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REPUBLIC OF THE PHILIPPINES SUPREME COURT

MANILA

EN BANC

MARIA CAROLINA P. ARAULLO, Chairperson, Bagong Alyansang Makabayan, et al. Petitioners, -versus- GR No. 209287 His Excellency BENIGNO SIMEON C. AQUINO III, President of the Republic of the Philippines, et al, Respondents. x------------------------------------------------x AUGUSTO L. SYJUCO, JR., Ph.D., Petitioner, -versus- GR No. 209135 Hon. FLORENCIO B. ABAD, in his capacity as Secretary of the Department of Budget and Management, et al., Respondents. x-------------------------------------------------x MANUELITO R. LUNA, Petitioner, -versus- GR No. 209136 Secretary FLORENCIO B. ABAD, in His official capacity as Head of the Department of Budget and Management, et al., Respondents. x-------------------------------------------------x Atty. JOSE MALVAR VILLEGAS, JR., Petitioner, -versus- GR No. 209155 Executive Secretary PAQUITO N. OCHOA, JR., et al., Respondents.

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x------------------------------------------------x PHILIPPINE CONSTITUTION ASSOCIATION, represented by Dean Froilan M. Bacungan, et al., Petitioners, -versus- GR No. 209164 DEPARTMENT OF BUDGET AND MANAGEMENT and/or Secretary FLORENCIO B. ABAD, Respondents. x-------------------------------------------------x INTEGRATED BAR OF THE PHILIPPINES, Petitioner, -versus- GR No. 209260 Secretary FLORENCIO B. ABAD of the Department of Budget and Management, Respondent. x--------------------------------------------------x GRECO ANTONIOUS BEDA B. BELGICA, et al., Petitioner, -versus- GR No. 209442 President BENIGNO SIMEON C. AQUINO III, et al., Respondents. x---------------------------------------------------x CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT EMPLOYEES, Represented by its 1st Vice President, Santiago Dasmarinas, Jr., et al., Petitioners, -versus- GR NO. 209517 His Excellency BENIGNO SIMEON C. AQUINO III, President of the Republic of the Philippines, et al., Respondents. x------------------------------------------------x

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VOLUNTEERS AGAINST CRIME AND CORRUPTION, represented by Dante LA. Jimenez, Petitioner, -versus- GR No. 209569 Hon. PAQUITO N. OCHOA, JR., Executive Secretary, et al., Respondents. x-------------------------------------------------x

MEMORANDUM

PETITIONERS IN GR NO. 209287 (ARAULLO PETITION), through counsel, to this Honorable Court most respectfully aver:

STATEMENT OF FACTS

While the country was still preoccupied and reeling with the effects of

the billions-worth scandal involving the Priority Development Assistance Fund (PDAF) – already declared unconstitutional by the Supreme Court due to, among others, the post-budget enactment interference by members of Congress – aseemingly innocuous yet similarly questionable budgetary practice in the process was unintentionally unmasked: the so-called Disbursement Acceleration Program (DAP).

On August 5, 2013 during the official budget deliberation of the

Development Budget Coordination Committee (DBCC) and the Department of Budget Management (DBM) Rep. Neri Colmenares of Bayan Muna Party-list inquired from the DBM Secretary, Respondent Florencio Abad about the nature of the DBM National Budget Circular No. 541 (NBC 541 hereafter). Sec. Abad informed the Appropriations Committee that NBC 541 is intended to accelerate disbursement under a then unknown DAP by withdrawing unobligated allotments from “under-spending” agencies.

When asked by Rep. Colmenares whether NBC 541 is constitutional

considering that it authorizes withdrawal of funds midyear and realigns it to other projects, Sec. Abad maintained that it is only intended to be realigned for existing projects anyway. He further stated that if the withdrawn funds will be spent on projects not contained in the General Appropriations Act then indeed it would be unconstitutional.

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When Sec. Abad was again asked how much was already withdrawn and realigned under the said program, he claimed that P75 Billion was realigned in 2011 and another P27 Billion in 2012. He confirmed that these funds supposedly came from “slow moving agencies” particularly the DENR, DPWH, DOTC, DOH, DSWD, DAR, DepEd, and the DA.

On September 25, 2013 Senator Jinggoy Estrada revealed in his

Privilege Speech that he and other senators, then siting as senator-judges in the Impeachment Trial of former Supreme Court Chief Justice Renato Corona, were offered P50 Million each in exchange for a vote of conviction against Corona.

Sen. Estrada said that after the conviction of Corona in May 2012,

those who voted to convict him were allotted an additional P50 Million, as provided in a private and confidential letter memorandum by the then Chairman of the Senate Finance Committee. In his speech, Estrada dubbed the additional amount as “incentive” for Corona’s ouster.

It will be recalled that at the height of the Impeachment Trial against

Corona in February 2012, his lawyer Atty. Jose Roy, claimed that Malacanang, through Pres. Aquino’s Executive Secretary, Respondent Paquito Ochoa, offered senators P100 Million worth of projects in exchange for defying the Supreme Court temporary restraining order on the opening of bank accounts under Corona’s name. Atty. Roy was cited for contempt and reprimanded by the Impeachment Court for making such a claim. It turned out a year after that there is basis for Atty. Roy’s expose.

On September 27, 2013, during the Plenary Deliberation for the

approval of the 2014 Budget on Second Reading, Rep. Neri Colmenares again inquired about NBC 541 from the Office of the President, then represented by Respondent Ochoa and on the floor by Appropriations Committee Chairman Rep. Isidro Ungab. Rep. Colmenares was informed by Respondent Ochoa that indeed the Disbursement Acceleration Program exists but it was intended to realign funds from under-spending agencies in order to accelerate growth, thereby confirming not only that the DAP exists but also that it was with the approval of Pres. Aquino.

On September 28, 2013 Sec. Abad issued a statement through the

DBM website explaining the purpose of the additional fund releases to senators as mentioned in the speech of Sen. Estrada and said that the same came from the Disbursement Acceleration Program (DAP). According to Sec. Abad these funds were not bribes, but were necessary to “help accelerate economic expansion”.

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Indeed, the DBM website 1 as well as the Official Gazette website2

The realignments of these “pooled savings” that included funds that “crossed-border” to COA and the House of Representatives were admitted

furtherclaimed that the DAP is a “stimulus package” designed to fast-track public spending and push economic growth. The DAP was supposedly approved by the President on October 12, 2011 upon the recommendation of the Development Budget Coordination Committee (DBCC) and the Cabinet Clusters. It included projects that were fast-moving or quick-disbursing, urgent or priority in terms of social and economic development objectives. Members of Congress have also endorsed programs and projects for the social and economic benefit of their constituents, such as medical assistance and local infrastructure projects. Of the total DAP approved by President Aquino for 2011-2012 amounting to a total of P142.23 Billion, P12.8 Billion or 9 percent was released to programs and projects identified by members of Congress.

The funding for DAP, the respondents said came from pooled savings

and the Unprogrammed Fund. The so-called “savings”, it claimed, came from the centralization of unreleased appropriations such as unreleased Personnel Services appropriations, unreleased appropriations of slow moving projects and discontinued projects and the withdrawal of unobligated allotments, also for slow-moving programs and projects, which have earlier been released to national government agencies.

However, the DBM admitted that in 2011, long before the issuance of

DBM NBC 541, the Disbursement Acceleration Program has already been implemented and the Executive has been withdrawing funds and realigning appropriations approved by Congress.

For example, in a DBM Memorandum dated October 12, 2011,

which was also approved by Pres. Aquino, a total amount of P72.11 Billion was appropriated for DAP identified projects, including the amount of P144 Million for the Commission an Audit (COA) and P6.5 Billion for “augmentation” of the Priority Development Assistance Fund (PDAF).

