ROSANNA L. TAN-ANDAL vs. MARIO VICTOR M.

ANDAL

G.R. No. 196359 May 11, 2021

Leonen, J.:

FACTS:

Mario Andal and Rosanna Tan-Andal were childhood friends. They lost contact with each other for 17
years. Mario had worked in Switzerland, Germany, and Italy before returning to the Philippines in April
1995. The parties reconnected and eventually became a couple. Mario left for Italy in July 1995. Barely
two (2) months after he had left, he had quit his job and stayed in the country.

Mario and Rosanna married on 16 December 1995 at the Saints Peter and Paul Parish in Poblacion,
Makati City. On 27 July 1996, Rosanna gave birth to Ma. Samantha, the only child of the parties. The
family lived in a duplex in Parañaque City, with Rosanna's parents living in the other half of the duplex.

According to Rosanna, Mario exhibited odd behaviors prior their wedding and during their marriage.
Mario had difficulty in managing his finances. Rosanna taught him to run Design and Construction
Matrix, the construction firm she had set up before she married. However, Mario continued with his
"emotional immaturity, irresponsibility, irritability, and psychological imbalance." He made numerous
cash advances and purchases using supplementary credit card, which resulted to the family’s financial
losses and the closure of Design and Construction Matrix. He would leave their house for several days
without informing Rosanna of his whereabouts. Once he returned home, he would refuse to go out and
would sleep for days. Mario was also "hyper-active" late at night.

Mario allegedly did not assist Rosanna when she gave birth to their child, Ma. Samantha. He left her in
the hospital, knowing that she could not move until the effects of the spinal anesthesia had worn off. He
only returned to the hospital later that evening to sleep. When Rosanna and Ma. Samantha were
discharged from the hospital, Mario showed symptoms of paranoia. He thought everyone was out to
attack him and, at times, would hide Ma. Samantha from those he thought was out to hurt them.
Further, during the times when Ma. Samantha was sick; Mario would instead ignore the ill child.

Rosanna petitioned the Regional Trial Court (“RTC”) to voluntarily commit Mario for drug rehabilitation
at the National Bureau of Investigation Treatment and Rehabilitation Center, and, eventually, at the
Seagulls Flight Foundation. Mario remained confined there until 24 December 2000, when the
rehabilitation center released Mario without completing his rehabilitation program. Rosanna wrote the
trial court as to Mario's premature release from the rehabilitation center. Since Mario's release,
Rosanna and Mario had been separated and had not lived together. Mario also failed to give support to
Rosanna and Ma. Samantha.

These events, according to Rosanna, showed Mario's psychological incapacity to comply with his
essential marital obligations to her. Rosanna contended that Mario's drug use was the manifestation of
a grave personality disorder "deeply rooted within Mario's adaptive system." She prayed that the trial
court nullify their marriage and that she be declared the sole and absolute owner of the parcel of land
donated to her by her aunt as well as the duplex built on it.

To prove Mario's psychological incapacity, Rosanna presented Dr. Garcia, a physician-psychiatrist, as

expert witness. Dr. Garcia found Rosanna "psychologically capacitated to comply with her essential
marital obligations." As for Mario, Dr. Garcia diagnosed him with narcissistic antisocial personality
disorder and substance abuse disorder with psychotic features. Mario's narcissistic antisocial personality
disorder, which Dr. Garcia found to be grave, with juridical antecedence, and incurable, allegedly
rendered Mario psychologically incapacitated to comply with his essential marital obligations to
Rosanna. Dr. Garcia testified that Mario's personality disorder was grave and "deeply rooted" in his
character. Dr. Garcia added that persons suffering from personality disorders are "impermeable to any
form of psychiatric therapeutic modality" because of "the presence of denial and cognizance on the
basic pathology of the person suffering from the disorder."

Mario contended that it was Rosanna who was psychologically incapacitated to comply with her
essential marital obligations. He prayed that the trial court nullify his marriage to Rosanna due to her
psychological incapacity, and that the properties they had acquired during their cohabitation be
divided equally between them. He also prayed that the custody of Ma. Samantha is awarded to him.

