Araullo vs. Aquino III, 749 SCRA 283

1/20/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 749
G.R. No. 209287. February 3, 2015.*

MARIA CAROLINA P. ARAULLO, Chairperson, BAGONG
ALYANSANG MAKABAYAN; JUDY M. TAGUIWALO,
PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN,
co-Chairperson, PAGBABAGO; HENRI KAHN, CONCERNED
CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA
WOMEN’S PARTY Representative; REP. TERRY L. RIDON,
KABATAAN PARTY-LIST Representative; REP. CARLOS
ISAGANI ZARATE, BAYAN MUNA PARTY-LIST Representative;
RENATO M. REYES, JR., secretary general of BAYAN; MANUEL
K. DAYRIT, Chairman, ANG KAPATIRAN PARTY; VENCER
MARI E. CRISOSTOMO, Chairperson, ANAKBAYAN; VICTOR
VILLANUEVA, convenor, YOUTH ACT NOW, petitioners, vs.
BENIGNO SIMEON C. AQUINO III, President of the REPUBLIC
OF THE PHILIPPINES; PAQUITO N. OCHOA, JR., Executive
Secretary; and FLORENCIO B. ABAD, Secretary of the
DEPARTMENT OF BUDGET AND MANAGEMENT,
respondents.
_______________
* EN BANC.
284
284 SUPREME COURT REPORTS ANNOTATED

Araullo vs. Aquino III
G.R. No. 209135. February 3, 2015.*

AUGUSTO L. SYJUCO, JR., Ph.D., petitioner, vs. FLORENCIO B.
ABAD, in his capacity as the SECRETARY OF DEPARTMENT OF
BUDGET AND MANAGEMENT; and HON. FRANKLIN
MAGTUNAO DRILON, in his capacity as the SENATE
PRESIDENT OF THE PHILIPPINES, respondents.
www.central.com.ph/sfsreader/session/00000177204c4789e2895998003600fb002c009e/t/?o=False 1/167
G.R. No. 209136. February 3, 2015.*

MANUELITO R. LUNA, petitioner, vs. SECRETARY
FLORENCIO ABAD, in his official capacity as HEAD OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT; and
EXECUTIVE SECRETARY PAQUITO OCHOA, in his official
capacity as ALTER EGO OF THE PRESIDENT, respondents.
G.R. No. 209155. February 3, 2015.*

ATTY. JOSE MALVAR VILLEGAS, JR., petitioner, vs. THE
HONORABLE EXECUTIVE SECRETARY PAQUITO N.
OCHOA, JR.; and the SECRETARY OF BUDGET AND
MANAGEMENT FLORENCIO B. ABAD, respondents.
G.R. No. 209164. February 3, 2015.*

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA),
represented by DEAN FROILAN M. BACUNGAN, BENJAMIN E.
DIOKNO and LEONOR M. BRIONES, petitioners, vs.
DEPARTMENT OF BUDGET AND MANAGEMENT and/or
HON. FLORENCIO B. ABAD, respondents.
G.R. No. 209260. February 3, 2015.*

INTEGRATED BAR OF THE PHILIPPINES (IBP), petitioner, vs.
SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT
OF BUDGET AND MANAGEMENT (DBM), respondent.
285
VOL. 749, FEBRUARY 3, 2015 285

G.R. No. 209442. February 3, 2015.*

GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN
M. ABANTE and REV. JOSE L. GONZALEZ, petitioners, vs.
PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE
OF THE PHILIPPINES, represented by SENATE PRESIDENT
FRANKLIN M. DRILON; THE HOUSE OF REPRESENTATIVES,
represented by SPEAKER FELICIANO BELMONTE, JR.; THE
EXECUTIVE OFFICE, represented by EXECUTIVE SECRETARY
PAQUITO N. OCHOA, JR.; THE DEPARTMENT OF BUDGET

AND MANAGEMENT, represented by SECRETARY
FLORENCIO ABAD; THE DEPARTMENT OF FINANCE,
represented by SECRETARY CESAR V. PURISIMA; and the
BUREAU OF TREASURY, represented by ROSALIA V. DE
LEON, respondents.
G.R. No. 209517. February 3, 2015.*

CONFEDERATION FOR UNITY, RECOGNITION AND
ADVANCEMENT OF GOVERNMENT EMPLOYEES
(COURAGE), represented by its 1ST Vice President, SANTIAGO
DASMARIÑAS, JR.; ROSALINDA NARTATES, for herself and as
National President of the CONSOLIDATED UNION OF
EMPLOYEES NATIONAL HOUSING AUTHORITY (CUE-
NHA); MANUEL BACLAGON, for himself and as President of the
SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE
PHILIPPINES, DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO);
ANTONIA PASCUAL, for herself and as National President of the
DEPARTMENT OF AGRARIAN REFORM EMPLOYEES
ASSOCIATION (DAREA); ALBERT MAGALANG, for himself
and as president of the ENVIRONMENT AND MANAGEMENT
BUREAU EMPLOYEES UNION (EMBEU); and MARCIAL
ARABA, for himself and as president of the KAPISANAN PARA
SA KAGALINGAN NG MGA KAWANI NG MMDA (KKK-
MMDA), petitioners, vs.
286

BENIGNO SIMEON C. AQUINO III, President of the

REPUBLIC OF THE PHILIPPINES; PAQUITO OCHOA, JR.,
Executive Secretary; and HON. FLORENCIO B. ABAD, Secretary
of the DEPARTMENT OF BUDGET AND MANAGEMENT,
respondents.
G.R. No. 209569. February 3, 2015.*

VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC),

represented by DANTE L. JIMENEZ, petitioner, vs. PAQUITO N.
OCHOA, executive secretary, and FLORENCIO B. ABAD,
secretary of the DEPARTMENT OF BUDGET AND
MANAGEMENT, respondents.
General Appropriations Act; Disbursement Acceleration Program;

Judicial Power; The consolidated petitions distinctly raised the question of
the constitutionality of the acts and practices under the Disbursement
Acceleration Program (DAP), particularly their non-conformity with
Section 25(5), Article VI of the Constitution and the principles of separation
of power and equal protection. Hence, the matter is still entirely within the
Supreme Court’s (SC’s) competence, and its determination does not pertain
to Congress to the exclusion of the Court.—The consolidated petitions
distinctly raised the question of the constitutionality of the acts and practices
under the DAP, particularly their non-conformity with Section 25(5), Article
VI of the Constitution and the principles of separation of power and equal
protection. Hence, the matter is still entirely within the Court’s competence,
and its determination does not pertain to Congress to the exclusion of the
Court. Indeed, the interpretation of the GAA and its definition of savings is
a foremost judicial function. This is because the power of judicial review
vested in the Court is exclusive.
Same; Same; Regardless of the perceived beneficial purposes of the
Disbursement Acceleration Program (DAP), and regardless of whether the
DAP is viewed as an effective tool of stimulating the national economy, the
acts and practices under the DAP and the relevant provisions of National
Budget Circular (NBC) No. 541 cited in the Decision should remain illegal
and unconstitutional as long as the funds used to finance the projects
mentioned therein are sourced
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VOL. 749, FEBRUARY 3, 2015 287

from savings that deviated from the relevant provisions of the General
Appropriations Act (GAA), as well as the limitation on the power to
augment under Section 25(5), Article VI of the Constitution.—Necessarily,
savings, their utilization and their management will also be strictly
construed against expanding the scope of the power to augment. Such a
strict interpretation is essential in order to keep the Executive and other
budget implementors within the limits of their prerogatives during budget
execution, and to prevent them from unduly transgressing Congress’ power

of the purse. Hence, regardless of the perceived beneficial purposes of the
DAP, and regardless of whether the DAP is viewed as an effective tool of
stimulating the national economy, the acts and practices under the DAP and
the relevant provisions of NBC No. 541 cited in the Decision should remain
illegal and unconstitutional as long as the funds used to finance the projects
mentioned therein are sourced from savings that deviated from the relevant
provisions of the GAA, as well as the limitation on the power to augment
under Section 25(5), Article VI of the Constitution. In a society governed by
laws, even the best intentions must come within the parameters defined and
set by the Constitution and the law. Laudable purposes must be carried out
through legal methods.
Same; Same; Savings; When the President suspends or stops
expenditure of funds, savings are not automatically generated until it has
been established that such funds or appropriations are free from any
obligation or encumbrance, and that the work, activity or purpose for which
the appropriation is authorized has been completed, discontinued or
abandoned.—Section 38 refers to the authority of the President “to suspend
or otherwise stop further expenditure of funds allotted for any agency, or
any other expenditure authorized in the General Appropriations Act.” When
the President suspends or stops expenditure of funds, savings are not
automatically generated until it has been established that such funds or
appropriations are free from any obligation or encumbrance, and that the
work, activity or purpose for which the appropriation is authorized has been
completed, discontinued or abandoned.
Constitutional Law; The Constitution is the basic law to which all laws
must conform. No act that conflicts with the Constitution can be valid.—In
this connection, the respondents must always be reminded that the
Constitution is the basic law to which all laws must
288

conform. No act that conflicts with the Constitution can be valid. In

Mutuc v. Commission on Elections, 36 SCRA 228 (1970), therefore, we
have emphasized the importance of recognizing and bowing to the
supremacy of the Constitution: x x x The concept of the Constitution as the
fundamental law, setting forth the criterion for the validity of any public act
whether proceeding from the highest official or the lowest functionary, is a

postulate of our system of government. That is to manifest fealty to the rule
of law, with priority accorded to that which occupies the topmost rung in the
legal hierarchy. The three departments of government in the discharge of the
functions with which it is [sic] entrusted have no choice but to yield
obedience to its commands. Whatever limits it imposes must be observed.
Congress in the enactment of statutes must ever be on guard lest the
restrictions on its authority, whether substantive or formal, be transcended.
The Presidency in the execution of the laws cannot ignore or disregard what
it ordains. In its task of applying the law to the facts as found in deciding
cases, the judiciary is called upon to maintain inviolate what is decreed by
the fundamental law. Even its power of judicial review to pass upon the
validity of the acts of the coordinate branches in the course of adjudication
is a logical corollary of this basic principle that the Constitution is
paramount. It overrides any governmental measure that fails to live up to its
mandates. Thereby there is a recognition of its being the supreme law.
General Appropriations Act; Disbursement Acceleration Program; The
Disbursement Acceleration Program (DAP) is a policy instrument that the
Executive, by its own prerogative, may utilize to spur economic growth and
development.—At the outset, we allay the respondents’ apprehension
regarding the validity of the DAP-funded projects. It is to be emphatically
indicated that the Decision did not declare the en masse invalidation of the
116 DAP-funded projects. To be sure, the Court recognized the encouraging
effects of the DAP on the country’s economy, and acknowledged its
laudable purposes, most especially those directed towards infrastructure
development and efficient delivery of basic social services. It bears
repeating that the DAP is a policy instrument that the Executive, by its own
prerogative, may utilize to spur economic growth and development.
Same; Same; Section 25(5) of the 1987 Constitution mentions of the
term item that may be the object of augmentation by the President, the
Senate President, the Speaker of the House, the Chief Jus-
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tice, and the heads of the Constitutional Commissions.—Indeed,

Section 25(5) of the 1987 Constitution mentions of the term item that may
be the object of augmentation by the President, the Senate President, the
Speaker of the House, the Chief Justice, and the heads of the Constitutional
Commissions. In Belgica v. Ochoa, 710 SCRA 1 (2013), we said that an
item that is the distinct and several part of the appropriation bill, in line with
the item-veto power of the President, must contain “specific appropriations
of money” and not be only general provisions.
Same; Same; So long as there is an item in the General Appropriations
Act (GAA) for which Congress had set aside a specified amount of public
fund, savings may be transferred thereto for augmentation purposes.—In
Nazareth v. Villar, 689 SCRA 385 (2013), we clarified that there must be an
existing item, project or activity, purpose or object of expenditure with an
appropriation to which savings may be transferred for the purpose of
augmentation. Accordingly, so long as there is an item in the GAA for
which Congress had set aside a specified amount of public fund, savings
may be transferred thereto for augmentation purposes. This interpretation is
consistent not only with the Constitution and the GAAs, but also with the
degree of flexibility allowed to the Executive during budget execution in
responding to unforeseeable contingencies.
Constitutional Law; As a general rule, the nullification of an
unconstitutional law or act carries with it the illegality of its effects.—As a
general rule, the nullification of an unconstitutional law or act carries with it
the illegality of its effects. However, in cases where nullification of the
effects will result in inequity and injustice, the operative fact doctrine may
apply. In so ruling, the Court has essentially recognized the impact on the
beneficiaries and the country as a whole if its ruling would pave the way for
the nullification of the P144.378 Billion worth of infrastructure projects,
social and economic services funded through the DAP. Bearing in mind the
disastrous impact of nullifying these projects by virtue alone of the
invalidation of certain acts and practices under the DAP, the Court has
upheld the efficacy of such DAP-funded projects by applying the operative
fact doctrine. For this reason, we cannot sustain the Motion for Partial
Reconsideration of the petitioners in G.R. No. 209442.
290

Carpio, J., Separate Opinion:
General Appropriation Act; Savings; Words and Phrases; View that

“savings” has been defined in the General Appropriations Acts (GAAs) as
“portions or balances of any programmed appropriation x x x 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 collective negotiation
agreements which resulted in improved systems and efficiencies and thus
enabled an agency to meet and deliver the required or planned targets,
programs and services x x x at a lesser cost.”—Prior to 2003, the term
“savings” has been consistently defined in the GAAs as “portions or
balances of any programmed appropriation x x x free of any obligation or
encumbrance still available after the completion or final discontinuance or
abandonment of the work, activity or purpose for which the appropriation is
authorized, or arising from unpaid compensation and related costs
pertaining to vacant positions and leaves of absence without pay.”
Beginning 2003, a third source of savings was added. Thus, “savings” has
been defined in the GAAs as “portions or balances of any programmed
appropriation x x x 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 collective negotiation agreements which resulted in improved systems
and efficiencies and thus enabled an agency to meet and deliver the required
or planned targets, programs and services x x x x at a lesser cost.”
Same; Same; View that any declaration of “savings” must be
reasonable, that is, there must be appropriations that are no longer needed
or can no longer be used for the purpose for which the appropriations were
made by Congress.—Assuming redefining the term “savings” is deemed
necessary by Congress, such redefinition must be consistent with the
Constitution. For example, “savings” cannot be
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VOL. 749, FEBRUARY 3, 2015 291

declared at anytime, like on the first day of the fiscal year, since it will
negate or render useless the power of Congress to appropriate. “Savings”
cannot also be declared out of future Maintenance and Other Operating
Expenses (MOOE) since such declaration will deprive a government agency
of operating funds during the rest of the fiscal year, effectively abolishing
the agency or paralyzing its operations. Any declaration of “savings” must

be reasonable, that is, there must be appropriations that are no longer needed
or can no longer be used for the purpose for which the appropriations were
made by Congress.
Same; Same; View that the President has more than enough time to
observe and comply with the law and request for a supplemental budget
from Congress.—The President has more than enough time to observe and
comply with the law and request for a supplemental budget from Congress.
In the PDAF cases, I pointed out: x x x. When the Gulf Coast of the United
States was severely damaged by Hurricane Katrina on 29 August 2005, the
U.S. President submitted to the U.S. Congress a request for an emergency
supplemental budget on 1 September 2005. The Senate passed the request
on 1 September 2005 while the House approved the bill on 2 September
2005, and the U.S. President signed it into law on the same day. It took only
two days for the emergency supplemental appropriations to be approved and
passed into law. There is nothing that prevents President Benigno S. Aquino
III from submitting an emergency supplemental appropriation bill that could
be approved on the same day by the Congress of the Philippines.
Same; Same; View that the construction and maintenance of the Halls
of Justice are essentially among the responsibilities of the Judiciary.—The
construction and maintenance of the Halls of Justice are essentially among
the responsibilities of the Judiciary. As such, they should necessarily be
included in the annual appropriations for the Judiciary. However, before
2013, Congress placed the construction and maintenance of the Halls of
Justice under the DOJ. The inclusion of such item in the DOJ budget clearly
creates an anomaly where the Judiciary will have to request the DOJ, an
Executive department, to construct a Hall of Justice for the Judiciary. Not
only does this undermine the independence of the Judiciary, it also violates
ultimately the constitutional separation of powers because one
292

branch is made to beg for the appropriations of another branch to be

used in the operations of the former.
Same; Same; View that there are two (2) kinds of funds under the
General Appropriations Act (GAA) — the programmed fund and the
unprogrammed fund.—There are two kinds of funds under the GAA — the
programmed fund and the unprogrammed fund. Under the programmed
fund, there is a definite amount of spending authorized in the GAA,
regardless of whether the government collects the full amount of its revenue
targets for the fiscal year. Any deficit can be funded from borrowings. Such
deficit spending from the programmed fund is acceptable and is carefully
calculated not to trigger excessive inflation. On the other hand, under the
unprogrammed fund, the government can only spend what it collects;
otherwise, it may trigger excessive inflation. That is why the GAA prohibits
spending from the unprogrammed fund unless the corresponding amounts
are actually collected. To allow the disbursement of the unprogrammed fund
without complying with the express condition imposed under the GAA will
send a negative signal to businessmen and creditors because the government
will be spending beyond its means — in effect borrowing or printing money.
This will adversely affect investments and interest rates. Compliance or
noncompliance with the express condition reflects the government’s fiscal
discipline or lack of it.
Constitutional Law; Operative Fact Doctrine; View that an
unconstitutional act confers no rights, imposes no duties, and affords no
protection. An unconstitutional act is inoperative as if it has not been passed
at all. The exception to this rule is the doctrine of operative fact.—I reiterate
my position that the operative fact doctrine never validates or
constitutionalizes an unconstitutional law. An unconstitutional act confers
no rights, imposes no duties, and affords no protection. An unconstitutional
act is inoperative as if it has not been passed at all. The exception to this rule
is the doctrine of operative fact. Under this doctrine, the law or
administrative issuance is recognized as unconstitutional but the effects of
the unconstitutional law or administrative issuance, prior to its declaration
of nullity, may be left undisturbed as a matter of equity and fair play.
Same; Same; View that as a rule of equity, the doctrine of operative
fact can be invoked only by those who relied in good faith on
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the law or the administrative issuance, prior to its declaration of

nullity.—As a rule of equity, the doctrine of operative fact can be invoked
only by those who relied in good faith on the law or the administrative
issuance, prior to its declaration of nullity. Those who acted in bad faith or
with gross negligence cannot invoke the doctrine. Likewise, those directly
responsible for an illegal or unconstitutional act cannot invoke the doctrine.
He who comes to equity must come with clean hands, and he who seeks
equity must do equity. Only those who merely relied in good faith on the
illegal or unconstitutional act, without any direct participation in the

commission of the illegal or unconstitutional act, can invoke the
doctrine.
General Appropriations Act; Savings; View that the power to realign
savings is vested in the President with respect to the executive branch, the
Speaker for the House of Representatives, the Senate President for the
Senate, the Chief Justice for the Judiciary, and the Heads of the
Constitutional Commissions.—The power to realign savings is vested in the
President with respect to the executive branch, the Speaker for the House of
Representatives, the Senate President for the Senate, the Chief Justice for
the Judiciary, and the Heads of the Constitutional Commissions. In these
cases, it was the President who approved NBC 541, and it was the DBM
Secretary who issued and implemented it. NBC 541 directed the
“withdrawal of unobligated allotments of agencies with low level of
obligations as of June 30, 2012” to augment or fund “priority and/or fast
moving programs/projects of the national government.” As discussed,
unobligated allotments are not savings, which term has a specific and
technical definition in the GAAs. Further, paragraph 5.7.3 of NBC 541
authorizing the augmentation of “projects not considered in the 2012
budget” is unconstitutional because under Section 25(5), Article VI of the
Constitution, what is authorized is “to augment any item in the general
appropriations law for their respective offices.”
Brion, J., Separate Opinion:
Courts; Supreme Court; Judicial Power; View that the concept of

judicial power under the 1987 Constitution recognizes the Court’s (1)
traditional jurisdiction to settle actual cases or controversies; and (2) its
expanded jurisdiction to determine whether a government
294

agency or instrumentality committed grave abuse of discretion in the

course of its actions.—The concept of judicial power under the 1987
Constitution recognizes the Court’s (1) traditional jurisdiction to settle
actual cases or controversies; and (2) its expanded jurisdiction to determine
whether a government agency or instrumentality committed grave abuse of
discretion in the course of its actions. The exercise of either power involves
the exercise of the Court’s power of judicial review, i.e., the Court’s
authority to strike down acts — of the Legislative, the Executive, the
constitutional bodies, and the administrative agencies — that are contrary to

the Constitution. Judicial review under the Court’s traditional jurisdiction
requires the following justiciability requirements: (1) the existence of an
actual case or controversy calling for the exercise of judicial power; (2) the
person challenging the act must have the standing to question the validity of
the subject act or issuance; otherwise stated, he must have a personal and
substantial interest in the case such that he has sustained, or will sustain,
direct injury as a result of its enforcement; (3) the question of
constitutionality must be raised at the earliest opportunity; and (4) the issue
of constitutionality must be the very lis mota of the case. In comparison, the
exercise of the Court’s expanded jurisdiction to determine whether grave
abuse of discretion amounting to lack of or excess of jurisdiction has been
committed by the government, is triggered by a prima facie showing of
grave abuse of discretion in the course of governmental action.
Judicial Power; Actual Case or Controversy; View that the grounds for
the petitions are the acts of grave abuse of discretion alleged to have been
committed by the country’s executive and legislative leaders in handling the
national budget. This is the justiciable controversy that is before us,
properly filed under the terms of the Constitution.—I really cannot see how
the respondents can claim with a straight face that there is no actual case or
controversy and that the petitioners have no standing to bring their petitions
before this Court. Stated bluntly, the grounds for the petitions are the acts of
grave abuse of discretion alleged to have been committed by the country’s
executive and legislative leaders in handling the national budget. This is the
justiciable controversy that is before us, properly filed under the terms of the
Constitution.
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Same; Same; View that the present case involves the Court’s expanded
jurisdiction, involving the determination of whether grave abuse of
discretion was committed by the government, specifically, by the Executive.
—The present case involves the Court’s expanded jurisdiction, involving the
determination of whether grave abuse of discretion was committed by the
government, specifically, by the Executive. Based on jurisprudence, such
grave abuse must amount to lack or excess of jurisdiction by the Executive:
otherwise stated, the assailed act must have been outside the powers
granted to the Executive by law or by the Constitution, or must have been
exercised in such a manner that he exceeded the power granted to him.

Savings; View that the definition of savings is an aspect of the power of the
purse that constitutionally belongs to Congress, i.e., the power to determine
the what, how, how much and why of public spending, and includes the
determination of when spending may be stopped, as well as where these
savings may be transferred.—The definition of savings is an aspect of the
power of the purse that constitutionally belongs to Congress, i.e., the power
to determine the what, how, how much and why of public spending, and
includes the determination of when spending may be stopped, as well as
where these savings may be transferred. This explains why we looked at the
definition of savings in the past GAAs in determining whether the DAP
violated the general prohibition against transfers and augmentation in
Section 25(5), Article VI, of the 1987 Constitution.
Same; Same; Same; View that the Supreme Court (SC) declared in
Sanchez v. Commission on Audit, 552 SCRA 471 (2008) that before a
transfer of savings under the narrow exception provided under Section
25(5) may take place, there must be actual savings.—While the power to
define “savings” rightfully belongs to Congress as an aspect of its power of
the purse, it is not an unlimited power; it is subject to the limitation that the
national budget or the GAA is a law that must necessarily comply with the
constitutional provisions governing the national budget, as well as with the
jurisprudential interpretation of these constitutional provisions. We declared,
for instance, in Sanchez v. Commission on Audit, 552 SCRA 471 (2008),
that before a transfer of savings under the narrow exception provided under
Section 25(5) may take place, there must be actual
296

savings, viz.: Actual savings is a sine qua non to a valid transfer of

funds from one government agency to another. The word “actual” denotes
that something is real or substantial, or exists presently in fact as opposed to
something which is merely theoretical, possible, potential or hypothetical.
This jurisprudential interpretation of “actual savings” may not be violated
by Congress in defining what constitutes “savings” in its yearly GAA;
neither may Congress, in defining “savings,” contravene the text and
purpose of Section 25(5), Article VI.
Same; Same; Same; View that the provisions regarding the release of
funds, the definition of savings, or the authority to augment contained in a
General Appropriations Act (GAA) affect only the income and items for that
year. These provisions cannot be made to extend beyond the appropriations

made in that particular GAA; otherwise, they would be extraneous to that
particular GAA and partake of the nature of a prohibited “rider” that
violates the “one subject-one title” rule under Section 26(1), Article VI of
the Constitution.—Necessarily, the provisions regarding the release of
funds, the definition of savings, or the authority to augment contained in a
GAA affect only the income and items for that year. These provisions
cannot be made to extend beyond the appropriations made in that particular
GAA; otherwise, they would be extraneous to that particular GAA and
partake of the nature of a prohibited “rider” that violates the “one subject-
one title” rule under Section 26(1), Article VI of the Constitution. Once the
provisions on release becomes effective with respect to appropriations other
than those found in the GAA in which they have been written, they no
longer pertain to the appropriations for that year, but to the process, rights
and duties in general of public officers in the handling of funds. They would
then already involve a separate and distinct subject matter from the current
GAA and should thus be contained in a separate bill. This is another
constitutional standard that cannot be disregarded in passing a law like the
GAA. For the same reasons, the definition of savings cannot be made to
retroact to past appropriations.
Same; Same; Same; View that releases from the Unprogrammed Fund
through the Disbursement Acceleration Program (DAP) is void because
they were made prematurely, i.e., before the original revenue targets had
been reached and exceeded.—In our main Decision, we found that the
proviso allowing the use of sources
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not considered in the original revenue targets to cover releases from

the Unprogrammed Fund was not intended to prevail over the general
provision requiring that revenue collections first exceed the original revenue
targets. We there declared that releases from the Unprogrammed Fund
through the DAP is void because they were made prematurely, i.e., before
the original revenue targets had been reached and exceeded. We reached this
conclusion because of the Republic’s failure to submit any document
certifying that revenue collections had exceeded original targets for the
Fiscal Years 2011, 2012, and 2013. We waited for this submission even
beyond the last oral arguments for the case (held in January 2014) and
despite the sufficient time given for the parties to file their respective
memoranda.
Statutory Construction; View that the prospective effect of a statutory

interpretation cannot be made to apply only to acts after the Supreme
Court’s (SC’s) new interpretation; the interpretation applies also to the case
in which the interpretation was laid down.—The prospective application of
a statutory interpretation of a law applies to the facts of the case in which
the interpretation was made and to acts subsequent to this pronouncement.
The prospective effect of a statutory interpretation cannot be made to apply
only to acts after the Court’s new interpretation; the interpretation applies
also to the case in which the interpretation was laid down. Statutory
interpretation, after all, is used to reach a decision on the immediate case
under consideration.
View that the budgetary process is a complex undertaking in which the
Executive and Congress are given their constitutionally-assigned tasks,
neither of whom can perform the function of the other.—The budgetary
process is a complex undertaking in which the Executive and Congress are
given their constitutionally-assigned tasks, neither of whom can perform the
function of the other. The budget proposal comes from the Executive, which
initially makes the determination of the PAPs to be funded, and by how
much each allotment class (i.e., the expense category of an item of
appropriation, classifying it either as a Capital Outlay [CO], Maintenance
and Other Operating Expense [MOOE], or Personal Services [PS]) will be
funded. The proposal would then be given to the Congress for scrutiny and
enactment into law during its legislative phase. At this
298

point, Congress can amend the items in the budget proposal but cannot
increase its total amount. These amendments may include increasing or
decreasing the expense categories found in the proposal; it may, in its
scrutiny of the budget, determine that certain PAPs need capital outlay or
additional funds for personnel services, or even eliminate allotments for
capital outlay for certain PAPs.
Same; Same; View that without a deficiency, an item cannot be
augmented, otherwise, it would violate the constitutional prohibition against
money being spent without an appropriation made by law.—The very nature
of an augmentation points to the existence of a deficiency. An item must
have been in existence, and must demonstrably need supplementation,

before it may be validly augmented. Without a deficiency, an item cannot
be augmented, otherwise, it would violate the constitutional prohibition
against money being spent without an appropriation made by law. An item
that has no deficiency does not need additional funding; thus, the funding of
an item with no deficiency could only mean that an additional PAP, not
otherwise considered in the GAA nor included in the item sought to be
augmented, would be funded by public funds.
Same; Same; View that Section 39, Chapter 5, Book VI of the
Administrative Code of the Philippines authorizes the President to augment
any regular appropriation, regardless of the branch of government it is
appropriated to, in clear contravention of the limitation in Section 25(5),
Article VI of the 1987 Constitution that transfers may be allowed only
within the branch of government to which the appropriation has been made.
—The majority, in denying the respondents’ motion for reconsideration,
points out that Section 39, Chapter 5, Book VI of the Administrative Code
cannot be used to justify the transfer of funds through the DAP, because it
contradicted the clear command of Section 25(5), Article VI of the 1987
Constitution. Section 39 authorizes the President to augment any regular
appropriation, regardless of the branch of government it is appropriated to,
in clear contravention of the limitation in Section 25(5) that transfers may
be allowed only within the branch of government to which the appropriation
has been made. The practical effect of this ruling would be the need for a
provision in the succeeding GAAs authorizing augmentation, if Congress
would be so minded to authorize it, in accordance with the clear mandate of
Section 25(5) of the Constitution. To
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recall, Section 25(5) of the Constitution requires that a law must first be
in place before augmentation may be performed.
Same; Same; Operative Fact Doctrine; View that the doctrine of
operative fact mitigates the harshness of the declared total nullity and
recognizes that the unconstitutional law, prior to the declaration of its
nullity, was an operative fact that the citizenry followed or acted upon.—As
I earlier pointed out, a declaration of unconstitutionality of a law renders it
void: the unconstitutional law is not deemed to have ever been enacted, and
no rights, obligations or any effect can spring from it. The doctrine of
operative fact mitigates the harshness of the declared total nullity and
recognizes that the unconstitutional law, prior to the declaration of its

nullity, was an operative fact that the citizenry followed or acted upon. This
doctrine, while maintaining the invalidity of the nullified law, provides for
an exceptional situation that recognizes that acts done in good faith and in
reliance of the law prior to its invalidity, are effective and can no longer be
undone.
Same; Same; Same; View that an unconstitutional act is not a law. It
confers no rights; it imposes no duties; it affords no protection; it creates no
office; it is, in legal contemplation, as inoperative as though it had never
been passed; By way of exception, the operative fact doctrine recognizes
that the Disbursement Acceleration Program’s (DAP’s) operation had
consequences, which would be iniquitous to undo despite the Supreme
Court’s (SC’s) declaration of the DAP’s unconstitutionality.—An
unconstitutional act is not a law. It confers no rights; it imposes no duties; it
affords no protection; it creates no office; it is, in legal contemplation, as
inoperative as though it had never been passed. In this light, the Court’s
declaration of the unconstitutionality of several aspects of the DAP
necessarily produces two main effects: (1) it voids the acts committed
through the DAP that are unconstitutional; and (2) the PAPs that have been
funded or benefitted from these void acts are likewise void. By way of
exception, the operative fact doctrine recognizes that the DAP’s operation
had consequences, which would be iniquitous to undo despite the Court’s
declaration of the DAP’s unconstitutionality.
300

Del Castillo, J., Concurring and Dissenting Opinion:

Savings; View that the President has the power to finally discontinue slow-
moving projects pursuant to (1) Section 38, Chapter 5, Book VI, of the
Administrative Code and (2) the General Appropriations Act (GAA)
definition of “savings,” which implicitly recognizes the power to finally
discontinue or abandon a work, activity or purpose; Hence, with the final
discontinuance of slow-moving projects, “savings” were thereby generated,
pursuant to the GAA definition of savings.—I maintain that the President has
the power to finally discontinue slow-moving projects pursuant to (1)
Section 38, Chapter 5, Book VI, of the Administrative Code and (2) the
General Appropriations Act (GAA) definition of “savings,” which implicitly
recognizes the power to finally discontinue or abandon a work, activity or
purpose. This power was impliedly exercised by the President, under

National Budget Circular No. (NBC) 541, by ordering the withdrawal of
unobligated allotments from slow-moving projects in order to spur
economic growth. Absent proof to the contrary and the undisputed claim
that this program, indeed, led to economic growth, the “public interest”
standard, which circumscribes the power to permanently stop expenditure
under Section 38, must be deemed satisfied. Hence, with the final
discontinuance of slow-moving projects, “savings” were thereby generated,
pursuant to the GAA definition of savings.
Same; Same; Same; View that it is premature to make a sweeping
generalization that the “withdrawal and transfer of unobligated allotments
remain unconstitutional.”—As I noted in my July 1, 2014 Opinion, whether
scenario 4 (or scenarios 1 to 3 for that matter) actually occurred requires a
factual determination that was not litigated in this case. Thus, it is premature
to make a sweeping generalization that the “withdrawal and transfer of
unobligated allotments remain unconstitutional.” Instead, a more limited
declaration that, to repeat, Sections 5.4, 5.5 and 5.7 of NBC 541 are only
partially unconstitutional and illegal, insofar as they (1) allowed the
withdrawal of unobligated allotments from slow-moving projects, which
were not finally discontinued or abandoned, and (2) authorized the use of
such withdrawn unobligated allotments as “savings,” is apropos. A
distinction must be made between the infirmity of the wording of NBC 541
and what actually happened during the course
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of the implementation of the DAP. The Court cannot assume facts that
were not established in this case.
Same; Same; Same; Cross-Border Transfer of Savings; View that if
cross-border transfer of savings has, indeed, been a long-standing practice
of the whole government bureaucracy, then the Court’s ruling in this case
should be a clear signal to put an end to this unconstitutional practice.
Long-standing practices cannot justify or legitimize a continuing violation
of the Constitution.—The prohibition on cross-border transfer of savings
applies to all the branches of government and constitutional bodies,
including the Court. If the Solicitor General thinks that the aforesaid transfer
of funds involving the Court violates the subject constitutional provision,
then the proper recourse is to have them declared unconstitutional, as was
done in this case. But, certainly, it cannot change the clear and unequivocal
language of the constitutional prohibition on cross-border transfer of

savings. In fine, if cross-border transfer of savings has, indeed, been a long-
standing practice of the whole government bureaucracy, then the Court’s
ruling in this case should be a clear signal to put an end to this
unconstitutional practice. Long-standing practices cannot justify or
legitimize a continuing violation of the Constitution.
Same; Same; Same; Operative Fact Doctrine; View that the operative
fact doctrine applies only to the cross-border transfers of savings actually
proven in this case, i.e., the admitted cross-border transfers of savings from
the Executive Department to the Commission on Audit (COA), House of
Representatives and Commission on Elections (COMELEC), respectively.—
I reiterate that the operative fact doctrine applies only to the cross-border
transfers of savings actually proven in this case, i.e., the admitted cross-
border transfers of savings from the Executive Department to the
Commission on Audit, House of Representatives and Commission on
Elections, respectively. Any ruling as to its applicability to the other DAP-
funded projects is premature in view of the lack of sufficient proof, litigated
in a proper case, that they were implemented in violation of the
Constitution.
302