In another DBM Memorandum dated June 25, 2012, Pres. Aquino

also approved the withdrawal of unobligated funds of agencies with “slow-moving projects/expenditures” as of June 30, 2012 and its realignment. Included in the said realignment is an amount of P250 Million appropriated for the House of Representative for the supposed construction of a legislative library.

1 Frequently Asked Questions, available at http://www.dbm.gov.ph/?page_id=7362. Last accessed October 11, 2013 2 Q&A on the Disbursement Acceleration Program, published on October 7, 2013, available at http://www.gov.ph/2013/10/07/qa-on-the-disbursement-acceleration-program/. Last accessed October 11, 2013

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by the OSG and Respondent Secretary Abad himself during the January 28, 2014 Oral Arguments.

More importantly, the transfer or realignment of funds did not only

went “border crossing”, but it even included funding for new projects. In his December 12, 2011 memorandum to the President, Respondent Sec. Abad said that the “pooled savings” were also intended for “new activities which have not been anticipated during the preparation of the budget” and to “provide for deficiencies under the Special Purpose Funds e.g. PDAF, Calamity Fund and Contingent Fund.”

True enough, this flawed spending mandate was further reinforced

when the DBM issued on July 18, 2012 the questioned NBC No. 541. Among its pertinent provisions are as follows:

“xxx 5.7 The withdrawn allotments may be: 5.7.1 Reissued for the original programs and

projects of the agencies/OUs concerned, from which the allotments were withdrawn;

5.7.2 Realigned to cover additional funding for other existing programs and projects of the agency/OU; or

5.7.3 Used to augment existing programs and projects of any agency and to fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented during the current year.” (Emphasis theirs).

According to Respondent Sec. Abad3

“Those who received releases during that period and their corresponding amounts were: Sens. Antonio Trillanes (October 2012–P50M), Manuel Villar (October 2012–P50M), Ramon Revilla (October 2012–P50M), Francis Pangilinan (October 2012–P30M),Loren Legarda (October 2012–P50M), Lito Lapid (October 2012–P50M),Jinggoy Estrada (October 2012–P50M), Alan Cayetano (October 2012–P50M),Edgardo Angara (October 2012–P50M), Ralph Recto (October 2012–P23M; December 2012–P27M), Koko Pimentel (October 2012–P25.5M; November 2012–P5M; December 2012–

, “in 2012, most releases were made during the period October-December, based entirely on the request submitted to us by the Senators.” He detailed the DAP releases to senators as follows:

3 Abad: Releases to Senators Part of Spending Acceleration Program. Published on September 30, 2013. Available at http://www.dbm.gov.ph/?p=7302. Last accessed October 9, 2013.

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P15M), Tito Sotto (October 2012–P11M; November 2012–P39M), Teofisto Guingona (October 2012–P35M; December 2012–P9M),Serge Osmena (December 2012–P50M), then-Senate President Juan Ponce Enrile(December 2012–P92M) and current Senate President Frank Drilon(December 2012–P100M).

There were two earlier releases made in late August of that same

year: Greg Honasan (P50M) and Francis Escudero (P99M). No releases were made in 2012 to Senators Ping Lacson, Joker Arroyo, Pia Cayetano, Bongbong Marcos and Miriam Defensor-Santiago. In 2013, however, releases were made for funding requests from the office of Sen. Arroyo (February 2013–P47M) and Sen. Pia Cayetano (January 2013–P50M). The 24th Senator then, Benigno S. Aquino III, was already President.

Claiming that those releases were made “to support projects that were

proposed by Senators on top of their regular PDAF allocation toward the end of 2012,” Respondent Sec. Abad also further admitted that “this was not the first time that releases from DAP were made to fund projects identified by legislators. In 2011, the DAP was instituted to ramp up spending after sluggish disbursements…During this period, the government also accommodated requests for project funding from legislators x.x.x.”

That the Respondents realigned funds already approved in the General

Appropriations Act (GAA) without legislative fiat is clear, albeit, they justified the same as supposed “savings” used to merely to augment existing items.

Unfortunately, save for the supposed Memoranda variably approved

by Pres. Aquino approving such withdrawal of unobligated allotments and pooling of supposed savings, respondents up until now did not provide the petitioners and the Honorable Court with itemized sources of savings and how and when the same were realized.

Curiously, while claiming that DAP is a successful “economic

stimulus” program, the respondents claimed during the Oral Arguments that it was already terminated in the middle of the last year for allegedly serving its purpose.

DAP as stimulus program The government claims that DAP is a stimulus program and that its

implementation has led to economic growth. In all their memos to the President, Respondent Sec. Abad and the

DBM always claim that the proposed DAP projects have been chosen based on three criteria:

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a. their multiplier impact on the economy and infrastructure development

b. their beneficial effect on the poor c. their translation into disbursements In any case, from Petitioners’ point of view, the projects being funded

by the so-called DAP are either implemented because of patronage politics and/or because they provide an opportunity for corruption. The DAP spending submitted by the DBM to the Supreme Court belies the government propaganda that the DAP was supposed to stimulate the economy and have a positive effect on growth.

Among the projects that appear questionable to Petitioners since these

do not meet the criteria of economic stimulus and benefits to the poor are the following:

a. P5.432 billion DAR funds for the compensation of landlords b. P1.819 billion OPPAP funds for so-called peace projects related to

seemingly questionable peace pacts such as the GPH-CPLA agreement (2011)

c. P5.5 billion allocated for “various infrastructure projects”, usually quick-disbursing projects below P40 million and often upon recommendation of elected officials (2011)

d. P6.5 billion “LGU support fund” of the DILG and DBM, supposedly for “LGU’s requiring financial assistance to implement projects under a prescribed menu” (2011)

e. P8.592 billion ARMM Transition and Investment Support Plan that covers such general goals as the “creation of enabling environment for PPP towards equitable growth, improvement of public safety and security, cleansing the electoral system” (2011)

f. P250 million Performance Challenge Fund that claims to be a “People Powered Community Driven Development” project which could just really be pork masquerading as a poverty alleviation program (2011)

g. P6.5 billion DAP funds to augment existing PDAF projects (2011) h. P2 billion National Roads project for the President’s home province of

Tarlac (2012) i. P1.8 billion for the notorious Tulay ng Pangulo para sa Kaunlaran

started under the Arroyo regime and continued by Aquino (2012) j. P5 billion Tourism Road Infrastructure Project (2012) k. P8.295 billion for so-called “priority local projects nationwide”

(2012) l. P1.6 billion for the “Capability Requirements for the Operations of

the Philippine Coast Guard in the West Philippine Sea”

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DAP’s claimed economic impact is an exaggeration

The Aquino administration defends DAP as, among other things, stimulating the economy in 2011 and creating momentum that continues until today. Pres. Aquino in particular claimed that the DAP contributed 1.3 percentage points to growth in gross domestic product (GDP) in the fourth quarter of 2011. However, based on an IBON news release4

4 “DAP did not contribute 1.3 percentage growth – IBON”, published by IBON NEWS, published on November 7, 2013, at

, this claim “is an exaggerated interpretation of a misleading World Bank report.” The news release further said:

The World Bank’s March 2012 Philippines Quarterly Updated said that “the government's DAP was partially successful and contributed 1.3 percentage points to GDP growth in [the fourth quarter of] 2011. The same report, however, clarifies in a footnote that this contribution actually refers to that of total government consumption and public construction and not just DAP-related spending. According to Africa, DAP-related spending at Php61.4 billion was only a portion or 19.8% of total government spending in the fourth quarter of 2011 totaling Php309.7 billion. It is also just 5.4% of total government spending for the year (Php1,144.2 billion). Total spending is the sum of government final consumption expenditure (GFCE) and public construction in the national income accounts measured at current prices. The research group said that the speech hailing DAP did not mention that GFCE actually grew slower at 6.4% from 2010-2011 compared to a 10.6% growth from 2009-2010. Public construction also contracted by 29.5% in 2011 after an 8.1% growth in 2010. These are measured at current prices. “The contribution of DAP-related spending to economic growth is likely just one-fourth of a percentage point at most in the fourth quarter of 2011 and an even more negligible fraction for 2011 as a whole,” said Africa. Xxx” (Emphasis supplied)

http://ibon.org/ibon_articles.php?id=344, last accessed, March 10, 2014.