The RTC nullified the parties’ marriage on the ground of Mario's psychological incapacity. It awarded
the custody of Ma. Samantha to Rosanna, with Mario having visitation rights. As to the Parañaque
duplex, the trial court declared Rosanna as its sole and absolute owner, including the parcel of land on
which it was built.

The Court of Appeals (“CA”) reversed the ruling of the lower court and declared the parties’ marriage
to be valid and subsisting. It found Dr. Garcia's psychiatric evaluation of Mario to be "unscientific and
unreliable" since she diagnosed Mario without interviewing him. It ruled that Dr. Garcia "was working
on pure suppositions and second-hand information fed to her by one side."

Before the Supreme Court, Rosanna argued that psychological incapacity need not be grounded on
psychological illness, as this is allegedly more consistent with psychological incapacity being a “liberal
ground” for nullifying marriages. She cited cases where the Supreme Court held that competent
evidence, not necessarily expert opinion, may establish psychological incapacity, and that what
matters is the totality of the evidence presented. Rosanna added that psychological incapacity is
incurable, but not necessarily in a medical or clinical sense. For her, incurability is manifested by
ingrained behavior manifested during the marriage by the psychologically incapacitated spouse.

ISSUE:

Does psychological incapacity need to be medically or clinically identified?

RULING:

NO. The Supreme Court ruled that psychological incapacity need not be medically or clinically proven. In
effect, the Court modified the doctrine enunciated in Republic vs. Court of Appeals and Molina
(“Molina”). Considering the inconsistencies with which the doctrine laid down in Molina has been
applied, the Court took a more comprehensive but nuanced approach regarding the proper
interpretation and application of said doctrine.

Under the second guideline in Molina, the root cause of psychological incapacity must be a) medically or
clinically identified, b) alleged in the complaint, c) sufficiently proven by experts, and d) clearly explained
in the decision. In Santos vs. Court of Appeals (“Santos”), the Court defined psychological incapacity as a
mental (not physical) incapacity to comply with the essential marital obligations. It involves the most
serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give
meaning and significance to the marriage. In the past, however, the Court has been inconsistent in
requiring expert evidence in psychological incapacity cases. In light of said inconsistencies, the Court
now categorically abandons the second Molina guideline. Now, psychological incapacity is neither a
mental incapacity nor a personality disorder that must be proven through expert opinion. There must,
however, be proof of the durable or enduring aspects of a person’s personality which manifests itself
through clear acts of dysfunctionality that undermines the family. Such personality structure must make
it impossible for him or her to understand and comply with their marital obligations. The proof required
for this need not be given by an expert. Ordinary witnesses who have been present in the life of the
spouses before the latter contracted marriage may testify on behaviors that they have consistently
observed from the incapacitated spouse.

With regard to the juridical antecedence requirement of the psychological incapacity under Article 36 of
the Family Code, the incapacity must be characterised as incurable. However, the Court acknowledges
that psychological incapacity, not being an illness in a medical sense, is not something to be cured. As
such, the third Molina guideline is amended to mean incurability in a legal sense, not a medical sense,
Particularly, this means that the incapacity is so enduring and persistent with respect to a specific
partner, and contemplates a situation where the couple’s respective personality structures are so
incompatible and antagonistic that the only result of the union would be the inevitable and irreparable
breakdown of the marriage.

Considering the foregoing, the Court found Mario psychologically incapacitated to comply with his
essential marital obligations. Rosanna was able to discharge the burden of proof required to nullify her
marriage to Mario. Clear and convincing evidence of his incapacity was shown through testimonies on
Mario’s personality and how it formed primarily through his childhood and adult experiences well
before he married Rosanna. Dr. Garcia was also able to recount how Mario developed traits exhibiting
chronic irresponsibility, impulsiveness, lack of remorse, lack of empath, and a sense of entitlement,
behaviours which manifest his inherent psychological incapacity to comply with his essential marital
obligations.

While drug addiction is a ground for legal separation, it will not prevent the court from voiding a
marriage so long as it can be proven that the drug abuse is a manifestation of psychological incapacity
existing at the time of marriage. Here, the totality of evidence presented by Rosanna clearly and
convincingly proved that Mario’s drug abuse was of sufficient durability that antedates the marriage. His
persistent failure to rehabilitate, even bringing his child into a room where he did drugs, indicates a level
of dysfunctionality that shows utter disregard of his obligations not only to his wife, but also to his child.

