LEGISLATIVE INQUIRIES
Subsequently,
Sabio v. Gordon
On February 20, 2006, Senator Miriam Defensor-Santiago
introduced Senate Res. No. 455 “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.” Pursuant to this, on May 8, 2006, Senator Richard
Gordon, wrote Chairman Camilo Sabio of the PCGG 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. Chairman
Sabio declined the invitation because of prior commitment. At the
same time, he invoked Section 4(b) of E.O. No. 1 “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.
Gordon’s Subpoenae Ad Testificandum was repeatedly ignored by
Sabio hence he threatened Sabio to be cited with contempt.
ISSUE: Whether or not Section 4 of EO No. 1 is constitutional.
HELD: No. 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, 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”. 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.
Senate of the Philippines v. Ermita
In 2005, scandals involving anomalous transactions about the
North Rail Project as well as the Garci tapes surfaced. This
prompted the Senate to conduct a public hearing to investigate the
said anomalies particularly the alleged overpricing in the NRP.
The investigating Senate committee issued invitations to certain
department heads and military officials to speak before the
committee as resource persons. Ermita submitted that he and some
of the department heads cannot attend the said hearing due to
pressing matters that need immediate attention. AFP Chief of Staff
Senga likewise sent a similar letter. Drilon, the senate president,
excepted the said requests for they were sent belatedly and
arrangements were already made and scheduled.
GMA issued EO 464 which took effect immediately.
EO 464 basically prohibited Department heads, 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; and Such other officers as may be determined
by the President, from appearing in such hearings conducted by
Congress without first securing the president’s approval.
The department heads and the military officers who were invited
by the Senate committee then invoked EO 464 to except
themselves. Despite EO 464, the scheduled hearing proceeded
with only 2 military personnel 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. EO 464’s constitutionality
was assailed for it is alleged that it infringes on the rights and
duties of Congress to conduct investigation in aid of legislation
and conduct oversight functions in the implementation of laws.
ISSUE: Whether or not EO 464 is constitutional.
HELD: The SC ruled that EO 464 is constitutional in part. To
determine the validity of the provisions of EO 464, the SC sought
to distinguish Section 21 from Section 22 of Art 6 of the 1987
Constitution. The Congress’ power of inquiry is expressly
recognized in Section 21 of Article VI of the Constitution.
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.
Section 22 on the other hand provides for the Question Hour. 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. Section 22 refers
only to Question Hour, whereas, Section 21 would refer
specifically to inquiries in aid of legislation, under which anybody
for that matter, may be summoned and if he refuses, he can be
held in contempt of the House. A distinction was thus made
between inquiries in aid of legislation and the question hour.
While attendance was meant to be discretionary in the question
hour, it was compulsory in inquiries in aid of legislation. Sections
21 and 22, therefore, while closely related and complementary to
each other, should not be considered as pertaining to the same
power of 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 legislation, while the other
pertains to the power to conduct a question hour, the objective of
which is to obtain information in pursuit of Congress’ oversight
function. 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. 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.
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 .
NOTES: The SC ruled that Section 1 and Section 2a are valid.
The rest invalid.
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. Ermita when they are invited to legislative inquiries in
aid of legislation.
NOTA BENE:
Please remember this, this is case of Arnault used in the cases.
Jean Arnault v. Nazareno
This case arose from the legislative inquiry into the acquisition by
the Philippine Government of the Buenavista and Tambobong
estates sometime in 1949. Among the witnesses called to be
examined by the special committee created by a Senate resolution
was Jean L. Arnault, a lawyer who delivered a partial of the
purchase price to a representative of the vendor. During the Senate
investigation, Arnault refused to reveal the identity of said
representative, at the same time invoking his constitutional right
against self-incrimination. The Senate adopted a resolution
committing Arnault to the custody of the Sergeant-at-Arms and
imprisoned “until he shall have purged the contempt by revealing
to the Senate . . . the name of the person to whom he gave the
P440,000, as well as answer other pertinent questions in
connection therewith.” Arnault petitioned for a writ of Habeas
Corpus
ISSUE: Can the senate impose penalty against those who refuse to
answer its questions in a congressional hearing in aid of
legislation.
HELD: It is the inherent right of the Senate to impose penalty in
carrying out their duty to conduct inquiry in aid of legislation. But
it must be herein established that a witness who refuses to answer
a query by the Committee may be detained during the term of the
members imposing said penalty but the detention should not be
too long as to violate the witness’ right to due process of law.