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PROCEDURAL ANTECEDENTS

On October 17, 2013 herein Petitioners filed a Petition for Certiorari and Prohibition (with Prayer for Temporary Restraining Order and/or Preliminary Injunction) praying that the DAP and the National Budget Circular No. 541 be declared null and void.

Oral arguments by the Petitioners were held on November 19, 2013;

and by the Respondents through Sec. Abad and the Office of the Solicitor General on January 28, 2014; and through retired Justice VV Mendoza on February 18, 2014.

On February 18, 2014, this Court ordered the parties to submit their

Memoranda of Law within 20 days from said date or until March 10, 2014 (March 8 falling on a Saturday).

Petitioners are submitting this Memorandum of Law in a timely

manner.

ISSUES

Following the Court’s en banc Advisory setting forth the scope of the

oral arguments, Petitioners will be focusing their discussion on the following issues:

I. Whether or not certiorari, prohibition, and mandamus are proper

remedies to assail the constitutionality and validity of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP. Subsumed in this issue are whether there is a controversy ripe for judicial determination, and the standing of petitioners.

II. Whether or not DAP violates Sec. 29, Art. VI of the 1987

Constitution, which provides: “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.”

III. Whether or not the DAP, NBC No. 451, and all other executive

issuances allegedly implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

(a) They treat the unreleased appropriations and unobligated

allotments withdrawn from the government agencies as “savings” as the term is used in Sec. 25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013;

(b) They authorise the disbursement of funds for projects or programs

not provided in the GAAs for the Executive Department

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DISCUSSION

I. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the constitutionality and validity of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP. Subsumed in this issue are whether there is a controversy ripe for judicial determination, and the standing of petitioners.

The Araullo petition presents an actual controversy

There exists a live controversy involving a clash of legal rights. Petitioners, along with all other citizens and taxpayers, invoke a public right—that funds raised through taxation are administered and used pursuant to legislative authorization. The DAP, they maintain, is a mechanism deadly to this right, as the President was allowed to spend public funds not in complete accord with the authorization from Congress, such as disbursement for non-existent projects and programs.

On the other hand, Respondents insist that the President has the

authority to play loose with the General Appropriations Act, based on the executive branch’s interpretation of the Constitution as regards the President’s power of transferring appropriations. Petitioners maintain that such interpretation has no basis in the letter and spirit of the Constitution, Executive Order 292 on National Government Budgeting, the General Appropriations Acts for fiscal years 2011 to 2013, and the jurisprudence on the GAA as “purposeful, deliberate, and precise in its provisions and stipulations” from which the Executive can stray only after strict compliance with certain conditions.5

5Nazareth v. Villar, G.R. No. 188635, 29 January 2013

The constitutional problem on DAP centers chiefly on legal

provisions on the prohibition on transfer of appropriations and the exceptional power of realignment, and laws related to savings, impoundment, reservation, and other powers of the President during the budget execution phase. The differing legal interpretations on these provisions aired by the parties before the Court during the Oral Arguments demonstrate that the controversy is sharply drawn and not imagined. Neither are the divergent legal interpretations hypothetical or abstract as the Respondents’ interpretation gave birth to DAP.

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Respondents allege that this Petition has been rendered moot as the DAP “no longer exists” as early as the first quarter of 2013.

A moot and academic case is one that ceases to present a justiciable

controversy because of supervening events so that a declaration thereon would be of no practical use or value.6

It should be noted that Respondents’ espouse certain interpretations of “savings” and when they may be declared, “augmentation,” “reservation,” and all other presidential powers during budget execution, and that pursuant to these powers, the President has “flexibility in the implementation of the budget.”

Petitioners submit that the discontinuance of DAP, if true, does not

render the Petition moot as its effects as well as the differences of interpretation of the provisions subsist.

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In addition to the grave violation of the Constitution and the paramount public interest involved, a decision on this Petition is apt despite its alleged mootness.

Respondents stick to these interpretations, which Petitioners maintain are contrary to the Constitution and established law, and therefore have no qualms to resort to a mechanism similar to DAP again should they find the necessity for it.

Granting arguendo that the discontinuance of DAP has rendered the

case moot, the controversy is capable of repetition yet evasive of review. There is necessity, therefore, for the Court to declare as wrong Respondents’ interpretations for guidance to the bench, the bar and the public.

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Jurisprudence recognize that citizens and taxpayers can invoke rights held in common by all citizens, and that “all citizen’s and taxpayer’s suits are efforts to air generalized grievances about the conduct of government and the allocation of power.”

Petitioners, as citizens, taxpayers, and legislators have the standing to raise the constitutional questions herein

Respondents during the Oral Arguments insisted that Petitioners “are

not aggrieved parties” and did not allege any injury.

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6Cocofed-Philippine Coconut Producers Federation v. Commission on Elections, G.R. No. 207026, 6 August 2013 7 OSG, Day 2 of the oral arguments 8David v. Macapagal-Arroyo, G.R. No. 171396, 3 May 2006 9Kapunan, citing Philippine and American jurisprudence, in his Separate Opinion in Cruz v. Secretary

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As previously mentioned, Petitioners are citizens and taxpayers carrying the public right against administration and use of funds contrary to legislative authorization, which ensures that these funds are spent solely for public purpose. The Araullo petition demonstrated that the premature withdrawal and pooling of funds are contrary to this public right, and in fact already occurred to the tune of P83.53 billion in 2011, P58.7 billion in 2012, and P15.13 billion in 2013—or a total of P157.36 billion.

In Sanidad v. COMELEC, the Court held thattaxpayers have the right

to restrain officials from wasting public funds through the enforcement of an unconstitutional statute. Consequently, they may assail the validity of a statute appropriating public funds, proceeding from the following rationale: The taxpayer has paid his taxes and contributed to the public coffers and, thus, may inquire into the manner by which the proceeds of his taxes are spent. The expenditure by an official of the State for the purpose of administering an invalid law constitutes a misapplication of such funds.

Petitioners submit that said rationale still holds true where the act assailed is a mere executive initiative. Taxpayers’ standing to inquire into the disposition of public funds is even more important where there is a valid law (a general appropriations act) but the administration and expenditure funds went beyond it (an impounding-spending mechanism such as DAP). This is so because no one in the Executive Branch, be it the President or any of his or her alter egos, can exercise any semblance of the power of appropriation, and the constitutional purpose of ensuring the public purpose element is severely diluted, if not foregone.

Legislator-Petitioners, for their part, have demonstrated that the DAP

diminishes the power of appropriation as it allows the President to skirt around the items set by Congress and augment as he wills, even those not even considered by Congress. With this injury, Petitioners Ilagan and Ridon claim their standing. The petition for certiorari and prohibition are proper remedies

Prohibition is an extraordinary writ directed against any tribunal, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions, ordering said entity or person to desist from further proceedings when they are without or in excess of said entity’s or person’s jurisdiction, or are accompanied with grave abuse of discretion, and there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law.10

10 Ruel 65, Section 1, Rules of Court

Respondents insist that Petitioners could have gone to the

Commission on Audit (COA) or lower courts for relief.

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The COA has no jurisdiction to strike down the DAP as an unconstitutional policy and is in no position to formulate the correct principles on the limitations of the President’s power during the budget execution stage. These, the Court is fully empowered to do.

The Constitution granted to courts of law alone the power to declaring

the existence of grave abuse of discretion. Petitioners deemed it vital to bring the issues immediately to the attention of this Court on the ground of special and important reasons.