Leonen, J., Concurring Opinion:

General Appropriations Act; View that the General Appropriations Act

(GAA) is the law required by the Constitution to authorize expenditures of
public funds for specific purposes.—The General Appropriations Act is the
law required by the Constitution to authorize expenditures of public funds
for specific purposes. Each appropriation item provides for the limits of the
amount that can be spent by any office, agency, bureau or department of
government. The provision of an appropriation item does not require that
government must spend the full amount appropriated. In other words, the
General Appropriations Act provides authority to spend; it does not compel
actual expenditures.
Same; View that disagreements as to the priorities of a President are
matters of political accountability.—Disagreements as to the priorities of a
President are matters of political accountability. They do not necessarily
translate into juridical necessities that can invoke the awesome power of
judicial review. This court sits to ensure that political departments exercise
their discretions within the boundaries set by the constitution and our laws.
We do not sit to replace their political wisdom with our own.
Same; View that the President can withhold the unobligated allotment
until the needed corrective measures are done within the office or agency.—
Withholding unobligated allotments is not unconstitutional per se. It can be
done legitimately for a variety of reasons. The revenues expected by
government may not be forthcoming as expected. The office or agency
involved may not have the capacity to spend due to organizational problems,
corruption issues, or even fail to meet the expectations of the President
himself. In my view, the President can withhold the unobligated allotment
until the needed corrective measures are done within the office or agency.
With the amount withheld, the President may also ensure that the other
appropriations items are fully funded as authorized in the general or in any
supplemental appropriations act.
Same; Savings; View that appropriated items may be augmented but
only from savings and only if the law authorizes the heads of constitutional
organs or departments to do so.—To underscore the power of Congress to
authorize appropriations items, the
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Constitution prohibits their augmentation. There is no authority to

spend beyond the amounts set for any appropriations item. Congress
receives information from the executive as to the projected revenues prior to
passing a budget. Members of Congress deliberate on whether they will
agree to the amounts allocated per project, activity, or program and thus, the
extent of their concurrence with the priorities set by the President with the
latter’s best available estimates of what can happen the following year. The
authorities that will eventually spend the amounts appropriated cannot
undermine this congressional power of authorization. However, the
Constitution itself provides for an exception. Appropriated items may be
augmented but only from savings and only if the law authorizes the heads of
constitutional organs or departments to do so. It is in this context that
savings gains constitutional relevance.
Same; Same; View that the President’s power to suspend a project in
order to declare savings for purposes of augmentation may be statutorily
granted in Section 38 of the Revised Administrative Code, but it cannot be
constitutional unless such grounds for suspension are reasonable and such
reasonable grounds are statutorily provided.—The President’s power to

suspend a project in order to declare savings for purposes of augmentation
may be statutorily granted in Section 38 of the Revised Administrative
Code, but it cannot be constitutional unless such grounds for suspension are
reasonable and such reasonable grounds are statutorily provided. Under the
present state of our laws, it will be reasonable when read in relation to the
GAAM.
Same; Same; View that for there to be valid savings of every centavo in
the pooled funds, there must be a showing (a) that the activity has been
completed, finally discontinued and abandoned; and (b) why such activity
was finally discontinued and abandoned and its consistency with existing
statutes.—But it is not only the existence of an appropriation item that will
make augmentation constitutional. It is likewise essential that it can be
clearly and convincingly shown that it comes from legitimate savings in a
constitutional and statutory sense. In other words, having appropriation
covers to the extent of showing that the item being funded is authorized is
not enough. For each augmentation, the source in savings must likewise be
shown. This is why constitutional difficulties arose in the kind of pooled
funds done under the Disbursement Allocation Program (DAP). There was
the wholesale assertion that all such
304

funds came from savings coming from slow moving projects. This is
not enough to determine whether the requirements of constitutionality have
been met. For there to be valid savings of every centavo in the pooled funds,
there must be a showing (a) that the activity has been completed, finally
discontinued and abandoned; and (b) why such activity was finally
discontinued and abandoned and its consistency with existing statutes.
Pooled funds make it difficult, for purposes of this determination, to make
this determination. DAP may be the mechanism to ensure that items that
needed to be augmented be funded in order to allow efficiencies to occur.
However, this mechanism should be grounded and limited by constitutional
acts. The source of the funds in the pool called DAP should be shown to
have come from legitimate savings in order that it can be used to augment
appropriations items.
Same; Same; Earmarking; View that earmarking savings for a
particular purpose without necessarily spending it is not augmentation.—I
concur with Justice Carpio’s observations in his Separate Opinion resolving
the present Motions for Reconsideration. Earmarking savings for a

particular purpose without necessarily spending it is not augmentation. It is
a prerogative that can be exercised within the judiciary’s prerogative of
fiscal autonomy. With respect to the alleged request to allocate funds from
the Department of Justice for the judiciary’s construction of the Malabon
Halls of Justice, suffice it to say that this resolution was not implemented.
The Chief Justice withdrew the request seasonably. This withdrawal was
confirmed by a Resolution issued by this court. Decisions of this court En
Banc are subject to limited reconsideration. Reconsideration presupposes
that this court also has the ability to correct itself in a timely fashion.
Same; Same; View that generally, revenue collections in excess of
targeted revenues cannot be considered as “savings” in the concept of
Article VI, Section 25(5) of the Constitution.—Generally, revenue
collections in excess of targeted revenues cannot be considered as “savings”
in the concept of Article VI, Section 25(5) of the Constitution. However, the
disposition of these funds may also be provided in the General
Appropriations Act or in a supplemental budget. This is consistent with the
basic principle that Congress authorizes expenditures of public funds as
found in Article VI, Section 29(1) of the Constitution.
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Same; Same; View that the title on Unprogrammed Funds require

actual revenue collections vis-à-vis a fixed base such as submitted revenue
targets that cannot be further modified.—During the deliberation in this
case, Justice Carpio suggested that the value of the article on
Unprogrammed Funds was to assure all actors in our economy that
government will not print money just to be able to make expenditures.
Printing money or increasing money supply generally has inflationary
effects. That is, the prices of all goods and services may increase not
because of the scarcity of these items but because there is a surplus of
currency floating in the economy. Thus, the title on Unprogrammed Funds
require actual revenue collections vis-à-vis a fixed base such as submitted
revenue targets that cannot be further modified. I agree. The entire
discussion thus far requires actual collection and an excess of these actual
collections over revenue targets.
MOTION FOR RECONSIDERATION and MOTION FOR

PARTIAL RECONSIDERATION of a decision of the Supreme
Court.
The facts are stated in the resolution of the Court.

Wanda M. Talosig for petitioner in G.R. No. 209136.
Raymond Parsifal A. Fortun and Maria Romina M. Dalagan for
petitioner in G.R. No. 209155.
Manuel S. Obedoza, Jr. for petitioner in G.R. No. 209569.
Manuel M. Lazaro for petitioners in G.R. No. 209164.
Froilan M. Bacungan, Rita Linda V. Jimeno, Reynaldo Y. Maulit
and Romulo B. Lumauig for petitioners in G.R. No. 209164.
Pacifico A. Agabin for petitioner in G.R. No. 209260.
Jovencio H. Evangelista, Vanessa Quiambao Maguigad and
Maria Cristina P. Yambot for petitioners in G.R. No. 209287.
306

H. Harry L. Roque, Jr., Joel Ruiz Butuyan and Roger R. Rayel

for petitioners in G.R. No. 209442.
Remigio D. Saladero, Jr., Noel V. Neri and Vicente Jaime M.
Topacio for petitioners in G.R. No. 209517.

RESOLUTION

BERSAMIN, J.:

The Constitution must ever remain supreme. All must bow to the
mandate of this law. Expediency must not be allowed to sap its
strength nor greed for power debase its rectitude.1
Before the Court are the Motion for Reconsideration2 filed by the
respondents, and the Motion for Partial Reconsideration3 filed by the
petitioners in G.R. No. 209442.
In their Motion for Reconsideration, the respondents assail the
decision4 promulgated on July 1, 2014 upon the following
procedural and substantive errors, viz.:

PROCEDURAL
I
WITHOUT AN ACTUAL CASE OR CONTROVERSY,
ALLEGATIONS OF GRAVE ABUSE OF DISCRETION ON THE PART
OF ANY INSTRUMENTALITY OF THE GOVERNMENT CANNOT
CONFER ON THIS HONORABLE COURT THE POWER TO
DETERMINE THE CONSTITUTIONALITY OF THE DAP AND NBC

NO. 541.
_______________
1 Biraogo v. Philippine Truth Commission of 2010, G.R. Nos. 192935 and

193036, December 7, 2010, 637 SCRA 78, 177.
2 Rollo (G.R. No. 209287), pp. 1431-1482.
3 Id., at pp. 1496-1520.
4 Id., at pp. 1135-1241.
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VOL. 749, FEBRUARY 3, 2015 307

II
PETITIONERS’ ACTIONS DO NOT PRESENT AN ACTUAL CASE
OR CONTROVERSY AND THEREFORE THIS HONORABLE COURT
DID NOT ACQUIRE JURISDICTION.
III
PETITIONERS HAVE NEITHER BEEN INJURED NOR
THREATENED WITH INJURY AS A RESULT OF THE OPERATION OF
THE DAP AND THEREFORE SHOULD HAVE BEEN HELD TO HAVE
NO STANDING TO BRING THESE SUITS FOR CERTIORARI AND
PROHIBITION.
IV
NOR CAN PETITIONERS’ STANDING BE SUSTAINED ON THE
GROUND THAT THEY ARE BRINGING THESE SUITS AS CITIZENS
AND AS TAXPAYERS.
V
THE DECISION OF THIS HONORABLE COURT IS NOT BASED
ON A CONSIDERATION OF THE ACTUAL APPLICATIONS OF THE
DAP IN 116 CASES BUT SOLELY ON AN ABSTRACT
CONSIDERATION OF NBC NO. 541.5

SUBSTANTIVE
I
THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED
“SAVINGS” UNDER THE RELEVANT PROVISIONS OF THE GAA.
II
ALL DAP APPLICATIONS HAVE APPROPRIATION COVER.
_______________
5 Id., at pp. 1434-1435.
308

III
THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS TO
OTHER DEPARTMENTS PURSUANT TO HIS CONSTITUTIONAL
POWERS.
IV
THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT
REVENUE COLLECTIONS FROM EACH SOURCE OF REVENUE
ENUMERATED IN THE BUDGET PROPOSAL MUST EXCEED THE
CORRESPONDING REVENUE TARGET.
V
THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED.6

The respondents maintain that the issues in these consolidated
cases were mischaracterized and unnecessarily constitutionalized;
that the Court’s interpretation of savings can be overturned by
legislation considering that savings is defined in the General
Appropriations Act (GAA), hence making savings a statutory issue;7
that the withdrawn unobligated allotments and unreleased
appropriations constitute savings and may be used for
augmentation;8 and that the Court should apply legally recognized
norms and principles, most especially the presumption of good faith,
in resolving their motion.9
On their part, the petitioners in G.R. No. 209442 pray for the
partial reconsideration of the decision on the ground that the Court
thereby:
FAILED TO DECLARE AS UNCONSTITUTIONAL AND ILLEGAL

ALL MONEYS UNDER THE DISBURSEMENT ACCELERATION
PROGRAM (DAP)
_______________
6 Id.
7 Id., at pp. 1435-1438.
8 Id., at pp. 1444-1449.

9 Id., at p. 1432.
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VOL. 749, FEBRUARY 3, 2015 309

USED FOR ALLEGED AUGMENTATION OF APPROPRIATION

ITEMS THAT DID NOT HAVE ACTUAL DEFICIENCIES.10

They submit that augmentation of items beyond the maximum
amounts recommended by the President for the programs, activities
and projects (PAPs) contained in the budget submitted to Congress
should be declared unconstitutional.

Ruling of the Court

We deny the motion for reconsideration of the petitioners in G.R.
No. 209442, and partially grant the motion for reconsideration of the
respondents.
The procedural challenges raised by the respondents, being a
mere rehash of their earlier arguments herein, are dismissed for
being already passed upon in the assailed decision.
As to the substantive challenges, the Court discerns that the
grounds are also reiterations of the arguments that were already
thoroughly discussed and passed upon in the assailed decision.
However, certain declarations in our July 1, 2014 Decision are
modified in order to clarify certain matters and dispel further
uncertainty.

1.
The Court’s power of judicial review

The respondents argue that the Executive has not violated the
GAA because savings as a concept is an ordinary species of
interpretation that calls for legislative, instead of judicial,
determination.11
This argument cannot stand.
_______________
10 Id., at p. 1496.
11 Id., at p. 1435.
310

The consolidated petitions distinctly raised the question of the

constitutionality of the acts and practices under the DAP, particularly
their non-conformity with Section 25(5), Article VI of the
Constitution and the principles of separation of power and equal
protection. Hence, the matter is still entirely within the Court’s
competence, and its determination does not pertain to Congress to
the exclusion of the Court. Indeed, the interpretation of the GAA
and its definition of savings is a foremost judicial function. This is
because the power of judicial review vested in the Court is
exclusive. As clarified in Endencia and Jugo v. David:12
Under our system of constitutional government, the Legislative

department is assigned the power to make and enact laws. The Executive
department is charged with the execution of carrying out of the provisions of
said laws. But the interpretation and application of said laws belong
exclusively to the Judicial department. And this authority to interpret
and apply the laws extends to the Constitution. Before the courts can
determine whether a law is constitutional or not, it will have to
interpret and ascertain the meaning not only of said law, but also of the
pertinent portion of the Constitution in order to decide whether there is
a conflict between the two, because if there is, then the law will have to
give way and has to be declared invalid and unconstitutional.
xxxx
We have already said that the Legislature under our form of
government is assigned the task and the power to make and enact laws,
but not to interpret them. This is more true with regard to the
interpretation of the basic law, the Constitution, which is not within the
sphere of the Legislative department. If the Legislature may declare
_______________
12 Nos. L-6355-56, 93 Phil. 696 (1953).
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VOL. 749, FEBRUARY 3, 2015 311

what a law means, or what a specific portion of the Constitution

means, especially after the courts have in actual case ascertain its
meaning by interpretation and applied it in a decision, this would surely
cause confusion and instability in judicial processes and court decisions.
Under such a system, a final court determination of a case based on a
judicial interpretation of the law of the Constitution may be
undermined or even annulled by a subsequent and different
interpretation of the law or of the Constitution by the Legislative
department. That would be neither wise nor desirable, besides being
clearly violative of the fundamental, principles of our constitutional
system of government, particularly those governing the separation of
powers.13

The respondents cannot also ignore the glaring fact that the
petitions primarily and significantly alleged grave abuse of
discretion on the part of the Executive in the implementation of the
DAP. The resolution of the petitions thus demanded the exercise by
the Court of its aforedescribed power of judicial review as mandated
by the Constitution.

2.
Strict construction on the accumulation
and utilization of savings

The decision of the Court has underscored that the exercise of the
power to augment shall be strictly construed by virtue of its being an
exception to the general rule that the funding of PAPs shall be
limited to the amount fixed by Congress for the purpose.14
Necessarily, savings, their utilization and their management will also
be strictly construed against expanding
_______________
13 Id., at pp. 700-702 (bold underscoring is supplied for emphasis).

14 Rollo (G.R. No. 209287), pp. 1203-1204.
312

the scope of the power to augment.15 Such a strict interpretation

is essential in order to keep the Executive and other budget
implementors within the limits of their prerogatives during budget
execution, and to prevent them from unduly transgressing Congress’
power of the purse.16 Hence, regardless of the perceived beneficial
purposes of the DAP, and regardless of whether the DAP is viewed
as an effective tool of stimulating the national economy, the acts and
practices under the DAP and the relevant provisions of NBC No.
541 cited in the Decision should remain illegal and unconstitutional
as long as the funds used to finance the projects mentioned therein
are sourced from savings that deviated from the relevant provisions
of the GAA, as well as the limitation on the power to augment under
Section 25(5), Article VI of the Constitution. In a society governed
by laws, even the best intentions must come within the parameters
defined and set by the Constitution and the law. Laudable purposes
must be carried out through legal methods.17
Respondents contend, however, that withdrawn unobligated
allotments and unreleased appropriations under the DAP are savings
that may be used for augmentation, and that the withdrawal of
unobligated allotments were made pursuant to Section 38, Chapter
5, Book VI of the Administrative Code;18 that Section 38 and
Section 39, Chapter 5, Book VI of the Administrative Code are
consistent with Section 25(5), Article VI of the Constitution, which,
taken together, constitute “a framework for which economic
managers of the nation may pull various levers in the form of
authorization from Congress to efficiently steer the economy
towards the specific and general purposes of the GAA”;19 and that
the President’s
_______________
15 Id., at p. 1208.
16 Id.
17 Brillantes, Jr. v. Commission on Elections, G.R. No. 163193, June 15, 2004,
432 SCRA 269, 307.
18 Rollo (G.R. No. 209287), p. 1448.
19 Id., at p. 1449.
313
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augmentation of deficient items is in accordance with the

standing authority issued by Congress through Section 39.
Section 25(5), Article VI of the Constitution states:
Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations;
however, the President, the President of the Senate, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, and the
heads of Constitutional Commissions may, by law, be authorized to augment
any item in the general appropriations law for their respective offices from
savings in other items of their respective appropriations.
xxxx

Section 38 and Section 39, Chapter 5, Book VI of the
Administrative Code provide:
Section 38. Suspension of Expenditure of Appropriations.—Except as

otherwise provided in the General Appropriations Act and whenever in his
judgment the public interest so requires, the President, upon notice to the
head of office concerned, is authorized to suspend or otherwise stop further
expenditure of funds allotted for any agency, or any other expenditure
authorized in the General Appropriations Act, except for personal services
appropriations used for permanent officials and employees.
Section 39. Authority to Use Savings in Appropriations to Cover
Deficits.—Except as otherwise provided in the General Appropriations Act,
any savings in the regular appropriations authorized in the General
Appropriations Act for programs and projects of any department,
office or agency, may, with the approval of the President, be used to
cover a deficit in any other item of the regular appropriations: Provided,
that the creation of new positions or increase of
314

salaries shall not be allowed to be funded from budgetary savings except

when specifically authorized by law: Provided, further, that whenever
authorized positions are transferred from one program or project to another
within the same department, office or agency, the corresponding amounts
appropriated for personal services are also deemed transferred, without,
however increasing the total outlay for personal services of the department,
office or agency concerned. (Bold underscoring supplied for emphasis)

In the Decision, we said that:
Unobligated allotments, on the other hand, were encompassed by the first

part of the definition of “savings” in the GAA, that is, as “portions or
balances of any programmed appropriation in this Act free from any
obligation or encumbrance.” But the first part of the definition was further
qualified by the three enumerated instances of when savings would be
realized. As such, unobligated allotments could not be indiscriminately
declared as savings without first determining whether any of the three
instances existed. This signified that the DBM’s withdrawal of unobligated
allotments had disregarded the definition of savings under the GAAs.
xxxx
The respondents rely on Section 38, Chapter 5, Book VI of the
Administrative Code of 1987 to justify the withdrawal of unobligated
allotments. But the provision authorized only the suspension or stoppage of
further expenditures, not the withdrawal of unobligated allotments, to wit:
xxxx
Moreover, the DBM did not suspend or stop further expenditures in
accordance with Section 38, supra, but instead transferred the funds to other
PAPs.20
_______________
20 Decision, 728 SCRA 1, 139-148 (2014).
315
VOL. 749, FEBRUARY 3, 2015 315

We now clarify.
Section 38 refers to the authority of the President “to suspend or
otherwise stop further expenditure of funds allotted for any agency,
or any other expenditure authorized in the General Appropriations
Act.” When the President suspends or stops expenditure of funds,
savings are not automatically generated until it has been established
that such funds or appropriations are free from any obligation or
encumbrance, and that the work, activity or purpose for which the
appropriation is authorized has been completed, discontinued or
abandoned.
It is necessary to reiterate that under Section 5.7 of NBC No.

541, the withdrawn unobligated allotments may be:
5.7.1 Reissued for the original programs and projects of the

agencies/OUs concerned, from which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs
and projects of the agency/
OU; or
5.7.3 Used to augment existing programs and projects of any agency and
to fund priority programs and projects not considered in the 2012 budget but
expected to be started or implemented during the current year.

Although the withdrawal of unobligated allotments may have
effectively resulted in the suspension or stoppage of expenditures
through the issuance of negative Special Allotment Release Orders
(SARO), the reissuance of withdrawn allotments to the original
programs and projects is a clear indication that the program or
project from which the allotments were withdrawn has not been
discontinued or abandoned. Consequently, as we have pointed out in
the Decision, “the purpose for which the withdrawn funds had been
appro-
316

priated was not yet fulfilled, or did not yet cease to exist,
rendering the declaration of the funds as savings impossible.”21 In
this regard, the withdrawal and transfer of unobligated allotments
remain unconstitutional. But then, whether the withdrawn allotments
have actually been reissued to their original programs or projects is a
factual matter determinable by the proper tribunal.
Also, withdrawals of unobligated allotments pursuant to NBC
No. 541 which shortened the availability of appropriations for
MOOE and capital outlays, and those which were transferred to
PAPs that were not determined to be deficient, are still
constitutionally infirm and invalid.
At this point, it is likewise important to underscore that the
reversion to the General Fund of unexpended balances of
appropriations — savings included — pursuant to Section 28
Chapter IV, Book VI of the Administrative Code22 does not apply to
the Constitutional Fiscal Autonomy Group (CFAG), which include
the Judiciary, Civil Service Commission, Commission on Audit,

Commission on Elections, Commission on Human Rights, and the
Office of the Ombudsman. The reason for this is that the fiscal
autonomy enjoyed by the CFAG —
x x x contemplates a guarantee of full flexibility to allocate and utilize

their resources with the wisdom and dispatch that their needs require. It
recognizes the power and authority to levy, assess and collect fees, fix rates
of compensation not exceeding the highest rates authorized by law for
compensation and pay plans of the government and allocate and disburse
such sums as may be provided by law or prescribed by them in the course of
the discharge of their functions.
Fiscal autonomy means freedom from outside control. If the Supreme
Court says it needs 100 typewriters but DBM rules we need only 10
typewriters and sends its
_______________
21 Id., at p. 140.
22 Id., at p. 146.
317
VOL. 749, FEBRUARY 3, 2015 317

recommendations to Congress without even informing us, the autonomy

given by the Constitution becomes an empty and illusory platitude.
The Judiciary, the Constitutional Commissions, and the Ombudsman
must have the independence and flexibility needed in the discharge of their
constitutional duties. The imposition of restrictions and constraints on the
manner the independent constitutional offices allocate and utilize the funds
appropriated for their operations is anathema to fiscal autonomy and
violative not only of the express mandate of the Constitution but especially
as regards the Supreme Court, of the independence and separation of powers
upon which the entire fabric of our constitutional system is based. x x x23

On the other hand, Section 39 is evidently in conflict with the
plain text of Section 25(5), Article VI of the Constitution because it
allows the President to approve the use of any savings in the regular
appropriations authorized in the GAA for programs and projects of
any department, office or agency to cover a deficit in any other item
of the regular appropriations. As such, Section 39 violates the
mandate of Section 25(5) because the latter expressly limits the

authority of the President to augment an item in the GAA to only
those in his own Department out of the savings in other items of his
own Department’s appropriations. Accordingly, Section 39 cannot
serve as a valid authority to justify cross-border transfers under the
DAP. Augmentations under the DAP which are made by the
Executive within its department shall, however, remain valid so long
as the requisites under Section 25(5) are complied with.
In this connection, the respondents must always be reminded that
the Constitution is the basic law to which all laws must conform. No
act that conflicts with the Constitu-
_______________
23 Bengzon v. Drilon, G.R. No. 103524, April 15, 1992, 208 SCRA 133.
318

tion can be valid.24 In Mutuc v. Commission on Elections,25

therefore, we have emphasized the importance of recognizing and
bowing to the supremacy of the Constitution:
x x x The concept of the Constitution as the fundamental law, setting

forth the criterion for the validity of any public act whether proceeding from
the highest official or the lowest functionary, is a postulate of our system of
government. That is to manifest fealty to the rule of law, with priority
accorded to that which occupies the topmost rung in the legal hierarchy. The
three departments of government in the discharge of the functions with
which it is [sic] entrusted have no choice but to yield obedience to its
commands. Whatever limits it imposes must be observed. Congress in the
enactment of statutes must ever be on guard lest the restrictions on its
authority, whether substantive or formal, be transcended. The Presidency in
the execution of the laws cannot ignore or disregard what it ordains. In its
task of applying the law to the facts as found in deciding cases, the judiciary
is called upon to maintain inviolate what is decreed by the fundamental law.
Even its power of judicial review to pass upon the validity of the acts of the
coordinate branches in the course of adjudication is a logical corollary of
this basic principle that the Constitution is paramount. It overrides any
governmental measure that fails to live up to its mandates. Thereby there is
a recognition of its being the supreme law.

Also, in Biraogo v. Philippine Truth Commission of 2010,26 we
have reminded that:
_______________
24 Social Justice Society (SJS) v. Dangerous Drugs Board, G.R. Nos. 157870,
158633 and 161658, November 3, 2008, 570 SCRA 410, 422-423.
25 No. L-32717, November 26, 1970, 36 SCRA 228, 234-235.
26 Supra note 1.
319
VOL. 749, FEBRUARY 3, 2015 319

The role of the Constitution cannot be overlooked. It is through the

Constitution that the fundamental powers of government are established,
limited and defined, and by which these powers are distributed among the
several departments. The Constitution is the basic and paramount law to
which all other laws must conform and to which all persons, including the
highest officials of the land, must defer. Constitutional doctrines must
remain steadfast no matter what may be the tides of time. It cannot be
simply made to sway and accommodate the call of situations and much
more tailor itself to the whims and caprices of government and the people
who run it.27

3.
The power to augment cannot be used to fund
nonexistent provisions in the GAA

The respondents posit that the Court has erroneously invalidated
all the DAP-funded projects by overlooking the difference between
an item and an allotment class, and by concluding that they do not
have appropriation cover; and that such error may induce Congress
and the Executive (through the DBM) to ensure that all items should
have at least P1 funding in order to allow augmentation by the
President.28
At the outset, we allay the respondents’ apprehension regarding
the validity of the DAP-funded projects. It is to be emphatically
indicated that the Decision did not declare the en masse invalidation
of the 116 DAP-funded projects. To be sure, the Court recognized
the encouraging effects of the DAP on the country’s economy,29 and
acknowledged its laudable purposes, most especially those directed

towards infrastructure development and efficient delivery of basic
social services.30 It bears repeating that the DAP is a policy
instrument
_______________
27 Id., at pp. 137-138.

28 Rollo (G.R. No. 209287), pp. 1450-1451.
29 Araullo v. Aquino III, supra note 20 at pp. 123-124.
30 Id., at pp. 182-183.
320

that the Executive, by its own prerogative, may utilize to spur

economic growth and development.
Nonetheless, the Decision did find doubtful those projects that
appeared to have no appropriation cover under the relevant GAAs
on the basis that: (1) the DAP funded projects that originally did not
contain any appropriation for some of the expense categories
(personnel, MOOE and capital outlay); and (2) the appropriation
code and the particulars appearing in the SARO did not correspond
with the program specified in the GAA.
The respondents assert, however, that there is no constitutional
requirement for Congress to create allotment classes within an item.
What is required is for Congress to create items to comply with the
line-item veto of the President.31
After a careful reexamination of existing laws and jurisprudence,
we find merit in the respondents’ argument.
Indeed, Section 25(5) of the 1987 Constitution mentions of the
term item that may be the object of augmentation by the President,
the Senate President, the Speaker of the House, the Chief Justice,
and the heads of the Constitutional Commissions. In Belgica v.
Ochoa,32 we said that an item that is the distinct and several part of
the appropriation bill, in line with the item-veto power of the
President, must contain “specific appropriations of money” and not
be only general provisions, thus:
For the President to exercise his item-veto power, it necessarily follows

that there exists a proper “item” which may be the object of the veto. An
item, as defined in the field of appropriations, pertains to “the particulars,
the details, the distinct and severable parts of the appropriation or of the
bill.” In the case of Bengzon v. Secretary
_______________
31 Respondents’ Motion for Reconsideration, p. 21.

32 G.R. No. 208566, November 19, 2013, 710 SCRA 1.
321
VOL. 749, FEBRUARY 3, 2015 321

of Justice of the Philippine Islands, the US Supreme Court characterized

an item of appropriation as follows:
An item of an appropriation bill obviously means an item which, in
itself, is a specific appropriation of money, not some general provision of
law which happens to be put into an appropriation bill. (Emphases supplied)
On this premise, it may be concluded that an appropriation bill, to ensure
that the President may be able to exercise his power of item veto, must
contain “specific appropriations of money” and not only “general
provisions” which provide for parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be
an item characterized by singular correspondence — meaning an allocation
of a specified singular amount for a specified singular purpose, otherwise
known as a “line-item.” This treatment not only allows the item to be
consistent with its definition as a “specific appropriation of money” but also
ensures that the President may discernibly veto the same. Based on the
foregoing formulation, the existing Calamity Fund, Contingent Fund and the
Intelligence Fund, being appropriations which state a specified amount for a
specific purpose, would then be considered as “line-item” appropriations
which are rightfully subject to item veto. Likewise, it must be observed that
an appropriation may be validly apportioned into component percentages or
values; however, it is crucial that each percentage or value must be allocated
for its own corresponding purpose for such component to be considered as a
proper line-item. Moreover, as Justice Carpio correctly pointed out, a valid
appropriation may even have several related purposes that are by accounting
and budgeting practice considered as one purpose, e.g., MOOE
(maintenance and other operating expenses), in which case the related
purposes shall be deemed sufficiently specific for the exercise of the
President‘s item veto power. Finally, special purpose funds and
discretionary funds would equally square with
322

the constitutional mechanism of item-veto for as long as they follow the

rule on singular correspondence as herein discussed. x x x (Emphasis
supplied)33

Accordingly, the item referred to by Section 25(5) of the
Constitution is the last and indivisible purpose of a program in the
appropriation law, which is distinct from the expense category or
allotment class. There is no specificity, indeed, either in the
Constitution or in the relevant GAAs that the object of augmentation
should be the expense category or allotment class. In the same vein,
the President cannot exercise his veto power over an expense
category; he may only veto the item to which that expense category
belongs to.
Further, in Nazareth v. Villar,34 we clarified that there must be an
existing item, project or activity, purpose or object of expenditure
with an appropriation to which savings may be transferred for the
purpose of augmentation. Accordingly, so long as there is an item in
the GAA for which Congress had set aside a specified amount of
public fund, savings may be transferred thereto for augmentation
purposes. This interpretation is consistent not only with the
Constitution and the GAAs, but also with the degree of flexibility
allowed to the Executive during budget execution in responding to
unforeseeable contingencies.
Nonetheless, this modified interpretation does not take away the
caveat that only DAP projects found in the appropriate GAAs may
be the subject of augmentation by legally accumulated savings.
Whether or not the 116 DAP-funded projects had appropriation
cover and were validly augmented require factual determination that
is not within the scope of the present consolidated petitions under
Rule 65.
_______________
33 Id., at pp. 126-127.

34 G.R. No. 188635, January 29, 2013, 689 SCRA 385.
323
VOL. 749, FEBRUARY 3, 2015 323
4.
Cross-border transfers are constitutionally
impermissible

The respondents assail the pronouncement of unconstitutionality
of cross-border transfers made by the President. They submit that
Section 25(5), Article VI of the Constitution prohibits only the
transfer of appropriation, not savings. They relate that cross-border
transfers have been the practice in the past, being consistent with the
President’s role as the Chief Executive.35
In view of the clarity of the text of Section 25(5), however, the
Court stands by its pronouncement, and will not brook any strained
interpretations.

5.
Unprogrammed funds may only be released
upon proof that the total revenues exceeded the target

Based on the 2011, 2012 and 2013 GAAs, the respondents
contend that each source of revenue in the budget proposal must
exceed the respective target to authorize release of unprogrammed
funds. Accordingly, the Court’s ruling thereon nullified the intention
of the authors of the unprogrammed fund, and renders useless the
special provisions in the relevant GAAs.36
The respondents’ contentions are without merit.
To recall, the respondents justified the use of unprogrammed
funds by submitting certifications from the Bureau of Treasury and
the Department of Finance (DOF) regarding the dividends derived
from the shares of stock held by the Government in government-
owned and -controlled corporations.37
_______________
35 Rollo (G.R. No. 209287), pp. 1455-1459.