Gudani v. Senga
Facts: Senator Rodolfo Biazon invited several senior officers of
the AFP, including Gen. Gudani and Col. Balutan, to appear at a
public hearing before the Senate Committee on National Defense
and Security to shed light on the “Hello Garci” controversy.
Gudani and Balutan were directed by AFP Chief of Staff Gen.
Senga, per instruction of Pres. Arroyo, not testify before said
Committee. On the very day of the hearing, President Gloria-
Macapagal-Arroyo issued Executive Order No. 464 enjoining
officials of the executive department including the military
establishment from appearing in any legislative inquiry without
her approval. However, the two testified before the Senate,
prompting Gen. Senga to issue an order directing Gudani and
Balutan to appear before the Office of the Provost Marshal
General (OPMG) on 3 October 2005 for investigation. The
following day, Gen. Gudani was compulsorily retired from
military service. After investigation, the OPMG recommended
that the two be charged with violation of Article of War 65, on
willfully disobeying a superior officer. Thus, Gudani and Balutan
filed a petition for certiorari and prohibition seeking that (1) the
order of President Arroyo be declared unconstitutional; (2) the
charges against them be quashed; and (3) Gen. Senga and their
successors-in-interest or persons acting for and on their behalf or
orders, be permanently enjoined from proceeding against them, as
a consequence of their having testified before the Senate.
Issue:
1. May the President prevent a member of the armed forces from
testifying before a legislative inquiry?
2. How may the members of the military be compelled to attend
legislative inquiries even if the President desires otherwise?
3. Does the court-martial have jurisdiction over Gudani
considering his retirement last 4 October 2005?
Held:
1. Yes. 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. 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, 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 Presidents
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.
2. 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.
Inasmuch 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.
3. 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. Military jurisdiction has fully attached to
Gen. Gudani inasmuch as both the acts complained of and the
initiation of the proceedings against him occurred before he
compulsorily retired on 4 October 2005. (Gudani vs. Senga, GR
No. 170165, August 15, 2006)
Neri v. Senate Committee on Accountability
In April April 2007, 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 $329,481,290.00 (approximately
P16 Billion Pesos). The Project was to be financed by the People’s
Republic of China. The Senate passed various resolutions relative
to the NBN deal. On the other hand, Joe De Venecia issued a
statement that several high executive officials and power brokers
were using their influence to push the approval of the NBN
Project by the NEDA.
Neri, the head of NEDA, was then invited to testify before the
Senate Blue Ribbon. He appeared in one hearing wherein he was
interrogated for 11 hrs and during which he admitted that Abalos
of COMELEC tried to bribe him with P200M 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, Neri 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, (b) whether or not she directed him
to prioritize it, and (c) whether or not she directed him to approve.
He later refused to attend the other hearings and Ermita sent a
letter to the SBRC averring that the communications between
GMA and Neri is privileged and that the jurisprudence laid down
in Senate vs Ermita be applied. The SBRC cited Neri for
contempt.
ISSUE: Whether or not the three questions sought by the SBRC to
be answered falls under executive privilege.
HELD: The oversight function of Congress may be facilitated by
compulsory process only to the extent that it is performed in
pursuit of legislation.
The communications elicited by the three (3) questions are
covered by the presidential communications privilege.
1st, 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.
2nd, 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
3rd, 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.
Alternative answer:
The communications are covered by executive privilege
The revocation of EO 464 (advised executive officials and
employees to follow and abide by the Constitution, existing laws
and jurisprudence, including, among others, the case of Senate v.
Ermita when they are invited to legislative inquiries in aid of
legislation.), does not in any way diminish the concept of
executive privilege. This is because this concept has
Constitutional underpinnings.
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, appointing,
pardoning, and diplomatic powers. Consistent with the doctrine of
separation of powers, the information relating to these powers
may enjoy greater confidentiality than others.
Several jurisprudence cited provide the elements of presidential
communications privilege:
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.
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. 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.
Respondent Committees further contend that the grant of
petitioner’s claim of executive privilege violates the constitutional
provisions on the right of the people to information on matters of
public concern.50 We might have agreed with such contention if
petitioner did not appear before them at all. 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 Senators, with the exception only of those covered by his
claim of executive privilege.