Public welfare and the advancement of public policy dictates it,11

The DAP thus authorized the creation of huge pork barrel the spending from which cannot be fully explained. It is with this view that Petitioners sought direct resort to this Court to immediately advance the public welfare and interest, as well as justice to the billions of taxpayers and citizens

in light of the recent scandals involving the pork barrel system and the public outrage against it, leading up to the unanimous decision declaring the Priority Development Assistance Fund and some items of presidential pork barrel unconstitutional. The Belgicav. Ochoa decision expressed a general distaste for lump sums, which, when combined with the unlimited discretion of an official, translates to the nefarious pork barrel and billions of public funds spent not for public purposes, usually political patronage.

Per the analysis of Petitioners, DAP has been a vehicle for the

concentration, as early as in the middle of a year, of a huge lump sum in the hands of the Executive, who disbursed it for programs and projects per the guidelines that he—not Congress holding the power of the purse—set. All these were effected due to the baseless impression that the Constitution, Executive Order 292, and the GAAs affords the President “flexibility in the implementation of the budget” and “unlimited” authority to spend. Now, Respondents has yet to fully account for the sources and proceeds of DAP-pooled funds, despite the Court’s order, and instead would have the Court and the pork-angered public simply rely on the few “exemplars” they offered and their word that all were aboveboard.

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11Ernesto Dy v. Hon. Gina M. Bibat- Palamos, G.R. No. 196200, 11 September 2013 12Ibid.

who trust that their money is spent for their use only, accountably and transparently.

The DAP is also a patent nullity when measured against

Constitutional and statutory parameters, as demonstrated by the Araullo Petition, during the oral arguments therefor, in the Reply to the Consolidated Comment of Respondents, and in this Memorandum of Arguments.

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On the alleged Presidential Immunity from Suit Petitioners replead their arguments in the Reply they submited, and state the following:

Nowhere in the 1987 Constitution does it say that the President is immune from suit.

Such immunity was expressly stated in the 1973 Constitution13

Thus, in Forbes, etc. vs. Chuoco Tiaco and Crossfield,

, but that was deleted and nowhere to be found under the 1987 Constitution. It is therefore the Petitioners’ contention that the intent of the present constitution, brought about by political upheaval and history of abuse of presidential powers, is to take away that immunity from the President.

Second, assuming that presidential immunity has been maintained in

our jurisdiction under the 1987 Constitution, Petitioners believe that such immunity does not prevent the courts from examining the legality of presidential acts, and leaving persons injured without recourse.

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In other words, assuming that the President may not be held liable for damages due to his performance of official acts (i.e., he is “nonliable”), he can be sued for the purpose of securing a ruling on the legality of his acts (i.e., he is not entirely “nonsuable”)

the Supreme Court granted a writ of prohibition in favor of Tiaco, a Chinese citizen, against an order issued by Governor General Forbes for his deportation. In his Separate Opinion, J. Moreland said that while Forbes, being the chief executive, cannot be sued for damages, his acts may be examined by the Supreme Court to determine the issue of their legality.

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“There is a great difference, intrinsically and in result, between the power to declare the executed acts of the chief executive illegal and void, and the power to hold him personally responsible in damages resulting from such acts. In the one case the results are, in a real sense, entirely impersonal. No evil to him directly flows from such acts. He is secure in his person and estate. In the other, he is directly involved personally in a high and effective responsibility. His person and estate are alike in danger. In the one case he acts freely and fearlessly without fear of consequences. In the other he proceeds with fear and

:

13 Article VII, Section 7 of the 1973 Constitution provides,“The President shall be immune from suit during his tenure.” 14G.R. No. L-6157, 30 July 1910 15This Separate Opinion was cited and made integral part of the ruling on executive immunity in Estrada v. Desierto (G.R. No. 146710-15, 2 March 2001).

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trembling, not knowing, and being wholly unable to know, when he will be called upon to pay heavy damages to some person whom he has unconsciously injured. “The principle of nonliability x x x does not mean that the judiciary has no authority to touch the acts of the Governor-General; that he may, under cover of his office, do what he will, unimpeded and unrestrained. Such a construction would mean that tyranny, under the guise of the execution of the law, could walk defiantly abroad, destroying rights of person and of property, wholly free from interference of courts or legislatures. This does not mean, either that a person injured by the executive authority by an act unjustifiable under the law has no remedy, but must submit in silence. On the contrary, it means, simply, that the governors-general, like the judges if the courts and the members of the Legislature, may not be personally mulcted in civil damages for the consequences of an act executed in the performance of his official duties. The judiciary has full power to, and will, when the matter is properly presented to it and the occasion justly warrants it, declare an act of the Governor-General illegal and void and place as nearly as possible in status quo any person who has been deprived his liberty or his property by such act. This remedy is assured to every person, however humble or of whatever country, when his personal or property rights have been invaded, even by the highest authority of the state. The thing which the judiciary can not do is mulct the Governor-General personally in damages which result from the performance of his official duty, any more than it can a member of the Philippine Commission of the Philippine Assembly. Public policy forbids it. “Neither does this principle of nonliability mean that the chief executive may not be personally sued at all in relation to acts which he claims to perform as such official. On the contrary, it clearly appears from the discussion heretofore had, particularly that portion which touched the liability of judges and drew an analogy between such liability and that of the Governor-General, that the latter is liable when he acts in a case so plainly outside of his power and authority that he can not be said to have exercised discretion in determining whether or not he had the right to act. What is held here is that he will be protected from personal liability for damages not only when he acts within his authority, but also when he

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is without authority, provided he actually used discretion and judgment, that is, the judicial faculty, in determining whether he had authority to act or not. In other words, in determining the question of his authority. If he decide wrongly, he is still protected provided the question of his authority was one over which two men, reasonably qualified for that position, might honestly differ; but he is not protected if the lack of authority to act is so plain that two such men could not honestly differ over its determination. In such case, be acts, not as Governor-General but as a private individual, and as such must answer for the consequences of his act.”

The issue of legality is distinct from that of damages, and as presidential immunity is based on the public policy of preventing the person of the President—and not his office and official acts—from being bogged down by suits, we submit that the doctrine cannot bar the Petitioners, or other citizens in their personal or representative capacities, from questioning before the Court the illegality of the President’s withholding of appropriated funds, pooling them into the DAP, and spending it for GAA and non-GAA programs and projects, especially since the DAP is the PRESIDENTIAL PORK BARREL, as far as Petitioners are concerned.

That the President is suable insofar as his acts are concerned is

consistent with the second paragraph of Section 1 and Section 5 (2) (a), both of Article VIII of the Constitution.

This Honorable Court in the case of In the Matter of the Petition for

the Writ of Amparo and Habeas Data in Favor of Noriel H. Rodriguez,16

16G.R. No. 191805, 15 November 2011

ruled that former President Gloria Macapagal-Arroyo can be sued in an amparo and habeas data “since there is no determination of administrative, civil or criminal liability in amparo and habeas data proceedings, courts can only go as far as ascertaining responsibility or accountability for the enforced disappearance or extrajudicial killing.”

The same rationale must be applied in this case. Cases of

constitutionality and grave abuse of discretion concerning the acts of the President do not require the Court to determine his administrative, civil, or criminal liability. The privilege of executive immunity therefore does not apply.

There is also a growing need for limiting Presidential immunity from

suit, especially if such privilege will impede the search for truth or impair the vindication of a right:

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“Indeed, critical reading of current literature on executive immunity will reveal a judicial disinclination to expand the privilege especially when it impedes the search for truth or impairs the vindication of a right. In the 1974 case of US v. Nixon, x x x The claim [of executive privilege by US President Richard Nixon, a sitting President] was rejected by the US Supreme Court. It concluded that ‘when the ground for asserting privilege as to subpoenaed materials sought for use in a criminal trial is based only on the generalized interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice’. In the 1982 case of Nixon v. Fitzgerald, the US Supreme Court further held that the immunity of the president from civil damages covers only ‘official acts’. Recently, the US Supreme Court had the occasion to reiterate this doctrine in the case of Clinton v. Jones where it held that the US President’s immunity from suits for money damages arising out of their official acts is inapplicable to unofficial conduct. “There are more reasons not to be sympathetic to appeals to stretch the scope of executive immunity in our jurisdiction. One of the great themes of the 1987 Constitution is that a public office is a public trust. It declared as a state policy that ‘the State shall maintain honesty and integrity in the public service and take positive and effective measures against graft and corruption’. It ordained that ‘public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency act with patriotism and justice, and lead modest lives’. x x x These constitutional policies will be devalued if we sustain petitioner’s claim that a non-sitting president enjoys immunity from suit for criminal acts committed during his incumbency.”17

17Estrada v. Desierto, ibid.

