LAMP VS. SEC OF BUDGET AND MANAGEMENTMARCH 28, 2013 ~ VBDIAZ

LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP),

represented by its Chairman and counsel, CEFERINO PADUA,

Members, ALBERTO ABELEDA, JR., ELEAZAR ANGELES,

GREGELY FULTON ACOSTA, VICTOR AVECILLA, GALILEO

BRION, ANATALIA BUENAVENTURA, EFREN CARAG, PEDRO

CASTILLO, NAPOLEON CORONADO, ROMEO ECHAUZ,

ALFREDO DE GUZMAN, ROGELIO KARAGDAG, JR., MARIA LUZ

ARZAGA-MENDOZA, LEO LUIS MENDOZA, ANTONIO P.

PAREDES, AQUILINO PIMENTEL III, MARIO REYES, EMMANUEL

SANTOS, TERESITA SANTOS, RUDEGELIO TACORDA,

SECRETARY GEN. ROLANDO ARZAGA, Board of Consultants,

JUSTICE ABRAHAM SARMIENTO, SEN. AQUILINO PIMENTEL,

JR., and BARTOLOME FERNANDEZ, JR.

vs.

THE SECRETARY OF BUDGET AND MANAGEMENT, THE

TREASURER OF THE PHILIPPINES, THE COMMISSION ON

AUDIT, and THE PRESIDENT OF THE SENATE and the

SPEAKER OF THE HOUSE OF REPRESENTATIVES in

representation of the Members of the Congress

G.R. No. 164987, April 24, 2012

FACTS: For consideration of the Court is an original action for

certiorari assailing the constitutionality and legality of the

implementation of the Priority Development Assistance Fund (PDAF)

as provided for in Republic Act (R.A.) 9206 or the General

Appropriations Act for 2004 (GAA of 2004).

Petitioner Lawyers Against Monopoly and Poverty(LAMP), a group of

lawyers who have banded together with a mission of dismantling all

forms of political, economic or social monopoly in the country.

According to LAMP, the above provision is silent and, therefore,

prohibits an automatic or direct allocation of lump sums to individual

senators and congressmen for the funding of projects. It does not

empower individual Members of Congress to propose, select and

identify programs and projects to be funded out of PDAF.

For LAMP, this situation runs afoul against the principle of separation

of powers because in receiving and, thereafter, spending funds for

their chosen projects, the Members of Congress in effect intrude into

an executive function. Further, the authority to propose and select

projects does not pertain to legislation. “It is, in fact, a non-

legislative function devoid of constitutional sanction,”8 and,

therefore, impermissible and must be considered nothing less than

malfeasance.

RESPONDENT’S POSITION: the perceptions of LAMP on the

implementation of PDAF must not be based on mere speculations

circulated in the news media preaching the evils of pork barrel.

ISSUES: 1) whether or not the mandatory requisites for the exercise

of judicial review are met in this case; and 2) whether or not the

implementation of PDAF by the Members of Congress is

unconstitutional and illegal.

HELD:

I.

A question is ripe for adjudication when the act being challenged

has had a direct adverse effect on the individual challenging it. In

this case, the petitioner contested the implementation of an alleged

unconstitutional statute, as citizens and taxpayers. The petition

complains of illegal disbursement of public funds derived from

taxation and this is sufficient reason to say that there indeed exists

a definite, concrete, real or substantial controversy before the Court.

LOCUS STANDI: The gist of the question of standing is whether a

party alleges “such a personal stake in the outcome of the

controversy as to assure that concrete adverseness which sharpens

the presentation of issues upon which the court so largely depends

for illumination of difficult constitutional questions. Here, the

sufficient interest preventing the illegal expenditure of money raised

by taxation required in taxpayers’ suits is established. Thus, in the

claim that PDAF funds have been illegally disbursed and wasted

through the enforcement of an invalid or unconstitutional law, LAMP

should be allowed to sue.

Lastly, the Court is of the view that the petition poses issues

impressed with paramount public interest. The ramification of issues

involving the unconstitutional spending of PDAF deserves the

consideration of the Court, warranting the assumption of jurisdiction

over the petition.

II.

The Court rules in the negative.

In determining whether or not a statute is unconstitutional, the

Court does not lose sight of the presumption of validity accorded to

statutory acts of Congress. To justify the nullification of the law or its

implementation, there must be a clear and unequivocal, not a

doubtful, breach of the Constitution. In case of doubt in the

sufficiency of proof establishing unconstitutionality, the Court must

sustain legislation because “to invalidate [a law] based on x x x

baseless supposition is an affront to the wisdom not only of the

legislature that passed it but also of the executive which approved

it.”