The right to public information, like any other right, is subject to
limitation. Section 7 of Article III provides:
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 POWER OF APPROPRIATION
Belgica v. Executive Secretary
This case is consolidated with G.R. No. 208493 and G.R. No.
209251.
The so-called pork barrel system has been around in the
Philippines since about 1922. Pork Barrel is commonly known as
the lump-sum, discretionary funds of the members of the
Congress. It underwent several legal designations from
“Congressional Pork Barrel” to the latest “Priority Development
Assistance Fund” or PDAF. The allocation for the pork barrel is
integrated in the annual General Appropriations Act (GAA).
Since 2011, the allocation of the PDAF has been done in the
following manner:
a. P70 million: for each member of the lower house; broken down
to – P40 million for “hard projects” (infrastructure projects like
roads, buildings, schools, etc.), and P30 million for “soft projects”
(scholarship grants, medical assistance, livelihood programs, IT
development, etc.);
b. P200 million: for each senator; broken down to – P100 million
for hard projects, P100 million for soft projects;
c. P200 million: for the Vice-President; broken down to – P100
million for hard projects, P100 million for soft projects.
The PDAF articles in the GAA do provide for realignment of
funds whereby certain cabinet members may request for the
realignment of funds into their department provided that the
request for realignment is approved or concurred by the legislator
concerned.
Presidential Pork Barrel
The president does have his own source of fund albeit not
included in the GAA. The so-called presidential pork barrel comes
from two sources: (a) the Malampaya Funds, from the
Malampaya Gas Project – this has been around since 1976, and (b)
the Presidential Social Fund which is derived from the earnings of
PAGCOR – this has been around since about 1983.
Pork Barrel Scam Controversy
Ever since, the pork barrel system has been besieged by
allegations of corruption. In July 2013, six whistle blowers,
headed by Benhur Luy, exposed that for the last decade, the
corruption in the pork barrel system had been facilitated by Janet
Lim Napoles. Napoles had been helping lawmakers in funneling
their pork barrel funds into about 20 bogus NGO’s (non-
government organizations) which would make it appear that
government funds are being used in legit existing projects but are
in fact going to “ghost” projects. An audit was then conducted by
the Commission on Audit and the results thereof concurred with
the exposes of Luy et al.
Motivated by the foregoing, Greco Belgica and several others,
filed various petitions before the Supreme Court questioning the
constitutionality of the pork barrel system.
ISSUES:
I. Whether or not the congressional pork barrel system is
constitutional.
II. Whether or not presidential pork barrel system is constitutional.
HELD:
I. No, the congressional pork barrel system is unconstitutional. It
is unconstitutional because it violates the following principles:
a. Separation of Powers
As a rule, the budgeting power lies in Congress. It regulates the
release of funds (power of the purse). The executive, on the other
hand, implements the laws – this includes the GAA to which the
PDAF is a part of. Only the executive may implement the law but
under the pork barrel system, what’s happening was that, after the
GAA, itself a law, was enacted, the legislators themselves dictate
as to which projects their PDAF funds should be allocated to – a
clear act of implementing the law they enacted – a violation of the
principle of separation of powers. (Note in the older case of
PHILCONSA vs Enriquez, it was ruled that pork barrel, then
called as CDF or the Countrywide Development Fund, was
constitutional insofar as the legislators only recommend where
their pork barrel funds go).
This is also highlighted by the fact that in realigning the PDAF,
the executive will still have to get the concurrence of the legislator
concerned.
b. Non-delegability of Legislative Power
As a rule, the Constitution vests legislative power in Congress
alone. (The Constitution does grant the people legislative power
but only insofar as the processes of referendum and initiative are
concerned). That being, legislative power cannot be delegated by
Congress for it cannot delegate further that which was delegated
to it by the Constitution.
Exceptions to the rule are:
(i) delegated legislative power to local government units but this
shall involve purely local matters;
(ii) 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, 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.