We wish to add to jurisprudence that these mandates—“public trust,” “honesty and integrity in the public service,” “accountability,” and “service with utmost responsibility, integrity, loyalty, and efficiency”—will remain as mere exhortations should the President be allowed to hide behind a strict implementation of executive immunity.

19

Third, assuming again that presidential immunity remains, Petitioners contend that it is only the President himself who can invoke such immunity, and not the OSG.

Petitioners challenge the President, the supposed creator and

champion of his presidential pork barrel that is DAP, not to hide under his cloak of immunity from suit – assuming arguendo that he may validly invoke it in this case – and instead, squarely and bravely face the issue and submit himself to the jurisdiction of this Honorable Court, if he is really confident that the DAP is legal and constitutional.

II. Whether or not DAP violates Sec. 29, Art. VI

of the 1987 Constitution, which provides: “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.”

No less than the Constitution mandates that public funds will not be

paid out of the national treasury exception through an appropriation law enacted by Congress. “Congress alone can authorize the expenditure of public funds through its power to appropriate. The power to appropriate carries with it the power to specify not just the amount that may be spent but also the purpose for which it may be spent.”18

Tantamount to appropriating public funds, the NBC 541 authorizes the funding “priority programs and projects not considered in the 2012

While being peddled as a “stimulus package”, the DAP is actually an

appropriation law which seeks to set aside public funds for public use. As discussed above, Sec. 24 Art. VI of the 1987 Constitution requires that all appropriation bills shall originate exclusively in the House of Representatives. The DAP, not being initiated by the House of Representatives, is unconstitutional.

Moreover, no appropriation law was enacted stating the amount that

may be spent for DAP, as well as the purpose for which the DAP may be spent. No appropriation law was enacted by Congress creating DAP. The cited provisions by Respondents do not amount to an appropriation law, but merely a futile and belated attempt to justify an illegal appropriation and disbursement of public funds and usurpation of the legislative’s power to appropriate public funds.

18Fr."Joaquin"Bernas,"“1987"Constitution"of"the"Republic"of"the"Philippines:" Commentary”"2003"edition.""

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budget but expected to be started or implemented during the fiscal year.” (5.7.3, NBC 541)

Clearly, the NBC 541 is an appropriation of public funds by the

Executive, which did not originate in the House of Representatives as mandated by Sec. 24, Art. VI of the 1987 Constitution which provides:

All appropriation, revenue or tariff bills, bills authorizing the increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

The DAP and NBC 541 also violate Sec. 27, Art. VI of the Constitution

While not enumerated as issue for the Oral Arguments, Petitioners nevertheless reiterate their argument in their Petition that the DAP and NBC 541 are in violation of the Sec. 27, Art. VI of the 1987 Constitution.

Before the GAA for a particular fiscal year becomes a law, the

Constitution mandates that the same be presented to the President, who has the power to veto any particular item or items in the appropriation bill. If the President exercises the veto power, Congress is given the opportunity to override the veto.

Sec. 27, Art. VI, 1987 Constitution (1) Every bill passed by the Congress shall, before it becomes a law, be presented to the President. If he approves the same he shall sign it; otherwise, he shall veto it and return the same with his objections to the House where it originated, which shall enter the objections at large in its Journal and proceed to reconsider it. If, after such reconsideration, two- thirds of all the Members of such House shall agree to pass the bill, it shall be sent, together with the objections, to the other House by which it shall likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the Members voting for or against shall be entered in its Journal. The President shall communicate his veto of any bill to the House where it originated within thirty days after the date of receipt thereof, otherwise, it shall become a law as if he had signed it. (2) The President shall have the power to veto any particular item or items in an appropriation, revenue, or

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tariff bill, but the veto shall not affect the item or items to which he does not object.

The President is given the power to item-veto the particulars, details, the distinct and severable parts of the appropriation bill.

However, item-veto is available to the President only before an

appropriation bill becomes a law. If the President does not exercise the item-veto and the appropriation bill becomes a law, thenhe is bound to execute the law faithfully as is mandated to him by the Constitution.

The DAP and the NBC 541 are executive creations which are noxious

to this constitutional process. The funds from which the Respondents intended to impound and transfer, or were actually impounded and transferred, were funds appropriated by Congress through the General Appropriations Acts for FY 2011, 2012 and 2013.

The DAP and the NBC 541 are actually unilateral executive

amendments to duly enacted appropriation laws, which Respondents have no authority or power to do. Not even Congress can amend the appropriation laws without passing an amendatory law in accordance with the Constitutional procedures.

III. Whether or not the DAP, NBC No. 451, and all other executive issuances allegedly implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

(a) They treat the unreleased appropriations and unobligated allotments withdrawn from the government agencies as “savings” as the term is used in Sec. 25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013;

(b) They authorise the disbursement of funds for projects or programs not provided in the GAAs for the Executive Department

The rule on the use and transfer of funds is clear as it is meticulously laid down in Art. VI, Section 25 (5) of our Constitution:

“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

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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.”

Section 25 (5) Article VI of the 1987 Constitution prohibits transfer of

appropriations. This simply means that once Congresspasses the General Appropriation Act (GAA) or any appropriation law, with or without any veto from the President, the same remains unalterable and must be executed to the letter.

The appropriations law becomes the law of the land, a product of the

collective effort of the representatives of the people and the different government agencies.

Those who have participated in the yearly budget process would know

how arduous, detailed, and lengthy such a process is, with government agencies listing all their spending in the previous year and coming up with new projects needing funding; preparing for the justifications for each and every line item budget in case Congress would ask for the wisdom of such an expenditure; as well as preparing for both parochial and national concerns that may be raised by Congress during the budget deliberation/interpellation which may or may not be related to the agencies’ budget but has an effect on its overall performance as an agency.

On the other hand, Congress has to contend with poring over at least 5

budget books – the National Expenditure Program, Budget of Expenditure and Sources of Financing, Staffing Summary and Details of the Budget 1 and 2 – and studying the spending history/backgrounds and budget requests of each and every agency; reviewing the agency’s previous claims and promises; and most importantly, the impact of the agencies’ past budget and current proposal to a particular lawmaker’s district or constituency.

This being the case, the resulting appropriations law is not a simple

feat that should easily be trifled with. Not even Congress who passed it can alter the same, without under going the same tedious process of enacting or amending a law. Such is the wisdom of our Constitution.

As a limited grant nevertheless, the Constitution allows the President,

President of the Senate, Speaker of the House, Chief Justice of the Supreme Court, and the heads of Constitutional Commissions, to transfer of appropriations ONLY in specific circumstances: (1) if there is a law; (2) if there are savings; and (3) only to augment any item in the general appropriations law for their respective offices.

The creation and implementation of the DAP and the NBC 541 violate

the above-stated provision.

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This Constitutional mandate on “savings” and its limited transfer is invariably written in the annual General Appropriations Act, where “savings” and “augmentation” are clearly defined.

Sec. 53. 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

Obligation refers to an amount committed to be paid by the Government for any lawful act made by an authorized

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. xxx (GAA for FY 2013; The same definition is also provided in the GAA for FY 2012 [see Sec. 54] and FY 2011 [see Sec. 60])

In essence, savings could only happen when there was an ACTUAL implementation of the project for which the fund was appropriated – whether the same was completed, discontinued or abandoned later on. The important element is the actual execution of the project or program.