The petition is miserably wanting in this regard. No convincing proof

was presented showing that, indeed, there were direct releases of

funds to the Members of Congress, who actually spend them

according to their sole discretion. Devoid of any pertinent

evidentiary support that illegal misuse of PDAF in the form of

kickbacks has become a common exercise of unscrupulous Members

of Congress, the Court cannot indulge the petitioner’s request for

rejection of a law which is outwardly legal and capable of lawful

enforcement.

PORK BARREL:

The Members of Congress are then requested by the President to

recommend projects and programs which may be funded from the

PDAF. The list submitted by the Members of Congress is endorsed

by the Speaker of the House of Representatives to the DBM, which

reviews and determines whether such list of projects submitted are

consistent with the guidelines and the priorities set by the

Executive.”33 This demonstrates the power given to the President

to execute appropriation laws and therefore, to exercise the

spending per se of the budget.

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

establishing that individual Members of Congress receive and

thereafter spend funds out of PDAF. So long as there is no showing

of a direct participation of legislators in the actual spending of the

budget, the constitutional boundaries between the Executive and

the Legislative in the budgetary process remain intact.

Maria Carolina Araullo vs Benigno Aquino III

Political Law – Constitutional Law – Separation of Powers – Fund Realignment –

Constitutionality of the Disbursement Acceleration Program

Power of the Purse – Executive Impoundment

When President Benigno Aquino III took office, his administration noticed the

sluggish growth of the economy. The World Bank advised that the economy needed a

stimulus plan. Budget Secretary Florencio “Butch” Abad then came up with a program

called the Disbursement Acceleration Program (DAP).

The DAP was seen as a remedy to speed up the funding of government projects. DAP

enables the Executive to realign funds from slow moving projects to priority projects

instead of waiting for next year’s appropriation. So what happens under the DAP was

that if a certain government project is being undertaken slowly by a certain executive

agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn,

these funds are declared as “savings” by the Executive and said funds will then be

reallotted to  other priority projects. The DAP program did work to stimulate the

economy as economic growth was in fact reported and portion of such growth was

attributed to the DAP (as noted by the Supreme Court).

Other sources of the DAP include the unprogrammed funds from the General

Appropriations Act (GAA). Unprogrammed funds are standby appropriations made by

Congress in the GAA.

Meanwhile, in September 2013, Senator Jinggoy Estrada made an exposé claiming that

he, and other Senators, received Php50M from the President as an incentive for voting

in favor of the impeachment of then Chief Justice Renato Corona. Secretary Abad

claimed that the money was taken from the DAP but was disbursed upon the request of

the Senators.

This apparently opened a can of worms as it turns out that the DAP does not only

realign funds within the Executive. It turns out that some non-Executive projects were

also funded; to name a few: Php1.5B for the CPLA (Cordillera People’s Liberation

Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the Quezon

Province, P50-P100M for certain Senators each, P10B for Relocation Projects, etc.

This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang

Makabayan, and several other concerned citizens to file various petitions with the

Supreme Court questioning the validity of the DAP. Among their contentions was:

DAP is unconstitutional because it violates the constitutional rule which provides that

“no money shall be paid out of the Treasury except in pursuance of an appropriation

made by law.”

Secretary Abad argued that the DAP is based on certain laws particularly the GAA

(savings and augmentation provisions thereof), Sec. 25(5), Art. VI of the Constitution

(power of the President to augment), Secs. 38 and 49 of Executive Order 292 (power of

the President to suspend expenditures and authority to use savings, respectively).

Issues:

I. Whether or not the DAP violates the principle “no money shall be paid out of the

Treasury except in pursuance of an appropriation made by law” (Sec. 29(1), Art. VI,

Constitution).

II. Whether or not the DAP realignments can be considered as impoundments by the

executive.

III. Whether or not the DAP realignments/transfers are constitutional.

IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.

V. Whether or not the Doctrine of Operative Fact is applicable.

HELD:

I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely

a program by the Executive and is not a fund nor is it an appropriation. It is a program

for prioritizing government spending. As such, it did not violate the Constitutional

provision cited in Section 29(1), Art. VI of the Constitution. In DAP no additional funds

were withdrawn from the Treasury otherwise, an appropriation made by law would have

been required. Funds, which were already appropriated for by the GAA, were merely

being realigned via the DAP.

II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to

the President’s power to refuse to spend appropriations or to retain or deduct

appropriations for whatever reason. Impoundment is actually prohibited by the GAA

unless there will be an unmanageable national government budget deficit (which did not

happen).  Nevertheless, there’s no impoundment in the case at bar because what’s

involved in the DAP was the transfer of funds.

