marcos v. Manglapus would be the basis
the sense that the border was crossed. But never has it been claimed that for this theory of the government?
the purpose was to augment a deficient item in another department of the
government or agency of the government. The cross-border transfers, if
HONORABLE MENDOZA:
Your Honors please, were in the nature of [aid] rather than augmentations.
Here is a government entity separate and independent from the Executive
Department solely in need of public funds. The President is there 24 hours Yes, if Your Honor, please.
a day, 7 days a week. He’s in charge of the whole operation although six or
seven heads of government offices are given the power to augment. Only JUSTICE LEONEN:
the President stationed there and in effect in-charge and has the
responsibility for the failure of any part of the government. You have
election, for one reason or another, the money is not enough to hold A while ago, Justice Carpio mentioned that the remedy is might be to go to
election. There would be chaos if no money is given as an aid, not to Congress. That there are opportunities and there have been opportunities
augment, but as an aid to a department like COA. The President is of the President to actually go to Congress and ask for supplemental
responsible in a way that the other heads, given the power to augment, are budgets?
not. So, he cannot very well allow this, if Your Honor please.189
HONORABLE MENDOZA:
JUSTICE LEONEN:
If there is time to do that, I would say yes.
May I move to another point, maybe just briefly. I am curious that the
position now, I think, of government is that some transfers of savings is JUSTICE LEONEN:
now considered to be, if I’m not mistaken, aid not augmentation. Am I
correct in my hearing of your argument?
So, the theory of aid rather than augmentation applies in extra-ordinary
situation?
HONORABLE MENDOZA:

HONORABLE MENDOZA:
That’s our submission, if Your Honor, please.
Very extra-ordinary situations.
JUSTICE LEONEN:

JUSTICE LEONEN:
May I know, Justice, where can we situate this in the text of the
Constitution? Where do we actually derive the concepts that transfers of
appropriation from one branch to the other or what happened in DAP can But Counsel, this would be new doctrine, in case?
be considered a said? What particular text in the Constitution can we
situate this? HONORABLE MENDOZA:

HONORABLE MENDOZA: Yes, if Your Honor please.190

There is no particular provision or statutory provision for that matter, if
Your Honor please. It is drawn from the fact that the Executive is the
executive in-charge of the success of the government.
JUSTICE LEONEN:
Regardless of the variant characterizations of the cross-border transfers of
funds, the plain text of Section 25(5), supra, disallowing cross border
transfers was disobeyed. Cross-border transfers, whether as augmentation,
or as aid, were prohibited under Section 25(5), supra.
 4.
Sourcing the DAP from unprogrammed
funds despite the original revenue targets
not having been exceeded was invalid
Funding under the DAP were also sourced from unprogrammed funds
provided in the GAAs for 2011, 2012,and 2013. The respondents stress,
however, that the unprogrammed funds were not brought under the DAP
as savings, but as separate sources of funds; and that, consequently, the
release and use of unprogrammed funds were not subject to the
restrictions under Section 25(5), supra.
The documents contained in the Evidence Packets by the OSG have
confirmed that the unprogrammed funds were treated as separate sources
of funds. Even so, the release and use of the unprogrammed funds were
still subject to restrictions, for, to start with, the GAAs precisely specified
the instances when the unprogrammed funds could be released and the
purposes for which they could be used.
The petitioners point out that a condition for the release of the
unprogrammed funds was that the revenue collections must exceed
revenue targets; and that the release of the unprogrammed funds was
illegal because such condition was not met.191
The respondents disagree, holding that the release and use of the
unprogrammed funds under the DAP were in accordance with the pertinent
provisions of the GAAs. In particular, the DBM avers that the
unprogrammed funds could be availed of when any of the following three
instances occur, to wit: (1) the revenue collections exceeded the original
revenue targets proposed in the BESFs submitted by the President to
Congress; (2) new revenues were collected or realized from sources not
originally considered in the BESFs; or(3) newly-approved loans for foreign
assisted projects were secured, or when conditions were triggered for other
sources of funds, such as perfected loan agreements for foreign-assisted
projects.192 This view of the DBM was adopted by all the respondents in
their Consolidated Comment.193
The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed
appropriations" as appropriations that provided standby authority to incur
additional agency obligations for priority PAPs when revenue collections
exceeded targets, and when additional foreign funds are
generated.194 Contrary to the DBM’s averment that there were three
instances when unprogrammed funds could be released, the BESFs
envisioned only two instances. The third mentioned by the DBM – the
collection of new revenues from sources not originally considered in the
BESFs – was not included. This meant that the collection of additional
revenues from new sources did not warrant the release of the
unprogrammed funds. Hence, even if the revenues not considered in the
BESFs were collected or generated, the basic condition that the revenue
collections should exceed the revenue targets must still be complied with in
order to justify the release of the unprogrammed funds.
The view that there were only two instances when the unprogrammed
funds could be released was bolstered by the following texts of the Special
Provisions of the 2011 and 2012 GAAs, to wit:
2011 GAA
1. Release of Fund. The amounts authorized herein shall be released only
when the revenue collections exceed the original revenue targets submitted
by the President of the Philippines to Congress pursuant to Section 22,
Article VII of the Constitution, including savings generated from
programmed appropriations for the year: PROVIDED, That collections
arising from sources not considered in the aforesaid original revenue
targets may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the
loan proceeds: PROVIDED, FURTHERMORE, That if there are savings
generated from the programmed appropriations for the first two quarters of
the year, the DBM may, subject to the approval of the President, release
the pertinent appropriations under the Unprogrammed Fund corresponding
to only fifty percent (50%) of the said savings net of revenue shortfall:
PROVIDED, FINALLY, That the release of the balance of the total savings
from programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released
only when the revenue collections exceed the original revenue targets
submitted by the President of the Philippines to Congress pursuant to
Section 22, Article VII of the Constitution: PROVIDED, That collections
arising from sources not considered in the aforesaid original revenue
targets may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the
loan proceeds.
As can be noted, the provisos in both provisions to the effect that condition being deemed complied with once the revenue collections from a
"collections arising from sources not considered in the aforesaid original particular source already exceeded the stated target.
revenue targets may be used to cover releases from appropriations in this
Fund" gave the authority to use such additional revenues for appropriations
The BESF provided for the following sources of revenue, with the
funded from the unprogrammed funds. They did not at all waive
corresponding revenue target stated for each source of revenue, to wit:
compliance with the basic requirement that revenue collections must still
exceed the original revenue targets.
TAX REVENUES
In contrast, the texts of the provisos with regard to additional revenues
generated from newly-approved foreign loans were clear to the effect that Taxes on Net Income and Profits
the perfected loan agreement would be in itself "sufficient basis" for the Taxes on Property
issuance of a SARO to release the funds but only to the extent of the Taxes on Domestic Goods and Services
amount of the loan. In such instance, the revenue collections need not
exceed the revenue targets to warrant the release of the loan proceeds, General Sales, Turnover or VAT
and the mere perfection of the loan agreement would suffice. Selected Excises on Goods

It can be inferred from the foregoing that under these provisions of the Selected Taxes on Services
GAAs the additional revenues from sources not considered in the BESFs Taxes on the Use of Goods or Property or Permission to Perform
must be taken into account in determining if the revenue collections Activities
exceeded the revenue targets. The text of the relevant provision of the Other Taxes
2013 GAA, which was substantially similar to those of the GAAs for 2011 Taxes on International Trade and Transactions
and 2012, already made this explicit, thus:

NON-TAX REVENUES
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 Fees and Charges
Section 22, Article VII of the Constitution, including collections arising from BTR Income
sources not considered in the aforesaid original revenue target, as certified
by the BTr: PROVIDED, That in case of newly approved loans for foreign- Government Services
assisted projects, the existence of a perfected loan agreement for the Interest on NG Deposits
purpose shall be sufficient basis for the issuance of a SARO covering the Interest on Advances to Government Corporations
loan proceeds. Income from Investments

Consequently, that there were additional revenues from sources not Interest on Bond Holdings
considered in the revenue target would not be enough. The total revenue
collections must still exceed the original revenue targets to justify the
release of the unprogrammed funds (other than those from newly- Guarantee Fee
approved foreign loans). Gain on Foreign Exchange
NG Income Collected by BTr