His failure to render mutual help and support was also clearly proven by his consistent failure to find
gainful employment and even driving to bankruptcy the construction firm founded by Rosanna by
siphoning its funds for his drug abuse.

Frank Colmenar vs. Apollo Colmenar et al. G.R. No. 252467, 21 June 2021 (APPLICATION OF THE 2019
AMENDED ROC ON CIVPRO) MissIdea Uncategorized September 22, 2021 7 Minutes
Frank Colmenar vs. Apollo Colmenar et al.

G.R. No. 252467, 21 June 2021

Ponente: Lazaro-Javier, J.

Topic: Remedial law; Affirmative defenses; Failure to state cause of action; application of the amended
Rules on Civil Procedure

[Full case title: Frank Colmenar, in his capacity as an heir of the late Francisco Colmenar vs. Apollo
Colmenar, Jeannie Colmenar Mendoza, Vitoria Jet Colmenar, Philippine Estates Corporation, Amaia Land
Corporation, Crisanta Development Corporation, Property Company of Friends and the Register of
Deeds of the Province of Cavite]

FACTS:

Petitioner filed a complaint on 11 September 2018 against the Respondents averring, in sum, the
following:

1. He is the second child of Filipino-born Francisco Jesus Colmenar and American Dorothy Marie
Crimmin;

2. Following his parents’ divorce, his father Francisco Jesus Colmenar returned to the Philippines;

3. Years later, he learned that his father died and the latter left real properties at General Trias, Cavite,
all registered in his father’s name;

4. He also learned that respondents executed Extrajudicial Settlement of Estate of the deceased making
it appear that they were the surviving heirs;

5. Respondents sold to the other respondents the properties. Such sales were made without his
knowledge and consent hence effectively depriving him of his successional rights as a legitimate son of
his late father;

6. That he sent demand letter to individual respondents to invoke his successional rights but to no avail.
Hence, the complaint he filed.

Respondents filed their respective answers. Profriends invoked as affirmative defense lack of cause of
action, while PEC and Crisanta averred that the complaint failed to state a cause of action against them.
They also invoked the defenses of innocent purchasers for value and prescription.

Apollo Colmenar and Amaia Land on the other hand filed their respective motion to dismiss. However,
the motion was denied by the trial court. Amaia thereafter filed its Answer with the same grounds with
PEC and Crisanta.

Meantime, the 2019 amendments to the Rules of Court took effect on 01 May 2020.
TRIAL COURT DECISION:

On 22 May 2020, the trial court issued the assailed Order dismissing the complaint on the ground that
the complaint failed to state a cause of action against PEC, Crisanta, Amaia and ProFriends. The Judge
stated that she applied Section 12, Rule 8 of the 2019 Amendments to the Revised Rules on Civil
Procedure, and stated, among others, that “the Court shall motu proprio resolve the affirmative defense
if the claim allegedly states no cause of action, among others. The Court marries the cases status with
the new provision”.

The court stated that nowhere in the complaint did plaintiff allege that defendants-companies are
purchasers in bad faith or that it has notice of the defect in the title of defendants-siblings Colmenar.

Hence, the Court ruled that the Complaint’s omission to allege that the respondents are purchaser in
bad faith or with notice of defect in the title makes the complaint fail to state a cause of action.

In light of the proscription against filing a motion for reconsideration under Section 12, Rule 15 of the
2019 Rules of Civil Procedure and in view of the singular question of law purportedly involved, petitioner
directly sought relief from the Supreme Court.

Hence, the present Petition.

Petitioner now seeks affirmative relief against the subject decision. Petitioner faults the Judge, for
applying the 2019 Rules on Civil Procedure to the case, among others, and based thereon, motu proprio
acted on the affirmative relief of respondent-companies despite the clear injustice it caused to him. He
asserts that although admittedly procedural rules may be applied to actions already pending prior to
their affectivity, the 2019 Amendments expressly proscribe their application to pending actions when “in
the opinion of the court, their application would not be feasible or would work injustice, in which case
the procedure under which cases were filed shall govern”.

Respondent-companies moved to dismiss the Petition for it raises a question of fact.