Respondents claim that the DAP and the NBC 541 pertain to funds

coming from “savings”. But the funds that the DAP and the NBC 541 call as “savings” – the unreleased appropriations and unobligated allotments – are not actually savings and could never become savings.

In the case of unreleased appropriations or unobligated

allotments, the projects for which the funds were appropriated were never executed or were retained or deferred, making it impossible for the department or agency to realize savings through these projects.

Executive Order No. 292 defines allotment and obligation, as follows:

Allotment refers to an authorization issued by the DBM to an agency which allows it to incur obligations for specified amounts contained in the legislative appropriation.

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officer for and in behalf of the Government. (Book VI, Chapter 1, Section 2)

With the foregoing definition, “unobligated allotments” means that there has no commitment to pay just yet, as the authorized officer has yet to perform any lawful act for an in behalf of the Government. Therefore, by its nature, “unobligated allotments” would not fall under the definition of savings:

In their Consolidated Comment, Respondents’ position that the

unobligated allotments are considered savings is contradicted and belied by their previous acts and claims. In the Memorandum for the President dated June 25, 2012 (Annex “1”, Manifestation by Respondents) separate and distinct authorities were prayed for by the DBM Secretary, one for the pooling of savings, and the other for the withdrawal of unobligated allotments:

1.0 Mr. President, this is to respectfully request for the

grant of authorities on the following fund sourcing mechanisms to cover other priority projects and expenditures:

1.1 Omnibus Authority to consolidate

savings/unutilized balances in FY 2012 corresponding to unfilled positions and completed or discontinued projects; and

1.2 Authority to withdraw and pool available and unobligated balances of agencies with low levels of obligations as of June 30, 2012, both for continuing and current allotments.

If Respondents really believe that unobligated allotments are indeed savings as they now claim, then there is no need for them to distinguish between the savings and unobligated allotments in the said memorandum.

Again, being an exception to the general rule enshrined in the Constitution, realization of “savings” and realignment of funds cannot be lightly inferred.

As ruled in Sanchez (Sanchez v. COA, G.R. 127545, April 23, 2008):

“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

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which is merely theoretical, possible, potential or hypothetical.”

Yet, as if this irregular practice is not enough, on July 18, 2012, the

Department of Budget Management issued a strange Circular, never before issued in Philippine history — National Budget Circular 541.

In that Circular, Malacañang declared that due to the “under-spending

of various agencies”, President Aquino ordered on June 27, 2012 “the withdrawal of all unobligated allotments of all agencies with low level of obligations as of June 30, 2012 both for continuing and current allotment”.

This means that even if Congress expressly ordered the allotment of

funds for a certain project for the 2012 Fiscal Year, said appropriation will be withdrawn by the President if it remained unobligated by June 30, 2012.

The said collated or hijacked funds are then realigned and pooled as

funding for DAP. The pooled withdrawn allotments, according to Section 5.7 of the

same Circular, may be spent or disbursed in the following manner:

1. Reissued later to the original program or projects from which it was withdrawn or realigned to other existing programs and projects of the agency from where it came;

2. Augment existing programs and projects of other agencies; and 3. Fund priority programs and projects not considered in the 2012

budget but expected to be started or implemented within the current year.

Certainly, this practice by the executive and the various departments

of not using or not obligating, deliberately or otherwise, the funds appropriated by Congress led to the consolidation or centralization of huge sums of money as funding sources of DAP.

NBC 541 practically circumvents and worse, amends, the

appropriations law passed by Congress for the year by realigning these to other projects, many of which were never even considered by Congress when it approved the budget, nor found in the General Appropriations Act.

When Congress allocated funds for a Fiscal Year, Congress intended

that these funds be available for spending in a particular budgetary item for the entire year.

Respondents claim that the provisions of EO 292 and GAAs for FYs

2011, 2012 and 2013 are sufficient legal basis for the creation and implementation of DAP and NBC 541.

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They are wrong. We submit that the unbridled withdrawal or retention of appropriated funds is akin to the President exercising his power to impound, which is restricted by the GAA, as it is only allowed in case of the existence of an “unmanageable national government budget deficit”.

Sec. 64. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities authorized under this Act, except those covered under the Unprogrammed Fund, shall be released pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.

Sec. 65. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations authorized in this Act shall be effected only in cases where there is an unmanageable national government budget deficit. Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the actual National Government budget deficit has exceeded the quarterly budget deficit targets consistent with the full-year target deficit as indicated in the Budget of Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such condition, as determined by the Development Budget Coordinating Committee and approved by the President.

In this case, when the unobligated allotment and unreleased funds were withdrawn, there was no actual budget deficit which has “exceeded the quarterly budget deficit targets” nor “clear economic indications of an impending occurrence of such condition” which would justify DAP and NBC 541.

It is also worth mentioning that E.O. 292 even mandated that

unexpended balances of any appropriation authorized by the GAA shall revertto the unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent legislative enactment.

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And, while the President under EO 292 is allowed, when pubic interest so requires, to suspend or stop FURTHER expenditure, nothing in the said grant was it stated that he is likewise authorize to withdraw the unobligated allotments.

Sec. 28 (Chapter 4, Book VI) of Executive Order No. 292 (Administrative Code of 1987) states:Reversion of Unexpended Balances of Appropriations, Continuing Appropriations. — Unexpended balances of appropriations authorized in the General Appropriation Act shall revertto the unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent legislative enactment: Provided, that appropriations for capital outlays shall remain valid until fully spent or reverted: provided, further, that continuing appropriations for current operating expenditures may be specifically recommended and approved as such in support of projects whose effective implementation calls for multi-year expenditure commitments: provided, finally, that the President may authorize the use of savings realized by an agency during given year to meetnon-recurring expenditures in a subsequent year. The balances of continuing appropriations shall be reviewed as part of the annual budget preparation process and the President may approve upon recommendation of the Secretary, the reversion of funds no longer needed in connection with the activities funded by said continuing appropriations.

The power to suspend expenditure of appropriation is subject to limitations, which limitations the Respondents failed to overcome. Respondents likewise argue that the NBC Circular No. 541 authorizes the withdrawal of allotments under Section 38, Chapter 5, Book VI of EO 292.

The power to suspend expenditure of appropriation given under EO 292 is limited by the GAA provisions, when Section 38 stated “Except as otherwise provided in the General Appropriations Act xxx”. This limit is provided by Sections 64 and 65 of the GAA, in that (1) impoundment of appropriations is generally prohibited; and that (2) retention or deduction of appropriations xxx shall be effected only in cases where there is an unmanageable national government budget deficit.

At this point, Respondents failed to justify such exercise of power to

suspend expenditure of appropriation, except to say that it was due to public

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interest. But a reading of related provisions would show that “public interest” is not the only standard. And as stated above, there needs to be a situation of an “unmanageable national government budget deficit” in order to justify such exercise.

In their Consolidated Comment, Respondents claim that NBC Circular No. 541 is not an impoundment scheme, as it is the thrust of the government to spend and not to save.

A reading of the Rationale of NBC Circular No. 541 belies

Respondents claim, as said circular specifically invokes the impoundment power of the President to justify the adoption of the program.

Respondents also claim that withdrawal of allotments under NBC

Circular No. 541 does not involve a “transfer of funds” as no money is released from the National Treasury through the mere reduction or increase in allotments.