The present controversy on the unprogrammed funds was rooted in the

correct interpretation of the phrase "revenue collections should exceed the Dividends on Stocks
original revenue targets." The petitioners take the phrase to mean that the NG Share from Airport Terminal Fee
total revenue collections must exceed the total revenue target stated in the NG Share from PAGCOR Income
BESF, but the respondents understand the phrase to refer only to the NG Share from MIAA Profit
collections for each source of revenue as enumerated in the BESF, with the
 Privatization
Foreign Grants
Thus, when the Court required the respondents to submit a certification
from the Bureau of Treasury (BTr) to the effect that the revenue collections
had exceeded the original revenue targets,195 they complied by submitting
certifications from the BTr and Department of Finance (DOF) pertaining to
only one identified source of revenue – the dividends from the shares of
stock held by the Government in government-owned and controlled
corporations.
To justify the release of the unprogrammed funds for 2011, the OSG
presented the certification dated March 4, 2011 issued by DOF
Undersecretary Gil S. Beltran, as follows:
This is to certify that under the Budget for Expenditures and Sources of
Financing for 2011, the programmed income from dividends from shares of
stock in government-owned and controlled corporations is 5.5 billion.
This is to certify further that based on the records of the Bureau of
Treasury, the National Government has recorded dividend income
amounting to ₱23.8 billion as of 31 January 2011.196
For 2012, the OSG submitted the certification dated April 26, 2012 issued
by National Treasurer Roberto B. Tan, viz:
This is to certify that the actual dividend collections remitted to the
National Government for the period January to March 2012 amounted to
₱19.419 billion compared to the full year program of ₱5.5 billion for
2012.197
And, finally, for 2013, the OSG presented the certification dated July 3,
2013 issued by National Treasurer Rosalia V. De Leon, to wit:
This is to certify that the actual dividend collections remitted to the
National Government for the period January to May 2013 amounted to
₱12.438 billion compared to the full year program of ₱10.0198 billion for
2013.
Moreover, the National Government accounted for the sale of the right to
build and operate the NAIA expressway amounting to ₱11.0 billion in June
2013.199
The certifications reflected that by collecting dividends amounting to ₱23.8
billion in 2011, ₱19.419 billion in 2012, and ₱12.438 billion in 2013 the BTr
had exceeded only the ₱5.5 billion in target revenues in the form of
dividends from stocks in each of 2011 and 2012, and only the ₱10 billion in
target revenues in the form of dividends from stocks in 2013.
However, the requirement that revenue collections exceed the original
revenue targets was to be construed in light of the purpose for which the
unprogrammed funds were incorporated in the GAAs as standby
appropriations to support additional expenditures for certain priority PAPs
should the revenue collections exceed the resource targets assumed in the
budget or when additional foreign project loan proceeds were realized. The
unprogrammed funds were included in the GAAs to provide ready cover so
as not to delay the implementation of the PAPs should new or additional
revenue sources be realized during the year.200 Given the tenor of the
certifications, the unprogrammed funds were thus not yet supported by the
corresponding resources.201
The revenue targets stated in the BESF were intended to address the
funding requirements of the proposed programmed appropriations. In
contrast, the unprogrammed funds, as standby appropriations, were to be
released only when there were revenues in excess of what the
programmed appropriations required. As such, the revenue targets should
be considered as a whole, not individually; otherwise, we would be dealing
with artificial revenue surpluses. The requirement that revenue collections
must exceed revenue target should be understood to mean that the
revenue collections must exceed the total of the revenue targets stated in
the BESF. Moreover, to release the unprogrammed funds simply because
there was an excess revenue as to one source of revenue would be an
unsound fiscal management measure because it would disregard the
budget plan and foster budget deficits, in contravention of the
Government’s surplus budget policy.202
We cannot, therefore, subscribe to the respondents’ view.
5.
Equal protection, checks and balances,
and public accountability challenges
The DAP is further challenged as violative of the Equal Protection Clause,
the system of checks and balances, and the principle of public
accountability.
With respect to the challenge against the DAP under the Equal Protection
Clause,203 Luna argues that the implementation of the DAP was "unfair as it
[was] selective" because the funds released under the DAP was not made could not of itself warrant a finding of contravention of the Equal Protection
available to all the legislators, with some of them refusing to avail Clause. The denial of equal protection of any law should be an issue to be
themselves of the DAP funds, and others being unaware of the availability raised only by parties who supposedly suffer it, and, in these cases, such
of such funds. Thus, the DAP practised "undue favoritism" in favor of select parties would be the few legislators claimed to have been discriminated
legislators in contravention of the Equal Protection Clause. against in the releases of funds under the DAP. The reason for the
requirement is that only such affected legislators could properly and fully
bring to the fore when and how the denial of equal protection occurred,
Similarly, COURAGE contends that the DAP violated the Equal Protection
and explain why there was a denial in their situation. The requirement was
Clause because no reasonable classification was used in distributing the
not met here. Consequently, the Court was not put in the position to
funds under the DAP; and that the Senators who supposedly availed
determine if there was a denial of equal protection. To have the Court do
themselves of said funds were differently treated as to the amounts they
so despite the inadequacy of the showing of factual and legal support
respectively received.
would be to compel it to speculate, and the outcome would not do justice
to those for whose supposed benefit the claim of denial of equal protection
Anent the petitioners’ theory that the DAP violated the system of checks has been made.
and balances, Luna submits that the grant of the funds under the DAP to
some legislators forced their silence about the issues and anomalies
The argument that the release of funds under the DAP effectively stayed
surrounding the DAP. Meanwhile, Belgica stresses that the DAP, by allowing
the hands of the legislators from conducting congressional inquiries into the
the legislators to identify PAPs, authorized them to take part in the
legality and propriety of the DAP is speculative. That deficiency eliminated
implementation and execution of the GAAs, a function that exclusively
any need to consider and resolve the argument, for it is fundamental that
belonged to the Executive; that such situation constituted undue and
speculation would not support any proper judicial determination of an issue
unjustified legislative encroachment in the functions of the Executive; and
simply because nothing concrete can thereby be gained. In order to sustain
that the President arrogated unto himself the power of appropriation
their constitutional challenges against official acts of the Government, the
vested in Congress because NBC No. 541 authorized the use of the funds
petitioners must discharge the basic burden of proving that the
under the DAP for PAPs not considered in the 2012 budget.
constitutional infirmities actually existed.205 Simply put, guesswork and
speculation cannot overcome the presumption of the constitutionality of the
Finally, the petitioners insist that the DAP was repugnant to the principle of assailed executive act.
public accountability enshrined in the Constitution,204 because the
legislators relinquished the power of appropriation to the Executive, and
We do not need to discuss whether or not the DAP and its implementation
exhibited a reluctance to inquire into the legality of the DAP.
through the various circulars and memoranda of the DBM transgressed the
system of checks and balances in place in our constitutional system. Our
The OSG counters the challenges, stating that the supposed discrimination earlier expositions on the DAP and its implementing issuances infringing
in the release of funds under the DAP could be raised only by the affected the doctrine of separation of powers effectively addressed this particular
Members of Congress themselves, and if the challenge based on the concern.
violation of the Equal Protection Clause was really against the
constitutionality of the DAP, the arguments of the petitioners should be
Anent the principle of public accountability being transgressed because the
directed to the entitlement of the legislators to the funds, not to the
adoption and implementation of the DAP constituted an assumption by the
proposition that all of the legislators should have been given such
Executive of Congress’ power of appropriation, we have already held that
entitlement.
the DAP and its implementing issuances were policies and acts that the
Executive could properly adopt and do in the execution of the GAAs to the
The challenge based on the contravention of the Equal Protection Clause, extent that they sought to implement strategies to ramp up or accelerate
which focuses on the release of funds under the DAP to legislators, lacks the economy of the country.
factual and legal basis. The allegations about Senators and Congressmen
being unaware of the existence and implementation of the DAP, and about
6.
some of them having refused to accept such funds were unsupported with
Doctrine of operative fact was applicable
relevant data. Also, the claim that the Executive discriminated against
some legislators on the ground alone of their receiving less than the others
After declaring the DAP and its implementing issuances constitutionally
infirm, we must now deal with the consequences of the declaration.
Article 7 of the Civil Code provides:
Article 7. Laws are repealed only by subsequent ones, and their violation or
non-observance shall not be excused by disuse, or custom or practice to
the contrary.
When the courts declared a law to be inconsistent with the Constitution,
the former shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws or the Constitution.
A legislative or executive act that is declared void for being unconstitutional
cannot give rise to any right or obligation.206 However, the generality of the
rule makes us ponder whether rigidly applying the rule may at times be
impracticable or wasteful. Should we not recognize the need to except from
the rigid application of the rule the instances in which the void law or
executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine,
definitely not a novel one, has been exhaustively explained in De Agbayani
v. Philippine National Bank:207
The decision now on appeal reflects the orthodox view that an
unconstitutional act, for that matter an executive order or a municipal
ordinance likewise suffering from that infirmity, cannot be the source of
any legal rights or duties. Nor can it justify any official act taken under it.
Its repugnancy to the fundamental law once judicially declared results in its
being to all intents and purposes a mere scrap of paper. As the new Civil
Code puts it: ‘When the courts declare a law to be inconsistent with the
Constitution, the former shall be void and the latter shall govern.’
Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws of the Constitution. It is
understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot
survive.
Such a view has support in logic and possesses the merit of simplicity. It
may not however be sufficiently realistic. It does not admit of doubt that
prior to the declaration of nullity such challenged legislative or executive
act must have been in force and had to be complied with. This is so as until
after the judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted under it and
may have changed their positions. What could be more fitting than that in
a subsequent litigation regard be had to what has been done while such
legislative or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive
measure is valid, a period of time may have elapsed before it can exercise
the power of judicial review that may lead to a declaration of nullity. It
would be to deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: ‘The actual
existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have consequences which
cannot justly be ignored. The past cannot always be erased by a new
judicial declaration. The effect of the subsequent ruling as to invalidity may
have to be considered in various aspects, with respect to particular
relations, individual and corporate, and particular conduct, private and
official.’"
The doctrine of operative fact recognizes the existence of the law or
executive act prior to the determination of its unconstitutionality as an
operative fact that produced consequences that cannot always be erased,
ignored or disregarded. In short, it nullifies the void law or executive act
but sustains its effects. It provides an exception to the general rule that a
void or unconstitutional law produces no effect.208 But its use must be
subjected to great scrutiny and circumspection, and it cannot be invoked to
validate an unconstitutional law or executive act, but is resorted to only as
a matter of equity and fair play.209 It applies only to cases where
extraordinary circumstances exist, and only when the extraordinary
circumstances have met the stringent conditions that will permit its
application.
We find the doctrine of operative fact applicable to the adoption and
implementation of the DAP. Its application to the DAP proceeds from equity
and fair play. The consequences resulting from the DAP and its related
issuances could not be ignored or could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or
unconstitutional executive act. The term executive act is broad enough to
include any and all acts of the Executive, including those that are quasi
legislative and quasi-judicial in nature. The Court held so in Hacienda
Luisita, Inc. v. Presidential Agrarian Reform Council:210
Nonetheless, the minority is of the persistent view that the applicability of utilized under his orders or those of his authorized military
the operative fact doctrine should be limited to statutes and rules and representatives.’
regulations issued by the executive department that are accorded the same
status as that of a statute or those which are quasi-legislative in nature.
Evidently, the operative fact doctrine is not confined to statutes and rules
Thus, the minority concludes that the phrase ‘executive act’ used in the
and regulations issued by the executive department that are accorded the
case of De Agbayani v. Philippine National Bank refers only to acts, orders,
same status as that of a statute or those which are quasi-legislative in
and rules and regulations that have the force and effect of law. The
nature.
minority also made mention of the Concurring Opinion of Justice Enrique
Fernando in Municipality of Malabang v. Benito, where it was supposedly
made explicit that the operative fact doctrine applies to executive acts, Even assuming that De Agbayani initially applied the operative fact doctrine
which are ultimately quasi-legislative in nature. only to executive issuances like orders and rules and regulations, said
principle can nonetheless be applied, by analogy, to decisions made by the
President or the agencies under the executive department. This doctrine, in
We disagree. For one, neither the De Agbayani case nor the Municipality of
the interest of justice and equity, can be applied liberally and in a broad
Malabang case elaborates what ‘executive act’ mean. Moreover, while
sense to encompass said decisions of the executive branch. In keeping with
orders, rules and regulations issued by the President or the executive
the demands of equity, the Court can apply the operative fact doctrine to
branch have fixed definitions and meaning in the Administrative Code and
acts and consequences that resulted from the reliance not only on a law or
jurisprudence, the phrase ‘executive act’ does not have such specific
executive act which is quasi-legislative in nature but also on decisions or
definition under existing laws. It should be noted that in the cases cited by
orders of the executive branch which were later nullified. This Court is not
the minority, nowhere can it be found that the term ‘executive act’ is
unmindful that such acts and consequences must be recognized in the
confined to the foregoing. Contrarily, the term ‘executive act’ is broad
higher interest of justice, equity and fairness.
enough to encompass decisions of administrative bodies and agencies
under the executive department which are subsequently revoked by the
agency in question or nullified by the Court. Significantly, a decision made by the President or the administrative
agencies has to be complied with because it has the force and effect of law,
springing from the powers of the President under the Constitution and
A case in point is the concurrent appointment of Magdangal B. Elma (Elma)
existing laws. Prior to the nullification or recall of said decision, it may have
as Chairman of the Presidential Commission on Good Government (PCGG)
produced acts and consequences in conformity to and in reliance of said
and as Chief Presidential Legal Counsel (CPLC) which was declared
decision, which must be respected. It is on this score that the operative
unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In
fact doctrine should be applied to acts and consequences that resulted from
said case, this Court ruled that the concurrent appointment of Elma to
the implementation of the PARC Resolution approving the SDP of HLI. (Bold
these offices is in violation of Section 7, par. 2, Article IX-B of the 1987
underscoring supplied for emphasis)
Constitution, since these are incompatible offices. Notably, the
appointment of Elma as Chairman of the PCGG and as CPLC is, without a
question, an executive act. Prior to the declaration of unconstitutionality of In Commissioner of Internal Revenue v. San Roque Power
the said executive act, certain acts or transactions were made in good faith Corporation,211 the Court likewise declared that "for the operative fact
and in reliance of the appointment of Elma which cannot just be set aside doctrine to apply, there must be a ‘legislative or executive measure,’
or invalidated by its subsequent invalidation. meaning a law or executive issuance." Thus, the Court opined there that
the operative fact doctrine did not apply to a mere administrative practice
of the Bureau of Internal Revenue, viz:
In Tan v. Barrios, this Court, in applying the operative fact doctrine, held
that despite the invalidity of the jurisdiction of the military courts over
civilians, certain operative facts must be acknowledged to have existed so Under Section 246, taxpayers may rely upon a rule or ruling issued by the
as not to trample upon the rights of the accused therein. Relevant thereto, Commissioner from the time the rule or ruling is issued up to its reversal
in Olaguer v. Military Commission No. 34, it was ruled that ‘military by the Commissioner or this Court. The reversal is not given retroactive
tribunals pertain to the Executive Department of the Government and are effect. This, in essence, is the doctrine of operative fact. There must,
simply instrumentalities of the executive power, provided by the legislature however, be a rule or ruling issued by the Commissioner that is relied upon
for the President as Commander-in-Chief to aid him in properly by the taxpayer in good faith. A mere administrative practice, not
commanding the army and navy and enforcing discipline therein, and formalized into a rule or ruling, will not suffice because such a mere
administrative practice may not be uniformly and consistently applied. An
administrative practice, if not formalized as a rule or ruling, will not be
known to the general public and can be availed of only by those with
informal contacts with the government agency.
It is clear from the foregoing that the adoption and the implementation of
the DAP and its related issuances were executive acts.1avvphi1 The DAP
itself, as a policy, transcended a merely administrative practice especially
after the Executive, through the DBM, implemented it by issuing various
memoranda and circulars. The pooling of savings pursuant to the DAP from
the allotments made available to the different agencies and departments
was consistently applied throughout the entire Executive. With the
Executive, through the DBM, being in charge of the third phase of the
budget cycle – the budget execution phase, the President could legitimately
adopt a policy like the DAP by virtue of his primary responsibility as the
Chief Executive of directing the national economy towards growth and
development. This is simply because savings could and should be
determined only during the budget execution phase.
As already mentioned, the implementation of the DAP resulted into the use
of savings pooled by the Executive to finance the PAPs that were not
covered in the GAA, or that did not have proper appropriation covers, as
well as to augment items pertaining to other departments of the
Government in clear violation of the Constitution. To declare the
implementation of the DAP unconstitutional without recognizing that its
prior implementation constituted an operative fact that produced
consequences in the real as well as juristic worlds of the Government and
the Nation is to be impractical and unfair. Unless the doctrine is held to
apply, the Executive as the disburser and the offices under it and
elsewhere as the recipients could be required to undo everything that they
had implemented in good faith under the DAP. That scenario would be
enormously burdensome for the Government. Equity alleviates such
burden.
The other side of the coin is that it has been adequately shown as to be
beyond debate that the implementation of the DAP yielded undeniably
positive results that enhanced the economic welfare of the country. To
count the positive results may be impossible, but the visible ones, like
public infrastructure, could easily include roads, bridges, homes for the
homeless, hospitals, classrooms and the like. Not to apply the doctrine of
operative fact to the DAP could literally cause the physical undoing of such
worthy results by destruction, and would result in most undesirable
wastefulness.
Nonetheless, as Justice Brion has pointed out during the deliberations, the
doctrine of operative fact does not always apply, and is not always the
consequence of every declaration of constitutional invalidity. It can be
invoked only in situations where the nullification of the effects of what used
to be a valid law would result in inequity and injustice;212but where no such
result would ensue, the general rule that an unconstitutional law is totally
ineffective should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact
can apply only to the PAPs that can no longer be undone, and whose
beneficiaries relied in good faith on the validity of the DAP, but cannot
apply to the authors, proponents and implementors of the DAP, unless
there are concrete findings of good faith in their favor by the proper
tribunals determining their criminal, civil, administrative and other
liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and
prohibition; and DECLARES the following acts and practices under the
Disbursement Acceleration Program, National Budget Circular No. 541 and
related executive issuances UNCONSTITUTIONAL for being in violation of
Section 25(5), Article VI of the 1987 Constitution and the doctrine of
separation of powers, namely:
(a) The withdrawal of unobligated allotments from the
implementing agencies, and the declaration of the withdrawn
unobligated allotments and unreleased appropriations as savings
prior to the end of the fiscal year and without complying with the
statutory definition of savings contained in the General
Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive;
and
(c) The funding of projects, activities and programs that were not
covered by any appropriation in the General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed funds despite
the absence of a certification by the National Treasurer that the revenue
collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
SO ORDERED.
PHILIPPINE CONSTITUTION ASSOCIATION, INC., JOSE E. ROMERO,
SALVADOR ARANETA, GUILLERMO B. GUEVARA, PIO PEDROSA,
CONRADO BENITEZ, JOSE M. ARUEGO, SOTERO H. LAUREL,
FELIXBERTO M. SERRANO and ROMAN OZAETA, Petitioners, v.
PEDRO M. GIMENEZ, JOSE VELASCO, ELADIO SALITA, and JOSE
AVILES, Respondents.
Roman Ozaeta, Guillermo B. Guevara, Jose M. Aruego, Sotero H .
Laurel and Felixberto M. Serrano, for Petitioners.
Solicitor General for Respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; STATUTE INVOLVING EXPENDITURES OF
PUBLIC FUNDS; PERSONALITY OF TAXPAYERS TO ATTACK ITS
CONSTITUTIONALITY. — In the determination of the degree of interest
essential to give the requisite standing to attack the constitutionality of a
statute, the general rule is that not only persons individually affected, but
also taxpayers have sufficient interest in preventing the illegal expenditure
of moneys raised by taxation and they may, therefore, question the
constitutionality of statutes requiring expenditure of public moneys. (11
Am. Jur. 761)
2. ID.; REPUBLIC ACT 3836; INCREASE IN EMOLUMENTS OF MEMBERS OF
CONGRESS. — Republic Act No. 3836 provides for the retirement benefits
for members of Congress which in effect are increases in the emoluments
of Senators and Members of the House of Representatives, to take effect
upon the approval of the Act, which was on June 22, 1963. Retirement
benefits were immediately available thereunder without awaiting the
expiration of the full term of all the Members of the Senate and the House
of Representatives approving such increase. Such provision clearly runs
counter to the prohibition in Article VI, Section 14 of the Constitution.
3. ID.; ID.; LAW VIOLATES EQUAL PROTECTION CLAUSE OF THE
CONSTITUTION. — The features of Republic Act 3836 are discriminatory,
and therefore violate the equal protection clause of the Constitution. (Art.
III, Sec. 1, par. 1.) In the first place, while the said law grants retirement
benefits to Senators and Members of the House of Representatives who are
elective officials, it does not include other elective officials of the provinces,
municipalities and chartered cities. Secondly, all members of Congress
under Republic Act 3836 are given retirement benefits after serving twelve
years, not necessarily continuous, whereas, most government officers and
employees are given retirement benefits after serving for at least twenty
years. In the third place, all government officers and employees are given
only one retirement benefit irrespective of their length of service in the
government, whereas, under Republic Act 3836 because of no age
limitation, a Senator or Member of the House of Representatives upon
being elected for 24 years will be entitled to two retirement benefits or
equivalent to six years salary. Also, while the payment of retirement
benefits (annuity) to an employee who had been retired and reappointed is
suspended during his new employment (under Commonwealth Act 186, as
amended), this is not so under Republic Act 3836. Lastly, Republic Act
3836 grants retirement benefits to officials who are not members of the
Government Service Insurance System. Most grantees of retirement
benefits under the various retirement laws have to be members or must at
least contribute a portion of their monthly salaries to the System.
4. ID.; ID.; TITLE OF LAW NOT GERMANE TO THE SUBJECT MATTER. —
Under Republic Act No. 3836, amending the first paragraph of section 12,
subsection (c) of Commonwealth Act 186, as amended by Republic Acts
Nos. 660 and 3096, the retirement benefits are granted to members of the
Government Service Insurance System who have rendered at least twenty
years of service regardless of age. This provision is related and germane to
the subject of Commonwealth Act 186. On the other hand, the succeeding
paragraph of Republic Act No. 3836 refers to members of Congress and to
elective officers thereof who are not members of the Government Service
Insurance System. To provide retirement benefits, therefore, for these
officials, would relate to subject matter, not germane to Commonwealth
Act No. 186.
5. ID.; ID.; ID.; DUTY OF COURT TO DECLARE VOID THE STATUTE. — The
requirement that the subject of an act shall be expressed in its title is not a
mere rule of legislative procedure, directory to Congress; it is mandatory.
It is the duty of the courts to declare void any statute not conforming to
the constitutional provision. (See Walker v. State, 49 Alabama 329;
Cooley, Constitutional Limitations, 8th Ed., Volume I, pp. 162-164.)
DECISION
REGALA, J.:
We are called upon in this case to decide the grave and fundamental
problem of the constitutionality of Republic Act No. 3836 "insofar as the
same allows retirement gratuity and commutation of vacation and sick
leave to Senators and Representatives, and to the elective officials of both
Houses (of Congress). The suit was instituted by the Philippine Constitution
Association, Inc. (Philconsa, for short), a non-profit, civic organization, duly
incorporated under Philippine laws, by way of petition for prohibition with
preliminary injunction to restrain the Auditor General of the Philippines and
the disbursing officers of both Houses of Congress from "passing in audit
the vouchers, and from countersigning the checks or treasury warrants for
the payment to any former Senator or former Member of the House of
Representatives of retirement and vacation gratuities pursuant to Republic
Act No. 3836; and likewise restraining the respondent disbursing officers of
the House and Senate, respectively, and their successors in office from
paying the said retirement and vacation gratuities."cralaw virtua1aw library
It is argued that the above-numbered Republic Act, at least to the end that
it provided for the retirement of the members of Congress in the manner
and terms that it did, is unconstitutional and void. The challenge to the
constitutionality of the law is centered on the following
propositions:chanrob1es virtual 1aw library
1. The provision for the retirement of the members and certain officers of
Congress is not expressed in the title of the bill, in violation of Section
21(1) of Article VI of the Constitution.
2. The provision on retirement gratuity is an attempt to circumvent the
Constitutional ban on increase of salaries of the members of Congress
during their term of office, contrary to the provisions of Article VI, Section
14 of the Constitution.
3. The same provision constitutes "selfish class legislation" because it
allows members and officers of Congress to retire after twelve (12) years
of service and gives them a gratuity equivalent to one year salary for every
four years of service, which is not refundable in case of reinstatement or
re-election of the retiree, while all other officers and employees of the
government can retire only after at least twenty (20) years of service and
are given a gratuity which is only equivalent to one month salary for every
year of service, which, in any case, can not exceed 24 months.
4. The provision on vacation and sick leave, commutable at the highest
rate received, insofar as members of Congress are concerned, is another
attempt of the legislator to further increase their compensation in violation
of the Constitution.
The text of Republic Act No. 3836
The text of Republic Act No. 3836 reads:jgc:chanrobles.com.ph
"AN ACT AMENDING SUBSECTION (c), SECTION TWELVE OF
COMMONWEALTH ACT NUMBERED ONE HUNDRED EIGHTY-SIX AS
AMENDED BY REPUBLIC ACT NUMBERED THIRTY HUNDRED NINETY-
SIX:chanrob1es virtual 1aw library
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:jgc:chanrobles.com.ph
"SECTION 1, Subsection (c), Section twelve of Commonwealth Act
Numbered One Hundred eighty-six as amended by Republic Act Numbered
Thirty hundred ninety-six, is further amended to read as
follows:chanrob1es virtual 1aw library
‘(c) Retirement is likewise allowed to a member, regardless of age, who
has rendered at least twenty years of service. The benefit shall in addition
to the return of his personal contributions plus interest and the payment of
the corresponding employer’s premiums described in subsection (a) of
Section five hereof, without interest, be only a gratuity equivalent to one
month’s salary for every year of service, based on the highest rate
received, but not to exceed twenty-four months; Provided, That the retiring
officer or employee has been in the service of the said employer or office
for at least four years immediately preceding his retirement.
‘Retirement is also allowed to a senator or a member of the House of
Representatives and to an elective officer of either House of the Congress,
regardless of age, provided that in the case of a Senator or Member, he
must have served at least twelve years as a Senator and/or as a member
of the House of Representatives, and, in the case of an elective officer of
either House, he must have served the government for at least twelve
years, not less than four years of which must have been rendered as such
elective officer: Provided, That the gratuity payable to a retiring senator,
member of the House of Representatives, or elective officer, of either
House, shall be equivalent to one year’s salary for every four years of
service in the government and the same shall be exempt from any tax
whatsoever and shall be neither liable to attachment or execution nor
refundable in case of reinstatement or re-election of the retiree.
This gratuity is payable by the employer of office concerned which is
hereby authorized to provide the necessary appropriation or pay the same
from any unexpended items of appropriations or savings in its
appropriations.
‘Elective or appointive officials and employees paid gratuity under this
subsection shall be entitled to the commutation of the unused vacation and
sick leave, based on the highest rate received, which they may have to
their credit at the time of retirement."cralaw virtua1aw library
"SECTION 2. This Act shall take effect upon its approval.
"Approved, June 22, 1963."cralaw virtua1aw library
The Solicitor General’s Office, in representation of the respondents, filed its
answer on September 8, 1964, and contends, by way of special and
affirmative defenses, that:chanrob1es virtual 1aw library
1. The grant of retirement or pension benefits under Republic Act No. 3836
to the officers objected to by the petitioner does not constitute "forbidden
compensation" within the meaning of Section 14 of Article VI of the
Philippine Constitution.
2. The title of the law in question sufficiently complies with the provisions
of Section 21, Article VI, of the Constitution that "no bill which may be
enacted into law shall embrace more than one subject which shall be
expressed in the title of the bill."cralaw virtua1aw library
3. The law in question does not constitute class legislation.
4. Certain indispensable parties, specifically the elected officers of Congress
who are authorized to approve vouchers for payments for funds under the
law in question, and the claimants to the vouchers to be presented for
payment under said items, were not included in the petition.
5. The petitioner has no standing to institute this suit.
6. The payment of commutable vacation and sick leave benefits under the
said Act is merely "in the nature of a basis for computing the gratuity due
each retiring member" and, therefore, is not an indirect scheme to increase
their salary.
A brief historical background of Republic Act No. 3836.
Republic Act No. 3836 was originally House Bill No. 6051, which was
introduced by Congressmen Marcial R. Pimentel of Camarines Norte and
Marcelino R. Veloso of the Third District of Leyte, on May 6, 1963. On the
same date, it was referred to the Committee on Civil Service, which on the
following May 8, submitted its REPORT No. 3129, recommending approval
of the bill with amendments, among others, that the word "TWENTY" in the
bill as filed — representing the number of years that a senator or member
must serve in Congress to entitle him to retirement under the bill — must
be reduced to "TWELVE" years, and that the following words were inserted,
namely, "AND THE SAME (referring to GRATUITY) SHALL BE EXEMPT FROM
ANY TAX WHATSOEVER AND SHALL NOT BE LIABLE FROM ATTACHMENT
OR EXECUTION NOR REFUNDABLE IN CASE OF REINSTATEMENT OR RE-
ELECTION OF THE RETIREE." On May 8, 1963, the bill with the proposed
amendments was approved on second reading. It was passed on third
reading on May 13, 1963, and on the same day was sent to the Senate,
which, in turn, on May 23, 1963, passed it without amendment. The bill
was finally approved on June 22, 1963. As explained in the EXPLANATORY
NOTE attached to the bill, among others —
"The inclusion of members of Congress in subsection (c), Section 12 C. A.
186, as amended, will enable them to retire voluntarily, regardless of age,
after serving a minimum of twenty years as a Member of Congress. This
gratuity will insure the security of the family of the retiring member of
Congress without the latter engaging in other activities which may detract
from his exalted position and usefulness as lawmaker. It is expected that
with this assurance of security for his loved ones, deserving and well-
intentioned but poor men will be attracted to serve their people in
Congress."cralaw virtua1aw library
As finally approved, the law (subsection [c], paragraph 2, Section 1, R.A.
3836) allows a Senator or a Member of the House of Representatives and
an elective officer of either House of Congress to retire regardless of age.
To be eligible for retirement, he must have served for at least twelve years
as such Senator and/or as member of the House of Representatives. For an
elective officer of either House, he must have served the government for at
least twelve years, of which not less than four years must have been
rendered as such elective officer. The gratuity payable by the employer or
office concerned is equivalent to one year’s salary for every four years of
service in the government. Said gratuity is exempt from taxation, not liable
to attachment or execution, and not refundable in case of reinstatement or
re-election of the retiree.
First legal point — personality of the Petitioner to bring suit.
The first point to be considered is whether petitioner Philconsa has a
standing to institute this action. This Court has not hesitated to examine
past decisions involving this matter. This Court has repeatedly held that
when the petitioner, like in this case, is composed of substantial taxpayers,
and the outcome will affect their vital interests, they are allowed to bring
this suit. (Pascual v. Secretary, G.R. No. L-10405, December 29, 1960;
and Gonzales v. Hechanova, 60 Off. Gaz. 802 ([1963]).
The petitioner, Philconsa, is precisely a non-profit, civic organization
composed of several leaders from all walks of life whose main objective is
to uphold the principles of the Constitution.
In rejecting the motion to dismiss in the case of Pascual v. Secretary,
supra, this Court stated, among other things, that "there are many
decisions nullifying, at the instance of the taxpayers, laws providing the
disbursement of public funds, upon the theory that the expenditures of
public funds by an officer of the State for the purpose of administering an
unconstitutional act constitutes a misappropriation of such funds, which
may be enjoined at the request of the taxpayers." 1 This legislation
(Republic Act 3836) involves the disbursement of public funds.
We are not, however, unmindful of the ruling laid down by the Supreme
Court of the United States in the case of Massachusetts v. Mellon, 262 U.S.
447, holding that:jgc:chanrobles.com.ph
". . . the relation of a taxpayer of the United States to the Federal
Government is very different. His interest in the money of the Treasury —
partly realized from taxation and partly from other sources — is shared
with millions of others; is comparatively minute and indeterminable; and
the effect upon future taxation of any payment out of the funds, so remote,
fluctuating and uncertain, that no basis is afforded for an appeal to the
preventive powers of equity"
The general view in the United States, which is followed here, is stated in
the American Jurisprudence, thus —
"In the determination of the degree of interest essential to give the
requisite standing to attack the constitutionality of a statute the general
rule is that not only persons individually affected, but also taxpayers have
sufficient interest in preventing the illegal expenditure of moneys raised by
taxation and may therefore question the constitutionality of statutes
requiring expenditures of public moneys." (II Am. Jur. Emphasis supplied)
As far as the first point is concerned, We hold, therefore, that the
contention of the Solicitor General is untenable.
Second legal point — Whether or not Republic Act No. 3836 falls within the
prohibition embodied in Art. VI, section 14 of the
Constitution.
The first constitutional question is whether Republic Act 3836 violates
Section 14, Article VI, of the Constitution, which reads as
follows:jgc:chanrobles.com.ph
"The senators and the Members of the House of Representatives shall,
unless otherwise provided by law, receive an annual compensation of seven
thousand two hundred pesos each, including per diems and other
emoluments or allowances, and exclusive only of travelling expenses to
and from their respective district in the case of Members of the House of
Representatives and to and from their places of residence in the case of
Senators, when attending sessions of the Congress. No increase in said
compensation shall take effect until after the expiration of the full term of
all the Members of the Senate and of the House of Representatives
approving such increase. Until otherwise provided by law, the President of
the Senate and the Speaker of the House of Representatives shall each
receive an annual compensation of sixteen thousand pesos." (Emphasis
supplied)
Before discussing this point, it is worthy to note that the Constitution
embodies some limitations and prohibitions upon the members of
Congress, to wit:chanrob1es virtual 1aw library
1. They may not hold any other office or employment in the Government
without forfeiting their respective seats;
2. They shall not be appointed, during the time for which they are elected,
to any civil office which may have been created or the emoluments whereof
shall have been increased while they were members of Congress; (Section
16, Article VI, Constitution)
3. They cannot be financially interested in any franchise;
4. They cannot appear in any civil case wherein the Government is an
adverse party;
5. They cannot appear as counsel before any Electoral Tribunal; and
6. They cannot appear as counsel in any criminal case where an officer or
employee of the Government is accused. (Section 17, Article VI,
Constitution)
In addition to the above prohibitions, the Anti-Graft Law (Republic Act
3019) also prohibits members of Congress to have any special interest in
any specific business which will directly or indirectly be favored by any law
or resolution authorized by them during their term of office.
It is thus clear that the Constitutional Convention wisely surrounded the
Constitution with these limitations and prohibitions upon Members of
Congress. This is a practical demonstration or application of the principle of
checks and balance which is one of the peculiar characteristics of our
Constitution. In the light of this background, can We conclude that
Congress can validly enact Republic Act 3836, providing retirement benefits
to its members, without violating the provisions in the aforementioned
Article VI, Section 14, of the Constitution, regarding increase of the
compensation as including other emoluments?
It is worthy to note that the original salary for the members of the National
Assembly (unicameral body) was fixed at P5,000.00 per annum each. This
was raised to P7,200 per annum by the enactment of the 1940
Constitutional amendment, when the unicameral body, the National
Assembly, was changed to Congress, composed of two bodies, the Senate
and the House of Representatives. Again, in 1964, by the enactment of
Republic Act 4143, the salary for the Members of Congress was raised to
P32,000.00 per annum for each of them; and for the President of the
Senate and the Speaker of the House of Representatives, to P40,000.00
per annum each.
Likewise, it is significant that, as stated above, when the Constitutional
Convention first determined the compensation for the Members of
Congress, the amount fixed by it was only P5,000.00 per annum but it
embodies a special proviso which reads as follows: "No increase in said
compensation shall take effect until after the expiration of the full term of
all the members of the National Assembly elected subsequent to approval
of such increase." In other words, under the original constitutional
provision regarding the power of the National Assembly to increase the
salaries of its members, no increase would take effect until after the
expiration of the full term of the members of the Assembly elected
subsequent to the approval of such increase. (See Aruego, The Framing of
the Constitution, Vol. 1, pp. 296-300; Sinco, Philippine Government and
Political Law, 4th ed., p. 187)
This goes to show how, zealous were the members of the Constitutional
Convention in guarding against the temptation for members of Congress to
increase their salaries. However, the original strict prohibition was modified
by the subsequent provision when the Constitutional amendments were
approved in 1940. 2
The Constitutional provision in the aforementioned Section 14, Article VI,
includes in the term compensation "other emoluments." This is the pivotal
point on this fundamental question as to whether the retirement benefit as
provided for in Republic Act 3836 fall within the purview of the term "other
emoluments."cralaw virtua1aw library
Most of the authorities and decided cases have regarded "emolument" as
"the profit arising from office or employment; that which is received as
compensation for services or which is annexed to the possession of an
office, as salary, fees and perquisites." 3
In another set of cases, "emolument" has been defined as "the profit
arising from office or employment; that which is received as compensation
for services, or which is annexed to the possession of office, as salary, fees
and perquisites; advantage, gain public or private. The gain, profit or
advantage which is contemplated in the definition or significance of the
word "emolument" as applied to public officers, clearly comprehends, We
think, a gain, profit, or advantage which is pecuniary in character. (citing
Taxpayers’ League of Cargon County v. McPherson, 54 P. 2d. 897, 901, 49
Wy. 26; 106 A.L.R. 767).
In Schieffelin v. Berry, 216 N.Y.S. (citing Wright v. Craig, 202 App. Div.
684, 195 N.Y.S. 391, affirmed 234 N.Y. 548, 138 N.E. 441), it has been
established that pensions and retirement allowances are part of
compensation of public officials; otherwise their payment would be
unconstitutional.
In another case, State v. Schmahl, 145 N. W. 795, 125 Minn. 104, it is
stated that "as used in Article 4, section 9, of the Constitution of
Minnesota, providing that no Senator or Representative shall hold any
office, the emoluments of which have been increased during the session of
the Legislature of which he was member, until after the expiration of his
term of office in the Legislature, the word "emoluments" does not refer to
the fixed salary alone, but includes fees and compensation as the
incumbent of the office is by law entitled to receive because he holds such
office and performed some service required of the occupant thereof
."cralaw virtua1aw library
From the decisions of this cases, it is evident that retirement benefit is a
form or another species of emolument, because it is a part of
compensation for services of one possessing any office.
Republic Act 3836 provides for an increase in the emoluments of Senators
and Members of the House of Representatives, to take effect upon the
approval of said Act, which was on June 22, 1963. Retirement were
immediately available thereunder, without awaiting the expiration of the
full term of all the Members of the Senate and the House of
Representatives approving such increase. Such provision clearly runs
counter to the prohibition in Article VI, Section 14 of the Constitution.
Third Legal Point — Whether or not the law in question violates the equal
protection clause of the Constitution.
Another reason in support of the conclusion reached herein is that the
features of said Republic Act 3836 are patently discriminatory, and
therefore violate the equal protection clause of the Constitution. (Art III,
Sec. 1, par. 1.)
In the first place, while the said law grants retirement benefits to Senators
and Members of the House of Representatives who are elective officials, it
does not include other elective officials such as the governors of provinces
and the members of the provincial boards, and the elective officials of the
municipalities and chartered cities.
The principles of equal protection of law embodied in our Constitution has
been fully explained by Us in the case of People v. Vera, 65 Phil. 56, 126,
where we stated that the classification to be reasonable must be based
upon substantial distinctions which make real differences and must be
germane to the purposes of the law.
As well stated by Willoughby on the Constitution of the United States
(second edition) p. 1937, the principle of the requirement of equal
protection of law applies to all persons similarly situated. Why limit the
application of the benefits of Republic Act 3836 to the elected members of
Congress? We feel that the classification here is not reasonable. (See also
Sinco, Philippine Political Law, 11th ed. [1962]; Selected Essays on
Constitutional Law [1938-62], p. 789; The Equal Protection of the Laws, 37
Cal. Law Rev. 341.)
Secondly, all members of Congress under Republic Act 3836 are given
retirement benefits after serving twelve years, not necessarily continuous,
whereas, most government officers and employees are given retirement
benefits after serving for at least twenty years. In fact, the original bill of
Act 3836 provided for twenty years of service.
In the third place, all government officers and employees are given only
one retirement benefits irrespective of their length of service in the
government, whereas, under Republic Act 3836, because of no age
limitation, a Senator or Member of the House of Representatives upon
being elected for 24 years will be entitled to two retirement benefits or
equivalent to six years’ salary.
Also, while the payment of retirement benefits (annuity) to an employee
who had been retired and reappointed is suspended during his new
employment (under Commonwealth Act 186, as amended), this is not so
under Republic Act 3836.
Lastly, it is peculiar that Republic Act 3836 grants retirement benefits to
officials who are not members of the Government Service Insurance
System. Lost grantees of retirement benefits under the various retirement
laws have to be members or must at least contribute a portion of their
monthly salaries to the system. 4
The arguments advanced against the discriminatory features of Republic
Act 3836, as far as Members of Congress are concerned, apply with equal
force to the elected officers of each House, such as the Secretaries and the
Sergeants-at-arms. Under Republic Act 3836, the Secretary and Sergeants-
at-arms of each House are given the benefits of retirement without having
served for twenty years as required with other officers and employees of
the Government.
Fourth Legal Point — Whether or not the title of Republic Act No. 3836 is
germane to the subject matter expressed in the act.
Another Constitutional point to determine is whether the title of Republic
Act 3836 complies with the requirement of paragraph 1 section 21, Article
VI of the Constitution, which reads as follows:jgc:chanrobles.com.ph
"No bill which may be enacted into law shall embrace more than one
subject which shall be expressed in the title of the bill."cralaw virtua1aw
library
We are not unmindful of the fact that there has been a general disposition
in all courts to construe the constitutional provision with reference to the
subject and title of the Act, liberally.
It is the contention of petitioner that the said title of Republic Act 3836
gives no inkling or notice whatsoever to the public regarding the retirement
gratuities and commutable vacation and sick leave privileges to members
of Congress. It is claimed that petitioner learned of this law for the first
time only when Jose Velasco, disbursing officer of the House, testified on
January 30, 1964, before Justice Labrador, in connection with the hearing
of the case, and he revealed that in 1963, Congress enacted the retirement
law for its members. In fact the Appropriation Act for the fiscal year 1964-
1965, Republic Act No. 4164, provides:jgc:chanrobles.com.ph
"13. For payment of retirement gratuities of members of the Senate
pursuant to the provisions of Republic Act No. 3836: PROVIDED, That no
portion of this Appropriation shall be transferred to any other item until
approved claims shall have been paid — P210,000.000.
In the appropriation for the House of Representatives, the following items
appear:jgc:chanrobles.com.ph
"7. For government share of premiums on life insurance and retirement of
Members and employees of the House of Representatives, as provided for
under Republic Act No. 1616 — P1,300,000.00
"8. For payment of the cash commutation of the accumulated vacation and
sick leaves as provided for under Republic Act. No. 611, and retirement
gratuities of Members and employees of the House of Representatives
under Republic Act No. 1616 — P1,300,000.00."cralaw virtua1aw library
In the Appropriations Act of 1965 1966 (Republic Act No. 4642), the
following item appears in the appropriations for the
Senate:jgc:chanrobles.com.ph
"13. For payment of retirement gratuities of Senate personnel pursuant to
the provisions of Republic Act No. 1616: PROVIDED. That no portion of this
appropriation shall be transferred to any other item until all approved
claims shall have been paid — P100,000.00."cralaw virtua1aw library
It is thus clear that in the Appropriations Act for 1965-1966, the item in the
Senate for P210,000.00 to implement Republic Act 3836, was eliminated.
In the appropriations for the House (1965-1966) the following items
appear:jgc:chanrobles.com.ph
"7. For government share of premiums on life insurance and retirement of
members and employees of the House of Representatives, as provided for
under Republic Act No. 1616 — P1,200,000.00
"8. For payment of the cash commutation of the accumulated vacation and
sick leaves as provided for under Republic Act No. 611, and retirement
gratuities of Members and employees of the House of Representatives
under Republic Act No. 1616 — P1,700,000.00.
It is to be observed that under Republic Act 3836, amending the first
paragraph of section 12, subsection (c) of Commonwealth Act 186, as
amended by Republic Act Nos. 660 and 3096, the retirement benefits are
granted to members of the Government Service Insurance System, who
have rendered at least twenty years of service regardless of age. This
paragraph is related and germane to the subject of Commonwealth Act No.
186.
On the other hand, the succeeding paragraph of Republic Act 3836 refers
to members of Congress and to elective officers thereof who are not
members of the Government Service Insurance System. To provide
retirement benefits, therefore, for these officials, would relate to subject
matter which is not germane to Commonwealth Act No. 186. In other
words, this portion of the amendment (re retirement benefits for Members
of Congress and elected officers, such as the Secretary and Sergeant-at-
arms for each House) is not related in any manner to the subject of
Commonwealth Act 186 establishing the Government Service Insurance
System and which provides for both retirement and insurance benefits to
its members.
Parenthetically, it may be added that the purpose of the requirement that
the subject of an act should be expressed in its title is fully explained by
Cooley, thus: (1) to prevent surprise or fraud upon the Legislature; and (2)
to fairly apprise the people, through such publication of legislation that are
being considered, in order that they may have the opportunity of being
heard thereon by petition or otherwise, if they shall so desire. (Cooley,
Constitutional Limitations, 8th ed., Vol. I, p. 162; See also Martin, Political
Law Reviewer, Book One [1965] p. 119)
With respect to sufficiency of title this Court has ruled in two
cases:jgc:chanrobles.com.ph
"The Constitutional requirements with respect to titles of statutes as
sufficient to reflect their contents is satisfied if all parts of a law relate to
the subject expressed in its title, and it is not necessary that the title be a
complete index of the content." (People v. Carlos, 78 Phil. 535)
"The Constitutional requirement that the subject of an act shall be
expressed in its title should be reasonably construed so as not to interfere
unduly with the enactment of necessary legislation. It should be given a
practical, rather than technical, construction. It should be a sufficient
compliance with such requirement if the title expresses the general subject
and all the provisions of the statute are germane to that general subject."
(Sumulong v. The Commission on Elections, 73 Phil. 288, 291)
The requirement that the subject of an act shall be expressed in its title is
wholly illustrated and explained in Central Capiz v. Ramirez, 40 Phil. 883.
In this case, the question raised was whether Commonwealth Act 2784,
known as the Public Land Act, was limited in its application to lands of the
public domain or whether its provisions also extended to agricultural lands
held in private ownership. The Court held that the act was limited to lands
of the public domain as indicated in its title, and did not include private
agricultural lands. The Court further stated that this provision of the
Constitution expressing the subject matter of an Act in its title, is not a
mere rule of legislative procedure, directory to Congress, but it is
mandatory. It is the duty of the Court to declare void any statute not
conforming to this constitutional provision. (See Walker v. State, 49
Alabama 329; Cooley, Constitutional Limitations, pp. 162-164 5; See also
Agcaoili v. Suguitan, 48 Phil. 676; Sutherland on Statutory Construction,
Sec. 111.)
In the light of the history and analysis of Republic Act 3836, We conclude
that the title of said Republic Act 3836 is void as it is not germane to the
subject matter and is a violation of the aforementioned paragraph 1,
section 21, Article VI of the Constitution.
In short, Republic Act 3836 violates three constitutional provisions,
namely: first, the pr prohibition regarding increase in the salaries of
Members of Congress; second, the equal protection clause; and third, the
prohibition that the title of a bill shall not embrace more than one subject.
IN VIEW OF THE FOREGOING CONSIDERATIONS, Republic Act No. 3836 is
hereby declared null and void, in so far as it refers to the retirement of
Members of Congress and the elected officials thereof, as being-
unconstitutional. The restraining order issued in our resolution on
December 6, 1965 is hereby made permanent. No costs.
 G.R. No. L-75697 June 18, 1987
VALENTIN TIO doing business under the name and style of OMI
ENTERPRISES, Petitioner, vs. VIDEOGRAM REGULATORY BOARD,
MINISTER OF FINANCE, METRO MANILA COMMISSION, CITY
MAYOR and CITY TREASURER OF MANILA, Respondents.
Nelson Y. Ng for petitioner.chanrobles virtual law library
The City Legal Officer for respondents City Mayor and City Treasurer.
MELENCIO-HERRERA, J.:
This petition was filed on September 1, 1986 by petitioner on his own
behalf and purportedly on behalf of other videogram operators adversely
affected. It assails the constitutionality of Presidential Decree No. 1987
entitled "An Act Creating the Videogram Regulatory Board" with broad
powers to regulate and supervise the videogram industry (hereinafter
briefly referred to as the BOARD). The Decree was promulgated on October
5, 1985 and took effect on April 10, 1986, fifteen (15) days after
completion of its publication in the Official
Gazette.chanroblesvirtualawlibrary chanrobles virtual law library
On November 5, 1985, a month after the promulgation of the
abovementioned decree, Presidential Decree No. 1994 amended the
National Internal Revenue Code providing, inter alia:
SEC. 134. Video Tapes. - There shall be collected on each processed video-
tape cassette, ready for playback, regardless of length, an annual tax of
five pesos; Provided, That locally manufactured or imported blank video
tapes shall be subject to sales tax.
On October 23, 1986, the Greater Manila Theaters Association, Integrated
Movie Producers, Importers and Distributors Association of the Philippines,
and Philippine Motion Pictures Producers Association, hereinafter
collectively referred to as the Intervenors, were permitted by the Court to
intervene in the case, over petitioner's opposition, upon the allegations that
intervention was necessary for the complete protection of their rights and
that their "survival and very existence is threatened by the unregulated
proliferation of film piracy." The Intervenors were thereafter allowed to file
their Comment in Intervention.chanroblesvirtualawlibrary chanrobles
virtual law library
The rationale behind the enactment of the DECREE, is set out in its
preambular clauses as follows:
1. WHEREAS, the proliferation and unregulated circulation of videograms
including, among others, videotapes, discs, cassettes or any technical
improvement or variation thereof, have greatly prejudiced the operations
of moviehouses and theaters, and have caused a sharp decline in theatrical
attendance by at least forty percent (40%) and a tremendous drop in the
collection of sales, contractor's specific, amusement and other taxes,
thereby resulting in substantial losses estimated at P450 Million annually in
government revenues; chanrobles virtual law library
2. WHEREAS, videogram(s) establishments collectively earn around P600
Million per annum from rentals, sales and disposition of videograms, and
such earnings have not been subjected to tax, thereby depriving the
Government of approximately P180 Million in taxes each year; chanrobles
virtual law library
3. WHEREAS, the unregulated activities of videogram establishments have
also affected the viability of the movie industry, particularly the more than
1,200 movie houses and theaters throughout the country, and occasioned
industry-wide displacement and unemployment due to the shutdown of
numerous moviehouses and theaters; chanrobles virtual law library
4. "WHEREAS, in order to ensure national economic recovery, it is
imperative for the Government to create an environment conducive to
growth and development of all business industries, including the movie
industry which has an accumulated investment of about P3
Billion; chanrobles virtual law library
5. WHEREAS, proper taxation of the activities of videogram establishments
will not only alleviate the dire financial condition of the movie industry
upon which more than 75,000 families and 500,000 workers depend for
their livelihood, but also provide an additional source of revenue for the
Government, and at the same time rationalize the heretofore uncontrolled
distribution of videograms; chanrobles virtual law library
6. WHEREAS, the rampant and unregulated showing of obscene videogram
features constitutes a clear and present danger to the moral and spiritual
well-being of the youth, and impairs the mandate of the Constitution for
the State to support the rearing of the youth for civic efficiency and the
development of moral character and promote their physical, intellectual,
and social well-being; chanrobles virtual law library
7. WHEREAS, civic-minded citizens and groups have called for remedial
measures to curb these blatant malpractices which have flaunted our
censorship and copyright laws; chanrobles virtual law library
8. WHEREAS, in the face of these grave emergencies corroding the moral
values of the people and betraying the national economic recovery
program, bold emergency measures must be adopted with dispatch; ...
(Numbering of paragraphs supplied).
Petitioner's attack on the constitutionality of the DECREE rests on the
following grounds:
1. Section 10 thereof, which imposes a tax of 30% on the gross receipts
payable to the local government is a RIDER and the same is not germane
to the subject matter thereof; chanrobles virtual law library
2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful
restraint of trade in violation of the due process clause of the
Constitution; chanrobles virtual law library
3. There is no factual nor legal basis for the exercise by the President of
the vast powers conferred upon him by Amendment No. 6; chanrobles
virtual law library
4. There is undue delegation of power and authority; chanrobles virtual law
library
5. The Decree is an ex-post facto law; and chanrobles virtual law library
6. There is over regulation of the video industry as if it were a nuisance,
which it is not.
We shall consider the foregoing objections
in seriatim.chanroblesvirtualawlibrary chanrobles virtual law library
1. The Constitutional requirement that "every bill shall embrace only one
subject which shall be expressed in the title thereof" 1 is sufficiently
complied with if the title be comprehensive enough to include the general
purpose which a statute seeks to achieve. It is not necessary that the title
express each and every end that the statute wishes to accomplish. The
requirement is satisfied if all the parts of the statute are related, and are
germane to the subject matter expressed in the title, or as long as they are
not inconsistent with or foreign to the general subject and title. 2 An act
having a single general subject, indicated in the title, may contain any
number of provisions, no matter how diverse they may be, so long as they
are not inconsistent with or foreign to the general subject, and may be
considered in furtherance of such subject by providing for the method and
means of carrying out the general object." 3 The rule also is that the
constitutional requirement as to the title of a bill should not be so narrowly
construed as to cripple or impede the power of legislation. 4 It should be
given practical rather than technical construction. 5chanrobles virtual law
library
Tested by the foregoing criteria, petitioner's contention that the tax
provision of the DECREE is a rider is without merit. That section
reads, inter alia:
Section 10. Tax on Sale, Lease or Disposition of Videograms. -
Notwithstanding any provision of law to the contrary, the province shall
collect a tax of thirty percent (30%) of the purchase price or rental rate, as
the case may be, for every sale, lease or disposition of a videogram
containing a reproduction of any motion picture or audiovisual program.
Fifty percent (50%) of the proceeds of the tax collected shall accrue to the
province, and the other fifty percent (50%) shall acrrue to the municipality
where the tax is collected; PROVIDED, That in Metropolitan Manila, the tax
shall be shared equally by the City/Municipality and the Metropolitan Manila
Commission.chanroblesvirtualawlibrary chanrobles virtual law library
xxx xxx xxx
The foregoing provision is allied and germane to, and is reasonably
necessary for the accomplishment of, the general object of the DECREE,
which is the regulation of the video industry through the Videogram
Regulatory Board as expressed in its title. The tax provision is not
inconsistent with, nor foreign to that general subject and title. As a tool for
regulation 6 it is simply one of the regulatory and control mechanisms
scattered throughout the DECREE. The express purpose of the DECREE to
include taxation of the video industry in order to regulate and rationalize
the heretofore uncontrolled distribution of videograms is evident from
Preambles 2 and 5, supra. Those preambles explain the motives of the
lawmaker in presenting the measure. The title of the DECREE, which is the
creation of the Videogram Regulatory Board, is comprehensive enough to
include the purposes expressed in its Preamble and reasonably covers all
its provisions. It is unnecessary to express all those objectives in the title
or that the latter be an index to the body of the DECREE. 7 chanrobles
virtual law library
2. Petitioner also submits that the thirty percent (30%) tax imposed is
harsh and oppressive, confiscatory, and in restraint of trade. However, it is
beyond serious question that a tax does not cease to be valid merely
because it regulates, discourages, or even definitely deters the activities
taxed. 8The power to impose taxes is one so unlimited in force and so
searching in extent, that the courts scarcely venture to declare that it is
subject to any restrictions whatever, except such as rest in the discretion
of the authority which exercises it. 9 In imposing a tax, the legislature acts
upon its constituents. This is, in general, a sufficient security against
erroneous and oppressive taxation. 10 chanrobles virtual law library
The tax imposed by the DECREE is not only a regulatory but also a revenue
measure prompted by the realization that earnings of videogram
establishments of around P600 million per annum have not been subjected
to tax, thereby depriving the Government of an additional source of
revenue. It is an end-user tax, imposed on retailers for every videogram
they make available for public viewing. It is similar to the 30% amusement
tax imposed or borne by the movie industry which the theater-owners pay
to the government, but which is passed on to the entire cost of the
admission ticket, thus shifting the tax burden on the buying or the viewing
public. It is a tax that is imposed uniformly on all videogram
operators.chanroblesvirtualawlibrary chanrobles virtual law library
The levy of the 30% tax is for a public purpose. It was imposed primarily to
answer the need for regulating the video industry, particularly because of
the rampant film piracy, the flagrant violation of intellectual property
rights, and the proliferation of pornographic video tapes. And while it was
also an objective of the DECREE to protect the movie industry, the tax
remains a valid imposition.
The public purpose of a tax may legally exist even if the motive which
impelled the legislature to impose the tax was to favor one industry over
another. 11 chanrobles virtual law library
It is inherent in the power to tax that a state be free to select the subjects
of taxation, and it has been repeatedly held that "inequities which result
from a singling out of one particular class for taxation or exemption infringe
no constitutional limitation". 12Taxation has been made the implement of
the state's police power. 13 chanrobles virtual law library
At bottom, the rate of tax is a matter better addressed to the taxing
legislature.chanroblesvirtualawlibrary chanrobles virtual law library
3. Petitioner argues that there was no legal nor factual basis for the
promulgation of the DECREE by the former President under Amendment
No. 6 of the 1973 Constitution providing that "whenever in the judgment of
the President ... , there exists a grave emergency or a threat or imminence
thereof, or whenever the interim Batasang Pambansa or the regular
National Assembly fails or is unable to act adequately on any matter for
any reason that in his judgment requires immediate action, he may, in
order to meet the exigency, issue the necessary decrees, orders, or letters
of instructions, which shall form part of the law of the land." chanrobles
virtual law library
In refutation, the Intervenors and the Solicitor General's Office aver that
the 8th "whereas" clause sufficiently summarizes the justification in that
grave emergencies corroding the moral values of the people and betraying
the national economic recovery program necessitated bold emergency
measures to be adopted with dispatch. Whatever the reasons "in the
judgment" of the then President, considering that the issue of the validity
of the exercise of legislative power under the said Amendment still pends
resolution in several other cases, we reserve resolution of the question
raised at the proper time.chanroblesvirtualawlibrary chanrobles virtual law
library
4. Neither can it be successfully argued that the DECREE contains an undue
delegation of legislative power. The grant in Section 11 of the DECREE of
authority to the BOARD to "solicit the direct assistance of other agencies
and units of the government and deputize, for a fixed and limited period,
the heads or personnel of such agencies and units to perform enforcement
functions for the Board" is not a delegation of the power to legislate but
merely a conferment of authority or discretion as to its execution,
enforcement, and implementation. "The true distinction is between the
delegation of power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring authority or discretion as to
its execution to be exercised under and in pursuance of the law. The first
cannot be done; to the latter, no valid objection can be made." 14 Besides,
in the very language of the decree, the authority of the BOARD to solicit
such assistance is for a "fixed and limited period" with the deputized
agencies concerned being "subject to the direction and control of the
BOARD." That the grant of such authority might be the source of graft and
corruption would not stigmatize the DECREE as unconstitutional. Should
the eventuality occur, the aggrieved parties will not be without adequate
remedy in law.chanroblesvirtualawlibrary chanrobles virtual law library
5. The DECREE is not violative of the ex post facto principle. An ex post
facto law is, among other categories, one which "alters the legal rules of
evidence, and authorizes conviction upon less or different testimony than
the law required at the time of the commission of the offense." It is
petitioner's position that Section 15 of the DECREE in providing that:
All videogram establishments in the Philippines are hereby given a period
of forty-five (45) days after the effectivity of this Decree within which to
register with and secure a permit from the BOARD to engage in the
videogram business and to register with the BOARD all their inventories of
videograms, including videotapes, discs, cassettes or other technical
improvements or variations thereof, before they could be sold, leased, or
otherwise disposed of. Thereafter any videogram found in the possession of
any person engaged in the videogram business without the required proof
of registration by the BOARD, shall be prima facie evidence of violation of
the Decree, whether the possession of such videogram be for private
showing and/or public exhibition.
raises immediately a prima facie evidence of violation of the DECREE when
the required proof of registration of any videogram cannot be presented
and thus partakes of the nature of an ex post
facto law.chanroblesvirtualawlibrary chanrobles virtual law library
The argument is untenable. As this Court held in the recent case of Vallarta
vs. Court of Appeals, et al. 15
... it is now well settled that "there is no constitutional objection to the
passage of a law providing that the presumption of innocence may be
overcome by a contrary presumption founded upon the experience of
human conduct, and enacting what evidence shall be sufficient to overcome
such presumption of innocence" (People vs. Mingoa 92 Phil. 856 [1953] at
858-59, citing 1 COOLEY, A TREATISE ON THE CONSTITUTIONAL
LIMITATIONS, 639-641). And the "legislature may enact that when certain
facts have been proved that they shall be prima facie evidence of the
existence of the guilt of the accused and shift the burden of proof provided
there be a rational connection between the facts proved and the ultimate
facts presumed so that the inference of the one from proof of the others is
not unreasonable and arbitrary because of lack of connection between the
two in common experience". 16
Applied to the challenged provision, there is no question that there is a
rational connection between the fact proved, which is non-registration, and
the ultimate fact presumed which is violation of the DECREE, besides the
fact that the prima facie presumption of violation of the DECREE attaches
only after a forty-five-day period counted from its effectivity and is,
therefore, neither retrospective in
character.chanroblesvirtualawlibrary chanrobles virtual law library
6. We do not share petitioner's fears that the video industry is being over-
regulated and being eased out of existence as if it were a nuisance. Being a
relatively new industry, the need for its regulation was apparent. While the
underlying objective of the DECREE is to protect the moribund movie
industry, there is no question that public welfare is at bottom of its
enactment, considering "the unfair competition posed by rampant film
piracy; the erosion of the moral fiber of the viewing public brought about
by the availability of unclassified and unreviewed video tapes containing
pornographic films and films with brutally violent sequences; and losses in
government revenues due to the drop in theatrical attendance, not to
mention the fact that the activities of video establishments are virtually
untaxed since mere payment of Mayor's permit and municipal license fees
are required to engage in business. 17
The enactment of the Decree since April 10, 1986 has not brought about
the "demise" of the video industry. On the contrary, video establishments
are seen to have proliferated in many places notwithstanding the 30% tax
imposed.chanroblesvirtualawlibrary chanrobles virtual law library
In the last analysis, what petitioner basically questions is the necessity,
wisdom and expediency of the DECREE. These considerations, however,
are primarily and exclusively a matter of legislative concern.
Only congressional power or competence, not the wisdom of the action
taken, may be the basis for declaring a statute invalid. This is as it ought to
be. The principle of separation of powers has in the main wisely allocated
the respective authority of each department and confined its jurisdiction to
such a sphere. There would then be intrusion not allowable under the
Constitution if on a matter left to the discretion of a coordinate branch, the
judiciary would substitute its own. If there be adherence to the rule of law,
as there ought to be, the last offender should be courts of justice, to which
rightly litigants submit their controversy precisely to maintain unimpaired
the supremacy of legal norms and prescriptions. The attack on the validity
of the challenged provision likewise insofar as there may be objections,
even if valid and cogent on its wisdom cannot be sustained. 18
In fine, petitioner has not overcome the presumption of validity which
attaches to a challenged statute. We find no clear violation of the
Constitution which would justify us in pronouncing Presidential Decree No.
1987 as unconstitutional and void.chanroblesvirtualawlibrary chanrobles
virtual law library
WHEREFORE, the instant Petition is hereby
dismissed.chanroblesvirtualawlibrary chanrobles virtual law library
No costs.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.
THE PHILIPPINE JUDGES ASSOCIATION, duly rep. by its President,
BERNARDO P. ABESAMIS, Vice-President for Legal Affairs,
MARIANO M. UMALI, Director for Pasig, Makati, and Pasay, Metro
Manila, ALFREDO C. FLORES, and Chairman of the Committee on
Legal Aid, JESUS G. BERSAMIRA, Presiding Judges of the Regional
Trial Court, Branch 85, Quezon City and Branches 160, 167 and
166, Pasig, Metro Manila, respectively: the NATIONAL
CONFEDERATION OF THE JUDGES ASSOCIATION OF THE
PHILIPPINES, composed of the METROPOLITAN TRIAL COURT
JUDGES ASSOCIATION rep. by its President. REINATO QUILALA of
the MUNICIPAL TRIAL CIRCUIT COURT, Manila; THE MUNICIPAL
JUDGES LEAGUE OF THE PHILIPPINES rep. by its President, TOMAS
G. TALAVERA; by themselves and in behalf of all the Judges of the
Regional Trial and Shari'a Courts, Metropolitan Trial Courts and
Municipal Courts throughout the Country, Petitioners, vs. HON. PETE
PRADO, in his capacity as Secretary of the Department of
Transportation and Communications, JORGE V. SARMIENTO, in his
capacity as Postmaster General, and the PHILIPPINE POSTAL
CORP., Respondents.chanrobles virtual law library
CRUZ, J.:
The basic issue raised in this petition is the independence of the Judiciary.
It is asserted by the petitioners that this hallmark of republicanism is
impaired by the statute and circular they are here challenging. The
Supreme Court is itself affected by these measures and is thus an
interested party that should ordinarily not also be a judge at the same
time. Under our system of government, however, it cannot inhibit itself and
must rule upon the challenge, because no other office has the authority to
do so. We shall therefore act upon this matter not with officiousness but in
the discharge of an unavoidable duty and, as always, with detachment and
fairness.chanroblesvirtualawlibrarychanrobles virtual law library
The main target of this petition is Section 35 of R.A. No. 7354 as
implemented by the Philippine Postal Corporation through its Circular No.
92-28. These measures withdraw the franking privilege from the Supreme
Court, the Court of Appeals, the Regional Trial Courts, the Metropolitan
Trial Courts, the Municipal Trial Courts, and the Land Registration
Commission and its Registers of Deeds, along with certain other
government offices.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioners are members of the lower courts who feel that their official
functions as judges will be prejudiced by the above-named measures. The
National Land Registration Authority has taken common cause with them
insofar as its own activities, such as sending of requisite notices in
registration cases, affect judicial proceedings. On its motion, it has been
allowed to intervene.chanroblesvirtualawlibrarychanrobles virtual law
library
The petition assails the constitutionality of R.A. No. 7354 on the grounds
that: (1) its title embraces more than one subject and does not express its
purposes; (2) it did not pass the required readings in both Houses of
Congress and printed copies of the bill in its final form were not distributed
among the members before its passage; and (3) it is discriminatory and
encroaches on the independence of the
Judiciary.chanroblesvirtualawlibrarychanrobles virtual law library
We approach these issues with one important principle in mind, to wit, the
presumption of the constitutionality of statutes. The theory is that as the
joint act of the Legislature and the Executive, every statute is supposed to
have first been carefully studied and determined to be constitutional before
it was finally enacted. Hence, unless it is clearly shown that it is
constitutionally flawed, the attack against its validity must be rejected and
the law itself upheld. To doubt is to sustain.
Ichanrobles virtual law library
We consider first the objection based on Article VI, Sec. 26(l), of the
Constitution providing that "Every bill passed by the Congress shall
embrace only one subject which shall be expressed in the title
thereof." chanrobles virtual law library
The purposes of this rule are: (1) to prevent hodge-podge or "log-rolling"
legislation; (2) to prevent surprise or fraud upon the legislature by means
of provisions in bills of which the title gives no intimation, and which might
therefore be overlooked and carelessly and unintentionally adopted; and
(3) to fairly apprise the people, through such publication of legislative
proceedings as is usually made, of the subject of legislation that is being
considered, in order that they may have opportunity of being heard
thereon, by petition or otherwise, if they shall so desire. 1chanrobles virtual
law library
It is the submission of the petitioners that Section 35 of R.A. No. 7354
which withdrew the franking privilege from the Judiciary is not expressed in
the title of the law, nor does it reflect its
purposes.chanroblesvirtualawlibrarychanrobles virtual law library
R.A. No. 7354 is entitled "An Act Creating the Philippine Postal Corporation,
Defining its Powers, Functions and Responsibilities, Providing for Regulation
of the Industry and for Other Purposes Connected Therewith."chanrobles
virtual law library
The objectives of the law are enumerated in Section 3, which provides:
The State shall pursue the following objectives of a nationwide postal
system:chanrobles virtual law library
a) to enable the economical and speedy transfer of mail and other postal
matters, from sender to addressee, with full recognition of their privacy or
confidentiality;chanrobles virtual law library
b) to promote international interchange, cooperation and understanding
through the unhampered flow or exchange of postal matters between
nations;chanrobles virtual law library
c) to cause or effect a wide range of postal services to cater to different
users and changing needs, including but not limited to, philately, transfer
of monies and valuables, and the like;chanrobles virtual law library
d) to ensure that sufficient revenues are generated by and within the
industry to finance the overall cost of providing the varied range of postal
delivery and messengerial services as well as the expansion and continuous
upgrading of service standards by the same.
Sec. 35 of R.A. No. 7354, which is the principal target of the petition, reads
as follows:
Sec. 35. Repealing Clause. - All acts, decrees, orders, executive orders,
instructions, rules and regulations or parts thereof inconsistent with the
provisions of this Act are repealed or modified
accordingly.chanroblesvirtualawlibrarychanrobles virtual law library
All franking privileges authorized by law are hereby repealed, except those
provided for under Commonwealth Act No. 265, Republic Acts Numbered
69, 180, 1414, 2087 and 5059. The Corporation may continue the franking
privilege under Circular No. 35 dated October 24, 1977 and that of the Vice
President, under such arrangements and conditions as may obviate abuse
or unauthorized use thereof.
The petitioners' contention is untenable. We do not agree that the title of
the challenged act violates the
Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
The title of the bill is not required to be an index to the body of the act, or
to be as comprehensive as to cover every single detail of the measure. It
has been held that if the title fairly indicates the general subject, and
reasonably covers all the provisions of the act, and is not calculated to
mislead the legislature or the people, there is sufficient compliance with the
constitutional requirement. 2chanrobles virtual law library
To require every end and means necessary for the accomplishment of the
general objectives of the statute to be expressed in its title would not only
be unreasonable but would actually render legislation impossible. 3As has
been correctly explained:
The details of a legislative act need not be specifically stated in its title, but
matter germane to the subject as expressed in the title, and adopted to the
accomplishment of the object in view, may properly be included in the act.
Thus, it is proper to create in the same act the machinery by which the act
is to be enforced, to prescribe the penalties for its infraction, and to
remove obstacles in the way of its execution. If such matters are properly
connected with the subject as expressed in the title, it is unnecessary that
they should also have special mention in the title (Southern Pac. Co. v.
Bartine, 170 Fed. 725).
This is particularly true of the repealing clause, on which Cooley writes:
"The repeal of a statute on a given subject is properly connected with the
subject matter of a new statute on the same subject; and therefore a
repealing section in the new statute is valid, notwithstanding that the title
is silent on the subject. It would be difficult to conceive of a matter more
germane to an act and to the object to be accomplished thereby than the
repeal of previous legislations connected therewith." 4chanrobles virtual law
library
The reason is that where a statute repeals a former law, such repeal is the
effect and not the subject of the statute; and it is the subject, not the
effect of a law, which is required to be briefly expressed in its title. 5As
observed in one case, 6if the title of an act embraces only one subject, we
apprehend it was never claimed that every other act which repeals it or
alters by implication must be mentioned in the title of the new act. Any
such rule would be neither within the reason of the Constitution, nor
practicable.chanroblesvirtualawlibrarychanrobles virtual law library
We are convinced that the withdrawal of the franking privilege from some
agencies is germane to the accomplishment of the principal objective of
R.A. No. 7354, which is the creation of a more efficient and effective postal
service system. Our ruling is that, by virtue of its nature as a repealing
clause, Section 35 did not have to be expressly included in the title of the
said law.
 IIchanrobles virtual law library It is a matter of record that the conference Committee Report on the bill in
question was returned to and duly approved by both the Senate and the
House of Representatives. Thereafter, the bill was enrolled with its
The petitioners maintain that the second paragraph of Sec. 35 covering the
certification by Senate President Neptali A. Gonzales and Speaker Ramon
repeal of the franking privilege from the petitioners and this Court under
V. Mitra of the House of Representatives as having been duly passed by
E.O. 207, PD 1882 and PD 26 was not included in the original version of
both Houses of Congress. It was then presented to and approved by
Senate Bill No. 720 or House Bill No. 4200. As this paragraph appeared
President Corazon C. Aquino on April 3,
only in the Conference Committee Report, its addition, violates Article VI,
1992.chanroblesvirtualawlibrarychanrobles virtual law library
Sec. 26(2) of the Constitution, reading as follows:

Under the doctrine of separation powers, the Court may not inquire beyond
(2) No bill passed by either House shall become a law unless it has passed
the certification of the approval of a bill from the presiding officers of
three readings on separate days, and printed copies thereof in its final form
Congress. Casco Philippine Chemical Co. v. Gimenez 7 laid down the rule
have been distributed to its Members three days before its passage, except
that the enrolled bill, is conclusive upon the Judiciary (except in matters
when the President certifies to the necessity of its immediate enactment to
that have to be entered in the journals like the yeas and nays on the final
meet a public calamity or emergency. Upon the last reading of a bill, no
reading of the
amendment thereto shall be allowed, and the vote thereon shall be taken
bill). 8The journals are themselves also binding on the Supreme Court, as
immediately thereafter, and the yeas andnays entered in the Journal.
we held in the old (but still valid) case of U.S. vs. Pons, 9where we
explained the reason thus:
The petitioners also invoke Sec. 74 of the Rules of the House of
Representatives, requiring that amendment to any bill when the House and
To inquire into the veracity of the journals of the Philippine legislature
the Senate shall have differences thereon may be settled by a conference
when they are, as we have said, clear and explicit, would be to violate both
committee of both chambers. They stress that Sec. 35 was never a subject
the, letter and spirit of the organic laws by which the Philippine
of any disagreement between both Houses and so the second paragraph
Government was brought into existence, to invade a coordinate and
could not have been validly added as an
independent department of the Government, and to interfere with the
amendment.chanroblesvirtualawlibrarychanrobles virtual law library
legitimate powers and functions, of the Legislature.