36 Id., at pp. 1459-1465.
37 Rollo (G.R. No. 209155), pp. 327, 337-339.
324

In the decision, the Court has held that the requirement under the
relevant GAAs should be construed in light of the purpose for which
the unprogrammed funds were denominated as “standby
appropriations.” Hence, revenue targets should be considered as a
whole, not individually; otherwise, we would be dealing with
artificial revenue surpluses. We have even cautioned that the release
of unprogrammed funds based on the respondents’ position could be
unsound fiscal management for disregarding the budget plan and
fostering budget deficits, contrary to the Government’s surplus
budget policy.38
While we maintain the position that aggregate revenue collection
must first exceed aggregate revenue target as a prerequisite to the
use of unprogrammed funds, we clarify the respondents’ notion that
the release of unprogrammed funds may only occur at the end of the
fiscal year.
There must be consistent monitoring as a component of the
budget accountability phase of every agency’s performance in terms
of the agency’s budget utilization as provided in Book VI, Chapter
6, Section 51 and Section 52 of the Administrative Code of 1987,
which state:
SECTION 51. Evaluation of Agency Performance.

—The President, through the Secretary shall evaluate on a continuing basis
the quantitative and qualitative measures of agency performance as reflected
in the units of work measurement and other indicators of agency
performance, including the standard and actual costs per unit of work.
SECTION 52. Budget Monitoring and Information System.—The
Secretary of Budget shall determine accounting and other items of
information, financial or otherwise, needed to monitor budget performance
and to assess effectiveness of agencies’ operations and shall prescribe the
forms, schedule of submission, and other com-
_______________
38 Rollo (G.R. No. 209287), pp. 1231-1232.
325
VOL. 749, FEBRUARY 3, 2015 325

ponents of reporting systems, including the maintenance of subsidiary

and other records which will enable agencies to accomplish and submit said
information requirements: Provided, that the Commission on Audit shall, in
coordination with the Secretary of Budget, issue rules and regulations that
may be applicable when the reporting requirements affect accounting
functions of agencies: Provided, further, that the applicable rules and
regulations shall be issued by the Commission on Audit within a period of
thirty (30) days after the Department of Budget and Management prescribes
the reporting requirements.

Pursuant to the foregoing, the Department of Budget and
Management (DBM) and the Commission on Audit (COA) require
agencies under various joint circulars to submit budget and financial
accountability reports (BFAR) on a regular basis,39 one of which is
the Quarterly Report of Income or Quarterly Report of Revenue and
Other Receipts.40 On the other hand, as Justice Carpio points out in
his Separate Opinion, the Development Budget Coordination
Committee (DBCC) sets quarterly revenue targets for a specific
fiscal year.41 Since information on both actual revenue collections
and targets are made available every quarter, or at such time as the
DBM may prescribe, actual revenue surplus may be determined
accordingly and releases from the unprogrammed fund may take
place even prior to the end of the fiscal year.42
_______________
39 http://budgetngbayan.com/budget-101/budget-accountability/
#BAR (visited on January 28, 2015).
40 See also the DBM and COA’s Joint Circular No. 2013-1, March 15, 2013 and
Joint Circular No. 2014-1, July 2, 2014.
41 J. Carpio, Separate Opinion, p. 348.
42 In this regard, the ninth and tenth special provisions for unprogrammed funds
in the 2011 GAA also provide the following:
9. Use of Income. In case of deficiency in the appropriations for the following
business-type activities, departments, bureaus, offices and agencies enumerated
hereunder and other agencies as may be determined by the Permanent Committee
326

In fact, the eleventh special provision for unprogrammed funds in

the 2011 GAA requires the DBM to submit quarterly reports stating
the details of the use and releases from the unprogrammed funds,
viz.:
11. Reportorial Requirement. The DBM shall submit to the House

Committee on Appropriations and the Senate Committee on Finance
separate quarterly reports stating the releases from the Unprogrammed
Fund, the amounts released and purposes thereof, and the recipient
departments, bureaus, agencies or offices, GOCCs and GFIs, including the
authority under which the funds are released under Special Provision No. 1
of the Unprogrammed Fund.
_______________
are hereby authorized to use their respective income collected during the year.
Said income shall be deposited with the National Treasury, chargeable against
Purpose 4 — General Fund Adjustments, to be used exclusively for the purposes
indicated herein or such other purposes authorized by the Permanent Committee, as
may be required until the end of the year, subject to the submission of a Special
Budget pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292, S. 1987:
xxxx
Implementation of this section shall be subject to guidelines to be issued by the
DBM.
10. Use of Excess Income. Agencies collecting fees and charges as shown in the
FY 2011 Budget of Expenditures and Sources of Financing (BESF) may be allowed
to use their income realized and deposited with the National Treasury, in excess of the
collection targets presented in the BESF, chargeable against Purpose 4 — General
Fund Adjustments, to augment their respective current appropriations, subject to the
submission of a Special Budget pursuant to Section 35, Chapter 5, Book VI of E.O.
No. 292: PROVIDED, That said income shall not be used to augment Personal
Services appropriations including payment of discretionary and representation
expenses. Implementation of this section shall be subject to guidelines jointly issued
by the DBM and DOF. The 2012 and 2013 GAAs also contain similar provisions.
327
VOL. 749, FEBRUARY 3, 2015 327

Similar provisions are contained in the 2012 and 2013 GAAs.43

However, the Court’s construction of the provision on
unprogrammed funds is a statutory, not a constitutional,
interpretation of an ambiguous phrase. Thus, the construction should
be given prospective effect.44

6.
The presumption of good faith stands
despite the obiter pronouncement

The remaining concern involves the application of the operative
fact doctrine.
The respondents decry the misapplication of the operative fact
doctrine, stating:
_______________
43 2012 GAA provides:

8. Reportorial Requirement. The DBM shall submit, either in printed form or by
way of electronic document, to the House Committee on Appropriations and the
Senate Committee on Finance separate quarterly reports stating the releases from the
Unprogrammed Fund, the amounts released and the purposes thereof, and the
recipient departments, bureaus, agencies or offices, including GOCCs and GFIs, as
well as the authority under which the funds are released under Special Provision No.
1 of the Unprogrammed Fund.
2013 GAA reads:
8. Reportorial Requirement. The DBM shall submit, either in printed form or by
way of electronic document, to the House Committee on Appropriations and the
Senate Committee on Finance separate quarterly reports stating the releases from the
Unprogrammed Fund, the amounts released and the purposes thereof, and the
recipient departments, bureaus, and offices, including GOCCs and GFIs, as well as
the authority under which the funds are released under Special Provision No. 1 of the
Unprogrammed Fund.
44 Commission of Internal Revenue v. San Roque Power Corporation, G.R. Nos.
187485, 196113 and 197156, 690 SCRA 336.
328

110. The doctrine of operative fact has nothing to do with the

potential liability of persons who acted pursuant to a then-
constitutional statute, order, or practice. They are presumed to have
acted in good faith and the court cannot load the dice, so to speak, by
disabling possible defenses in potential suits against so-called “authors,
proponents and implementors.” The mere nullification are still deemed
valid on the theory that judicial nullification is a contingent or unforeseen
event.
111. The cases before us are about the statutory and constitutional
interpretations of so-called acts and practices under a government program,
DAP. These are not civil, administrative, or criminal actions against the
public officials responsible for DAP, and any statement about bad faith may
be unfairly and maliciously exploited for political ends. At the same time,
any negation of the presumption of good faith, which is the unfortunate
implication of paragraphs 3 and 4 of page 90 of the Decision, violates
the constitutional presumption of innocence, and is inconsistent with
the Honorable Court’s recognition that “the implementation of the DAP
yielded undeniably positive results that enhanced the economic welfare
of the country.”
112. The policy behind the operative fact doctrine is consistent with the
idea that regardless of the nullification of certain acts and practices
under the DAP and/or NBC No. 541, it does not operate to impute bad
faith to authors, proponents and implementors who continue to enjoy
the presumption of innocence and regularity in the performance of
official functions and duties. Good faith is presumed, whereas bad faith
requires the existence of facts. To hold otherwise would send a chilling
effect to all public officers whether of minimal or significant discretion,
the result of which would be a
329
VOL. 749, FEBRUARY 3, 2015 329

dangerous paralysis of bureaucratic activity.45 (Emphasis supplied)

In the speech he delivered on July 14, 2014, President Aquino III
also expressed the view that in applying the doctrine of operative
fact, the Court has already presumed the absence of good faith on
the part of the authors, proponents and implementors of the DAP, so
that they would have to prove good faith during trial.46
Hence, in their Motion for Reconsideration, the respondents now
urge that the Court should extend the presumption of good faith in
favor of the President and his officials who coauthored, proposed or
implemented the DAP.47
The paragraphs 3 and 4 of page 90 of the Decision alluded to by
the respondents read:
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
_______________
45 Rollo (G.R. No. 209287), pp. 1466-1467.

46 http://www.gov.ph/2014/07/14/english-national-address-of-president-aquino-
on-the-supreme-courts-decision-on-dap/ (last visited on November 13, 2014).
47 Rollo (G.R. No. 209287), p. 1432.
330

by the proper tribunals determining their criminal, civil,

administrative and other liabilities.48 (Bold underscoring is supplied)

The quoted text of paragraphs 3 and 4 shows that the Court has
neither thrown out the presumption of good faith nor imputed bad
faith to the authors, proponents and implementors of the DAP. The
contrary is true, because the Court has still presumed their good faith
by pointing out that “the doctrine of operative fact x x x 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.” Note that the proper tribunals can make
“concrete findings of good faith in their favor” only after a full
hearing of all the parties in any given case, and such a hearing can
begin to proceed only after according all the presumptions,
particularly that of good faith, by initially requiring the
complainants, plaintiffs or accusers to first establish their complaints
or charges before the respondent authors, proponents and
implementors of the DAP.
It is equally important to stress that the ascertainment of good
faith, or the lack of it, and the determination of whether or not due
diligence and prudence were exercised, are questions of fact.49 The

want of good faith is thus better determined by tribunals other than
this Court, which is not a trier of facts.50
For sure, the Court cannot jettison the presumption of good faith
in this or in any other case. The presumption is a matter of law. It
has had a long history. Indeed, good faith has long been established
as a legal principle even in the heydays of the
_______________
48 Rollo (G.R. No. 209287), p. 1239.

49 Philippine National Bank v. Heirs of Estanislao Militar, G.R. Nos. 164801 and
165165, June 30, 2006, 494 SCRA 308, 319.
50 Id.
331
VOL. 749, FEBRUARY 3, 2015 331

Roman Empire.51 In Soriano v. Marcelo,52 citing Collantes v.

Marcelo,53 the Court emphasizes the necessity of the presumption of
good faith, thus:
Well-settled is the rule that good faith is always presumed and the
Chapter on Human Relations of the Civil Code directs every person, inter
alia, to observe good faith which springs from the fountain of good
conscience. Specifically, a public officer is presumed to have acted in good
faith in the performance of his duties. Mistakes committed by a public
officer are not actionable absent any clear showing that they were motivated
by malice or gross negligence amounting to bad faith. “Bad faith” does not
simply connote bad moral judgment or negligence. There must be some
dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of a sworn duty through some motive or intent or ill will. It
partakes of the nature of fraud. It contemplates a state of mind affirmatively
operating with furtive design or some motive of self-interest or ill will for
ulterior purposes.
The law also requires that the public officer’s action caused undue injury
to any party, including the government, or gave any private party
unwarranted benefits, advantage or preference in the discharge of his
functions. x x x
The Court has further explained in Philippine Agila Satellite, Inc.

v. Trinidad-Lichauco:54
We do not doubt the existence of the presumptions of “good faith” or

“regular performance of official duty,”
_______________
51 See Good Faith in European Contract Law, R. Zimmermann, S. Whittaker,

eds., Cambridge University Press, p. 16; 2000,
http://catdir.loc.gov/catdir/samples/cam032/99037679.pdf (visited on November 24,
2014).
52 G.R. No. 160772, July 13, 2009, 592 SCRA 394.
53 G.R. Nos. 167006-07, 14 August 2007, 530 SCRA 142.
54 G.R. No. 142362, May 3, 2006, 489 SCRA 22.
332

yet these presumptions are disputable and may be contradicted and

overcome by other evidence. Many civil actions are oriented towards
overcoming any number of these presumptions, and a cause of action can
certainly be geared towards such effect. The very purpose of trial is to allow
a party to present evidence to overcome the disputable presumptions
involved. Otherwise, if trial is deemed irrelevant or unnecessary, owing to
the perceived indisputability of the presumptions, the judicial exercise
would be relegated to a mere ascertainment of what presumptions apply in a
given case, nothing more. Consequently, the entire Rules of Court is
rendered as excess verbiage, save perhaps for the provisions laying down
the legal presumptions.

Relevantly, the authors, proponents and implementors of the
DAP, being public officers, further enjoy the presumption of
regularity in the performance of their functions. This presumption is
necessary because they are clothed with some part of the sovereignty
of the State, and because they act in the interest of the public as
required by law.55 However, the presumption may be disputed.56
At any rate, the Court has agreed during its deliberations to
extend to the proponents and implementors of the DAP the benefit
of the doctrine of operative fact. This is because they had nothing to

do at all with the adoption of the invalid acts and practices.

7.
The PAPs under the DAP remain effective
under the operative fact doctrine

As a general rule, the nullification of an unconstitutional law or
act carries with it the illegality of its effects. However,
_______________
55 Words and Phrases, Vol. 35, p. 356, citing Bender v. Cushing, 14 Ohio Dec.
65, 70.
56 Section 3(l), Rule 131, Rules of Court.
333
VOL. 749, FEBRUARY 3, 2015 333

in cases where nullification of the effects will result in inequity

and injustice, the operative fact doctrine may apply.57 In so ruling,
the Court has essentially recognized the impact on the beneficiaries
and the country as a whole if its ruling would pave the way for the
nullification of the P144.378 Billion58 worth of infrastructure
projects, social and economic services funded through the DAP.
Bearing in mind the disastrous impact of nullifying these projects by
virtue alone of the invalidation of certain acts and practices under
the DAP, the Court has upheld the efficacy of such DAP-funded
projects by applying the operative fact doctrine. For this reason, we
cannot sustain the Motion for Partial Reconsideration of the
petitioners in G.R. No. 209442.
IN VIEW OF THE FOREGOING, and SUBJECT TO THE
FOREGOING CLARIFICATIONS, the Court PARTIALLY
GRANTS the Motion for Reconsideration filed by the respondents,
and DENIES the Motion for Partial Reconsideration filed by the
petitioners in G.R. No. 209442 for lack of merit.
ACCORDINGLY, the dispositive portion of the Decision
promulgated on July 1, 2014 is hereby MODIFIED as follows:
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:
_______________
57 Id.
58 http://www.gov.ph/2014/07/24/dap-presentation-of-secretary-abad-to-the-
senate-of-the-philippines/ (November 27, 2014).
334

(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 without complying with the
statutory definition of savings contained in the General
Appropriations Acts; and
(b) The cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive.
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
noncompliance with the conditions provided in the relevant General
Appropriations Acts.
SO ORDERED.
Sereno (CJ.), Brion,** Peralta, Villarama, Jr., Perez, Mendoza,

Reyes and Perlas-Bernabe, JJ., concur.
Carpio, J., See Separate Opinion.
Velasco, Jr., J., I join the Concurring & Dissenting Opinion of
J. Del Castillo.
Leonardo-De Castro, J., No part. (Due to close relation with
one of the counsels of a party)
Del Castillo, J., See Concurring and Dissenting Opinion.
Leonen, J., See Concurring Opinion.
Jardeleza, J., No part prior action as SolGen.
_______________
* * As per CJ. Sereno, J. Brion left his vote; see his Separate Opinion (Qualified
Concurrence).
335
VOL. 749, FEBRUARY 3, 2015 335

SEPARATE OPINION

CARPIO, J.:

The Motion for Reconsideration filed by respondents must be
denied for lack of merit.

I. Statutorily-defined “savings” does not make the issues raised in
the petitions less constitutional.

In their Motion for Reconsideration, respondents contend, among
others, that “the issues [in these consolidated cases] were
mischaracterized and unnecessarily constitutionalized.” Respondents
argue that “[w]hile ‘savings’ is a constitutional term, its meaning is
entirely legislatively determined. x x x.” Respondents assert that the
question of “whether the Executive properly accumulated savings is
a matter of statutory interpretation involving the question of
administrative compliance with the parameters set by the GAA, not
by the Constitution.”
Indeed, the term “savings,” as used in Section 25(5), Article VI
of the Constitution, is defined by law, the General Appropriations
Act (GAA).
However, the definition of the term “savings” by statute does not
make the threshold issue in these petitions purely a question of
statutory interpretation. Whether respondents violated the
prohibition in Section 25(5), Article VI of the Constitution,
regarding “savings” and “augmentation,” falls squarely within the
category of a constitutional issue which in turn necessarily demands
a careful examination of the definition of these terms under the
relevant GAAs in relation to the use of these terms in the
Constitution.
Significantly, aside from the term “savings,” there are other
words found in several provisions of the Constitution which are
defined by law. The terms “contract,” “capital” and “political
dynasty,” found in the following provisions of the
336

Constitution, are defined or to be defined either by law or

jurisprudence.1
Art. III, Sec. 10

Section 10. No law impairing the obligation of contracts shall be
passed.
Article XII, Sec. 11
Section 11. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations organized under
the laws of the Philippines, at least sixty per centum of whose capital is
owned by such citizens; nor shall such franchise, certificate, or authorization
be exclusive in character or for a longer period than fifty years. Neither shall
any such franchise or right be granted except under the condition that it shall
be subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in
public utilities by the general public. The participation of foreign investors
in the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing
officers of such corporation or association must be citizens of the
Philippines.
_______________
1 Other terms in the Constitution that are defined or to be defined by statute or by

jurisprudence:
1. social justice (Article II, Sec. 10 and Art. XIII)
2. due process and equal protection (Art. III, Sec. 1)
3. taking of private property (Article III, Sec. 9)
4. writ of habeas corpus (Article III, Sec. 15)
5. ex post facto law and bill of attainder (Article III, Sec. 22)
6. naturalized citizen (Article IV, Sec. 1)
7. martial law (Article VII, Sec. 18)
8. reprieve, commutation and pardon (Article VII, Sec. 19)
9. engaged in the practice of law (Article IX, Sec. 1)
10. academic freedom (Article XIV, Sec. 5[2])
337
VOL. 749, FEBRUARY 3, 2015 337

Article II, Sec. 26

Section 26. The State shall guarantee equal access to opportunities for
public service and prohibit political dynasties as may be defined by law.

While these terms in the Constitution are statutorily defined, a
case involving their usage does not automatically reduce the case
into one of mere statutory interpretation. On the contrary, it
highlights the dynamic process of scrutinizing the statutory
definition of certain terms and determining whether such definition
conforms to the intent and language of the Constitution.

II. The definition of the term “savings” has been consistent. Any
redefinition of the term must not violate the Constitution.

Prior to 2003, the term “savings” has been consistently defined in
the GAAs as “portions or balances of any programmed
appropriation x x x free of any obligation or encumbrance still
available after the completion or final discontinuance or
abandonment of the work, activity or purpose for which the
appropriation is authorized, or arising from unpaid compensation
and related costs pertaining to vacant positions and leaves of
absence without pay.”
Beginning 2003, a third source of savings was added. Thus,
“savings” has been defined in the GAAs as “portions or balances of
any programmed appropriation x x x 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 collective negotiation agreements which resulted
in improved systems and efficiencies and thus enabled an agency to
meet and de-
338

liver the required or planned targets, programs and services x x x

at a lesser cost.”
Assuming redefining the term “savings” is deemed necessary by
Congress, such redefinition must be consistent with the Constitution.
For example, “savings” cannot be declared at anytime, like on the
first day of the fiscal year, since it will negate or render useless the
power of Congress to appropriate. “Savings” cannot also be declared
out of future Maintenance and Other Operating Expenses (MOOE)
since such declaration will deprive a government agency of
operating funds during the rest of the fiscal year, effectively
abolishing the agency or paralyzing its operations. Any declaration
of “savings” must be reasonable, that is, there must be
appropriations that are no longer needed or can no longer be used for
the purpose for which the appropriations were made by Congress.

III. Respondents’ consistent argument of mootness defeats their
newly-raised contention of adverse effects as a result of the decision
in this case.

In their Motion for Reconsideration, respondents allege that the
DAP was a response to a fiscal emergency2 and DAP had already
become operationally dead.3
During the Oral Arguments, respondents asserted that the present
petitions be dismissed on the ground of mootness. Respondents
maintained that the DAP has become functus officio.
(1) Presentation of Secretary Abad
In conclusion, Your Honors, may I inform the Court that because the
DAP has already fully served its purpose, the Administration’s economic
managers have rec-
_______________
2 Motion for Reconsideration, p. 9.

3 Id., at p. 11.
339
VOL. 749, FEBRUARY 3, 2015 339

ommended its termination to the President. Thank you and good

afternoon.4

(2) Presentation of the Solicitor General
Your Honors, what we have shown you is how the DAP was used as a
mechanism for building the DREAM and other projects. This constitutional
exercise, repeated 115 times, is the story of the DAP. As Secretary Abad
showed you, the circumstances that justified the creation of DAP no
longer obtained. The systematic issues that slowed down public
spending have been resolved, and line agencies now have normal levels
of budget utilization. This is indicated by the diminishing use of DAP,
which lapsed into complete disuse in the second half of 2013, and thus
became legally functus officio. The President no longer has any use for
DAP in 2014. This is a compelling fact and development that we
respectfully submit undermines the viability of the present petitions and puts
in issue the necessity of deciding these cases in the first place. The same
constitutional authority used by the President to pump-rise the economy in
the first half of his Administration has not transitioned to providing relief
and rehabilitation in areas of our country struck by destructive calamities.
This only emphasized our point that generic constitutional tools can take on
different purposes depending on the exigencies of the moment.
DAP as a program, no longer exists, thereby mooting these present
cases brought to challenge its constitutionality. Any constitutional
challenge should no longer be at the level of the program, which is now
extinct, but at the level of its prior applications or the specific
disbursements under the now defunct policy.5 x x x. (Emphasis supplied)
_______________
4 TSN, 28 January 2014, p. 14.

5 Id., at p. 23.
340

(3) Justice Leonen’s questions
JUSTICE LEONEN:
Ok, you are now saying... Alright, I heard it twice: Once, by the DBM
Secretary and second, by your representations that DAP is no longer there.
SOLICITOR GENERAL JARDELEZA:
That’s right.
JUSTICE LEONEN:
Did I hear you correctly?

That’s correct, Your Honor.
JUSTICE LEONEN:
Is there an amendatory.... is there a document, an officially released
document that would clearly say that there is no longer DAP?
I do not believe so, Your Honor, but as the Secretary has said the
economic managers have, in fact, already recommended to the President
that there is no need for DAP.
JUSTICE LEONEN:
Is it because the case has been filed, or because of another reason?
No, Your Honor, because the DAP 541 has become functus officio.
JUSTICE LEONEN:
So it was not applicable in fiscal year 2013, there was no DAP in 2013?
There was still some diminishing DAP application up to the middle of
2013 but none in the second half, Your Honor.
JUSTICE LEONEN:
Again, can you enlighten us what is “diminishing” means, what project?
341
VOL. 749, FEBRUARY 3, 2015 341


For 2013, the DAP application was only.... in the first half of 2013, it was
only 16.03 Billion, Your Honor.
JUSTICE LEONEN:
Still a large amount.
Still a large amount but if we have given the total applications approved
was a Hundred and Forty-Nine Million, Your Honor.
JUSTICE LEONEN:
Okay. The good Secretary mentioned the Disbursement Acceleration
Program is more that just savings and more that just unprogrammed funds
containing the GAA that it was a package of reforms meant to accelerate the
spending of government so as to expand the economy by saying that the
DAP is no longer there, do you mean the entire thing or only the portion that
mean savings and the unprogrammed funds?
By that we mean, Circular 51, Your Honor.

JUSTICE LEONEN:
Circular 541, therefore, is no longer existing.
Yes, Your Honor.6
(4) Justice Abad’s questions
JUSTICE ABAD:
Yes. So, can we not presume from this, that this government know its
departments and agencies whether it has capability to spend so much money
before proposing it to Congress and that in five months you are going to say,
“I just discovered they cannot do it and I’m going to abandon some of these
projects and use the money for other things.” Is
_______________
6 Id., at pp. 81-83.
342

that.... that seems logical for a government that proposes budget to be

spent for a specific purpose and then within five months abandon them. How
can you explain that?
Again, my explanation. Your Honor, is that logic and our wish may not
be reality. The reality was: on 2010 the administration comes in, they have
managers, the orders given, use it or lose it; there is slippage, there is delay.
By the middle of 2013, they have gotten their act together, they are now
spending to the tune, to the clip because the president wants them to do.
Therefore, there is no more DAP.7
xxxx
JUSTICE ABAD:
It worked for you?
It worked, Your Honor.
JUSTICE ABAD:
But why are you abandoning it already when....
Because it worked, Your Honor.
JUSTICE ABAD:
...in the future such problems as calamities, etc., can take place, if it’s not
an admission that something is wrong with it?
It has stopped because it worked, Your Honor.8

Likewise, in their Memorandum, respondents averred that “[t]he
termination of the DAP has rendered these cases moot, leaving any
question concerning the constitutionality of its prior applications a
matter for lower courts to decide.” Respondents alleged:
_______________
7 Id., at p. 103.
8 Id., at p. 105.
343
VOL. 749, FEBRUARY 3, 2015 343

1. DAP, as a program, no longer exists.

82. As respondents manifested before this Honorable Court during the
second hearing, the DAP no longer exists. The President’s economic
advisers have reported to him that the systemic issues that had slowed down
public spending have been resolved, and line agencies now had normal
levels of budget utilization. This is indicated by the diminishing use of DAP,
which downward shift continued in 2012 and 2013, and its total disuse by
the last quarter of 2013. Thus, even before the various present petitions were
filed, DAP had already become operationally dead. Contrary to what some
have intimated, DAP was not stopped or withdrawn because there was
“something wrong with it” — rather, it became functus officio because it had
already worked. Petitioners are challenging the ghost of a program.
83. The President no longer has any use for DAP in 2014 and its total
disuse means that [] there is no longer an ongoing program that the
Honorable Court can enjoin. This is a compelling fact that undermines the
viability of the present cases, and puts in issue the necessity of deciding
these cases in the first place. Moreover, the same constitutional authority
used by the President to pump-prime the economy in the first half of his
administration has now transitioned to providing relief and rehabilitation to
areas of our country struck by destructive calamities. This only emphasizes
respondents’ point that generic constitutional tools can take on different
purposes depending on the exigencies of the moment.9

Clearly, respondents’ argument of mootness on the ground that
the DAP had served its purpose negates the government’s fears of
the “chilling effect” of the Decision to the economy and the rest of
the country. If the DAP had already achieved its goal of stimulating
the economy, as respondents repeatedly and consistently argued
before the Court, then no adverse
_______________
9 Memorandum, p. 30.
344

economic effects could possibly result in the declaration of

unconstitutionality of the DAP and the practices undertaken under
the DAP.
Hence, the grim scenario of prolonging assistance to victims in
case of calamities due to this Court’s decision has no basis precisely
because to repeat, according to respondents, the DAP had already
served its purpose. Significantly, the President has an almost
unlimited resources that he can tap and juggle for reconstruction and
rehabilitation of affected areas in cases of emergencies and
calamities. For these unforeseen tragic natural events, the President
can certainly utilize the Calamity Fund or the Contingent Fund in
the GAA, as well as his Discretionary Fund and Presidential Social
Fund.
In the 2011 GAA, the Calamity Fund amounted to
P5,000,000,000 while the Contingent Fund amounted to
P1,000,000,000. In the 2012 GAA, the Calamity Fund amounted to
P1,000,000,000. For 2013, the Calamity Fund amounted to
P1,000,000,000. For 2014, the National Disaster Risk Reduction and
Management Fund amounted to P13,000,000,000 while the
Contingent Fund amounted to P1,000,000,000. In addition, the 2014
GAA provided for Rehabilitation and Reconstruction Program (for
rehabilitation, repair and reconstruction works and activities of areas
affected by disasters and calamities, both natural and man-made
including the areas devastated by typhoons “Yolanda,” “Santi,”
“Odette,” “Pablo,” “Sendong,” “Vinta” and “Labuyo,” the 7.2

magnitude earthquake in Bohol and Cebu and the siege and unrest in
Zamboanga City) amounting to P20,000,000,000.
Moreover, the President has more than enough time to observe
and comply with the law and request for a supplemental budget from
Congress. In the PDAF cases, I pointed out:
345
VOL. 749, FEBRUARY 3, 2015 345

x x x. When the Gulf Coast of the United States was severely damaged
by Hurricane Katrina on 29 August 2005, the U.S. President submitted to
the U.S. Congress a request for an emergency supplemental budget on 1
September 2005. The Senate passed the request on 1 September 2005 while
the House approved the bill on 2 September 2005, and the U.S. President
signed it into law on the same day. It took only two days for the emergency
supplemental appropriations to be approved and passed into law. There is
nothing that prevents President Benigno S. Aquino III from submitting an
emergency supplemental appropriation bill that could be approved on the
same day by the Congress of the Philippines. x x x.
IV. The earmarking of judiciary savings for the construction of

the Manila Hall of Justice is not a cross-border transfer of funds.

In their Motion for Reconsideration, respondents point out that
this Court itself committed a cross-border transfer of funds, citing
the Court’s 17 July 2012 Resolution that approved the earmarking of
P1,865,000,000 for the construction of the Manila Hall of Justice.
Respondents allege that the construction of the Manila Hall of
Justice was an item in the appropriations for Department of Justice
in the 2012 GAA. Respondents assumed, obviously incorrectly, that
this Court transferred the amount of P1,865,000,000 to augment the
items appropriated to the DOJ for the construction of the Manila
Hall of Justice.
Pursuant to its “fiscal automony”10 under the Constitution, the
Court on 17 July 2012 adopted a Resolution setting aside and
earmarking from its savings P1,865,000,000 for the construction
costs of the Manila Hall of Justice. The amount was
_______________
10 SECTION 3. The Judiciary shall enjoy fiscal autonomy. Appropriations for
the Judiciary may not be reduced by the legislature below the amount appropriated for
the previous year and, after approval, shall be automatically and regularly released.
346

earmarked for a particular purpose, specifically the construction

of the Manila Hall of Justice. However, contrary to respondents’
allegation, the amount for this purpose was never transferred to the
Department of Justice or to any agency under the Executive branch.
In fact, the Court kept the entire amount in its own account because
it intends to construct the Manila Hall of Justice by itself. There is
nothing in the language of the 17 July 2012 Resolution transferring
the amount to the DOJ.
Notably, under the 2013 GAA, the
Construction/Repair/Rehabilitation of Halls of Justice was already
placed under the budget of the Judiciary. Under the 2014 GAA, the
provision on Capital Outlays (Buildings and Other Structures)
remains under the Judiciary (Annex A of the 2014 GAA). There is
no provision in the 2013 and 2014 GAAs for the construction of any
Hall of Justice under the DOJ.
The construction and maintenance of the Halls of Justice are
essentially among the responsibilities of the Judiciary. As such, they
should necessarily be included in the annual appropriations for the
Judiciary. However, before 2013, Congress placed the construction
and maintenance of the Halls of Justice under the DOJ. The
inclusion of such item in the DOJ budget clearly creates an anomaly
where the Judiciary will have to request the DOJ, an Executive
department, to construct a Hall of Justice for the Judiciary. Not only
does this undermine the independence of the Judiciary, it also
violates ultimately the constitutional separation of powers because
one branch is made to beg for the appropriations of another branch
to be used in the operations of the former.

V. Various other local projects (VOLP) is not an item in the GAA.

As I stated in my Separate Concurring Opinion, “[a]ttached to
DBM Secretary Abad’s Memorandum for the President, dated 12
October 2011, is a Project List for FY 2011 DAP. The last item on
the list, item no. 22, is for PDAF augmentation in
347
VOL. 749, FEBRUARY 3, 2015 347

the amount of P6.5 billion, also listed as “various other local

projects.”11
“Savings can augment any existing item in the GAA, provided
such item is in the “respective appropriations” of the same branch or
constitutional body. As defined in Section 60, Section 54, and
Section 53 of the General Provisions of the 2011, 2012 and 2013
GAAs, respectively, “augmentation implies the existence x x x of a
program, activity, or project with an appropriation, which upon
implementation or subsequent evaluation of needed resources, is
determined to be deficient. In no case shall a nonexistent program,
activity, or project, be funded by augmentation from savings x x
x.”
It must be noted that the item “various other local projects” in
the DBM’s Memoradum to the President is not an existing item in
the 2011, 2012 and 2013 GAAs. In respondents’ Seventh Evidence
Packet, the term “other various local projects” refers not to a specific
item in the GAAs since no such term or item appears in the relevant
GAAs. Rather, such term refers to various soft and hard projects to
be implemented by various government offices or local government
units. Therefore, to augment “various other local projects,” a
nonexisting item in the GAA, violates the Constitution which
requires the existence of an item in the general appropriations law.
Likewise, it defies the express provision of the GAA which states
that “[i]n no case shall a nonexistent program, activity, or project, be
funded by augmentation from savings
x x x.”