Respondents attempt to mislead this Honorable Court. First, Petitioners’ contention with respect to unobligated allotments is

that these are not savings in accordance with law and thus cannot be considered for transfer or augmentation. Second, the procedure outlined in DBM Circular No. 541 does not stop in the mere pooling of withdrawn allotments, but extends to the actual transfer of funds either through reissuance, realignment or augmentation, thus:

“5.7 The withdrawn allotments may be: 5.7.1 Reissued for the original programs and

projects of the agencies/OUs concerned, from which the allotments were withdrawn;

5.7.2 Realigned to cover additional funding for

other existing programs and projects of the agency/OU; or

5.7.3 Used to augmentexisting programs and

projects of any agency and to fund priority programs and projectsnot considered in the 2012 budget but expected to be started or implemented during the current year.” (DBM Circular No. 541)

Clearly, there is transfer of funds in the implementation of the DBM

Circular No. 541.

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Again, as the Honorable Court ruled in Sanchezsavings cannot be presumed from the mere transfer of funds as it makes the prohibition against transfer of appropriations the general rule rather than the stringent exception the constitutional framers clearly intended it to be.

To reiterate, “The thesis that savings may and should be presumed

from the mere transfer of funds is plainly anathema to the doctrine laid down in Demetria v. Alba as it makes the prohibition against transfer of appropriations the general rule rather than the stringent exception the constitutional framers clearly intended it to be. It makes a mockery of Demetria v. Alba as it would have the Court allow the mere expectancy of savings to be transferred.”

During their Oral Arguments, Respondents harp on the concept of “considerable flexibility” in the use of public funds and the complexity of the national budget in justifying the DAP and the NBC 541. Notably, while harping on such concept, they conveniently fail to mention that such concept has a limitation – “The leeway granted was thus limited. The purpose and conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if there are savings from another item in the appropriation of the government branch or constitutional body.” (Demetria v. Alba)

Clearly, Respondents unduly and illegally extends the privilege granted in Section 25(5), Article VI of the Constitution. Considerable flexibility does not mean that the President has the power to amend the appropriation laws passed by Congress. Moreover, complexity of the national budget is not a valid excuse for circumventing and violating the Constitution, when such complexity is precisely brought about by the actions of the Respondents themselves. The yearly appropriation law passed by Congress exactly tries to make simple the complex national budget by enumerating as much as possible the budget items for each and every agency. And yet, with a simple stroke of the DAP and its accompanying circulars, Respondents were able to scrap the entire budget process and supplant it with their own will and shady policy. If Respondents really see the need for the projects enumerated under DAP to have additional funding, then they should have proposed for a higher budget allocation for such project in the National Expenditure Program submitted to Congress, for the years 2011, 2012 and 2013, instead of suddenly changing their minds and forcing the departments and agencies accumulate funds for transfer. Yet they did not do so.

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The Unprogrammed Fund is an illegal source for DAP funding because the requirements for its release were not met by Respondents.

To elaborate, the Unprogrammed Fund can only be released when

(1) the “revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress xxx” and (2) when there are “newly approved loans for foreign-assisted projects xxx”.

These requirements could not have been met or present during

the time of DAP implementation because obviously and historically, our national revenue collections never exceeded the national revenue targets. DAP violated Section 25 (5), Article VI of the Constitution by authorizing the President to augment items outside the budget of the Office of the President

Section 25 (5) of Article VI of the Constitution, as well as Section 59 of the 2011 GAA, say that the President may take savings from one item in his or her office then add it to another item within his or her own office’s budget. The same authority goes for the Senate President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions—all with respect to their own offices.

Clearly, therefore, “cross-border augmentations”—as admitted by

Respondents to have been done in at least two instances (COA and House of Representatives)—are prohibited by the Constitution.

Petitioners submit that this is supported by the use of “respective”

(twice by the Constitution), the nature of the offices enumerated (as those constitutionally guaranteed with fiscal autonomy), and the nature of the power of augmentation as an exception to the prohibition on transfer of appropriations (as clearly stated by the first part of Section 25 (5)).

Merriam-Webster defines “respective” as “belonging or relating to

each one of the people or things that have been mentioned” and lists “different, individual, separate” as its synonyms.19

19http://www.merriam-webster.com/dictionary/respective

Respondents cannot assign to “respective” a meaning other than its

usual sense and thereby allow the President (1) to withdraw the savings from any item in any office other than those under the Executive Branch and (2) to augment any item in the budgets of offices other than those under the Executive Branch.

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Petitioners also note that the act of the President of tinkering with the

budgets of either House of Congress, the Judiciary, the Constitutional Commissions and the Office of the Ombudsman violates their fiscal autonomy. For instance, the President has no power to say—above the protests of the Chief Justice and despite evidence from the Supreme Court’s Fiscal Management and Budget Office—that the Judiciary has realized some savings from a certain item. He has no power to withdraw these alleged savings from the Judiciary, pool it with other amounts from other agencies, and spend it for another project or program within the Executive Branch or in any of the enumerated offices.

If the President or any of the enumerated officers were to be granted

such power, we will have a situation where any office declared fiscally autonomous can be controlled through budget constriction by some other office or branch of government. This is also a situation where either one of the enumerated officers can throw the GAA out of the window and effectively make his or her own.

The damage to fiscal autonomy is not any less where the cross-border

transfer is “requested,” as is claimed by Respondents. In this argument, Petitioners submit that the determination of the

existence of savings and the decision where these amounts will go20

Respondents insist that the cross-border transfers are called for by circumstances, but Petitioners counter that the Executive and Congress have enough powers under the Constitution and the National Government Budgeting provisions of the Administrative Code

are powers left by the Constitution to the officers enumerated, that is, for their respective offices.

Petitioners also highlight their grave concern that the President

through DAP padded the budgets of the House of Representatives and the state’s audit firm—two agencies with check-and-balance power over the acts of the Executive Branch. Petitioners submit that the inevitable consequence of the cross-border augmentations, and the very thing Section 25 (5) aims to prevent, is a mar on these agencies’ integrity as effective watch on the acts of the President.

21

In particular, the President may propose, and Congress approve, a supplemental or deficiency budget under Section 27, Chapter 4, Book VI of

to answer for such circumstances.

20 As enabled by provisions under general appropriations laws on use of savings (e.g., Section 59 in the 2011 GAA), meaning of savings and augmentation (Section 60), priority in the use of savings (Section 61, among others). 21 Book VI, Executive Order 292

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the Administrative Code. That there is “no time,” as claimed by Respondents, is not a valid excuse. The two branches can come up with a law within a few days if they want to, as they have proven in the past,22 and do so in following the procedure for a certified bill.23

• To provide for new activities which have not been anticipated during the preparation of the budget

Transfer of appropriations is a diminution of the legislative power of

appropriation, such that when the President withdraws savings from whatever item and transfers it to another, he takes exception to the general appropriations act of Congress or “goes out of the budget.” Hence, the Constitution prohibits it through Section 25 (5), save for the exception stated therein.

Exceptions are subject to the rule of strict construction, moreso when

the general rule concerns a power confined by the Constitution to a certain branch of government. Transfer of appropriations therefore has to strictly follow the letter and spirit of the Constitution and statute, with the transferring official having the burden to prove the elements of actual savings and appropriations cover per Demetria, Sanchez, and Nazareth. DAP was intended for new projects outside GAA and to augment lump sum items in the Special Purpose Funds as PDAF, hence also illegal

In his December 12, 2011 Memorandum to the President, DBM Sec.

Abad said that government savings were being pooled for the following:

• To augment additional requirements of on-going priority projects • To provide for deficiencies under the Special Purpose Funds e.g.

PDAF, Calamity Fund and Contingent Fund • To cover for the modifications of the original allotment class

allocation as a result of on-going projects and implementation of new activities. The same would appear in the June 25, 2012 DBM memorandum to

the President. It is thus no coincidence that in his earlier October 12, 2011

Memorandum, in the document PROJECT LIST FY 2011 DISBURSEMENT ACCELERATION PLAN (page 12), there is an item 22 Several supplemental budgets have been enacted within a few days from the filing of a bill therefor, the most recent of which is R.A. 10634 or An Act Appropriating the Sum of Fourteen Billion Six Hundred Million Pesos (P14,600,000,000.00) as Supplemental Appropriations For FY 2013 and for Other Purposes. It was enacted eight days from the filing of House Bill 3423, albeit with procedural infirmities contested in plenary. 23 Section 26 (2) and Section 15, Article VI

33

called “PDAF (Various Other Local Projects) with the description “for augmentation”, amounting to P6.5 billion. When confronted with this outside the court, Abad claims that there must have been some clerical error and that no DAP funds were used to augment PDAF. During the oral arguments Sec. Abad also denied the use of DAP to augment PDAF.

