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UNIVERSITY OF THE VISAYAS

GULLAS LAW SCHOOL

TAXATION I

SUBMITTED TO:
ATTY. NERI B. YU

SUBMITTED BY:
EDWIN M. ESTORGIO

CASE DIGEST:
Belgica v. Executive Secretary
(G.R. Nos. 208566, 208493 and 209251, 2013)
I. SUBSTANTIVE ISSUES
A. Congressional Pork Barrel
Whether or not the 2013 PDAF Article and all other Congressional Pork Barrel
Laws similar to it are unconstitutional considering that they violate the
principles of/constitutional provisions on
1.) separation of powers
2.) non-delegability of legislative power
3.) checks and balances
4.) accountability
5.) political dynasties
6.) local autonomy
B. Substantive Issues on the Presidential Pork Barrel
Whether or not the phrases:
(a) and for such other purposes as may be hereafter directed by the
President under Section 8 of PD 910 relating to the Malampaya Funds, and
(b) to finance the priority infrastructure development projects and to finance
the restoration of damaged or destroyed facilities due to calamities, as may be
directed and authorized by the Office of the President of the Philippines under
Section 12 of PD 1869, as amended by PD 1993, relating to the
Presidential Social Fund,
are unconstitutional insofar as they constitute undue delegations of legislative
power
* HELD AND RATIO:
A. Congressional Pork Barrel
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1.) YES. At its core, legislators have been consistently accorded postenactment authority (a) to identify the projects they desire to be
funded through various Congressional Pork Barrel allocations; (b) and in the
areas of fund release and realignment. Thus, legislators have been, in one
form or another, authorized to participate in the various operational aspects of
budgeting, violating the separation of powers principle. That the said authority
is treated as merely recommendatory in nature does not alter
its unconstitutional tenor since the prohibition covers any role in
the implementation or enforcement of the law. Informal practices, through
which legislators have effectively intruded into the proper phases of
budget execution, must be deemed as acts of grave abuse of discretion
amounting to lack or excess of jurisdiction and, hence, accorded the
same unconstitutional treatment.
2.) YES. The 2013 PDAF Article violates the principle of non-delegability since
legislators are effectively allowed to individually exercise the power
of appropriation, which, as settled in Philconsa, is lodged in Congress.
3.) YES. Under the 2013 PDAF Article, the amount of P24.79 Billion
only appears as a collective allocation limit. Legislators make intermediate
appropriations of the PDAF only after the GAA is passed and hence, outside of
the law. Thus, actual items of PDAF appropriation would not have been written
into the General Appropriations Bill and are thus put into effect without veto
consideration. This kind of lump-sum/post-enactment legislative identification
budgeting system fosters the creation of a budget within a budget which
subverts the prescribed procedure of presentment and consequently impairs
the Presidents power of item veto. As petitioners aptly point out, the President
is forced to decide between (a) accepting the entire P24. 79 Billion PDAF
allocation without knowing the specific projects of the legislators, which may or
may not be consistent with his national agenda and (b) rejecting the whole
PDAF to the detriment of all other legislators with legitimate projects.
Even without its post-enactment legislative identification feature, the 2013
PDAF Article would remain constitutionally flawed since the lump-sum amount
of P24.79 Billion would be treated as a mere funding source allotted for
multiple purposes of spending (i.e. scholarships, medical missions, assistance
to indigents, preservation of historical materials, construction of roads, flood
control, etc). This setup connotes that the appropriation law leaves the actual
amounts and purposes of the appropriation for further determination and,
therefore, does not readily indicate a discernible item which may be subject to
the Presidents power of item veto.

4.) YES. To a certain extent, the conduct of oversight would be tainted as said
legislators, who are vested with post-enactment authority, would, in effect, be
checking on activities in which they themselves participate. Also, this very
same concept of post-enactment authorization runs afoul of Section 14, Article
VI of the 1987 Constitution which provides that: [A Senator or Member of
the House of Representatives] shall not intervene in any matter before any
office of the Government for his pecuniary benefit or where he may be called
upon to act on account of his office. Allowing legislators to intervene in the
various phases of project implementation renders them susceptible to taking
undue advantage of their own office.
However, the same post-enactment authority and/or the individual legislators
control of his PDAF per se would allow him to perpetrate himself in office. This
is a matter which must be analyzed based on particular facts and on a caseto-case basis.
Also, while it is possible that the close operational proximity between
legislators and the Executive department, through the formers post-enactment
participation, may affect the process of impeachment, this matter largely
borders on the domain of politics and does not strictly concern the Pork Barrel
Systems intrinsic constitutionality. As such, it is an improper subject of judicial
assessment.
5.) NO. Section 26, Article II of the 1987 Constitution is considered as not selfexecuting due to the qualifying phrase as may be defined by law. Therefore,
since there appears to be no standing law which crystallizes the policy on
political dynasties for enforcement, the Court must defer from ruling on this
issue. In any event, the above-stated argument on this score is largely
speculative since it has not been properly demonstrated how the Pork Barrel
System would be able to propagate political dynasties.
6.) YES. The Court, however, finds an inherent defect in the system which
actually belies the avowed intention of making equal the unequal. The
gauge of PDAF and CDF allocation/division is based solely on the fact
of office, without taking into account the specific interests and peculiarities of
the district the legislator represents. As a result, a district representative of a
highly-urbanized metropolis gets the same amount of funding as a district
representative of a far-flung rural province which would be relatively
underdeveloped compared to the former. To add, what rouses graver scrutiny
is that even Senators and Party-List Representatives and in some years,
even the Vice-President who do not represent any locality, receive funding
from the Congressional Pork Barrel as well.

The Court also observes that this concept of legislator control underlying the
CDF and PDAF conflicts with the functions of the various Local Development
Councils (LDCs), instrumentalities whose functions are essentially geared
towards managing local affairs. The programs, policies and resolutions of
LDCs should not be overridden nor duplicated by individual legislators, who
are national officers that have no law-making authority except only when
acting as a body.
C. Presidential Pork Barrel
YES. Regarding the Malampaya Fund: The phrase and for such other
purposes as may be hereafter directed by the President under Section 8 of
PD 910 constitutes an undue delegation of legislative power as it does not lay
down a sufficient standard to adequately determine the limits of the
Presidents authority with respect to the purpose for which the Malampaya
Funds may be used. As it reads, the said phrase gives the President wide
latitude to use the Malampaya Funds for any other purpose he may direct and,
in effect, allows him to unilaterally appropriate public funds beyond the purview
of the law.
Regarding the Presidential Social Fund: Section 12 of PD 1869, as
amended by PD 1993, indicates that the Presidential Social Fund may be
used to finance the priority infrastructure development projects. This gives
him carte blanche authority to use the same fund for any infrastructure project
he may so determine as a priority. The law does not supply a definition of
priority infrastructure development projects and hence, leaves the President
without any guideline to construe the same. To note, the delimitation of a
project as one of infrastructure is too broad of a classification since the said
term could pertain to any kind of facility. Thus, the phrase to finance the
priority infrastructure development projects must be stricken down as
unconstitutional since similar to Section 8 of PD 910 it lies
independently unfettered by any sufficient standard of the delegating law.

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
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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 years 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 expos
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
Peoples 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
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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 Presidents 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, theres no impoundment in the
case at bar because whats 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 nonexistent 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.

CASE DIGEST:
Maria Carolina Araullo vs Benigno Aquino

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 years 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 expos
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
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Peoples 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,

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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 Presidents 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, theres no impoundment in the
case at bar because whats 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 nonexistent 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
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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.

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