VI. Release of the Unprogrammed Fund.

One of the sources of the DAP is the Unprogrammed Fund under
the GAA. The 2011, 2012, and 2013 GAAs have a common
condition on the Release of the [Unprogrammed] Fund:
_______________
11 Rollo (G.R. No. 209287), p. 536.
348

that the “amounts authorized herein shall be released only

when the revenue collections exceed the original revenue targets
submitted by the President of the Philippines to Congress
pursuant to Section 22, Article VII of the Constitution x x x.”
The condition in these provisions is clear and thus needs no
interpretation, but only application. In other words, this express
condition, that actual revenue collections must exceed the original
revenue targets for the release of the Unprogrammed Fund, must be
strictly observed. It is not for this Court to interpret or lift this
condition. To do so is tantamount to repealing these provisions in the
GAA and giving the President unbridled discretion in the
disbursement of the Unprogrammed Fund.
The disbursement of the Unprogrammed Fund is determined on a
quarterly basis. The revenue targets are set by the Development
Budget Coordination Committee (DBCC) for each quarter of a
specific fiscal year. The DBCC bases its quarterly fiscal targets on
historical cumulative revenue collections. For instance, in FY 2013,
the quarterly fiscal targets are as follows:
2013 QUARTERLY FISCAL PROGRAM12

Considering that revenue targets are determined quarterly,
revenue collections are ascertained on a quarterly basis as well.
Therefore, if the government determines that revenue collections for
a certain quarter exceed the revenue target for
_______________
12 http://www.dbm.gov.ph/wp-content/uploads/DBCC_MATTERS/
Fiscal_Program/FiscalProgramOfNGFy_2013.pdf (visited on 20 January 2015).
349
VOL. 749, FEBRUARY 3, 2015 349

the same quarter, the government can lawfully release the appro-
priations under the Unprogrammed Fund. In other words, the
government need not wait for the end of the fiscal year to release
and spend such funds if at the end of each quarter, it has already
determined an excess in revenue collections.
There are two kinds of funds under the GAA — the programmed
fund and the unprogrammed fund. Under the programmed fund,
there is a definite amount of spending authorized in the GAA,
regardless of whether the government collects the full amount of its
revenue targets for the fiscal year. Any deficit can be funded from
borrowings. Such deficit spending from the programmed fund is
acceptable and is carefully calculated not to trigger excessive
inflation. On the other hand, under the unprogrammed fund, the
government can only spend what it collects; otherwise, it may
trigger excessive inflation. That is why the GAA prohibits spending
from the unprogrammed fund unless the corresponding amounts are
actually collected. To allow the disbursement of the unprogrammed
fund without complying with the express condition imposed under
the GAA will send a negative signal to businessmen and creditors
because the government will be spending beyond its means — in
effect borrowing or printing money. This will adversely affect
investments and interest rates. Compliance or noncompliance with
the express condition reflects the government’s fiscal discipline or
lack of it.

VII. The applicability of the doctrine of operative fact.

I reiterate my position that the operative fact doctrine never
validates or constitutionalizes an unconstitutional law.13
An unconstitutional act confers no rights, imposes no duties, and
affords no protection.14 An unconstitutional act is in-
_______________
13 League of Cities of the Philippines v. Commission on Elections, G.R. Nos.

176951, et al., 24 August 2010, 628 SCRA 819.
14 Chavez v. Judicial and Bar Council, G.R. No. 202242, 16 April 2013, 696
SCRA 496, 516.
350

operative as if it has not been passed at all.15 The exception to

this rule is the doctrine of operative fact. Under this doctrine, the law
or administrative issuance is recognized as unconstitutional but the
effects of the unconstitutional law or administrative issuance, prior
to its declaration of nullity, may be left undisturbed as a matter of
equity and fair play.16
As a rule of equity, the doctrine of operative fact can be invoked
only by those who relied in good faith on the law or the
administrative issuance, prior to its declaration of nullity. Those who
acted in bad faith or with gross negligence cannot invoke the
doctrine. Likewise, those directly responsible for an illegal or
unconstitutional act cannot invoke the doctrine. He who comes to
equity must come with clean hands,17 and he who seeks equity must
do equity.18 Only those who merely relied in good faith on the
illegal or unconstitutional act, without any direct participation
in the commission of the illegal or unconstitutional act, can
invoke the doctrine.
To repeat, the power to realign savings is vested in the President
with respect to the executive branch, the Speaker for the House of
Representatives, the Senate President for the Senate, the Chief
Justice for the Judiciary, and the Heads of the Constitutional
Commissions.
In these cases, it was the President who approved NBC 541, and
it was the DBM Secretary who issued and implemented it. NBC 541
directed the “withdrawal of unobligated allotments of agencies with
low level of obligations as of June
_______________
15 Id.
16 Supra note 13 at p. 832; Commissioner of Internal Revenue v. San Roque
Power Corporation, G.R. No. 187485, 8 October 2013, 707 SCRA 66.
17 Chemplex (Phils.), Inc. v. Pamatian, 156 Phil. 408; 57 SCRA 408 (1974);
Alvendia v. Intermediate Appellate Court, 260 Phil. 265; 181 SCRA 252 (1990).
18 Arcenas v. Cinco, 165 Phil. 741; 74 SCRA 118 (1976).
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VOL. 749, FEBRUARY 3, 2015 351

30, 2012” to augment or fund “priority and/or fast moving

programs/projects of the national government.” As discussed,
unobligated allotments are not savings, which term has a specific
and technical definition in the GAAs. Further, paragraph 5.7.3 of
NBC 541 authorizing the augmentation of “projects not considered
in the 2012 budget” is unconstitutional because under Section 25(5),
Article VI of the Constitution, what is authorized is “to augment any
item in the general appropriations law for their respective offices.”
Since the President and the DBM Secretary approved and issued
NBC 541, they are considered the authors of the unconstitutional
act. As a consequence, neither the President nor the DBM Secretary
can invoke the equitable doctrine of operative fact although they
may raise other defenses. As authors of the unconstitutional act, they
have to answer for such act.
The proponents and implementors of the projects under the DAP
are presumed to have relied in good faith that the source, or
realignment, of the funds is valid. To illustrate, a governor, who
proposes to the President or DBM to build a school house and
receives funds for such project, simply accepts and spends the funds,
and would have no idea if the funds were validly realigned or not by
the President. Another example is a district engineer, who receives
instructions to construct a bridge and receives funds for such project.
The engineer is solely concerned with the implementation of the
project, and thus would also have no idea whether the funds were
validly realigned or not by the President. Clearly, the proponents and
implementors, who had no direct participation in the commission of
the unconstitutional act and merely relied in good faith that such
funds were validly appropriated or realigned for the projects, cannot
be held liable for the unconstitutional act, unless they themselves
committed an illegal act, like pocketing the funds.

352

ACCORDINGLY, I vote to DENY the respondents’ Motion for

Reconsideration.

SEPARATE OPINION
(Qualified Concurrence)

BRION, J.:

I write this SEPARATE OPINION (Qualified Concurrence) to
express my qualified agreement with the ponencia’s DENIAL WITH
FINALITY of the parties’ respective motions for reconsideration of
the Court’s Decision in these consolidated cases, promulgated on
July 1, 2014.
I qualify my concurrence as I do not completely agree with the
ponencia’s views on AUGMENTATION; our commonly held views
on this topic should take effect in the present case and in all similar
future cases. While I share the ponencia’s views on the
OPERATIVE FACT DOCTRINE, I believe that our ruling is direct,
in point and is necessary to the full resolution of the present case. It
is not at all an obiter dictum.
Last but not the least, I also offer my thoughts on the Court’s
exercise of judicial review in these cases, and its impact on the
public funds and the participants involved.

The Decision under Consideration.

We declared in our Decision that the Executive’s Disbursement
Acceleration Program (DAP) is unconstitutional for violating the
principle of separation of powers, as well as the prohibition against
the transfers and augmentation of funds under Article VI, Section
25, paragraph 51 of the 1987 Constitution.
_______________
1 No law shall be passed authorizing any transfer of appropriations; however, the

President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice
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VOL. 749, FEBRUARY 3, 2015 353


This cited constitutional provision states that no transfer of
appropriations from one item to another may be made except within
very narrow exceptions. The DAP, described by its proponents as a
“mechanism to support high-impact and priority programs and
projects using savings and unprogrammed funds,”2 facilitated the
transfer of appropriations without complying with the requirements

to allow the exceptional transfer of appropriation that the
Constitution imposes:
(1) The General Appropriation Acts (GAAs) of 2011 and 2012
lacked the appropriate provisions authorizing the transfer of funds.
Contrary to the constitutional provision limiting the transfer of
savings within a single branch of government, the GAAs authorized
the “cross-border” transfer of savings from appropriations in one
branch of government to other branches;
(2) Some of the funds used to finance DAP projects were not
sourced from savings. Savings could be generated only when the
purpose of the appropriation has been fulfilled, or when the need for
the appropriation no longer exists. Under these standards, the
unobligated allotments and unreleased appropriations, which the
Executive used to fund the DAP, were not savings.
(3) Some of the projects funded through the DAP do not have
items in the GAA; hence, the Executive — in violation of the
Constitution — usurped the Legis-
_______________
of the Supreme Court, and the heads of Constitutional Commissions may, by law,
be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.
2 Department of Budget and Management, The Disbursement Acceleration
Program: What You Need to Know About DAP, http://www.gov.ph/featured/dap/.
354

lative’s power of the purse by effectively allocating and spending

funds on its own authority.
(4) Funds that the DAP sourced from the Executive had been
used to augment items in other branches of the government, thus
violating the rule against the transfer of funds from one branch of
government to another.
(5) The DAP unlawfully released and allowed the use of
unprogrammed funds,3 without complying with the prior requisite
that the original revenue targets must have first been exceeded.
The Court’s ruling also explained and clarified the application of
the Doctrine of Operative Fact to the case. We pointed out the
general rule (the void ab initio doctrine) that “an unconstitutional

act is not a law and in legal contemplation, as inoperative as though
it had never been passed.”4
Without changing this rule of invalidity (i.e., without rendering
the unconstitutional act valid), the effects of actions made pursuant
to the unconstitutional act or statute prior to the declaration of its
unconstitutionality, may be recognized if the strict application of
the general rule would result
_______________
3 Unprogrammed Funds are standby appropriations authorized by Congress in the

annual general appropriations act. Department of Budget and Management, A Brief on
the Special Purpose Funds in the National Budget (Oct. 5, 2013), available at
http://www.dbm.
gov.ph/wp-content/uploads/DAP/Note%20on%20the%20Special%20
Purpose%20Funds%20_Released%20-%20Oct%202013.pdf. Note, however, that this
definition had been abbreviated to accommodate special provisions that may be
required by Congress prior to the release of unprogrammed funds.
4 The term ab initio doctrine was first used in the case Norton v. Shelby Conty,
118 US 425, 6 S. Ct. 1121, 30 L. Ed. 178 (1886).
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VOL. 749, FEBRUARY 3, 2015 355

in inequity and injustice, and if the prior reliance on the

unconstitutional statute had been made in good faith.5
In the context of the case before us and as explained in my
Separate Opinion supporting J. Lucas Bersamin’s ponencia, the
Doctrine of Operative Fact is a rule established in favor of those
who relied in good faith on an unconstitutional law prior to the
declaration of its invalidity. It is not a doctrine for those who did not
rely on the law because they were the authors, proponents and
implementers of the unconstitutional act.

I. My Concurrence

I agree with the majority that the points raised in the parties’
motions for reconsideration no longer need to be further discussed as
they had been raised and passed upon in the Court’s original ruling.
If I add my concurrence at all, the addition is only to clarify and
explain my vote in my own terms, hoping thereby to explain as well

the full import of the majority’s ruling.
First, the Court did not “unnecessarily constitutionalize” the
issues before it. As the majority concluded, the final determination
of whether the provisions of the GAA (including its definition of
“savings”) adhere to the terms of the Constitution, is first and
foremost a judicial function.
The issues raised and resolved, at their core, involve the question
of whether the government gravely abused its discretion in its
expenditure of funds. To answer this question through the exercise
of the Court’s power of judicial review, the Court had to look at both
the relevant laws and the constitutional provisions governing the
budget expenditure process, and to use them as standards in
considering the acts
_______________
5 See the ponencia in the main decision in Araullo v. Aquino III, G.R. No.
209287, July 1, 2014, 728 SCRA 1, 175-183, Brion, J.’s Separate Concurring
Opinion, pp. 297-312.
356

alleged to have been committed with grave abuse of discretion.

The use of the Constitution in fact is rendered necessary by its
provisions detailing how the national funds are to be safeguarded in
the course of their allocation and expenditure.6 These details are
there for one primary and overriding purpose — to safeguard the
funds and their integrity.7
Thus, we could not have fully fulfilled our judicial review task
had we limited ourselves solely to the statutory interpretation of the
Administrative Code of 1987. Incidentally, the petitioners
themselves cited the same constitutional rules we cited and/or
passed upon, to support and defend their positions; the parties fully
argued the merits and demerits of their respective causes based on
these cited constitutional rules. Thus, it appears too late in the day to
argue that only the Administrative Code of 1987 should have been
used as standard of review.
Second, The legislatively defined term “savings,” although
arrived at through the exercise of the congressional power of the
purse, cannot and should not be understood as an overriding,

exclusive and conclusive standard in determining the propriety of
the use of public funds; the congressional definition cannot go
against or undermine the standards set by the Constitution on the use
of public funds. In other words, in defining “savings,” the
Legislature cannot defy nor subvert the terms laid down by the
Constitution.
Third, past executive practice does not and cannot legalize an
otherwise unconstitutional act. While executive interpreta-
_______________
6 See, for instance, Sections 24, 25, 27(2), 29, Article VI of the 1987
Constitution.
7 The Constitution, in specifying the process for and providing checks and
balances in the formulation, enactment, implementation and audit of the national
budget seeks to ensure that public funds shall be spent only for a public purpose,
determined by Congress through a law.
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VOL. 749, FEBRUARY 3, 2015 357

tion in the course of applying the law may have persuasive effect
in considering the constitutionality of the law the Executive
implements, executive interpretation is not the applicable nor the
conclusive legal yardstick to test the law’s validity.8 The assailed
law, first and foremost, should be consistent
_______________
8 The interpretation of an administrative government agency x x x which is

tasked to implement a statute, is accorded great respect and ordinarily controls the
construction of the courts. A long line of cases establish the basic rule that the courts
will not interfere in matters which are addressed to the sound discretion of
government agencies entrusted with the regulation of activities coming under the
special technical knowledge and training of such agencies. x x x
“The rationale for this rule relates not only to the emergence of the multifarious
needs of a modern or modernizing society and the establishment of diverse
administrative agencies for addressing and satisfying those needs; it also relates to the
accumulation of experience and growth of specialized capabilities by the
administrative agency charged with implementing a particular statute. In Asturias
Sugar Central, Inc. v. Commissioner of Customs, the Court stressed that executive
officials are presumed to have familiarized themselves with all the considerations
pertinent to the meaning and purpose of the law, and to have formed an independent,
conscientious and competent expert opinion thereon. The courts give much weight to
the government agency or officials charged with the implementation of the law, their
competence, expertness, experience and informed judgment, and the fact that they
frequently are drafters of the law they interpret.”
As a general rule, contemporaneous construction is resorted to for certainty and
predictability in the laws, especially those involving specific terms having technical
meanings.
However, courts will not hesitate to set aside such executive interpretation when
it is clearly erroneous, or when there is no ambiguity in the rule, or when the
language or words used are clear and plain or readily understandable to any
ordinary reader.
Stated differently, when an administrative agency renders an opinion or issues a
statement of policy, it merely interprets a preex-
358

with the terms of the Constitution, as explained and interpreted

by the Judiciary through its rulings.9
Precisely, a third branch of government — the Judiciary — has
been made a coequal component in the governmental structure, to
pass upon the constitutionality and legality of the acts of the
Executive and the Legislative branches when these acts are
questioned.10 In exercising this function, the Judici-
_______________
isting law and the administrative interpretation is at best advisory for it is the
courts that finally determine what the law means. Thus, an action by an
administrative agency may be set aside by the judicial department if there is an
error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly
conflicting with the letter and spirit of the law. Energy Regulation Board v. Court of
Appeals, 409 Phil. 36, 47-48; 357 SCRA 30, 40-41 (2001). Citation omitted.
9 Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws of the Constitution. De Agbayani v. Philippine
National Bank, 148 Phil. 443, 447; 38 SCRA 429, 434 (1971).
x x x administrative interpretation of the law is at best merely advisory, for it is the
courts that finally determine what the law means. It cannot be otherwise as the
Constitution limits the authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed. No lesser administrative
executive office or agency then can, contrary to the express language of the
Constitution, assert for itself a more extensive prerogative. Bautista v. Juinio, 212
Phil. 307, 321; 127 SCRA 329, 343 (1984), citing Teoxon v. Member of the Board of
Administrators, No. L-25619, June 30, 1970, 30 SCRA 585, United States v. Barrias,
11 Phil. 327 (1908); United States v. Tupasi Molina, 29 Phil. 119 (1914); People v.
Santos, 63 Phil. 300 (1936); Chinese Flour Importers Association v. Price
Stabilization Board, 89 Phil. 439 (1951), Victorias Milling Co. v. Social Security
Commission, 114 Phil. 555; 4 SCRA 627 (1962). Cf. People v. Maceren, No. L-
32166, October 18, 1977, 79 SCRA 450 (per Aquino, J.).
10 The judiciary is the final arbiter on the question of whether or not a branch of
government or any of its officials has acted without jurisdiction or in excess of
jurisdiction or so capriciously as to
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VOL. 749, FEBRUARY 3, 2015 359

ary is always guided by the rule that the Constitution is the

supreme law and all acts of government, including those of the
Court, are subject to its terms.11 The Executive, to be sure, has no
basis to claim exception to this norm, based solely on the practice
that it and the Legislative Branch of government have established in
the past.
Fourth, Section 39,12 Chapter 5, Book VI of the Administrative
Code, in allowing the President to transfer funds from
_______________
constitute an abuse of discretion amounting to excess of jurisdiction. This is not

only a judicial power but a duty to pass judgment on matters of this nature. Tañada v.
Angara, 338 Phil. 546, 574-575; 272 SCRA 18, 48 (1997) former Chief Justice
Roberto Concepcion’s discussion during the Constitutional Commission’s
deliberations on judicial power.
11 The Constitution is a definition of the powers of government. Who is to
determine the nature, scope and extent of such powers? The Constitution itself has
provided for the instrumentality of the judiciary as the rational way. And when the
judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an
act of the legislature, but only asserts the solemn and sacred obligation assigned to it
by the Constitution to determine conflicting claims of authority under the Constitution
and to establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. Angara v. Electoral Commission, 63 Phil.

139, 158 (1936).
12 Section 39. Authority to Use Savings in Appropriations to Cover Deficits.—
Except as otherwise provided in the General Appropriations Act, any savings in the
regular appropriations authorized in the General Appropriations Act for programs and
projects of any department, office or agency, may, with the approval of the President,
be used to cover a deficit in any other item of the regular appropriations: provided,
that the creation of new positions or increase of salaries shall not be allowed to be
funded from budgetary savings except when specifically authorized by law: provided,
further, that whenever authorized positions are transferred from one program or
project to another within the same department, office or agency, the corresponding
amounts appropriated for personal services are also
360

and to any regular appropriation — regardless of the branch of

government to which the fund is allotted — violates Article VI,
Section 25, paragraph 5, of the 1987 Constitution.

Fifth, The Court discussed the Operative Fact Doctrine in its
ruling to clarify the effects of the declaration of the
unconstitutionality of the DAP, given the rule that an
unconstitutional act or statute is void from the beginning.
The Court’s discussion clarifies the effects on the public funds
already disbursed and spent, on the projects that can no longer be
undone, and on the officials who disbursed and spent the
unconstitutional DAP funds before the declaration of the DAP’s
unconstitutionality. This ruling is not an obiter dictum as it directly
bears on the constitutional issues raised.
I shall discuss the Operative Fact Doctrine in greater detail, in
relation with the points raised in the parties’ motions, to remove all
doubts and misgivings about this Doctrine and its application to the
present case.

II. The Court’s Exercise of Judicial Review
over the DAP

The respondents question the Court’s exercise of judicial review
on the DAP based on two grounds:
First, the Court cannot exercise its power of judicial review

without an actual case or controversy. The second paragraph in
Section 1, Article VIII of the 1987 Constitution did not expand the
Court’s jurisdiction, but instead added to its judicial power the
authority to determine whether grave abuse of discretion had
intervened in the course of governmental action.13
_______________
deemed transferred, without, however increasing the total outlay for personal
services of the department, office or agency concerned.
13 Respondents’ Motion for Reconsideration, pp. 38-48.
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VOL. 749, FEBRUARY 3, 2015 361

The respondents further posit that before this Court may exercise
this additional aspect of judicial power, the petitioners must first
comply with the requisites of an actual case or controversy; the
petitioners failed to comply with this requirement and to show as
well their standing to file their petitions in view of the absence of
any injury or threatened injury resulting from the enforcement of the
DAP.
Second, the issues resolving the DAP’s legality had been
unnecessarily constitutionalized. These questions should have been
examined only against the statutes involving the national budget.
Had this been done, the DBM’s interpretation of these statutes is
entitled to a heavy presumption of validity. The respondents
consequently insist that the Court’s interpretation of “savings” and
the requisites for the release of “unprogrammed funds” is contrary to
the established practices of past administrations, Congress, and even
those of the Supreme Court.
The respondents assert that their cited past practices should be
given weight in interpreting the relevant provisions of the laws
governing the national budget. The respondents cite, by way of
example, the definition of savings. The Court’s interpretation of
savings, according to the respondents, can be overturned by
subsequent legislation redefining “savings, thus proving that the
issue involves statutory, and not constitutional interpretation.”14 The
respondents similarly argue with respect to the President’s release of
the unprogrammed funds that the presidential action only involves

the interpretation of relevant GAA provisions.15
I shall address these issues in the same order they are posed
above.
_______________
14 Id., at pp. 5-8.

15 Id., at pp. 29-35.
362

A. The petitioners successfully established a prima facie case of

grave abuse of discretion sufficient to trigger the Court’s expanded
jurisdiction.

The concept of judicial power under the 1987 Constitution
recognizes the Court’s (1) traditional jurisdiction to settle actual
cases or controversies; and (2) its expanded jurisdiction to
determine whether a government agency or instrumentality
committed grave abuse of discretion in the course of its actions.
The exercise of either power involves the exercise of the Court’s
power of judicial review, i.e., the Court’s authority to strike down
acts — of the Legislative, the Executive, the constitutional bodies,
and the administrative agencies — that are contrary to the
Constitution.16
_______________
16 See the discussion of judicial supremacy in Angara v. Electoral Commission,

supra note 11, as juxtaposed with the discussion of the Court’s expanded certiorari
jurisdiction in Francisco, Jr. v. The House of Representatives, 460 Phil. 830, 882-883,
891; 415 SCRA 44, 124 (2003):
The Constitution has provided for an elaborate system of checks and balances to
secure coordination in the workings of the various departments of the government.
x x x And the judiciary in turn, with the Supreme Court as the final arbiter, effectively
checks the other departments in the exercise of its power to determine the law, and
hence to declare executive and legislative acts void if violative of the Constitution.
In the scholarly estimation of former Supreme Court Justice Florentino Feliciano,
“x x x judicial review is essential for the maintenance and enforcement of the
separation of powers and the balancing of powers among the three great departments
of government through the definition and maintenance of the boundaries of authority

and control between them.” To him, “[j]udicial review is the chief, indeed the only,
medium of participation — or instrument of intervention — of the judiciary in that
balancing operation.”
To ensure the potency of the power of judicial review to curb grave abuse of
discretion by “any branch or instrumentalities of
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VOL. 749, FEBRUARY 3, 2015 363

Judicial review under the Court’s traditional jurisdiction

requires the following justiciability requirements: (1) the existence
of an actual case or controversy calling for the exercise of judicial
power; (2) the person challenging the act must have the standing to
question the validity of the subject act or issuance; otherwise stated,
he must have a personal and substantial interest in the case such that
he has sustained, or will sustain, direct injury as a result of its
enforcement; (3) the question of constitutionality must be raised at
the earliest opportunity; and (4) the issue of constitutionality must
be the very lis mota of the case.17
In comparison, the exercise of the Court’s expanded jurisdiction
to determine whether grave abuse of discretion amounting to lack of
or excess of jurisdiction has been committed by the government, is
triggered by a prima facie showing of grave abuse of discretion in
the course of governmental action.18
A reading of Section 1, Article VIII of the 1987 Constitution,
quoted below, shows that textually, the commission of
_______________
government,” the aforequoted Section 1, Article VIII of the Constitution

engraves, for the first time into its history, into block letter law the so-called
“expanded certiorari jurisdiction” of this Court x x x.
xxxx
There is indeed a plethora of cases in which this Court exercised the power of
judicial review over congressional action. Thus, in Santiago v. Guingona, Jr., this
Court ruled that it is well within the power and jurisdiction of the Court to inquire
whether the Senate or its officials committed a violation of the Constitution or grave
abuse of discretion in the exercise of their functions and prerogatives. x x x
17 Senate of the Philippines v. Ermita, G.R. No. 169777, April 20, 2006, 488
SCRA 1, 35; and Francisco v. House of Representatives, id., at p. 842; p. 133.
18 See Justice Arturo D. Brion’s discussion on the requisites to trigger the Court’s
expanded jurisdiction in his Separate Concurring Opinion on Imbong v. Ochoa, Jr.,
G.R. No. 204819, April 8, 2014, 721 SCRA 146.
364

grave abuse of discretion by the government is the cause that

triggers the Court’s expanded judicial power and that gives rise to
the actual case or controversy that the complaining petitioners (who
had been at the receiving end of the governmental grave abuse) can
invoke in filing their petitions. In other words, the commission of
grave abuse takes the place of the actual case or controversy
requirement under the Court’s traditional judicial power.
Section 1. The judicial power shall be vested in one Supreme Court

and in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.

A textual examination of the definition of judicial power shows
that two distinct and separate powers are involved over distinct and
separate matters.
Under the Court’s traditional jurisdiction, what are involved are
controversies brought about by rights, whether public or private,
which are demandable and enforceable against another. Thus, the
“standing” that must be shown is based on the possession of rights
that are demandable and enforceable or which have been violated,
giving rise to damage or injury and to actual disputes or
controversies between or among the contending parties.
In comparison, the expanded jurisdiction — while running
along the same lines — involves a dispute of a totally different
nature. It does not address the rights that a private party may
demand of another party, whether public or private. It solely
addresses the relationships of parties to any branch or
instrumentality of the government, and allows direct but
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VOL. 749, FEBRUARY 3, 2015 365

limited redress against the government; the redress is not for all
causes and on all occasions, but only when a grave abuse of
discretion on the part of government is alleged19 to have been
committed, to the petitioning party’s prejudice. Thus, the scope of
this judicial power is very narrow, but its focus also gives it strength
as it is a unique remedy specifically fashioned to actualize an active
means of redress against an all-powerful government.
These distinctions alone already indicate that the two branches of
judicial power that the Constitution expressly defines should be
distinguished from, and should not be confused with, one another.
The case or controversy falling under the Court’s jurisdiction,
whether traditional or expanded, relates to disputes under the terms
the Constitution expressly requires. But because of their distinctions,
the context of the required “case or controversy” under the Court’s
twin powers differs from one another. By the Constitution’s own
definition, the controversy under the Court’s expanded jurisdiction
must relate to the rights that a party may have against the
government in the latter’s exercise of discretion affecting the
complaining party.
The immediate questions, under this view, are two-fold.
First, does the complaining party have a right to demand or
claim action or inaction from a branch or agency of government?
Second, is there grave abuse of discretion in the government’s
exercise of its powers, affecting the complaining party?
_______________
19 By virtue of the Court’s expanded certiorari jurisdiction, judicial power had
been “extended over the very powers exercised by other branches or instrumentalities
of government when grave abuse of discretion is present. In other words, the
expansion empowers the judiciary, as a matter of duty, to inquire into acts of
lawmaking by the legislature and into law implementation by the executive when
these other branches act with grave abuse of discretion.” Imbong v. Ochoa, Jr., id., at
p. 490 (Brion, J. Separate Concurring).
366
In the present consolidated cases, the petitions indisputably relate

to the budget process that has been alleged (and proven under our
assailed Decision) to be contrary to the Constitution; they likewise
necessarily relate to the legality and constitutionality of the
expenditure of public funds that government raised through taxation,
i.e., from forced exactions from people subject to the government’s
taxing jurisdiction.
As I have separately discussed in my Separate Opinion to our
Decision, the public funds involved are massive and, unfortunately,
have not been fully accounted for, even with respect only to the
portion that the present administration has administered since it
was sworn to office on June 30, 2010.20 This situation potentially
carries with it grave and serious criminal, civil and administrative
liabilities.
The petitions also alleged violations of constitutional principles
that are critical to the continued viability of the country as a
constitutional democracy, among them, the rule of law, the system of
checks and balances, and the separation of powers.
That the complaining petitioners have a right to question the
budget and expenditure processes and their implementation cannot
be doubted as they are Filipino citizens and organizations of
Filipinos who pay their taxes; who expect that public funds shall be
spent pursuant to guidelines laid down by the Constitution and the
laws; and who likewise expect that the country will be run as a
constitutional democracy by upright leaders and responsible
institutions, not by shattered institutions headed by misguided
leaders and manned by subservient followers.21
_______________

21 Compare with requisites for standing as a citizen and as a taxpayer:
The question in standing is whether a party has “alleged such a personal stake in
the outcome of the controversy as to assure that concrete adverseness which sharpens
the presentation of issues upon which the court so largely depends for illumination of
difficult consti-
367
VOL. 749, FEBRUARY 3, 2015 367

To be sure, the unimpeded access that the DAP and the illegally
diverted funds it made available to the country’s political leaders,
results not only in the opportunity for the misuse of public funds.
Such misuse and the availability of funds in the wrong hands can
destroy institutions — even this Court — against whom these funds
may be or has been used; rig even the elections and destroy the
integrity of the ballot that the nation badly needs for its continued
stability; and ultimately convert the country — under the false
façade of reform — into the caricature of a republic. These are the
injuries that the petitioners wish to avert.
From these perspectives, I really cannot see how the respondents
can claim with a straight face that there is no actual case or
controversy and that the petitioners have no standing to bring their
petitions before this Court.
Stated bluntly, the grounds for the petitions are the acts of grave
abuse of discretion alleged to have been committed by the country’s
executive and legislative leaders in handling the national budget.
This is the justiciable controversy that is before us, properly filed
under the terms of the Constitution.
_______________
tutional questions.” Kilosbayan, Incorporated v. Morato, 316 Phil. 652, 696; 246
SCRA 540, 562-563 (1995), citing Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633
(1962).
Standing as taxpayer requires that public funds are disbursed by a political
subdivision or instrumentality and in doing so, a law is violated or some irregularity is
committed, and that the petitioner is directly affected by the alleged ultra vires act.
Bugnay Construction & Development Corp. v. Laron, 257 Phil. 245, 256-257; 176
SCRA 240, 250 (1989).
A citizen acquires standing only if he can establish that he has suffered some
actual or threatened injury as a result of the allegedly illegal conduct of the
government; the injury is fairly traceable to the challenged action; and the injury is
likely to be redressed by a favorable action. Telecommunications and Broadcast
Attorneys of the Philippines, Inc. v. Commission on Elections, 352 Phil. 153, 168; 289
SCRA 337, 343 (1998).
368

As I already observed in my previous Separate Opinion in this

case:
I note that aside from newspaper clippings showing the antecedents

surrounding the DAP, the petitions are filled with quotations from the
respondents themselves, either through press releases to the general public
or as published in government websites. In fact, the petitions — quoting the
press release published in the respondents’ website — enumerated
disbursements released through the DAP; it also included admissions from
no less than Secretary Abad regarding the use of funds from the DAP to
fund projects identified by legislators on top of their regular PDAF
allocations.
Additionally, the respondents, in the course of the oral arguments,
submitted details of the programs funded by the DAP, and admitted in Court
that the funding of Congress’ e-library and certain projects in the COA
came from the DAP. They likewise stated in their submitted memorandum
that the President “made available” to the Commission on Elections
(COMELEC) the “savings” of his department upon request for fund.
All of these cumulatively and sufficiently lead to a prima facie case of
grave abuse of discretion by the Executive in the handling of public funds.
In other words, these admitted pieces of evidence, taken together, support
the petitioners’ allegations and establish sufficient basic premises for the
Court’s action on the merits. While the Court, unlike the trial courts, does
not conduct proceedings to receive evidence, it must recognize as
established the facts admitted or undisputedly represented by the parties
themselves.
First, the existence of the DAP itself, the justification for its creation, the
respondent’s legal characterization of the source of DAP funds (i.e.,
unobligated allotments and unreleased appropriations for slow moving
projects) and the various purposes for which the DAP funds would be used
(i.e., for PDAF augmentation and for
369
VOL. 749, FEBRUARY 3, 2015 369

“aiding” other branches of government and other constitutional bodies)

are clearly and indisputably shown.
Second, the respondents’ undisputed realignment of funds from one point
to another inevitably raised questions that, as discussed above, are ripe for
constitutional scrutiny. (Citations omitted)22

I see no reason to change these views and observations.

B. The framework in reviewing acts alleged to constitute grave
abuse of discretion under the Court’s expanded jurisdiction.