ISSUES:

1. Does the petition raise pure questions of law?

2. Did the trial court commit reversible error when it applied the 2019 Amendments to the 1997 Revised
Rules on Civil Procedure to resolve the affirmative defenses pleaded by respondent companies?

3. Did the trial court commit reversible error when it dismissed the complaint against respondent
companies on ground that it failed to state a cause of action against them?

RULING:

1. Yes, the petition raises pure questions of law.

A question of law exists when the doubt hinges on what the law is on a certain set of facts or
circumstances; on the other hand, there is question of fact when the issue raised on appeal pertains to
the truth or falsity of the alleged facts.

The test for determining whether the supposed error was one of “law” or “fact” is not the appellation
given by the parties raising the same; rather, it is whether the reviewing court can resolve the issues
raised without reevaluating the evidence, in which case, it is a question of law; otherwise, it is one of
fact.

Here, the question on the trial court’s application of the 2019 Amendment to the Rules is one of law
because it is where the Court ought to look only into whether the trial court correctly applied the law o
rules in the case.

For the question on whether the allegations in the complaint state a cause of action against respondent
companies is also one of law. In BCDA v. Reyes, the Court held that where there is no dispute as to the
facts, the question of whether the conclusions drawn from the facts are correct is a question of law.
Indeed, in resolving whether the complaint states a cause of action, the Court need not re-evaluate the
evidence.

2. The trial court gravely erred when it applied the 2019 Amendments to resolve the affirmative
defenses pleaded by respondent companies.

Rule 144 of the 2019 Rules provides that the amendments shall govern all cases filed AFTER their
effectivity on 01 May 2020, and also all pending proceedings, except to the extent that “in the opinion of
the court, their application would not be feasible or would work injustice, in which case the procedure
under which cases were filed shall govern”.

As worded, the 2019 Amendments shall also govern all pending cases commenced before they took
effect, with the above-exception. Here, the case commenced with the filing of the Complaint in
September 2018 and remained pending when the 2019 Amendments took effect.

As it was, the trial court Judge applied Section 12, Rule 8 of the 2019 Amendments. However, records
shows that when the Judge motu proprio resolved the affirmative defenses on 22 May 2020, the
prescribed thirty (30) days period had long expired. Respondent ProFriends filed its answer with
affirmative defense in December 2018 while PEC and Crisanta in January 20191 and Amaia in February
2020. The trial court Judge should have, therefore, desisted from applying the 2019 Amendments
because when she did, the same was no longer feasible.

The worst part is when the trial court Judge ignored the injustice caused by the application of the 2019
Amendment to the case. For as a consequence, petitioner lost his substantial right to be heard on the
common affirmative defense of respondent companies and right to seek reconsideration of the order of
dismissal which were both granted him under the 1997 Revised Rules on Civil Procedure.

3. The complaint stated a cause of action against respondent companies

It has been repeatedly held that failure to state a cause of action and lack of cause of action are distinct
and separate grounds to dismiss a particular action. Zuniga-Santos v. Santos-Gran explained that failure
to state a cause of action refers to the insufficiency of the allegations in the pleadings, while lack of
cause of action refers to the insufficiency of the factual basis for the action.

Dismissal for failure to state a cause of action may be raised at the earliest stages of the proceedings
through a motion to dismiss in the old rules or raised as an affirmative defense, while dismissal for lack
of cause of action may be raised any time AFTER the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented by the plaintiff.

Consequently, the trial court erred in dismissing the complaint against Profriends on ground that the
complaint failed to state a cause of action, an affirmative defense it did not raise, and which is
completely different from what it actually raised (lack of cause of action) which may only be raised after
question of fact has been resolved.

On the affirmative defense of failure to state a cause of action filed by PEC, Amaia and Crisanta, the
Court cited Asia Brewery, inc. vs. Equitable PCI Bank in which the Court ordained that the test to
determine whether a complaint states a cause of action against a defendant is – admitting
hypothetically the truth of the allegations of fact made in the complaint, may a judge validly grant the
relief demanded in the complaint?

Here, assuming the allegation to be true, petitioner as legitimate child and lawful heir of Francisco Jesus
Colmenar has the right to the relief prayed for i.e. to declare as void the Extrajudicial Settlement of
Estate effected by the individual respondents who, not being lawful heirs, had no legal right to settle the
estate, among others.