These argument are unacceptable.chanroblesvirtualawlibrarychanrobles

virtual law library
While it is true that a conference committee is the mechanism for
compromising differences between the Senate and the House, it is not
limited in its jurisdiction to this question. Its broader function is described
thus:
A conference committee may, deal generally with the subject matter or it
may be limited to resolving the precise differences between the two
houses. Even where the conference committee is not by rule limited in its
jurisdiction, legislative custom severely limits the freedom with which new
subject matter can be inserted into the conference bill. But occasionally a
conference committee produces unexpected results, results beyond its
mandate, These excursions occur even where the rules impose strict
limitations on conference committee jurisdiction. This is symptomatic of the
authoritarian power of conference committee (Davies, Legislative Law and
Process: In a Nutshell, 1986 Ed., p.81).
Applying these principles, we shall decline to look into the petitioners'
charges that an amendment was made upon the last reading of the bill that
eventually became R.A. No. 7354 and that copies thereof in its final form
were not distributed among the members of each House. Both the enrolled
bill and the legislative journals certify that the measure was duly
enacted i.e., in accordance with Article VI, Sec. 26(2) of the Constitution.
We are bound by such official assurances from a coordinate department of
the government, to which we owe, at the very least, a becoming courtesy.
IIIchanrobles virtual law library
The third and most serious challenge of the petitioners is based on the
equal protection clause.chanroblesvirtualawlibrary chanrobles virtual law
library
It is alleged that R.A. No. 7354 is discriminatory because while withdrawing
the franking privilege from the Judiciary, it retains the same for the
President of the Philippines, the Vice President of the Philippines; Senators
and Members of the House of Representatives, the Commission on
Elections; former Presidents of the Philippines; the National Census and
Statistics Office; and the general public in the filing of complaints against
public offices and officers. 10chanrobles virtual law library
The respondents counter that there is no discrimination because the law is
based on a valid classification in accordance with the equal protection
clause. In fact, the franking privilege has been withdrawn not only from the
Judiciary but also the Office of Adult Education, the Institute of National
Language; the Telecommunications Office; the Philippine Deposit Insurance
Corporation; the National Historical Commission; the Armed Forces of the
Philippines; the Armed Forces of the Philippines Ladies Steering
Committee; the City and Provincial Prosecutors; the Tanodbayan (Office of
Special Prosecutor); the Kabataang Barangay; the Commission on the
Filipino Language; the Provincial and City Assessors; and the National
Council for the Welfare of Disabled Persons. 11chanrobles virtual law library
The equal protection of the laws is embraced in the concept of due process,
as every unfair discrimination offends the requirements of justice and fair
play. It has nonetheless been embodied in a separate clause in Article III
Sec. 1., of the Constitution to provide for a more, specific guaranty against
any form of undue favoritism or hostility from the government.
Arbitrariness in general may be challenged on the basis of the due process
clause. But if the particular act assailed partakes of an unwarranted
partiality or prejudice, the sharper weapon to cut it down is the equal
protection clause.chanroblesvirtualawlibrarychanrobles virtual law library
According to a long line of decisions, equal protection simply requires that
all persons or things similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed, 12Similar subjects, in other
words, should not be treated differently, so as to give undue favor to some
and unjustly discriminate against
others.chanroblesvirtualawlibrarychanrobles virtual law library
The equal protection clause does not require the universal application of
the laws on all persons or things without distinction. This might in fact
sometimes result in unequal protection, as where, for example, a law
prohibiting mature books to all persons, regardless of age, would benefit
the morals of the youth but violate the liberty of adults. What the clause
requires is equality among equals as determined according to a valid
classification. By classification is meant the grouping of persons or things
similar to each other in certain particulars and different from all others in
these same particulars. 13chanrobles virtual law library
What is the reason for the grant of the franking privilege in the first place?
Is the franking privilege extended to the President of the Philippines or the
Commission on Elections or to former Presidents of the Philippines purely
as a courtesyfrom the lawmaking body? Is it offered because of
the importance or status of the grantee or because of its need for the
privilege? Or have the grantees been chosen pell-mell, as it were, without
any basis at all for the selection?chanrobles virtual law library
We reject outright the last conjecture as there is no doubt that the statute
as a whole was carefully deliberated upon, by the political departments
before it was finally enacted. There is reason to suspect, however, that not
enough care or attention was given to its repealing clause, resulting in the
unwitting withdrawal of the franking privilege from the
Judiciary.chanroblesvirtualawlibrary chanrobles virtual law library
We also do not believe that the basis of the classification was mere
courtesy, for it is unimaginable that the political departments would have
intended this serious slight to the Judiciary as the third of the major and
equal departments the government. The same observations are made if the
importance or status of the grantee was the criterion used for the
extension of the franking privilege, which is enjoyed by the National
Census and Statistics Office and even some private individuals but not the
courts of justice.chanroblesvirtualawlibrarychanrobles virtual law library
In our view, the only acceptable reason for the grant of the franking
privilege was the perceived need of the grantee for the accommodation,
which would justify a waiver of substantial revenue by the Corporation in
the interest of providing for a smoother flow of communication between the
government and the people.chanroblesvirtualawlibrarychanrobles virtual
law library
Assuming that basis, we cannot understand why, of all the departments of
the government, it is the Judiciary, that has been denied the franking
privilege. There is no question that if there is any major branch of the
government that needs the privilege, it is the Judicial Department, as the
respondents themselves point out. Curiously, the respondents would justify
the distinction on the basis precisely of this need and, on this basis, deny
the Judiciary the franking privilege while extending it to others less
deserving.chanroblesvirtualawlibrarychanrobles virtual law library
In their Comment, the respondents point out that available data from the
Postal Service Office show that from January 1988 to June 1992, the total
volume of frank mails amounted to P90,424,175.00. Of this amount, frank
mails from the Judiciary and other agencies whose functions include the
service of judicial processes, such as the intervenor, the Department of
Justice and the Office of the Ombudsman, amounted to P86,481,759. Frank
mails coming fromthe Judiciary amounted to P73,574,864.00, and those
coming from the petitioners reached the total amount of P60,991,431.00.
The respondents' conclusion is that because of this considerable volume of
mail from the Judiciary, the franking privilege must be withdrawn from
it.chanroblesvirtualawlibrarychanrobles virtual law library
The argument is self-defeating. The respondents are in effect saying that
the franking privilege should be extended only to those who do not need it
very much, if at all, (like the widows of former Presidents) but not to those
who need it badly (especially the courts of justice). It is like saying that a
person may be allowed cosmetic surgery although it is not really necessary
but not an operation that can save his
life.chanroblesvirtualawlibrarychanrobles virtual law library
If the problem of the respondents is the loss of revenues from the franking
privilege, the remedy, it seems to us, is to withdraw it altogether
from all agencies of government, including those who do not need it. The
problem is not solved by retaining it for some and withdrawing it from
others, especially where there is no substantial distinction between those
favored, which may or may not need it at all, and the Judiciary, which
definitely needs it. The problem is not solved by violating the
Constitution.chanroblesvirtualawlibrarychanrobles virtual law library
In lumping the Judiciary with the other offices from which the franking
privilege has been withdrawn, Section 35 has placed the courts of justice in
a category to which it does not belong. If it recognizes the need of the
President of the Philippines and the members of Congress for the franking
privilege, there is no reason why it should not recognize a similar and in
fact greater need on the part of the Judiciary for such privilege. While we
may appreciate the withdrawal of the franking privilege from the Armed
Forces of the Philippines Ladies Steering Committee, we fail to understand
why the Supreme Court should be similarly treated as that Committee. And
while we may concede the need of the National Census and Statistics Office
for the franking privilege, we are intrigued that a similar if not greater need
is not recognized in the courts of
justice.chanroblesvirtualawlibrarychanrobles virtual law library
(On second thought, there does not seem to be any justifiable need for
withdrawing the privilege from the Armed Forces of the Philippines Ladies
Steering Committee, which, like former Presidents of the Philippines or
their widows, does not send as much frank mail as the
Judiciary.)chanrobles virtual law library
It is worth observing that the Philippine Postal Corporation, as a
government-controlled corporation, was created and is expected to operate
for the purpose of promoting the public service. While it may have been
established primarily for private gain, it cannot excuse itself from
performing certain functions for the benefit of the public in exchange for
the franchise extended to it by the government and the many advantages
it enjoys under its charter. 14 Among the services it should be prepared to
extend is free carriage of mail for certain offices of the government that
need the franking privilege in the discharge of their own public
functions.chanroblesvirtualawlibrarychanrobles virtual law library
We also note that under Section 9 of the law, the Corporation is capitalized
at P10 billion pesos, 55% of which is supplied by the Government, and that
it derives substantial revenues from the sources enumerated in Section 10,
on top of the exemptions it enjoys. It is not likely that the retention of the
franking privilege of the Judiciary will cripple the
Corporation.chanroblesvirtualawlibrarychanrobles virtual law library
At this time when the Judiciary is being faulted for the delay in the
administration of justice, the withdrawal from it of the franking privilege
can only further deepen this serious problem. The volume of judicial mail,
as emphasized by the respondents themselves, should stress the
dependence of the courts of justice on the postal service for communicating
with lawyers and litigants as part of the judicial process. The Judiciary has
the lowest appropriation in the national budget compared to the Legislative
and Executive Departments; of the P309 billion budgeted for 1993, only
.84%, or less than 1%, is alloted for the judiciary. It should not be hard to
imagine the increased difficulties of our courts if they have to affix a
purchased stamp to every process they send in the discharge of their
judicial functions.chanroblesvirtualawlibrarychanrobles virtual law library
We are unable to agree with the respondents that Section 35 of R.A. No.
7354 represents a valid exercise of discretion by the Legislature under the
police power. On the contrary, we find its repealing clause to be a
discriminatory provision that denies the Judiciary the equal protection of
the laws guaranteed for all persons or things similarly situated. The
distinction made by the law is superficial. It is not based on substantial
distinctions that make real differences between the Judiciary and the
grantees of the franking privilege.chanroblesvirtualawlibrarychanrobles
virtual law library
This is not a question of wisdom or power into which the Judiciary may not
intrude. It is a matter of arbitrariness that this Court has the duty and
power to correct.
IVchanrobles virtual law library
In sum, we sustain R.A. No. 7354 against the attack that its subject is not
expressed in its title and that it was not passed in accordance with the
prescribed procedure. However, we annul Section 35 of the law as violative
of Article 3, Sec. 1, of the Constitution providing that no person shall "be
deprived of the equal protection of laws."chanrobles virtual law library

We arrive at these conclusions with a full awareness of the criticism it is

certain to provoke. While ruling against the discrimination in this case, we
may ourselves be accused of similar discrimination through the exercise of
our ultimate power in our own favor. This is inevitable. Criticism of judicial
conduct, however undeserved, is a fact of life in the political system that
we are prepared to accept.. As judges, we cannot debate with our
detractors. We can only decide the cases before us as law imposes on us
the duty to be fair and our own conscience gives us the light to be
right.chanroblesvirtualawlibrarychanrobles virtual law library

ACCORDINGLY, the petition is partially GRANTED and Section 35 of R.A.

No. 7354 is declared UNCONSTITUTIONAL. Circular No. 92-28 is SET ASIDE
insofar as it withdraws the franking privilege from the Supreme Court, the
Court of Appeals, the Regional trail Courts, the Municipal trial Courts, and
the National Land Registration Authority and its Register of Deeds to all of
which offices the said privilege shall be RESTORED. The temporary
restraining order dated June 2, 1992, is made
permanent.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.
 G.R. No. 109289 October 3, 1994 Article III, Section 1 - No person shall be deprived of . . . property without
due process of law, nor shall any person be denied the equal protection of
the laws.
RUFINO R. TAN, Petitioner, v. RAMON R. DEL ROSARIO, JR., as
SECRETARY OF FINANCE & JOSE U. ONG, as COMMISSIONER OF
INTERNAL REVENUE, Respondents. In G.R. No. 109446, petitioners, assailing Section 6 of Revenue Regulations
No. 2-93, argue that public respondents have exceeded their rule-making
authority in applying SNIT to general professional
G.R. No. 109446 October 3, 1994
partnerships.chanroblesvirtualawlibrarychanrobles virtual law library

CARAG, CABALLES, JAMORA AND SOMERA LAW OFFICES, CARLO A.

The Solicitor General espouses the position taken by public
CARAG, MANUELITO O. CABALLES, ELPIDIO C. JAMORA, JR. and
respondents.chanroblesvirtualawlibrarychanrobles virtual law library
BENJAMIN A. SOMERA, JR., Petitioners, v. RAMON R. DEL ROSARIO,
in his capacity as SECRETARY OF FINANCE and JOSE U. ONG, in his
capacity as COMMISSIONER OF INTERNAL REVENUE, Respondents. The Court has given due course to both petitions. The parties, in
compliance with the Court's directive, have filed their respective
memoranda.
Rufino R. Tan for and in his own behalf.chanrobles virtual law library

G.R. No. 109289

Carag, Caballes, Jamora & Zomera Law Offices for petitioners in G.R.
109446.
Petitioner contends that the title of House Bill No. 34314, progenitor of
Republic Act No. 7496, is a misnomer or, at least, deficient for being
VITUG, J.:
merely entitled, "Simplified Net Income Taxation Scheme for the Self-
Employed
These two consolidated special civil actions for prohibition challenge, in and Professionals Engaged in the Practice of their Profession" (Petition in
G.R. No. 109289, the constitutionality of Republic Act No. 7496, also G.R. No. 109289).chanroblesvirtualawlibrarychanrobles virtual law library
commonly known as the Simplified Net Income Taxation Scheme ("SNIT"),
amending certain provisions of the National Internal Revenue Code and, in
The full text of the title actually reads:
G.R. No. 109446, the validity of Section 6, Revenue Regulations No. 2-93,
promulgated by public respondents pursuant to said
law.chanroblesvirtualawlibrarychanrobles virtual law library An Act Adopting the Simplified Net Income Taxation Scheme For The Self-
Employed and Professionals Engaged In The Practice of Their Profession,
Amending Sections 21 and 29 of the National Internal Revenue Code, as
Petitioners claim to be taxpayers adversely affected by the continued
Amended.
implementation of the amendatory
legislation.chanroblesvirtualawlibrarychanrobles virtual law library
The pertinent provisions of Sections 21 and 29, so referred to, of the
National Internal Revenue Code, as now amended, provide:
In G.R. No. 109289, it is asserted that the enactment of Republic Act
No. 7496 violates the following provisions of the Constitution:
Sec. 21. Tax on citizens or residents. -
Article VI, Section 26(1) - Every bill passed by the Congress shall embrace
only one subject which shall be expressed in the title xxx xxx xxxchanrobles virtual law library
thereof.chanroblesvirtualawlibrarychanrobles virtual law library
(f) Simplified Net Income Tax for the Self-Employed and/or Professionals
Article VI, Section 28(1) - The rule of taxation shall be uniform and Engaged in the Practice of Profession. - A tax is hereby imposed upon the
equitable. The Congress shall evolve a progressive system of taxable net income as determined in Section 27 received during each
taxation.chanroblesvirtualawlibrarychanrobles virtual law library taxable year from all sources, other than income covered by paragraphs
(b), (c), (d) and (e) of this section by every individual whether
a citizen of the Philippines or an alien residing in the Philippines who is self-
employed or practices his profession herein, determined in accordance with
the following schedule:
Not over P10,000 3%
Over P10,000 P300 + 9%
but not over P30,000 of excess over P10,000
Over P30,000 P2,100 + 15%
but not over P120,00 of excess over P30,000
Over P120,000 P15,600 + 20%
but not over P350,000 of excess over P120,000
Over P350,000 P61,600 + 30%
of excess over P350,000chanrobles virtual law library
Sec. 29. Deductions from gross income. - In computing taxable income
subject to tax under Sections 21(a), 24(a), (b) and (c); and 25 (a)(1),
there shall be allowed as deductions the items specified in paragraphs (a)
to (i) of this section:Provided, however, That in computing taxable income
subject to tax under Section 21 (f) in the case of individuals engaged in
business or practice of profession, only the following direct costs shall be
allowed as deductions:chanrobles virtual law library
(a) Raw materials, supplies and direct labor;chanrobles virtual law library
(b) Salaries of employees directly engaged in activities in the course of or
pursuant to the business or practice of their profession;chanrobles virtual
law library
(c) Telecommunications, electricity, fuel, light and water;chanrobles virtual
law library
(d) Business rentals;chanrobles virtual law library
(e) Depreciation;chanrobles virtual law library
(f) Contributions made to the Government and accredited relief
organizations for the rehabilitation of calamity stricken areas declared by
the President; andchanrobles virtual law library
(g) Interest paid or accrued within a taxable year on loans contracted from
accredited financial institutions which must be proven to have been
incurred in connection with the conduct of a taxpayer's profession, trade or
business.chanroblesvirtualawlibrarychanrobles virtual law library
For individuals whose cost of goods sold and direct costs are difficult to
determine, a maximum of forty per cent (40%) of their gross receipts shall
be allowed as deductions to answer for business or professional expenses
as the case may be.
On the basis of the above language of the law, it would be difficult to
accept petitioner's view that the amendatory law should be considered as
having now adopted a gross income, instead of as having still retained
the net income, taxation scheme. The allowance for deductible items, it is
true, may have significantly been reduced by the questioned law in
comparison with that which has prevailed prior to the amendment; limiting,
however, allowable deductions from gross income is neither discordant
with, nor opposed to, the net income tax concept. The fact of the matter is
still that various deductions, which are by no means inconsequential,
continue to be well provided under the new
law.chanroblesvirtualawlibrarychanrobles virtual law library
Article VI, Section 26(1), of the Constitution has been envisioned so as (a)
to prevent log-rolling legislation intended to unite the members of the
legislature who favor any one of unrelated subjects in support of the whole
act, (b) to avoid surprises or even fraud upon the legislature, and (c) to
fairly apprise the people, through such publications of its proceedings as
are usually made, of the subjects of legislation. 1The above objectives of
the fundamental law appear to us to have been sufficiently met. Anything
else would be to require a virtual compendium of the law which could not
have been the intendment of the constitutional
mandate.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner intimates that Republic Act No. 7496 desecrates the
constitutional requirement that taxation "shall be uniform and equitable" in
that the law would now attempt to tax single proprietorships and
professionals differently from the manner it imposes the tax on
corporations and partnerships. The contention clearly forgets, however,
that such a system of income taxation has long been the prevailing rule
even prior to Republic Act No. 7496.chanroblesvirtualawlibrarychanrobles
virtual law library
Uniformity of taxation, like the kindred concept of equal protection, merely
requires that all subjects or objects of taxation, similarly situated, are to be
treated alike both in privileges and liabilities (Juan Luna Subdivision vs.
Sarmiento, 91 Phil. 371). Uniformity does not forfend classification as long
as: (1) the standards that are used therefor are substantial and not
arbitrary, (2) the categorization is germane to achieve the legislative
purpose, (3) the law applies, all things being equal, to both present and
future conditions, and (4) the classification applies equally well to all those
belonging to the same class (Pepsi Cola vs. City of Butuan, 24 SCRA
3; Basco vs. PAGCOR, 197 SCRA 52).chanroblesvirtualawlibrarychanrobles
virtual law library
What may instead be perceived to be apparent from the amendatory law is
the legislative intent to increasingly shift the income tax system towards
the schedular approach 2 in the income taxation of individual taxpayers and
to maintain, by and large, the present global treatment 3 on taxable
corporations. We certainly do not view this classification to be arbitrary and
inappropriate.chanroblesvirtualawlibrarychanrobles virtual law library
Petitioner gives a fairly extensive discussion on the merits of the law,
illustrating, in the process, what he believes to be an imbalance between
the tax liabilities of those covered by the amendatory law and those who
are not. With the legislature primarily lies the discretion to determine the
nature (kind), object (purpose), extent (rate), coverage (subjects)
and situs(place) of taxation. This court cannot freely delve into those
matters which, by constitutional fiat, rightly rest on legislative judgment.
Of course, where a tax measure becomes so unconscionable and unjust as
to amount to confiscation of property, courts will not hesitate to strike it
down, for, despite all its plenitude, the power to tax cannot override
constitutional proscriptions. This stage, however, has not been
demonstrated to have been reached within any appreciable distance in this
controversy before us.chanroblesvirtualawlibrarychanrobles virtual law
library
Having arrived at this conclusion, the plea of petitioner to have the law
declared unconstitutional for being violative of due process must perforce
fail. The due process clause may correctly be invoked only when there is a
clear contravention of inherent or constitutional limitations in the exercise
of the tax power. No such transgression is so evident to us.
G.R. No. 109446
The several propositions advanced by petitioners revolve around the
question of whether or not public respondents have exceeded their
authority in promulgating Section 6, Revenue Regulations No. 2-93, to
carry out Republic Act No. 7496.chanroblesvirtualawlibrarychanrobles
virtual law library
The questioned regulation reads:
Sec. 6. General Professional Partnership - The general professional
partnership (GPP) and the partners comprising the GPP are covered by R.
A. No. 7496. Thus, in determining the net profit of the partnership, only
the direct costs mentioned in said law are to be deducted from partnership
income. Also, the expenses paid or incurred by partners in their individual
capacities in the practice of their profession which are not reimbursed or
paid by the partnership but are not considered as direct cost, are not
deductible from his gross income.
The real objection of petitioners is focused on the administrative
interpretation of public respondents that would apply SNIT to partners in
general professional partnerships. Petitioners cite the pertinent
deliberations in Congress during its enactment of Republic Act No. 7496,
also quoted by the Honorable Hernando B. Perez, minority floor leader of
the House of Representatives, in the latter's privilege speech by way of
commenting on the questioned implementing regulation of public
respondents following the effectivity of the law, thusly:
MR. ALBANO, Now Mr. Speaker, I would like to get the correct impression
of this bill. Do we speak here of individuals who are earning, I mean, who
earn through business enterprises and therefore, should file an income tax
return?chanrobles virtual law library
MR. PEREZ. That is correct, Mr. Speaker. This does not apply to
corporations. It applies only to individuals.
(See Deliberations on H. B. No. 34314, August 6, 1991, 6:15 P.M.;
Emphasis ours).
Other deliberations support this position, to wit:chanrobles virtual law
library
MR. ABAYA . . . Now, Mr. Speaker, did I hear the Gentleman from Batangas
say that this bill is intended to increase collections as far as individuals are
concerned and to make collection of taxes equitable?chanrobles virtual law
library
MR. PEREZ. That is correct, Mr. Speaker.
(Id. at 6:40 P.M.; Emphasis ours).chanroblesvirtualawlibrarychanrobles
virtual law library
In fact, in the sponsorship speech of Senator Mamintal Tamano on the
Senate version of the SNITS, it is categorically stated, thus:
This bill, Mr. President, is not applicable to business corporations or to
partnerships; it is only with respect to individuals and professionals.
(Emphasis ours)
The Court, first of all, should like to correct the apparent misconception
that general professional partnerships are subject to the payment of
income tax or that there is a difference in the tax treatment between
individuals engaged in business or in the practice of their respective
professions and partners in general professional partnerships. The fact of
the matter is that a general professional partnership, unlike an ordinary
business partnership (which is treated as a corporation for income tax
purposes and so subject to the corporate income tax), is not itself an
income taxpayer. The income tax is imposed not on the professional
partnership, which is tax exempt, but on the partners themselves in their
individual capacity computed on their distributive shares of partnership
profits. Section 23 of the Tax Code, which has not been amended at all by
Republic Act 7496, is explicit:
Sec. 23. Tax liability of members of general professional partnerships. - (a)
Persons exercising a common profession in general partnership shall be
liable for income tax only in their individual capacity, and the share in the
net profits of the general professional partnership to which any taxable
partner would be entitled whether distributed or otherwise, shall be
returned for taxation and the tax paid in accordance with the provisions of
this Title.chanroblesvirtualawlibrarychanrobles virtual law library
(b) In determining his distributive share in the net income of the
partnership, each partner -
(1) Shall take into account separately his distributive share of the
partnership's income, gain, loss, deduction, or credit to the extent provided
by the pertinent provisions of this Code, andchanrobles virtual law library
(2) Shall be deemed to have elected the itemized deductions, unless he
declares his distributive share of the gross income undiminished by his
share of the deductions.
There is, then and now, no distinction in income tax liability between a
person who practices his profession alone or individually and one who does
it through partnership (whether registered or not) with others in the
exercise of a common profession. Indeed, outside of the gross
compensation income tax and the final tax on passive investment income,
under the present income tax system all individuals deriving income from
any source whatsoever are treated in almost invariably the same manner
and under a common set of rules.chanroblesvirtualawlibrarychanrobles
virtual law library
We can well appreciate the concern taken by petitioners if perhaps we were
to consider Republic Act No. 7496 as an entirely independent, not merely
as an amendatory, piece of legislation. The view can easily become myopic,
however, when the law is understood, as it should be, as only forming part
of, and subject to, the whole income tax concept and precepts long
obtaining under the National Internal Revenue Code. To elaborate a little,
the phrase "income taxpayers" is an all embracing term used in the Tax
Code, and it practically covers all persons who derive taxable income. The
law, in levying the tax, adopts the most comprehensive tax situs of
nationality and residence of the taxpayer (that renders citizens, regardless
of residence, and resident aliens subject to income tax liability on their
income from all sources) and of the generally accepted and internationally
recognized income taxable base (that can subject non-resident aliens and
foreign corporations to income tax on their income from Philippine
sources). In the process, the Code classifies taxpayers into four main
groups, namely: (1) Individuals, (2) Corporations, (3) Estates under
Judicial Settlement and (4) Irrevocable Trusts (irrevocable both as
to corpus and as to income).chanroblesvirtualawlibrarychanrobles virtual
law library
Partnerships are, under the Code, either "taxable partnerships" or "exempt
partnerships." Ordinarily, partnerships, no matter how created or
organized, are subject to income tax (and thus alluded to as "taxable
partnerships") which, for purposes of the above categorization, are by law
assimilated to be within the context of, and so legally contemplated as,
corporations. Except for few variances, such as in the application of the
"constructive receipt rule" in the derivation of income, the income tax
approach is alike to both juridical persons. Obviously, SNIT is not intended
or envisioned, as so correctly pointed out in the discussions in Congress
during its deliberations on Republic Act 7496, aforequoted, to cover
corporations and partnerships which are independently subject to the
payment of income tax.chanroblesvirtualawlibrarychanrobles virtual law
library
"Exempt partnerships," upon the other hand, are not similarly identified as
corporations nor even considered as independent taxable entities for
income tax purposes. A generalprofessional partnership is such an
example. 4 Here, the partners themselves, not the partnership (although it
is still obligated to file an income tax return [mainly for administration and
data]), are liable for the payment of income tax in their individual capacity
computed on their respective and distributive shares of profits. In the
determination of the tax liability, a partner does so as an individual, and
there is no choice on the matter. In fine, under the Tax Code on income
taxation, the general professional partnership is deemed to be no more
than a mere mechanism or a flow-through entity in the generation of
income by, and the ultimate distribution of such income to, respectively,
each of the individual partners.chanroblesvirtualawlibrarychanrobles virtual
law library