I next address the respondents’ arguments regarding the
impropriety of the Court’s exercise of judicial review because the
issues presented before the Court could be better resolved through
statutory interpretation, a process where the Executive’s
interpretation of the statute should be given great weight.
The present case involves the Court’s expanded jurisdiction,
involving the determination of whether grave abuse of discretion
was committed by the government, specifically, by the Executive.
Based on jurisprudence, such grave abuse must amount to lack or
excess of jurisdiction by the Executive: otherwise stated, the
assailed act must have been outside the powers granted to the
Executive by law or by the Constitution, or must have been
exercised in such a manner that he exceeded the power granted to
him.23
In examining these cases, the Court necessarily has to look at the
laws granting power to the government official or
_______________

23 See, for instance, Biraogo v. The Philippine Truth Commission of 2010, G.R.
No. 192935, December 7, 2010, 637 SCRA 78; David v. Arroyo, G.R. No. 171396,
May 3, 2006, 489 SCRA 160, and Kilosbayan v. Guingona, G.R. No. 113375, May 5,
1994, 232 SCRA 110.
370

agency involved, to determine whether they acted outside of their

lawfully-given powers.
And to determine whether the Executive gravely abused its
discretion in creating and implementing the DAP, the Court must
necessarily also look at both the laws governing the budget
expenditure process and the relevant constitutional provisions
involving the national budget. In the course of reviewing these laws,
the Court would have to compare these provisions, and in case of
discrepancy between the statutory grant of authority and the

constitutional standards governing them, rule that the latter must
prevail.
The Constitution itself directly provides guidelines and standards
that must be observed in creating, implementing, and even auditing
the national budget.24 It outlines what the government can and
cannot do. Necessarily, the laws involving the national budget would
have to comply with these standards, and any act or law that
contravenes them is unconstitutional.

a. The definition of savings

The definition of savings is an aspect of the power of the purse
that constitutionally belongs to Congress, i.e., the power to
determine the what, how, how much and why of public spending,25
and includes the determination of when
_______________
24 See Article VI, Sections 24, 25, 27(2), 29, and Article IX-D, Sections 1-4,
1987 Constitution.
25 Under the Constitution, the spending power called by James Madison as “the
power of the purse,” belongs to Congress, subject only to the veto power of the
President. The President may propose the budget, but still the final say on the matter
of appropriations is lodged in the Congress.
The power of appropriation carries with it the power to specify the project or
activity to be funded under the appropriation law. It can be as detailed and as broad as
Congress wants it to be. Philippine Constitutional Association v. Enriquez, G.R. No.
113105, August 19, 1994, 235 SCRA 506, 522.
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VOL. 749, FEBRUARY 3, 2015 371

spending may be stopped, as well as where these savings may be

transferred. This explains why we looked at the definition of savings
in the past GAAs in determining whether the DAP violated the
general prohibition against transfers and augmentation in Section
25(5), Article VI, of the 1987 Constitution.
While the power to define “savings” rightfully belongs to
Congress as an aspect of its power of the purse, it is not an unlimited
power; it is subject to the limitation that the national budget or the
GAA is a law that must necessarily comply with the constitutional

provisions governing the national budget, as well as with the
jurisprudential interpretation of these constitutional provisions.
We declared, for instance, in Sanchez v. Commission on Audit26
that before a transfer of savings under the narrow exception
provided under Section 25(5) may take place, there must be actual
savings, viz.:
Actual savings is a sine qua non to a valid transfer of funds from one
government agency to another. The word “actual” denotes that something is
real or substantial, or exists presently in fact as opposed to something which
is merely theoretical, possible, potential or hypothetical.27

This jurisprudential interpretation of “actual savings” may not be
violated by Congress in defining what constitutes “savings” in its
yearly GAA; neither may Congress, in defining “savings,”
contravene the text and purpose of Section 25(5), Article VI.
Congress, for instance, is constitutionally prohibited from
creating a definition of savings that makes it possible for
_______________
26 575 Phil. 428; 552 SCRA 471 (2008).

27 Id., at p. 454; p. 497.
372

hypothetical, or potential sources of savings to readily be

considered as savings.
That there must be “actual” savings connotes tangibility or the
character of being substantially real; savings must have first been
realized before it may be used to augment other items of
appropriation. In this sense, actual savings carry the
commonsensical notion that there must first have been an amount
left over from what was intended to be spent in compliance with an
item in the GAA before funds may be considered as savings. Thus,
Congress can provide for the means of determining how savings are
generated, but this cannot be made in such a way that would allow
the transfer of appropriations from one item to another before
savings have actually been realized.
Congress, in defining savings, would have to abide by Article VI,

Section 25(5), among other constitutional provisions involving the
national budget, as well as the jurisprudential interpretations of the
Court involving these provisions.
Additionally, note that the general appropriations act is an
annual exercise by the Congress of its power to appropriate or to
determine how public funds should be spent. It involves a yearly act
through which Congress determines how the income for a particular
year may be spent.
Necessarily, the provisions regarding the release of funds, the
definition of savings, or the authority to augment contained in a
GAA affect only the income and items for that year. These
provisions cannot be made to extend beyond the appropriations
made in that particular GAA; otherwise, they would be extraneous
to that particular GAA and partake of the nature of a prohibited
“rider”28 that violates the “one sub-
_______________
28 Where the subject of a bill is limited to a particular matter, the members of the
legislature as well as the people should be informed of the subject of proposed
legislative measures. This constitutional provision thus precludes the insertion of
riders in legislation, a rider being a provision not germane to the subject matter of the
373
VOL. 749, FEBRUARY 3, 2015 373

ject-one title” rule under Section 26(1), Article VI29 of the

Constitution.30
Once the provisions on release becomes effective with respect to
appropriations other than those found in the GAA in which they
have been written, they no longer pertain to the appropriations for
that year, but to the process, rights and duties in general of public
officers in the handling of funds. They would then already involve a
separate and distinct subject matter from the current GAA and
should thus be contained in a separate bill.31 This is another
constitutional standard that cannot be disregarded in passing a law
like the
_______________
bill. Lidasan v. Comelec, No. L-28089, October 25, 1967, 21 SCRA 479, 510
(Fernando, J., dissenting).
29 Section 26, Article VI of the 1987 Constitution provides:
Section 26. (1) Every bill passed by the Congress shall embrace only one
subject which shall be expressed in the title thereof.
30 Note, too, that Congress cannot include in a general appropriations bill matters
that should be more properly enacted in separate legislation, and if it does that, the
inappropriate provisions inserted by it must be treated as “item,” which can be vetoed
by the President in the exercise of his item-veto power. Philippine Constitutional
Association v. Enriquez, supra note 25 at p. 532.
31 As the Constitution is explicit that the provision which Congress can include in
an appropriations bill must “relate specifically to some particular appropriation
therein” and “be limited in its operation to the appropriation to which it relates,” it
follows that any provision which does not relate to any particular item, or which
extends in its operation beyond an item of appropriation, is considered “an
inappropriate provision” which can be vetoed separately from an item. Also to be
included in the category of “inappropriate provisions” are unconstitutional provisions
and provisions which are intended to amend other laws, because clearly these kind of
laws have no place in an appropriations bill. These are matters of general legislation
more appropriately dealt with in separate enactments. Philippine Constitutional
Association v. Enriquez, id., at p. 534.
374

GAA.32 For the same reasons, the definition of savings cannot be

made to retroact to past appropriations.
On the other hand, the Court’s statutory interpretation of
“unprogrammed funds,” and its review of the Special Provisions for
its release in the 2011 and 2012 GAAs, is in line with the
constitutional command that money shall be paid out of the Treasury
only in pursuance of an appropriation made by law.33
Likewise, while the Executive’s interpretation of the provisions
governing unprogrammed funds is entitled to great weight, such
interpretation cannot and should not be applied when it contravenes
both the text and purpose of the provision.34

b. Unprogrammed Fund

In this light, I reiterate my support for the ponencia’s and Justice
Antonio Carpio’s conclusion that the use of the Unprogrammed
Fund under the DAP violated the special conditions for its release.
In our main Decision, we found that the proviso allowing the use
of sources not considered in the original revenue targets to cover
releases from the Unprogrammed Fund was not
_______________
32 Article VI, Section 25, paragraph 2 of the 1987 Constitution requires that “No
provision or enactment shall be embraced in the general appropriations bill unless it
relates specifically to some particular appropriation therein. Any such provision or
enactment shall be limited in its operation to the appropriation to which it relates.”
33 Article VI, Section 29, paragraph 1 of the 1987 Constitution provides that:
29. (1) No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law.
34 Bautista v. Juinio, supra note 9 at p. 343.
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VOL. 749, FEBRUARY 3, 2015 375

intended to prevail over the general provision requiring that

revenue collections first exceed the original revenue targets.35
We there declared that releases from the Unprogrammed Fund
through the DAP is void because they were made prematurely, i.e.,
before the original revenue targets had been reached and exceeded.
We reached this conclusion because of the Republic’s failure to
submit any document certifying that revenue collections had
exceeded original targets for the Fiscal Years 2011, 2012, and 2013.
We waited for this submission even beyond the last oral arguments
for the case (held in January 2014) and despite the sufficient time
given for the parties to file their respective memoranda.
Instead, the respondents submitted certifications of windfall
income, and argued that the proviso on releases under the
Unprogrammed Fund allows the Executive to use this windfall
income to fund items in the Unprogrammed Fund.
The respondent’s Motion for Reconsideration argues that this
kind of interpretation is absurd and renders nil the proviso allowing
the use of income not otherwise considered in the original revenue
targets, since actual revenue collections may be determined only by
the next fiscal year.36
If the respondents’ argument (that the Court’s interpretation is
absurd and cannot be implemented) were to be followed, the actual
result would in fact be to render the entire provision on releases

under the Unprogrammed Fund unimplementable.
It must be remembered that the general provision for releases for
items under the Unprogrammed Fund requires that revenue
collections must first exceed the original targets before these
collections may be released. Assuming in arguendo that the
Executive can determine this only by March 31 of the next fiscal
year, then no Unprogrammed Fund could be re-
_______________

376

leased at all because the requirement in the general provision

cannot be timely complied with. In other words, the respondent’s
argument regarding the impracticality of the proviso directly impacts
on, and negates, the general provision that the proviso qualifies.
To illustrate, assuming that the original revenue targets had been
exceeded (without need for unexpected income), releases for items
under the Unprogrammed Fund would still not be made based on the
respondents’ assertion that revenue collections can only be
determined by the first quarter of the next fiscal year.
From the point of view of history, I do not think that this general
provision on releases for items under the Unprogrammed Fund
would have been in place as early as FY 2000 if it could not actually
be implemented.37 This improbability, as well as the consistent
requirement that original revenue targets first be exceeded before
funds may be released for items under the Unprogrammed Fund,
clearly supports the Court’s interpretation on the special conditions
for releases under the Unprogrammed Fund. Additionally, as both
the ponencia38 and Justice Carpio39 point out, total revenue targets
_______________
37 In as early as the 2000, the General Appropriations Act require, as a condition
for the release of unprogrammed funds, that revenue collections first exceed the
original revenue targets, in a similar language as the provisions in the 2011 and 2012
GAA, viz.:
1. Release of Fund. The amounts herein appropriated shall be released only

when the revenue collections exceed the original revenue targets submitted by the
President of the Philippines to Congress pursuant to Section 22, Article VII of the
Constitution or when the corresponding funding or receipts for the purpose have been
realized in the special cases covered by specific procedures in Special Provision Nos.
2, 3, 4, 5, 7, 8, 9, 13 and 14 herein: x x x
38 See the ponencia’s discussion on pp. 323-327.
39 See Justice Carpio’s discussion on the release of the Unprogrammed Fund in
pp. 347-349 of his Separate Opinion.
377
VOL. 749, FEBRUARY 3, 2015 377

may be determined on a quarterly basis. Thus, requiring that total

revenue targets be first met before releases may be made under the
Unprogrammed Funds is not as impracticable and absurd as the
respondents picture them to be.

c. Qualification to the ponencia’s prospective application of the
Court’s statutory interpretation on the release of the
Unprogrammed Fund

I qualify, my concurrence, however, with respect to the
ponencia’s conclusion that the Court’s statutory interpretation of the
Unprogrammed Fund provision should be applied prospectively.
Prospective application, to me, is application in the present and in
all future similar cases.
The Court’s statutory interpretation of a law applies prospectively
if it does not apply to actions prior to the Court’s decision. We have
used this kind of application in several cases when we opted not to
apply new doctrines to acts that transpired prior to the
pronouncement of these new doctrines.
In People v. Jabinal,40 for instance, we acquitted a secret agent
found to be in possession of an unlicensed firearm prior to the
Court’s pronouncement in People v. Mapa41 overturning several
cases that declared secret agents to be exempt from the illegal
possession of firearms provisions. Jabinal committed the crime of
illegal possession of firearms at a time when the prevailing doctrine
exempted secret agents, but the trial court found him guilty of illegal
possession of firearms after the Court’s ruling in People v. Mapa.
The Court reversed Jabinal’s conviction, ruling that the People v.

Mapa ruling cannot have retroactive application.
_______________
40 154 Phil. 565; 55 SCRA 607 (1974).

41 127 Phil. 624; 20 SCRA 1164 (1967).
378

The Court explained the reason for the prospective application of

its decisions interpreting a statute, under the following terms:
Decisions of this Court, although in themselves not laws, are

nevertheless evidence of what the laws mean, and this is the reason why
under Article 8 of the New Civil Code, “Judicial decisions applying or
interpreting the laws or the Constitution shall form a part of the legal system
. . .” The interpretation upon a law by this Court constitutes, in a way, a
part of the law as of the date that law was originally passed, since this
Court’s construction merely establishes the contemporaneous legislative
intent that the law thus construed intends to effectuate. The settled rule
supported by numerous authorities is a restatement of the legal maxim “legis
interpretation legis vim obtinet” — the interpretation placed upon the
written law by a competent court has the force of law. The doctrine laid
down in Lucero and Macarandang was part of the jurisprudence, hence, of
the law, of the land, at the time appellant was found in possession of the
firearm in question and where he was arraigned by the trial court. It is true
that the doctrine was overruled in the Mapa case in 1967, but when a
doctrine of this Court is overruled and a different view is adopted, the new
doctrine should be applied prospectively, and should not apply to parties
who had relied on, the old doctrine and acted on the faith thereof. This is
especially true in the construction and application of criminal laws, where it
is necessary that the punishment of an act be reasonably foreseen for the
guidance of society.42

The prospective application of a statutory interpretation,
however, does not extend to its application to the case in which the
pronouncement or new interpretation
_______________
42 People v. Jabinal, supra note 40 at p. 571; p. 612.
379
VOL. 749, FEBRUARY 3, 2015 379

was made. For this reason, we affirmed Mapa’s conviction for

illegal possession of firearms.43
In other words, the prospective application of a statutory
interpretation of a law applies to the facts of the case in which the
interpretation was made and to acts subsequent to this
pronouncement. The prospective effect of a statutory interpretation
cannot be made to apply only to acts after the Court’s new
interpretation; the interpretation applies also to the case in which the
interpretation was laid down. Statutory interpretation, after all, is
used to reach a decision on the immediate case under consideration.
For instance, in several cases44 where we declared an
administrative rule or regulation to be void for being contrary to
_______________
43 People v. Mapa, supra note 41.

44 See for instance, the following cases: (1) People v. Maceren, No. L-32166,
October 18, 1977, 79 SCRA 450, where the Court acquitted Maceren, who was then
charged with the violation of the Fisheries Administrative Order No. 84 for engaging
in electro-fishing. The AO No. 84 sought to implement the Fisheries Law, which
prohibited “the use of any obnoxious or poisonous substance” in fishing. In acquitting
Maceren, the Court held that AO No. 84 exceeded the prohibited acts in the Fisheries
Law, and hence should not penalize electro-fishing. (2) Conte v. Commission on
Audit, G.R. No. 116422, November 4, 1996, 264 SCRA 19, where the Court, in
interpreting that SSS Resolution No. 56 is illegal for contravening Republic Act No.
660, and thus refused to reverse the Commission on Audit’s disallowance of the
petitioners’ benefits under SSS Resolution No. 56. (3) Insular Bank of Asia and
Americas Employees Union v. Inciong, 217 Phil 629; 132 SCRA 663 (1984), where
the Court nullified Section 2, Rule IV, Book III of the Rules to implement the Labor
Code and Policy instruction No. 9 for unduly enlarging the exclusions for holiday pay
in the Labor Code, and thus ordered its payment to the petitioner; and (4) Philippine
Apparel Workers Union v. National Labor Relations Commission, No. L-50320, July
31, 1981, 106 SCRA 444, where the Court held that the implementing rules issued by
the Secretary of Labor exceeded the authority it was granted under Presidential
Decree No. 1123, and thus ordered the
380

the law it seeks to implement, we applied our interpretation to

resolve the issue in the cases before us. We did not say that the
application of our interpretation applies only to all cases after the
pronouncement of illegality.
The present case poses to us the issue of whether the DAP made
releases under the Unprogrammed Fund in violation of the special
conditions for its release. In resolving this issue, we clarified the
meaning of one of these conditions, and found that it had been
violated. Thus, the Court’s statutory interpretation of the release of
unprogrammed funds applies to the present case, and to cases with
similar facts thereafter. The release of unprogrammed funds under
the DAP is void and illegal, for having violated the special
conditions requisite to their release.
At this point, the funds have presumably been spent,45 and are
now being subjected to audit. Thus, it is up to the Commission on
Audit46 to issue the appropriate notice of disallowance
_______________
respondent employer company to pay its union the emergency cost of living
allowance that PD No. 1123 requires.
45 Ninety-six percent or P69.3 billion of the P72.11 billion Disbursement
Acceleration Plan (DAP) has successfully been released to agencies and government-
owned or -controlled corporations (GOCCs) as of end-December 2011. Department
of Budget and Management, 96% of P72.11-B disbursement acceleration already
released, 77.5% disbursed (Jan. 9, 2012), available at http://www.gov.ph/2012/01/09/
96-of-p72-11-b-disbursement-acceleration-already-released-77-5 disbursed/.
46 Article IX-D, Section 2, paragraph 1 provides:
(1) The Commission on Audit shall have the power, authority, and duty to
examine, audit, and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or pertaining to,
the Government, or any of its subdivisions, agencies, or instrumentalities, including
government-owned or -controlled corporations with original charters, and on a post-
audit basis:
(a) constitutional bodies, commissions and offices that have been granted fiscal
autonomy under this Constitution;
381
VOL. 749, FEBRUARY 3, 2015 381
for the illegal release of these funds, and to decide whether the
officials behind its release should be liable for their return.47 It is in
these proceedings that the question of whether the officials acted in
good faith or in bad faith would be relevant, as only officials who
acted in bad faith in causing the
_______________
(b) autonomous state colleges and universities;

(c) other government-owned or -controlled corporations and their subsidiaries; and
(d) such nongovernmental entities receiving subsidy or equity, directly or
indirectly, from or through the Government, which are required by law or the granting
institution to submit to such audit as a condition of subsidy or equity. However, where
the internal control system of the audited agencies is inadequate, the Commission
may adopt such measures, including temporary or special pre-audit, as are necessary
and appropriate to correct the deficiencies. It shall keep the general accounts of the
Government and, for such period as may be provided by law, preserve the vouchers
and other supporting papers pertaining thereto.
47 Pursuant to its mandate as the guardian of public funds, the COA is vested
with broad powers over all accounts pertaining to government revenue and
expenditures and the uses of public funds and property. This includes the exclusive
authority to define the scope of its audit and examination, establish the techniques and
methods for such review, and promulgate accounting and auditing rules and
regulations. The COA is endowed with enough latitude to determine, prevent and
disallow irregular, unnecessary, excessive, extravagant or unconscionable
expenditures of government funds. It is tasked to be vigilant and conscientious in
safeguarding the proper use of the government’s, and ultimately the people’s,
property. The exercise of its general audit power is among the constitutional
mechanisms that gives life to the check and balance system inherent in our form of
government. Veloso v. Commission on Audit, G.R. No. 193677, September 6, 2011,
656 SCRA 767, 776.
382

unlawful release of public funds may be held liable for the return
of funds illegally spent.48
III. Reconsideration of what constitutes an

item for augmentation purposes

Upon a close reexamination of the issue, I concur with the
ponencia’s decision to reverse its earlier conclusion that several
PAPs funded by the DAP had no items, in violation of the
constitutional requirement that savings may be transferred only to
existing items in the GAA.
My concurrence, however, is subject to the qualifications I have
made in the succeeding discussion on the need for a deficiency
before an item may be augmented.
This change of position, too, does not, in any way, affect the
unconstitutionality of the methods by which the DAP funds were
sourced to augment these PAPs. The acts of using funds that were
not yet savings to augment other items in the GAA remain contrary
to the Constitution.

A. Jurisprudential standards for determining an item

For an augmentation to be valid, the savings should have been
transferred to an item in the general appropriations act. This
requirement reflects and is related to two other constitutional
provisions regarding the use of public funds, first, that no money
from the public coffers may be spent except through an
appropriation provided by law;49 and second, that the President may
veto any particular item or items in an appropriation, revenue, or
tariff bill, but the veto shall not affect the items to which he does not
object.50
_______________
48 See Blaquera v. Alcala, 356 Phil. 678; 295 SCRA 366 (1998); Casal v.
Commission on Audit, 538 Phil. 634; 509 SCRA 138 (2006).
49 Article VI, Section 29, paragraph 1, 1987 Constitution.
50 Article VI, Section 27, paragraph 2, 1987 Constitution.
383
VOL. 749, FEBRUARY 3, 2015 383

In my view, the power of augmentation cannot be exercised to

circumvent or dilute these principles, such that an interpretation of
what constitutes as an item for purposes of augmentation cannot

be at odds with the exercise of the President’s power to veto items
in the GAA or Congress’s exclusive, plenary power of the purse.
As early as 1936, the Court has defined an item, in the context of
the President’s veto power, as “the particulars, the details, the
distinct severable parts of the appropriation bill.”51 An
appropriation, on the other hand, is the setting apart by law of a
certain sum from the public revenue for a specified purpose.52 Thus,
for purposes of an item veto, an item consists of a severable part of a
sum of public money set aside for a particular purpose.
This definition, however, begs the question of how to determine
when a part of the appropriation law is its distinct and severable
part. Subsequent cases, still pertaining to the President’s veto
powers, gave us the opportunity to gradually expound and develop
the applicable standard. In Bengzon v. Drilon,53 in particular, we
described an item as an “indivisible sum of money dedicated to a
stated purpose,” and as “specific appropriation of money, not some
general provision of law, which happens to be put into an
appropriation bill.”54
We further refined this characterization in the recent case of
Belgica v. Executive Secretary,55 where we pointed out that “an item
of appropriation must be an item characterized by singular
correspondence — meaning an allocation of a specified
_______________
51 Bengzon v. Secretary of Justice, 62 Phil. 912, 916 (1936).

52 Id.
53 Bengzon v. Drilon, G.R. No. 103524, April 15, 1992, 208 SCRA 133.
54 Id., at p. 144.
55 G.R. No. 208566, November 19, 2013, 710 SCRA 1.
384

singular amount for a specified singular purpose, otherwise known

as a “line-item.”56
In the course of these succeeding cases, we have narrowed our
description of the term “item” in an appropriation bill so that (1) it
now must be indivisible; (2) that this indivisible amount be for a
specific purpose; and (3) that there must exist a singular
correspondence between the indivisible amount and the specified,

singular purpose.
In Nazareth v. Villar,57 a case we cited in Belgica, we even
required, for augmentation purposes, that there must be an existing
item, project, activity, purpose or object of expenditure with an
appropriation to which the savings would be transferred.58

B. Our original main Decision: an expenditure category that had
no appropriation cannot be augmented

Our main Decision, considering these jurisprudential standards,
found that the allotment class (i.e., the expense category of an item
of appropriation, classifying it either as a Capital Outlay [CO],
Maintenance and Other Operating Expense [MOOE], or Personal
Services [PS]) of several PAPs funded through the DAP had no
appropriation.
Thus, it was then observed that the DAP funded the following
expenditure items that had no appropriation cover, to wit: (i)
personnel services and capital outlay under the DOST’s Disaster
Risk, Exposure, Assessment and Mitigation (DREAM) project; (ii)
capital outlay for the COA’s “IT Infrastructure Program and hiring
of additional litigation experts”; (iii) capi-
_______________
56 Id.
57 G.R. No. 188635, January 29, 2013, 689 SCRA 385.
58 Id., at p. 405.
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tal outlay for the Philippine Air Force’s “On-Base Housing

Facilities and Communications Equipment”; and (iv) capital outlay
for the Department of Finance’s “IT Infrastructure Maintenance
Project.”
It must be emphasized, at this point, that these PAPs had been
funded through items found in the GAA; the ponencia concluded
that they had no appropriation cover because these items had no
allocations for the expenditure categories that the DAP funded.
To illustrate, Department of Finance’s IT Infrastructure

Maintenance Project had been funded by increasing the
appropriation for the “Electronic data management processing,” an
item which under the GAA only had funding for PS and MOOE.
The DAP, in funding the IT Infrastructure Maintenance Project,
increased appropriation for this item by adding funds for its CO,
when it initially had zero funding for them. It was concluded that
the DAP’s act of financing the CO of an item which had no
funding for CO violated the requirement that only items found in
the GAA may be augmented.
I supported this argument in the main decision because the
jurisprudential standards to determine an item fit the expenditure
category of a PAP. It is an indivisible sum of money, and it had been
set aside for a specific, singular purpose of funding an aspect of a
PAP. As I pointed out in my Separate Opinion:
Since Congress did not provide anything for personnel services and
capital outlays under the appropriation “Generation of new knowledge and
technologies and research capability building in priority areas identified as
strategic to National Development,” then these cannot be funded in the
guise of a valid transfer of savings and augmentation of appropriations.59
_______________
59 Araullo v. Aquino III, supra note 5 at p. 293.
386

I made this conclusion bearing in mind that the jurisprudential

standards apply to an allotment class, and with due consideration as
well of the complexity and dynamism of the budgetary process.
The budgetary process is a complex undertaking in which the
Executive and Congress are given their constitutionally-assigned
tasks, neither of whom can perform the function of the other. The
budget proposal comes from the Executive, which initially makes
the determination of the PAPs to be funded, and by how much each
allotment class (i.e., the expense category of an item of
appropriation, classifying it either as a Capital Outlay [CO],
Maintenance and Other Operating Expense [MOOE], or Personal
Services [PS]) will be funded. The proposal would then be given to
the Congress for scrutiny and enactment into law during its
legislative phase. At this point, Congress can amend the items in the
budget proposal but cannot increase its total amount. These
amendments may include increasing or decreasing the expense
categories found in the proposal; it may, in its scrutiny of the budget,
determine that certain PAPs need capital outlay or additional funds
for personnel services, or even eliminate allotments for capital
outlay for certain PAPs.60
In this light, I concluded then that when the Executive opts to
augment an expenditure item that Congress had no intention of
funding, then it usurped Congress’s power to appropriate.

C. The motion for reconsideration: items, not their allotment
classes, may be augmented

The respondents in their Motion for Reconsideration argue that
the PAPs funded by the DAP had items in the GAA, and
_______________
60 Article VI, Section 25, paragraph 1 of the 1987 Constitution, Joaquin G.
Bernas, S.J., The 1987 Constitution of the Republic of the Philippines: A
Commentary, p. 779 (2009).
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VOL. 749, FEBRUARY 3, 2015 387

that the breakdown of its expenditure categories may be

augmented even if the GAA did not fund them, so long as the PAPs
themselves have items. The point of inquiry should be whether the
PAP had an item, and not whether the expenditure category of a
PAP was funded. In asserting this argument, the respondents pointed
out that the Constitution requires the augmentation to an item, and
not an allotment class.
The majority supports this argument, citing the need to give the
Executive sufficient flexibility in the implementation of the budget,
and noting that equating an item to an expense category or
allotment class would mean that the President can veto an expense
category without vetoing the PAP. It could lead to situation where a
PAP would continue to exist, despite having no appropriation for PS
or MOOE, because the President has vetoed these expense
categories.
To be sure, the provisions in the Constitution do not exist in

isolation from each other; they must be construed and interpreted in
relation with other provisions and with other grants and limitations
of power found in the Constitution. The Constitution, after all,
provides the basic blueprint of how our government should be run,
and in so doing, reflects the careful compromises and check-and-
balancing mechanisms that we, as a nation, have agreed to.
As I have earlier pointed out, the power of augmentation, as an
exception to the general rule against transfer of appropriations, must
be construed in relation to both the President’s item veto power and
Congress’s exclusive power to appropriate.
Considering that our interpretation of the meaning of what
constitutes an item in the present case would necessarily affect what
the President may veto in an appropriation law, I agree with the
decision to clarify that the jurisprudential
388

tests for determining an item pertains to a PAP, and not its expense
categories.
Given, too, the interrelated nature of the President’s veto power
and his power to augment an item in the GAA, I agree that what
may be vetoed (and consequently, what may be augmented) is the
total appropriation for a PAP, and not each of its allotment class.
Notably, past presidential vetoes show direct vetoes of items and
special provisions, not of a specific allotment class of a PAP.
Thus, an appropriation for a PAP is the indivisible, specified
purpose for which a public fund has been set aside for. The
President, therefore, may validly augment the PAP representing an
item in an appropriation law, including its expenditure categories
that initially had no funding.
To illustrate, the CO of the item “Electronic data management
processing” may be augmented, even if the GAA did not allocate
funds for its CO.

D. Qualification: Augmentation requires that an item must have
been deficient

But while I agree with the ponencia’s decision to elevate the
definition of an item to a particular PAP and not limit it to an
expense category, I would like to point out that we are dealing with
an augmentation, and not a veto — hence, aside from the
consideration of the existence of an item, it must also be
determined whether this augmented item had a deficiency.
The very nature of an augmentation points to the existence of a
deficiency. An item must have been in existence, and must
demonstrably need supplementation, before it may be validly
augmented. Without a deficiency, an item cannot be augmented,
otherwise, it would violate the constitutional prohibition against
money being spent without
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VOL. 749, FEBRUARY 3, 2015 389

an appropriation made by law. An item that has no deficiency

does not need additional funding; thus, the funding of an item with
no deficiency could only mean that an additional PAP, not otherwise
considered in the GAA nor included in the item sought to be
augmented, would be funded by public funds.
This interpretation finds support and statutory authority in the
definition of augmentation in the GAA of 2011 and 2012, viz.:
Augmentation implies the existence in this Act of a program, activity, or

project with an appropriation, which upon implementation or subsequent
evaluation of needed resources, is determined to be deficient. In no case
shall a nonexistent program, activity, or project, be funded by augmentation
from savings or by the use of appropriations otherwise authorized in this
Act.61

Thus, a PAP that has no deficiency could not be augmented.
Augmenting an otherwise sufficiently-funded PAP violates the
constitutional command that public money should be spent only
through an appropriation made by law; too, if committed during the
implementation of the 2011 and 2012 GAA, it also contravenes the
definition of augmentation found therein.
At this point, it is worth noting that the items that the main
decision earlier found to be objectionable for having no
appropriations have two common features: first, the augmentations
massively increased their funding, and second, the massive
increase went to expense categories that initially had no funding.
_______________
61 Section 60 of the General Provisions of Rep. Act No. 10147 (General
Appropriations Act of 2011) and Section 54 of the General Provisions of Rep. Act
No. 10155 (General Appropriations Act of 2012).

390

Although I have earlier pointed out that these expense categories

may be augmented provided that the PAP itself encounters a
deficiency, the two commonalities in the above mentioned projects
render their augmentations highly suspect. These commonalities
do not indicate a deficiency, but rather, that PAPs not otherwise
considered under their GAAs had been funded by the
augmentations.
Allow me to illustrate my point in more concrete queries: If the
Department of Finance’s Electronic data management processing is
indeed an existing, deficient item under the GAA, why would its
appropriation need an additional augmentation of Php192.64 million
in CO, when its original appropriation had none at all?62
The Court, however, is not a trier of facts, and we cannot make a
determination of whether there had been a deficiency in the present
case. In the interest of ensuring that the law and the Constitution
have been followed, however, I
_______________
62 The same query applies to the DAP’s augmentation of the Commission on
Audit’s appropriation for “A1.a1. General Administration and Support,” and the
Philippine Airforce’s appropriations for “A.II.a.2 Service Support Activities, A.III.a.1
Air and Ground Combat Services, A.III.a.3 Combat Support Services and A.III.b.1
Territorial Defense Activities”
The DAP, in order to finance the “IT Infrastructure Program and hiring of
additional expenses” of the Commission on Audit in 2011 increased the latter’s
appropriation for General Administration and Support. DAP increased the
appropriation by adding P5.8 million for MOOE and P137.9 million for CO. The
COA’s appropriation for General Administration and Support, during the GAA of
2011, however, does not contain any item for CO.
In order to finance the Philippine Airforce’s “On-Base Housing Facilities and

Communication Equipment,” the DAP augmented several appropriations of the
Philippine Airforce with capital outlay totaling to Php29.8 million. None of these
appropriations had an item for CO. (Respondents’ Seventh Evidence Packet)
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VOL. 749, FEBRUARY 3, 2015 391

urge my colleagues in the Court to refer the records of the case

to the Commission on Audit for the determination of whether the
items augmented by the DAP, particularly the items previously
declared unconstitutional, had been deficient prior to their
augmentation.

IV. The impact of the Court’s exercise of judicial review on
existing laws involving the budgetary process

The majority, in denying the respondents’ motion for
reconsideration, points out that Section 39, Chapter 5, Book VI of
the Administrative Code cannot be used to justify the transfer of
funds through the DAP, because it contradicted the clear command
of Section 25(5), Article VI of the 1987 Constitution. Section 39
authorizes the President to augment any regular appropriation,
regardless of the branch of government it is appropriated to, in clear
contravention of the limitation in Section 25(5) that transfers may be
allowed only within the branch of government to which the
appropriation has been made.
The practical effect of this ruling would be the need for a
provision in the succeeding GAAs authorizing augmentation, if
Congress would be so minded to authorize it, in accordance with the
clear mandate of Section 25(5) of the Constitution. To recall, Section
25(5) of the Constitution requires that a law must first be in place
before augmentation may be performed.
Arguably, the wordings of the Administrative Code and the
GAAs of 2011 and 2012 (which, like the Administrative Code, allow
the President to augment any appropriation) on the authority to
augment funds, give credence to the respondents’ contention that the
President may, upon request, transfer the Executive’s savings to
items allotted to other branches of government.
In my view, they most certainly do not. No law may contravene
the clear text and terms of the Constitution, and Section 25(5),
Article VI cannot be clearer in limiting the
392

transfer of savings within the branch of government in which it

had been generated. In other words, no cross-border transfer of
funds may be allowed.
To begin with, what need is there for a law allowing for
augmentation, if it may be done through more informal channels of
requests? Further, a regime that allows transfers based solely on
requests is inconsistent with the limited and exceptional nature of
the power of augmentation. Note that the language of Article VI,
Section 25(5) begins with a general prohibition against the passage
of law allowing for transfer of funds, and that the power to augment
had been provided by way of exception, and with several
qualifications.
Lastly, I cannot agree that past practice holds any persuasive
value in legalizing the cross-border transfer of funds. Past practice,
while expressive of the interpretation of the officers who implement
a law, cannot prevail over the clear text and terms of the
Constitution.63
Notably, the language of the past GAAs also show varying
interpretation of Section 25(5), Article VI of the 1987 Constitution.
For instance, while the Administrative Code of 1987 contained
faulty language in giving the President the authority to augment,
such language was soon addressed by Congress, when as early as the
1990 GAA,64 it granted the author-
_______________
63 Supra note 9.