In this case, the PDAF articles which allow the individual
legislator to identify the projects to which his PDAF money
should go to is a violation of the rule on non-delegability of
legislative power. The power to appropriate funds is solely lodged
in Congress (in the two houses comprising it) collectively and not
lodged in the individual members. Further, nowhere in the
exceptions does it state that the Congress can delegate the power
to the individual member of Congress.
c. Principle of Checks and Balances
One feature in the principle of checks and balances is the power of
the president to veto items in the GAA which he may deem to be
inappropriate. But this power is already being undermined
because of the fact that once the GAA is approved, the legislator
can now identify the project to which he will appropriate his
PDAF. Under such system, how can the president veto the
appropriation made by the legislator if the appropriation is made
after the approval of the GAA – again, “Congress cannot choose a
mode of budgeting which effectively renders the constitutionally-
given power of the President useless.”
d. Local Autonomy
As a rule, the local governments have the power to manage their
local affairs. Through their Local Development Councils (LDCs),
the LGUs can develop their own programs and policies
concerning their localities. But with the PDAF, particularly on the
part of the members of the house of representatives, what’s
happening is that a congressman can either bypass or duplicate a
project by the LDC and later on claim it as his own. This is an
instance where the national government (note, a congressman is a
national officer) meddles with the affairs of the local government
– and this is contrary to the State policy embodied in the
Constitution on local autonomy. It’s good if that’s all that is
happening under the pork barrel system but worse, the PDAF
becomes more of a personal fund on the part of legislators.
II. Yes, the presidential pork barrel is valid.
The main issue raised by Belgica et al against the presidential
pork barrel is that it is unconstitutional because it violates Section
29 (1), Article VI of the Constitution which provides:
No money shall be paid out of the Treasury except in pursuance of
an appropriation made by law.
Belgica et al emphasized that the presidential pork comes from the
earnings of the Malampaya and PAGCOR and not from any
appropriation from a particular legislation.
The Supreme Court disagrees as it ruled that PD 910, which
created the Malampaya Fund, as well as PD 1869 (as amended by
PD 1993), which amended PAGCOR’s charter, provided for the
appropriation, to wit:
(i) PD 910: Section 8 thereof provides that all fees, among others,
collected from certain energy-related ventures shall form part of a
special fund (the Malampaya Fund) which shall be used to further
finance energy resource development and for other purposes
which the President may direct;
(ii) PD 1869, as amended: Section 12 thereof provides that a part
of PAGCOR’s earnings shall be allocated to a General Fund (the
Presidential Social Fund) which shall be used in government
infrastructure projects.
These are sufficient laws which met the requirement of Section
29, Article VI of the Constitution. The appropriation contemplated
therein does not have to be a particular appropriation as it can be a
general appropriation as in the case of PD 910 and PD 1869.
Araullo v. Aquino III
When President Benigno Aquino III took office, his
administration noticed the sluggish growth of the economy. The
World Bank advised that the economy needed a stimulus plan.
Budget Secretary Florencio “Butch” Abad then came up with a
program called the Disbursement Acceleration Program (DAP).
The DAP was seen as a remedy to speed up the funding of
government projects. DAP enables the Executive to realign funds
from slow moving projects to priority projects instead of waiting
for next year’s appropriation. So what happens under the DAP
was that if a certain government project is being undertaken
slowly by a certain executive agency, the funds allotted therefor
will be withdrawn by the Executive. Once withdrawn, these funds
are declared as “savings” by the Executive and said funds will
then be reallotted to other priority projects. The DAP program did
work to stimulate the economy as economic growth was in fact
reported and portion of such growth was attributed to the DAP (as
noted by the Supreme Court).
Other sources of the DAP include the unprogrammed funds from
the General Appropriations Act (GAA). Unprogrammed funds are
standby appropriations made by Congress in the GAA.
Meanwhile, in September 2013, Senator Jinggoy Estrada made an
exposé claiming that he, and other Senators, received Php50M
from the President as an incentive for voting in favor of the
impeachment of then Chief Justice Renato Corona. Secretary
Abad claimed that the money was taken from the DAP but was
disbursed upon the request of the Senators.
This apparently opened a can of worms as it turns out that the
DAP does not only realign funds within the Executive. It turns out
that some non-Executive projects were also funded; to name a
few: Php1.5B for the CPLA (Cordillera People’s Liberation
Army), Php1.8B for the MNLF (Moro National Liberation Front),
P700M for the Quezon Province, P50-P100M for certain Senators
each, P10B for Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the
Bagong Alyansang Makabayan, and several other concerned
citizens to file various petitions with the Supreme Court
questioning the validity of the DAP. Among their contentions
was:
DAP is unconstitutional because it violates the constitutional rule
which provides that “no money shall be paid out of the Treasury
except in pursuance of an appropriation made by law.”
Secretary Abad argued that the DAP is based on certain laws
particularly the GAA (savings and augmentation provisions
thereof), Sec. 25(5), Art. VI of the Constitution (power of the
President to augment), Secs. 38 and 49 of Executive Order 292
(power of the President to suspend expenditures and authority to
use savings, respectively).