III. No, the transfers made through the DAP were unconstitutional. It is true that the

President (and even the heads of the other branches of the government) are allowed by

the Constitution to make realignment of funds, however, such transfer or realignment

should only be made “within their respective offices”. Thus, no cross-border

transfers/augmentations may be allowed. But under the DAP, this was violated because

funds appropriated by the GAA for the Executive were being transferred to the

Legislative and other non-Executive agencies.

Further, transfers “within their respective offices” also contemplate realignment of funds

to an existing project in the GAA. Under the DAP, even though some projects were

within the Executive, these projects are non-existent insofar as the GAA is concerned

because no funds were appropriated to them in the GAA. Although some of these

projects may be legitimate, they are still non-existent under the GAA because they were

not provided for by the GAA. As such, transfer to such projects is unconstitutional and is

without legal basis.

On the issue of what are “savings”

These DAP transfers are not “savings” contrary to what was being declared by the

Executive. Under the definition of “savings” in the GAA, savings only occur, among

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

completed, finally discontinued, or finally abandoned. The GAA does not refer to

“savings” as funds withdrawn from a slow moving project. Thus, since the statutory

definition of savings was not complied with under the DAP, there is no basis at all for

the transfers.  Further, savings should only be declared at the end of the fiscal year. But

under the DAP, funds are already being withdrawn from certain projects in the middle of

the year and then being declared as “savings” by the Executive particularly by the DBM.

IV. No. Unprogrammed funds from the GAA cannot be used as money source for the

DAP because under the law, such funds may only be used if there is a certification from

the National Treasurer to the effect that the revenue collections have exceeded the

revenue targets. In this case, no such certification was secured before unprogrammed

funds were used.

V. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act

prior to it being declared as unconstitutional by the Supreme Court, is applicable. The

DAP has definitely helped stimulate the economy. It has funded numerous projects. If

the Executive is ordered to reverse all actions under the DAP, then it may cause more

harm than good. The DAP effects can no longer be undone. The beneficiaries of the

DAP cannot be asked to return what they received especially so that they relied on the

validity of the DAP. However, the Doctrine of Operative Fact may not be applicable to

the authors, implementers, and proponents of the DAP if it is so found in the appropriate

tribunals (civil, criminal, or administrative) that they have not acted in good faith.

Greco Belgica vs Executive Secretary Paquito Ochoa

710 SCRA 1 – Political Law – Constitutional Law – Local Government – Invalid

Delegation

Legislative Department – Invalid Delegation of Legislative Power

This case is consolidated with G.R. No. 208493 and G.R. No. 209251.

The so-called pork barrel system has been around in the Philippines since about 1922.

Pork Barrel is commonly known as the lump-sum, discretionary funds of the members of

the Congress. It underwent several legal designations from “Congressional Pork Barrel”

to the latest “Priority Development Assistance Fund” or PDAF. The allocation for the

pork barrel is integrated in the annualGeneral Appropriations Act (GAA).

Since 2011, the allocation of the PDAF has been done in the following manner:

a. P70 million: for each member of the lower house; broken down to – P40 million for

“hard projects” (infrastructure projects like roads, buildings, schools, etc.), and P30

million for “soft projects” (scholarship grants, medical assistance, livelihood programs,

IT development, etc.);

b. P200 million: for each senator; broken down to – P100 million for hard projects,

P100 million for soft projects;

c. P200 million: for the Vice-President; broken down to – P100 million for hard projects,

P100 million for soft projects.

The PDAF articles in the GAA do provide for realignment of funds whereby certain

cabinet members may request for the realignment of funds into their department

provided that the request for realignment is approved or concurred by the legislator

concerned.

Presidential Pork Barrel

The president does have his own source of fund albeit not included in the GAA. The so-

called presidential pork barrel comes from two sources: (a) the  Malampaya Funds, from

the Malampaya Gas Project – this has been around since 1976, and (b) the Presidential

Social Fund which is derived from the earnings of PAGCOR – this has been around

since about 1983.

Pork Barrel Scam Controversy

Ever since, the pork barrel system has been besieged by allegations of corruption. In

July 2013, six whistle blowers, headed by Benhur Luy, exposed that for the last decade,

the corruption in the pork barrel system had been facilitated by Janet Lim Napoles.

Napoles had been helping lawmakers in funneling their pork barrel funds into about 20

bogus NGO’s (non-government organizations) which would make it appear that

government funds are being used in legit existing projects but are in fact going to

“ghost” projects. An audit was then conducted by the Commission on Audit and the

results thereof concurred with the exposes of Luy et al.