64 Section 16 of the General Provisions of Rep. Act No. 6831 (the General
Appropriations Act of 1990) provides:
Section 16. Use of Savings.—The President of the Philippines, the President of
the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, the Heads of Constitutional Commissions under Article IX of the
Constitution, and the Ombudsman are hereby authorized to augment any item in this
Act for their respective offices from savings in other items of their respective
appropriations: provided, that no item of appropriation recommended by the
President in the budget submitted to Congress pursuant to Article VII, Section 22 of

the Consti-
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VOL. 749, FEBRUARY 3, 2015 393

ity to use savings to the officials enumerated in Section 25(5),

Article VI of the 1987 Constitution, as expressed in this provision.
The broader authority allowing them to augment any item in the
appropriations act started only in the 2005 GAA, an unconstitutional
practice in the annual GAA that should now be clipped.

V. Operative Fact Doctrine

With the DAP’s unconstitutionality, the next point of inquiry
logically must be on this ruling’s impact on the projects and
programs funded under the DAP. This is only logical as our ruling
necessarily must carry practical effects on the many sectors that the
DAP has touched.

A. The application of the doctrine of operative fact to the
DAP

As I earlier pointed out, a declaration of unconstitutionality of a
law renders it void: the unconstitutional law is not deemed to have
ever been enacted, and no rights, obligations or any effect can spring
from it.
The doctrine of operative fact mitigates the harshness of the
declared total nullity and recognizes that the unconstitutional law,
prior to the declaration of its nullity, was an operative fact that the
citizenry followed or acted upon. This doctrine, while maintaining
the invalidity of the nullified law, provides for an exceptional
situation that recognizes that acts done in
_______________
tution which has been disapproved or reduced by Congress shall be restored or

increased by the use of appropriations authorized for other purposes in this Act by
augmentation. Any item of appropriation for any purpose recommended by the
President in the budget shall be deemed to have been disapproved by Congress if no
corresponding appropriation for the specific purpose is provided in this Act.
394

good faith and in reliance of the law prior to its invalidity, are
effective and can no longer be undone.65
A lot of the misunderstanding exists in this case in considering
the doctrine, apparently because of the term “good faith” and the
confusion between the present case and future cases seeking to
establish the criminal, civil or administrative liability of those who
participated in the DAP affair.
The respondents, particularly, demonstrate their less than full
understanding of the operative fact doctrine, as shown by their claim
that it has nothing to do with persons who acted pursuant to the DAP
prior to its declaration of invalidity and that “the court cannot load
the dice, so to speak, by disabling possible defenses in potential suits
against the so-called ‘authors, proponents and implementors.’”66
The respondents likewise decry the use of the terms “good faith”
and “bad faith” which may be exploited for political ends, and that
any negation of good faith violates the constitutional presumption of
innocence. Lastly, the nullification of certain acts under the DAP
does not operate to impute bad faith on the DAP’s authors,
proponents and implementors.
A first point I wish to stress is that the doctrine is about the
effects of the declaration of the unconstitutionality of an act, law or
measure. It is not about the unconstitutionality itself or its
underlying reasons. The doctrine in fact was formulated to address
the situation of those who acted under an invalidated law prior to
the declaration of invalidity.
_______________
65 See Municipality of Malabang, Lanao del Sur v. Benito, 137 Phil. 360; 27
SCRA 533 (1969), Serrano de Agbayani v. Philippine National Bank, 148 Phil. 443,
447-448; 38 SCRA 429, 435 (1971), Planters Products, Inc. v. Fertiphil Corporation,
G.R. No. 166006, March 14, 2008, 548 SCRA 485.
66 Respondents’ Motion for Reconsideration, p. 36.
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Thus, while as a general rule, an unconstitutional law or act is a

nullity and carries no effect at all, the operative fact doctrine holds
that its effects may still be recognized (although the law or act
remains invalid) with respect to those who had acted and relied in
good faith on the unconstitutional act or law prior to the declaration
of its invalidity; to reiterate what I have stated before, the
invalidated law or act was then an operative fact and those who
relied on it in good faith should not be prejudiced as a matter of
equity and justice.67 The key essential word under the doctrine is the
fact of “reliance”; “good faith” only characterizes the reliance
made.
It was in this manner and under this usage that “good faith” came
into play in the present case. The clear reference point of the term
was to the “reliance” by those who had acted under the
unconstitutional act or law prior to the declaration of its invalidity.
To again hark back to what has been mentioned above, all these refer
to the “effects” of an invalidated act or law. No reference at all is
made of the term “good faith” (as used in the operative fact doctrine
sense) to whatever criminal, civil or administrative liability a
participant in the DAP may have incurred for his or her
participation.68
Two reasons explain why the term “good faith” could not have
referred to any potential criminal, civil or administrative liability of
a DAP participant.
The first reason is that the determination of criminal, civil or
administrative liability is not within the jurisdiction of this Court to
pass upon at this point. The Court therefore has no business
speaking of good faith in the context of any criminal, civil or
administrative liability that might have been incurred; in fact, the
Court never did. If it did at all, it was to explain that good faith in
that context is out of place in the
_______________
67 See Kristin Grenfell, California Coastal Commission: Retroactivity of a

Judicial Ruling of Unconstitutionality, 14 Duke Envtl. L & Policy F. 245 (Fall 2003).
68 See Araullo v. Aquino III, supra note 5 at pp. 302-307.
396

present proceedings because the issue of criminal, civil or

administrative liability belongs to other tribunals in other
proceedings. If the respondents still fail to comprehend this, I can
only say — there can be none so blind as those who refuse to see.
The second reason, related to the first, is that cases touching on
the criminal, civil or administrative liabilities incurred for
participation in the DAP affair are cases that have to wait for another
day at a forum other than this Court. These future cases may only be
affected by our present ruling insofar as we clarified (1) the effects
of an unconstitutional statute on those who relied in good faith,
under the operative fact doctrine, on the unconstitutional act prior to
the declaration of its unconstitutionality; and (2) that the authors,
proponents and implementors of the unconstitutional DAP are not
among those who can seek cover behind the operative fact doctrine
as they did not rely on the unconstitutional act prior to the
declaration of its nullity. They were in fact the parties responsible
for establishing and implementing the DAP’s unconstitutional terms
and in these capacities, cannot rely on the unconstitutionality or
invalidity of the DAP as reason to escape potential liability for any
unconstitutional act they might have committed.
For greater certainty and in keeping with the strict meaning of the
operative fact doctrine, the authors, proponents and implementors of
the DAP are those who formulated, made or approved the DAP as a
budgetary policy instrument, including in these ranks the sub-
cabinet senior officials who effectively recommended its
formulation, promulgation or approval and who actively participated
or collaborated in its implementation. They cannot rely on the terms
of the DAP as in fact they were its originators and initiators.
In making this statement, the Court is not “loading the dice,” to
use the respondents’ phraseology, against the authors, proponents
and implementors of the DAP. We are only
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clarifying the scope of application of the operative fact doctrine

by initially defining where and how it applies, and to whom, among
those related to the DAP, the doctrine would and would not apply.
By so acting, the Court is not cutting off possible lines of defenses
that the authors, proponents and implementors of the
unconstitutional DAP may have; it is merely stating a legal

consequence of the constitutional invalidity that we have declared.
Apparently, the good and bad faith that the respondents mention
and have in mind relate to the potential criminal, civil, and
administrative cases that may be filed against the authors,
proponents and implementors of the unconstitutional DAP. Since
these are not issues in the petitions before us but are cases yet to
come, we cannot and should not be heard about the presence of good
faith or bad faith in these future cases. If I mentioned at all specific
actions indicating bad faith, it was only to balance my statement that
the Court should not be identified with a ruling that seemingly clears
the respondents from liabilities for the constitutional transgression
we found.69
I reiterate the above points by quoting the pertinent portion of my
Separate Opinion:
Given the jurisprudential meaning of the operative fact doctrine, a first

consideration to be made under the circumstances of this case is the
application of the doctrine: (1) to the programs, works and projects the DAP
funded in relying on its validity; (2) to the officials who undertook the
programs, works and projects; and (3) to the public officials responsible for
the establishment and implementation of the DAP.
With respect to the programs, works and projects, I fully agree with J.
Bersamin that the DAP-funded programs, works and projects can no
longer be undone;
_______________
69 Id., at p. 306.
398

practicality and equity demand that they be left alone as they were
undertaken relying on the validity of the DAP funds at the time these
programs, works and projects were undertaken.
The persons and officials, on the other hand, who merely received or
utilized the budgetary funds in the regular course and without knowledge
of the DAP’s invalidity, would suffer prejudice if the invalidity of the DAP
would affect them. Thus, they should not incur any liability for utilizing
DAP funds, unless they committed criminal acts in the course of their
actions other than the use of the funds in good faith.
The doctrine, on the other hand, cannot simply and generally be

extended to the officials who never relied on the DAP’s validity and who
are merely linked to the DAP because they were its authors and
implementors. A case in point is the case of the DBM Secretary who
formulated and sought the approval of NBC No. 541 and who, as author,
cannot be said to have relied on it in the course of its operation. Since he did
not rely on the DAP, no occasion exists to apply the operative fact doctrine
to him and there is no reason to consider his “good or bad faith” under
this doctrine.
This conclusion should apply to all others whose only link to the DAP is
as its authors, implementors or proponents. If these parties, for their own
reasons, would claim the benefit of the doctrine, then the burden is on them
to prove that they fall under the coverage of the doctrine. As claimants
seeking protection, they must actively show their good faith reliance; good
faith cannot rise on its own and self-levitate from a law or measure that has
fallen due to its unconstitutionality. Upon failure to discharge the burden,
then the general rule should apply — the DAP is a void measure which is
deemed never to have existed at all.
The good faith under this doctrine should be distinguished from the
good faith considered from the perspective of liability. It will be recalled
from our above finding that the respondents, through grave abuse of dis-
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cretion, committed a constitutional violation by withdrawing funds that

are not considered savings, pooling them together, and using them to finance
projects outside of the Executive branch and to support even the PDAF
allocations of legislators.
When transgressions such as these occur, the possibility for liability for
the transgressions committed inevitably arises. It is a basic rule under the
law on public officers that public accountability potentially imposes a three-
fold liability — criminal, civil and administrative against a public officer.
A ruling of this kind can only come from a tribunal with direct or original
jurisdiction over the issue of liability and where the good or bad faith in the
performance of duty is a material issue. This Court is not that kind of
tribunal in these proceedings as we merely decide the question of the DAP’s
constitutionality. If we rule beyond pure constitutionality at all, it is only to
expound on the question of the consequences of our declaration of
unconstitutionality, in the manner that we do when we define the application
of the operative fact doctrine. Hence, any ruling we make implying the
existence of the presumption of good faith or negating it, is only for the
purpose of the question before us — the constitutionality of the DAP and
other related issuances.
To go back to the case of Secretary Abad as an example, we cannot
make any finding on good faith or bad faith from the perspective of the
operative fact doctrine since, as author and implementor, he did not rely in
good faith on the DAP.
Neither can we make any pronouncement on his criminal, civil or
administrative liability, i.e., based on his performance of duty, since we do
not have the jurisdiction to make this kind of ruling and we cannot do so
without violating his due process rights. In the same manner, given our
findings in this case, we should not identify this Court with a ruling that
seemingly clears the respondents from liabilities for the transgressions we
found in the DBM Secretary’s performance of duties when the
400

evidence before us, at the very least, shows that his actions negate the
presumption of good faith that he would otherwise enjoy in an assessment
of his performance of duty.
To be specific about this disclaimer, aside from the many admissions
outlined elsewhere in the Opinion, there are indicators showing that the
DBM Secretary might have established the DAP knowingly aware that it is
tainted with unconstitutionality.70

B. The application of the operative fact doctrine to the PAPs
that relied on the DAP and to the DAP’s authors, proponents and
implementors, is not obiter dictum

While I agree with the ponencia’s discussion of the application of
the operative fact doctrine to the case, I cannot agree with its
characterization of our ruling as an obiter dictum.
An unconstitutional act is not a law. It confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is,
in legal contemplation, as inoperative as though it had never been
passed.71
In this light, the Court’s declaration of the unconstitutionality of
several aspects of the DAP necessarily produces two main effects:
(1) it voids the acts committed through the DAP that are
unconstitutional; and (2) the PAPs that have been funded or
benefitted from these void acts are likewise void.
By way of exception, the operative fact doctrine recognizes that
the DAP’s operation had consequences, which would be iniquitous
to undo despite the Court’s declaration of the DAP’s
unconstitutionality.
_______________
70 Id., at pp. 304-307.

71 This is otherwise known as the void ab initio doctrine, first used in the case of
Norton v. Shelby County, 118 US 425, 6 S. Ct. 1121, 30 L. Ed. 178 (1886).
401
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Necessarily, the Court would have to specify the application of

the operative fact doctrine, and in so doing, distinguish between the
two main effects. In other words, given the unconstitutionality’s two
effects, the Court, logically, would have to distinguish which of
these effects remains recognized by the operative fact doctrine.
This is the reason for the discussion distinguishing between the
applicability of the operative fact doctrine to PAPs that relied in
good faith to the DAP’s existence, and its nonapplication to the
DAP’s authors, proponents and implementors. The operative fact
doctrine, given its nature and definition, only applies to the PAPs,
but cannot apply to the unconstitutional act itself. As the doctrine
cannot apply to the act, with more strong reason can it not apply to
the acts of its authors, proponents and implementors of the
unconstitutional act.
It is in this sense and for these reasons that the Court
distinguished between the PAPs that benefitted from the DAP, and
the DAP’s authors, proponents and implementors.
It is also in this sense that the Court pointed out that the DAP’s
authors, proponents and implementors cannot claim any reliance in
good faith; the operative fact doctrine does not apply to them, as the
nature of their participation in the DAP’s conception is antithetical
to any good faith reliance on its constitutionality.
Without the Court’s discussion on the operative fact doctrine and
its application to the case, the void ab initio doctrine applies to
nullify both the acts and the PAPs that relied on these acts. Hence,
the Court’s discussion on the operative fact doctrine is integral to the
Court’s decision — it provides how the effect of the Court’s
declaration of unconstitutionality would be implemented. The
discussion is not, as the ponente vaguely described it, an “obiter
pronouncement.”
402

In sum, I concur with the ponencia’s legal conclusions denying

the following issues raised by the motions for reconsideration:
(1) That the following acts and practices under the Disbursement
Acceleration Program, National Budget Circular No. 541 and related
executive issuances are UNCONSTITUTIONAL for violating
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 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; and
(b) The cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive.
(2) That the use of unprogrammed funds despite the absence of a
certification by the National Treasurer that the revenue collections
exceeded the revenue targets is VOID and ILLEGAL for non-
compliance with the conditions provided in the relevant General
Too, I join the ponencia in reversing its former conclusion that
several projects, activities and programs funded by the DAP had not
been covered by an item in the GAAs, but subject to the
qualification that these items should be audited by the Commission
on Audit to determine whether there had been a deficiency prior to
the augmentation of said items. This is in line with my discussion
that an item needs to be deficient before it may be augmented.
403
VOL. 749, FEBRUARY 3, 2015 403
My concurrence in the ponencia is further qualified by my

discussions on: (1) the prospective application of our statutory
interpretation on the release of unprogrammed funds; and (2) the
application of the operative fact doctrine as an integral aspect in
reaching the Court’s decision.
For all these reasons, I join the majority’s conclusion, but subject
to my opposition against the conclusion that the Court’s discussion
on the operative fact doctrine is obiter dictum, as well as to the
qualification that an item must first be found to be deficient before it
may be augmented.
Further, in light of my recommendations as regards the
implementation of the Court’s ruling on the release of
unprogrammed funds and augmentation, I recommend that we
provide the Commission on Audit with a copy of the Court’s
decision and the records of the case, and to direct it to immediately
conduct the necessary audit of the projects funded by the DAP.

CONCURRING AND DISSENTING OPINION

DEL CASTILLO, J.:

I submit this Opinion to reiterate the views that I expressed in my
July 1, 2014 Concurring and Dissenting Opinion (July 1, 2014
Opinion, for brevity) in the context of the present arguments raised
by petitioners in their Motion for Partial Reconsideration and by
respondents in their Motion for Reconsideration as well as to
address the new arguments raised therein.

I.

Petitioners argue that the augmentations made by the Executive
Department under the DAP relative to specific items in the pertinent
GAAs are many times over their original
404

appropriations. Hence, they pray that the Court declare as

unconstitutional and illegal the expenditures under the DAP which
were used (1) to augment appropriation items over and above the
maximum amount recommended by the President in the proposed
budget submitted to Congress or (2) to augment appropriation items
which were not deficient.
I find the argument unavailing. I already addressed this argument
in my July 1, 2014 Opinion and reiterate, thus:
[T]he view has been expressed that the DAP was used to authorize the
augmentations of items in the GAA many times over their original
appropriations. While the magnitude of these supposed augmentations are,
indeed, considerable, it must be recalled that Article VI, Section 25(5) of the
Constitution purposely did not set a limit, in terms of percentage, on the
power to augment of the heads of offices:
MR. SARMIENTO. I have one last question. Section 25, paragraph (5)
authorizes the Chief Justice of the Supreme Court, the Speaker of the House
of Representatives, the President, the President of the Senate to augment any
item in the General Appropriations Law. Do we have a limit in terms of
percentage as to how much they should augment any item in the General
Appropriations Law?
MR. AZCUNA. The limit is not in percentage but “from savings.” So it
is only to the extent of their savings.
Consequently, even if Congress appropriated only one peso for a
particular PAP in the appropriations of the Executive Department, and the
Executive Department, thereafter, generated savings in the amount of P1B,
it is, theoretically, possible to augment the aforesaid one peso PAP
appropriation with P1B. The intent to give considerable leeway to the heads
of offices in the exercise of their power to augment allows this result.
405
VOL. 749, FEBRUARY 3, 2015 405

Verily, the sheer magnitude of the augmentation, without more, is not a

ground to declare it unconstitutional. For it is possible that the huge
augmentations were legitimately necessitated by the prevailing conditions at
the time of the budget execution. On the other hand, it is also possible that
the aforesaid augmentations may have breached constitutional limitations.
But, in order to establish this, the burden of proof is on the challenger to
show that the huge augmentations were done with grave abuse of discretion,
such as where it was merely a veiled attempt to defeat the legislative will as
expressed in the GAA, or where there was no real or actual deficiency in the
original appropriation, or where the augmentation was motivated by malice,
ill will or to obtain illicit political concessions. Here, none of the petitioners
have proved grave abuse of discretion nor have the beneficiaries of these
augmentations been properly impleaded in order for the Court to determine
the justifications for these augmentations, and thereafter, rule on the
presence or absence of grave abuse of discretion.
The Court cannot speculate or surmise, by the sheer magnitude of the
augmentations, that a constitutional breach occurred. Clear and convincing
proof must be presented to nullify the challenged executive actions because
they are presumptively valid. Concededly, it is difficult to mount such a
challenge based on grave abuse of discretion, but it is not impossible. It will
depend primarily on the particular circumstances of a case, hence, as
previously noted, the necessity of remedial legislation making access to
information readily available to the people relative to the justifications on
the exercise of the power to augment.
Further, assuming that the power to augment has become prone to abuse,
because it is limited only by the extent of actual savings, then the remedy is
a constitutional amendment; or remedial legislation subjecting the power to
augment to strict conditions or guidelines as well as strict real time
monitoring. Yet, it cannot be discounted that limiting the power to augment,
based on, say, a set percentage, would unduly restrict the effectiv-
406

ity of this fiscal management tool. As can be seen, these issues go into
the wisdom of the subject constitutional provision which is not proper for
judicial review. As it stands, the substantial augmentations in this case,
without more, cannot be declared unconstitutional absent a clear showing of
grave abuse of discretion for the necessity of such augmentations are
presumed to have been legitimate and bona fide.1

II.

I maintain that the President has the power to finally discontinue
slow-moving projects pursuant to (1) Section 38,2 Chapter 5, Book
VI, of the Administrative Code and (2) the General Appropriations
Act (GAA) definition of “savings,”3 which implicitly recognizes the
power to finally discontinue or
_______________
1 Citations omitted.
2 SECTION 38. Suspension of Expenditure of Appropriations.—Except as

otherwise provided in the General Appropriations Act and whenever in his judgment
the public interest so requires, the President, upon notice to the head of office
concerned, is authorized to suspend or otherwise stop further expenditure of funds
allotted for any agency, or any other expenditure authorized in the General
Appropriations Act, except for personal services appropriations used for permanent
officials and employees. (Emphasis supplied)
3 [S]avings refer to portions or balances of any programmed appropriation in this
Act free from any obligation or encumbrances which are: (i) still available after the
completion or final discontinuance or abandonment of the work, activity or
purpose for which the appropriation is authorized; (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. (Emphasis
supplied) [See Sections 60, 54 and 52 of the 2011, 2012 and 2013 GAAs,
respectively]
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VOL. 749, FEBRUARY 3, 2015 407

abandon a work, activity or purpose. This power was impliedly

exercised by the President, under National Budget Circular No.
(NBC) 541, by ordering the withdrawal of unobligated allotments
from slow-moving projects in order to spur economic growth.
Absent proof to the contrary and the undisputed claim that this
program, indeed, led to economic growth, the “public interest”
standard, which circumscribes the power to permanently stop
expenditure under Section 38, must be deemed satisfied. Hence, with
the final discontinuance of slow-moving projects, “savings” were
thereby generated, pursuant to the GAA definition of savings.
I noted, however, in my July 1, 2014 Opinion that, because the
wording of NBC 541 is so broad, the amount of withdrawn
allotments that may be reissued or ploughed back to the same
project may be: (1) zero, (2) the same amount as the unobligated
allotment previously withdrawn in that project, (3) more than the
amount of the unobligated allotment previously withdrawn in that
project, and (4) less than the amount of the unobligated allotment
previously withdrawn in that project. In scenario 4, a constitutional
breach would be present because the project would effectively not
be finally discontinued but its withdrawn allotment would be treated

as “savings.”
I now further clarify that when I stated that the “project would
effectively not be finally discontinued” under scenario 4, I speak
about the net effect of the operation of NBC 541. It should be noted
that the withdrawal of the unobligated allotments as well as the
reissuance or realignment, as the case may be, of the aforesaid
allotments were done on a quarterly basis. Thus, the net effect of the
operation of NBC 541 can only be determined after the period of its
implementation. This is the reason why an in-depth or intensive
factual determination is necessary prior to a declaration that scenario
4 occurred and, thus, breached the statutory definition of “savings”
under the pertinent GAAs. Stated another way, it is equally possible
that the net effect of the operation of NBC
408

541 would not result to the breach of the statutory definition of

“savings.” It depends on the pivotal issue of whether the project,
from which the unobligated allotments were withdrawn, was finally
discontinued or abandoned; a matter which must be established and
determined in a proper case. As I discussed in my July 1, 2014
Opinion, this ambiguity, in determining when a project is finally
discontinued or abandoned, is a weak point of the GAAs which
opens the doors to abuse:
[T]he third requisite of the first type of “savings” in the GAA deserves
further elaboration. Note that the law contemplates, among others, the final
discontinuance or abandonment of the work, activity or purpose for which
the appropriation is authorized. Implicit in this provision is the recognition
of the possibility that the work, activity or purpose may be finally
discontinued or abandoned. The law, however, does not state (1) who
possesses the power to finally discontinue or abandon the work, activity or
purpose, (2) how such power shall be exercised, and (3) when or under what
circumstances such power shall or may be exercised.
Under the doctrine of necessary implication, it is reasonable to presume
that the power to finally discontinue or abandon the work, activity or
purpose is vested in the person given the duty to implement the
appropriation (i.e., the heads of offices), like the President with respect to
the budget of the Executive Department.
As to the manner it shall be exercised, the silence of the law, as presently

worded, allows the exercise of such power to be express or implied. Since
there appears to be no particular form or procedure to be followed in giving
notice that such power has been exercised, the Court must look into the
particular circumstances of a case which tend to show, whether expressly or
impliedly, that the work, activity or purpose has been finally abandoned or
discontinued in determining whether the first type of “savings” arose in a
given case.
409
VOL. 749, FEBRUARY 3, 2015 409

This lack of form, procedure or notice requirement is, concededly, a

weak point of this law because (1) it creates ambiguity when a work,
activity or purpose has been finally discontinued or abandoned, and (2) it
prevents interested parties from looking into the government’s justification
in finally discontinuing or abandoning a work, activity or purpose.
Indubitably, it opens the doors to abuse of the power to finally discontinue
or abandon which may lead to the generation of illegal “savings.” Be that as
it may, the Court cannot remedy the perceived weakness of the law in this
regard for this properly belongs to Congress to remedy or correct. The
particular circumstances of a case must, thus, be looked into in order to
determine if, indeed, the power to finally discontinue or abandon the work,
activity or purpose was validly effected.

In sum, I maintain that Sections 5.4, 5.5 and 5.7 of NBC 541 are
only partially unconstitutional and illegal insofar as they (1) allowed
the withdrawal of unobligated allotments from slow-moving
projects, which were not finally discontinued or abandoned, and (2)
authorized the use of such withdrawn unobligated allotments as
“savings.”
The majority now acknowledges that the withdrawal of the
unobligated allotments under NBC 541 may have effectively
suspended or permanently stopped the expenditures on slow-moving
projects, but maintains that the reissuance of the withdrawn
allotments to the original programs or projects is a clear indication
that the same were not discontinued or abandoned. In effect, the
majority concedes that scenario 4 may have occurred in the course
of the implementation of the DAP, however, the majority maintains
that the withdrawal of the unobligated allotments under NBC 541
remains unconstitutional.
I disagree.
As I noted in my July 1, 2014 Opinion, whether scenario 4 (or
scenarios 1 to 3 for that matter) actually occurred requires
410

a factual determination that was not litigated in this case. Thus, it

is premature to make a sweeping generalization that the “withdrawal
and transfer of unobligated allotments remain unconstitutional.”
Instead, a more limited declaration that, to repeat, Sections 5.4, 5.5
and 5.7 of NBC 541 are only partially unconstitutional and illegal,
insofar as they (1) allowed the withdrawal of unobligated allotments
from slow-moving projects, which were not finally discontinued or
abandoned, and (2) authorized the use of such withdrawn
unobligated allotments as “savings,” is apropos. A distinction must
be made between the infirmity of the wording of NBC 541 and what
actually happened during the course of the implementation of the
DAP. The Court cannot assume facts that were not established in this
case.
The majority further states that “withdrawals of unobligated
allotments pursuant to NBC No. 541 which shortened the
availability of appropriations for MOOE and capital outlays, and
those which were transferred to PAPs that were not determined to be
deficient, are still constitutionally infirm and invalid.”
I disagree for two reasons.
First, there appears to be no evidence which sufficiently
established that there were transfers made to PAPs that were not
deficient. As previously discussed, the sheer magnitude of
augmentations does not, by itself, establish that the augmentations
were illegal or unconstitutional.
Second, as I extensively discussed in my July 1, 2014 Opinion,
the shortening of the availability of the MOOE and capital outlays,
through the withdrawal of the unobligated allotments, does not
automatically result to illegality or unconstitutionality:
I do not subscribe to the view that the provisions in the GAAs giving the
appropriations on Maintenance and Other Operating Expenses (MOOE) and
Capital Outlays (CO) a life-span of two years prohibit the President from
411
VOL. 749, FEBRUARY 3, 2015 411

withdrawing the unobligated allotments covering such items.

The availability for release of the appropriations for the MOOE and CO
for a period of two years simply means that the work or activity may be
pursued within the aforesaid period. It does not follow that the aforesaid
provision prevents the President from finally discontinuing or abandoning
such work, activity or purpose, through the exercise of the power to
permanently stop further expenditure, if public interest so requires, under
the second phrase of Section 38 of the Administrative Code.
It should be emphasized that Section 38 requires that the power of the
President to suspend or to permanently stop expenditure must be expressly
abrogated by a specific provision in the GAA in order to prevent the
President from stopping a specific expenditure:
SECTION 38. Suspension of Expenditure of Appropriations.—Except
as otherwise provided in the General Appropriations Act and whenever
in his judgment the public interest so requires, the President, upon notice to
the head of office concerned, is authorized to suspend or otherwise stop
further expenditure of funds allotted for any agency, or any other
expenditure authorized in the General Appropriations Act, except for
personal services appropriations used for permanent officials and
employees. (Emphasis supplied)
This is the clear import and meaning of the phrase “except as otherwise
provided in the General Appropriations Act.” Plainly, there is nothing in the
aforequoted GAA provision on the availability for release of the
appropriations for the MOOE and CO for a period of two years which
expressly provides that the President cannot exercise the power to suspend
or to permanently stop expenditure under Section 38 relative to such items.
412

That the funds should be made available for two years does not mean
that the expenditure cannot be permanently stopped prior to the lapse of this
period, if public interest so requires. For if this was the intention, the
legislature should have so stated in more clear and categorical terms given
the proviso (i.e., “except as otherwise provided in the General
Appropriations Act”) in Section 38 which requires that the power to suspend
or to permanently stop expenditure must be expressly abrogated by a
provision in the GAA. In other words, we cannot imply from the wording of
the GAA provision, on the availability for release of appropriations for the
MOOE and CO for a period of two years, that the power of the President
under Section 38 to suspend or to permanently stop expenditure is
specifically withheld. A more express and clear provision must so provide.
The legislature must be presumed to know the wording of the proviso in
Section 38 which requires an express abrogation of such power.
It should also be noted that the power to suspend or to permanently stop
expenditure under Section 38 is not qualified by any timeframe for good
reason. Fraud or other exceptional circumstances or exigencies are no
respecters of time; they can happen in the early period of the
implementation of the GAA which may justify the exercise of the
President’s power to suspend or to permanently stop expenditure under
Section 38. As a result, such power can be exercised at any time even a few
days, weeks or months from the enactment of the GAA, when public
interest so requires. Otherwise, this means that the release of the funds and
the implementation of the MOOE and CO must continue until the lapse of
the two-year period even if, for example, prior thereto, grave anomalies
have already been uncovered relative to the execution of these items or their
execution have become impossible.
An illustration may better highlight the point. Suppose Congress
appropriates funds to build a bridge between island A and island B in the
Philippine archipelago. A few days before the start of the project, when no
portion of the allotment has yet to be obligated, the water level rises due to
global warming. As a result, islands A and B are completely submerged. If
the two-year period is not quali-
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VOL. 749, FEBRUARY 3, 2015 413

fied by Section 38, then the President cannot order the permanent
stoppage of the expenditure, through the withdrawal of the unobligated
allotment relative to this project, until after the lapse of the two-year period.
Rather, the President must continue to make available and authorize the
release of the funds for this project despite the impossibility of its
accomplishment. Again, the law could not have intended such an absurdity.
In sum, the GAA provision on the availability for release and obligation
of the appropriations relative to the MOOE and CO for a period of two
years is not a ground to declare the DAP invalid because the power of the
President to permanently stop expenditure under Section 38 is not expressly
abrogated by this provision. Hence, the President’s order to withdraw the
unobligated allotments of slow-moving projects, pursuant to NBC 541 in
conjunction with Section 38, did not violate the aforesaid GAA provision
considering that, as previously discussed, the power to permanently stop
expenditure was validly exercised in furtherance of public interest, absent
sufficient proof to the contrary.
III.
I also maintain that the phrase “to fund priority programs and
projects not considered in the 2012 budget but expected to be started
or implemented during the current year” in Section 5.7.3 of NBC
541 is void insofar as it allows the transfer of the withdrawn
allotments to nonexistent programs and projects in the 2012 GAA.
This violates Article VI, Section 29(1)4 of the Constitution and
Section 545 of the 2012 GAA.
_______________
4 Section 29. (1) No money shall be paid out of the Treasury except in
pursuance of an appropriation made by law.
5 Section 54. x x x
Augmentation implies the existence in this Act of a program, activity, or project
with an appropriation, which upon implementation or subsequent evaluation of
needed resources, is determined to be deficient. In no case shall a nonexistent
program, activity, or project, be funded by augmentation from savings or by the
use of ap
414

However, it is premature, at this time, to conclude that, indeed,

such transfer of savings to nonexistent programs or projects did
occur under the DAP on due process grounds.
The majority, however, in its July 1, 2014 Decision, used the
DOST’s DREAM project and the augmentation to the DOST-
PCIEETRD to illustrate that there were augmentations of
nonexistent programs or projects under the DAP. I already noted in
my July 1, 2014 Opinion that this finding is premature and violates
respondents’ right to due process because these specific issues were
not litigated in a proper case, as they were merely deduced from the
evidence packets submitted by the Solicitor General.
In their Motion for Reconsideration, respondents, through the
Solicitor General, now explain at length why these augmentations
have appropriation covers. In particular, they argue that the general
prohibition on transfer of appropriations applies only to

appropriation items and not allotment classes (or expense categories,
i.e., PS, MOOE and CO).
The majority upholds the Solicitor General’s interpretation of
item of appropriation versus allotment class. I am in accord with the
majority’s position, for the reasons given by the majority. However,
I note that, while the discussion on transfer of allotment classes and
augmentation of appropriation items are consistent with judicial
precedents, this should be understood in relation to the existing
standards of efficiency, effectivity and economy in budget execution
under the Administrative Code, as I extensively discussed in my
July 1, 2014 Opinion. The exercise of the vast power to realign and
to augment should be understood as being circumscribed by existing
constitutional and legislative standards and limitations as well as
safeguards that Congress may institute in the future, consistent with
the Constitution, in order to prevent the abuse or misuse of this
power.
_______________
propriations otherwise authorized by this Act. (Emphasis supplied)
415
VOL. 749, FEBRUARY 3, 2015 415

I further note that the majority states that “whether the 116 DAP
funded projects had appropriation cover and were validly
augmented, require factual determination which is not within the
scope of the present consolidated petitions under Rule 65.” I am in
accord with this finding. As I stated in my July 1, 2014 Opinion:
[T]he Solicitor General impliedly argues that, despite the defective

wording of Section 5.7.3 of NBC 541, no nonexistent program or project
was ever funded through the DAP. Whether that claim is true necessarily
involves factual matters that are not proper for adjudication before this
Court. In any event, petitioners may bring suit at the proper time and place
should they establish that nonexistent programs or projects were funded
through the DAP by virtue of Section 5.7.3 of NBC 541.