Issues:
I. Whether or not the DAP violates the principle “no money shall
be paid out of the Treasury except in pursuance of an
appropriation made by law” (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as
impoundments by the executive.
III. Whether or not the DAP realignments/transfers are
constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the
DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. No, the DAP did not violate Section 29(1), Art. VI of the
Constitution. DAP was merely a program by the Executive and is
not a fund nor is it an appropriation. It is a program for prioritizing
government spending. As such, it did not violate the
Constitutional provision cited in Section 29(1), Art. VI of the
Constitution. In DAP no additional funds were withdrawn from
the Treasury otherwise, an appropriation made by law would have
been required. Funds, which were already appropriated for by the
GAA, were merely being realigned via the DAP.
II. No, there is no executive impoundment in the DAP.
Impoundment of funds refers to the President’s power to refuse to
spend appropriations or to retain or deduct appropriations for
whatever reason. Impoundment is actually prohibited by the GAA
unless there will be an unmanageable national government budget
deficit (which did not happen). Nevertheless, there’s no
impoundment in the case at bar because what’s involved in the
DAP was the transfer of funds.
III. No, the transfers made through the DAP were
unconstitutional. It is true that the President (and even the heads of
the other branches of the government) are allowed by the
Constitution to make realignment of funds, however, such transfer
or realignment should only be made “within their respective
offices”. Thus, no cross-border transfers/augmentations may be
allowed. But under the DAP, this was violated because funds
appropriated by the GAA for the Executive were being transferred
to the Legislative and other non-Executive agencies.
Further, transfers “within their respective offices” also
contemplate realignment of funds to an existing project in the
GAA. Under the DAP, even though some projects were within the
Executive, these projects are non-existent insofar as the GAA is
concerned because no funds were appropriated to them in the
GAA. Although some of these projects may be legitimate, they are
still non-existent under the GAA because they were not provided
for by the GAA. As such, transfer to such projects is
unconstitutional and is without legal basis.
On the issue of what are “savings”
These DAP transfers are not “savings” contrary to what was being
declared by the Executive. Under the definition of “savings” in the
GAA, savings only occur, among other instances, when there is an
excess in the funding of a certain project once it is completed,
finally discontinued, or finally abandoned. The GAA does not
refer to “savings” as funds withdrawn from a slow moving
project. Thus, since the statutory definition of savings was not
complied with under the DAP, there is no basis at all for the
transfers. Further, savings should only be declared at the end of
the fiscal year. But under the DAP, funds are already being
withdrawn from certain projects in the middle of the year and then
being declared as “savings” by the Executive particularly by the
DBM.
IV. No. Unprogrammed funds from the GAA cannot be used as
money source for the DAP because under the law, such funds may
only be used if there is a certification from the National Treasurer
to the effect that the revenue collections have exceeded the
revenue targets. In this case, no such certification was secured
before unprogrammed funds were used.
V. Yes. The Doctrine of Operative Fact, which recognizes the
legal effects of an act prior to it being declared as unconstitutional
by the Supreme Court, is applicable. The DAP has definitely
helped stimulate the economy. It has funded numerous projects. If
the Executive is ordered to reverse all actions under the DAP, then
it may cause more harm than good. The DAP effects can no
longer be undone. The beneficiaries of the DAP cannot be asked
to return what they received especially so that they relied on the
validity of the DAP. However, the Doctrine of Operative Fact may
not be applicable to the authors, implementers, and proponents of
the DAP if it is so found in the appropriate tribunals (civil,
criminal, or administrative) that they have not acted in good faith.
THE POWER OF TAXATION
Tan v. Del Rosario
Facts:
1. Two consolidated cases assail the validity of RA 7496 or the
Simplified Net Income Taxation Scheme ("SNIT"), which
amended certain provisions of the NIRC, as well as the Rules and
Regulations promulgated by public respondents pursuant to said
law.
2. Petitioners posit that RA 7496 is unconstitutional as it
allegedly violates the following provisions of the Constitution:
-Article VI, Section 26(1) — Every bill passed by the Congress
shall embrace only one subject which shall be expressed in the
title thereof.
- Article VI, Section 28(1) — The rule of taxation shall be
uniform and equitable. The Congress shall evolve a progressive
system of taxation.
- 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.