Hence, whether respondent companies were buyers in bad faith or had knowledge of the defect in the
title of the seller is not the issue not the trigger that gave rise to the complaint. Petitioner’s cause of
action hinged on his averment that the individual respondent are not the owners of the properties,
hence, they cannot validly sell the same to respondent companies, nor convey any title to the latter by
reason of invalid sale. Needless to state, the trial court cannot inject its own theory to take the place of
the actual allegations in the complaint.

Thus, the trial court erred when it held that the complaint failed to state a cause of action against
respondent companies, and based thereon, dismissed the complaint against them.

THE PETITION WAS GRANTED AND THE SUBJECT ORDER WAS REVERSED AND SET ASIDE. THE
COMPLAINT IS REINSTATED AND THE TRIAL COURT IS DIRECTED TO PROCEED WITH THE RESOLUTION
OF THE CASE WITH UTMOST DISPATCH
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 209287               July 1, 2014
MARIA CAROLINA P. ARAULLO et. Al
vs.
BENIGNO SIMEON C. AQUINO III, et.al
DECISION
BERSAMIN, J.:

Facts:

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 prioritize 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.

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  P50
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, 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.

The DBM soon came out to claim in its website 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 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 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.

Issues:

1. 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?

2. 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

3. 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?

4. Whether or not the Doctrine of Operative Fact is applicable?

Ruling:

1. No. The OSG posits, however, that no law was necessary for the adoption and implementation
of the DAP because of 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. 
 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. 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.

2. No. The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made
upon a concurrence of the following requisites, namely:

(1) There is a law authorizing the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the heads of the
Constitutional Commissions to transfer funds within their respective offices;

(2) The funds to be transferred are savings generated from the appropriations for their
respective offices; and

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

GAA’s of 2011 and 2012 lacked a law to authorize transfers of funds under the DAP.
Hence, transfers under DAP were unconstitutional.

Section 25(5), supra, not being a self-executing provision of the Constitution, must have an
implementing law for it to be operative. That law, generally, is the GAA of a given fiscal year.
To comply with the first requisite, the GAAs should expressly authorize the transfer of funds.

In the 2011 GAA, the provision that gave the President and the other high officials the
authority to transfer funds was Section 59, as follows:

Section 59. 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 augment any item in this Act from savings in other items of their respective
appropriations.

In the 2012 GAA, the empowering provision was Section 53, to wit:

Section 53. 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 augment any item in this Act from savings in other items of their respective
appropriations.

A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012
were textually unfaithful to the Constitution for not carrying the phrase "for their respective
offices" contained in Section 25(5), supra. The impact of the phrase "for their respective
offices" was to authorize only transfers of funds within their offices (i.e., in the case of the
President, the transfer was to an item of appropriation within the Executive). The provisions
carried a different phrase ("to augment any item in this Act"), and the effect was that the
2011 and 2012 GAAs thereby literally allowed the transfer of funds from savings to augment
any item in the GAAs even if the item belonged to an office outside the Executive. To that
extent did the 2011 and 2012 GAAs contravene the Constitution.

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

We partially find for the petitioners.

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.

In ascertaining the meaning of savings, certain principles should be borne in mind. The
first principle is that Congress wields the power of the purse. Congress decides how the
budget will be spent; what PAPs to fund; and the amounts of money to be spent for each
PAP. The second principle is that the Executive, as the department of the Government
tasked to enforce the laws, is expected to faithfully execute the GAA and to spend the
budget in accordance with the provisions of the GAA. The Executive is expected to faithfully
implement the PAPs for which Congress allocated funds, and to limit the expenditures
within the allocations, unless exigencies result to deficiencies for which augmentation is
authorized, subject to the conditions provided by law. The third principle is that in making
the President’s power to augment operative under the GAA, Congress recognizes the need
for flexibility in budget execution. In so doing, Congress diminishes its own power of the
purse, for it delegates a fraction of its power to the Executive. But Congress does not
thereby allow the Executive to override its authority over the purse as to let the Executive
exceed its delegated authority. And the fourth principle is that savings should be actual.
"Actual" denotes something that is real or substantial, or something that exists presently in
fact, as opposed to something that is merely theoretical, possible, potential or hypothetical.