Motivated by the foregoing, Greco Belgica and several others, filed various petitions

before the Supreme Court questioning the constitutionality of the pork barrel system.

ISSUES: 

I. Whether or not the congressional pork barrel system is constitutional.

II. Whether or not presidential pork barrel system is constitutional.

HELD: 

I. No, the congressional pork barrel system is unconstitutional. It is unconstitutional

because it violates the following principles:

a. Separation of Powers

As a rule, the budgeting power lies in Congress. It regulates the release of funds (power

of the purse). The executive, on the other hand, implements the laws – this includes the

GAA to which the PDAF is a part of. Only the executive may implement the law but

under the pork barrel system, what’s happening was that, after the GAA, itself a law,

was enacted, the legislators themselves dictate as to which projects their PDAF funds

should be allocated to – a clear act of implementing the law they enacted – a violation of

the principle of separation of powers. (Note in the older case of PHILCONSA vs

Enriquez, it was ruled that pork barrel, then called as CDF or the Countrywide

Development Fund, was constitutional insofar as the legislators only recommend where

their pork barrel funds go).

This is also highlighted by the fact that in realigning the PDAF, the executive will still

have to get the concurrence of the legislator concerned.

b. Non-delegability of Legislative Power

As a rule, the Constitution vests legislative power in Congress alone. (The Constitution

does grant the people legislative power but only insofar as the processes of referendum

and initiative are concerned). That being, legislative power cannot be delegated by

Congress for it cannot delegate further that which was delegated to it by the

Constitution.

Exceptions to the rule are:

(i) delegated legislative power to local government units but this shall involve purely

local matters;

(ii) authority of the President to, by law, exercise powers necessary and proper to carry

out a declared national policy in times of war or other national emergency, or fix within

specified limits, and subject to such limitations and restrictions as Congress may

impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other

duties or imposts within the framework of the national development program of the

Government.

In this case, the PDAF articles which allow the individual legislator to identify the

projects to which his PDAF money should go to is a violation of the rule on non-

delegability of legislative power. The power to appropriate funds is solely lodged in

Congress (in the two houses comprising it) collectively and not lodged in the individual

members. Further, nowhere in the exceptions does it state that the Congress can

delegate the power to the individual member of Congress.

c. Principle of Checks and Balances

One feature in the principle of checks and balances is the power of the president to veto

items in the GAA which he may deem to be inappropriate. But this power is already

being undermined because of the fact that once the GAA is approved, the legislator can

now identify the project to which he will appropriate his PDAF. Under such system, how

can the president veto the appropriation made by the legislator if the appropriation is

made after the approval of the GAA – again, “Congress cannot choose a mode of

budgeting which effectively renders the constitutionally-given power of the President

useless.”

d. Local Autonomy

As a rule, the local governments have the power to manage their local affairs. Through

their Local Development Councils (LDCs), the LGUs can develop their own programs

and policies concerning their localities. But with the PDAF, particularly on the part of the

members of the house of representatives, what’s happening is that a congressman can

either bypass or duplicate a project by the LDC and later on claim it as his own. This is

an instance where the national government (note, a congressman is a national officer)

meddles with the affairs of the local government – and this is contrary to the State policy

embodied in the Constitution on local autonomy. It’s good if that’s all that is happening

under the pork barrel system but worse, the PDAF becomes more of a personal fund on

the part of legislators.

II. Yes, the presidential pork barrel is valid.

The main issue raised by Belgica et al against the presidential pork barrel is that it is

unconstitutional because it violates Section 29 (1), Article VI of the Constitution which

provides:

No money shall be paid out of the Treasury except in pursuance of an appropriation made

by law.

Belgica et al emphasized that the presidential pork comes from the earnings of the

Malampaya and PAGCOR and not from any appropriation from a particular legislation.

The Supreme Court disagrees as it ruled that PD 910, which created the Malampaya

Fund, as well as PD 1869 (as amended by PD 1993), which amended PAGCOR’s

charter, provided for the appropriation, to wit:

(i) PD 910: Section 8 thereof provides that all fees, among others, collected from certain

energy-related ventures shall form part of a special fund (the Malampaya Fund) which

shall be used to further finance energy resource development and for other purposes

which the President may direct;

(ii) PD 1869, as amended: Section 12 thereof provides that a part of PAGCOR’s

earnings shall be allocated to a General Fund (the Presidential Social Fund) which shall

be used in government infrastructure projects.

These are sufficient laws which met the requirement of Section 29, Article VI of the

Constitution. The appropriation contemplated therein does not have to be a particular

appropriation as it can be a general appropriation as in the case of PD 910 and PD

1869.