Section 6 of Revenue Regulation No. 2-93 did not alter, but merely
confirmed, the above standing rule as now so modified by Republic Act
No. 7496 on basically the extent of allowable deductions applicable
to all individual income taxpayers on their non-compensation income.
There is no evident intention of the law, either before or after the
amendatory legislation, to place in an unequal footing or in significant
variance the income tax treatment of professionals who practice their
respective professions individually and of those who do it through a general
professional partnership.chanroblesvirtualawlibrarychanrobles virtual law
library

WHEREFORE, the petitions are DISMISSED. No special pronouncement on

costs.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.
THE HONORABLE EXECUTIVE business under the name and style
SECRETARY EDUARDO ERMITA; of 'SHELL GATE ' N. DOMINGO;
HONORABLE SECRETARY OF THE BETHZAIDA TAN doing business
DEPARTMENT OF FINANCE CESAR under the name and style of
PURISIMA; and HONORABLE 'ADVANCE SHELL STATION;
COMMISSIONER OF INTERNAL REYNALDO P. MONTOYA doing
REVENUE GUILLERMO PARAYNO, business under the name and style
JR., of 'NEW LAMUAN SHELL SERVICE
Respondents. STATION; EFREN SOTTO doing
business under the name and style
x----------------------- of 'RED FIELD SHELL SERVICE
--x STATION; DONICA CORPORATION
represented by its President, DESI
AQUILINO Q. PIMENTEL, JR., G.R. No. 168207 TOMACRUZ; RUTH E. MARBIBI
LUISA P. EJERCITO-ESTRADA, doing business under the name
JINGGOY E. ESTRADA, PANFILO M. and style of 'R&R PETRON
LACSON, ALFREDO S. LIM, JAMBY STATION; PETER M. UNGSON doing
A.S. MADRIGAL, AND SERGIO R. business under the name and style
OSMEA III, of 'CLASSIC STAR GASOLINE
Petitioners, SERVICE STATION; MARIAN
SHEILA A. LEE doing business
- versus - under the name and style of 'NTE
GASOLINE & SERVICE STATION;
EXECUTIVE SECRETARY EDUARDO JULIAN CESAR P. POSADAS doing
R. ERMITA, CESAR V. PURISIMA, business under the name and style
SECRETARY OF FINANCE, of 'STARCARGA ENTERPRISES' ;
GUILLERMO L. PARAYNO, JR., ADORACION MAEBO doing
COMMISSIONER OF THE BUREAU business under the name and style
OF INTERNAL REVENUE, of 'CMA MOTORISTS CENTER;
Respondents. SUSAN M. ENTRATA doing business
under the name and style of
x----------------------- 'LEONA'S GASOLINE STATION and
--x SERVICE CENTER; CARMELITA
BALDONADO doing business under
ASSOCIATION OF PILIPINAS G.R. No. 168461 the name and style of 'FIRST
SHELL DEALERS, INC. represented CHOICE SERVICE CENTER;
by its President, ROSARIO MERCEDITAS A. GARCIA doing
ANTONIO; PETRON DEALERS' business under the name and style
ASSOCIATION represented by its of 'LORPED SERVICE CENTER;
President, RUTH E. BARBIBI; RHEAMAR A. RAMOS doing
ASSOCIATION OF CALTEX business under the name and style
DEALERS' OF THE PHILIPPINES of 'RJRAM PTT GAS STATION; MA.
represented by its President, ISABEL VIOLAGO doing business
MERCEDITAS A. GARCIA; ROSARIO under the name and style of
ANTONIO doing business under the 'VIOLAGO-PTT SERVICE CENTER;
name and style of 'ANB NORTH MOTORISTS' HEART
SHELL SERVICE STATION; CORPORATION represented by its
LOURDES MARTINEZ doing Vice-President for Operations,
JOSELITO F. FLORDELIZA; Petitioners,
MOTORISTS' HARVARD
CORPORATION represented by its - versus -
Vice-President for Operations,
JOSELITO F. FLORDELIZA;
MOTORISTS' HERITAGE
CESAR V. PURISIMA, in his
CORPORATION represented by its
capacity as Secretary of Finance,
Vice-President for Operations,
GUILLERMO L. PARAYNO, JR., in his
JOSELITO F. FLORDELIZA;
capacity as Commissioner of
PHILIPPINE STANDARD OIL
Internal Revenue, and EDUARDO
CORPORATION represented by its
R. ERMITA, in his capacity as
Vice-President for Operations,
Executive Secretary,
JOSELITO F. FLORDELIZA; ROMEO
MANUEL doing business under the
name and style of 'ROMMAN
GASOLINE STATION; ANTHONY
ALBERT CRUZ III doing business Respondents.
under the name and style of 'TRUE
SERVICE STATION', x-----------------------
'Petitioners, --x

- versus - BATAAN GOVERNOR ENRIQUE T. G.R. No. 168730

GARCIA, JR.
CESAR V. PURISIMA, in his Petitioner,
capacity as Secretary of the
Department of Finance and - versus -
GUILLERMO L. PARAYNO, JR., in his
capacity as Commissioner of HON. EDUARDO R. ERMITA, in his
Internal Revenue, capacity as the Executive
Respondents. Secretary; HON. MARGARITO
TEVES, in his capacity as Secretary
x----------------------- of Finance; HON. JOSE MARIO
--x BUNAG, in his capacity as the OIC
Commissioner of the Bureau of
FRANCIS JOSEPH G. ESCUDERO, G.R. No. 168463 Internal Revenue; and HON.
VINCENT CRISOLOGO, EMMANUEL ALEXANDER AREVALO, in his
JOEL J. VILLANUEVA, RODOLFO G. capacity as the OIC Commissioner
PLAZA, DARLENE ANTONINO- of the Bureau of Customs,
CUSTODIO, OSCAR G. MALAPITAN,
BENJAMIN C. AGARAO, JR. JUAN
EDGARDO M. ANGARA, JUSTIN
MARC SB. CHIPECO, FLORENCIO G.
NOEL, MUJIV S. HATAMAN,
RENATO B. MAGTUBO, JOSEPH A.
SANTIAGO, TEOFISTO DL.
GUINGONA III, RUY ELIAS C.
LOPEZ, RODOLFO Q. AGBAYANI
and TEODORO A. CASIO, Promulgated:
 Respondents. September 1, 2005
9337 (R.A. No. 9337) [1] was enacted. Reasons, the wisdom of which, the

Court even with its extensive constitutional power of review, cannot probe.

x----------------------------------------------- The petitioners in these cases, however, question not only the wisdom of the
------------x
law, but also perceived constitutional infirmities in its passage.

Every law enjoys in its favor the presumption of constitutionality. Their

DECISION
arguments notwithstanding, petitioners failed to justify their call for the

invalidity of the law. Hence, R.A. No. 9337 is not unconstitutional.

AUSTRIA-MARTINEZ, J .:
LEGISLATIVE HISTORY

R.A. No. 9337 is a consolidation of three legislative bills namely, House Bill
The expenses of government, having for their object the interest of all,
should be borne by everyone, and the more man enjoys the advantages of Nos. 3555 and 3705, and Senate Bill No. 1950.
society, the more he ought to hold himself honored in contributing to those
expenses.

-Anne Robert Jacques Turgot (1727-1781)

House Bill No. 3555 [2] was introduced on first reading on January 7,
'French statesman and economist
2005. The House Committee on Ways and Means approved the bill, in

substitution of House Bill No. 1468, which Representative (Rep.) Eric D.

Singson introduced on August 8, 2004. The President certified the bill

Mounting budget deficit, revenue generation, inadequate fiscal allocation for on January 7, 2005 for immediate enactment. On January 27, 2005, the

education, increased emoluments for health workers, and wider coverage for House of Representatives approved the bill on second and third reading.

full value-added tax benefits ' these are the reasons why Republic Act No.
House Bill No. 3705 [3] on the other hand, substituted House Bill No. 3105 Before long, the Conference Committee on the Disagreeing Provisions of

introduced by Rep. Salacnib F. Baterina, and House Bill No. 3381 introduced House Bill No. 3555, House Bill No. 3705, and Senate Bill No. 1950, 'after

by Rep. Jacinto V. Paras. Its 'mother bill is House Bill No. 3555. The House having met and discussed in full free and conference, recommended the

Committee on Ways and Means approved the bill on February 2, 2005. The approval of its report, which the Senate did on May 10, 2005, and with the

President also certified it as urgent on February 8, 2005. The House of House of Representatives agreeing thereto the next day, May 11, 2005.

Representatives approved the bill on second and third reading on February

28, 2005.

On May 23, 2005, the enrolled copy of the consolidated House and Senate

version was transmitted to the President, who signed the same into law

Meanwhile, the Senate Committee on Ways and Means approved Senate on May 24, 2005. Thus, came R.A. No. 9337.

Bill No. 1950 [4] on March 7, 2005, 'in substitution of Senate Bill Nos.

1337, 1838 and 1873, taking into consideration House Bill Nos. 3555 and

3705. Senator Ralph G. Recto sponsored Senate Bill No. 1337, while Senate July 1, 2005 is the effectivity date of R.A. No. 9337. [5] When said date

Bill Nos. 1838 and 1873 were both sponsored by Sens. Franklin M. Drilon, came, the Court issued a temporary restraining order, effective immediately

Juan M. Flavier and Francis N. Pangilinan. The President certified the bill and continuing until further orders, enjoining respondents from enforcing

on March 11, 2005, and was approved by the Senate on second and third and implementing the law.

reading on April 13, 2005.

Oral arguments were held on July 14, 2005. Significantly, during the hearing,

On the same date, April 13, 2005, the Senate agreed to the request of the the Court speaking through Mr. Justice Artemio V. Panganiban, voiced the

House of Representatives for a committee conference on the disagreeing rationale for its issuance of the temporary restraining order on July 1, 2005,

provisions of the proposed bills. to wit:

J. PANGANIBAN : . . . But before I go into the details of

your presentation, let me just
tell you a little background. You
know when the law took effect
on July 1, 2005, the Court
 issued a TRO at about 5 oclock
in the afternoon. But before
that, there was a lot of
complaints aired on television
and on radio. Some people in a
gas station were complaining
that the gas prices went up by
10%. Some people were
complaining that their electric
bill will go up by 10%. Other
times people riding in domestic
air carrier were complaining
that the prices that theyll have
to pay would have to go up by
10%. While all that was being
aired, per your presentation
and per our own understanding
of the law, that's not true. It's
not true that the e-vat law
necessarily increased prices by
10% uniformly isnt it?
ATTY. BANIQUED : No, Your Honor.
J. PANGANIBAN : It is not?
ATTY. BANIQUED : It's not, because, Your Honor, there is
an Executive Order that
granted the Petroleum
companies some subsidy . . .
interrupted
J. PANGANIBAN : That's correct . . .
ATTY. BANIQUED : . . . and therefore that was meant to
temper the impact . . .
interrupted
J. PANGANIBAN : . . . mitigating measures . . .
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : As a matter of fact a part of the
mitigating measures would be
the elimination of the Excise
Tax and the import duties. That
is why, it is not correct to say
that the VAT as to petroleum
dealers increased prices by
10%.
ATTY. BANIQUED : Yes, Your Honor.
J. PANGANIBAN : And therefore, there is no justification
for increasing the retail price by
10% to cover the E-Vat tax. If
you consider the excise tax and
the import duties, the Net Tax
would probably be in the
neighborhood of 7%? We are
not going into exact figures I
am just trying to deliver a point
that different industries,
different products, different
services are hit differently. So
it's not correct to say that all
prices must go up by 10%.
ATTY. BANIQUED : Youre right, Your Honor.
J. PANGANIBAN : Now. For instance, Domestic Airline
companies, Mr. Counsel, are at
present imposed a Sales Tax of
3%. When this E-Vat law took
effect the Sales Tax was also
removed as a mitigating
measure. So, therefore, there
is no justification to increase
the fares by 10% at best 7%,
correct?
ATTY. BANIQUED : I guess so, Your Honor, yes.
J. PANGANIBAN : There are other products that the people
were complaining on that first
day, were being increased
arbitrarily by 10%. And that's
one reason among many others
this Court had to issue TRO
because of the confusion in the
implementation. That's why we
added as an issue in this case,
even if it's tangentially taken up
by the pleadings of the parties,
 the confusion in the
implementation of the E-vat. 106, 107 and 108, respectively, of the National Internal Revenue Code
Our people were subjected to
the mercy of that confusion of (NIRC). Section 4 imposes a 10% VAT on sale of goods and properties,
an across the board increase of
Section 5 imposes a 10% VAT on importation of goods, and Section 6
10%, which you yourself now
admit and I think even the imposes a 10% VAT on sale of services and use or lease of properties. These
Government will admit is
incorrect. In some cases, it questioned provisions contain a uniform proviso authorizing the President,
should be 3% only, in some
cases it should be 6% upon recommendation of the Secretary of Finance, to raise the VAT rate to
depending on these mitigating
measures and the location and 12%, effective January 1, 2006, after any of the following conditions have
situation of each product, of
each service, of each company, been satisfied, to wit:
isnt it?

ATTY. BANIQUED : Yes, Your Honor.

J. PANGANIBAN : Alright. So that's one reason why we had
to issue a TRO pending the
clarification of all these and we
wish the government will take
time to clarify all these by
means of a more detailed
implementing rules, in case the
law is upheld by this Court. . .
. [6]
. . . That the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%),
after any of the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds two
and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of
the previous year exceeds one and one-half percent (1
'%).

The Court also directed the parties to file their respective Memoranda.

G.R. No. 168056

Petitioners argue that the law is unconstitutional, as it constitutes

abandonment by Congress of its exclusive authority to fix the rate of taxes

under Article VI, Section 28(2) of the 1987 Philippine Constitution.

Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et

al., filed a petition for prohibition on May 27, 2005. They question the

constitutionality of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections

 G.R. No. 168207
On June 9, 2005, Sen. Aquilino Q. Pimentel, Jr., et al., filed a petition
for certiorari likewise assailing the constitutionality of Sections 4, 5 and 6 of
R.A. No. 9337.
Aside from questioning the so-called stand-by authority of the President to
increase the VAT rate to 12%, on the ground that it amounts to an undue
delegation of legislative power, petitioners also contend that the increase in
the VAT rate to 12% contingent on any of the two conditions being satisfied
violates the due process clause embodied in Article III, Section 1 of the
Constitution, as it imposes an unfair and additional tax burden on the people,
in that: (1) the 12% increase is ambiguous because it does not state if the
rate would be returned to the original 10% if the conditions are no longer
satisfied; (2) the rate is unfair and unreasonable, as the people are unsure
of the applicable VAT rate from year to year; and (3) the increase in the VAT
rate, which is supposed to be an incentive to the President to raise the VAT
collection to at least 2 4/5 of the GDP of the previous year, should only be
based on fiscal adequacy.
Petitioners further claim that the inclusion of a stand-by authority granted to
the President by the Bicameral Conference Committee is a violation of the
'no-amendment rule upon last reading of a bill laid down in Article VI, Section
26(2) of the Constitution.
G.R. No. 168461
Thereafter, a petition for prohibition was filed on June 29, 2005, by the
Association of Pilipinas Shell Dealers, Inc., et al., assailing the following
provisions of R.A. No. 9337:
1) Section 8, amending Section 110 (A)(2) of the NIRC,
requiring that the input tax on depreciable goods
shall be amortized over a 60-month period, if the
acquisition, excluding the VAT components,
exceeds One Million Pesos (P1, 000,000.00);
2) Section 8, amending Section 110 (B) of the NIRC,
imposing a 70% limit on the amount of input tax
to be credited against the output tax; and
3) Section 12, amending Section 114 (c) of the NIRC,
authorizing the Government or any of its political
subdivisions, instrumentalities or agencies,
including GOCCs, to deduct a 5% final
withholding tax on gross payments of goods and
services, which are subject to 10% VAT under
Sections 106 (sale of goods and properties) and
108 (sale of services and use or lease of
properties) of the NIRC.
Petitioners contend that these provisions are unconstitutional for being
arbitrary, oppressive, excessive, and confiscatory.
Petitioners' argument is premised on the constitutional right of non-

deprivation of life, liberty or property without due process of law under Article
G.R. No. 168463
III, Section 1 of the Constitution. According to petitioners, the contested

sections impose limitations on the amount of input tax that may be claimed.

Petitioners also argue that the input tax partakes the nature of a property
Several members of the House of Representatives led by Rep. Francis Joseph
that may not be confiscated, appropriated, or limited without due process of
G. Escudero filed this petition for certiorari on June 30, 2005. They question
law. Petitioners further contend that like any other property or property
the constitutionality of R.A. No. 9337 on the following grounds:
right, the input tax credit may be transferred or disposed of, and that by

limiting the same, the government gets to tax a profit or value-added even

if there is no profit or value-added. 1) Sections 4, 5, and 6 of R.A. No. 9337 constitute an

undue delegation of legislative power, in violation
of Article VI, Section 28(2) of the Constitution;

2) The Bicameral Conference Committee acted without

jurisdiction in deleting the no pass on provisions
Petitioners also believe that these provisions violate the constitutional present in Senate Bill No. 1950 and House Bill No.
3705; and
guarantee of equal protection of the law under Article III, Section 1 of the

Constitution, as the limitation on the creditable input tax if: (1) the entity
has a high ratio of input tax; or (2) invests in capital equipment; or (3) has
several transactions with the government, is not based on real and
substantial differences to meet a valid classification.
3) Insertion by the Bicameral Conference Committee of
Sections 27, 28, 34, 116, 117, 119, 121,
125, [7] 148, 151, 236, 237 and 288, which were
present in Senate Bill No. 1950, violates Article
VI, Section 24(1) of the Constitution, which
provides that all appropriation, revenue or tariff
bills shall originate exclusively in the House of
Representatives

Lastly, petitioners contend that the 70% limit is anything but progressive,
G.R. No. 168730
violative of Article VI, Section 28(1) of the Constitution, and that it is the

smaller businesses with higher input tax to output tax ratio that will suffer

the consequences thereof for it wipes out whatever meager margins the
On the eleventh hour, Governor Enrique T. Garcia filed a petition
petitioners make.
for certiorariand prohibition on July 20, 2005, alleging unconstitutionality of
the law on the ground that the limitation on the creditable input tax in effect complete and leaves no discretion to the President but to increase the rate

allows VAT-registered establishments to retain a portion of the taxes they to 12% once any of the two conditions provided therein arise.

collect, thus violating the principle that tax collection and revenue should be

solely allocated for public purposes and expenditures. Petitioner Garcia

further claims that allowing these establishments to pass on the tax to the Respondents also refute petitioners' argument that the increase to 12%, as

consumers is inequitable, in violation of Article VI, Section 28(1) of the well as the 70% limitation on the creditable input tax, the 60-month

Constitution. amortization on the purchase or importation of capital goods

exceeding P1,000,000.00, and the 5% final withholding tax by government

agencies, is arbitrary, oppressive, and confiscatory, and that it violates the

RESPONDENTS' COMMENT constitutional principle on progressive taxation, among others.

The Office of the Solicitor General (OSG) filed a Comment in behalf of Finally, respondents manifest that R.A. No. 9337 is the anchor of the

respondents. Preliminarily, respondents contend that R.A. No. 9337 enjoys government's fiscal reform agenda. A reform in the value-added system of

the presumption of constitutionality and petitioners failed to cast doubt on taxation is the core revenue measure that will tilt the balance towards a

its validity. sustainable macroeconomic environment necessary for economic growth.