The 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 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 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. 

Unobligated allotments, on the other hand, were encompassed by the first part of the
0definition 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.

No funds from savings could be transferred under DAP to augment deficient items not
provided in the GAA.

The third requisite for a valid transfer of funds is that the purpose of the transfer should
be "to augment an item in the general appropriations law for the respective offices." The
term "augment" means to enlarge or increase in size, amount, or degree.

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.

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.

The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00

were transferred under the DAP respectively to the COA and the House of
Representatives. Those transfers of funds, which constituted cross-border augmentations
for being from the Executive to the COA and the House of Representatives.

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…" This was another instance of a cross-border augmentation.

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, was prohibited under Section 25(5), supra.

Sourcing the DAP from unprogrammed funds despite the original revenue targets not
having been exceeded was invalid.

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 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. This view of the DBM was adopted by all the respondents in their Consolidated
Comment.

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. 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 present controversy on the unprogrammed funds was rooted in the correct
interpretation of the phrase "revenue collections should exceed the original revenue
targets." The petitioners take the phrase to mean that the total revenue collections must
exceed the total revenue target stated in the BESF, but the respondents understand the
phrase to refer only to the collections for each source of revenue as enumerated in the
BESF, with the condition being deemed complied with once the revenue collections from a
particular source already exceeded the stated target.

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. Given the tenor of the certifications, the unprogrammed funds were thus
not yet supported by the corresponding resources.

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.

We cannot, therefore, subscribe to the respondents’ view.

3. No. With respect to the challenge against the DAP under the Equal Protection Clause,  Luna
argues that the implementation of the DAP was "unfair as it [was] selective" because the funds
released under the DAP was not made available to all the legislators, with some of them
refusing to avail themselves of the DAP funds, and others being unaware of the availability of
such funds. Thus, the DAP practised "undue favoritism" in favor of select legislators in
contravention of the Equal Protection Clause.

COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable
classification was used in distributing the funds under the DAP; and that the Senators who
supposedly availed themselves of said funds were differently treated as to the amounts they
respectively received.

The OSG counters the challenges, stating that the supposed discrimination in the release of
funds under the DAP could be raised only by the affected Members of Congress themselves, and
if the challenge based on the violation of the Equal Protection Clause was really against the
constitutionality of the DAP, the arguments of the petitioners should be directed to the
entitlement of the legislators to the funds, not to the proposition that all of the legislators
should have been given such entitlement.

Equal Protection Clause

The challenge based on the contravention of the Equal Protection Clause, which focuses on the
release of funds under the DAP to legislators, lacks factual and legal basis. The allegations about
Senators and Congressmen being unaware of the existence and implementation of the DAP, and
about some of them having refused to accept such funds were unsupported with relevant data.
Also, the claim that the Executive discriminated against some legislators on the ground alone of
their receiving less than the others could not of itself warrant a finding of contravention of the
Equal Protection Clause. The denial of equal protection of any law should be an issue to be
raised only by parties who supposedly suffer it, and, in these cases, such parties would be the
few legislators claimed to have been discriminated against in the releases of funds under the
DAP. 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, and explain why
there was a denial in their situation. The requirement was not met here. Consequently, the
Court was not put in the position to determine if there was a denial of equal protection.

Separation of Powers

Although the OSG rightly contends that the Executive was authorized to spend in line with its
mandate to faithfully execute the laws (which included the GAAs), such authority did not
translate to unfettered discretion that allowed the President to substitute his own will for that
of Congress. He was still required to remain faithful to the provisions of the GAAs, given that his
power to spend pursuant to the GAAs was but a delegation to him from Congress. Verily, the
power to spend the public wealth resided in Congress, not in the Executive. Moreover, leaving
the spending power of the Executive unrestricted would threaten to undo the principle of
separation of powers.