Various memoranda however (October 2011, December 2011, June

2012) disprove Abad’s claims, and show clearly that the use of DAP to augment PDAF was no clerical error.

The amount of P6.5 billion was being allotted it appears to lawmakers

on top of their regular PDAF allocations. The utilization of the funds are consistent with the post-enactment intervention lawmakers undertake with the regular PDAF. There is no doubt DAP was used as added pork for lawmakers.

This becomes even clearer when even the COA reports24 that P100

million in DAP and PDAF funds for Philforest endorsed by lawmakers went to Napoles NGOs. Or reports25 that P370 million were given to 4 senators for their pet projects at the height of the Corona trial, and that the same was admitted by the DBM though the funds were described as part of a stimulus program.26

Earlier, it was reported

27

24 Gil Cabacungan, “22 lawmakers gave P100-M pork to ‘fake’ NGOs – COA”, published on February 8, 2014; available at

that Senators themselves lobbied for their pet projects in November 2011 perhaps after learning of the savings that were declared on October 12, 2011. Senators apparently endorsed “priority projects” amounting to P100 million each.

DAP was also clearly intended for projects not covered by the GAA

as evidenced by the DBM Memoranda to the President dated December 12, 2011 and June 25, 2012.

Thus, in Petitioner’s Reply, they have enumerated instances where the

supposed appropriation covers of the DAP funded programs and projects are belied by the press statements made by either the DBM or the respective government agencies themselves.

http://newsinfo.inquirer.net/575452/22-lawmakers-gave-p100-m-pork-to-fake-ngos-coa, last accessed March 10, 2014. 25 Gil Cabacungan, “4 senators got P370M during Corona impeachment”, published on February 20, 2014; available at http://newsinfo.inquirer.net/579285/4-senators-got-p370m-during-corona-impeachment; last accessed March 10, 2014. 26 Michael Lim Ubac, “P370M for 4 senators for ‘stimulus’ – Palace, published on February 21, 2014; available at http://newsinfo.inquirer.net/579504/p370m-for-4-senators-for-stimulus-palace, last accessed March 10, 2014. 27 “6 administration senators seek P100M each for ‘priority projects’”, available at http://www.inquirer.net/napoles/senators-dap, last accessed March 10, 2014.

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Presidential Pork Barrel There is no other explanation and justification for the DAP and its circulars than it is a mechanism to blur budget transparency and facilitate the accumulation of Presidential Pork Barrel.

The DAP is unconstitutional in that it constitutes presidential pork, the sources of its funds being illegal and its disbursement rests solely on the discretion of the President, circumventing the power of Congress to appropriate public funds for public use.

Presidential pork, as characterized in the implementation of DAP, is

not just a source of corruption. It is also a display of fiscal dictatorship by the President to ensure political patronage, as can be seen in the enumeration of DAP funded programs and projects.

The President, through the DAP, in essence, drafts the budget, approves the budget and implements the budget, a form of budgetary dictatorship that is not only a source of graft and corruption but also patronage politics.

Despite the explicit Constitutional provision PROHIBITING the

transfer of appropriations, the DAP, through the DBM, “hijacked” sizeable portions of the government’s approved annual budget and appropriated these to items and projects outside of the legislative authority and review.

Therefore, DAP and the executive issuances implementing it, which

supposedly provides “considerable flexibility” to the President, on the contrary “empowers the President to indiscriminately transfer funds from one department, bureau, office or agency to another program, project or activity of another department, bureau, office or agency”.

True, year in and year out, Congress gives its stamp of approval on

the budget being proposed by the President. Yet, with this DAP, Congress in effect did not only become a rubber stamp, but, even worse as it has become a useless stamp so to speak.

PRAYER

WHEREFORE, premises considered, it is most humbly and respectfully prayed of this Honorable Court that the DAP and NBC Circular No. 541 and other similar DBM issuances of the same effect and tenor, be declared NULL and VOID.

Other reliefs just and equitable under the circumstances are likewise

prayed for.

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Respectfully submitted. Quezon City for Manila. March 10, 2014.

COUNSELS FOR PETITIONERS

ATTY. JOVENCIO H. EVANGELISTA No. 45 K-7th St., Brgy. West Kamias, Quezon City

Telephone No.: 9213473 Email: evangelista_law@yahoo.com

PTR No. 2637758; 1-24-2014; Manila IBP No. 894918; 1-24-2014; Manila

MCLE Compliance No. IV-0007340; 08.10.12 Attorney’s Roll No. 42797

ATTY. VANESSA QUIAMBAO MAGUIGAD Mobile No. 0906-3288104

Email: anet_maguigad@yahoo.com PTR No. 1444212; 01.10.13, Manila

IBP No. 836619; 01.10.13, Manila Chapter III MCLE Compliance No. IV-0007341; 08.10.12

Attorney’s Roll No. 58291, 05-04-10

MARIA CRISTINA P. YAMBOT PTR No. 1273804; 1-6-2014;Rizal

IBP No. 961187; 02-04-2014;Rizal MCLE Compliance No. IV – 0016616/04-11-13

Attorney’s Roll No. 59700 Copy Furnished by registered mail: Augusto L. Syjuco, Jr. Petitioner in GR No. 209135 No. 4 Rodriguez St., Sta. Barbara, Iloilo City Atty. Wanda M. Talosig Counsel for Petitioner in GR No. 209136 No. 321 FEMII Bldg. (Annex), A. Soriano, Jr. Ave. Intramuros Manila Atty. Raymond Parsifal A. Fortun and Maria Romina M. Dalagan Counsel for Petitioner in GR No. 209155 137 CRM Avenue cor. CRM Marina BF Homes Almanza, Las Pinas City

36

Atty. Manuel M. Lazaro Counsel for Petitioners in GR No. 209164 Chatham House Bldg. Valero cor Rufino St. Salcedo Village, Makati City Attys. Froilan M. Bacungan, Rita Linda V. Jimeno, Reynaldo Y. Maulit and Romulo B. Lumauig Counsels for Petitioners in GR No. 209164 2nd Floor Philtrust Building Remedios cor. MH Del Pilar Sts. Malate Manila Atty. Pacifico Agabin Counsel for Petitioner in GR No. 209260 26th Floor, Pacific Star Building Gil Puyat Avenue cor Makati Avenue, Makati City Attys. Harry L. Roque, Jr., Joel Ruiz Butuyan and Rogel R. Rayel Counsels for Petitioners in GR No. 209442 Antel Corporate Center Until 1904, 19th Floor 212 Valero St. Salcedo Village Makati City Atty. Remigio D. Saladero, Jr., Noel V. Neri and Vicente Jaime Topacio Counsels for Petitioners in GR No. 209517 No. 33-B E. Rodriguez Sr. Avenue, Quezon City Atty. Manuel S. Obedoza, Jr. Counsel for Petitioner in GR No. 209569 108 Mendez Road, Project 8, Quezon City Solicitor General Francis H. Jardeleza Office of the Solicitor General 134 Amorsolo St., Legaspi Village, Makati City Hon. Vicente V. Mendoza No. 3 Aster St. West Fairview, Quezon City

EXPLANATION (Pursuant to Sec. 11, Rule 13 of the 1997 Rules of Civil Procedure)

The foregoing MEMORANDUMwas served upon the above parties by registered mail due to lack of personnel to effect personal service.

MARIA CRISTINA YAMBOT