Relying on the case of Tolentino vs. Secretary of Finance, 235 SCRA ISSUES

630 (1994), respondents argue that the procedural issues raised by

petitioners, i.e., legality of the bicameral proceedings, exclusive origination

The Court defined the issues, as follows:
of revenue measures and the power of the Senate concomitant thereto, have

already been settled. With regard to the issue of undue delegation of

legislative power to the President, respondents contend that the law is PROCEDURAL ISSUE
 Whether R.A. No. 9337 violates the following provisions of
the Constitution: tax on expenditure, the seller of goods or services may pass on the amount

a. Article VI, Section 24, and of tax paid to the buyer, [9] with the seller acting merely as a tax
b. Article VI, Section 26(2)
collector. [10] The burden of VAT is intended to fall on the immediate buyers
SUBSTANTIVE ISSUES and ultimately, the end-consumers.
1. Whether Sections 4, 5 and 6 of R.A. No. 9337, amending
Sections 106, 107 and 108 of the NIRC, violate the
following provisions of the Constitution:

a. Article VI, Section 28(1), and In contrast, a direct tax is a tax for which a taxpayer is directly liable on the
b. Article VI, Section 28(2)
transaction or business it engages in, without transferring the burden to
2. Whether Section 8 of R.A. No. 9337, amending Sections
110(A)(2) and 110(B) of the NIRC; and Section 12 of R.A. someone else. [11] Examples are individual and corporate income taxes,
No. 9337, amending Section 114(C) of the NIRC, violate
the following provisions of the Constitution: transfer taxes, and residence taxes. [12]

a. Article VI, Section 28(1), and

b. Article III, Section 1

In the Philippines, the value-added system of sales taxation has long been

in existence, albeit in a different mode. Prior to 1978, the system was a

single-stage tax computed under the 'cost deduction method and was

RULING OF THE COURT payable only by the original sellers. The single-stage system was

subsequently modified, and a mixture of the 'cost deduction method and 'tax

credit method was used to determine the value-added tax

As a prelude, the Court deems it apt to restate the general principles and payable. [13] Under the 'tax credit method, an entity can credit against or

concepts of value-added tax (VAT), as the confusion and inevitably, subtract from the VAT charged on its sales or outputs the VAT paid on its

litigation, breeds from a fallacious notion of its nature. purchases, inputs and imports. [14]

The VAT is a tax on spending or consumption. It is levied on the sale, barter,

exchange or lease of goods or properties and services. [8] Being an indirect

It was only in 1987, when President Corazon C. Aquino issued Executive
Order No. 273, that the VAT system was rationalized by imposing a multi-
stage tax rate of 0% or 10% on all sales using the 'tax credit method. [15]
E.O. No. 273 was followed by R.A. No. 7716 or the Expanded VAT
Law, [16] R.A. No. 8241 or the Improved VAT Law, [17] R.A. No. 8424 or
the Tax Reform Act of 1997, [18] and finally, the presently beleaguered R.A.
No. 9337, also referred to by respondents as the VAT Reform Act.
The Court will now discuss the issues in logical sequence.
PROCEDURAL ISSUE
I.
Whether R.A. No. 9337 violates the following provisions of the Constitution:
a. Article VI, Section 24, and
b. Article VI, Section 26(2)
A. The Bicameral Conference Committee
Petitioners Escudero, et al., and Pimentel, et al., allege that the Bicameral
Conference Committee exceeded its authority by:
1) Inserting the stand-by authority in favor of the
President in Sections 4, 5, and 6 of R.A. No. 9337;
2) Deleting entirely the no pass-on provisions found in
both the House and Senate bills;
3) Inserting the provision imposing a 70% limit on the
amount of input tax to be credited against the output tax;
and
4) Including the amendments introduced only by Senate
Bill No. 1950 regarding other kinds of taxes in addition to
the value-added tax.
Petitioners now beseech the Court to define the powers of the Bicameral
Conference Committee.
It should be borne in mind that the power of internal regulation and discipline
are intrinsic in any legislative body for, as unerringly elucidated by Justice
Story, '[i]f the power did not exist, it would be utterly impracticable
to transact the business of the nation, either at all, or at least with
decency, deliberation, and order. [19] Thus, Article VI, Section 16 (3) of
the Constitution provides that 'each House may determine the rules of its
proceedings. Pursuant to this inherent constitutional power to promulgate
and implement its own rules of procedure, the respective rules of each house
of Congress provided for the creation of a Bicameral Conference Committee.
Thus, Rule XIV, Sections 88 and 89 of the Rules of House of Representatives
provides as follows:
Sec. 88. Conference Committee. ' In the event that the
House does not agree with the Senate on the amendment
to any bill or joint resolution, the differences may be
settled by the conference committees of both chambers.
In resolving the differences with the Senate, the House
panel shall, as much as possible, adhere to and support
the House Bill. If the differences with the Senate are so
substantial that they materially impair the House Bill, the
panel shall report such fact to the House for the latter's
appropriate action.
Sec. 89. Conference Committee Reports. ' . . . Each report
shall contain a detailed, sufficiently explicit statement of
the changes in or amendments to the subject measure.
...
The Chairman of the House panel may be interpellated on
the Conference Committee Report prior to the voting
thereon. The House shall vote on the Conference
Committee Report in the same manner and procedure as
it votes on a bill on third and final reading.
Rule XII, Section 35 of the Rules of the Senate states:
Sec. 35. In the event that the Senate does not agree with
the House of Representatives on the provision of any bill
or joint resolution, the differences shall be settled by a
conference committee of both Houses which shall meet
within ten (10) days after their composition. The President
shall designate the members of the Senate Panel in the
conference committee with the approval of the Senate.
Each Conference Committee Report shall contain a detailed
and sufficiently explicit statement of the changes in, or
amendments to the subject measure, and shall be signed
by a majority of the members of each House panel, voting
separately.
A comparative presentation of the conflicting House and
Senate provisions and a reconciled version thereof with the
explanatory statement of the conference committee shall
be attached to the report.
...
The creation of such conference committee was apparently in response to a
problem, not addressed by any constitutional provision, where the two
houses of Congress find themselves in disagreement over changes or
amendments introduced by the other house in a legislative bill. Given that
one of the most basic powers of the legislative branch is to formulate and
implement its own rules of proceedings and to discipline its members, may
the Court then delve into the details of how Congress complies with its
internal rules or how it conducts its business of passing legislation? Note that
in the present petitions, the issue is not whether provisions of the rules of
 is not the proper forum for the enforcement of these internal rules
both houses creating the bicameral conference committee are of Congress, whether House or Senate. Parliamentary rules are
merely procedural and with their observance the courts have no
unconstitutional, but whether the bicameral conference committee concern. Whatever doubts there may be as to the formal validity of
Rep. Act No. 9006 must be resolved in its favor. The Court reiterates
has strictly complied with the rules of both houses, thereby
its ruling in Arroyo vs. De Venecia, viz.:
remaining within the jurisdiction conferred upon it by Congress.

But the cases, both here and abroad,

in varying forms of expression, all
deny to the courts the power to
inquire into allegations that, in
In the recent case of Farias vs. The Executive Secretary, [20] the Court En enacting a law, a House of Congress
failed to comply with its own rules,
Banc, unanimously reiterated and emphasized its adherence to the
in the absence of showing that there
'enrolled bill doctrine, thus, declining therein petitioners' plea for the Court was a violation of a constitutional
provision or the rights of private
to go behind the enrolled copy of the bill. Assailed in said case was individuals. In Osmea v. Pendatun, it
was held: 'At any rate, courts have
Congress's creation of two sets of bicameral conference committees, the lack declared that 'the rules adopted by
deliberative bodies are subject to
of records of said committees' proceedings, the alleged violation of said revocation, modification or waiver at the
pleasure of the body adopting
committees of the rules of both houses, and the disappearance or deletion them. And it has been said that
'Parliamentary rules are merely
of one of the provisions in the compromise bill submitted by the bicameral procedural, and with their
observance, the courts have no
conference committee. It was argued that such irregularities in the passage
concern. They may be waived or
of the law nullified R.A. No. 9006, or the Fair Election Act. disregarded by the legislative body.
Consequently, 'mere failure to
conform to parliamentary usage will
not invalidate the action (taken by a
deliberative body) when the
requisite number of members have
Striking down such argument, the Court held thus: agreed to a particular
measure. [21] (Emphasis supplied)

Under the 'enrolled bill doctrine, the signing of a bill by the Speaker of the
House and the Senate President and the certification of the Secretaries of
both Houses of Congress that it was passed are conclusive of its due
enactment. A review of cases reveals the Court's consistent adherence to
the rule. The Court finds no reason to deviate from the salutary rule The foregoing declaration is exactly in point with the present cases, where
in this case where the irregularities alleged by the petitioners
mostly involved the internal rules of Congress, e.g., creation of the petitioners allege irregularities committed by the conference committee in
2nd or 3rd Bicameral Conference Committee by the House. This Court
introducing changes or deleting provisions in the House and Senate bills. committee to be very useful for purposes of prompt and efficient legislative

Akin to the Farias case, [22] the present petitions also raise an issue action.

regarding the actions taken by the conference committee on matters

regarding Congress' compliance with its own internal rules. As stated earlier,

one of the most basic and inherent power of the legislature is the power to Nevertheless, just to put minds at ease that no blatant irregularities tainted

formulate rules for its proceedings and the discipline of its members. the proceedings of the bicameral conference committees, the Court deems

Congress is the best judge of how it should conduct its own business' it necessary to dwell on the issue. The Court observes that there was a

expeditiously and in the most orderly manner. It is also the sole necessity for a conference committee because a comparison of the provisions

of House Bill Nos. 3555 and 3705 on one hand, and Senate Bill No. 1950 on
concern of Congress to instill discipline among the members of its conference
the other, reveals that there were indeed disagreements. As pointed out in
committee if it believes that said members violated any of its rules of
the petitions, said disagreements were as follows:
proceedings. Even the expanded jurisdiction of this Court cannot apply to

questions regarding only the internal operation of Congress, thus, the Court

is wont to deny a review of the internal proceedings of a co-equal branch of House Bill No. House Bill Senate Bill No.
3555 No.3705 1950
government.

With regard to 'Stand-By Authority in favor of President

Moreover, as far back as 1994 or more than ten years ago, in the case

of Tolentino vs. Secretary of Finance, [23] the Court already made the
Provides for 12% Provides for 12% Provides for a single
pronouncement that '[i]f a change is desired in the practice [of the VAT on every sale VAT in general on rate of 10% VAT on
of goods or sales of goods or sale of goods or
Bicameral Conference Committee] it must be sought in Congress properties properties and properties (amending
(amending Sec. reduced rates for Sec. 106 of NIRC),
since this question is not covered by any constitutional provision but 106 of NIRC); sale of certain locally 10% VAT on sale of
12% VAT on manufactured goods services including
is only an internal rule of each house. [24] To date, Congress has not importation of and petroleum sale of electricity by
goods (amending products and raw generation
seen it fit to make such changes adverted to by the Court. It seems,
Sec. 107 of materials to be used companies,
therefore, that Congress finds the practices of the bicameral conference NIRC); and 12% in the manufacture transmission and
VAT on sale of thereof (amending distribution
services and use Sec. 106 of NIRC); companies, and use
or lease of 12% VAT on or lease of properties With regard to 70% limit on input tax credit
properties importation of goods (amending Sec. 108
(amending Sec. and reduced rates for of NIRC)
108 of NIRC) certain imported
Provides that the No similar provision Provides that the
products including
input tax credit input tax credit for
petroleum products
for capital goods capital goods on
(amending Sec. 107
on which a VAT which a VAT has been
of NIRC); and 12%
has been paid paid shall be equally
VAT on sale of
shall be equally distributed over 5
services and use or
distributed over 5 years or the
lease of properties
years or the depreciable life of
and a reduced rate
depreciable life of such capital goods;
for certain services
such capital the input tax credit for
including power
goods; the input goods and services
generation
tax credit for other than capital
(amending Sec. 108
goods and goods shall not
of NIRC)
services other exceed 90% of the
than capital goods output VAT.
shall not exceed
5% of the total
amount of such
goods and
With regard to the 'no pass-on provision
services; and for
persons engaged
in retail trading of
No similar Provides that the Provides that the VAT goods, the
provision VAT imposed on imposed on sales of allowable input
power generation electricity by tax credit shall
and on the sale of generation companies not exceed 11%
petroleum products and services of of the total
shall be absorbed by transmission amount of goods
generation companies and purchased.
companies or sellers, distribution
respectively, and companies, as well as
shall not be passed those of franchise
on to consumers grantees of electric
utilities shall not
apply to residential
With regard to amendments to be made to NIRC provisions
end-users. VAT shall regarding income and excise taxes
be absorbed by
generation,
transmission, and
No similar No similar provision Provided for
distribution
provision amendments to
companies.
several NIRC
provisions regarding
 corporate income,
percentage, franchise
and excise taxes
The disagreements between the provisions in the House bills and the Senate
bill were with regard to (1) what rate of VAT is to be imposed; (2) whether
only the VAT imposed on electricity generation, transmission and distribution
companies should not be passed on to consumers, as proposed in the Senate
bill, or both the VAT imposed on electricity generation, transmission and
distribution companies and the VAT imposed on sale of petroleum products
should not be passed on to consumers, as proposed in the House bill; (3) in
what manner input tax credits should be limited; (4) and whether the NIRC
provisions on corporate income taxes, percentage, franchise and excise
taxes should be amended.
There being differences and/or disagreements on the foregoing provisions of
the House and Senate bills, the Bicameral Conference Committee was
mandated by the rules of both houses of Congress to act on the same by
settling said differences and/or disagreements. The Bicameral Conference
Committee acted on the disagreeing provisions by making the following
changes:
1. With regard to the disagreement on the rate of VAT to be imposed, it
would appear from the Conference Committee Report that the Bicameral
Conference Committee tried to bridge the gap in the difference between
the 10% VAT rate proposed by the Senate, and the various rates with 12%
as the highest VAT rate proposed by the House, by striking a compromise
whereby the present 10% VAT rate would be retained until certain
conditions arise, i.e., the value-added tax collection as a percentage of
gross domestic product (GDP) of the previous year exceeds 2 4/5%, or
National Government deficit as a percentage of GDP of the previous year
exceeds 1%, when the President, upon recommendation of the Secretary
of Finance shall raise the rate of VAT to 12% effective January 1, 2006.
2. With regard to the disagreement on whether only the VAT imposed on
electricity generation, transmission and distribution companies should not be
passed on to consumers or whether both the VAT imposed on electricity
generation, transmission and distribution companies and the VAT imposed
on sale of petroleum products may be passed on to consumers, the
Bicameral Conference Committee chose to settle such disagreement by
altogether deleting from its Report any no pass-on provision.
3. With regard to the disagreement on whether input tax credits should be
limited or not, the Bicameral Conference Committee decided to adopt the
position of the House by putting a limitation on the amount of input tax
that may be credited against the output tax, although it crafted its own
language as to the amount of the limitation on input tax credits and the
manner of computing the same by providing thus:
(A) Creditable Input Tax. ' . . .
...
Provided, The input tax on goods
purchased or imported in a calendar
month for use in trade or business for
which deduction for depreciation is
allowed under this Code, shall be spread
evenly over the month of acquisition and
the fifty-nine (59) succeeding months if
the aggregate acquisition cost for such
goods, excluding the VAT component
 thereof, exceeds one million Pesos
(P1,000,000.00): PROVIDED, however, Bicameral Conference Committee may then (a) adopt the specific provisions
that if the estimated useful life of the
capital good is less than five (5) years, of either the House bill or Senate bill, (b) decide that neither provisions in
as used for depreciation purposes, then
the House bill or the provisions in the Senate bill would
the input VAT shall be spread over such
shorter period: . . .

(B) Excess Output or Input Tax. ' If at be carried into the final form of the bill, and/or (c) try to arrive at a
the end of any taxable quarter the
output tax exceeds the input tax, the compromise between the disagreeing provisions.
excess shall be paid by the VAT-
registered person. If the input tax
exceeds the output tax, the excess shall
be carried over to the succeeding
quarter or quarters: PROVIDED that the
input tax inclusive of input VAT carried
over from the previous quarter that may
be credited in every quarter shall not
exceed seventy percent (70%) of the In the present case, the changes introduced by the Bicameral Conference
output VAT: PROVIDED, HOWEVER,
Committee on disagreeing provisions were meant only to reconcile and
THAT any input tax attributable to zero-
rated sales by a VAT-registered person
harmonize the disagreeing provisions for it did not inject any idea or intent
may at his option be refunded or
credited against other internal revenue that is wholly foreign to the subject embraced by the original provisions.
taxes, . . .

4. With regard to the amendments to other provisions of the NIRC on

The so-called stand-by authority in favor of the President, whereby the rate
corporate income tax, franchise, percentage and excise taxes, the
conference committee decided to include such amendments and basically
of 10% VAT wanted by the Senate is retained until such time that certain
adopted the provisions found in Senate Bill No. 1950, with some changes as
to the rate of the tax to be imposed. conditions arise when the 12% VAT wanted by the House shall be imposed,

appears to be a compromise to try to bridge the difference in the rate of VAT

proposed by the two houses of Congress. Nevertheless, such compromise is

Under the provisions of both the Rules of the House of Representatives and still totally within the subject of what rate of VAT should be imposed on

Senate Rules, the Bicameral Conference Committee is mandated to settle taxpayers.

the differences between the disagreeing provisions in the House bill and the

Senate bill. The term settle is synonymous to 'reconcile and

'harmonize. [25] To reconcile or harmonize disagreeing provisions, the

The no pass-on provision was deleted altogether. In the transcripts of the limitations on the claiming of tax credit, we are capping a major leakage that

proceedings of the Bicameral Conference Committee held on May 10, 2005, has placed our collection efforts at an apparent disadvantage. [28]

Sen. Ralph Recto, Chairman of the Senate Panel, explained the reason for

deleting the no pass-on provision in this wise:

As to the amendments to NIRC provisions on taxes other than the value-

added tax proposed in Senate Bill No. 1950, since said provisions were
. . . the thinking was just to keep the VAT law or the VAT bill simple. And
we were thinking that no sector should be a beneficiary of legislative grace, among those referred to it, the conference committee had to act on the same
neither should any sector be discriminated on. The VAT is an indirect
tax. It is a pass on-tax. And let's keep it plain and simple. Let's not and it basically adopted the version of the Senate.
confuse the bill and put a no pass-on provision. Two-thirds of the world
have a VAT system and in this two-thirds of the globe, I have yet to see a
VAT with a no pass-though provision. So, the thinking of the Senate is
basically simple, let's keep the VAT simple. [26] (Emphasis supplied)
Thus, all the changes or modifications made by the Bicameral Conference

Rep. Teodoro Locsin further made the manifestation that the no pass- Committee were germane to subjects of the provisions' referred

on provision 'never really enjoyed the support of either House. [27]

to it for reconciliation. Such being the case, the Court does not see any grave

abuse of discretion amounting to lack or excess of jurisdiction committed by

the Bicameral Conference Committee. In the earlier cases of Philippine

With regard to the amount of input tax to be credited against output tax, the
Judges Association vs. Prado [29] and Tolentino vs. Secretary of
Bicameral Conference Committee came to a compromise on the percentage
Finance, [30] the Court recognized the long-standing legislative practice of
rate of the limitation or cap on such input tax credit, but again, the change
giving said conference committee ample latitude for compromising
introduced by the Bicameral Conference Committee was totally within the
differences' between the Senate and the House. Thus, in the Tolentino case,
intent of both houses' to 'put 'a cap on input tax that may be
it was held that:

credited against the output tax. From the inception of the subject revenue

bill in the House of Representatives, one of the major objectives was to 'plug
a glaring loophole in the tax policy and administration by creating vital
restrictions on the claiming of input VAT tax credits . . . and '[b]y introducing
. . . it is within the power of a conference committee to
include in its report an entirely new provision that is not
found either in the House bill or in the Senate bill. If the
committee can propose an amendment consisting of one
or two provisions, there is no reason why it cannot propose
 several provisions, collectively considered as an
'amendment in the nature of a substitute, so long as such of the 'no amendment rule (Sec. 26 (2), Art. VI of the 1987 Constitution),
amendment is germane to the subject of the bills before
the committee. After all, its report was not final but needed fails to convince the Court to deviate from its ruling in the Tolentino case
the approval of both houses of Congress to become valid
that:
as an act of the legislative department. The charge that
in this case the Conference Committee acted as a
third legislative chamber is thus without any
basis.[31] (Emphasis supplied)
Nor is there any reason for requiring that the Committee's
Report in these cases must have undergone three readings
B. R.A. No. 9337 Does Not Violate Article
in each of the two houses. If that be the case, there would
VI, Section 26(2) of the
be no end to negotiation since each house may seek
Constitution on the 'No-
modification of the compromise bill. . . .
Amendment Rule
Art. VI. ' 26 (2) must, therefore, be construed as
referring only to bills introduced for the first time in
either house of Congress, not to the conference
committee report. [32] (Emphasis supplied)

Article VI, Sec. 26 (2) of the Constitution, states:

The Court reiterates here that the no-amendment rule refers only to the
No bill passed by either House shall become a law unless
it has passed three readings on separate days, and printed procedure to be followed by each house of Congress with regard to
copies thereof in its final form have been distributed to its
Members three days before its passage, except when the bills initiated in each of said respective houses, before said bill is
President certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon transmitted to the other house for its concurrence or amendment.
the last reading of a bill, no amendment thereto shall be
allowed, and the vote thereon shall be taken immediately Verily, to construe said provision in a way as to proscribe any further changes
thereafter, and the yeas and nays entered in the Journal.
to a bill after one house has voted on it would lead to absurdity as this would

mean that the other house of Congress would be deprived of its constitutional

power to amend or introduce changes to said bill. Thus, Art. VI, Sec. 26 (2)

of the Constitution cannot be taken to mean that the introduction by the

Petitioners' argument that the practice where a bicameral conference Bicameral Conference Committee of amendments and modifications to

committee is allowed to add or delete provisions in the House bill and the disagreeing provisions in bills that have been acted upon by both houses of

Senate bill after these had passed three readings is in effect a circumvention Congress is prohibited.
 151 Excise Tax on mineral
products
C. R.A. No. 9337 Does Not Violate Article 236 Registration requirements
VI, Section 24 of the
Constitution on Exclusive 237 Issuance of receipts or
Origination of Revenue Bills sales or commercial
invoices
288 Disposition of Incremental
Revenue

Coming to the issue of the validity of the amendments made regarding the

NIRC provisions on corporate income taxes and percentage, excise taxes.

Petitioners refer to the following provisions, to wit: Petitioners claim that the amendments to these provisions of the NIRC did

not at all originate from the House. They aver that House Bill No. 3555

proposed amendments only regarding Sections 106, 107, 108, 110 and 114
Section
27 of the NIRC, while House Bill No. 3705 proposed amendments only to
Rates of Income Tax on
Domestic Corporation Sections 106, 107,108, 109, 110 and 111 of the NIRC; thus, the other
28(A)(1) Tax on Resident Foreign
sections of the NIRC which the Senate amended but which amendments were
Corporation
28(B)(1) Inter-corporate Dividends not found in the House bills are not intended to be amended by the House

34(B)(1) Inter-corporate Dividends of Representatives. Hence, they argue that since the proposed amendments

116 Tax on Persons Exempt did not originate from the House, such amendments are a violation of Article
from VAT
VI, Section 24 of the Constitution.
117 Percentage Tax on
domestic carriers and
keepers of Garage
119 Tax on franchises

121 Tax on banks and Non- The argument does not hold water.
Bank Financial
Intermediaries
148 Excise Tax on
manufactured oils and
other fuels Article VI, Section 24 of the Constitution reads:

Sec. 24. All appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in
the House of Representatives but the Senate may propose
or concur with amendments.
In the present cases, petitioners admit that it was indeed House Bill Nos.
3555 and 3705 that initiated the move for amending provisions of the NIRC
dealing mainly with the value-added tax. Upon transmittal of said House bills
to the Senate, the Senate came out with Senate Bill No. 1950 proposing
amendments not only to NIRC provisions on the value-added tax but also
amendments to NIRC provisions on other kinds of taxes. Is the introduction
by the Senate of provisions not dealing directly with the value- added tax,
which is the only kind of tax being amended in the House bills, still within
the purview of the constitutional provision authorizing the Senate to propose
or concur with amendments to a revenue bill that originated from the
House?
The foregoing question had been squarely answered in the Tolentino case,
wherein the Court held, thus:
Since there is no question that the revenue bill exclusively originated in the
House of Representatives, the Senate was acting within its
. . . To begin with, it is not the law ' but the revenue bill '
which is required by the Constitution to 'originate
exclusively in the House of Representatives. It is important
to emphasize this, because a bill originating in the House
may undergo such extensive changes in the Senate that
the result may be a rewriting of the whole. . . . At this
point, what is important to note is that, as a result of the
Senate action, a distinct bill may be produced. To insist
that a revenue statute ' and not only the bill which
initiated the legislative process culminating in the
enactment of the law must substantially be the same
as the House bill would be to deny the Senate's
power not only to 'concur with amendments but also
to 'propose amendments. It would be to violate the
coequality of legislative power of the two houses of
Congress and in fact make the House superior to the
Senate.
Given, then, the power of the Senate to propose
amendments, the Senate can propose its own
version even with respect to bills which are required
by the Constitution to originate in the House.
...
Indeed, what the Constitution simply means is that the
initiative for filing revenue, tariff or tax bills, bills
authorizing an increase of the public debt, private bills and
bills of local application must come from the House of
Representatives on the theory that, elected as they are
from the districts, the members of the House can be
expected to be more sensitive to the local needs and
problems. On the other hand, the senators, who are
elected at large, are expected to approach the same
problems from the national perspective. Both views
are thereby made to bear on the enactment of such
laws. [33] (Emphasis supplied)
constitutional power to introduce amendments to the House bill when it
included provisions in Senate Bill No. 1950 amending corporate income
taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24
of the Constitution does not contain any prohibition or limitation on the
extent of the amendments that may be introduced by the Senate to the
House revenue bill.
Furthermore, the amendments introduced by the Senate to the NIRC
provisions that had not been touched in the House bills are still in furtherance
of the intent of the House in initiating the subject revenue bills. The
Explanatory Note of House Bill No. 1468, the very first House bill introduced
on the floor, which was later substituted by House Bill No. 3555, stated:
One of the challenges faced by the present administration
is the urgent and daunting task of solving the country's
serious financial problems. To do this, government
expenditures must be strictly monitored and controlled
and revenues must be significantly increased. This may be
easier said than done, but our fiscal authorities are still
optimistic the government will be operating on a balanced
budget by the year 2009. In fact, several measures that
will result to significant expenditure savings have been
identified by the administration. It is supported with a
credible package of revenue measures that include
measures to improve tax administration and control
the leakages in revenues from income taxes and the
value-added tax (VAT). (Emphasis supplied)
Rep. Eric D. Singson, in his sponsorship speech for House Bill No. 3555,
declared that:
In the budget message of our President in the year 2005,
she reiterated that we all acknowledged that on top of our
agenda must be the restoration of the health of our fiscal
system.
In order to considerably lower the consolidated public
sector deficit and eventually achieve a balanced budget by
the year 2009, we need to seize windows of
opportunities which might seem poignant in the
beginning, but in the long run prove effective and
beneficial to the overall status of our economy. One
such opportunity is a review of existing tax rates,
evaluating the relevance given our present
conditions. [34] (Emphasis supplied)
Notably therefore, the main purpose of the bills emanating from the House
of Representatives is to bring in sizeable revenues for the government
to supplement our country's serious financial problems, and improve tax
administration and control of the leakages in revenues from income taxes
and value-added taxes. As these house bills were transmitted to the Senate,
the latter, approaching the measures from the point of national perspective,
can introduce amendments within the purposes of those bills. It can provide
for ways that would soften the impact of the VAT measure on the
consumer, i.e., by distributing the burden across all sectors instead of
putting it entirely on the shoulders of the consumers. The sponsorship
speech of Sen. Ralph Recto on why the provisions on income tax on

corporation were included is worth quoting:

As the Court has said, the Senate can propose amendments and in fact, the

amendments made on provisions in the tax on income of corporations are

germane to the purpose of the house bills which is to raise revenues for the
All in all, the proposal of the Senate Committee on Ways
and Means will raise P64.3 billion in additional revenues government.
annually even while by mitigating prices of power, services
and petroleum products.

However, not all of this will be wrung out of VAT. In fact,

only P48.7 billion amount is from the VAT on twelve goods
and services. The rest of the tab ' P10.5 billion- will be
picked by corporations.
Likewise, the Court finds the sections referring to other percentage and
What we therefore prescribe is a burden sharing between
corporate Philippines and the consumer. Why should the excise taxes germane to the reforms to the VAT system, as these sections
latter bear all the pain? Why should the fiscal salvation be
only on the burden of the consumer? would cushion the effects of VAT on consumers. Considering that certain

The corporate world's equity is in form of the increase in
the corporate income tax from 32 to 35 percent, but up to
2008 only. This will raise P10.5 billion a year. After that,
the rate will slide back, not to its old rate of 32 percent,
but two notches lower, to 30 percent.
goods and services which were subject to percentage tax and excise tax
would no longer be VAT-exempt, the consumer would be burdened more as
they would be paying the VAT in addition to these taxes. Thus, there is a

need to amend these sections to soften the impact of VAT. Again, in his
Clearly, we are telling those with the capacity to pay,
corporations, to bear with this emergency provision that sponsorship speech, Sen. Recto said:
will be in effect for 1,200 days, while we put our fiscal
house in order. This fiscal medicine will have an expiry
date.

For their assistance, a reward of tax reduction awaits
them. We intend to keep the length of their sacrifice brief.
We would like to assure them that not because there is a
light at the end of the tunnel, this government will keep on
making the tunnel long.
However, for power plants that run on oil, we will reduce to zero the
present excise tax on bunker fuel, to lessen the effect of a VAT on this
product.

The responsibility will not rest solely on the weary
shoulders of the small man. Big business will be there to
share the burden. [35]
For electric utilities like Meralco, we will wipe out the
franchise tax in exchange for a VAT.
And in the case of petroleum, while we will levy the VAT
on oil products, so as not to destroy the VAT chain, we will
however bring down the excise tax on socially sensitive
products such as diesel, bunker, fuel and kerosene.
 A. No Undue Delegation of
... Legislative Power

What do all these exercises point to? These are not

contortions of giving to the left hand what was taken from
the right. Rather, these sprang from our concern of
softening the impact of VAT, so that the people can cushion
the blow of higher prices they will have to pay as a result
of VAT. [36]
Petitioners ABAKADA GURO Party List, et al., Pimentel, Jr., et al., and

Escudero,et al. contend in common that Sections 4, 5 and 6 of R.A. No. 9337,

amending Sections 106, 107 and 108, respectively, of the NIRC giving the
The other sections amended by the Senate pertained to matters of tax
President the stand-by authority to raise the VAT rate from 10% to 12%
administration which are necessary for the implementation of the changes in
when a certain condition is met, constitutes undue delegation of the
the VAT system.
legislative power to tax.

To reiterate, the sections introduced by the Senate are germane to the

The assailed provisions read as follows:
subject matter and purposes of the house bills, which is to supplement our

country's fiscal deficit, among others. Thus, the Senate acted within its

power to propose those amendments. SEC. 4. Sec. 106 of the same Code, as amended, is hereby
further amended to read as follows:

SEC. 106. Value-Added Tax on Sale of Goods or

Properties. '
SUBSTANTIVE ISSUES
(A) Rate and Base of Tax. ' There shall
I. be levied, assessed and collected on
every sale, barter or exchange of goods
or properties, a value-added tax
Whether Sections 4, 5 and 6 of R.A. No. 9337, amending Sections 106, 107
equivalent to ten percent (10%) of the
and 108 of the NIRC, violate the following provisions of the Constitution:
gross selling price or gross value in
money of the goods or properties sold,
bartered or exchanged, such tax to be
paid by the seller or
a. Article VI, Section 28(1), and transferor: provided, that the
President, upon the
recommendation of the Secretary of
b. Article VI, Section 28(2) Finance, shall, effective January 1,
 2006, raise the rate of value-added Domestic Product (GDP) of
tax to twelve percent (12%), after the previous year exceeds
any of the following conditions has two and four-fifth percent
been satisfied. (2 4/5%) or
(ii) national government deficit as a
(i) value-added tax percentage of GDP of the
collection as a percentage of previous year exceeds one
Gross Domestic Product and one-half percent (1
(GDP) of the previous year '%).
exceeds two and four-fifth
percent (2 4/5%) or
SEC. 6. Section 108 of the same Code, as amended, is hereby further
(ii) national government deficit as a
amended to read as follows:
percentage of GDP of the
previous year exceeds one
and one-half percent (1
'%).
SEC. 108. Value-added Tax on Sale of
SEC. 5. Section 107 of the same Code, as amended, is Services and Use or Lease of Properties
hereby further amended to read as follows: '

SEC. 107. Value-Added Tax on Importation of Goods. '

(A) In General. ' There shall be levied, (A) Rate and Base of Tax. ' There shall
assessed and collected on every be levied, assessed and collected, a
importation of goods a value-added tax value-added tax equivalent to ten
equivalent to ten percent (10%) based percent (10%) of gross receipts derived
on the total value used by the Bureau of from the sale or exchange of
Customs in determining tariff and services: provided, that the
customs duties, plus customs duties, President, upon the
excise taxes, if any, and other charges, recommendation of the Secretary of
such tax to be paid by the importer prior Finance, shall, effective January 1,
to the release of such goods from 2006, raise the rate of value-added
customs custody: Provided, That where tax to twelve percent (12%), after
the customs duties are determined on any of the following conditions has
the basis of the quantity or volume of the been satisfied.
goods, the value-added tax shall be
based on the landed cost plus excise (i) value-added tax collection as a
taxes, if any: provided, further, that percentage of Gross
the President, upon the Domestic Product (GDP) of
recommendation of the Secretary of the previous year exceeds
Finance, shall, effective January 1, two and four-fifth percent
2006, raise the rate of value-added (2 4/5%) or
tax to twelve percent (12%) after (ii) national government deficit as a
any of the following conditions has percentage of GDP of the
been satisfied. previous year exceeds one
and one-half percent (1
(i) value-added tax collection as a '%). (Emphasis supplied)
percentage of Gross

Petitioners allege that the grant of the stand-by authority to the President to
increase the VAT rate is a virtual abdication by Congress of its exclusive
power to tax because such delegation is not within the purview of Section 28
(2), Article VI of the Constitution, which provides:
The Congress may, by law, authorize the President to fix within specified
limits, and may impose, tariff rates, import and export quotas, tonnage
and wharfage dues, and other duties or imposts within the framework of
the national development program of the government.
They argue that the VAT is a tax levied on the sale, barter or exchange of
goods and properties as well as on the sale or exchange of services, which
cannot be included within the purview of tariffs under the exempted
delegation as the latter refers to customs duties, tolls or tribute payable upon
merchandise to the government and usually imposed on goods or
merchandise imported or exported.
Petitioners ABAKADA GURO Party List, et al., further contend that delegating
to the President the legislative power to tax is contrary to republicanism.
They insist that accountability, responsibility and transparency should dictate
the actions of Congress and they should not pass to the President the
decision to impose taxes. They also argue that the law also effectively
nullified the President's power of control, which includes the authority to set
aside and nullify the acts of her subordinates like the Secretary of Finance,
by mandating the fixing of the tax rate by the President upon the
recommendation of the Secretary of Finance.
Petitioners Pimentel, et al. aver that the President has ample powers to
cause, influence or create the conditions provided by the law to bring about
either or both the conditions precedent.
On the other hand, petitioners Escudero, et al. find bizarre and revolting the
situation that the imposition of the 12% rate would be subject to the whim
of the Secretary of Finance, an unelected bureaucrat, contrary to the
principle of no taxation without representation. They submit that the
Secretary of Finance is not mandated to give a favorable recommendation
and he may not even give his recommendation. Moreover, they allege that
no guiding standards are provided in the law on what basis and as to how
he will make his recommendation. They claim, nonetheless, that any
recommendation of the Secretary of Finance can easily be brushed aside by
the President since the former is a mere alter ego of the latter, such that,
ultimately, it is the President who decides whether to impose the increased
tax rate or not.
A brief discourse on the principle of non-delegation of powers is instructive.
The principle of separation of powers ordains that each of the three great
branches of government has exclusive cognizance of and is supreme in
matters' falling within its' own constitutionally allocated sphere. [37] A
logical
corollary to the doctrine of separation of powers is the principle of non-
delegation of powers, as expressed in the Latin maxim: potestas delegata
non delegari potest which means 'what has been delegated, cannot be
delegated.[38] This doctrine is based on the ethical principle that such as
delegated power constitutes not only a right but a duty to be performed by
the delegate through the instrumentality of his own judgment and not
through the intervening mind of another. [39]
With respect to the Legislature, Section 1 of Article VI of the Constitution
provides that 'the Legislative power shall be vested in the Congress of
the Philippines which shall consist of a Senate and a House
Representatives . The powers which Congress is prohibited from delegating
are those which are strictly, or inherently and exclusively, legislative. Purely
legislative power, which can never be delegated, has been described as
the authority to make a complete law ' complete as to the time when
it shall take effect and as to whom it shall be applicable ' and to
determine the expediency of its enactment. [40] Thus, the rule is that
in order that a court may be justified in holding a statute unconstitutional as
a delegation of legislative power, it must appear that the power involved is
purely legislative in nature ' that is, one appertaining exclusively to the
legislative department. It is the nature of the power, and not the liability of
its use or the manner of its exercise, which determines the validity of its
delegation.
Nonetheless, the general rule barring delegation of legislative powers is
subject to the following recognized limitations or exceptions:
(1) Delegation of tariff powers to the President under Section 28
(2) of Article VI of the Constitution;
(2) Delegation of emergency powers to the President under
Section 23 (2) of Article VI of the Constitution;
(3) Delegation to the people at large;
(4) Delegation to local governments; and
(5) Delegation to administrative bodies.
of
In every case of permissible delegation, there must be a showing that the
delegation itself is valid. It is valid only if the law (a) is complete in itself,
setting forth therein the policy to be executed, carried out, or implemented

by the delegate; [41] and (b) fixes a standard ' the limits of which are
sufficiently determinate and determinable ' to which the delegate must
conform in the performance of his functions. [42] A sufficient standard is one
which defines legislative policy, marks its limits, maps out its boundaries and
specifies the public agency to apply it. It indicates the circumstances under
which the legislative command is to be effected. [43] Both tests are intended
to prevent a total transference of legislative authority to the delegate, who
is not allowed to step into the shoes of the legislature and exercise a power
essentially legislative.[44]
In People vs. Vera, [45] the Court, through eminent Justice Jose P. Laurel,
expounded on the concept and extent of delegation of power in this wise:
In testing whether a statute constitutes an undue
delegation of legislative power or not, it is usual to inquire
whether the statute was complete in all its terms and
provisions when it left the hands of the legislature so that
nothing was left to the judgment of any other appointee or
delegate of the legislature.
...
The true distinction', says Judge Ranney, 'is
between the delegation of power to make the law,
which necessarily involves a discretion as to what it
shall be, and conferring an authority or discretion as
to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to
the latter no valid objection can be made.
...
It is contended, however, that a legislative act may be
made to the effect as law after it leaves the hands of the
legislature. It is true that laws may be made effective on
certain contingencies, as by proclamation of the executive
or the adoption by the people of a particular community.
In Wayman vs. Southard, the Supreme Court of the United
States ruled that the legislature may delegate a power not
legislative which it may itself rightfully exercise. The
power to ascertain facts is such a power which may
be delegated. There is nothing essentially legislative
in ascertaining the existence of facts or conditions
as the basis of the taking into effect of a law. That is
a mental process common to all branches of the
government. Notwithstanding the apparent tendency,
however, to relax the rule prohibiting delegation of
legislative authority on account of the complexity arising
from social and economic forces at work in this modern
industrial age, the orthodox pronouncement of Judge
Cooley in his work on Constitutional Limitations finds
restatement in Prof. Willoughby's treatise on the
Constitution of the United States in the following language
' speaking of declaration of legislative power to
administrative agencies: The principle which permits
the legislature to provide that the administrative
agent may determine when the circumstances are
such as require the application of a law is defended
upon the ground that at the time this authority is
granted, the rule of public policy, which is the
essence of the legislative act, is determined by the
legislature. In other words, the legislature, as it is
its duty to do, determines that, under given
circumstances, certain executive or administrative
action is to be taken, and that, under other
circumstances, different or no action at all is to be
taken. What is thus left to the administrative official
is not the legislative determination of what public
policy demands, but simply the ascertainment of
what the facts of the case require to be done
according to the terms of the law by which he is
governed. The efficiency of an Act as a declaration
of legislative will must, of course, come from
Congress, but the ascertainment of the contingency
upon which the Act shall take effect may be left to
such agencies as it may designate. The legislature,
then, may provide that a law shall take effect upon
the happening of future specified contingencies
leaving to some other person or body the power to
 determine when the specified contingency has
arisen. (Emphasis supplied). [46] depend, but the legislature must prescribe sufficient standards, policies or

limitations on their authority. [49] While the power to tax cannot be

delegated to executive agencies, details as to the enforcement and

administration of an exercise of such power may be left to them, including

the power to determine the existence of facts on which its operation

In Edu vs. Ericta, [47] the Court reiterated:
depends. [50]

What cannot be delegated is the authority under the

Constitution to make laws and to alter and repeal them;
the test is the completeness of the statute in all its terms The rationale for this is that the preliminary ascertainment of facts as basis
and provisions when it leaves the hands of the legislature.
To determine whether or not there is an undue delegation for the enactment of legislation is not of itself a legislative function, but is
of legislative power, the inquiry must be directed to the
simply ancillary to legislation. Thus, the duty of correlating information and
scope and definiteness of the measure enacted. The
legislative does not abdicate its functions when it making recommendations is the kind of subsidiary activity which the
describes what job must be done, who is to do it, and
what is the scope of his authority. For a complex legislature may perform through its members, or which it may delegate to
economy, that may be the only way in which the legislative
process can go forward. A distinction has rightfully others to perform. Intelligent legislation on the complicated problems of
been made between delegation of power to make
the laws which necessarily involves a discretion as modern society is impossible in the absence of accurate information on the
to what it shall be, which constitutionally may not be
done, and delegation of authority or discretion as to part of the legislators, and any reasonable method of securing such
its execution to be exercised under and in pursuance
of the law, to which no valid objection can be made. information is proper. [51] The Constitution as a continuously operative
'The Constitution is thus not to be regarded as denying the
charter of government does not require that Congress find for itself
legislature the necessary resources of flexibility and
practicability. (Emphasis supplied). [48]

every fact upon which it desires to base legislative action or that it make for

itself detailed determinations which it has declared to be prerequisite to

application of legislative policy to particular facts and circumstances

impossible for Congress itself properly to investigate. [52]

Clearly, the legislature may delegate to executive officers or bodies the

power to determine certain facts or conditions, or the happening of

contingencies, on which the operation of a statute is, by its terms, made to

In the present case, the challenged section of R.A. No. 9337 is the
common proviso in Sections 4, 5 and 6 which reads as follows:
That the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006,
raise the rate of value-added tax to twelve percent (12%),
after any of the following conditions has been satisfied:
(i) Value-added tax collection as a
percentage of Gross Domestic Product
(GDP) of the previous year exceeds two
and four-fifth percent (2 4/5%); or
(ii) National government deficit as a
percentage of GDP of the previous year
exceeds one and one-half percent (1
'%).
The case before the Court is not a delegation of legislative power. It is
simply a delegation of ascertainment of facts upon which enforcement and
administration of the increase rate under the law is contingent. The
legislature has made the operation of the 12% rate effective January 1,
2006, contingent upon a specified fact or condition. It leaves the entire
operation or non-operation of the 12% rate upon factual matters outside of
the control of the executive.
No discretion would be exercised by the President. Highlighting the absence
of discretion is the fact that the word shall is used in the
common proviso. The use of the word shall connotes a mandatory
order. Its use in a statute denotes an imperative obligation and is
inconsistent with the idea of discretion. [53] 'Where the law is clear and
unambiguous, it must be taken to mean exactly what it says, and courts
have no choice but to see to it that the mandate is obeyed. [54]
Thus, it is the ministerial duty of the President to immediately impose the
12% rate upon the existence of any of the conditions specified by Congress.
This is a duty which cannot be evaded by the President. Inasmuch as the law
specifically uses the word shall, the exercise of discretion by the President
does not come into play. It is a clear directive to impose the 12% VAT rate
when the specified conditions are present. The time of taking into effect of
the 12% VAT rate is based on the happening of a certain specified
contingency, or upon the ascertainment of certain facts or conditions by a
person or body other than the legislature itself.
The Court finds no merit to the contention of petitioners ABAKADA
GURO Party List, et al. that the law effectively nullified the President's power
of control over the Secretary of Finance by mandating the fixing of the tax
rate by the President upon the recommendation of the Secretary of Finance.
The Court cannot also subscribe to the position of petitioners
Pimentel, et al. that the word shall should be interpreted to mean may in
view of the phrase upon the recommendation of the Secretary of Finance.
Neither does the Court find persuasive the submission of petitioners
Escudero, et al. that any recommendation by the Secretary of Finance can
easily be brushed aside by the President since the former is a mere alter ego President. He is acting as the agent of the legislative department, to

of the latter. determine and declare the event upon which its expressed will is to take

effect. [56] The Secretary of Finance becomes the means or tool by which

legislative policy is determined and implemented, considering that he

When one speaks of the Secretary of Finance as the alter ego of the possesses all the facilities to gather data and information and has a much

President, it simply means that as head of the Department of Finance he is broader perspective to properly evaluate them. His function is to gather and

the assistant and agent of the Chief Executive. The multifarious executive collate statistical data and other pertinent information and verify if any of

and administrative functions of the Chief Executive are performed by and the two conditions laid out by Congress is present. His personality in such

through the executive departments, and the acts of the secretaries of such instance is in reality but a projection of that of Congress.Thus, being the

departments, such as the Department of Finance, performed and agent of Congress and not of the President, the President cannot alter or

promulgated in the regular course of business, are, unless disapproved or modify or nullify, or set aside the findings of the Secretary of Finance and to

reprobated by the Chief Executive, presumptively the acts of the Chief substitute the judgment of the former for that of the latter.

Executive. The Secretary of Finance, as such, occupies a political position

and holds office in an advisory capacity, and, in the language of Thomas

Jefferson, "should be of the President's bosom confidence" and, in the Congress simply granted the Secretary of Finance the authority to ascertain

language of Attorney-General Cushing, is 'subject to the direction of the the existence of a fact, namely, whether by December 31, 2005, the value-

President." [55] added tax collection as a percentage of Gross Domestic Product (GDP) of the

previous year exceeds two and four-fifth percent (24/5%) or the national

government deficit as a percentage of GDP of the previous year exceeds one

and one-half percent (1%). If either of these two instances has occurred,

the Secretary of Finance, by legislative mandate, must submit such

In the present case, in making his recommendation to the President on the information to the President. Then the 12% VAT rate must be imposed by

existence of either of the two conditions, the Secretary of Finance is not the President effective January 1, 2006. There is no undue delegation of

acting as the alter ego of the President or even her subordinate. In such legislative power but only of the discretion as to the execution of a

instance, he is not subject to the power of control and direction of the law. This is constitutionally permissible. [57] Congress does not

abdicate its functions or unduly delegate power when it describes what job
must be done, who must do it, and what is the scope of his authority; in our
complex economy that is frequently the only way in which the legislative
process can go forward. [58]
As to the argument of petitioners ABAKADA GURO Party List, et al. that
delegating to the President the legislative power to tax is contrary to the
principle of republicanism, the same deserves scant consideration. Congress
did not delegate the power to tax but the mere implementation of the law.
The intent and will to increase the VAT rate to 12% came from Congress and
the task of the President is to simply execute the legislative policy. That
Congress chose to do so in such a manner is not within the province of the
Court to inquire into, its task being to interpret the law. [59]
The insinuation by petitioners Pimentel, et al. that the President has ample
powers to cause, influence or create the conditions to bring about either or
both the conditions precedent does not deserve any merit as this argument
is highly speculative. The Court does not rule on allegations which are
manifestly conjectural, as these may not exist at all. The Court deals with
facts, not fancies; on realities, not appearances. When the Court acts on
appearances instead of realities, justice and law will be short-lived.
B. The 12% Increase VAT Rate Does Not
Impose an Unfair and
Unnecessary Additional Tax
Burden
Petitioners Pimentel, et al. argue that the 12% increase in the VAT rate
imposes an unfair and additional tax burden on the people. Petitioners also
argue that the 12% increase, dependent on any of the 2 conditions set
forth in the contested provisions, is ambiguous because it does not state if
the VAT rate would be returned to the original 10% if the rates are no
longer satisfied. Petitioners also argue that such rate is unfair and
unreasonable, as the people are unsure of the applicable VAT rate from
year to year.
Under the common provisos of Sections 4, 5 and 6 of R.A. No. 9337, if any
of the two conditions set forth therein are satisfied, the President shall
increase the VAT rate to 12%. The provisions of the law are clear. It does
not provide for a return to the 10% rate nor does it empower the President
to so revert if, after the rate is increased to 12%, the VAT collection goes
below the 24/5 of the GDP of the previous year or that the national
government deficit as a percentage of GDP of the previous year does not
exceed 1%.
Therefore, no statutory construction or interpretation is needed. Neither can
conditions or limitations be introduced where none is provided for. Rewriting
the law is a forbidden ground that only Congress may tread upon. [60]
 1. VAT/GDP Ratio > 2.8%

The condition set for increasing VAT rate to 12% have

Thus, in the absence of any provision providing for a return to the 10% rate,
which in this case the Court finds none, petitioners' argument is, at best,
purely speculative. There is no basis for petitioners' fear of a fluctuating VAT
rate because the law itself does not provide that the rate should go back to
10% if the conditions provided in Sections 4, 5 and 6 are no longer present.
The rule is that where the provision of the law is clear and unambiguous, so
that there is no occasion for the court's seeking the legislative intent, the
law must be taken as it is, devoid of judicial addition or subtraction. [61]
economic or fiscal meaning. If VAT/GDP is less than 2.8%,
it means that government has weak or no capability of
implementing the VAT or that VAT is not effective in the
function of the tax collection. 'Therefore, there is no value
to increase it to 12% because such action will also be
ineffectual.
2. Natl Govt Deficit/GDP >1.5%
The condition set for increasing VAT when deficit/GDP is
1.5% or less means the fiscal condition of government has
reached a relatively sound position or is towards the
direction of a balanced budget position. Therefore, there is
no need to increase the VAT rate since the fiscal house is
in a relatively healthy position. Otherwise stated, if the
ratio is more than 1.5%, there is indeed a need to increase
the VAT rate. [62]

Petitioners also contend that the increase in the VAT rate, which was

allegedly an incentive to the President to raise the VAT collection to at least

2 4/5 of the GDP of the previous year, should be based on fiscal adequacy.
That the first condition amounts to an incentive to the President to increase

the VAT collection does not render it unconstitutional so long as there is a

public purpose for which the law was passed, which in this case, is mainly to
Petitioners obviously overlooked that increase in VAT collection is not
raise revenue. In fact, fiscal adequacy dictated the need for a raise in
the onlycondition. There is another condition, i.e., the national government
revenue.
deficit as a percentage of GDP of the previous year exceeds one and one-

half percent (1 '%).

The principle of fiscal adequacy as a characteristic of a sound tax system was

originally stated by Adam Smith in his Canons of Taxation (1776), as:

Respondents explained the philosophy behind these alternative conditions:

IV. Every tax ought to be so contrived as both to take out

and to keep out of the pockets of the people as
 little as possible over and above what it brings
into the public treasury of the state. [63]
It simply means that sources of revenues must be adequate to meet
government expenditures and their variations. [64]
The dire need for revenue cannot be ignored. Our country is in a quagmire
of financial woe. During the Bicameral Conference Committee hearing, then
Finance Secretary Purisima bluntly depicted the country's gloomy state of
economic affairs, thus:
First, let me explain the position that the Philippines finds
itself in right now. We are in a position where 90 percent
of our revenue is used for debt service. So, for every peso
of revenue that we currently raise, 90 goes to debt service.
That's interest plus amortization of our debt. So clearly,
this is not a sustainable situation. That's the first fact.
The second fact is that our debt to GDP level is way out of
line compared to other peer countries that borrow money
from that international financial markets. Our debt to GDP
is approximately equal to our GDP. Again, that shows you
that this is not a sustainable situation.
The third thing that Id like to point out is the environment
that we are presently operating in is not as benign as what
it used to be the past five years.
What do I mean by that?
In the past five years, weve been lucky because we were
operating in a period of basically global growth and low
interest rates. The past few months, we have seen an
inching up, in fact, a rapid increase in the interest rates in
the leading economies of the world. And, therefore, our
ability to borrow at reasonable prices is going to be
challenged. In fact, ultimately, the question is our ability
to access the financial markets.
When the President made her speech in July last year, the
environment was not as bad as it is now, at least based on
the forecast of most financial institutions. So, we were
assuming that raising 80 billion would put us in a position
where we can then convince them to improve our ability
to borrow at lower rates. But conditions have changed on
us because the interest rates have gone up. 'In fact, just
within this room, we tried to access the market for a billion
dollars because for this year alone, the Philippines will
have to borrow 4 billion dollars. Of that amount, we have
borrowed 1.5 billion. We issued last January a 25-year
bond at 9.7 percent cost. We were trying to access last
week and the market was not as favorable and up to now
we have not accessed and we might pull back because the
conditions are not very good.
So given this situation, we at the Department of Finance
believe that we really need to front-end our deficit
reduction. Because it is deficit that is causing the increase
of the debt and we are in what we call a debt spiral. The
more debt you have, the more deficit you have because
interest and debt service eats and eats more of your
revenue. We need to get out of this debt spiral. And the
only way, I think, we can get out of this debt spiral is really
have a front-end adjustment in our revenue base.[65]
The image portrayed is chilling. Congress passed the law hoping for rescue
from an inevitable catastrophe. Whether the law is indeed sufficient to
answer the state's economic dilemma is not for the Court to judge. In
the Farias case, the Court refused to consider the various arguments raised
therein that dwelt on the wisdom of Section 14 of R.A. No. 9006 (The Fair

Election Act), pronouncing that:

A. Due Process and Equal Protection Clauses

. . . policy matters are not the concern of the Court.

Government policy is within the exclusive dominion of the
political branches of the government. It is not for this Court
to look into the wisdom or propriety of legislative
determination. Indeed, whether an enactment is wise or
unwise, whether it is based on sound economic theory,
Petitioners Association of Pilipinas Shell Dealers, Inc., et al. argue that
whether it is the best means to achieve the desired results,
whether, in short, the legislative discretion within its Section 8 of R.A. No. 9337, amending Sections 110 (A)(2), 110 (B), and
prescribed limits should be exercised in a particular
manner are matters for the judgment of the legislature, Section 12 of R.A. No. 9337, amending Section 114 (C) of the NIRC are
and the serious conflict of opinions does not suffice to bring
them within the range of judicial cognizance. [66] arbitrary, oppressive, excessive and confiscatory. Their argument is

premised on the constitutional right against deprivation of life, liberty of

property without due process of law, as embodied in Article III, Section 1 of

the Constitution.

In the same vein, the Court in this case will not dawdle on the purpose of

Congress or the executive policy, given that it is not for the judiciary to "pass
Petitioners also contend that these provisions violate the constitutional
upon questions of wisdom, justice or expediency of legislation. [67]
guarantee of equal protection of the law.

II. The doctrine is that where the due process and equal protection clauses are

Whether Section 8 of R.A. No. 9337, amending Sections 110(A)(2) and
110(B) of the NIRC; and Section 12 of R.A. No. 9337, amending Section
114(C) of the NIRC, violate the following provisions of the Constitution:
invoked, considering that they are not fixed rules but rather broad standards,
there is a need for proof of such persuasive character as would lead to such
a conclusion. Absent such a showing, the presumption of validity must

prevail.[68]

a. Article VI, Section 28(1), and

b. Article III, Section 1

Section 8 of R.A. No. 9337, amending Section 110(B) of the NIRC imposes uncredited. However, to the extent that the input tax is less than 70% of the

a limitation on the amount of input tax that may be credited against the output tax, then 100% of such input tax is still creditable.

output tax. It states, in part: '[P]rovided, that the input tax inclusive of the

input VAT carried over from the previous quarter that may be credited in

every quarter shall not exceed seventy percent (70%) of the output VAT: More importantly, the excess input tax, if any, is retained in a business's

books of accounts and remains creditable in the succeeding quarter/s. This

is explicitly allowed by Section 110(B), which provides that 'if the input tax

Input Tax is defined under Section 110(A) of the NIRC, as amended, as the exceeds the output tax, the excess shall be carried over to the succeeding

value-added tax due from or paid by a VAT-registered person on the quarter or quarters. In addition, Section 112(B) allows a VAT-registered

importation of goods or local purchase of good and services, including lease person to apply for the issuance of a tax credit certificate or refund for any

or use of property, in the course of trade or business, from a VAT-registered unused input taxes, to the extent that such input taxes have not been applied

person, and Output Tax is the value-added tax due on the sale or lease of against the output taxes. Such unused input tax may be used in payment of

taxable goods or properties or services by any person registered or required his other internal revenue taxes.

to register under the law.

The non-application of the unutilized input tax in a given quarter is not ad

infinitum, as petitioners exaggeratedly contend. Their analysis of the effect

of the 70% limitation is incomplete and one-sided. It ends at the net effect
Petitioners claim that the contested sections impose limitations on the that there will be unapplied/unutilized inputs VAT for a given quarter. It does
amount of input tax that may be claimed. In effect, a portion of the input tax not proceed further to the fact that such unapplied/unutilized input tax may
that has already been paid cannot now be credited against the output tax. be credited in the subsequent periods as allowed by the carry-over provision

of Section 110(B) or that it may later on be refunded through a tax credit

certificate under Section 112(B).

Petitioners' argument is not absolute. It assumes that the input tax exceeds

70% of the output tax, and therefore, the input tax in excess of 70% remains
Therefore, petitioners' argument must be rejected.

Third, if the input taxes exceed the output taxes, the excess shall be carried

over to the succeeding quarter or quarters. Should the input taxes result
On the other hand, it appears that petitioner Garcia failed to comprehend
from zero-rated or effectively zero-rated transactions, any excess over the
the operation of the 70% limitation on the input tax. According to petitioner,
output taxes shall instead be refunded to the taxpayer or credited against
the limitation on the creditable input tax in effect allows VAT-registered
other internal revenue taxes, at the taxpayer's option. [70]
establishments to retain a portion of the taxes they collect, which violates

the principle that tax collection and revenue should be for public purposes

and expenditures
Section 8 of R.A. No. 9337 however, imposed a 70% limitation on the input

tax. Thus, a person can credit his input tax only up to the extent of 70% of

the output tax. In layman's term, the value-added taxes that a

As earlier stated, the input tax is the tax paid by a person, passed on to him
person/taxpayer paid and passed on to him by a seller can only be credited
by the seller, when he buys goods. Output tax meanwhile is the tax due to
up to 70% of the value-added taxes that is due to him on a taxable
the person when he sells goods. In computing the VAT payable, three
transaction. There is no retention of any tax collection because the
possible scenarios may arise:
person/taxpayer has already previously paid the input tax to a seller, and

the seller will subsequently remit such input tax to the BIR. The party directly

liable for the payment of the tax is the seller. [71] What only needs to be

First, if at the end of a taxable quarter the output taxes charged by the seller done is for the person/taxpayer to apply or credit these input taxes, as

are equal to the input taxes that he paid and passed on by the suppliers, evidenced by receipts, against his output taxes.
then no payment is required;

Petitioners Association of Pilipinas Shell Dealers, Inc., et al. also argue that
Second, when the output taxes exceed the input taxes, the person shall be the input tax partakes the nature of a property that may not be confiscated,
liable for the excess, which has to be paid to the Bureau of Internal Revenue appropriated, or limited without due process of law.
(BIR);[69] and
The input tax is not a property or a property right within the constitutional
purview of the due process clause. A VAT-registered person's entitlement to
the creditable input tax is a mere statutory privilege.
The distinction between statutory privileges and vested rights must be borne
in mind for persons have no vested rights in statutory privileges. The state
may change or take away rights, which were created by the law of the state,
although it may not take away property, which was vested by virtue of such
rights. [72]
Under the previous system of single-stage taxation, taxes paid at every level
of distribution are not recoverable from the taxes payable, although it
becomes part of the cost, which is deductible from the gross revenue. When
Pres. Aquino issued E.O. No. 273 imposing a 10% multi-stage tax on all
sales, it was then that the crediting of the input tax paid on purchase or
importation of goods and services by VAT-registered persons against the
output tax was introduced. [73]This was adopted by the Expanded VAT Law
(R.A. No. 7716), [74] and The Tax Reform Act of 1997 (R.A. No.
8424). [75] The right to credit input tax as against the output tax is clearly
a privilege created by law, a privilege that also the law can remove, or in
this case, limit.
Petitioners also contest as arbitrary, oppressive, excessive and confiscatory,
Section 8 of R.A. No. 9337, amending Section 110(A) of the NIRC, which
provides:
SEC. 110. Tax Credits. '
(A) Creditable Input Tax. '
Provided, That the input tax on goods purchased or
imported in a calendar month for use in trade or business
for which deduction for depreciation is allowed under this
Code, shall be spread evenly over the month of acquisition
and the fifty-nine (59) succeeding months if the aggregate
acquisition cost for such goods, excluding the VAT
component thereof, exceeds One million pesos
(P1,000,000.00): Provided, however, That if the estimated
useful life of the capital goods is less than five (5) years,
as used for depreciation purposes, then the input VAT shall
be spread over such a shorter period: Provided, finally,
That in the case of purchase of services, lease or use of
properties, the input tax shall be creditable to the
purchaser, lessee or license upon payment of the
compensation, rental, royalty or fee.
The foregoing section imposes a 60-month period within which to amortize
the creditable input tax on purchase or importation of capital goods with
acquisition cost of P1 Million pesos, exclusive of the VAT component. Such
spread out only poses a delay in the crediting of the input tax. Petitioners'
argument is without basis because the taxpayer is not permanently deprived
of his privilege to credit the input tax.
 shall be subject to ten percent (10%) withholding tax at
the time of payment. For purposes of this Section, the
payor or person in control of the payment shall be
It is worth mentioning that Congress admitted that the spread-out of the considered as the withholding agent.

creditable input tax in this case amounts to a 4-year interest-free loan to the The value-added tax withheld under this Section shall be
remitted within ten (10) days following the end of the
government. [76] In the same breath, Congress also justified its move by month the withholding was made.

saying that the provision was designed to raise an annual revenue of 22.6

billion. [77]The legislature also dispelled the fear that the provision will fend

off foreign investments, saying that foreign investors have other tax

incentives provided by law, and citing the case of China, where despite a
Section 114(C) merely provides a method of collection, or as stated by
17.5% non-creditable VAT, foreign investments were not
respondents, a more simplified VAT withholding system. The government in
deterred. [78] Again, for whatever is the purpose of the 60-month
this case is constituted as a withholding agent with respect to their payments
amortization, this involves executive economic policy and legislative wisdom
for goods and services.
in which the Court cannot intervene.

Prior to its amendment, Section 114(C) provided for different rates of value-
With regard to the 5% creditable withholding tax imposed on payments
added taxes to be withheld -- 3% on gross payments for purchases of goods;
made by the government for taxable transactions, Section 12 of R.A. No.
6% on gross payments for services supplied by contractors other than by
9337, which amended Section 114 of the NIRC, reads:
public works contractors; 8.5% on gross payments for services supplied by

public work contractors; or 10% on payment for the lease or use of

SEC. 114. Return and Payment of Value-added
Tax. ' properties or property rights to nonresident owners. Under the present

(C) Withholding of Value-added Tax. ' The Government or Section 114(C), these different rates, except for the 10% on lease or
any of its political subdivisions, instrumentalities or
agencies, including government-owned or controlled property rights payment to nonresidents, were deleted, and a uniform rate
corporations (GOCCs) shall, before making payment on
of 5% is applied.
account of each purchase of goods and services which are
subject to the value-added tax imposed in Sections 106
and 108 of this Code, deduct and withhold a final value-
added tax at the rate of five percent (5%) of the gross
payment thereof: Provided, That the payment for lease or
use of properties or property rights to nonresident owners
The Court observes, however, that the law the used the word final. In tax
usage, final, as opposed to creditable, means full. Thus, it is provided in
Section 114(C): final value-added tax at the rate of five percent (5%).
In Revenue Regulations No. 02-98, implementing R.A. No. 8424 (The Tax
Reform Act of 1997), the concept of final withholding tax on income was
explained, to wit:
SECTION 2.57. Withholding of Tax at Source
(A) Final Withholding Tax. ' Under the final withholding tax
system the amount of income tax withheld by the
withholding agent is constituted as full and final
payment of the income tax due from the payee on the
said income. The liability for payment of the tax rests
primarily on the payor as a withholding agent. Thus, in
case of his failure to withhold the tax or in case of
underwithholding, the deficiency tax shall be collected
from the payor/withholding agent. '
(B) Creditable Withholding Tax. ' Under the creditable
withholding tax system, taxes withheld on certain income
payments are intended to equal or at least approximate
the tax due of the payee on said income. ' Taxes withheld
on income payments covered by the expanded withholding
tax (referred to in Sec. 2.57.2 of these regulations) and
compensation income (referred to in Sec. 2.78 also of
these regulations) are creditable in nature.
As applied to value-added tax, this means that taxable transactions with the
government are subject to a 5% rate, which constitutes as full payment of
the tax payable on the transaction. This represents the net VAT payable of
the seller. The other 5% effectively accounts for the standard input VAT
(deemed input VAT), in lieu of the actual input VAT directly or attributable
to the taxable transaction. [79]
The Court need not explore the rationale behind the provision. It is clear that
Congress intended to treat differently taxable transactions with the
government.[80] This is supported by the fact that under the old provision,
the 5% tax withheld by the government remains creditable against the tax
liability of the seller or contractor, to wit:
SEC. 114. Return and Payment of Value-added Tax. '
(C) Withholding of Creditable Value-added Tax. ' The
Government or any of its political subdivisions,
instrumentalities or agencies, including government-
owned or controlled corporations (GOCCs) shall, before
making payment on account of each purchase of goods
from sellers and services rendered by contractors which
are subject to the value-added tax imposed in Sections
106 and 108 of this Code, deduct and withhold the value-
added tax due at the rate of three percent (3%) of the
gross payment for the purchase of goods and six percent
(6%) on gross receipts for services rendered by
contractors on every sale or installment payment which
shall be creditable against the value-added tax
liability of the seller or contractor : Provided, however,
That in the case of government public works contractors,
the withholding rate shall be eight and one-half percent
(8.5%): Provided, further, That the payment for lease or
use of properties or property rights to nonresident owners
shall be subject to ten percent (10%) withholding tax at
the time of payment. For this purpose, the payor or person
in control of the payment shall be considered as the
withholding agent.
The valued-added tax withheld under this Section shall be remitted within
ten (10) days following the end of the month the withholding was
made. (Emphasis supplied)
Petitioners' stance is purely hypothetical, argumentative, and again, one-

sided. The Court will not engage in a legal joust where premises are what

ifs, arguments, theoretical and facts, uncertain. Any disquisition by the Court

on this point will only be, as Shakespeare describes life in Macbeth, [82] full
As amended, the use of the word final and the deletion of the
of sound and fury, signifying nothing.
word creditable exhibits Congress's intention to treat transactions with the

government differently. Since it has not been shown that the class subject

to the 5% final withholding tax has been unreasonably narrowed, there is no

What's more, petitioners' contention assumes the proposition that there is
reason to invalidate the provision. Petitioners, as petroleum dealers, are not
no profit or value-added. It need not take an astute businessman to know
the only ones subjected to the 5% final withholding tax. It applies to all those
that it is a matter of exception that a business will sell goods or services
who deal with the government.
without profit or value-added. It cannot be overstressed that a business is

created precisely for profit.

Moreover, the actual input tax is not totally lost or uncreditable, as

petitioners believe. Revenue Regulations No. 14-2005 or the Consolidated

The equal protection clause under the Constitution means that 'no person or
Value-Added Tax Regulations 2005 issued by the BIR, provides that should
class of persons shall be deprived of the same protection of laws which is
the actual input tax exceed 5% of gross payments, the excess may form part
enjoyed by other persons or other classes in the same place and in like
of the cost. Equally, should the actual input tax be less than 5%, the
circumstances. [83]
difference is treated as income.[81]

The power of the State to make reasonable and natural classifications for the
Petitioners also argue that by imposing a limitation on the creditable input
purposes of taxation has long been established. Whether it relates to the
tax, the government gets to tax a profit or value-added even if there is no
subject of taxation, the kind of property, the rates to be levied, or the
profit or value-added.
amounts to be raised, the methods of assessment, valuation and collection,
the State's power is entitled to presumption of validity. As a rule, the

judiciary will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness. [84]
Petitioners point out that the limitation on the creditable input tax if the
Petitioners brought to the Court's attention the introduction of Senate Bill
No. 2038 by Sens. S.R. Osmea III and Ma. Ana Consuelo A.S. ' Madrigal on
June 6, 2005, and House Bill No. 4493 by Rep. Eric D. Singson. The
proposed legislation seeks to amend the 70% limitation by increasing the
same to 90%. This, according to petitioners, supports their stance that the
70% limitation is arbitrary and confiscatory. On this score, suffice it to say
that these are still proposed legislations. Until Congress amends the law,
and absent any unequivocal basis for its unconstitutionality, the 70%
limitation stays.

entity has a high ratio of input tax, or invests in capital equipment, or has

several transactions with the government, is not based on real and

B. Uniformity and Equitability of
substantial differences to meet a valid classification.
Taxation

The argument is pedantic, if not outright baseless. The law does not make

any classification in the subject of taxation, the kind of property, the rates
Article VI, Section 28(1) of the Constitution reads:
to be levied or the amounts to be raised, the methods of assessment,

valuation and collection. Petitioners' alleged distinctions are based on

variables that bear different consequences. While the implementation of the The rule of taxation shall be uniform and equitable. The
Congress shall evolve a progressive system of taxation.
law may yield varying end results depending on one's profit margin and

value-added, the Court cannot go beyond what the legislature has laid down

and interfere with the affairs of business.

The equal protection clause does not require the universal application of the
Uniformity in taxation means that all taxable articles or kinds of property of
laws on all persons or things without distinction. This might in fact sometimes
the same class shall be taxed at the same rate. Different articles may be
result in unequal protection. What the clause requires is equality among
taxed at different amounts provided that the rate is uniform on the same
equals as determined according to a valid classification. By classification is
class everywhere with all people at all times. [86]
meant the grouping of persons or things similar to each other in certain

particulars and different from all others in these same particulars. [85]
In this case, the tax law is uniform as it provides a standard rate of 0% or
10% (or 12%) on all goods and services. Sections 4, 5 and 6 of R.A. No.
9337, amending Sections 106, 107 and 108, respectively, of the NIRC,
provide for a rate of 10% (or 12%) on sale of goods and properties,
importation of goods, and sale of services and use or lease of properties.
These same sections also provide for a 0% rate on certain sales and
transaction.
Neither does the law make any distinction as to the type of industry or trade
that will bear the 70% limitation on the creditable input tax, 5-year
amortization of input tax paid on purchase of capital goods or the 5% final
withholding tax by the government. It must be stressed that the rule of
uniform taxation does not deprive Congress of the power to classify subjects
of taxation, and only demands uniformity within the particular class. [87]
R.A. No. 9337 is also equitable. The law is equipped with a threshold margin.
The VAT rate of 0% or 10% (or 12%) does not apply to sales of goods or
services with gross annual sales or receipts not
exceeding P1,500,000.00. [88]Also, basic marine and agricultural food
products in their original state are still not subject to the tax, [89] thus
ensuring that prices at the grassroots level will remain accessible. As was
stated in Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. vs.
Tan: [90]
The disputed sales tax is also equitable. It is imposed only
on sales of goods or services by persons engaged in
business with an aggregate gross annual sales
exceeding P200,000.00. Small corner sari-sari stores are
consequently exempt from its application. Likewise
exempt from the tax are sales of farm and marine
products, so that the costs of basic food and other
necessities, spared as they are from the incidence of the
VAT, are expected to be relatively lower and within the
reach of the general public.
It is admitted that R.A. No. 9337 puts a premium on businesses with low
profit margins, and unduly favors those with high profit margins. Congress
was not oblivious to this. Thus, to equalize the weighty burden the law
entails, the law, under Section 116, imposed a 3% percentage tax on VAT-
exempt persons under Section 109(v), i.e., transactions with gross annual
sales and/or receipts not exceeding P1.5 Million. This acts as a equalizer
because in effect, bigger businesses that qualify for VAT coverage and VAT-
exempt taxpayers stand on equal-footing.
Moreover, Congress provided mitigating measures to cushion the impact of
the imposition of the tax on those previously exempt. Excise taxes on
petroleum products [91] and natural gas [92] were reduced. Percentage tax
on domestic carriers was removed. [93] Power producers are now exempt
from paying franchise tax. [94]
 Progressive taxation is built on the principle of the taxpayer's ability to pay.

This principle was also lifted from Adam Smith's Canons of Taxation, and it
Aside from these, Congress also increased the income tax rates of
states:
corporations, in order to distribute the burden of taxation. Domestic, foreign,

and non-resident corporations are now subject to a 35% income tax rate,

from a previous 32%. [95] Intercorporate dividends of non-resident foreign

I. The subjects of every state ought to contribute towards
corporations are still subject to 15% final withholding tax but the tax credit the support of the government, as nearly as
possible, in proportion to their respective
allowed on the corporation's domicile was increased to 20%. [96] The abilities; that is, in proportion to the revenue
which they respectively enjoy under the
Philippine Amusement and Gaming Corporation (PAGCOR) is not exempt protection of the state.

from income taxes anymore.[97] Even the sale by an artist of his works or

services performed for the production of such works was not spared. Taxation is progressive when its rate goes up depending on the resources of

the person affected. [98]

All these were designed to ease, as well as spread out, the burden of

taxation, which would otherwise rest largely on the consumers. It cannot The VAT is an antithesis of progressive taxation. By its very nature, it is

therefore be gainsaid that R.A. No. 9337 is equitable. regressive. The principle of progressive taxation has no relation with the VAT

system inasmuch as the VAT paid by the consumer or business for every

goods bought or services enjoyed is the same regardless of income. In

C. Progressivity of Taxation

other words, the VAT paid eats the same portion of an income, whether big

or small. The disparity lies in the income earned by a person or profit margin

marked by a business, such that the higher the income or profit margin, the

smaller the portion of the income or profit that is eaten by VAT. A converso,
Lastly, petitioners contend that the limitation on the creditable input tax is
the lower the income or profit margin, the bigger the part that the VAT eats
anything but regressive. It is the smaller business with higher input tax-
away. At the end of the day, it is really the lower income group or businesses
output tax ratio that will suffer the consequences.
with low-profit margins that is always hardest hit.
Nevertheless, the Constitution does not really prohibit the imposition of
indirect taxes, like the VAT. What it simply provides is that Congress shall
"evolve a progressive system of taxation." The Court stated in the Tolentino
case, thus:
The Constitution does not really prohibit the imposition of
indirect taxes which, like the VAT, are regressive. What it
simply provides is that Congress shall 'evolve a
progressive system of taxation. The constitutional
provision has been interpreted to mean simply that 'direct
taxes are . . . to be preferred [and] as much as possible,
indirect taxes should be minimized. (E. FERNANDO, THE
CONSTITUTION OF THE PHILIPPINES 221 (Second ed.
1977)) Indeed, the mandate to Congress is not to
prescribe, but to evolve, a progressive tax system.
Otherwise, sales taxes, which perhaps are the oldest form
of indirect taxes, would have been prohibited with the
proclamation of Art. VIII, '17 (1) of the 1973 Constitution
from which the present Art. VI, '28 (1) was taken. Sales
taxes are also regressive.
Resort to indirect taxes should be minimized but not
avoided entirely because it is difficult, if not impossible, to
avoid them by imposing such taxes according to the
taxpayers' ability to pay. In the case of the VAT, the law
minimizes the regressive effects of this imposition by
providing for zero rating of certain transactions (R.A. No.
7716, '3, amending 102 (b) of the NIRC), while granting
exemptions to other transactions. (R.A. No. 7716, '4
amending '103 of the NIRC) [99]
CONCLUSION
It has been said that taxes are the lifeblood of the government. In this case,
it is just an enema, a first-aid measure to resuscitate an economy in distress.
The Court is neither blind nor is it turning a deaf ear on the plight of the
masses. But it does not have the panacea for the malady that the law seeks
to remedy. As in other cases, the Court cannot strike down a law as
unconstitutional simply because of its yokes.
Let us not be overly influenced by the plea that for every
wrong there is a remedy, and that the judiciary should
stand ready to afford relief. There are undoubtedly many
wrongs the judicature may not correct, for instance, those
involving political questions. . . .
Let us likewise disabuse our minds from the notion that
the judiciary is the repository of remedies for all political
or social ills; We should not forget that the Constitution
has judiciously allocated the powers of government to
three distinct and separate compartments; and that
judicial interpretation has tended to the preservation of the
independence of the three, and a zealous regard of the
prerogatives of each, knowing full well that one is not the
guardian of the others and that, for official wrong-doing,
each may be brought to account, either by impeachment,
trial or by the ballot box. [100]
The words of the Court in Vera vs. Avelino [101] holds true then, as it still
holds true now. All things considered, there is no raison d'tre for the
unconstitutionality of R.A. No. 9337.
WHEREFORE, Republic Act No. 9337 not being unconstitutional, the petitions

in G.R. Nos. 168056, 168207, 168461, 168463, and 168730, are

hereby DISMISSED.

There being no constitutional impediment to the full enforcement and

implementation of R.A. No. 9337, the temporary restraining order issued by

the Court on July 1, 2005 is LIFTED upon finality of herein decision.

SO ORDERED.