Congress acts as the guardian of the public treasury in faithful discharge of its power of the
purse whenever it deliberates and acts on the budget proposal submitted by the Executive. Its
power of the purse is touted as the very foundation of its institutional strength, and underpins
"all other legislative decisions and regulating the balance of influence between the legislative
and executive branches of government." Such enormous power encompasses the capacity to
 generate money for the Government, to appropriate public funds, and to spend the
money. 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.For 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.” To conform to the
governing principles, the Executive cannot circumvent the prohibition by Congress of
expenditure for a PAP by resorting to either public or private funds. 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.

Principle of Accountability with regard to DAP

Anent the principle of public accountability being transgressed because the adoption and
implementation of the DAP constituted an assumption by the Executive of Congress’ power of
appropriation, we have already held that 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
extent that they sought to implement strategies to ramp up or accelerate the economy of the
country.

4. Yes. Doctrine of operative fact was applicable.

The doctrine of operative fact recognizes the existence of the law or executive act prior to the
determination of its unconstitutionality as an operative fact that produced consequences that
cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive
act but sustains its effects. It provides an exception to the general rule that a void or
unconstitutional law produces no effect.

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.

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; but where no such result
would ensue, the general rule that an unconstitutional law is totally ineffective should apply.

In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the
PAPs that can no longer be undone, and whose beneficiaries relied in good faith on the validity
 of the DAP, but cannot apply to the authors, proponents and implementors of the DAP, unless
there are concrete findings of good faith in their favor by the proper tribunals determining their
criminal, civil, administrative and other liabilities.

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.

HOW DOES A BILL BECOMES A LAW IN THE PHILIPPINES?

In the Philippines, a law starts off as a bill filed in congress. It then goes through a
process which culminates with its submission to the President for his Consideration.
Once signed the bill thereafter becomes law.

Congress is divided into two chambers, the House of Representatives which are
composed of District and Party-List Representatives, and the Senate which is
composed of Senators.
A member of congress can file a bill. A bill is a proposed legislation, hence it’s called
“panukalang batas” which identifies the societal problem and provides a solution to
solve that problem through the passage and implementation of the new law.

Once a Bill is filed, it has to go through,

Three Readings;

First House

General Rule: The three readings must be done on separate days. Printed copies of
the bill in its final form should be distributed to the Members of the house three days
before its passage.

Exception: The requirements of (1) printing; and (2) reading on separate days are
not required when the President certifies to the necessity of the immediate
enactment of the bill to meet a public calamity or emergency. (Sec. 26, Art. VI of
the Constitution)

First Reading

In the first reading, the bill is introduced to the plenary, number and title of the bill
is read. The bill is then sent to the proper Committee for study and
recommendation.

Second Reading

In the second reading, the bill is read in full, with the amendments proposed by the
Committee. The bill is then subject to debates and amendments. After any
amendments, the bill is voted upon.

Third Reading

If the bill is approved after the second reading, it goes to third reading. In the third
reading, the bill is again voted upon.

Second House
After the three readings in the first house, the bill is transmitted to the Second
House. The same process of three readings is followed.

If the Second House approves the bill, the bill is authenticated and transmitted to
the President. But if the Second House introduces amendments, the bill is
transmitted to the First House.

If the First House agrees to the amendments, the bill is authenticated and
transmitted to the President.

But if the First House does not agree to the amendments, “the differences will be
settled by the Conference Committees of both houses.”

Conference Committee

The Conference Committee will provide a report or recommendation (which is not

limited to considering the conflicting provisions — this means the Committee can
include a whole new provision not related to the conflict between the Houses).

If the Committee’s report or recommendation is approved by both houses, the new

version is authenticated, and then transmitted to the President.

Authentication

Authentication means the “signing by the Speaker [of the HoR] and the Senate
President of the printed copy of the approved bill, certified by the respective
secretaries of both Houses.” After authentication, the bill is transmitted to the
President.

The President

The President has three options:

1. He can sign the bill, making it a law;

2. He cannot act on the bill (neither sign nor veto) within 30 days after his
receipt of the bill, making it a law as if he had signed the bill; or
3. He can veto the bill.
 Veto

When the President vetoes a bill, he returns the bill, with his objections, to the First
House. The First House should reconsider the bill.

If 2/3 of the Members of the First House agree to pass the bill, the bill (with the
objections) are transmitted to the Second House.

If 2/3 of the Members of the Second House agree to pass the bill, the bill becomes
law. It doesn’t have to go through the President anymore.