3. Petitioners contended that public respondents exceeded their
rule-making authority in applying SNIT to general professional
partnerships. Petitioner contends that the title of HB 34314,
progenitor of RA 7496, is deficient for being merely entitled,
"Simplified Net Income Taxation Scheme for the Self-Employed
and Professionals Engaged in the Practice of their Profession"
(Petition in G.R. No. 109289) when the full text of the title
actually reads,
'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 amended. Petitioners also
contend it violated due process.
5. The Solicitor General espouses the position taken by public
respondents.
6. The Court has given due course to both petitions.
ISSUE: Whether or not the tax law is unconstitutional for
violating due process
NO. 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 in herein case.
1. Uniformity of taxation, like the 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.
Uniformity does not violate 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.
2. What is apparent from the amendatory law is the legislative
intent to increasingly shift the income tax system towards the
schedular approach in the income taxation of individual taxpayers
and to maintain, by and large, the present global treatment on
taxable corporations. The Court does not view this classification
to be arbitrary and inappropriate.
ISSUE 2: Whether or not public respondents exceeded their
authority in promulgating the RR
No. 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.
Planters Products v. Fertiphil
Lessons Applicable: Bet. private and public suit, easier to file
public suit, Apply real party in interest test for private suit and
direct injury test for public suit, Validity test varies depending on
which inherent power
Laws Applicable:
FACTS:
President Ferdinand Marcos, exercising his legislative powers,
issued LOI No. 1465 which provided, among others, for the
imposition of a capital recovery component (CRC) on the
domestic sale of all grades of fertilizers which resulted in having
Fertiphil paying P 10/bag sold to the Fertilizer and Perticide
Authority (FPA).
FPA remits its collection to Far East Bank and Trust Company
who applies to the payment of corporate debts of Planters
Products Inc. (PPI)
After the Edsa Revolution, FPA voluntarily stopped the
imposition of the P10 levy. Upon return of democracy, Fertiphil
demanded a refund but PPI refused. Fertiphil filed a complaint for
collection and damages against FPA and PPI with the RTC on the
ground that LOI No. 1465 is unjust, unreaonable oppressive,
invalid and unlawful resulting to denial of due process of law.
FPA answered that it is a valid exercise of the police power of the
state in ensuring the stability of the fertilizing industry in the
country and that Fertiphil did NOT sustain damages since the
burden imposed fell on the ultimate consumers.
RTC and CA favored Fertiphil holding that it is an exercise of the
power of taxation ad is as such because it is NOT for public
purpose as PPI is a private corporation.
ISSUE:
1. W/N Fertiphil has locus standi
2. W/N LOI No. 1465 is an invalid exercise of the power of
taxation rather the police power
Held:
1. Yes. In private suits, locus standi requires a litigant to be a
"real party in interest" or party who stands to be benefited or
injured by the judgment in the suit. In public suits, there is the
right of the ordinary citizen to petition the courts to be freed from
unlawful government intrusion and illegal official action subject
to the direct injury test or where there must be personal and
substantial interest in the case such that he has sustained or will
sustain direct injury as a result. Being a mere procedural
technicality, it has also been held that locus standi may be waived
in the public interest such as cases of transcendental importance or
with far-reaching implications whether private or public suit,
Fertiphil has locus standi.
2. As a seller, it bore the ultimate burden of paying the levy which
made its products more expensive and harm its business. It is also
of paramount public importance since it involves the
constitutionality of a tax law and use of taxes for public purpose.
3. Yes. Police power and the power of taxation are inherent
powers of the state but distinct and have different tests for
validity. Police power is the power of the state to enact the
legislation that may interfere with personal liberty on property in
order to promote general welfare. While, the power of taxation is
the power to levy taxes as to be used for public purpose. The
main purpose of police power is the regulation of a behavior or
conduct, while taxation is revenue generation. The lawful subjects
and lawful means tests are used to determine the validity of a law
enacted under the police power. The power of taxation, on the
other hand, is circumscribed by inherent and constitutional
limitations.

In this case, it is for purpose of revenue. But it is a robbery for the

State to tax the citizen and use the funds generation for a private
purpose. Public purpose does NOT only pertain to those purpose
which are traditionally viewed as essentially governmental
function such as building roads and delivery of basic services, but
also includes those purposes designed to promote social justice.
Thus, public money may now be used for the relocation of illegal
settlers, low-cost housing and urban or agrarian reform.