IV.
The Solicitor General reiterates his novel theory that cross-border

transfer of savings is allowed under Article VI, Section 25(5)6 of the
Constitution because this provision merely prohibits unilateral inter-
departmental transfer of savings, and not those where the other
department requested for the funds.
I maintain that this theory is unavailing.
As I explained at length in my July 1, 2014 Opinion, the subject
constitutional provision is clear, absolute and categorical. If we
allow the relaxation of this rule, to occasionally address certain
exigencies, it will open the doors to abuse and defeat the laudable
purposes of this provision that is an inte-
_______________
6 No law shall be passed authorizing any transfer of appropriations; however, the

President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court, and the heads of the Constitutional
Commissions may, by law, be authorized to augment any item in the general
appropriations law for their respective offices from savings in other items of their
respective appropriations.
416

gral component of the system of checks and balances under our

plan of government. Again, the proper recourse is for the other
departments and constitutional bodies to request for additional funds
through a supplemental budget duly passed and scrutinized by
Congress.
The Solicitor General points out that even this Court has (1)
approved the allocation of amounts from its savings to augment an
item within the Executive, and (2) sought funds from the Executive
for transfer to the Judiciary, to establish that cross-border transfer of
savings is a long-standing practice not just of past administrations
but by the Court as well.
In my July 1, 2014 Opinion, commenting on Article VI, Section
25(5), I stated:
[T]he principal motivation for the inclusion of the subject provision in

the Constitution was to prevent the President from consolidating power by
transferring appropriations to the other branches of government and
constitutional bodies in exchange for undue or unwarranted favors from the
latter. Thus, the subject provision is an integral component of the system of

checks and balances under our plan of government. It should be noted
though, based on the broad language of the subject provision, that the
check is not only on the President, even though the bulk of the budget is
necessarily appropriated to the Executive Department, because the
other branches and constitutional bodies can very well commit the
aforedescribed transgression although to a much lesser degree.
(Emphasis supplied)

The prohibition on cross-border transfer of savings applies to all
the branches of government and constitutional bodies, including the
Court. If the Solicitor General thinks that the aforesaid transfer of
funds involving the Court violates the subject constitutional
provision, then the proper recourse is to have them declared
unconstitutional, as was done in this case. But, certainly, it cannot
change the clear and unequivo-
417
VOL. 749, FEBRUARY 3, 2015 417

cal language of the constitutional prohibition on cross-border

transfer of savings.
In fine, if cross-border transfer of savings has, indeed, been a
long-standing practice of the whole government bureaucracy, then
the Court’s ruling in this case should be a clear signal to put an end
to this unconstitutional practice. Longstanding practices cannot
justify or legitimize a continuing violation of the Constitution.
In another vein, I agree with the majority that Section 39,
Chapter V, Book VI of the Administrative Code cannot be made a
basis to justify the cross-border transfer of savings, for the reasons
given by the majority.
V.
On the legality of the releases from the Unprogrammed Fund and
the use thereof under the DAP, the Solicitor General argues, thus:
87. The Honorable Court ruled that revenue collections must exceed
the total of the revenue targets stated in the Budget for Expenditures and
Sources of Financing (BESF) before expenditures under the Unprogrammed
Fund can be made. This is incorrect not only because this is not what those
who wrote the item — the DBM — intended, which intention was ratified
by Congress over the years, but also because such interpretation defeats the
purpose of creating the Unprogrammed Fund.
88. This interpretation is incorrect, for a simple reason: everybody
knows that the government’s total revenue collections have never
exceeded the total original revenue targets. Certainly, the government —
the Executive and the Legislature — would never have created the
Unprogrammed Fund as a revenue source if, apart from newly-approved
loans for foreign-assisted project, it would have never been available for
use. The effect of the Honorable Court’s interpretation is to effectively
nullify the Unprogrammed Fund for the
418

years 2011 to 2013. Certainly, the Executive would not have proposed
billions of pesos under the Unprogrammed Fund in the NEP, and Congress
would not have provided for said appropriation in the GAA, with the
intention that it can never be implemented.
89. Because we are not interpreting the Constitution with respect to the
meaning of the Unprogrammed Fund, with respect, it is incorrect for the
Honorable Court to reject the interpretation placed by those who actually
wrote the item for the Unprogrammed Fund. What is the purpose to be
served in nullifying the intention of the authors of the Unprogrammed Fund,
which intention was effectively ratified by Congress over the course of
several years? In the absence of a violation of the Constitution, this
Honorable Court should not reject the Executive department’s reading of the
provisions of the Unprogrammed Fund which it coauthored with Congress.
90. The text is clear: excess revenue collections refer to the excess of
actual revenue collections over estimated revenue targets, not the difference
between revenue collections and expenditures. The 2011, 2012 and 2013
GAAs only require that revenue collections from each source of revenue
enumerated in the budget proposal must exceed the corresponding revenue
target.
91. To illustrate, under the 2011 BESF, the estimated revenues to be
collected from dividends from shares of stock in government-owned and -
controlled corporations is P5.5 billion. By 31 January 2011, the National
Government had already collected dividend income in the amount of P23.8
billion. In such case, the difference between the revenues collected (P23.8
billion) and the revenue target (P5.5) becomes excess revenue which can be
used to fund the purposes under the Unprogrammed Fund.
x x x x
93. Apart from the fact that the Honorable Court’s interpretation would
render much of the Unprogrammed Fund useless, the text of the special
provision referring to
419
VOL. 749, FEBRUARY 3, 2015 419

the Unprogrammed Fund supports the government’s intention and

interpretation: (1) if the provision was meant to refer to aggregate
amounts, it would have used the word “total” or the phrase “only when
the revenue collection exceeds the original revenue target”; (2) the
phrase “original revenue targets” clearly indicates a plurality of
revenue targets with which the revenue collections must be matched.7
(Emphasis supplied; italics in the original)

The point is well-taken.
In my July 1, 2014 Opinion, I joined the majority in interpreting
the phrase “when the revenue collections exceed the original
revenue targets” as pertaining to the actual total revenue collections
vis-à-vis original total revenue targets so much so that this provision
would trigger the release of the Unprogrammed Fund only when
there is a budget surplus, which, as correctly pointed out by the
Solicitor General, would render useless the billions of pesos
appropriated by Congress under the Unprogrammed Fund because
we can take judicial notice that the government operates under a
budget deficit. The phrase also could have been specifically worded
as using the term “total” if the purpose was, indeed, to refer to the
aggregate actual revenue collections vis-à-vis the aggregate original
revenue targets.
Although I note that these arguments are being raised for the first
time by the Solicitor General, I find the same to be correct based on
the familiar rule of statutory construction according great respect to
the interpretation by officers entrusted with the administration of the
law subject of judicial scrutiny. Because the law is ambiguous, as
even the majority concedes, and, thus, susceptible to two
interpretations, there is no obstacle to adopting the interpretation of
those who were closely involved in the crafting of the law, for their
interpretation is solidly founded on the wording of the law and the

prac-
_______________
7 Motion for Reconsideration, pp. 29-31.
420

tical realities of its operation. It should not be forgotten that the

Executive Department proposed the budget, including the provisions
on the Unprogrammed Fund of the pertinent GAAs. Further, that this
interpretation may result to budgetary deficit spending goes into the
wisdom and policy of the law, which the Court cannot overturn in
the guise of statutory construction.
I, therefore, modify my position in my July 1, 2014 Opinion and
agree with the Solicitor General that the phrase “when the revenue
collections exceed the original revenue targets” should be construed
as merely requiring “that revenue collections from each source of
revenue enumerated in the budget proposal must exceed the
corresponding revenue target.”
The majority maintains its previous position in its July 1, 2014
Decision that the aforesaid phrase refers to total revenue collections
versus total original revenue targets. It reasons that “revenue targets
should be considered as a whole, not individually; otherwise, we
would be dealing with artificial revenue surpluses. We have even
cautioned that the release of unprogrammed funds based on the
respondents’ position could be unsound fiscal management for
disregarding the budget plan and fostering budget deficits, contrary
to the Government’s surplus budget policy.”
I disagree.
As earlier stated, this reasoning goes into the wisdom and policy
of the GAA provisions on the Unprogrammed Fund. It cannot,
therefore, be considered controlling in interpreting the subject
phrase unless it is shown that such a surplus budget policy was
clearly and absolutely intended by the legislature.
It was not.
The wording of the GAA provisions on the Unprogrammed Fund
point to the contrary. As I noted in my July 1, 2014 Opinion:
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VOL. 749, FEBRUARY 3, 2015 421

The Unprogrammed Fund provisions under the 2011, 2012 and 2013
GAAs, respectively, state:
2011 GAA (Article XLV):
1. Release of Fund. The amounts authorized herein shall be released
only when the revenue collections exceed the original revenue targets
submitted by the President of the Philippines to Congress pursuant to
Section 22, Article VII of the Constitution, including savings generated
from programmed appropriations for the year: PROVIDED, That collections
arising from sources not considered in the aforesaid original revenue targets
may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the purpose
shall be sufficient basis for the issuance of a SARO covering the loan
proceeds: PROVIDED, FURTHERMORE, That if there are savings
generated from the programmed appropriations for the first two quarters of
the year, the DBM may, subject to the approval of the President release the
pertinent appropriations under the Unprogrammed Fund corresponding to
only fifty percent (50%) of the said savings net of revenue shortfall:
PROVIDED, FINALLY, That the release of the balance of the total savings
from programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
2012 GAA (Article XLVI)
Section 22, Article VII of the Constitution: PROVIDED, That collections
arising from sources not considered in the aforesaid original revenue targets
may be used to cover releases from appropriations in this Fund:
PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a per-
422

fected loan agreement for the purpose shall be sufficient basis for the
issuance of a SARO covering the loan proceeds.
2013 GAA (Article XLV)

Section 22, Article VII of the Constitution, including collections arising
from sources not considered in the original revenue targets, as certified by
the Btr: PROVIDED, That in case of newly approved loans for foreign-
proceeds. (Emphasis supplied)
As may be gleaned from the aforequoted provisions, in the 2011 GAA,
there are three provisos, to wit:
1. PROVIDED, That collections arising from sources not considered in
the aforesaid original revenue targets may be used to cover releases from
appropriations in this Fund,
2. PROVIDED, FURTHER, That in case of newly approved loans for
foreign-assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the
loan proceeds,
3. PROVIDED, FURTHERMORE, That if there are savings generated
from the programmed appropriations for the first two quarters of the year,
the DBM may, subject to the approval of the President, release the pertinent
appropriations under the Unprogrammed Fund corresponding to only fifty
percent (50%) of the said savings net of revenue shortfall: PROVIDED,
FINALLY, That the release of the balance of the total savings from
programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
423
VOL. 749, FEBRUARY 3, 2015 423

In the 2012 GAA, there are two provisos, to wit:

1. PROVIDED, That collections arising from sources not considered in
the aforesaid original revenue targets may be used to cover releases from
appropriations in this Fund,
2. PROVIDED, FURTHER, That in case of newly approved loans for
foreign-assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the
loan proceeds.
And, in the 2013 GAA, there is one proviso, to wit:
1. PROVIDED, That in case of newly approved loans for foreign
proceeds.

If, indeed, a surplus budget policy is the overriding principle
governing the Unprogrammed Fund, then Congress would not have
authorized the release of the Unprogrammed Fund from (1)
collections arising from sources not considered in the original
revenue targets, (2) newly approved loans for foreign-assisted
projects, and (3) savings from programmed appropriations subject to
certain conditions insofar as the 2011 GAA, instead, Congress
should have specifically provided that the aforesaid sources of funds
should be first used to cover any deficit in the entire budget before
being utilized for unprogrammed appropriations.
Further, a special provision of the Unprogrammed Fund under
the 2011, 2012 and 2013 GAAs uniformly provide:
Use of Excess Income. Agencies collecting fees and charges as shown in

the FY [2011, 2012 or 2013] Budget of Expenditures and Sources of
Financing (BESF) may be allowed to use their income realized and
deposited with the National Treasury, in excess of the collection targets
presented in the BESF, chargeable against Purpose [4,
424

3 or 3] — General Fund Adjustments, to augment their respective current

appropriations, subject to the submission of a Special Budget pursuant to
Section 35, Chapter 5, Book VI of E.O. No. 292: PROVIDED, That said
income shall not be used to augment Personal Services appropriations
including payment of discretionary and representation expenses.
Implementation of this section shall be subject to guidelines jointly
issued by the DBM and DOF. (Emphasis supplied)

The same reasoning may be applied to the above quoted
provision. Again, if a surplus budget policy was clearly and
absolutely intended by Congress, then it would not have authorized
the release of excess income, by the concerned agencies, for the
purpose of “General Fund Adjustments” under the Unprogrammed
Fund without specifically providing that such excess income be first
utilized to cover any deficit in the entire budget before applying the
same to the unprogrammed appropriations.
While the majority may have good reasons to employ an
interpretation of the GAA provisions on the Unprogrammed Fund
that seeks to prevent or mitigate budgetary deficit spending, it is not
within the province of the Court to engage in policy-making. If the
interpretation and application of the subject phrase by the Executive
Department leads to dire or ill effects in the economy, then the
remedy is with Congress and not this Court. (Parenthetically, after
the majority’s July 1, 2014 Decision was issued by this Court,
Congress repudiated the majority’s interpretation of the subject
phrase by, among others, expressly providing in the 2015 GAA that
releases from the Unprogrammed Fund may be authorized when
“there are excess revenue collections in any one of the identified
non-tax revenue sources from its corresponding revenue target,”
subject to certain conditions.)
In sum, given the ambiguity of the subject phrase, the doubt
should be resolved in favor of the interpretation of those who are
entrusted with the administration of the law and who were closely
involved in its enactment. The Court should
425
VOL. 749, FEBRUARY 3, 2015 425

not allow itself to be entangled with policy-making under the

guise of statutory construction.
In any event, the foregoing will not alter my vote, relative to this
issue, in this case. Instead, it merely allows the government to prove
that, indeed, the revenue collections from each source of revenue
enumerated in the budget proposal exceeded the corresponding
revenue target to justify the release of funds under the
Unprogrammed Fund, apart from the exceptive clauses which I
already extensively discussed in my July 1, 2014 Opinion. Whether
there is sufficient proof that the aforesaid scenario occurred to justify
the release of the Unprogrammed Fund, which was used under the
DAP, must be established and decided in a proper case.
In another vein, the majority further ruled that the release from
the Unprogrammed Fund may occur prior to the end of the fiscal
year provided that there are surpluses from the quarterly revenue
collections versus the quarterly revenue targets set by the
Development Budget Coordination Committee (DBCC).
I disagree insofar as the basis made for the releases is the revenue
targets set by the DBCC.
The 2011, 2012 and 2013 GAA provisions on the
Unprogrammed Fund uniformly provide that the release therefrom
shall be authorized when “the revenue collections exceed the
original revenue targets submitted by the President of the
Philippines to Congress pursuant to Section 22, Article VII of
the Constitution.”8 Section 22, Article VII of the Constitution
provides:

The President shall submit to the Congress within thirty days from the
opening of the regular session, as the basis of the general appropriations bill,
a budget of expenditures and sources of financing, including re-
_______________
8 Emphasis supplied.
426

ceipts from existing and proposed revenue measures. (Emphasis

supplied)

The law is clear. The basis of the “original revenue targets” under
the Unprogrammed Fund is the budget of expenditures and sources
of financing submitted by the President to Congress. This is
commonly known as the Budget for Expenditures and Sources of
Financing (BESF).
As correctly noted by Justice Carpio, the DBCC set the 2013
total revenue target at P1,745.9B.9 However, a comparison with the
2013 BESF shows that the total revenue target set therein is at
P1,780.1B.10 Revenue targets are normally adjusted downward due
to developments in the economy as well as other internal and
external factors. This appears to be the reason why the law uses the
term “original” to qualify the phrase “revenue targets” under the
Unprogrammed Fund. That is, the law recognizes that the
government may adjust revenue targets downward during the course
of budget execution due to unforeseen developments. By providing
that the “original” revenue targets under the BESF shall be made the
bases for the release of the Unprogrammed Fund, the Executive

Department is, thus, prevented or precluded from “abusing” the
Unprogrammed Fund by maneuvering increased releases therefrom
through the downward adjustment of the revenue targets during the
course of budget execution.
Hence, I find that the “original” revenue targets in the BESF are
the proper bases for the release of the Unprogrammed Fund, by
virtue of the clear provisions of the pertinent GAAs, and not the
revenue targets set by the DBCC.
_______________
9 http://www/dbm/gov.ph/wp-content/uploads/DBCC_MATTERS/
Fiscal_Program/FiscalProgramOfNGFy_2013.pdf (last visited February 2, 2015).
10 http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2013/C
1.pdf (last visited February 2, 2015).
427
VOL. 749, FEBRUARY 3, 2015 427

VI.
In its July 1, 2014 Decision, the majority stated, thus:
Nonetheless, as Justice Brion has pointed out during the deliberations,

the doctrine of operative fact does not always apply, and is not always the
consequence of every declaration of constitutional validity. It can be
invoked only in situations where the nullification of the effects of what used
to be a valid law would result in inequity and injustice; but where no such
result would ensue, the general rule that an unconstitutional law is totally
ineffective should apply.
In that context, as Justice Brion has clarified, the doctrine of operative
fact can apply only to the PAPs that can no longer be undone, and whose
beneficiaries relied in good faith on the validity of the DAP, but cannot
apply to the authors, proponents and implementors of the DAP, unless
there are concrete findings of good faith in their favor by the proper
tribunals determining their criminal, civil, administrative and other
liabilities. (Emphasis supplied)

In response to this statement, and those in the other separate
opinions in this case, relative to this issue, I stated that —
Because of the various views expressed relative to the impact of the

operative fact doctrine on the potential administrative, civil and/or criminal
liability of those involved in the implementation of the DAP, I additionally
state that any discussion or ruling on the aforesaid liability of the persons
who authorized and the persons who received the funds from the
aforementioned unconstitutional cross-border transfers of savings, is
premature. The doctrine of operative fact is limited to the effects of the
declaration of unconstitutionality on the executive or legislative act that is
declared unconstitutional. Thus, it is improper for this Court to discuss or
rule on matters not squarely at issue or decisive in this case which affect or
may affect their alleged liabilities without giving them an opportunity to be
heard and to raise such defenses
428

that the law allows them in a proper case where their liabilities are
properly at issue. Due process is the bedrock principle of our democracy.
Again, we cannot run roughshod over fundamental rights.

The majority now clarifies that its statement that “the doctrine of
operative fact x x x 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” does not do away
with the presumption of good faith, the presumption of innocence
and the presumption of regularity in the performance of official
duties.
I am in accord with this clarification.
Finally, I reiterate that the operative fact doctrine applies only to
the cross-border transfers of savings actually proven in this case, i.e.,
the admitted cross-border transfers of savings from the Executive
Department to the Commission on Audit, House of Representatives
and Commission on Elections, respectively. Any ruling as to its
applicability to the other DAP-funded projects is premature in view
of the lack of sufficient proof, litigated in a proper case, that they
were implemented in violation of the Constitution.
ACCORDINGLY, I vote to:
1. DENY petitioners’ Motion for Partial Reconsideration; and
2. PARTIALLY GRANT respondents’ Motion for
Reconsideration. Consistent with my July 1, 2014 Opinion, I
maintain that the Disbursement Acceleration Program is

PARTIALLY UNCONSTITUTIONAL:
2.1 Sections 5.4, 5.5 and 5.7 of National Budget Circular No.
541 are VOID insofar as they (1) allowed the withdrawal of
unobligated allotments from slow-moving projects which were not
finally discontinued or abandoned, and (2) authorized the use of
such withdrawn unobligated allotments
429
VOL. 749, FEBRUARY 3, 2015 429

as “savings” for violating the definition of “savings” under the

2011, 2012 and 2013 general appropriations acts.
2.2 The admitted cross-border transfers of savings from the
Executive Department, on the one hand, to the Commission on
Audit, House of Representatives and Commission on Elections,
respectively, on the other, are VOID for violating Article VI, Section
25(5) of the Constitution.
2.3 The phrase “to fund priority programs and projects not
considered in the 2012 budget but expected to be started or
implemented during the current year” in Section 5.7.3 of National
Budget Circular No. 541 is VOID for contravening Article VI,
Section 29(1) of the Constitution and Section 54 of the 2012 General
Appropriations Act.

CONCURRING OPINION

LEONEN, j.:

I concur, in the result, with the denial of the Motions for
Reconsideration filed by petitioners. I concur with the partial grant
of the Motion for Reconsideration filed by respondents clarifying (a)
the concept of appropriation item as differentiated from allotment
classes and (b) the effect of the interpretation of the statutory
provisions on the use of unprogrammed funds. I vote to add that
there are other situations when unprogrammed funds can be used
without regard to whether the total quarterly or annual collections
exceed the revenue targets.
I clarify these positions in this separate opinion.

I
The General Appropriations Act authorizes,

not compels, expenditures

The General Appropriations Act is the law required by the
Constitution to authorize expenditures of public funds for spe-
430

cific purposes.1 Each appropriation item provides for the limits of

the amount that can be spent by any office, agency, bureau or
department of government.2 The provision of an appropriation item
does not require that government must spend the full amount
appropriated. In other words, the General Appropriations Act
provides authority to spend; it does not compel actual expenditures.
By providing for the maximum that can be spent per
appropriation item, the budget frames a plan of action. It is enacted
on the basis of projections of what will be needed within a future
time frame — that is, the next year in the case of the General
Appropriations Act. Both the Constitution and the law provide that
the President initially proposes projects, activities, and programs to
meet the projected needs for the next year.3 Congress scrutinizes the
proposed budget and is the constitutional authority that passes the
appropriations act that authorizes expenditures of the entire budget
through appropriation items4 subject to the flexibilities provided in
the Constitution,5 existing law, and in the provisions of the General
Appropriations Act6 not inconsistent with the Constitution or
existing law.7
To read the Constitution as requiring that every appropriation
item be spent only in the full and exact amount provided
_______________
1 Const., Art. VI, Sec. 29(1).

2 Id.
3 Const., Art. VII, Sec. 22; Exec. Order No. 292 (1987), Book I, Ch. 3, Sec. 11;
Exec. Order No. 292 (1987), Book VI, Ch. 2, Sec. 3; Exec. Order No. 292 (1987),
Book VI, Ch. 1, Sec. 2(3).
4 Const., Art. VI, Secs. 24 and 26.
6 Rep. Act No. 10155, GAA Fiscal Year 2012, General Provisions, Sec. 54; Rep.
Act No. 10352, GAA Fiscal Year 2013, General Provisions, Sec. 53; Rep. Act No.
10147, GAA Fiscal Year 2011, General Provisions, Sec. 60.
7 See also 1 Government Accounting and Auditing Manual Book III, Title 3, Art.
2, Secs. 162-166.
431
VOL. 749, FEBRUARY 3, 2015 431

in the appropriation item — and nothing less than the full amount
— is absurd. Reality will not always be as predicted by the President
and Congress as they deliberated on the budget. Obviously, reality is
far richer than our plans.
The Constitution should be read as having intended reasonable
outcomes on the basis of the values congealed in the text of its
provisions enlightened by the precedents of this court.
Thus, there is nothing unconstitutional or illegal when the
President establishes his priorities. He is expected to exhort and
provide fiscal discipline for executive offices within his control.8 He
may, in line with public expectations, do things more effectively,
economically, and efficiently. This is inherent in the executive power
vested on him.9 He is expected to fully and faithfully execute all
laws.10 This constitutional flexibility, while not unlimited, is
fundamental for government to function.
Disagreements as to the priorities of a President are matters of
political accountability. They do not necessarily translate into
juridical necessities that can invoke the awesome power of judicial
review. This court sits to ensure that political departments exercise
their discretions within the boundaries set by the constitution and
our laws.11 We do not sit to replace their political wisdom with our
own.12
_______________
8 Const., Art. VII, Sec. 17.

11 Angara v. Electoral Commission, 63 Phil. 139, 158 (1936) [Per J. Laurel, En
Banc].
12 Id.
432


II
Withholding unobligated allotments
is not unconstitutional per se

Setting priorities generally means that the President decides on
which project, activity, or program within his department will be
funded first or last within the period of effectivity of the
appropriation items.
The Constitution provides for clear delineations of authority.
Congress has the power to authorize the budget.13 However, it is the
President that generally decides on when and how to allocate funds,
order or encourage agencies to obligate, and then cause the releases
of the funds to contracted entities.14 The process of obligation,
which includes procurement as well as the requirements for the
payment, or release of funds may be further limited by law.15
Thus, withholding unobligated allotments is not unconstitutional
per se. It can be done legitimately for a variety of reasons. The
revenues expected by government may not be forthcoming as
expected. The office or agency involved may not have the capacity
to spend due to organizational problems, corruption issues, or even
fail to meet the expectations of the President himself. In my view,
the President can withhold the unobligated allotment until the
needed corrective measures are done within the office or agency.
With the amount withheld, the President may also ensure that the
_______________
13 Const., Art. VI, Sec. 24.

14 As discussed in my concurring opinion to the main decision, “The president’s
power or discretion to spend up to the limits provided by law is inherent in executive
power.” J. Leonen, Concurring Opinion in Araullo v. Aquino III, G.R. No. 209287,
July 1, 2014, 728 SCRA 1, 407 [Per J. Bersamin, En Banc]. See also Const., Art. VII,
Sec. 17.
15 See for example Rep. Act No. 9184 (2003).
433
VOL. 749, FEBRUARY 3, 2015 433

other appropriations items are fully funded as authorized in the

general or in any supplemental appropriations act.
This flexibility is subject to several constitutional constraints.
First, he can only spend for a project, activity, or program whose
expenditure is authorized by law.16 Second, he cannot augment any
appropriations item within his department unless it comes from
savings.17

III
Withheld unobligated allotments
are not necessarily “savings”

Savings is a term that has a constitutionally relevant meaning.
The constitutional meaning of the term savings allows Congress to
further refine its details.
To underscore the power of Congress to authorize appropriations
items, the Constitution prohibits their augmentation. There is no
authority to spend beyond the amounts set for any appropriations
item.18 Congress receives information from the executive as to the
projected revenues prior to passing a budget. Members of Congress
deliberate on whether they will agree to the amounts allocated per
project, activity, or program and thus, the extent of their concurrence
with the priorities set by the President with the latter’s best available
estimates of what can happen the following year. The authorities that
will eventually spend the amounts appropriated cannot undermine
this congressional power of authorization.
However, the Constitution itself provides for an exception.
Appropriated items may be augmented but only from savings and
only if the law authorizes the heads of constitutional
_______________

434

organs or departments to do so.19 It is in this context that savings

gains constitutional relevance.
From a constitutional perspective, I view “savings” as related

only to the privilege to augment. As a constitutional concept, it
cannot be endowed with a meaning that will practically undermine
the constitutional grant of power to Congress to limit and authorize
appropriations items. There must be a reasonable justification for the
failure of the spending authority to spend the amount declared as
savings from an appropriated item. This reasonable justification
must be based on causes external to the authority deciding when to
declare actual savings.
On the other hand, given that the power of Congress to determine
when the heads of constitutional organs and departments may
exercise the prerogative of augmentation,20 Congress, too, may
define the limits of the concept of savings but only within the
parameters of its constitutional relevance.
In the General Appropriations Acts of 2011,21 2012,22 and
2013,23 savings was defined as:
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;
_______________

20 Id.
21 Rep. Act No. 10147, GAA Fiscal Year 2011, General Provisions, Sec. 60.
435
VOL. 749, FEBRUARY 3, 2015 435

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.
Currently, the definition of savings in the General Appropriations

Act of 201424 is as follows:
Sec. 68. Meaning of Savings and Augmentation.—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 appropriation
balances arising from unpaid compensation and related costs pertaining to
vacant positions and leaves of absence without pay; and (iii) from
appropriation 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.
Augmentation implies the existence in this Act of a program, activity, or
project with an appropriation, which upon implementation or subsequent
evaluation of needed resources, is determined to be deficient. In no case
shall a nonexistent program, activity, or project, be funded by augmentation
from savings or by the use of appropriations otherwise authorized in this
Act.

Definitely, the difference between the actual expenditure and the
authorized amount appropriated by law as a result of the completion
of a project is already savings that can be used to augment other
appropriations items within the same department.
_______________
436

Analogously, the expense category called Personnel Services

(PS) within an appropriations item also creates savings during the
year. Thus, for various reasons, when an executive office is able to
hire less than the authorized plantilla funded by the appropriation
item, the President may declare the compensation and benefits
corresponding to the unfilled items after any payroll period as
“savings” that can be used for augmentation.25 Certainly, the monies
that should have been paid for personnel services for positions that
were unfilled for a certain period will no longer be used until the end
of the year. Similarly, there is savings when the actual expenditure
for Maintenance and Other Operating Expenses (MOOE) is less than
what was planned for a given period. There is no need to wait until
the end of the year to declare savings for purposes of augmentation.
The justification for projects, activities, and programs to be
considered as “finally discontinued” and “abandoned” must be clear
in order that their funds can be considered savings for purposes of
augmentation. Thus, in my Concurring Opinion in the main
Decision of this case, I clarified that this should be read in
conjunction with the Government Accounting and Auditing Manual
(GAAM)26 provisions that state:
Sec. 162. Irregular expenditures.—The term “irregular expenditure”

signifies an expenditure incurred without adhering to established rules,
regulations, pro-
_______________
25 See the definition of savings under the general provisions of the General
Appropriations Act in a given year.
26 The Government Accounting and Auditing Manual (GAAM) was issued
pursuant to Commission on Audit Circular No. 91-368 dated December 19, 1991. The
GAAM is composed of three volumes: Volume I – Government Auditing Rules and
Regulations; Volume II – Government Accounting; and Volume III – Government
Auditing Standards and Principles and Internal Control System. In 2002, Volume II of
the GAAM was replaced by the New Government Accounting System as per
Commission on Audit Circular No. 2002-002 dated June 18, 2002.
437
VOL. 749, FEBRUARY 3, 2015 437

cedural guidelines, policies, principles or practices that have gained

recognition in law. Irregular expenditures are incurred without conforming
with prescribed usages and rules of discipline. There is no observance of an
established pattern, course, mode of action, behavior, or conduct in the
incurrence of an irregular expenditure. A transaction conducted in a manner
that deviates or departs from, or which does not comply with standards set,
is deemed irregular. An anomalous transaction which fails to follow or
violate appropriate rules of procedure is likewise irregular. Irregular
expenditures are different from illegal expenditures since the latter would
pertain to expenses incurred in violation of the law whereas the former in

violation of applicable rules and regulations other than the law.
Sec. 163. Unnecessary expenditures.—The term “unnecessary
expenditures” pertains to expenditures which could not pass the test of
prudence or the obligation of a good father of a family, thereby non-
responsiveness to the exigencies of the service. Unnecessary expenditures
are those not supportive of the implementation of the objectives and mission
of the agency relative to the nature of its operation. This could also include
incurrence of expenditure not dictated by the demands of good government,
and those the utility of which cannot be ascertained at a specific time. An
expenditure that is not essential or that which can be dispensed with without
loss or damage to property is considered unnecessary. The mission and
thrusts of the agency incurring the expenditure must be considered in
determining whether or not the expenditure is necessary.
Sec. 164. Excessive expenditures.—The term “ex-cessive
expenditures” signifies unreasonable expense or expenses incurred at an
immoderate quantity or exorbitant price. It also includes expenses which
exceed what is usual or proper as well as expenses which are unreasonably
high, and beyond just measure or amount. They also include expenses in
excess of reasonable limits.
Sec. 165. Extravagant expenditures.—The term “extravagant
expenditures” signifies those incurred with-
438

out restraint, judiciousness and economy. Extravagant expenditures

exceed the bounds of propriety. These expenditures are immoderate,
prodigal, lavish, luxurious, wasteful, grossly excessive, and injudicious.
Sec. 166. Unconscionable expenditures.—The term “unconscionable
expenditures” signifies expenses without a knowledge or sense of what is
right, reasonable and just and not guided or restrained by conscience. These
are unreasonable and immoderate expenses incurred in violation of ethics
and morality by one who does not have any feeling of guilt for the violation.

The President’s power to suspend a project in order to declare
savings for purposes of augmentation may be statutorily granted in
Section 38 of the Revised Administrative Code, but it cannot be
constitutional unless such grounds for suspension are reasonable and
such reasonable grounds are statutorily provided. Under the present
state of our laws, it will be reasonable when read in relation to the
GAAM. As I explained in my Concurring Opinion27 to the main

Decision:
Of course, there are instances when the President must mandatorily

withhold allocations and even suspend expenditure in an obligated item.
This is in accordance with the concept of “fiscal responsibility”: a duty
imposed on heads of agencies and other government officials with authority
over the finances of their respective agencies.
Section 25(1) of Presidential Decree No. 1445, which defines the powers
of the Commission on Audit, states:
Section 25. Statement of Objectives.—
. . . .
(1) To determine whether or not the fiscal responsibility that rests
directly with the
_______________
27 J. Leonen, Concurring Opinion in Araullo v. Aquino III, supra note 14.
439
VOL. 749, FEBRUARY 3, 2015 439

head of the government agency has been properly and effectively

discharged;
. . . .
This was reiterated in Volume I, Book 1, Chapter 2, Section 13 of the
Government Accounting and Auditing Manual, which states:
Section 13. The Commission and the fiscal responsibility of agency
heads.—One primary objective of the Commission is to determine whether
or not the fiscal responsibility that rests directly with the head of the
government agency has been properly and effectively discharged.
The head of an agency and all those who exercise authority over the
financial affairs, transaction, and operations of the agency, shall take care of
the management and utilization of government resources in accordance with
law and regulations, and safeguarded against loss or wastage to ensure
efficient, economical, and effect operations of the government.
Included in fiscal responsibility is the duty to prevent irregular,
unnecessary, excessive, or extravagant expenses. Thus:
Section 33. Prevention of irregular, unnecessary, excessive, or
extravagant expenditures of funds or uses of property; power to disallow
such expenditures.—The Commission shall promulgate such auditing and
accounting rules and regulations as shall prevent irregular, unnecessary,
excessive, or extravagant expenditures or uses of government funds or

property.
The provision authorizes the Commission on Audit to promulgate rules
and regulations. But, this provision also guides all other government
agencies not to make
440

any expenditure that is “irregular, unnecessary, excessive, or

extravagant.” The President should be able to prevent unconstitutional or
illegal expenditure based on any allocation or obligation of government
funds.
. . . .
The President can withhold allocations from items that he deems will be
“irregular, unnecessary, excessive or extravagant.” Viewed in another way,
should the President be confronted with an expenditure that is clearly
“irregular, unnecessary, excessive or extravagant,” it may be an abuse of
discretion for him not to withdraw the allotment or withhold or suspend
the expenditure.
For purposes of augmenting items — as opposed to realigning funds
— the President should be able to treat such amounts resulting from
otherwise “irregular, unnecessary, excessive or extravagant” expenditures
as savings.28 (Emphasis in the original, citations omitted)

IV
“Appropriation covers” does not always
justify proper augmentation

Fundamental to a proper constitutional exercise of the
prerogative to augment is the existence of an appropriations item.29
But it is not only the existence of an appropriation item that will
make augmentation constitutional. It is likewise essential that it can
be clearly and convincingly shown that it comes from legitimate
savings in a constitutional and statutory sense.30 In other words,
having appropriation covers to
_______________
28 Id., at pp. 418-423.

30 Id.
441
VOL. 749, FEBRUARY 3, 2015 441

the extent of showing that the item being funded is authorized is

not enough. For each augmentation, the source in savings must
likewise be shown.31
This is why constitutional difficulties arose in the kind of pooled
funds done under the Disbursement Allocation Program (DAP).
There was the wholesale assertion that all such funds came from
savings coming from slow moving projects. This is not enough to
determine whether the requirements of constitutionality have been
met. For there to be valid savings of every centavo in the pooled
funds, there must be a showing (a) that the activity has been
completed, finally discontinued and abandoned;32 and (b) why such
activity was finally discontinued and abandoned and its consistency
with existing statutes.33 Pooled funds make it difficult, for purposes
of this determination, to make this determination. DAP may be the
mechanism to ensure that items that needed to be augmented be
funded in order to allow efficiencies to occur. However, this
mechanism should be grounded and limited by constitutional acts.
The source of the funds in the pool called DAP should be shown to
have come from legitimate savings in order that it can be used to
augment appropriations items.
The amount of augmentation is not constitutionally limited when
there are legitimate savings and statutory authority to modify an
appropriations item.34 Furthermore, there is a difference between an
appropriations item and the expense categories within these items.
The Constitution only mentions that the entire appropriations item
may be augmented from sav-
_______________
31 Id.
32 Rep. Act No. 10155, GAA Fiscal Year 2012, General Provisions, Sec. 54. See
also Rep. Act No. 10352, GAA Fiscal Year 2013, General Provisions, Sec. 53 and
Rep. Act No. 10147, GAA Fiscal Year 2011, General Provisions, Sec. 60.
33 See also 1 Government Accounting and Auditing Manual Book III, Title 3,
Art. 2, Secs. 162-166; Exec. Order No. 292, Book VI, Ch. 5, Sec. 38.
442

ings.35 Neither the Constitution nor any provision of law limits

the expense category that may be used within the item that will be
augmented. Thus, I agree with the ponencia that when an item is
properly augmented, additional funds may be poured into Personnel
Services, MOOE, or Capital Outlay even if originally the
appropriations item may not have had a provision for any one of
these expense categories.

V
Augmentation may only be
within a constitutional department

The Solicitor General strains the meaning of Article VI, Section
25(5) to the point of losing its spirit.36 He proposes that
augmentation by the President is allowable when there is a request
coming from another constitutional organ or department.37 He parses
the provision to show that one sentence is meant to contain two
ideas: first, the transfer of appropriation and second, the power to
augment.
This is a novel idea that is not consistent with existing
precedents. Besides, such interpretation does not make sense in the
light of the fundamental principle of separation of powers and the
sovereign grant to Congress to authorize the budget. The proposed
interpretation undermines these principles to the point of rendering
them meaningless.
Contemporaneous construction by the political departments aids
this court’s exercise of its constitutional duty of judicial review.
Contemporaneous construction does not replace this power.
_______________
35 Id.
37 Id., at p. 26.
443
VOL. 749, FEBRUARY 3, 2015 443

Parenthetically, the Solicitor General asserts in his Motion for

Reconsideration that:
77. This understanding of the Constitution is not exclusive to the

political branches of government. Documentary evidence exists to show that
the Supreme Court itself has (1) approved the allocation of amounts from its
savings to augment an item within the Executive and (2) sought funds from
the Executive for transfer to the Judiciary. These practices validate
respondents’ theory of benign and necessary interdepartmental
augmentations.
78. On 17 July 2012, when Justice Antonio T. Carpio was Acting Chief
Justice, the Supreme Court En Banc issued a Resolution in A.M. No. 12-7-
14-SC, which reads:

The foregoing amounts are hereby set aside and earmarked for the
construction costs of the said buildings.
79. As can be gleaned from the above Resolution, the Supreme Court
earmarked its existing savings of P1.865 billion to augment the P100
million budget for the Manila Hall of Justice, which is an item (B.I.d –
“Civil Works and Construction Design for the Manila Hall of Justice”) in
the 2012 budget of the Department of Justice-Office of the Secretary, which
is within the Executive Department. This is an example of the benign and
necessary interaction between interdependent departments.
444

Obviously, the Supreme Court has an interest in the construction of

Halls of Justice, and no one can say that this cross-border augmentation was
a means by which the judiciary tried to co-opt the Executive.
80. Moreover, on 05 March 2013, the Supreme Court En Banc issued a

Resolution in A.M. No. 13-1-4-SC, the dispositive portion of which reads:
WHEREFORE, the Court hereby requests the Department of Budget
and Management to approve the transfer of the amount of One Hundred
Million Pesos (P100,000,000.00) which was included in the DOJ-JUSIP
budget for Fiscal Year 2012 for the Manila Hall of Justice to the budget of
the Judiciary, subject to existing budget policies and procedures, to be used
for the construction of the Malabon Hall of Justice.
81. In the above Resolution, the Supreme Court requested the DBM to
transfer the P100 million in the budget of the DOJ for the Manila Hall of
Justice to the Judiciary, which it intended to utilize to fund the construction
of the Malabon Hall of Justice. This means that the P100 million allocation
will be taken away from the Manila Hall of Justice, which has an item in the
2012 GAA under the Executive, and used instead to fund the construction of
the Malabon Hall of Justice, which has no item in the 2012 or the 2013
GAA.
82. When the petitions were filed and while they were being heard,
Chief Justice Sereno, in a letter dated 23 December 2013, informed the
DBM that the Supreme Court was withdrawing its request to realign the
P100 million intended for the Manila Hall of Justice to the budget of the
Judiciary. These two instances show both cross-border transfers on the part
of the Supreme Court — (a) the augmentation of an item in the Executive
from funds in the Judiciary; and (b) the “transfer” of funds from the
Executive to the Supreme Court, whether or not for purposes of
augmentation.
445
VOL. 749, FEBRUARY 3, 2015 445

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

Honorable Court. But it does serve to highlight the fact that the Honorable
Court’s practice was based on an understanding of the constitutional
provision that coincides with the government’s.38 (Citations omitted)

I concur with Justice Carpio’s observations in his Separate
Opinion resolving the present Motions for Reconsideration.
Earmarking savings for a particular purpose without necessarily
spending it is not augmentation.39 It is a prerogative that can be
exercised within the judiciary’s prerogative of fiscal autonomy. With
respect to the alleged request to allocate funds from the Department
of Justice for the judiciary’s construction of the Malabon Halls of
Justice, suffice it to say that this resolution was not implemented.

The Chief Justice withdrew the request seasonably. This withdrawal
was confirmed by a Resolution issued by this court. Decisions of this
court En Banc are subject to limited reconsideration.
Reconsideration presupposes that this court also has the ability to
correct itself in a timely fashion.
The more salient question is why both the President and
Congress insist that the items for renovation, repair and
construction of court buildings should not be put under the
judiciary. Instead it is alternatively provided in the General
Appropriations Act under the budget of either the Department of
Justice or the Department of Public Works and Highways. Both of
these agencies are obviously under the executive.40 This produces
excessive entanglements between the judiciary and the executive
and undermines the constitutional requirement of independence.
In my view, these appropriation items are valid but its location
(under the ex-
_______________
38 Id., at pp. 26-28.

39 See J. Carpio, Separate Opinion, pp. 345-346.
446

ecutive) is unconstitutional. These items should be read and

deemed a part of the judiciary’s budget.

VI
The liabilities of any party were
not issues in these cases

I fully concur with the ponencia’s characterization that the
pronouncements of good faith or bad faith of authors, proponents,
and implementors of the DAP are obiter. Obiter dictum is part of
the flourish of writing an opinion. They serve the purpose of
elucidation but should not be read as binding rule of the case
(ratio decidendi). This is so because the parties did not litigate
them as issues. They are not essential to arrive at a resolution of
the issues enumerated by this court as fundamental to reach the

disposition of this case.41
There was neither a declaration of illegality or unconstitutionality
of any of or all of the 116 projects identified to have benefitted from
the DAP mechanism nor was there a declaration that the DAP
mechanism per se was unconstitutional. That the administration
chose to stop or suspend all these projects was not called for by the
decision. The dispositive of the decision (fallo) only declared acts or
practices under the DAP42 as unconstitutional, e.g., cross-border
transfers, fund-
_______________
41
The City of Manila v. Entote, 156 Phil. 498, 510-511; 57 SCRA 497, 508-509
(1974) [Per J. Muñoz-Palma, First Division], citing Morales v. Paredes, 55 Phil. 565,
567 (1930) [Per J. Ostrand, En Banc], states: “A remark made, or opinion expressed,
by a judge, in his decision upon a cause, incidentally or collaterally, and not directly
upon the question before him, or upon a point not necessarily involved in the
determination of the cause, is an obiter dictum and as such it lacks the force of an
adjudication and is not to be regarded as such.”
42 (a) The withdrawal of unobli-
447
VOL. 749, FEBRUARY 3, 2015 447

ing of programs not covered by any appropriation under the

General Appropriations Act, and the declaration of savings without
complying with the requirements under the General Appropriations
Act. Unless all the DAP projects were considered by the executive
as having elements of the unconstitutional acts, the decision to stop
or suspend was theirs alone.
Anxiety for the party losing a case is natural. These anxieties are
normally assuaged by better legal advice. Sobriety follows good
legal advice. After all, our opinions form part of jurisprudence,
which are principal sources for the bar to give good legal advice and
the bench to decide future cases. Bad legal advice given to the
President as to the import of our rulings may have dire
consequences, but it does not change what we have declared or
proclaimed. We can only do so much in our opinions.

VII
Release of unprogrammed funds

The Office of the Solicitor General points out that this court is
mistaken in ruling that:
[R]evenue collections must exceed the total of the revenue targets stated
in the Budget for Expenditures and Sources of Financing (BESF) before
expenditures under the Unprogrammed Fund can be made.43 (Citation
omitted)
_______________
gated 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.
43 Respondent’s Motion for Reconsideration, p. 29.

448

The Office of the Solicitor General argues that in reality, “the

government’s total revenue collections have never exceeded the total
original revenue targets”44 and that the proper interpretation is:
[E]xcess revenue collections refer to the excess of actual revenue

collections over estimated revenue targets, not the difference between
revenue collections and expenditures.45

In my Concurring Opinion to the July 1, 2014 Decision, I
initially agreed with the majority decision that “[s]ourcing the DAP
from unprogrammed funds despite the original revenue targets not
having been exceeded was invalid”46 referred to total revenue
targets, not revenue target per income class.
The interpretation of the article on Unprogrammed Funds
covered by the period when DAP was in place deserves closer
scrutiny. The resolution of whether authorization to spend income

only upon a showing that total collected revenues exceed total
targeted revenues requires examination of the entire structure of the
article and not only its first provision.
In the original Decision, we focused on the first special
provision. In the FY 2011 General Appropriations Act, this
provision states:
Special Provision(s)
Section 22, Article VII of the Constitution, including savings generated
from programmed appropriations for the year: PROVIDED, That collections
arising from sources
_______________
44 Id.
45 Id., at pp. 29-30.
46 Araullo v. Aquino III, supra note 14 at p. 164.
449
VOL. 749, FEBRUARY 3, 2015 449

not considered in the aforesaid original revenue targets may be used to

cover releases from appropriations in this Fund: PROVIDED, FURTHER,
That in case of newly approved loans for foreign-assisted projects, the
existence of a perfected loan agreement for the purpose shall be sufficient
basis for the issuance of a SARO covering the loan proceeds: PROVIDED,
FURTHERMORE, That if there are savings generated from the programmed
appropriations for the first two quarters of the year, the DBM may, subject to
the approval of the President, release thepertinent [sic] appropriations under
the Unprogrammed Fund corresponding to only fifty percent (50%) of the
said savings net of revenue shortfall: PROVIDED, FINALLY, That the
release of the balance of the total savings from programmed appropriations
for the year shall be subject to fiscal programming and approval of the
President.47
However, this is not the only special provision for this

appropriations item.

A
Use of savings in programmed funds
for purposes enumerated for Unprogrammed Funds

The article on Unprogrammed Funds is generally the
appropriations item that allows expenditures from income arising
from collected revenues exceeding those targeted. Starting from the
General Appropriations Act of 2012, the applicable laws
consistently no longer included the clause, “including savings
generated from programmed appropriations for the
_______________
47 Rep. Act No. 10147, GAA Fiscal Year 2011, Art. XLV. Similar provisions are
found in Art. XLVI of Rep. Act No. 10155, GAA Fiscal Year 2012 and Art. XLV of
Rep. Act No. 10352, GAA Fiscal Year 2013. In the 2014 GAA, the purposes and
specific allocations are found in Art. [X]LVI, Annex A and the special provisions are
in Art. XLVI of Rep. Act No. 10633, GAA Fiscal Year 2014. For FY 2011, total
Unprogrammed Funds authorized was P66.9 B; in 2012, P152.8 B; in 2013, P117.6
B; and in 2014, P139.9 B.
450

year,” found in the General Appropriations Act of 2011 from the

common first special provision. This manifests the clear intention
that none of the savings from programmed appropriation will be
used for any of the purposes enumerated in the article on
Unprogrammed Funds. These purposes are:
1. Budgetary Support to Government-Owned and/or

-Controlled Corporations
2. Strategic Government Reforms
3. Support to Foreign-Assisted Projects
4. General Fund Adjustments
5. Support for Infrastructure Projects and Social Programs
6. Support for Pre-School Education
7. Collective Negotiation Agreement
8. Payment of Total Administrative Disability Pension48
_______________
48 In the 2012 GAA, only four (4) of the eight (8) purposes enumerated in the
2011 GAA were retained. The 2012 GAA also introduced two (2) purposes not
contemplated in the 2011 GAA. The authorized purposes in the 2012 GAA were:
5. Disaster Risk Reduction and Management
6. Debt Management Program
The 2013 GAA retained the four (4) purposes retained by the 2012 GAA from the
2011 GAA and reinstated a fifth purpose from the 2011 GAA. It retained one (1) of
the two (2) purposes introduced by the 2012 GAA and introduced two new purposes.
The authorized purposes in the 2013 GAA were:
451
VOL. 749, FEBRUARY 3, 2015 451

Starting FY 2012, therefore, expenditures from the purposes

enumerated in Unprogrammed Funds using “savings” from
programmed appropriations would be void for lack of statutory
authority to spend for such purposes in such manner.

Use of excess revenue collections

Generally, revenue collections in excess of targeted revenues
cannot be considered as “savings” in the concept of Article VI,
Section 25(5) of the Constitution. However, the disposition of these
funds may also be provided in the General Appropriations Act or in
a supplemental budget. This is consistent with the basic principle
that Congress authorizes expen-
_______________

5. AFP Modernization Program

7. Payment of Total Administrative Disability Pension
8. People’s Survival Fund
The 2014 GAA retained all the purposes indicated in the 2013 GAA and added
three (3) others. The authorized purposes in the 2014 GAA were:
5. AFP Modernization Program
7. Risk Management Program
8. Disaster Relief and Mitigation Fund
9. Reconstruction and Rehabilitation Program
10. Total Administrative Disability Pension
11. People’s Survival Fund
452

ditures of public funds as found in Article VI, Section 29(1) of

the Constitution, to wit:
(1) No money shall be paid out of the Treasury except in pursuance of

an appropriation made by law.

Thus, apart from the first special provision, the ninth provision
states:
9. Use of Income. In case of deficiency in the appropriations for the

following business-type activities, departments, bureaus, offices and
agencies enumerated hereunder and other agencies as may be determined by
the Permanent Committee are hereby authorized to use their respective
income collected during the year. Said income shall be deposited with the
National Treasury, chargeable against Purpose 4 – General Fund
Adjustments, to be used exclusively for the purposes indicated herein or
such other purposes authorized by the Permanent Committee, as may be
required until the end of the year, subject to the submission of a Special
Budget pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292, S.
1987:
453
VOL. 749, FEBRUARY 3, 2015 453

_______________
49 Rep. Act No. 10147, GAA Fiscal Year 2011, Art. XLV, Unprogrammed Fund,
Special Provision(s) (compare with provisions in the rest of the GAAs). Exec. Order
No. 292 (1987), Book VI, Ch. 5, Sec. 35, contains the procedure for expenditures
from Lump Sum Appropriations, thus:
SECTION 35. Special Budgets for Lump-Sum Appropriations.—Expenditures
from lump-sum appropriations authorized for any purpose or for any department,
office or agency in any annual General Appropriations Act or other Act and from any
fund of the National Government, shall be made in accordance with a special budget
to be approved by the President, which shall include but shall not be limited to the
number of each kind of position, the designations, and the annual salary proposed for
which an appropriation is intended. This provision shall be applicable to all revolving
funds, receipts which are automatically made available for expenditure for certain
specific purposes, aids and donations for carrying out certain activities, or deposits
made to cover to cost of special services to be rendered to private parties. Unless
otherwise expressly provided by law, when any Board, head of department, chief of
bureau or office, or any other official, is authorized to appropriate, allot, distribute or
454


The deficiency referred to in this special provision refers to the
inadequacy of the amount already appropriated. The purpose of
addressing the deficiency is to ensure that the income generating
activities of the offices and agencies continue. It grants flexibility
inasmuch as the actual demand for the government services
enumerated might not be exactly as predicted. To achieve this
flexibility, this special provision does not require that there be a
showing that total collected revenue for all sources of funds exceed
total targeted revenue.
The tenth special provision for Unprogrammed Funds in the
General Appropriations Act of 2011 more specifically addresses the
use of excess income for revenue generating agencies and offices:
10. Use of Excess Income. Agencies collecting fees and charges as

shown in the FY 2011 Budget of Expenditures and Sources of Financing
(BESF) may be allowed to use their income realized and deposited with the
National Treasury, in excess of the collection targets presented in the BESF,
chargeable against Purpose 4 – General Fund Adjustments, to augment their
respective current appropriations, subject to the submission of a Special
Budget pursuant to section 35, Chapter 5, Book VI of E.O. No. 292:
PROVIDED, That said income shall not be used to augment Personal
Services appropriations including payment of discretionary and
representation expenses.50
_______________
spend any lump-sum appropriation or special, bond, trust, and other funds, such
authority shall be subject to the provisions of this section.
In case of any lump-sum appropriation for salaries and wages of temporary and
emergency laborers and employees, including contractual personnel, provided in any
General Appropriation Act or other Acts, the expenditure of such appropriation shall
be limited to the employment of persons paid by the month, by the day, or by the
hour.
50 Rep. Act No. 10147, GAA Fiscal Year 2011, Art. XLV (compare with similar
provisions in GAAs for 2012, 2013, 2014).
The counterpart provision in the 2012 GAA reads:
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VOL. 749, FEBRUARY 3, 2015 455

_______________
4. Use of Excess Income. Agencies collecting fees and charges as shown in the
FY 2012 Budget of Expenditures and Sources of Financing (BESF) may be allowed
to use their income realized and deposited with the National Treasury, in excess of the
collection targets presented in the BESF, chargeable against Purpose 3 – General
Fund Adjustments, to augment their respective current appropriations, subject to the
No. 292; PROVIDED, That said income shall not be used to augment Personal
expenses.
Implementation of this section shall be subject to guidelines issued by the DBM.
4. Use of Excess Income. Departments, bureaus and offices authorized to
collect fees and charges as shown in the FY 2013 BESF may be allowed to use their
income realized and deposited with the National Treasury, in excess of the collection
targets presented in the BESF, chargeable against Purpose 3 –General Fund
Adjustments, to augment their respective current appropriations, subject to the
No. 292: PROVIDED, That said income shall not be used to augment Personal
expenses.
Implementation of this provision shall be subject to the guidelines issued by the
DBM.
5. Use of Excess Income. Departments, bureaus and offices authorized to
collect fees and charges as shown in the FY 2014 BESF may be allowed to use their
income realized and deposited with the National Treasury: PROVIDED, That said
income shall be in excess of the collection targets presented in the BESF:
PROVIDED, FURTHER, That it shall be chargeable against Purpose 3: PROVIDED,
FURTHERMORE, That it shall only be used to augment their respective current
appropriations during the year: PROVIDED, FINALLY, That said income shall not be
used to augment Personnel Services
456

This special provision specifically authorizes the use of the

excess in collected revenue over targeted revenue for the collecting
agency. This flexibility in the budget allows government to
continually ensure that income-generating activities of government
do not come to a standstill for lack of funds. More than an expense,
this funding can be seen as an investment into the operations of

these special offices and agencies.
Again, similar to the ninth special provision, there is no need to
show that the total revenue collections of government exceed their
submitted total targeted collections.
Other than these statutory authorities, Unprogrammed Funds or
revenue collected in excess of the submitted targets may not be used
to augment programed appropriations. Any such expenditure will be
void for lack of statutory authority required by the Constitution.
B
Apart from these special provisions, the absolute and universal
requirement that expenditures from Unprogrammed Funds will only
be allowed when the total revenue collected exceeds the submitted
targets may not be supported even by the text of the first special
provision.
The text of the first special provision reads: “Release of Funds . .
. shall be released only when the revenue collections exceed the
original revenue targets submitted by the President[.]”51 Revenue
targets are in plural form. The provision
_______________
appropriations including payment of discretionary and representation expenses.

Releases from said income shall be subject to the submission of a Special Budget
pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292.
Implementation of this provision shall be subject to the guidelines issued by the
DBM.
51 Rep. Act No. 10147, GAA Fiscal Year 2011, Art. XLV, Special Provision(s)
(1).
457
VOL. 749, FEBRUARY 3, 2015 457

also fails to qualify that the basis for reckoning whether the
excess is the total “original revenue target[s].” The absence of the
adjective “total” is palpable and unmistakable.
The ponencia proposes that we discover an unequivocal intent on
the part of this statute that the authority to spend for any purpose
covered by this title (Unprogrammed Funds) is present only when
the actual revenue collection exceeds the total revenue target
submitted by the President. While this interpretation may have its
own reasonable merit, it is not the only interpretation possible. There

can be other interpretations that would be fully supported by the text
of the provision. There can be other interpretations which will not
require that this court make generalizations and surmises.
At best, therefore, the universal qualifier for the use of
Unprogrammed Funds may just be one interpretation; but, it is not
the only one.
The text of this statutory provision can also be reasonably
interpreted as allowing expenditures for the purposes enumerated
when it can be shown that the actual revenue collection in an
income source exceeds the target for that source as submitted by
the President in his National Expenditure Program. There is no need
to show that the total revenue collection exceeds the total revenue
targets.
This alternative interpretation, apart from being plainly supported
by the text, is also reasonable to achieve discernable state interests.
For instance, different departments and agencies are responsible
for varying sources of revenue. The Bureau of Internal Revenue
ensures a viable tax collection rate. The Bureau of Customs oversees
the collection of tariffs and other customs duties. Each of these
agencies is faced with their own ambient and organizational
challenges. The leadership styles of those given charge of these
offices will be different resulting in varying results in terms of their
collection efforts. Similarly, the problems of government financial
institutions
458

(GFIs) and government-owned and -controlled corporations

(GOCC) may require different interventions to improve their
profitability and efficiencies. Thus, when each of these agencies and
offices actually exceed their revenue collection over their targets is
dependent on a lot of factors, many of which are not common to all
of them.
It is as reasonable to infer that Congress may have intended to
provide incentives — and its corresponding flexibility — to the
President as his team is able to solve the challenges of each of the
agencies involved in generating revenues. It is reasonable also to
assume that members of Congress were pragmatic and that they
expected that the problems of collection (including leakages) in
some agencies, such as the Bureau of Customs, would be difficult to

solve as compared with GFIs and GOCCs. Thus, authority to spend
for the purposes enumerated in the article on Unprogrammed Funds
will depend on the success of each of the agencies involved.
The provision in question is sufficiently broad to carry either or
both interpretations: (a) targeted revenues refer to total revenues,
and (b) that targeted revenues refer to revenues per income class.
Both can be supported by their own set of reasons, but the first
option — that of considering targeted revenues as total revenues —
carries the potential of being absurd. Thus, the real question is
whether it is within our power to choose which interpretation is the
more pragmatic and sound policy. This decision is different from
whether the provision itself or its application is consistent with a
provision in the Constitution. It is a choice of the wiser or more
politically palatable route. It is a question of wisdom.
Judicial review should take a more deferential temperament when
the interpretation of a statutory provision involves political choices.
At the very least, these questions should be deferred until parties in
the proper case using the appropriate remedy are able to lay down
the ambient facts that can show that one interpretation adopted by
government respondents clearly and categorically runs afoul of any
law or
459
VOL. 749, FEBRUARY 3, 2015 459

constitutional provision. In my separate opinion in Umali v.

Commission on Elections,52 I noted:
Our power to strike down an act of coequal constitutional organs is not

unlimited. When we nullify a governmental act, we are required “to
determine whether there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government.”
No less than three constitutional organs have interpreted the law and the
relevant provision of the Constitution. I am of the view that our power to
strike down that interpretation should not be on the basis of the
interpretation we prefer. Rather, Governor Umali should bear the burden of
proving that the interpretation of the law and the Constitution in the actual
controversy it presents is not unreasonable and not attended by any proven
clear and convincing democratic deficit. We should wield the awesome
power of judicial review awash with respectful deference that the other
constitutional organs are equally conscious of the mandate of our people

through our Constitution.53 (Emphasis and citation omitted)

When judicial review is being applied to check on the powers of
other constitutional departments or organs, it should require
deference as a constitutional duty. This proceeds from the idea that
the Constitution, as a fundamental legal document, contains norms
that should also be interpreted by other public officers as they
discharge their functions within the framework of their
constitutional powers.
To this extent, I qualify my concurrence to the declaration that
the expenditures under DAP from Unprogrammed Funds
_______________
52 G.R. No. 203974, April 22, 2014, 723 SCRA 170 [Per J. Velasco, Jr., En
Banc].
53 J. Leonen, Dissenting Opinion in Umali v. Commission on Elections, id., at pp.
220-221.
460

is void without conditions. I suspend judgment for the more

appropriate case where facts have been properly adjudicated in the
proper forum. Perhaps, this will be a certiorari or prohibition case
arising out of an actual disallowance of the Commission on Audit of
an expenditure claimed under Unprogrammed Funds.
Assuming without conceding that the interpretation that
Unprogrammed Funds can only be sourced from the excess over the
total revenue targets is a new construction on a statutory provision.
It is not a finding that there is a constitutional violation. Thus,
fairness to concerned parties requires that it be prospective in its
effect. In this regard, I concur with the ponencia’s view that the
majority’s interpretation should be prospective without conceding
the points I have made in this Opinion.
My concurrence relating to the three acts and practices under the
DAP that are considered unconstitutional and the application of the
operative fact doctrine for third party beneficiaries remains
vigorously unaltered.
C
During the deliberation in this case, Justice Carpio suggested that

the value of the article on Unprogrammed Funds was to assure all
actors in our economy that government will not print money just to
be able to make expenditures. Printing money or increasing money
supply generally has inflationary effects. That is, the prices of all
goods and services may increase not because of the scarcity of these
items but because there is a surplus of currency floating in the
economy. Thus, the title on Unprogrammed Funds require actual
revenue collections vis-à-vis a fixed base such as submitted revenue
targets that cannot be further modified.
I agree. The entire discussion thus far requires actual collection
and an excess of these actual collections over revenue targets.
461
VOL. 749, FEBRUARY 3, 2015 461

Justice Carpio next pointed out the consequences of the special

provision on reportorial requirements. This provides:
11. Reportorial Requirement. The DBM shall submit to the House

Committee on Appropriations and the Senate Committee on Finance
separate quarterly reports stating the releases from the Unprogrammed
Fund, the amounts released and purposes thereof, and the recipient
departments, bureaus, agencies or offices, GOCCs and GFIs, including the
authority under which the funds are released under Special Provision No. 1
of the Unprogrammed Fund.54

I agree that this special provision debunks the Solicitor General’s
argument that Unprogrammed Funds using the interpretation of this
court’s original majority opinion will never be used because it can
only be assessed the following year. The provision clearly allows
use of the funds within the year because it contemplates quarterly
reports, which it requires to be made with Congress.
However, I regret that I cannot agree that this special provision
implies a resolution of the basis for construing what targeted
revenue means. On a quarterly basis, government can assess either
total quarterly revenue or quarterly revenue per income source.
There is also need for quarterly reports in view of the ninth and tenth
special provision in the article on Unprogrammed Funds in the
General Appropriations Act of 2011, which are similar to the
corresponding special provisions in subsequent General

ACCORDINGLY, with these clarifications, I vote:
_______________
54 Rep. Act No. 10147, GAA Fiscal Year 2011, Art. XLV, Special Provision(s)
(11). Similar provisions are found in Art. XLVI of Rep. Act No. 10155, GAA Fiscal
Year 2012, Art. XLV of Rep. Act No. 10352, GAA Fiscal Year 2013, and Art. XLVI
of Rep. Act No. 10633, GAA Fiscal Year 2014.
462

(a) to DENY the Motions for Reconsideration of petitioners for

lack of merit;
(b) to PARTIALLY GRANT the Motion for Reconsideration of
respondents in relation to the concept of expense classes as opposed
to appropriation items; and
(c) with respect to Unprogrammed Funds, to DECLARE that the
use of Unprogrammed Funds to augment programmed
appropriations is VOID unless consistent with the special
provisions. However, this interpretation on the use of
Unprogrammed Funds should be applied prospectively.
Motion for Reconsideration partially granted, while Motion for

Partial Reconsideration denied.
Notes.—If, by the end of any fiscal year, the Congress shall have
failed to pass the General Appropriations Bill (GAB) for the ensuing
fiscal year, the General Appropriations Act for the preceding fiscal
year shall be deemed reenacted and shall remain in force and effect
until the General Appropriations Bill is passed by the Congress.
(Araullo vs. Aquino III, 728 SCRA 1 [2014])
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
Disbursement Acceleration Program (DAP). (Id.)
——o0o——
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1/20/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 749

G.R. No. 209287. February 3, 2015.*

284 SUPREME COURT REPORTS ANNOTATED

G.R. No. 209135. February 3, 2015.*

G.R. No. 209136. February 3, 2015.*

G.R. No. 209155. February 3, 2015.*

G.R. No. 209164. February 3, 2015.*

G.R. No. 209260. February 3, 2015.*

VOL. 749, FEBRUARY 3, 2015 285

G.R. No. 209442. February 3, 2015.*

PAQUITO N. OCHOA, JR.; THE DEPARTMENT OF BUDGET

G.R. No. 209517. February 3, 2015.*

286 SUPREME COURT REPORTS ANNOTATED

BENIGNO SIMEON C. AQUINO III, President of the

G.R. No. 209569. February 3, 2015.*

VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC),

General Appropriations Act; Disbursement Acceleration Program;

VOL. 749, FEBRUARY 3, 2015 287

execution, and to prevent them from unduly transgressing Congress’ power

288 SUPREME COURT REPORTS ANNOTATED

conform. No act that conﬂicts with the Constitution can be valid. In

whether proceeding from the highest ofﬁcial or the lowest functionary, is a

VOL. 749, FEBRUARY 3, 2015 289

tice, and the heads of the Constitutional Commissions.—Indeed,

290 SUPREME COURT REPORTS ANNOTATED

Carpio, J., Separate Opinion:

General Appropriation Act; Savings; Words and Phrases; View that

which the appropriation is authorized; (ii) from appropriations balances

VOL. 749, FEBRUARY 3, 2015 291

the agency or paralyzing its operations. Any declaration of “savings” must

292 SUPREME COURT REPORTS ANNOTATED

branch is made to beg for the appropriations of another branch to be

VOL. 749, FEBRUARY 3, 2015 293

the law or the administrative issuance, prior to its declaration of

illegal or unconstitutional act, without any direct participation in the

Brion, J., Separate Opinion:

Courts; Supreme Court; Judicial Power; View that the concept of

294 SUPREME COURT REPORTS ANNOTATED

agency or instrumentality committed grave abuse of discretion in the

constitutional bodies, and the administrative agencies — that are contrary to

VOL. 749, FEBRUARY 3, 2015 295

General Appropriations Act; Disbursement Acceleration Program;

296 SUPREME COURT REPORTS ANNOTATED

savings, viz.: Actual savings is a sine qua non to a valid transfer of

year. These provisions cannot be made to extend beyond the appropriations

VOL. 749, FEBRUARY 3, 2015 297

not considered in the original revenue targets to cover releases from

Statutory Construction; View that the prospective effect of a statutory

298 SUPREME COURT REPORTS ANNOTATED

have been in existence, and must demonstrably need supplementation,

VOL. 749, FEBRUARY 3, 2015 299

recognizes that the unconstitutional law, prior to the declaration of its

300 SUPREME COURT REPORTS ANNOTATED

Del Castillo, J., Concurring and Dissenting Opinion:

General Appropriations Act; Disbursement Acceleration Program;

purpose. This power was impliedly exercised by the President, under

VOL. 749, FEBRUARY 3, 2015 301

language of the constitutional prohibition on cross-border transfer of

302 SUPREME COURT REPORTS ANNOTATED

Leonen, J., Concurring Opinion: