Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R No. 187167 August 16, 2011

PROF. MERLIN M. MAGALLONA, AKBAYAN PARTY-LIST REP. RISA HONTIVEROS, PROF. HARRY C.
ROQUE, JR., AND UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW STUDENTS, ALITHEA
BARBARA ACAS, VOLTAIRE ALFERES, CZARINA MAY ALTEZ, FRANCIS ALVIN ASILO, SHERYL BALOT,
RUBY AMOR BARRACA, JOSE JAVIER BAUTISTA, ROMINA BERNARDO, VALERIE PAGASA
BUENAVENTURA, EDAN MARRI CAÑETE, VANN ALLEN DELA CRUZ, RENE DELORINO, PAULYN MAY
DUMAN, SHARON ESCOTO, RODRIGO FAJARDO III, GIRLIE FERRER, RAOULLE OSEN FERRER, CARLA
REGINA GREPO, ANNA MARIE CECILIA GO, IRISH KAY KALAW, MARY ANN JOY LEE, MARIA LUISA
MANALAYSAY, MIGUEL RAFAEL MUSNGI, MICHAEL OCAMPO, JAKLYN HANNA PINEDA, WILLIAM
RAGAMAT, MARICAR RAMOS, ENRIK FORT REVILLAS, JAMES MARK TERRY RIDON, JOHANN
FRANTZ RIVERA IV, CHRISTIAN RIVERO, DIANNE MARIE ROA, NICHOLAS SANTIZO, MELISSA
CHRISTINA SANTOS, CRISTINE MAE TABING, VANESSA ANNE TORNO, MARIA ESTER VANGUARDIA,
and MARCELINO VELOSO III, Petitioners,

vs.

HON. EDUARDO ERMITA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERTO ROMULO, IN
HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS, HON. ROLANDO
ANDAYA, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT,
HON. DIONY VENTURA, IN HIS CAPACITY AS ADMINISTRATOR OF THE NATIONAL MAPPING &
RESOURCE INFORMATION AUTHORITY, and HON. HILARIO DAVIDE, JR., IN HIS CAPACITY AS
REPRESENTATIVE OF THE PERMANENT MISSION OF THE REPUBLIC OF THE PHILIPPINES TO THE
UNITED NATIONS, Respondents.

DECISION

CARPIO, J.:

The Case

This original action for the writs of certiorari and prohibition assails the constitutionality of
Republic Act No. 95221 (RA 9522) adjusting the country’s archipelagic baselines and classifying the
baseline regime of nearby territories.
The Antecedents

In 1961, Congress passed Republic Act No. 3046 (RA 3046)2 demarcating the maritime baselines of
the Philippines as an archipelagic State.3 This law followed the framing of the Convention on the
Territorial Sea and the Contiguous Zone in 1958 (UNCLOS I),4 codifying, among others, the
sovereign right of States parties over their "territorial sea," the breadth of which, however, was
left undetermined. Attempts to fill this void during the second round of negotiations in Geneva in
1960 (UNCLOS II) proved futile. Thus, domestically, RA 3046 remained unchanged for nearly five
decades, save for legislation passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting
typographical errors and reserving the drawing of baselines around Sabah in North Borneo.

In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny.
The change was prompted by the need to make RA 3046 compliant with the terms of the United
Nations Convention on the Law of the Sea (UNCLOS III),5 which the Philippines ratified on 27
February 1984.6 Among others, UNCLOS III prescribes the water-land ratio, length, and contour of
baselines of archipelagic States like the Philippines7 and sets the deadline for the filing of
application for the extended continental shelf.8 Complying with these requirements, RA 9522
shortened one baseline, optimized the location of some basepoints around the Philippine
archipelago and classified adjacent territories, namely, the Kalayaan Island Group (KIG) and the
Scarborough Shoal, as "regimes of islands" whose islands generate their own applicable maritime
zones.

Petitioners, professors of law, law students and a legislator, in their respective capacities as
"citizens, taxpayers or x x x legislators,"9 as the case may be, assail the constitutionality of RA
9522 on two principal grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and
logically, the reach of the Philippine state’s sovereign power, in violation of Article 1 of the 1987
Constitution,10 embodying the terms of the Treaty of Paris11 and ancillary treaties,12 and (2) RA
9522 opens the country’s waters landward of the baselines to maritime passage by all vessels and
aircrafts, undermining Philippine sovereignty and national security, contravening the country’s
nuclear-free policy, and damaging marine resources, in violation of relevant constitutional
provisions.13

In addition, petitioners contend that RA 9522’s treatment of the KIG as "regime of islands" not
only results in the loss of a large maritime area but also prejudices the livelihood of subsistence
fishermen.14 To buttress their argument of territorial diminution, petitioners facially attack RA
9522 for what it excluded and included – its failure to reference either the Treaty of Paris or Sabah
and its use of UNCLOS III’s framework of regime of islands to determine the maritime zones of the
KIG and the Scarborough Shoal.

Commenting on the petition, respondent officials raised threshold issues questioning (1) the
petition’s compliance with the case or controversy requirement for judicial review grounded on
petitioners’ alleged lack of locus standi and (2) the propriety of the writs of certiorari and
prohibition to assail the constitutionality of RA 9522. On the merits, respondents defended RA
9522 as the country’s compliance with the terms of UNCLOS III, preserving Philippine territory over
the KIG or Scarborough Shoal. Respondents add that RA 9522 does not undermine the country’s
security, environment and economic interests or relinquish the Philippines’ claim over Sabah.

Respondents also question the normative force, under international law, of petitioners’ assertion
that what Spain ceded to the United States under the Treaty of Paris were the islands and all the
waters found within the boundaries of the rectangular area drawn under the Treaty of Paris.

We left unacted petitioners’ prayer for an injunctive writ.

The Issues

The petition raises the following issues:

1. Preliminarily –

1. Whether petitioners possess locus standi to bring this suit; and

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522.

2. On the merits, whether RA 9522 is unconstitutional.

The Ruling of the Court

On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as
citizens and (2) the writs of certiorari and prohibition are proper remedies to test the
constitutionality of RA 9522. On the merits, we find no basis to declare RA 9522 unconstitutional.

On the Threshold Issues

Petitioners Possess Locus

Standi as Citizens
Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers
because the petition alleges neither infringement of legislative prerogative15 nor misuse of public
funds,16 occasioned by the passage and implementation of RA 9522. Nonetheless, we recognize
petitioners’ locus standi as citizens with constitutionally sufficient interest in the resolution of the
merits of the case which undoubtedly raises issues of national significance necessitating urgent
resolution. Indeed, owing to the peculiar nature of RA 9522, it is understandably difficult to find
other litigants possessing "a more direct and specific interest" to bring the suit, thus satisfying one
of the requirements for granting citizenship standing.17

The Writs of Certiorari and Prohibition

Are Proper Remedies to Test

the Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict
observance of the offices of the writs of certiorari and prohibition, noting that the writs cannot
issue absent any showing of grave abuse of discretion in the exercise of judicial, quasi-judicial or
ministerial powers on the part of respondents and resulting prejudice on the part of petitioners.18

Respondents’ submission holds true in ordinary civil proceedings. When this Court exercises its
constitutional power of judicial review, however, we have, by tradition, viewed the writs of
certiorari and prohibition as proper remedial vehicles to test the constitutionality of statutes,19
and indeed, of acts of other branches of government.20 Issues of constitutional import are
sometimes crafted out of statutes which, while having no bearing on the personal interests of the
petitioners, carry such relevance in the life of this nation that the Court inevitably finds itself
constrained to take cognizance of the case and pass upon the issues raised, non-compliance with
the letter of procedural rules notwithstanding. The statute sought to be reviewed here is one such
law.

RA 9522 is Not Unconstitutional

RA 9522 is a Statutory Tool

to Demarcate the Country’s

Maritime Zones and Continental

Shelf Under UNCLOS III, not to

Delineate Philippine Territory

Petitioners submit that RA 9522 "dismembers a large portion of the national territory"21 because
it discards the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and
related treaties, successively encoded in the definition of national territory under the 1935, 1973
and 1987 Constitutions. Petitioners theorize that this constitutional definition trumps any treaty or
statutory provision denying the Philippines sovereign control over waters, beyond the territorial
sea recognized at the time of the Treaty of Paris, that Spain supposedly ceded to the United
States. Petitioners argue that from the Treaty of Paris’ technical description, Philippine
sovereignty over territorial waters extends hundreds of nautical miles around the Philippine
archipelago, embracing the rectangular area delineated in the Treaty of Paris.22

Petitioners’ theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty
regulating, among others, sea-use rights over maritime zones (i.e., the territorial waters [12
nautical miles from the baselines], contiguous zone [24 nautical miles from the baselines],
exclusive economic zone [200 nautical miles from the baselines]), and continental shelves that
UNCLOS III delimits.23 UNCLOS III was the culmination of decades-long negotiations among United
Nations members to codify norms regulating the conduct of States in the world’s oceans and
submarine areas, recognizing coastal and archipelagic States’ graduated authority over a limited
span of waters and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to
mark-out specific basepoints along their coasts from which baselines are drawn, either straight or
contoured, to serve as geographic starting points to measure the breadth of the maritime zones
and continental shelf. Article 48 of UNCLOS III on archipelagic States like ours could not be any
clearer:

Article 48. Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf. – The breadth of the territorial sea, the contiguous zone,
the exclusive economic zone and the continental shelf shall be measured from archipelagic
baselines drawn in accordance with article 47. (Emphasis supplied)

Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit
with precision the extent of their maritime zones and continental shelves. In turn, this gives notice
to the rest of the international community of the scope of the maritime space and submarine
areas within which States parties exercise treaty-based rights, namely, the exercise of sovereignty
over territorial waters (Article 2), the jurisdiction to enforce customs, fiscal, immigration, and
sanitation laws in the contiguous zone (Article 33), and the right to exploit the living and non-living
resources in the exclusive economic zone (Article 56) and continental shelf (Article 77).

Even under petitioners’ theory that the Philippine territory embraces the islands and all the
waters within the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines
would still have to be drawn in accordance with RA 9522 because this is the only way to draw the
baselines in conformity with UNCLOS III. The baselines cannot be drawn from the boundaries or
other portions of the rectangular area delineated in the Treaty of Paris, but from the "outermost
islands and drying reefs of the archipelago."24

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as
petitioners claim, diminution of territory. Under traditional international law typology, States
acquire (or conversely, lose) territory through occupation, accretion, cession and prescription,25
not by executing multilateral treaties on the regulations of sea-use rights or enacting statutes to
comply with the treaty’s terms to delimit maritime zones and continental shelves. Territorial
claims to land features are outside UNCLOS III, and are instead governed by the rules on general
international law.26

RA 9522’s Use of the Framework

of Regime of Islands to Determine the

Maritime Zones of the KIG and the

Scarborough Shoal, not Inconsistent

with the Philippines’ Claim of Sovereignty

Over these Areas

Petitioners next submit that RA 9522’s use of UNCLOS III’s regime of islands framework to draw
the baselines, and to measure the breadth of the applicable maritime zones of the KIG, "weakens
our territorial claim" over that area.27 Petitioners add that the KIG’s (and Scarborough Shoal’s)
exclusion from the Philippine archipelagic baselines results in the loss of "about 15,000 square
nautical miles of territorial waters," prejudicing the livelihood of subsistence fishermen.28 A
comparison of the configuration of the baselines drawn under RA 3046 and RA 9522 and the
extent of maritime space encompassed by each law, coupled with a reading of the text of RA 9522
and its congressional deliberations, vis-à-vis the Philippines’ obligations under UNCLOS III, belie
this view.1avvphi1

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely
followed the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522
skipped to optimize the location of basepoints and adjust the length of one baseline (and thus
comply with UNCLOS III’s limitation on the maximum length of baselines). Under RA 3046, as
under RA 9522, the KIG and the Scarborough Shoal lie outside of the baselines drawn around the
Philippine archipelago. This undeniable cartographic fact takes the wind out of petitioners’
argument branding RA 9522 as a statutory renunciation of the Philippines’ claim over the KIG,
assuming that baselines are relevant for this purpose.
Petitioners’ assertion of loss of "about 15,000 square nautical miles of territorial waters" under RA
9522 is similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the
location of basepoints, increased the Philippines’ total maritime space (covering its internal
waters, territorial sea and exclusive economic zone) by 145,216 square nautical miles, as shown in
the table below:29

Extent of maritime area using RA 3046, as amended, taking into account the Treaty of Paris’
delimitation (in square nautical miles)

Extent of maritime area using RA 9522, taking into account UNCLOS III (in square nautical miles)

Internal or archipelagic waters 166,858 171,435

Territorial Sea 274,136 32,106

Exclusive Economic Zone 382,669

TOTAL 440,994 586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522
even extends way beyond the waters covered by the rectangular demarcation under the Treaty of
Paris. Of course, where there are overlapping exclusive economic zones of opposite or adjacent
States, there will have to be a delineation of maritime boundaries in accordance with UNCLOS
III.30

Further, petitioners’ argument that the KIG now lies outside Philippine territory because the
baselines that RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the
law commits to text the Philippines’ continued claim of sovereignty and jurisdiction over the KIG
and the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises
sovereignty and jurisdiction shall be determined as "Regime of Islands" under the Republic of the
Philippines consistent with Article 121 of the United Nations Convention on the Law of the Sea
(UNCLOS):

a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and
b) Bajo de Masinloc, also known as Scarborough Shoal. (Emphasis supplied)

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine
archipelago, adverse legal effects would have ensued. The Philippines would have committed a
breach of two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that "[t]he
drawing of such baselines shall not depart to any appreciable extent from the general
configuration of the archipelago." Second, Article 47 (2) of UNCLOS III requires that "the length of
the baselines shall not exceed 100 nautical miles," save for three per cent (3%) of the total number
of baselines which can reach up to 125 nautical miles.31

Although the Philippines has consistently claimed sovereignty over the KIG32 and the Scarborough
Shoal for several decades, these outlying areas are located at an appreciable distance from the
nearest shoreline of the Philippine archipelago,33 such that any straight baseline loped around
them from the nearest basepoint will inevitably "depart to an appreciable extent from the general
configuration of the archipelago."

The principal sponsor of RA 9522 in the Senate, Senator Miriam Defensor-Santiago, took pains to
emphasize the foregoing during the Senate deliberations:

What we call the Kalayaan Island Group or what the rest of the world call[] the Spratlys and the
Scarborough Shoal are outside our archipelagic baseline because if we put them inside our
baselines we might be accused of violating the provision of international law which states: "The
drawing of such baseline shall not depart to any appreciable extent from the general configuration
of the archipelago." So sa loob ng ating baseline, dapat magkalapit ang mga islands. Dahil malayo
ang Scarborough Shoal, hindi natin masasabing malapit sila sa atin although we are still allowed by
international law to claim them as our own.

This is called contested islands outside our configuration. We see that our archipelago is defined
by the orange line which [we] call[] archipelagic baseline. Ngayon, tingnan ninyo ang maliit na
circle doon sa itaas, that is Scarborough Shoal, itong malaking circle sa ibaba, that is Kalayaan
Group or the Spratlys. Malayo na sila sa ating archipelago kaya kung ilihis pa natin ang dating
archipelagic baselines para lamang masama itong dalawang circles, hindi na sila magkalapit at
baka hindi na tatanggapin ng United Nations because of the rule that it should follow the natural
configuration of the archipelago.34 (Emphasis supplied)

Similarly, the length of one baseline that RA 3046 drew exceeded UNCLOS III’s limits.1avvphi1 The
need to shorten this baseline, and in addition, to optimize the location of basepoints using current
maps, became imperative as discussed by respondents:
[T]he amendment of the baselines law was necessary to enable the Philippines to draw the outer
limits of its maritime zones including the extended continental shelf in the manner provided by
Article 47 of [UNCLOS III]. As defined by R.A. 3046, as amended by R.A. 5446, the baselines suffer
from some technical deficiencies, to wit:

1. The length of the baseline across Moro Gulf (from Middle of 3 Rock Awash to Tongquil Point) is
140.06 nautical miles x x x. This exceeds the maximum length allowed under Article 47(2) of the
[UNCLOS III], which states that "The length of such baselines shall not exceed 100 nautical miles,
except that up to 3 per cent of the total number of baselines enclosing any archipelago may
exceed that length, up to a maximum length of 125 nautical miles."

2. The selection of basepoints is not optimal. At least 9 basepoints can be skipped or deleted from
the baselines system. This will enclose an additional 2,195 nautical miles of water.

3. Finally, the basepoints were drawn from maps existing in 1968, and not established by geodetic
survey methods. Accordingly, some of the points, particularly along the west coasts of Luzon down
to Palawan were later found to be located either inland or on water, not on low-water line and
drying reefs as prescribed by Article 47.35

Hence, far from surrendering the Philippines’ claim over the KIG and the Scarborough Shoal,
Congress’ decision to classify the KIG and the Scarborough Shoal as "‘Regime[s] of Islands’ under
the Republic of the Philippines consistent with Article 121"36 of UNCLOS III manifests the
Philippine State’s responsible observance of its pacta sunt servanda obligation under UNCLOS III.
Under Article 121 of UNCLOS III, any "naturally formed area of land, surrounded by water, which is
above water at high tide," such as portions of the KIG, qualifies under the category of "regime of
islands," whose islands generate their own applicable maritime zones.37

Statutory Claim Over Sabah under

RA 5446 Retained

Petitioners’ argument for the invalidity of RA 9522 for its failure to textualize the Philippines’ claim
over Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal,
keeps open the door for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as
provided in this Act is without prejudice to the delineation of the baselines of the territorial sea
around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines
has acquired dominion and sovereignty. (Emphasis supplied)
UNCLOS III and RA 9522 not

Incompatible with the Constitution’s

Delineation of Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law
unconstitutionally "converts" internal waters into archipelagic waters, hence subjecting these
waters to the right of innocent and sea lanes passage under UNCLOS III, including overflight.
Petitioners extrapolate that these passage rights indubitably expose Philippine internal waters to
nuclear and maritime pollution hazards, in violation of the Constitution.38

Whether referred to as Philippine "internal waters" under Article I of the Constitution39 or as

"archipelagic waters" under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over
the body of water lying landward of the baselines, including the air space over it and the
submarine areas underneath. UNCLOS III affirms this:

Article 49. Legal status of archipelagic waters, of the air space over archipelagic waters and of their
bed and subsoil. –

1. The sovereignty of an archipelagic State extends to the waters enclosed by the archipelagic
baselines drawn in accordance with article 47, described as archipelagic waters, regardless of their
depth or distance from the coast.

2. This sovereignty extends to the air space over the archipelagic waters, as well as to their bed
and subsoil, and the resources contained therein.

xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters, including the sea lanes, or the exercise by the
archipelagic State of its sovereignty over such waters and their air space, bed and subsoil, and the
resources contained therein. (Emphasis supplied)

The fact of sovereignty, however, does not preclude the operation of municipal and international
law norms subjecting the territorial sea or archipelagic waters to necessary, if not marginal,
burdens in the interest of maintaining unimpeded, expeditious international navigation,
consistent with the international law principle of freedom of navigation. Thus, domestically, the
political branches of the Philippine government, in the competent discharge of their constitutional
powers, may pass legislation designating routes within the archipelagic waters to regulate
innocent and sea lanes passage.40 Indeed, bills drawing nautical highways for sea lanes passage
are now pending in Congress.41

In the absence of municipal legislation, international law norms, now codified in UNCLOS III,
operate to grant innocent passage rights over the territorial sea or archipelagic waters, subject to
the treaty’s limitations and conditions for their exercise.42 Significantly, the right of innocent
passage is a customary international law,43 thus automatically incorporated in the corpus of
Philippine law.44 No modern State can validly invoke its sovereignty to absolutely forbid innocent
passage that is exercised in accordance with customary international law without risking
retaliatory measures from the international community.

The fact that for archipelagic States, their archipelagic waters are subject to both the right of
innocent passage and sea lanes passage45 does not place them in lesser footing vis-à-vis
continental coastal States which are subject, in their territorial sea, to the right of innocent
passage and the right of transit passage through international straits. The imposition of these
passage rights through archipelagic waters under UNCLOS III was a concession by archipelagic
States, in exchange for their right to claim all the waters landward of their baselines, regardless of
their depth or distance from the coast, as archipelagic waters subject to their territorial
sovereignty. More importantly, the recognition of archipelagic States’ archipelago and the waters
enclosed by their baselines as one cohesive entity prevents the treatment of their islands as
separate islands under UNCLOS III.46 Separate islands generate their own maritime zones, placing
the waters between islands separated by more than 24 nautical miles beyond the States’
territorial sovereignty, subjecting these waters to the rights of other States under UNCLOS III.47

Petitioners’ invocation of non-executory constitutional provisions in Article II (Declaration of

Principles and State Policies)48 must also fail. Our present state of jurisprudence considers the
provisions in Article II as mere legislative guides, which, absent enabling legislation, "do not
embody judicially enforceable constitutional rights x x x."49 Article II provisions serve as guides in
formulating and interpreting implementing legislation, as well as in interpreting executory
provisions of the Constitution. Although Oposa v. Factoran50 treated the right to a healthful and
balanced ecology under Section 16 of Article II as an exception, the present petition lacks factual
basis to substantiate the claimed constitutional violation. The other provisions petitioners cite,
relating to the protection of marine wealth (Article XII, Section 2, paragraph 251 ) and subsistence
fishermen (Article XIII, Section 752 ), are not violated by RA 9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic
zone, reserving solely to the Philippines the exploitation of all living and non-living resources
within such zone. Such a maritime delineation binds the international community since the
delineation is in strict observance of UNCLOS III. If the maritime delineation is contrary to UNCLOS
III, the international community will of course reject it and will refuse to be bound by it.
UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates a sui generis
maritime space – the exclusive economic zone – in waters previously part of the high seas.
UNCLOS III grants new rights to coastal States to exclusively exploit the resources found within
this zone up to 200 nautical miles.53 UNCLOS III, however, preserves the traditional freedom of
navigation of other States that attached to this zone beyond the territorial sea before UNCLOS III.

RA 9522 and the Philippines’ Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not
bound to pass RA 9522.54 We have looked at the relevant provision of UNCLOS III55 and we find
petitioners’ reading plausible. Nevertheless, the prerogative of choosing this option belongs to
Congress, not to this Court. Moreover, the luxury of choosing this option comes at a very steep
price. Absent an UNCLOS III compliant baselines law, an archipelagic State like the Philippines will
find itself devoid of internationally acceptable baselines from where the breadth of its maritime
zones and continental shelf is measured. This is recipe for a two-fronted disaster: first, it sends an
open invitation to the seafaring powers to freely enter and exploit the resources in the waters and
submarine areas around our archipelago; and second, it weakens the country’s case in any
international dispute over Philippine maritime space. These are consequences Congress wisely
avoided.

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent
areas, as embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of
the Philippines’ maritime zones and continental shelf. RA 9522 is therefore a most vital step on
the part of the Philippines in safeguarding its maritime zones, consistent with the Constitution and
our national interest.

WHEREFORE, we DISMISS the petition.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice
PRESBITERO J. VELASCO, JR.

Associate Justice TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ARTURO D. BRION

Associate Justice DIOSDADO M. PERALTA

Associate Justice

LUCAS P. BERSAMIN

Associate Justice MARIANO C. DEL CASTILLO

Associate Justice

ROBERTO A. ABAD

Associate Justice MARTIN S. VILLARAMA, JR.

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice JOSE C. MENDOZA

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Court.

RENATO C. CORONA

Chief Justice

Footnotes
1 Entitled "An Act to Amend Certain Provisions of Republic Act No. 3046, as Amended by Republic
Act No. 5446, to Define the Archipelagic Baselines of the Philippines, and for Other Purposes."

2 Entitled "An Act to Define the Baselines of the Territorial Sea of the Philippines."

3 The third "Whereas Clause" of RA 3046 expresses the import of treating the Philippines as an
archipelagic State:

"WHEREAS, all the waters around, between, and connecting the various islands of the Philippine
archipelago, irrespective of their width or dimensions, have always been considered as necessary
appurtenances of the land territory, forming part of the inland waters of the Philippines."

4 One of the four conventions framed during the first United Nations Convention on the Law of
the Sea in Geneva, this treaty, excluding the Philippines, entered into force on 10 September 1964.

5 UNCLOS III entered into force on 16 November 1994.

6 The Philippines signed the treaty on 10 December 1982.

7 Article 47, paragraphs 1-3, provide:

1. An archipelagic State may draw straight archipelagic baselines joining the outermost points of
the outermost islands and drying reefs of the archipelago provided that within such baselines are
included the main islands and an area in which the ratio of the area of the water to the area of the
land, including atolls, is between 1 to 1 and 9 to 1.

2. The length of such baselines shall not exceed 100 nautical miles, except that up to 3 per cent of
the total number of baselines enclosing any archipelago may exceed that length, up to a maximum
length of 125 nautical miles.

3. The drawing of such baselines shall not depart to any appreciable extent from the general
configuration of the archipelago. (Emphasis supplied)

xxxx
8 UNCLOS III entered into force on 16 November 1994. The deadline for the filing of application is
mandated in Article 4, Annex II: "Where a coastal State intends to establish, in accordance with
article 76, the outer limits of its continental shelf beyond 200 nautical miles, it shall submit
particulars of such limits to the Commission along with supporting scientific and technical data as
soon as possible but in any case within 10 years of the entry into force of this Convention for that
State. The coastal State shall at the same time give the names of any Commission members who
have provided it with scientific and technical advice." (Underscoring supplied)

In a subsequent meeting, the States parties agreed that for States which became bound by the
treaty before 13 May 1999 (such as the Philippines) the ten-year period will be counted from that
date. Thus, RA 9522, which took effect on 27 March 2009, barely met the deadline.

9 Rollo, p. 34.

10 Which provides: "The national territory comprises the Philippine archipelago, with all the
islands and waters embraced therein, and all other territories over which the Philippines has
sovereignty or jurisdiction, consisting of its terrestrial, fluvial, and aerial domains, including its
territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters
around, between, and connecting the islands of the archipelago, regardless of their breadth and
dimensions, form part of the internal waters of the Philippines."

11 Entered into between the Unites States and Spain on 10 December 1898 following the
conclusion of the Spanish-American War. Under the terms of the treaty, Spain ceded to the United
States "the archipelago known as the Philippine Islands" lying within its technical description.

12 The Treaty of Washington, between Spain and the United States (7 November 1900),
transferring to the US the islands of Cagayan, Sulu, and Sibutu and the US-Great Britain
Convention (2 January 1930) demarcating boundary lines between the Philippines and North
Borneo.

13 Article II, Section 7, Section 8, and Section 16.

14 Allegedly in violation of Article XII, Section 2, paragraph 2 and Article XIII, Section 7 of the
Constitution.

15 Kilosbayan, Inc. v. Morato, 320 Phil. 171, 186 (1995).

16 Pascual v. Secretary of Public Works, 110 Phil. 331 (1960); Sanidad v. COMELEC, 165 Phil. 303
(1976).

17 Francisco, Jr. v. House of Representatives, 460 Phil. 830, 899 (2003) citing Kilosbayan, Inc. v.
Guingona, Jr., G.R. No. 113375, 5 May 1994, 232 SCRA 110, 155-156 (1995) (Feliciano, J.,
concurring). The two other factors are: "the character of funds or assets involved in the
controversy and a clear disregard of constitutional or statutory prohibition." Id.

18 . Rollo, pp. 144-147.

19 See e.g. Aquino III v. COMELEC, G.R. No. 189793, 7 April 2010, 617 SCRA 623 (dismissing a
petition for certiorari and prohibition assailing the constitutionality of Republic Act No. 9716, not
for the impropriety of remedy but for lack of merit); Aldaba v. COMELEC, G.R. No. 188078, 25
January 2010, 611 SCRA 137 (issuing the writ of prohibition to declare unconstitutional Republic
Act No. 9591); Macalintal v. COMELEC, 453 Phil. 586 (2003) (issuing the writs of certiorari and
prohibition declaring unconstitutional portions of Republic Act No. 9189).

20 See e.g. Neri v. Senate Committee on Accountability of Public Officers and Investigations, G.R.
No. 180643, 25 March 2008, 549 SCRA 77 (granting a writ of certiorari against the Philippine
Senate and nullifying the Senate contempt order issued against petitioner).

21 Rollo, p. 31.

22 Respondents state in their Comment that petitioners’ theory "has not been accepted or
recognized by either the United States or Spain," the parties to the Treaty of Paris. Respondents
add that "no State is known to have supported this proposition." Rollo, p. 179.

23 UNCLOS III belongs to that larger corpus of international law of the sea, which petitioner
Magallona himself defined as "a body of treaty rules and customary norms governing the uses of
the sea, the exploitation of its resources, and the exercise of jurisdiction over maritime regimes. x
x x x" (Merlin M. Magallona, Primer on the Law of the Sea 1 [1997]) (Italicization supplied).

24 Following Article 47 (1) of UNCLOS III which provides:

An archipelagic State may draw straight archipelagic baselines joining the outermost points of the
outermost islands and drying reefs of the archipelago provided that within such baselines are
included the main islands and an area in which the ratio of the area of the water to the area of the
land, including atolls, is between 1 to 1 and 9 to 1. (Emphasis supplied)
25 Under the United Nations Charter, use of force is no longer a valid means of acquiring territory.

26 The last paragraph of the preamble of UNCLOS III states that "matters not regulated by this
Convention continue to be governed by the rules and principles of general international law."

27 Rollo, p. 51.

28 Id. at 51-52, 64-66.

29 Based on figures respondents submitted in their Comment (id. at 182).

30 Under Article 74.

31 See note 7.

32 Presidential Decree No. 1596 classifies the KIG as a municipality of Palawan.

33 KIG lies around 80 nautical miles west of Palawan while Scarborough Shoal is around 123
nautical west of Zambales.

34 Journal, Senate 14th Congress 44th Session 1416 (27 January 2009).

35 Rollo, p. 159.

36 Section 2, RA 9522.

37 Article 121 provides: "Regime of islands. —

1. An island is a naturally formed area of land, surrounded by water, which is above water at high
tide.
2. Except as provided for in paragraph 3, the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf of an island are determined in accordance with the
provisions of this Convention applicable to other land territory.

3. Rocks which cannot sustain human habitation or economic life of their own shall have no
exclusive economic zone or continental shelf."

38 Rollo, pp. 56-57, 60-64.

39 Paragraph 2, Section 2, Article XII of the Constitution uses the term "archipelagic waters"
separately from "territorial sea." Under UNCLOS III, an archipelagic State may have internal waters
– such as those enclosed by closing lines across bays and mouths of rivers. See Article 50, UNCLOS
III. Moreover, Article 8 (2) of UNCLOS III provides: "Where the establishment of a straight baseline
in accordance with the method set forth in article 7 has the effect of enclosing as internal waters
areas which had not previously been considered as such, a right of innocent passage as provided in
this Convention shall exist in those waters." (Emphasis supplied)

40 Mandated under Articles 52 and 53 of UNCLOS III:

Article 52. Right of innocent passage. —

1. Subject to article 53 and without prejudice to article 50, ships of all States enjoy the right of
innocent passage through archipelagic waters, in accordance with Part II, section 3.

2. The archipelagic State may, without discrimination in form or in fact among foreign ships,
suspend temporarily in specified areas of its archipelagic waters the innocent passage of foreign
ships if such suspension is essential for the protection of its security. Such suspension shall take
effect only after having been duly published. (Emphasis supplied)

Article 53. Right of archipelagic sea lanes passage. —

1. An archipelagic State may designate sea lanes and air routes thereabove, suitable for the
continuous and expeditious passage of foreign ships and aircraft through or over its archipelagic
waters and the adjacent territorial sea.

2. All ships and aircraft enjoy the right of archipelagic sea lanes passage in such sea lanes and air
routes.
3. Archipelagic sea lanes passage means the exercise in accordance with this Convention of the
rights of navigation and overflight in the normal mode solely for the purpose of continuous,
expeditious and unobstructed transit between one part of the high seas or an exclusive economic
zone and another part of the high seas or an exclusive economic zone.

4. Such sea lanes and air routes shall traverse the archipelagic waters and the adjacent territorial
sea and shall include all normal passage routes used as routes for international navigation or
overflight through or over archipelagic waters and, within such routes, so far as ships are
concerned, all normal navigational channels, provided that duplication of routes of similar
convenience between the same entry and exit points shall not be necessary.

5. Such sea lanes and air routes shall be defined by a series of continuous axis lines from the entry
points of passage routes to the exit points. Ships and aircraft in archipelagic sea lanes passage
shall not deviate more than 25 nautical miles to either side of such axis lines during passage,
provided that such ships and aircraft shall not navigate closer to the coasts than 10 per cent of the
distance between the nearest points on islands bordering the sea lane.

6. An archipelagic State which designates sea lanes under this article may also prescribe traffic
separation schemes for the safe passage of ships through narrow channels in such sea lanes.

7. An archipelagic State may, when circumstances require, after giving due publicity thereto,
substitute other sea lanes or traffic separation schemes for any sea lanes or traffic separation
schemes previously designated or prescribed by it.

8. Such sea lanes and traffic separation schemes shall conform to generally accepted international
regulations.

9. In designating or substituting sea lanes or prescribing or substituting traffic separation schemes,

an archipelagic State shall refer proposals to the competent international organization with a view
to their adoption. The organization may adopt only such sea lanes and traffic separation schemes
as may be agreed with the archipelagic State, after which the archipelagic State may designate,
prescribe or substitute them.

10. The archipelagic State shall clearly indicate the axis of the sea lanes and the traffic separation
schemes designated or prescribed by it on charts to which due publicity shall be given.
11. Ships in archipelagic sea lanes passage shall respect applicable sea lanes and traffic separation
schemes established in accordance with this article.

12. If an archipelagic State does not designate sea lanes or air routes, the right of archipelagic sea
lanes passage may be exercised through the routes normally used for international navigation.
(Emphasis supplied)

41 Namely, House Bill No. 4153 and Senate Bill No. 2738, identically titled "AN ACT TO ESTABLISH
THE ARCHIPELAGIC SEA LANES IN THE PHILIPPINE ARCHIPELAGIC WATERS, PRESCRIBING THE
RIGHTS AND OBLIGATIONS OF FOREIGN SHIPS AND AIRCRAFTS EXERCISING THE RIGHT OF
ARCHIPELAGIC SEA LANES PASSAGE THROUGH THE ESTABLISHED ARCHIPELAGIC SEA LANES AND
PROVIDING FOR THE ASSOCIATED PROTECTIVE MEASURES THEREIN."

42 The relevant provision of UNCLOS III provides:

Article 17. Right of innocent passage. —

Subject to this Convention, ships of all States, whether coastal or land-locked, enjoy the right of
innocent passage through the territorial sea. (Emphasis supplied)

Article 19. Meaning of innocent passage. —

1. Passage is innocent so long as it is not prejudicial to the peace, good order or security of the
coastal State. Such passage shall take place in conformity with this Convention and with other
rules of international law.

2. Passage of a foreign ship shall be considered to be prejudicial to the peace, good order or
security of the coastal State if in the territorial sea it engages in any of the following activities:

(a) any threat or use of force against the sovereignty, territorial integrity or political independence
of the coastal State, or in any other manner in violation of the principles of international law
embodied in the Charter of the United Nations;

(b) any exercise or practice with weapons of any kind;

(c) any act aimed at collecting information to the prejudice of the defence or security of the
coastal State;

(d) any act of propaganda aimed at affecting the defence or security of the coastal State;

(e) the launching, landing or taking on board of any aircraft;

(f) the launching, landing or taking on board of any military device;

(g) the loading or unloading of any commodity, currency or person contrary to the customs, fiscal,
immigration or sanitary laws and regulations of the coastal State;

(h) any act of willful and serious pollution contrary to this Convention;

(i) any fishing activities;

(j) the carrying out of research or survey activities;

(k) any act aimed at interfering with any systems of communication or any other facilities or
installations of the coastal State;

(l) any other activity not having a direct bearing on passage

Article 21. Laws and regulations of the coastal State relating to innocent passage. —

1. The coastal State may adopt laws and regulations, in conformity with the provisions of this
Convention and other rules of international law, relating to innocent passage through the
territorial sea, in respect of all or any of the following:

(a) the safety of navigation and the regulation of maritime traffic;

(b) the protection of navigational aids and facilities and other facilities or installations;
(c) the protection of cables and pipelines;

(d) the conservation of the living resources of the sea;

(e) the prevention of infringement of the fisheries laws and regulations of the coastal State;

(f) the preservation of the environment of the coastal State and the prevention, reduction and
control of pollution thereof;

(g) marine scientific research and hydrographic surveys;

(h) the prevention of infringement of the customs, fiscal, immigration or sanitary laws and
regulations of the coastal State.

2. Such laws and regulations shall not apply to the design, construction, manning or equipment of
foreign ships unless they are giving effect to generally accepted international rules or standards.

3. The coastal State shall give due publicity to all such laws and regulations.

4. Foreign ships exercising the right of innocent passage through the territorial sea shall comply
with all such laws and regulations and all generally accepted international regulations relating to
the prevention of collisions at sea.

43 The right of innocent passage through the territorial sea applies only to ships and not to
aircrafts (Article 17, UNCLOS III). The right of innocent passage of aircrafts through the sovereign
territory of a State arises only under an international agreement. In contrast, the right of innocent
passage through archipelagic waters applies to both ships and aircrafts (Article 53 (12), UNCLOS
III).

44 Following Section 2, Article II of the Constitution: "Section 2. The Philippines renounces war as
an instrument of national policy, adopts the generally accepted principles of international law as
part of the law of the land and adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations." (Emphasis supplied)
45 "Archipelagic sea lanes passage is essentially the same as transit passage through straits" to
which the territorial sea of continental coastal State is subject. R.R. Churabill and A.V. Lowe, The
Law of the Sea 127 (1999).

46 Falling under Article 121 of UNCLOS III (see note 37).

47 Within the exclusive economic zone, other States enjoy the following rights under UNCLOS III:

Article 58. Rights and duties of other States in the exclusive economic zone. —

1. In the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the
relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and
overflight and of the laying of submarine cables and pipelines, and other internationally lawful
uses of the sea related to these freedoms, such as those associated with the operation of ships,
aircraft and submarine cables and pipelines, and compatible with the other provisions of this
Convention.

2. Articles 88 to 115 and other pertinent rules of international law apply to the exclusive economic
zone in so far as they are not incompatible with this Part.

xxxx

Beyond the exclusive economic zone, other States enjoy the freedom of the high seas, defined
under UNCLOS III as follows:

Article 87. Freedom of the high seas. —

1. The high seas are open to all States, whether coastal or land-locked. Freedom of the high seas is
exercised under the conditions laid down by this Convention and by other rules of international
law. It comprises, inter alia, both for coastal and land-locked States:

(a) freedom of navigation;

(b) freedom of overflight;

(c) freedom to lay submarine cables and pipelines, subject to Part VI;

(d) freedom to construct artificial islands and other installations permitted under international
law, subject to Part VI;

(e) freedom of fishing, subject to the conditions laid down in section 2;

(f) freedom of scientific research, subject to Parts VI and XIII.

2. These freedoms shall be exercised by all States with due regard for the interests of other States
in their exercise of the freedom of the high seas, and also with due regard for the rights under this
Convention with respect to activities in the Area.

48 See note 13.

49 Kilosbayan, Inc. v. Morato, 316 Phil. 652, 698 (1995); Tañada v. Angara, 338 Phil. 546, 580-581
(1997).

50 G.R. No. 101083, 30 July 1993, 224 SCRA 792.

51 "The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens."

52 "The State shall protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of the communal marine and fishing resources, both inland and offshore. It
shall provide support to such fishermen through appropriate technology and research, adequate
financial, production, and marketing assistance, and other services. The State shall also protect,
develop, and conserve such resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive a just share from their
labor in the utilization of marine and fishing resources."

53 This can extend up to 350 nautical miles if the coastal State proves its right to claim an
extended continental shelf (see UNCLOS III, Article 76, paragraphs 4(a), 5 and 6, in relation to
Article 77).

54 Rollo, pp. 67-69.

55 Article 47 (1) provides: "An archipelagic State may draw straight archipelagic baselines joining
the outermost points of the outermost islands and drying reefs of the archipelago provided that
within such baselines are included the main islands and an area in which the ratio of the area of
the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1." (Emphasis
supplied) in the Area.

The Lawphil Project - Arellano Law Foundation

CONCURRING OPINION

VELASCO, JR., J.:

I concur with the ponencia and add the following complementary arguments and observations:

A statute is a product of hard work and earnest studies of Congress to ensure that no
constitutional provision, prescription or concept is infringed. Withal, before a law, in an
appropriate proceeding, is nullified, an unequivocal breach of, or a clear conflict with, the
Constitution must be demonstrated in such a way as to leave no doubt in the mind of the Court.1
In the same token, if a law runs directly afoul of the Constitution, the Court’s duty on the matter
should be clear and simple: Pursuant to its judicial power and as final arbiter of all legal
questions,2 it should strike such law down, however laudable its purpose/s might be and
regardless of the deleterious effect such action may carry in its wake.

Challenged in these proceedings is the constitutionality of Republic Act (RA 9522) entitled "An Act
to Amend Certain Provisions of [RA] 3046, as Amended by [RA] 5446 to Define the Archipelagic
Baselines Of The Philippines and for Other Purposes." For perspective, RA 3046, "An Act to Define
the Baselines of the Territorial Sea of the Philippines, was enacted in 1961 to comply with the
United Nations Convention on the Law of the Sea (UNCLOS) I. Eight years later, RA 5446 was
enacted to amend typographical errors relating to coordinates in RA 3046. The latter law also
added a provision asserting Philippine sovereignty over Sabah.

As its title suggests, RA 9522 delineates archipelagic baselines of the country, amending in the
process the old baselines law, RA 3046. Everybody is agreed that RA 9522 was enacted in response
to the country’s commitment to conform to some 1982 Law of the Sea Convention (LOSC) or
UNCLOS III provisions to define new archipelagic baselines through legislation, the Philippines
having signed3 and eventually ratified4 this multilateral treaty. The Court can take judicial notice
that RA 9522 was registered and deposited with the UN on April 4, 2009.
As indicated in its Preamble,5 1982 LOSC aims, among other things, to establish, with due regard
for the sovereignty of all States, "a legal order for the seas and oceans which will facilitate
international communication, and will promote the peaceful uses of the seas and oceans." One of
the measures to attain the order adverted to is to have a rule on baselines. Of particular relevance
to the Philippines, as an archipelagic state, is Article 47 of UNCLOS III which deals with baselines:

1. An archipelagic State may draw straight archipelagic baselines joining the outermost points of
the outermost islands and drying reefs of the archipelago provided that within such baselines are
included the main islands and an area in which the ratio of the area of the water to the area of the
land, including atolls, is between 1 to 1 and 9 to 1.

2. The length of such baseline shall not exceed 100 nautical miles, except that up to 3 per cent of
the total number of baselines enclosing any archipelago may exceed that length, up to a maximum
length of 125 nautical miles.

3. The drawing of such baselines shall not depart to any appreciable extent from the general
configuration of the archipelago.

xxxx

9. The archipelagic State shall give due publicity to such charts or lists of geographical co-ordinates
and shall deposit a copy of each such chart or list with the Secretary-General of the United
Nations.6 (Emphasis added.)

To obviate, however, the possibility that certain UNCLOS III baseline provisions would, in their
implementation, undermine its sovereign and/or jurisdictional interests over what it considers its
territory,7 the Philippines, when it signed UNCLOS III on December 10, 1982, made the following
"Declaration" to said treaty:

The Government of the Republic of the Philippines [GRP] hereby manifests that in signing the 1982
United Nations Convention on the Law of the Sea, it does so with the understandings embodied in
this declaration, made under the provisions of Article 310 of the Convention, to wit:

The signing of the Convention by the [GRP] shall not in any manner impair or prejudice the
sovereign rights of the [RP] under and arising from the Constitution of the Philippines;
Such signing shall not in any manner affect the sovereign rights of the [RP] as successor of the
United States of America [USA], under and arising out of the Treaty of Paris between Spain and
the United States of America of December 10, 1898, and the Treaty of Washington between the
[USA] and Great Britain of January 2, 1930;

xxxx

Such signing shall not in any manner impair or prejudice the sovereignty of the [RP] over any
territory over which it exercises sovereign authority, such as the Kalayaan Islands, and the waters
appurtenant thereto;

The Convention shall not be construed as amending in any manner any pertinent laws and
Presidential Decrees or Proclamations of the Republic of the Philippines. The [GRP] maintains and
reserves the right and authority to make any amendments to such laws, decrees or proclamations
pursuant to the provisions of the Philippine Constitution;

The provisions of the Convention on archipelagic passage through sea lanes do not nullify or
impair the sovereignty of the Philippines as an archipelagic state over the sea lanes and do not
deprive it of authority to enact legislation to protect its sovereignty independence and security;

The concept of archipelagic waters is similar to the concept of internal waters under the
Constitution of the Philippines, and removes straits connecting these waters with the economic
zone or high sea from the rights of foreign vessels to transit passage for international navigation.8
(Emphasis added.)

Petitioners challenge the constitutionality of RA 9522 on the principal ground that the law violates
Section 1, Article I of the 1987 Constitution on national territory which states:

Section 1. The national territory comprises the Philippine archipelago, with all the islands and
waters embraced therein, and all other territories over which the Philippines has sovereignty or
jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including its territorial sea, the
seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between,
and connecting the islands of the archipelago, regardless of their breadth and dimensions, form
part of the internal waters of the Philippines. (Emphasis supplied.)

According to Fr. Joaquin Bernas, S.J., himself a member of the 1986 Constitutional Commission
which drafted the 1987 Constitution, the aforequoted Section 1 on national territory was "in
substance a copy of its 1973 counterpart."9 Art. I of the 1973 Constitution reads:
Section 1. The national territory comprises the Philippine archipelago, with all the islands and
waters embraced therein, and all other territories belonging to the Philippines by historic right or
legal title, including the territorial sea, the air space, the subsoil, the insular shelves, and other
submarine areas over which the Philippines has sovereignty or jurisdiction. The waters around,
between, and connecting the islands of the archipelago, regardless of their breadth and
dimensions, form part of the internal waters of the Philippines. (Emphasis added.)

As may be noted both constitutions speak of the "Philippine archipelago," and, via the last
sentence of their respective provisions, assert the country’s adherence to the "archipelagic
principle." Both constitutions divide the national territory into two main groups: (1) the Philippine
archipelago and (2) other territories belonging to the Philippines. So what or where is Philippine
archipelago contemplated in the 1973 and 1987 Constitutions then? Fr. Bernas answers the poser
in the following wise:

Article I of the 1987 Constitution cannot be fully understood without reference to Article I of the
1973 Constitution. x x x

xxxx

x x x To understand [the meaning of national territory as comprising the Philippine archipelago],

one must look into the evolution of [Art. I of the 1973 Constitution] from its first draft to its final
form.

Section 1 of the first draft submitted by the Committee on National Territory almost literally
reproduced Article I of the 1935 Constitution x x x. Unlike the 1935 version, however, the draft
designated the Philippines not simply as the Philippines but as "the Philippine archipelago.10 In
response to the criticism that the definition was colonial in tone x x x, the second draft further
designated the Philippine archipelago, as the historic home of the Filipino people from its
beginning.11

After debates x x x, the Committee reported out a final draft, which became the initially approved
version: "The national territory consists of the Philippine archipelago which is the ancestral home
of the Filipino people and which is composed of all the islands and waters embraced therein…"

What was the intent behind the designation of the Philippines as an "archipelago"? x x x Asked by
Delegate Roselller Lim (Zamboanga) where this archipelago was, Committee Chairman Quintero
answered that it was the area delineated in the Treaty of Paris. He said that objections to the
colonial implication of mentioning the Treaty of Paris was responsible for the omission of the
express mention of the Treaty of Paris.

Report No. 01 of the Committee on National Territory had in fact been explicit in its delineation of
the expanse of this archipelago. It said:

Now if we plot on a map the boundaries of this archipelago as set forth in the Treaty of Paris, a
huge or giant rectangle will emerge, measuring about 600 miles in width and 1,200 miles in length.
Inside this giant rectangle are the 7,100 islands comprising the Philippine Islands. From the east
coast of Luzon to the eastern boundary of this huge rectangle in the Pacific Ocean, there is a
distance of over 300 miles. From the west coast of Luzon to the western boundary of this giant
rectangle in the China sea, there is a distance of over 150 miles.

When the [US] Government enacted the Jones Law, the Hare-Hawes Cutting Law and the Tydings
McDuffie Law, it in reality announced to the whole world that it was turning over to the
Government of the Philippine Islands an archipelago (that is a big body of water studded with
islands), the boundaries of which archipelago are set forth in Article III of the Treaty of Paris. It
also announced to the whole world that the waters inside the giant rectangle belong to the
Philippines – that they are not part of the high seas.

When Spain signed the Treaty of Paris, in effect she announced to the whole world that she was
ceding to the [US] the Philippine archipelago x x x, that this archipelago was bounded by lines
specified in the treaty, and that the archipelago consisted of the huge body of water inside the
boundaries and the islands inside said boundaries.

The delineation of the extent of the Philippine archipelago must be understood in the context of
the modifications made both by the Treaty of Washington of November 7, 1900, and of the
Convention of January 12, 1930, in order to include the Islands of Sibutu and of Cagayan de Sulu
and the Turtle and Mangsee Islands. However, x x x the definition of the archipelago did not
include the Batanes group[, being] outside the boundaries of the Philippine archipelago as set
forth in the Treaty of Paris. In literal terms, therefore, the Batanes islands would come not under
the Philippine archipelago but under the phrase "all other territories belong to the Philippines."12
x x x (Emphasis added.)

From the foregoing discussions on the deliberations of the provisions on national territory, the
following conclusion is abundantly evident: the "Philippine archipelago" of the 1987 Constitution
is the same "Philippine archipelago" referred to in Art. I of the 1973 Constitution which in turn
corresponds to the territory defined and described in Art. 1 of the 1935 Constitution,13 which
pertinently reads:
Section 1. The Philippines comprises all the territory ceded to the [US] by the Treaty of Paris
concluded between the [US] and Spain on the tenth day of December, [1898], the limits of which
are set forth in Article III of said treaty, together with all the islands in the treaty concluded at
Washington, between the [US] and Spain on November [7, 1900] and the treaty concluded
between the [US] and Great Britain x x x.

While the Treaty of Paris is not mentioned in both the 1973 and 1987 Constitutions, its mention,
so the nationalistic arguments went, being "a repulsive reminder of the indignity of our colonial
past,"14 it is at once clear that the Treaty of Paris had been utilized as key reference point in the
definition of the national territory.

On the other hand, the phrase "all other territories over which the Philippines has sovereignty or
jurisdiction," found in the 1987 Constitution, which replaced the deleted phrase "all territories
belonging to the Philippines by historic right or legal title"15 found in the 1973 Constitution,
covers areas linked to the Philippines with varying degrees of certainty.16 Under this category
would fall: (a) Batanes, which then 1971 Convention Delegate Eduardo Quintero, Chairperson of
the Committee on National Territory, described as belonging to the Philippines in all its history;17
(b) Sabah, over which a formal claim had been filed, the so-called Freedomland (a group of islands
known as Spratleys); and (c) any other territory, over which the Philippines had filed a claim or
might acquire in the future through recognized modes of acquiring territory.18 As an author puts
it, the deletion of the words "by historic right or legal title" is not to be interpreted as precluding
future claims to areas over which the Philippines does not actually exercise sovereignty.19

Upon the foregoing perspective and going into specifics, petitioners would have RA 9522 stricken
down as unconstitutional for the reasons that it deprives the Philippines of what has long been
established as part and parcel of its national territory under the Treaty of Paris, as supplemented
by the aforementioned 1900 Treaty of Washington or, to the same effect, revises the definition on
or dismembers the national territory. Pushing their case, petitioners argue that the constitutional
definition of the national territory cannot be remade by a mere statutory act.20 As another point,
petitioners parlay the theory that the law in question virtually weakens the country’s territorial
claim over the Kalayaan Island Group (KIG) and Sabah, both of which come under the category of
"other territories" over the Philippines has sovereignty or jurisdiction. Petitioners would also
assail the law on grounds related to territorial sea lanes and internal waters transit passage by
foreign vessels.

It is remarkable that petitioners could seriously argue that RA 9522 revises the Philippine territory
as defined in the Constitution, or worse, constitutes an abdication of territory.

It cannot be over-emphasized enough that RA 9522 is a baseline law enacted to implement the
1982 LOSC, which in turn seeks to regulate and establish an orderly sea use rights over maritime
zones. Or as the ponencia aptly states, RA 9522 aims to mark-out specific base points along the
Philippine coast from which baselines are drawn to serve as starting points to measure the
breadth of the territorial sea and maritime zones.21 The baselines are set to define the sea limits
of a state, be it coastal or archipelagic, under the UNCLOS III regime. By setting the baselines to
conform to the prescriptions of UNCLOS III, RA 9522 did not surrender any territory, as petitioners
would insist at every turn, for UNCLOS III is concerned with setting order in the exercise of sea-use
rights, not the acquisition or cession of territory. And let it be noted that under UNCLOS III, it is
recognized that countries can have territories outside their baselines. Far from having a
dismembering effect, then, RA 9522 has in a limited but real sense increased the country’s
maritime boundaries. How this situation comes about was extensively explained by then Minister
of State and head of the Philippine delegation to UNCLOS III Arturo Tolentino in his sponsorship
speech22 on the concurrence of the Batasang Pambansa with the LOSC:

xxxx

Then, we should consider, Mr. Speaker, that under the archipelagic principle, the whole area
inside the archipelagic base lines become a unified whole and the waters between the islands
which formerly were regarded by international law as open or international seas now become
waters under the complete sovereignty of the Filipino people. In this light there would be an
additional area of 141,800 square nautical miles inside the base lines that will be recognized by
international law as Philippine waters, equivalent to 45,351,050 hectares. These gains in the
waters of the sea, 45,211,225 hectares outside the base lines and 141,531,000 hectares inside the
base lines, total 93,742,275 hectares as a total gain in the waters under Philippine jurisdiction.

From a pragmatic standpoint, therefore, the advantage to our country and people not only in
terms of the legal unification of land and waters of the archipelago in the light of international
law, but also in terms of the vast resources that will come under the dominion and jurisdiction of
the Republic of the Philippines, your Committee on Foreign Affairs does not hesitate to ask this
august Body to concur in the Convention by approving the resolution before us today.

May I say it was the unanimous view of delegations at the Conference on the Law of the Sea that
archipelagos are among the biggest gainers or beneficiaries under the Convention on the Law of
the Sea.

Lest it be overlooked, the constitutional provision on national territory, as couched, is broad

enough to encompass RA 9522’s definition of the archipelagic baselines. To reiterate, the laying
down of baselines is not a mode of acquiring or asserting ownership a territory over which a state
exercises sovereignty. They are drawn for the purpose of defining or establishing the maritime
areas over which a state can exercise sovereign rights. Baselines are used for fixing starting point
from which the territorial belt is measured seawards or from which the adjacent maritime waters
are measured. Thus, the territorial sea, a marginal belt of maritime waters, is measured from the
baselines extending twelve (12) nautical miles outward.23 Similarly, Art. 57 of the 1982 LOSC
provides that the Exclusive Economic Zone (EEZ) "shall not extend beyond 200 nautical miles from
the baselines from which the breadth of the territorial sea is measured."24 Most important to
note is that the baselines indicated under RA 9522 are derived from Art. 47 of the 1982 LOSC
which was earlier quoted.

Since the 1987 Constitution’s definition of national territory does not delimit where the
Philippine’s baselines are located, it is up to the political branches of the government to supply the
deficiency. Through Congress, the Philippines has taken an official position regarding its baselines
to the international community through RA 3046,25 as amended by RA 544626 and RA 9522.
When the Philippines deposited a copy of RA 9522 with the UN Secretary General, we effectively
complied in good faith with our obligation under the 1982 LOSC. A declaration by the Court of the
constitutionality of the law will complete the bona fides of the Philippines vis-a-vis the law of the
sea treaty.

It may be that baseline provisions of UNCLOS III, if strictly implemented, may have an imposing
impact on the signatory states’ jurisdiction and even their sovereignty. But this actuality, without
more, can hardly provide a justifying dimension to nullify the complying RA 9522. As held by the
Court in Bayan Muna v. Romulo,27 treaties and international agreements have a limiting effect on
the otherwise encompassing and absolute nature of sovereignty. By their voluntary acts, states
may decide to surrender or waive some aspects of their sovereignty. The usual underlying
consideration in this partial surrender may be the greater benefits derived from a pact or
reciprocal undertaking. On the premise that the Philippines has adopted the generally accepted
principles of international law as part of the law of the land, a portion of sovereignty may be
waived without violating the Constitution.

As a signatory of the 1982 LOSC, it behooves the Philippines to honor its obligations thereunder.
Pacta sunt servanda, a basic international law postulate that "every treaty in force is binding upon
the parties to it and must be performed by them in good faith."28 The exacting imperative of this
principle is such that a state may not invoke provisions in its constitution or its laws as an excuse
for failure to perform this duty."29

The allegation that Sabah has been surrendered by virtue of RA 9522, which supposedly repealed
the hereunder provision of RA 5446, is likewise unfounded.

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as
provided in this Act is without prejudice to the delineation of the baselines of the territorial sea
around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines
has acquired dominion and sovereignty.

There is nothing in RA 9522 indicating a clear intention to supersede Sec. 2 of RA 5446. Petitioners
obviously have read too much into RA 9522’s amendment on the baselines found in an older law.
Aside from setting the country’s baselines, RA 9522 is, in its Sec. 3, quite explicit in its reiteration
of the Philippines’ exercise of sovereignty, thus:
Section 3. This Act affirms that the Republic of the Philippines has dominion, sovereignty and
jurisdiction over all portions of the national territory as defined in the Constitution and by
provisions of applicable laws including, without limitation, Republic Act No. 7160, otherwise
known as the Local Government Code of 1991, as amended.

To emphasize, baselines are used to measure the breadth of the territorial sea, the contiguous
zone, the exclusive economic zone and the continental shelf. Having KIG and the Scarborough
Shoal outside Philippine baselines will not diminish our sovereignty over these areas. Art. 46 of
UNCLOS III in fact recognizes that an archipelagic state, such as the Philippines, is a state
"constituted wholly by one or more archipelagos and may include other islands." (emphasis
supplied) The "other islands" referred to in Art. 46 are doubtless islands not forming part of the
archipelago but are nevertheless part of the state’s territory.

The Philippines’ sovereignty over KIG and Scarborough Shoal are, thus, in no way diminished.
Consider: Other countries such as Malaysia and the United States have territories that are located
outside its baselines, yet there is no territorial question arising from this arrangement. 30

It may well be apropos to point out that the Senate version of the baseline bill that would become
RA 9522 contained the following explanatory note: The law "reiterates our sovereignty over the
Kalayaan Group of Islands declared as part of the Philippine territory under Presidential Decree
No. 1596. As part of the Philippine territory, they shall be considered as a ‘regime of islands’ under
Article 121 of the Convention."31 Thus, instead of being in the nature of a "treasonous surrender"
that petitioners have described it to be, RA 9522 even harmonizes our baseline laws with our
international agreements, without limiting our territory to those confined within the country’s
baselines.

Contrary to petitioners’ contention, the classification of KIG and the Scarborough Shoal as falling
under the Philippine’s regime of islands is not constitutionally objectionable. Such a classification
serves as compliance with LOSC and the Philippines’ assertion of sovereignty over KIG and
Scarborough Shoal. In setting the baseline in KIG and Scarborough Shoal, RA 9522 states that these
are areas "over which the Philippines likewise exercises sovereignty and jurisdiction." It is, thus,
not correct for petitioners to claim that the Philippines has lost 15,000 square nautical miles of
territorial waters upon making this classification. Having 15,000 square nautical miles of Philippine
waters outside of our baselines, to reiterate, does not translate to a surrender of these waters.
The Philippines maintains its assertion of ownership over territories outside of its baselines. Even
China views RA 9522 as an assertion of ownership, as seen in its Protest32 filed with the UN
Secretary-General upon the deposit of RA 9522.

We take judicial notice of the effective occupation of KIG by the Philippines. Petitioners even point
out that national and local elections are regularly held there. The classification of KIG as under a
"regime of islands" does not in any manner affect the Philippines’ consistent position with regard
to sovereignty over KIG. It does not affect the Philippines’ other acts of ownership such as
occupation or amend Presidential Decree No. 1596, which declared KIG as a municipality of
Palawan.

The fact that the baselines of KIG and Scarborough Shoal have yet to be defined would not detract
to the constitutionality of the law in question. The resolution of the problem lies with the political
departments of the government.

All told, the concerns raised by the petitioners about the diminution or the virtual
dismemberment of the Philippine territory by the enactment of RA 9522 are, to me, not well
grounded. To repeat, UNCLOS III pertains to a law on the seas, not territory. As part of its
Preamble,33 LOSC recognizes "the desirability of establishing through this Convention, with due
regard for the sovereignty of all States, a legal order for the seas and oceans x x x."

This brings me to the matter of transit passage of foreign vessels through Philippine waters.

Apropos thereto, petitioners allege that RA 9522 violates the nuclear weapons-free policy under
Sec. 8, in relation to Sec. 16, Art. II of the Constitution, and exposes the Philippines to marine
pollution hazards, since under the LOSC the Philippines supposedly must give to ships of all states
the right of innocent passage and the right of archipelagic sea-lane passage.

The adverted Sec. 8, Art. II of the 1987 Constitution declares the adoption and pursuit by the
Philippines of "a policy of freedom from nuclear weapons in its territory." On the other hand, the
succeeding Sec. l6 underscores the State’s firm commitment "to protect and advance the right of
the people to a balanced and healthful ecology in accord with the rhythm and harmony of
nature." Following the allegations of petitioners, these twin provisions will supposedly be violated
inasmuch as RA 9522 accedes to the right of innocent passage and the right of archipelagic sea-
lane passage provided under the LOSC. Therefore, ships of all nations––be they nuclear-carrying
warships or neutral commercial vessels transporting goods––can assert the right to traverse the
waters within our islands.

A cursory reading of RA 9522 would belie petitioners’ posture. In context, RA 9522 simply seeks to
conform to our international agreement on the setting of baselines and provides nothing about
the designation of archipelagic sea-lane passage or the regulation of innocent passage within our
waters. Again, petitioners have read into the amendatory RA 9522 something not intended.

Indeed, the 1982 LOSC enumerates the rights and obligations of archipelagic party-states in terms
of transit under Arts. 51 to 53, which are explained below:
To safeguard, in explicit terms, the general balance struck by [Articles 51 and 52] between the
need for passage through the area (other than straits used for international navigation) and the
archipelagic state’s need for security, Article 53 gave the archipelagic state the right to regulate
where and how ships and aircraft pass through its territory by designating specific sea lanes.
Rights of passage through these archipelagic sea lanes are regarded as those of transit passage:

(1) An archipelagic State may designate sea lanes and air routes thereabove, suitable for safe,
continuous and expeditious passage of foreign ships and aircraft through or over its archipelagic
waters and the adjacent territorial sea.

(2) All ships and aircraft enjoy the right of archipelagic sea lanes passage in such sea lanes and air
routes.

(3) Archipelagic sea lanes passage is the exercise in accordance with the present Convention of the
rights of navigation and overflight in the normal mode solely for the purpose of continuous,
expeditious and unobstructed transit between one part of the high seas or an exclusive economic
zone and another part of the high seas or an exclusive economic zone.34

But owing to the geographic structure and physical features of the country, i.e., where it is
"essentially a body of water studded with islands, rather than islands with water around them,"35
the Philippines has consistently maintained the conceptual unity of land and water as a necessary
element for territorial integrity,36 national security (which may be compromised by the presence
of warships and surveillance ships on waters between the islands),37 and the preservation of its
maritime resources. As succinctly explained by Minister Arturo Tolentino, the essence of the
archipelagic concept is "the dominion and sovereignty of the archipelagic State within its
baselines, which were so drawn as to preserve the territorial integrity of the archipelago by the
inseparable unity of the land and water domain."38 Indonesia, like the Philippines, in terms of
geographic reality, has expressed agreement with this interpretation of the archipelagic concept.
So it was that in 1957, the Indonesian Government issued the Djuanda Declaration, therein stating
:

[H]istorically, the Indonesian archipelago has been an entity since time immemorial.1avvphi1 In
view of the territorial entirety and of preserving the wealth of the Indonesian state, it is deemed
necessary to consider all waters between the islands and entire entity.

x x x On the ground of the above considerations, the Government states that all waters around,
between and connecting, the islands or parts of islands belonging to the Indonesian archipelago
irrespective of their width or dimension are natural appurtenances of its land territory and
therefore an integral part of the inland or national waters subject to the absolute sovereignty of
Indonesia.39 (Emphasis supplied.)
Hence, the Philippines maintains the sui generis character of our archipelagic waters as equivalent
to the internal waters of continental coastal states. In other words, the landward waters
embraced within the baselines determined by RA 9522, i.e., all waters around, between, and
connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of
the internal waters of the Philippines.40 Accordingly, such waters are not covered by the
jurisdiction of the LOSC and cannot be subjected to the rights granted to foreign states in
archipelagic waters, e.g., the right of innocent passage,41 which is allowed only in the territorial
seas, or that area of the ocean comprising 12 miles from the baselines of our archipelago;
archipelagic sea-lane passage;42 over flight;43 and traditional fishing rights.44

Our position that all waters within our baselines are internal waters, which are outside the
jurisdiction of the 1982 LOSC,45 was abundantly made clear by the Philippine Declaration at the
time of the signing of the LOSC on December 10, 1982. To reiterate, paragraphs 5, 6 and 7 of the
Declaration state:

5. The Convention shall not be construed as amending in any manner any pertinent laws and
Presidential decrees of Proclamation of the republic of the Philippines; the Government x x x
maintains and reserves the right and authority to make any amendments to such laws, decrees or
proclamations pursuant to the provisions of the Philippine Constitution;

6. The provisions of the Convention on archipelagic passage through sea lanes do not nullify or
impair the sovereignty of the Philippines as an archipelagic State over the sea lanes and do not
deprive it of authority to enact legislation to protect its sovereignty, independence and security;

7. The concept of archipelagic waters is similar to the concept of internal waters under the
Constitution of the Philippines and removes straits connecting this water with the economic zone
or high seas from the rights of foreign vessels to transit passage for international navigation.
(Emphasis supplied.)46

More importantly, by the ratification of the 1987 Constitution on February 2, 1987, the integrity of
the Philippine state as comprising both water and land was strengthened by the proviso in its first
article, viz: "The waters around, between, and connecting the islands of the [Philippine]
archipelago, regardless of their breadth and dimensions, form part of the internal waters of the
Philippines. (emphasis supplied)

In effect, contrary to petitioners’ allegations, the Philippines’ ratification of the 1982 LOSC did not
matter-of-factly open our internal waters to passage by foreign ships, either in the concept of
innocent passage or archipelagic sea-lane passage, in exchange for the international community’s
recognition of the Philippines as an archipelagic state. The Filipino people, by ratifying the 1987
Constitution, veritably rejected the quid pro quo petitioners take as being subsumed in that
treaty.
Harmonized with the Declaration and the Constitution, the designation of baselines made in RA
9522 likewise designates our internal waters, through which passage by foreign ships is not a right,
but may be granted by the Philippines to foreign states but only as a dissolvable privilege.

In view of the foregoing, I vote to DISMISS the Petition.

PRESBITERO J. VELASCO, JR.

Associate Justice

Footnotes

1 League of Cities of the Phil. v. COMELEC, G.R. No. 176951, December 21, 2009, 608 SCRA 636.

2 Under Art. VIII, Sec. 5 of the Constitution, the Supreme Court is empowered to review, revise,
reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide,
final judgments and orders of lower courts in: all cases in which the Constitutionality or validity of
any treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question. (Emphasis supplied.)

3 December 10, 1982.

4 May 8, 1984.

5 Available on
<http://www.un.org/Depts/los/convention_agreements/texts/unclos/closindx.htm> (visited July
28, 2011).

6 UNCLOS, Art. 47, December 10, 1982.

7 J. Bernas, S.J., The 1987 Constitution of the Republic of the Philippines A Commentary 57 (2003).
8 See J. Batongbacal, The Metes and Bounds of the Philippine National Territory, An International
Law and Policy Perspective, Supreme Court of the Philippines, Philippine Judicial Academy Third
Distinguished Lecture, Far Eastern University, June 27, 2008.

9 J. Bernas, supra note 7, at 10.

10 Citing Report No. 01 of the Committee on National Territory.

11 Citing Report No. 02 of the Committee on National Territory.

12 J. Bernas, supra note 7, at 11-14.

13 Id. at 14.

14 Id. at 9; citing Speech, Session February 15, 1972, of Delegates Amanio Sorongon, et al.

15 The history of this deleted phrase goes back to the last clause of Art. I of the 1935 Constitution
which included "all territory over which the present Government of the Philippine Islands
exercises jurisdiction. See J. Bernas, supra note 7, at 14.

16 J. Bernas, supra note 7, at 16.

17 Id.; citing deliberations of the February 17, 1972 Session.

18 Id.

19 De Leon, Philippine Constitution 62 (2011).

20 Petition, pp. 4-5.

21 Art. 48 of UNCLOS III provides that the breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelf shall be measured from the archipelagic
baseline drawn in accordance with Art. 47.
22 R.P. Lotilla, The Philippine National Territory: A Collection of Related Documents 513-517
(1995); citing Batasang Pambansa, Acts and Resolution, 6th Regular Session.

23 J. Bernas, supra note 7, at 22.

24 UNCLOS III, Art. 57.

25 June 17, 1961.

26 September 18, 1968.

27 G.R. No. 159618, February 1, 2011; citing Tañada v. Angara, G.R. No. 118295, May 2, 1997, 272
SCRA 18.

28 Art. 26, Vienna Convention on the Law of Treaties, 1969.

29 Art. 13, Declaration of Rights and Duties of States Adopted by the International Law
Commission, 1949.

30 See J. Batongbacal, supra note 8.

31 Id.

32 The Protest reads in part: "The above-mentioned Philippine Act illegally claims Huangyan Island
(referred as "Bajo de Masinloc" in the Act) of China as "areas over which the Philippines likewise
exercises sovereignty and jurisdiction." The Chinese Government hereby reiterates that Huangyan
Island and Nansha Islands have been part of the territory of China since ancient time. The People’s
Republic of China has indisputable sovereignty over Huangyan Island and Nansha Islands and their
surrounding areas. Any claim to territorial sovereignty over Huangyan Island and Nansha Islands
by any other State is, therefore, null and void." Available on

<http://www.un.org/Depts/los/LEGISLATIONANDTREATIES/PDFFILES/DEPOSIT/
communicationsredeposit/mzn69_2009_chn.pdf> (visited August 9, 2011).
33 Supra note 5.

34 C. Ku, The Archipelagic States Concept and Regional Stability in Southeast Asia, Case W. Res. J.
Int’l L., Vol. 23:463, 469; citing 1958 U.N. Conference on the Law of the Sea, Summary Records 44,
Doc. A/Conf. 13/42.

35 Id.

36 Hiran W. Jayewardene, The Regime of Islands in International Law, AD Dordrecht: Martinus

Nijhoff Publishers, p. 103 (1990).

37 Id. at 112.

38 UNCLOS III Off. Rec., Vol. II, 264, par. 65, and also pars. 61-62 and 66; cited in B. Kwiatkowska,
"The Archipelagic Regime in Practice in the Philippines and Indonesia – Making or Breaking
International Law?", International Journal of Estuarine and Coastal Law, Vol. 6, No. 1, pp. 6-7.

39 4 Whiteman D.G., International Law 284 (1965); quoted in C. Ku, supra note 34, at 470.

40 1987 Constitution, Art. I.

41 LOSC, Arts. 52 and 54.

42 LOSC, Art. 53, par. 2.

43 LOSC, Art. 53, par. 2.

44 LOSC, Art. 51.

45 LOSC, Art. 8, par. 2.

46 Cf. B. Kwiatkowska, supra note 38; citing J.D. Ingles, "The United Nations Convention on the
Law of the Sea: Implications of Philippine Ratification," 9 Philippine Yil (1983) 48-9 and 61-2; and
Congress of the Philippines, First Regular Session, Senate, S. No. 232, Explanatory Note and An Act
to Repeal Section 2 (concerning TS baselines around Sabah disputed with Malaysia) of the 1968
Act No. 5446.

The Lawphil Project - Arellano Law Foundation

CASE DIGEST: MAGALLONA V. ERMITA

G.R. No. 187167 : August 16, 2011 | PROF. MERLIN MAGALLONA, ET AL.,
Petitioners, v. EDUARDO ERMITA, ET AL., Respondents. CARPIO, J.:

FACTS: In 1961, Congress passed Republic Act No. 3046 (RA 3046) demarcating the maritime
baselines of the Philippines as an archipelagic State. This law followed the framing of the Convention
on the Territorial Sea and the Contiguous Zone in 1958 (UNCLOS I), codifying, among others, the
sovereign right of States parties over their territorial sea, the breadth of which, however, was left
undetermined. Attempts to fill this void during the second round of negotiations in Geneva in 1960
(UNCLOS II) proved futile. Thus, domestically, RA 3046 remained unchanged for nearly five decades,
save for legislation passed in 1968 (Republic Act No. 5446 [RA 5446]) correcting typographical errors
and reserving the drawing of baselines around Sabah in North Borneo.

In March 2009, Congress amended RA 3046 by enacting RA 9522, the statute now under scrutiny.
The change was prompted by the need to make RA 3046 compliant with the terms of the United
Nations Convention on the Law of the Sea (UNCLOS III), which the Philippines ratified on 27 February
1984. Among others, UNCLOS III prescribes the water-land ratio, length, and contour of baselines of
archipelagic States like the Philippines and sets the deadline for the filing of application for the
extended continental shelf. Complying with these requirements, RA 9522 shortened one baseline,
optimized the location of some basepoints around the Philippine archipelago and classified adjacent
territories, namely, the Kalayaan Island Group (KIG) and the Scarborough Shoal, as regimes of islands
whose islands generate their own applicable maritime zones.

Petitioners, professors of law, law students and a legislator, in their respective capacities as citizens,
taxpayers or x x x legislators, as the case may be, assail the constitutionality of RA 9522 on two
principal grounds, namely: (1) RA 9522 reduces Philippine maritime territory, and logically, the reach
of the Philippine states sovereign power, in violation of Article 1 of the 1987 Constitution,embodying
the terms of the Treaty of Parisand ancillary treaties,and (2) RA 9522 opens the countrys waters
landward of the baselines to maritime passage by all vessels and aircrafts, undermining Philippine
sovereignty and national security, contravening the country's nuclear-free policy, and damaging
marine resources, in violation of relevant constitutional provisions.
In addition, petitioners contend that RA 9522s treatment of the KIG as regime of islands not only
results in the loss of a large maritime area but also prejudices the livelihood of subsistence
fishermen.To buttress their argument of territorial diminution, petitioners facially attack RA 9522 for
what it excluded and included its failure to reference either the Treaty of Paris or Sabah and its use
of UNCLOS IIIs framework of regime of islands to determine the maritime zones of the KIG and the
Scarborough Shoal.

ISSUES:

1. Whether petitioners possess locus standi to bring this suit;

2. Whether the writs of certiorari and prohibition are the proper remedies to assail the
constitutionality of RA 9522; and

3. Whether RA 9522 is unconstitutional.

HELD: On the threshold issues, we hold that (1) petitioners possess locus standi to bring this suit as
citizens and (2) the writs of certiorari and prohibition are proper remedies to test the
constitutionality of RA 9522. On the merits, we find no basis to declare RA 9522 unconstitutional.

REMEDIAL LAW: Petitioners Possess Locus Standi as Citizens

Petitioners themselves undermine their assertion of locus standi as legislators and taxpayers
because the petition alleges neither infringement of legislative prerogative or misuse of public
funds,occasioned by the passage and implementation of RA 9522. Nonetheless, we recognize
petitioners locus standi as citizens with constitutionally sufficient interest in the resolution of the
merits of the case which undoubtedly raises issues of national significance necessitating urgent
resolution. Indeed, owing to the peculiar nature of RA 9522, it is understandably difficult to find
other litigants possessing a more direct and specific interest to bring the suit, thus satisfying one of
the requirements for granting citizenship standing.

REMEDIAL LAW: The Writs of Certiorari and Prohibition Are Proper Remedies to Testthe
Constitutionality of Statutes

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict
observance of the offices of the writs of certiorari and prohibition, noting that the writs cannot issue
absent any showing of grave abuse of discretion in the exercise of judicial, quasi-judicial or
ministerial powers on the part of respondents and resulting prejudice on the part of petitioners.

Respondent's submission holds true in ordinary civil proceedings. When this Court exercises its
constitutional power of judicial review, however, we have, by tradition, viewed the writs of certiorari
and prohibition as proper remedial vehicles to test the constitutionality of statutes, and indeed, of
acts of other branches of government.Issues of constitutional import are sometimes crafted out of
statutes which, while having no bearing on the personal interests of the petitioners, carry such
relevance in the life of this nation that the Court inevitably finds itself constrained to take cognizance
of the case and pass upon the issues raised, non-compliance with the letter of procedural rules
notwithstanding. The statute sought to be reviewed here is one such law.

POLITICAL LAW: RA 9522 is Not Unconstitutional - RA 9522 is a Statutory Tool To Demarcate the
Country's Maritime Zones and Continental Shelf Under UNCLOS III, not to Delineate Philippine
Territory

Petitioners submit that RA 9522 dismembers a large portion of the national territory because it
discards the pre-UNCLOS III demarcation of Philippine territory under the Treaty of Paris and related
treaties, successively encoded in the definition of national territory under the 1935, 1973 and 1987
Constitutions. Petitioners theorize that this constitutional definition trumps any treaty or statutory
provision denying the Philippines sovereign control over waters, beyond the territorial sea
recognized at the time of the Treaty of Paris, that Spain supposedly ceded to the United States.
Petitioners argue that from the Treaty of Paris technical description, Philippine sovereignty over
territorial waters extends hundreds of nautical miles around the Philippine archipelago, embracing
the rectangular area delineated in the Treaty of Paris.

Petitioners theory fails to persuade us.

UNCLOS III has nothing to do with the acquisition (or loss) of territory. It is a multilateral treaty
regulating, among others, sea-use rights over maritime zones (i.e., the territorial waters [12 nautical
miles from the baselines], contiguous zone [24 nautical miles from the baselines], exclusive
economic zone [200 nautical miles from the baselines]), and continental shelves that UNCLOS III
delimits. UNCLOS III was the culmination of decades-long negotiations among United Nations
members to codify norms regulating the conduct of States in the worlds oceans and submarine
areas, recognizing coastal and archipelagic States graduated authority over a limited span of waters
and submarine lands along their coasts.

On the other hand, baselines laws such as RA 9522 are enacted by UNCLOS III States parties to mark-
out specific basepoints along their coasts from which baselines are drawn, either straight or
contoured, to serve as geographic starting points to measure the breadth of the maritime zones and
continental shelf. Article 48 of UNCLOS III on archipelagic States like ours could not be any clearer:
Article 48.Measurement of the breadth of the territorial sea, the contiguous zone, the exclusive
economic zone and the continental shelf. The breadth of the territorial sea, the contiguous zone, the
exclusive economic zone and the continental shelfshall be measured from archipelagic baselines
drawn in accordance with article 47.

Thus, baselines laws are nothing but statutory mechanisms for UNCLOS III States parties to delimit
with precision the extent of their maritime zones and continental shelves. In turn, this gives notice to
the rest of the international community of the scope of the maritime space and submarine areas
within which States parties exercise treaty-based rights, namely, the exercise of sovereignty over
territorial waters (Article 2), the jurisdiction to enforce customs, fiscal, immigration, and sanitation
laws in the contiguous zone (Article 33), and the right to exploit the living and non-living resources in
the exclusive economic zone (Article 56) and continental shelf (Article 77).

Even under petitioners theory that the Philippine territory embraces the islands and all the
waterswithin the rectangular area delimited in the Treaty of Paris, the baselines of the Philippines
would still have to be drawn in accordance with RA 9522 because this is the only way to draw the
baselines in conformity with UNCLOS III. The baselines cannot be drawn from the boundaries or
other portions of the rectangular area delineated in the Treaty of Paris, but from the outermost
islands and drying reefs of the archipelago.

UNCLOS III and its ancillary baselines laws play no role in the acquisition, enlargement or, as
petitioners claim, diminution of territory. Under traditional international law typology, States acquire
(or conversely, lose) territory through occupation, accretion, cession and prescription, not by
executing multilateral treaties on the regulations of sea-use rights or enacting statutes to comply
with the treatys terms to delimit maritime zones and continental shelves. Territorial claims to land
features are outside UNCLOS III, and are instead governed by the rules on general international law.

POLITICAL LAW: RA 9522s Use of the Framework of Regime of Islands to Determine the Maritime
Zones of the KIG and the Scarborough Shoal, not Inconsistent with the Philippines Claim of
Sovereignty Over these Areas
Petitioners next submit that RA 9522s use of UNCLOS IIIs regime of islands framework to draw the
baselines, and to measure the breadth of the applicable maritime zones of the KIG, weakens our
territorial claim over that area.Petitioners add that the KIGs (and Scarborough Shoals) exclusion from
the Philippine archipelagic baselines results in the loss of about 15,000 square nautical miles of
territorial waters, prejudicing the livelihood of subsistence fishermen.A comparison of the
configuration of the baselines drawn under RA 3046 and RA 9522 and the extent of maritime space
encompassed by each law, coupled with a reading of the text of RA 9522 and its congressional
deliberations,vis-visthe Philippines obligations under UNCLOS III, belie this view.

The configuration of the baselines drawn under RA 3046 and RA 9522 shows that RA 9522 merely
followed the basepoints mapped by RA 3046, save for at least nine basepoints that RA 9522 skipped
to optimize the location of basepoints and adjust the length of one baseline (and thus comply with
UNCLOS IIIs limitation on the maximum length of baselines). Under RA 3046, as under RA 9522, the
KIG and the Scarborough Shoal lie outside of the baselines drawn around the Philippine archipelago.
This undeniable cartographic fact takes the wind out of petitioners argument branding RA 9522 as a
statutory renunciation of the Philippines claim over the KIG, assuming that baselines are relevant for
this purpose.

Petitioners assertion of loss of about 15,000 square nautical miles of territorial waters under RA
9522 is similarly unfounded both in fact and law. On the contrary, RA 9522, by optimizing the
location of base points,increased the Philippines total maritime space (covering its internal waters,
territorial sea and exclusive economic zone) by 145,216 square nautical miles, as shown in the table
below:

Extent of maritime area using RA 3046, as amended, taking into account the Treaty of Paris
delimitation (in square nautical miles)

Extent of maritime area using RA 9522, taking into account UNCLOS III (in square nautical miles)

Internal or archipelagic waters

166,858

171,435

Territorial Sea

274,136

32,106

Exclusive Economic Zone

382,669

TOTAL
440,994

586,210

Thus, as the map below shows, the reach of the exclusive economic zone drawn under RA 9522 even
extends way beyond the waters covered by the rectangular demarcation under the Treaty of Paris.
Of course, where there are overlapping exclusive economic zones of opposite or adjacent States,
there will have to be a delineation of maritime boundaries in accordance with UNCLOS III.

Further, petitioners argument that the KIG now lies outside Philippine territory because the
baselines that RA 9522 draws do not enclose the KIG is negated by RA 9522 itself. Section 2 of the
law commits to text the Philippines continued claim of sovereignty and jurisdiction over the KIG and
the Scarborough Shoal:

SEC. 2. The baselines in the following areas over which the Philippines likewise exercises sovereignty
and jurisdiction shall be determined as Regime of Islands under the Republic of the Philippines
consistent with Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS):

a) The Kalayaan Island Group as constituted under Presidential Decree No. 1596 and

b) Bajo de Masinloc, also known as Scarborough Shoal.

Had Congress in RA 9522 enclosed the KIG and the Scarborough Shoal as part of the Philippine
archipelago, adverse legal effects would have ensued. The Philippines would have committed a
breach of two provisions of UNCLOS III. First, Article 47 (3) of UNCLOS III requires that [t]he drawing
of such baselines shall not depart to any appreciable extent from the general configuration of the
archipelago. Second, Article 47 (2) of UNCLOS III requires that the length of the baselines shall not
exceed 100 nautical miles, save for three per cent (3%) of the total number of baselines which can
reach up to 125 nautical miles.

Although the Philippines has consistently claimed sovereignty over the KIG and the Scarborough
Shoal for several decades, these outlying areas are located at an appreciable distance from the
nearest shoreline of the Philippine archipelago, such that any straight baseline loped around them
from the nearest basepoint will inevitably depart to an appreciable extent from the general
configuration of the archipelago.

Hence, far from surrendering the Philippines claim over the KIG and the Scarborough Shoal,
Congress decision to classify the KIG and the Scarborough Shoal as Regime[s] of Islands under the
Republic of the Philippines consistent with Article 121of UNCLOS III manifests the Philippine States
responsible observance of its pacta sunt servanda obligation under UNCLOS III. Under Article 121 of
UNCLOS III, any naturally formed area of land, surrounded by water, which is above water at high
tide, such as portions of the KIG, qualifies under the category of regime of islands, whose islands
generate their own applicable maritime zones.

POLITICAL LAW: Statutory Claim Over Sabah under RA 5446 Retained

Petitioners argument for the invalidity of RA 9522 for its failure to textualize the Philippines claim
over Sabah in North Borneo is also untenable. Section 2 of RA 5446, which RA 9522 did not repeal,
keeps open the door for drawing the baselines of Sabah:

Section 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as
provided in this Act is without prejudice to the delineation of the baselines of the territorial sea
around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines
has acquired dominion and sovereignty.

POLITICAL LAW: UNCLOS III and RA 9522 not Incompatible with the Constitutions Delineation of
Internal Waters

As their final argument against the validity of RA 9522, petitioners contend that the law
unconstitutionally converts internal waters into archipelagic waters, hence subjecting these waters
to the right of innocent and sea lanes passage under UNCLOS III, including overflight. Petitioners
extrapolate that these passage rights indubitably expose Philippine internal waters to nuclear and
maritime pollution hazards, in violation of the Constitution.

Whether referred to as Philippine internal waters under Article I of the Constitutionor as archipelagic
waters under UNCLOS III (Article 49 [1]), the Philippines exercises sovereignty over the body of water
lying landward of the baselines, including the air space over it and the submarine areas underneath.
UNCLOS III affirms this:

Article 49.Legal status of archipelagic waters, of the air space over archipelagic waters and of their
bed and subsoil.

1.The sovereignty of an archipelagic State extends to the waters enclosed by the archipelagic
baselines drawn in accordance with article 47, described as archipelagic waters, regardless of their
depth or distance from the coast.

2.This sovereignty extends to the air space over the archipelagic waters, as well as to their bed and
subsoil, and the resources contained therein.
xxxx

4. The regime of archipelagic sea lanes passage established in this Part shall not in other respects
affect the status of the archipelagic waters,including the sea lanes,or the exercise by the archipelagic
State of its sovereignty over such waters and their air space, bed and subsoil, and the resources
contained therein.

The fact of sovereignty, however, does not preclude the operation of municipal and international
law norms subjecting the territorial sea or archipelagic waters to necessary, if not marginal, burdens
in the interest of maintaining unimpeded, expeditious international navigation, consistent with the
international law principle of freedom of navigation. Thus, domestically, the political branches of the
Philippine government, in the competent discharge of their constitutional powers, may pass
legislation designating routes within the archipelagic waters to regulate innocent and sea lanes
passage. Indeed, bills drawing nautical highways for sea lanes passage are now pending in Congress.

In the absence of municipal legislation, international law norms, now codified in UNCLOS III, operate
to grant innocent passage rights over the territorial sea or archipelagic waters, subject to the treatys
limitations and conditions for their exercise.Significantly, the right of innocent passage is a
customary international law, thus automatically incorporated in the corpus of Philippine law.No
modern State can validly invoke its sovereignty to absolutely forbid innocent passage that is
exercised in accordance with customary international law without risking retaliatory measures from
the international community.

The fact that for archipelagic States, their archipelagic waters are subject to both the right of
innocent passage and sea lanes passagedoes not place them in lesser footingvis-viscontinental
coastal States which are subject, in their territorial sea, to the right of innocent passage and the right
of transit passage through international straits. The imposition of these passage rights through
archipelagic waters under UNCLOS III was a concession by archipelagic States, in exchange for their
right to claim all the waters landward of their baselines,regardless of their depth or distance from
the coast, as archipelagic waters subject to theirterritorial sovereignty. More importantly, the
recognition of archipelagic States archipelago and the waters enclosed by their baselines as one
cohesive entity prevents the treatment of their islands as separate islands under UNCLOS
III.Separate islands generate their own maritime zones, placing the waters between islands
separated by more than 24 nautical miles beyond the States territorial sovereignty, subjecting these
waters to the rights of other States under UNCLOS III.

Petitioners invocation of non-executory constitutional provisions in Article II (Declaration of

Principles and State Policies)must also fail. Our present state of jurisprudence considers the
provisions in Article II as mere legislative guides, which, absent enabling legislation, do not embody
judicially enforceable constitutional rights. Article II provisions serve as guides in formulating and
interpreting implementing legislation, as well as in interpreting executory provisions of the
Constitution. AlthoughOposa v. Factorantreated the right to a healthful and balanced ecology under
Section 16 of Article II as an exception, the present petition lacks factual basis to substantiate the
claimed constitutional violation. The other provisions petitioners cite, relating to the protection of
marine wealth (Article XII, Section 2, paragraph 2) and subsistence fishermen (Article XIII, Section 7),
are not violated by RA 9522.

In fact, the demarcation of the baselines enables the Philippines to delimit its exclusive economic
zone, reserving solely to the Philippines the exploitation of all living and non-living resources within
such zone. Such a maritime delineation binds the international community since the delineation is in
strict observance of UNCLOS III. If the maritime delineation is contrary to UNCLOS III, the
international community will of course reject it and will refuse to be bound by it.

UNCLOS III favors States with a long coastline like the Philippines. UNCLOS III creates asui generis
maritime space the exclusive economic zone in waters previously part of the high seas. UNCLOS III
grants new rights to coastal States to exclusively exploit the resources found within this zone up to
200 nautical miles.UNCLOS III, however, preserves the traditional freedom of navigation of other
States that attached to this zone beyond the territorial sea before UNCLOS III.

POLITICAL LAW: RA 9522 and the Philippines Maritime Zones

Petitioners hold the view that, based on the permissive text of UNCLOS III, Congress was not bound
to pass RA 9522.We have looked at the relevant provision of UNCLOS III and we find petitioner's
reading plausible. Nevertheless, the prerogative of choosing this option belongs to Congress, not to
this Court. Moreover, the luxury of choosing this option comes at a very steep price. Absent an
UNCLOS III compliant baselines law, an archipelagic State like the Philippines will find itself devoid of
internationally acceptable baselines from where the breadth of its maritime zones and continental
shelf is measured. This is recipe for a two-fronted disaster:first, it sends an open invitation to the
seafaring powers to freely enter and exploit the resources in the waters and submarine areas around
our archipelago; and second, it weakens the country's case in any international dispute over
Philippine maritime space. These are consequences Congress wisely avoided.

The enactment of UNCLOS III compliant baselines law for the Philippine archipelago and adjacent
areas, as embodied in RA 9522, allows an internationally-recognized delimitation of the breadth of
the Philippines maritime zones and continental shelf. RA 9522 is therefore a most vital step on the
part of the Philippines in safeguarding its maritime zones, consistent with the Constitution and our
national interest. DISMISS.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 206510 September 16, 2014

MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto Princesa D.D.; MOST REV. DEOGRACIAS S.
INIGUEZ, JR., Bishop-Emeritus of Caloocan, FRANCES Q. QUIMPO, CLEMENTE G. BAUTISTA, JR.,
Kalikasan-PNE, MARIA CAROLINA P. ARAULLO, RENATO M. REYES, JR., Bagong Alyansang
Makabayan, HON. NERI JAVIER COLMENARES, Bayan Muna Partylist, ROLAND G. SIMBULAN, PH.D.,
Junk VF A Movement, TERESITA R. PEREZ, PH.D., HON. RAYMOND V. PALATINO, Kabataan Party-list,
PETER SJ. GONZALES, Pamalakaya, GIOVANNI A. TAPANG, PH. D., Agham, ELMER C. LABOG, Kilusang
Mayo Uno, JOAN MAY E. SALVADOR, Gabriela, JOSE ENRIQUE A. AFRICA, THERESA A. CONCEPCION,
MARY JOAN A. GUAN, NESTOR T. BAGUINON, PH.D., A. EDSEL F. TUPAZ, Petitioners,

vs.

SCOTT H. SWIFT in his capacity as Commander of the US. 7th Fleet, MARK A. RICE in his capacity as
Commanding Officer of the USS Guardian, PRESIDENT BENIGNO S. AQUINO III in his capacity as
Commander-in-Chief of the Armed Forces of the Philippines, HON. ALBERT F. DEL ROSARIO,
Secretary, pepartment of Foreign Affair.s, HON. PAQUITO OCHOA, JR., Executiv~.:Secretary, Office of
the President, . HON. VOLTAIRE T. GAZMIN, Secretary, Department of National Defense, HON.
RAMON JESUS P. P AJE, Secretary, Department of Environment and Natural Resoz!rces, VICE
ADMIRAL JOSE LUIS M. ALANO, Philippine Navy Flag Officer in Command, Armed Forces of the
Philippines, ADMIRAL RODOLFO D. ISO RENA, Commandant, Philippine Coast Guard, COMMODORE
ENRICO EFREN EVANGELISTA, Philippine Coast Guard Palawan, MAJOR GEN. VIRGILIO 0. DOMINGO,
Commandant of Armed Forces of the Philippines Command and LT. GEN. TERRY G. ROBLING, US
Marine Corps Forces. Pacific and Balikatan 2013 Exercise Co-Director, Respondents.

DECISION

VILLARAMA, JR, J.:

Before us is a petition for the issuance of a Writ of Kalikasan with prayer for the issuance of a
Temporary Environmental Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise
known as the Rules of Procedure for Environmental Cases (Rules), involving violations of
environmental laws and regulations in relation to the grounding of the US military ship USS Guardian
over the Tubbataha Reefs.
Factual Background

The name "Tubbataha" came from the Samal (seafaring people of southern Philippines) language
which means "long reef exposed at low tide." Tubbataha is composed of two huge coral atolls - the
north atoll and the south atoll - and the Jessie Beazley Reef, a smaller coral structure about 20
kilometers north of the atolls. The reefs of Tubbataha and Jessie Beazley are considered part of
Cagayancillo, a remote island municipality of Palawan.1

In 1988, Tubbataha was declared a National Marine Park by virtue of Proclamation No. 306 issued by
President Corazon C. Aquino on August 11, 1988. Located in the middle of Central Sulu Sea, 150
kilometers southeast of Puerto Princesa City, Tubbataha lies at the heart of the Coral Triangle, the
global center of marine biodiversity.

In 1993, Tubbataha was inscribed by the United Nations Educational Scientific and Cultural
Organization (UNESCO) as a World Heritage Site. It was recognized as one of the Philippines' oldest
ecosystems, containing excellent examples of pristine reefs and a high diversity of marine life. The
97,030-hectare protected marine park is also an important habitat for internationally threatened
and endangered marine species. UNESCO cited Tubbataha's outstanding universal value as an
important and significant natural habitat for in situ conservation of biological diversity; an example
representing significant on-going ecological and biological processes; and an area of exceptional
natural beauty and aesthetic importance.2

On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067,3 otherwise known as the
"Tubbataha Reefs Natural Park (TRNP) Act of 2009" "to ensure the protection and conservation of
the globally significant economic, biological, sociocultural, educational and scientific values of the
Tubbataha Reefs into perpetuity for the enjoyment of present and future generations." Under the
"no-take" policy, entry into the waters of TRNP is strictly regulated and many human activities are
prohibited and penalized or fined, including fishing, gathering, destroying and disturbing the
resources within the TRNP. The law likewise created the Tubbataha Protected Area Management
Board (TPAMB) which shall be the sole policy-making and permit-granting body of the TRNP.

The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In December
2012, the US Embassy in the Philippines requested diplomatic clearance for the said vessel "to enter
and exit the territorial waters of the Philippines and to arrive at the port of Subic Bay for the purpose
of routine ship replenishment, maintenance, and crew liberty."4 On January 6, 2013, the ship left
Sasebo, Japan for Subic Bay, arriving on January 13, 2013 after a brief stop for fuel in Okinawa,
Japan.1âwphi1

On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in Makassar,
Indonesia. On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground on
the northwest side of South Shoal of the Tubbataha Reefs, about 80 miles east-southeast of
Palawan. No cine was injured in the incident, and there have been no reports of leaking fuel or oil.

On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift, expressed regret for the
incident in a press statement.5 Likewise, US Ambassador to the Philippines Harry K. Thomas, Jr., in a
meeting at the Department of Foreign Affairs (DFA) on February 4, "reiterated his regrets over the
grounding incident and assured Foreign Affairs Secretazy Albert F. del Rosario that the United States
will provide appropriate compensation for damage to the reef caused by the ship."6 By March 30,
2013, the US Navy-led salvage team had finished removing the last piece of the grounded ship from
the coral reef.

On April 1 7, 2013, the above-named petitioners on their behalf and in representation of their
respective sector/organization and others, including minors or generations yet unborn, filed the
present petition agairtst Scott H. Swift in his capacity as Commander of the US 7th Fleet, Mark A.
Rice in his capacity as Commanding Officer of the USS Guardian and Lt. Gen. Terry G. Robling, US
Marine Corps Forces, Pacific and Balikatan 2013 Exercises Co-Director ("US respondents"); President
Benigno S. Aquino III in his capacity as Commander-in-Chief of the Armed Forces of the Philippines
(AFP), DF A Secretary Albert F. Del Rosario, Executive Secretary Paquito Ochoa, Jr., Secretary Voltaire
T. Gazmin (Department of National Defense), Secretary Jesus P. Paje (Department of Environment
and Natural Resources), Vice-Admiral Jose Luis M. Alano (Philippine Navy Flag Officer in Command,
AFP), Admiral Rodolfo D. Isorena (Philippine Coast Guard Commandant), Commodore Enrico Efren
Evangelista (Philippine Coast Guard-Palawan), and Major General Virgilio 0. Domingo (AFP
Commandant), collectively the "Philippine respondents."

The Petition

Petitioners claim that the grounding, salvaging and post-salvaging operations of the USS Guardian
cause and continue to cause environmental damage of such magnitude as to affect the provinces of
Palawan, Antique, Aklan, Guimaras, Iloilo, Negros Occidental, Negros Oriental, Zamboanga del Norte,
Basilan, Sulu, and Tawi-Tawi, which events violate their constitutional rights to a balanced and
healthful ecology. They also seek a directive from this Court for the institution of civil, administrative
and criminal suits for acts committed in violation of environmental laws and regulations in
connection with the grounding incident.

Specifically, petitioners cite the following violations committed by US respondents under R.A. No.
10067: unauthorized entry (Section 19); non-payment of conservation fees (Section 21 ); obstruction
of law enforcement officer (Section 30); damages to the reef (Section 20); and destroying and
disturbing resources (Section 26[g]). Furthermore, petitioners assail certain provisions of the Visiting
Forces Agreement (VFA) which they want this Court to nullify for being unconstitutional.
The numerous reliefs sought in this case are set forth in the final prayer of the petition, to wit:
WHEREFORE, in view of the foregoing, Petitioners respectfully pray that the Honorable Court: 1.
Immediately issue upon the filing of this petition a Temporary Environmental Protection Order
(TEPO) and/or a Writ of Kalikasan, which shall, in particular,

a. Order Respondents and any person acting on their behalf, to cease and desist all operations over
the Guardian grounding incident;

b. Initially demarcating the metes and bounds of the damaged area as well as an additional buffer
zone;

c. Order Respondents to stop all port calls and war games under 'Balikatan' because of the absence
of clear guidelines, duties, and liability schemes for breaches of those duties, and require
Respondents to assume responsibility for prior and future environmental damage in general, and
environmental damage under the Visiting Forces Agreement in particular.

d. Temporarily define and describe allowable activities of ecotourism, diving, recreation, and limited
commercial activities by fisherfolk and indigenous communities near or around the TRNP but away
from the damaged site and an additional buffer zone;

2. After summary hearing, issue a Resolution extending the TEPO until further orders of the Court;

3. After due proceedings, render a Decision which shall include, without limitation:

a. Order Respondents Secretary of Foreign Affairs, following the dispositive portion of Nicolas v.
Romulo, "to forthwith negotiate with the United States representatives for the appropriate
agreement on [environmental guidelines and environmental accountability] under Philippine
authorities as provided in Art. V[] of the VFA ... "

b. Direct Respondents and appropriate agencies to commence administrative, civil, and criminal
proceedings against erring officers and individuals to the full extent of the law, and to make such
proceedings public;

c. Declare that Philippine authorities may exercise primary and exclusive criminal jurisdiction over
erring U.S. personnel under the circumstances of this case;
d. Require Respondents to pay just and reasonable compensation in the settlement of all
meritorious claims for damages caused to the Tubbataha Reef on terms and conditions no less
severe than those applicable to other States, and damages for personal injury or death, if such had
been the case;

e. Direct Respondents to cooperate in providing for the attendance of witnesses and in the collection
and production of evidence, including seizure and delivery of objects connected with the offenses
related to the grounding of the Guardian;

f. Require the authorities of the Philippines and the United States to notify each other of the
disposition of all cases, wherever heard, related to the grounding of the Guardian;

g. Restrain Respondents from proceeding with any purported restoration, repair, salvage or post
salvage plan or plans, including cleanup plans covering the damaged area of the Tubbataha Reef
absent a just settlement approved by the Honorable Court;

h. Require Respondents to engage in stakeholder and LOU consultations in accordance with the
Local Government Code and R.A. 10067;

i. Require Respondent US officials and their representatives to place a deposit to the TRNP Trust
Fund defined under Section 17 of RA 10067 as a bona .fide gesture towards full reparations;

j. Direct Respondents to undertake measures to rehabilitate the areas affected by the grounding of
the Guardian in light of Respondents' experience in the Port Royale grounding in 2009, among other
similar grounding incidents;

k. Require Respondents to regularly publish on a quarterly basis and in the name of transparency
and accountability such environmental damage assessment, valuation, and valuation methods, in all
stages of negotiation;

l. Convene a multisectoral technical working group to provide scientific and technical support to the
TPAMB;

m. Order the Department of Foreign Affairs, Department of National Defense, and the Department
of Environment and Natural Resources to review the Visiting Forces Agreement and the Mutual
Defense Treaty to consider whether their provisions allow for the exercise of erga omnes rights to a
balanced and healthful ecology and for damages which follow from any violation of those rights;
n. Narrowly tailor the provisions of the Visiting Forces Agreement for purposes of protecting the
damaged areas of TRNP;

o. Declare the grant of immunity found in Article V ("Criminal Jurisdiction") and Article VI of the
Visiting Forces Agreement unconstitutional for violating equal protection and/or for violating the
preemptory norm of nondiscrimination incorporated as part of the law of the land under Section 2,
Article II, of the Philippine Constitution;

p. Allow for continuing discovery measures;

q. Supervise marine wildlife rehabilitation in the Tubbataha Reefs in all other respects; and

4. Provide just and equitable environmental rehabilitation measures and such other reliefs as are
just and equitable under the premises.7 (Underscoring supplied.)

Since only the Philippine respondents filed their comment8 to the petition, petitioners also filed a
motion for early resolution and motion to proceed ex parte against the US respondents.9

Respondents' Consolidated Comment

In their consolidated comment with opposition to the application for a TEPO and ocular inspection
and production orders, respondents assert that: ( 1) the grounds relied upon for the issuance of a
TEPO or writ of Kalikasan have become fait accompli as the salvage operations on the USS Guardian
were already completed; (2) the petition is defective in form and substance; (3) the petition
improperly raises issues involving the VFA between the Republic of the Philippines and the United
States of America; and ( 4) the determination of the extent of responsibility of the US Government as
regards the damage to the Tubbataha Reefs rests exdusively with the executive branch.

The Court's Ruling

As a preliminary matter, there is no dispute on the legal standing of petitioners to file the present
petition.

Locus standi is "a right of appearance in a court of justice on a given question."10 Specifically, it is "a
party's personal and substantial interest in a case where he has sustained or will sustain direct injury
as a result" of the act being challenged, and "calls for more than just a generalized grievance."11
However, the rule on standing is a procedural matter which this Court has relaxed for non-traditional
plaintiffs like ordinary citizens, taxpayers and legislators when the public interest so requires, such as
when the subject matter of the controversy is of transcendental importance, of overreaching
significance to society, or of paramount public interest.12

In the landmark case of Oposa v. Factoran, Jr.,13 we recognized the "public right" of citizens to "a
balanced and healthful ecology which, for the first time in our constitutional history, is solemnly
incorporated in the fundamental law." We declared that the right to a balanced and healthful
ecology need not be written in the Constitution for it is assumed, like other civil and polittcal rights
guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of
transcendental importance with intergenerational implications.1âwphi1 Such right carries with it the
correlative duty to refrain from impairing the environment.14

On the novel element in the class suit filed by the petitioners minors in Oposa, this Court ruled that
not only do ordinary citizens have legal standing to sue for the enforcement of environmental rights,
they can do so in representation of their own and future generations. Thus:

Petitioners minors assert that they represent their generation as well as generations yet unborn. We
find no difficulty in ruling that they can, for themselves, for others of their generation and for the
succeeding generations, file a class suit. Their personality to sue in behalf of the succeeding
generations can only be based on the concept of intergenerational responsibility insofar as the right
to a balanced and healthful ecology is concerned. Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. Such rhythm
and harmony indispensably include, inter alia, the judicious disposition, utilization, management,
renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources to the end that their exploration, development and utilization be
equitably accessible to the present a:: well as future generations. Needless to say, every generation
has a responsibility to the next to preserve that rhythm and harmony for the full 1:njoyment of a
balanced and healthful ecology. Put a little differently, the minors' assertion of their right to a sound
environment constitutes, at the same time, the performance of their obligation to ensure the
protection of that right for the generations to come.15 (Emphasis supplied.)

The liberalization of standing first enunciated in Oposa, insofar as it refers to minors and generations
yet unborn, is now enshrined in the Rules which allows the filing of a citizen suit in environmental
cases. The provision on citizen suits in the Rules "collapses the traditional rule on personal and direct
interest, on the principle that humans are stewards of nature."16

Having settled the issue of locus standi, we shall address the more fundamental question of whether
this Court has jurisdiction over the US respondents who did not submit any pleading or
manifestation in this case.
The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-
suability of the State,17 is expressly provided in Article XVI of the 1987 Constitution which states:

Section 3. The State may not be sued without its consent.

In United States of America v. Judge Guinto,18 we discussed the principle of state immunity from
suit, as follows:

The rule that a state may not be sued without its consent, now · expressed in Article XVI, Section 3,
of the 1987 Constitution, is one of the generally accepted principles of international law that we
have adopted as part of the law of our land under Article II, Section 2. x x x.

Even without such affirmation, we would still be bound by the generally accepted principles of
international law under the doctrine of incorporation. Under this doctrine, as accepted by the
majority of states, such principles are deemed incorporated in the law of every civilized state as a
condition and consequence of its membership in the society of nations. Upon its admission to such
society, the state is automatically obligated to comply with these principles in its relations with other
states.

As applied to the local state, the doctrine of state immunity is based on the justification given by
Justice Holmes that ''there can be no legal right against the authority which makes the law on which
the right depends." [Kawanakoa v. Polybank, 205 U.S. 349] There are other practical reasons for the
enforcement of the doctrine. In the case of the foreign state sought to be impleaded in the local
jurisdiction, the added inhibition is expressed in the maxim par in parem, non habet imperium. All
states are sovereign equals and cannot assert jurisdiction over one another. A contrary disposition
would, in the language of a celebrated case, "unduly vex the peace of nations." [De Haber v. Queen
of Portugal, 17 Q. B. 171]

While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in
the discharge of their duties. The rule is that if the judgment against such officials will require the
state itself to perform an affirmative act to satisfy the same,. such as the appropriation of the
amount needed to pay the damages awarded against them, the suit must be regarded as against the
state itself although it has not been formally impleaded. [Garcia v. Chief of Staff, 16 SCRA 120] In
such a situation, the state may move to dismiss the comp.taint on the ground that it has been filed
without its consent.19 (Emphasis supplied.)

Under the American Constitution, the doctrine is expressed in the Eleventh Amendment which
reads:
The Judicial power of the United States shall not be construed to extend to any suit in law or equity,
commenced or prosecuted against one of the United States by Citizens of another State, or by
Citizens or Subjects of any Foreign State.

In the case of Minucher v. Court of Appeals,20 we further expounded on the immunity of foreign
states from the jurisdiction of local courts, as follows:

The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of
customary international law then closely identified with the personal immunity of a foreign
sovereign from suit and, with the emergence of democratic states, made to attach not just to the
person of the head of state, or his representative, but also distinctly to the state itself in its sovereign
capacity. If the acts giving rise to a suit arc those of a foreign government done by its foreign agent,
although not necessarily a diplomatic personage, but acting in his official capacity, the complaint
could be barred by the immunity of the foreign sovereign from suit without its consent. Suing a
representative of a state is believed to be, in effect, suing the state itself. The proscription is not
accorded for the benefit of an individual but for the State, in whose service he is, under the maxim -
par in parem, non habet imperium -that all states are soverr~ign equals and cannot assert
jurisdiction over one another. The implication, in broad terms, is that if the judgment against an
official would rec 1uire the state itself to perform an affirmative act to satisfy the award, such as the
appropriation of the amount needed to pay the damages decreed against him, the suit must be
regarded as being against the state itself, although it has not been formally impleaded.21 (Emphasis
supplied.)

In the same case we also mentioned that in the case of diplomatic immunity, the privilege is not an
immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it
is, rather, an immunity from the exercise of territorial jurisdiction.22

In United States of America v. Judge Guinto,23 one of the consolidated cases therein involved a
Filipino employed at Clark Air Base who was arrested following a buy-bust operation conducted by
two officers of the US Air Force, and was eventually dismissed from his employment when he was
charged in court for violation of R.A. No. 6425. In a complaint for damages filed by the said
employee against the military officers, the latter moved to dismiss the case on the ground that the
suit was against the US Government which had not given its consent. The RTC denied the motion but
on a petition for certiorari and prohibition filed before this Court, we reversed the RTC and dismissed
the complaint. We held that petitioners US military officers were acting in the exercise of their
official functions when they conducted the buy-bust operation against the complainant and
thereafter testified against him at his trial. It follows that for discharging their duties as agents of the
United States, they cannot be directly impleaded for acts imputable to their principal, which has not
given its consent to be sued.
This traditional rule of State immunity which exempts a State from being sued in the courts of
another State without the former's consent or waiver has evolved into a restrictive doctrine which
distinguishes sovereign and governmental acts (Jure imperil") from private, commercial and
proprietary acts (Jure gestionis). Under the restrictive rule of State immunity, State immunity
extends only to acts Jure imperii. The restrictive application of State immunity is proper only when
the proceedings arise out of commercial transactions of the foreign sovereign, its commercial
activities or economic affairs.24

In Shauf v. Court of Appeals,25 we discussed the limitations of the State immunity principle, thus:

It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by JustiGe Zaldivar in
Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. : "Inasmuch as the State
authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not
acts of the State, and an action against the officials or officers by one whose rights have been
invaded or violated by such acts, for the protection of his rights, is not a suit against the State within
the rule of immunity of the State from suit. In the same tenor, it has been said that an action at law
or suit in equity against a State officer or the director of a State department on the ground that,
while claiming to act for the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does not have,
is not a suit against the State within the constitutional provision that the State may not be sued
without its consent." The rationale for this ruling is that the doctrine of state immunity cannot be
used as an instrument for perpetrating an injustice.

xxxx

The aforecited authorities are clear on the matter. They state that the doctrine of immunity from
suit will not apply and may not be invoked where the public official is being sued in his private and
personal capacity as an ordinary citizen. The cloak of protection afforded the officers and agents of
the government is removed the moment they are sued in their individual capacity. This situation
usually arises where the public official acts without authority or in excess of the powers vested in
him. It is a well-settled principle of law that a public official may be liable in his personal private
capacity for whatever damage he may have caused by his act done with malice and in bad faith, or
beyond the scope of his authority or jurisdiction.26 (Emphasis supplied.) In this case, the US
respondents were sued in their official capacity as commanding officers of the US Navy who had
control and supervision over the USS Guardian and its crew. The alleged act or omission resulting in
the unfortunate grounding of the USS Guardian on the TRNP was committed while they we:re
performing official military duties. Considering that the satisfaction of a judgment against said
officials will require remedial actions and appropriation of funds by the US government, the suit is
deemed to be one against the US itself. The principle of State immunity therefore bars the exercise
of jurisdiction by this Court over the persons of respondents Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio T. Carpio took the position that the
conduct of the US in this case, when its warship entered a restricted area in violation of R.A. No.
10067 and caused damage to the TRNP reef system, brings the matter within the ambit of Article 31
of the United Nations Convention on the Law of the Sea (UNCLOS). He explained that while
historically, warships enjoy sovereign immunity from suit as extensions of their flag State, Art. 31 of
the UNCLOS creates an exception to this rule in cases where they fail to comply with the rules and
regulations of the coastal State regarding passage through the latter's internal waters and the
territorial sea.

According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a matter of
long-standing policy the US considers itself bound by customary international rules on the
"traditional uses of the oceans" as codified in UNCLOS, as can be gleaned from previous declarations
by former Presidents Reagan and Clinton, and the US judiciary in the case of United States v. Royal
Caribbean Cruise Lines, Ltd.27

The international law of the sea is generally defined as "a body of treaty rules arid customary norms
governing the uses of the sea, the exploitation of its resources, and the exercise of jurisdiction over
maritime regimes. It is a branch of public international law, regulating the relations of states with
respect to the uses of the oceans."28 The UNCLOS is a multilateral treaty which was opened for
signature on December 10, 1982 at Montego Bay, Jamaica. It was ratified by the Philippines in 1984
but came into force on November 16, 1994 upon the submission of the 60th ratification.

The UNCLOS is a product of international negotiation that seeks to balance State sovereignty (mare
clausum) and the principle of freedom of the high seas (mare liberum).29 The freedom to use the
world's marine waters is one of the oldest customary principles of international law.30 The UNCLOS
gives to the coastal State sovereign rights in varying degrees over the different zones of the sea
which are: 1) internal waters, 2) territorial sea, 3) contiguous zone, 4) exclusive economic zone, and
5) the high seas. It also gives coastal States more or less jurisdiction over foreign vessels depending
on where the vessel is located.31

Insofar as the internal waters and territorial sea is concerned, the Coastal State exercises
sovereignty, subject to the UNCLOS and other rules of international law. Such sovereignty extends to
the air space over the territorial sea as well as to its bed and subsoil.32

In the case of warships,33 as pointed out by Justice Carpio, they continue to enjoy sovereign
immunity subject to the following exceptions:

Article 30

Non-compliance by warships with the laws and regulations of the coastal State
If any warship does not comply with the laws and regulations of the coastal State concerning
passage through the territorial sea and disregards any request for compliance therewith which is
made to it, the coastal State may require it to leave the territorial sea immediately.

Article 31

Responsibility of the flag State for damage caused by a warship

or other government ship operated for non-commercial purposes

The flag State shall bear international responsibility for any loss or damage to the coastal State
resulting from the non-compliance by a warship or other government ship operated for non-
commercial purposes with the laws and regulations of the coastal State concerning passage through
the territorial sea or with the provisions of this Convention or other rules of international law.

Article 32

Immunities of warships and other government ships operated for non-commercial purposes

With such exceptions as are contained in subsection A and in articles 30 and 31, nothing in this
Convention affects the immunities of warships and other government ships operated for non-
commercial purposes. (Emphasis supplied.) A foreign warship's unauthorized entry into our internal
waters with resulting damage to marine resources is one situation in which the above provisions
may apply. But what if the offending warship is a non-party to the UNCLOS, as in this case, the US?

An overwhelming majority - over 80% -- of nation states are now members of UNCLOS, but despite
this the US, the world's leading maritime power, has not ratified it.

While the Reagan administration was instrumental in UNCLOS' negotiation and drafting, the U.S.
delegation ultimately voted against and refrained from signing it due to concerns over deep seabed
mining technology transfer provisions contained in Part XI. In a remarkable, multilateral effort to
induce U.S. membership, the bulk of UNCLOS member states cooperated over the succeeding
decade to revise the objection.able provisions. The revisions satisfied the Clinton administration,
which signed the revised Part XI implementing agreement in 1994. In the fall of 1994, President
Clinton transmitted UNCLOS and the Part XI implementing agreement to the Senate requesting its
advice and consent. Despite consistent support from President Clinton, each of his successors, and
an ideologically diverse array of stakeholders, the Senate has since withheld the consent required for
the President to internationally bind the United States to UNCLOS.
While UNCLOS cleared the Senate Foreign Relations Committee (SFRC) during the 108th and 110th
Congresses, its progress continues to be hamstrung by significant pockets of political ambivalence
over U.S. participation in international institutions. Most recently, 111 th Congress SFRC Chairman
Senator John Kerry included "voting out" UNCLOS for full Senate consideration among his highest
priorities. This did not occur, and no Senate action has been taken on UNCLOS by the 112th
Congress.34

Justice Carpio invited our attention to the policy statement given by President Reagan on March 10,
1983 that the US will "recognize the rights of the other , states in the waters off their coasts, as
reflected in the convention [UNCLOS], so long as the rights and freedom of the United States and
others under international law are recognized by such coastal states", and President Clinton's
reiteration of the US policy "to act in a manner consistent with its [UNCLOS] provisions relating to
traditional uses of the oceans and to encourage other countries to do likewise." Since Article 31
relates to the "traditional uses of the oceans," and "if under its policy, the US 'recognize[s] the rights
of the other states in the waters off their coasts,"' Justice Carpio postulates that "there is more
reason to expect it to recognize the rights of other states in their internal waters, such as the Sulu
Sea in this case."

As to the non-ratification by the US, Justice Carpio emphasizes that "the US' refusal to join the UN
CLOS was centered on its disagreement with UN CLOS' regime of deep seabed mining (Part XI) which
considers the oceans and deep seabed commonly owned by mankind," pointing out that such "has
nothing to do with its [the US'] acceptance of customary international rules on navigation."

It may be mentioned that even the US Navy Judge Advocate General's Corps publicly endorses the
ratification of the UNCLOS, as shown by the following statement posted on its official website:

The Convention is in the national interest of the United States because it establishes stable maritime
zones, including a maximum outer limit for territorial seas; codifies innocent passage, transit
passage, and archipelagic sea lanes passage rights; works against "jurisdictiomtl creep" by
preventing coastal nations from expanding their own maritime zones; and reaffirms sovereign
immunity of warships, auxiliaries anJ government aircraft.

xxxx

Economically, accession to the Convention would support our national interests by enhancing the
ability of the US to assert its sovereign rights over the resources of one of the largest continental
shelves in the world. Further, it is the Law of the Sea Convention that first established the concept of
a maritime Exclusive Economic Zone out to 200 nautical miles, and recognized the rights of coastal
states to conserve and manage the natural resources in this Zone.35
We fully concur with Justice Carpio's view that non-membership in the UNCLOS does not mean that
the US will disregard the rights of the Philippines as a Coastal State over its internal waters and
territorial sea. We thus expect the US to bear "international responsibility" under Art. 31 in
connection with the USS Guardian grounding which adversely affected the Tubbataha reefs. Indeed,
it is difficult to imagine that our long-time ally and trading partner, which has been actively
supporting the country's efforts to preserve our vital marine resources, would shirk from its
obligation to compensate the damage caused by its warship while transiting our internal waters.
Much less can we comprehend a Government exercising leadership in international affairs, unwilling
to comply with the UNCLOS directive for all nations to cooperate in the global task to protect and
preserve the marine environment as provided in Article 197, viz:

Article 197

Cooperation on a global or regional basis

States shall cooperate on a global basis and, as appropriate, on a regional basis, directly or through
competent international organizations, in formulating and elaborating international rules, standards
and recommended practices and procedures consistent with this Convention, for the protection and
preservation of the marine environment, taking into account characteristic regional features.

In fine, the relevance of UNCLOS provisions to the present controversy is beyond dispute. Although
the said treaty upholds the immunity of warships from the jurisdiction of Coastal States while
navigating the.latter's territorial sea, the flag States shall be required to leave the territorial '::;ea
immediately if they flout the laws and regulations of the Coastal State, and they will be liable for
damages caused by their warships or any other government vessel operated for non-commercial
purposes under Article 31.

Petitioners argue that there is a waiver of immunity from suit found in the VFA. Likewise, they
invoke federal statutes in the US under which agencies of the US have statutorily waived their
immunity to any action. Even under the common law tort claims, petitioners asseverate that the US
respondents are liable for negligence, trespass and nuisance.

We are not persuaded.

The VFA is an agreement which defines the treatment of United States troops and personnel visiting
the Philippines to promote "common security interests" between the US and the Philippines in the
region. It provides for the guidelines to govern such visits of military personnel, and further defines
the rights of the United States and the Philippine government in the matter of criminal jurisdiction,
movement of vessel and aircraft, importation and exportation of equipment, materials and
supplies.36 The invocation of US federal tort laws and even common law is thus improper
considering that it is the VF A which governs disputes involving US military ships and crew navigating
Philippine waters in pursuance of the objectives of the agreement.
As it is, the waiver of State immunity under the VF A pertains only to criminal jurisdiction and not to
special civil actions such as the present petition for issuance of a writ of Kalikasan. In fact, it can be
inferred from Section 17, Rule 7 of the Rules that a criminal case against a person charged with a
violation of an environmental law is to be filed separately:

SEC. 17. Institution of separate actions.-The filing of a petition for the issuance of the writ of
kalikasan shall not preclude the filing of separate civil, criminal or administrative actions.

In any case, it is our considered view that a ruling on the application or non-application of criminal
jurisdiction provisions of the VF A to US personnel who may be found responsible for the grounding
of the USS Guardian, would be premature and beyond the province of a petition for a writ of
Kalikasan. We also find it unnecessary at this point to determine whether such waiver of State
immunity is indeed absolute. In the same vein, we cannot grant damages which have resulted from
the violation of environmental laws. The Rules allows the recovery of damages, including the
collection of administrative fines under R.A. No. 10067, in a separate civil suit or that deemed
instituted with the criminal action charging the same violation of an environmental law.37

Section 15, Rule 7 enumerates the reliefs which may be granted in a petition for issuance of a writ of
Kalikasan, to wit:

SEC. 15. Judgment.-Within sixty (60) days from the time the petition is submitted for decision, the
court shall render judgment granting or denying the privilege of the writ of kalikasan.

The reliefs that may be granted under the writ are the following:

(a) Directing respondent to permanently cease and desist from committing acts or neglecting the
performance of a duty in violation of environmental laws resulting in environmental destruction or
damage;

(b) Directing the respondent public official, govemment agency, private person or entity to protect,
preserve, rehabilitate or restore the environment;

(c) Directing the respondent public official, government agency, private person or entity to monitor
strict compliance with the decision and orders of the court;
(d) Directing the respondent public official, government agency, or private person or entity to make
periodic reports on the execution of the final judgment; and

(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or
to the protection, preservation, rehabilitation or restoration of the environment, except the award
of damages to individual petitioners. (Emphasis supplied.)

We agree with respondents (Philippine officials) in asserting that this petition has become moot in
the sense that the salvage operation sought to be enjoined or restrained had already been
accomplished when petitioners sought recourse from this Court. But insofar as the directives to
Philippine respondents to protect and rehabilitate the coral reef stn icture and marine habitat
adversely affected by the grounding incident are concerned, petitioners are entitled to these reliefs
notwithstanding the completion of the removal of the USS Guardian from the coral reef. However,
we are mindful of the fact that the US and Philippine governments both expressed readiness to
negotiate and discuss the matter of compensation for the damage caused by the USS Guardian. The
US Embassy has also declared it is closely coordinating with local scientists and experts in assessing
the extent of the damage and appropriate methods of rehabilitation.

Exploring avenues for settlement of environmental cases is not proscribed by the Rules. As can be
gleaned from the following provisions, mediation and settlement are available for the consideration
of the parties, and which dispute resolution methods are encouraged by the court, to wit:

RULE3

xxxx

SEC. 3. Referral to mediation.-At the start of the pre-trial conference, the court shall inquire from the
parties if they have settled the dispute; otherwise, the court shall immediately refer the parties or
their counsel, if authorized by their clients, to the Philippine Mediation Center (PMC) unit for
purposes of mediation. If not available, the court shall refer the case to the clerk of court or legal
researcher for mediation.

Mediation must be conducted within a non-extendible period of thirty (30) days from receipt of
notice of referral to mediation.

The mediation report must be submitted within ten (10) days from the expiration of the 30-day
period.
SEC. 4. Preliminary conference.-If mediation fails, the court will schedule the continuance of the pre-
trial. Before the scheduled date of continuance, the court may refer the case to the branch clerk of
court for a preliminary conference for the following purposes:

(a) To assist the parties in reaching a settlement;

xxxx

SEC. 5. Pre-trial conference; consent decree.-The judge shall put the parties and their counsels under
oath, and they shall remain under oath in all pre-trial conferences.

The judge shall exert best efforts to persuade the parties to arrive at a settlement of the dispute. The
judge may issue a consent decree approving the agreement between the parties in accordance with
law, morals, public order and public policy to protect the right of the people to a balanced and
healthful ecology.

xxxx

SEC. 10. Efforts to settle.- The court shall endeavor to make the parties to agree to compromise or
settle in accordance with law at any stage of the proceedings before rendition of judgment.
(Underscoring supplied.)

The Court takes judicial notice of a similar incident in 2009 when a guided-missile cruiser, the USS
Port Royal, ran aground about half a mile off the Honolulu Airport Reef Runway and remained stuck
for four days. After spending $6.5 million restoring the coral reef, the US government was reported
to have paid the State of Hawaii $8.5 million in settlement over coral reef damage caused by the
grounding.38

To underscore that the US government is prepared to pay appropriate compensation for the damage
caused by the USS Guardian grounding, the US Embassy in the Philippines has announced the
formation of a US interdisciplinary scientific team which will "initiate discussions with the
Government of the Philippines to review coral reef rehabilitation options in Tubbataha, based on
assessments by Philippine-based marine scientists." The US team intends to "help assess damage
and remediation options, in coordination with the Tubbataha Management Office, appropriate
Philippine government entities, non-governmental organizations, and scientific experts from
Philippine universities."39
A rehabilitation or restoration program to be implemented at the cost of the violator is also a major
relief that may be obtained under a judgment rendered in a citizens' suit under the Rules, viz:

RULES

SECTION 1. Reliefs in a citizen suit.-If warranted, the court may grant to the plaintiff proper reliefs
which shall include the protection, preservation or rehabilitation of the environment and the
payment of attorney's fees, costs of suit and other litigation expenses. It may also require the
violator to submit a program of rehabilitation or restoration of the environment, the costs of which
shall be borne by the violator, or to contribute to a special trust fund for that purpose subject to the
control of the court.1âwphi1

In the light of the foregoing, the Court defers to the Executive Branch on the matter of compensation
and rehabilitation measures through diplomatic channels. Resolution of these issues impinges on our
relations with another State in the context of common security interests under the VFA. It is settled
that "[t]he conduct of the foreign relations of our government is committed by the Constitution to
the executive and legislative-"the political" --departments of the government, and the propriety of
what may be done in the exercise of this political power is not subject to judicial inquiry or
decision."40

On the other hand, we cannot grant the additional reliefs prayed for in the petition to order a review
of the VFA and to nullify certain immunity provisions thereof.

As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora,41 the VFA was duly
concurred in by the Philippine Senate and has been recognized as a treaty by the United States as
attested and certified by the duly authorized representative of the United States government. The
VF A being a valid and binding agreement, the parties are required as a matter of international law
to abide by its terms and provisions.42 The present petition under the Rules is not the proper
remedy to assail the constitutionality of its provisions. WHEREFORE, the petition for the issuance of
the privilege of the Writ of Kalikasan is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice
WE CONCUR:

See Concurring Opinion

MARIA LOURDES P. A. SERENO

Chief Justice

ANTONIO T. CARPIO

Associate Justice PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice ARTURO D. BRION

Associate Justice

DIOSDADO M. PERALTA

Associate Justice LUCAS P. BERSAMIN

Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice JOSE PORTUGAL PEREZ

Associate Justice

(On official leave)

JOSE CATRAL MENDOZA*

Associate Justice BIENVENIDO L. REYES

Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice See Separate Concurring Opinion

MARVIC M.V.F. LEONEN

Associate Justice

(No Part)

FRANCIS H. JARDELEZA**

Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution, it is hereby certified that the conclusions
in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* On official leave.

** No part.

1 T ubbataha Reefs Natural Park - <http://tubbatahareef org>.

2 Id.

3 "AN ACT ESTABLISHING THE TUBBATAHA REEFS NATURAL PARK IN THE PROVINCE OF PALAWAN AS
A PROTECTED AREA UNDER THE NIPAS ACT (R.A. 7586) AND THE STRATEGIC ENVIRONMENTAL PLAN
(SEP) FOR PALAWAN ACT (R.A. 7611), PROVIDING FOR ITS MANAGEMENT AND FOR OTHER
PURPOSES."

4 Rollo, pp. 194-199.

5 < http://manila.usembassy.gov/pressphotoreleases2013/navy-commander-expresses-regret-
concerning-uss-guardian-grounding.html>.

6 "Joint Statement Between The Philippines And The United States On The USS Guardian Grounding
On Tubbatata Reef," February 5, 2013. Accessed. at US Embassy website
-<http://manila.usembassy.gov/jointstatementguardiantubbataha.html>.

7 Rollo, pp. 89-92.

8 Id. at 156-191. In a letter dated 27 May 2013, the DFA's Office of Legal Affairs informed this Court
that it has received from the Embassy of the United States the Notice sent by this Court, with a
request to return the same. It said that the US Embassy "asserts that it is not an agent for the service
of process upon the individuals named in court documents, and that the transmission of the Court
documents should have been done through diplomatic channels." (Id. at 255.)

9 Id. at 215-247.

10 Bayan Muna v. Romulo, G.R. No. 159618, February 1, 2011, 641 SCRA 244, 254, citing David v.
Macapagal-Arroyo, 522 Phil. 705, 755 (2006).

11 Id., citing Jumamil v. Cafe, 507 Phil. 455, 465 (2005), citing Integrated Bar of the Philippines v.
Zamora, 392 Phil. 6I8, 632-633 (2000).

12 Biraogo v. Philippine Truth Commission of2010, G.R. Nos. 192935 & 193036, December 7, 2010,
637 SCRA 78, 151, citing Social Justice Society (SJS) v. Dangerous Drugs Board, et al., 591 Phil. 393,
404 (2008); Tatad v. Secretary of the Department of Energy, 346 Phil. 321 (1997) and De Guia v.
COMELEC, G.R. No. 104712, May 6, 1992, 208 SCRA 420, 422.

13 G.R. No. 101083, July 30, 1993, 224 SCRA 792.

14 Id. at 804-805.

15 Id. at 802-803.

16 See ANNOTATION TO THE RULES OF PROCEDURE FOR ENVIRONMENTAL CASES ..

17 Air Transportation Office v. Ramos, G.R. No. 159402, February 23, 2011, 644 SCRA 36, 41.

18 261 Phil. 777 (1990).

19 Id. at 790-792.
20 445 Phil. 250 (2003).

21 Id. at 269-270. Citations omitted.

22 Id. at 268, citing J.L. Brierly, "The Law of Nations," Oxford University Press, 6th Edition, 1963, p.
244.

23 Supra note 18, at 788-789 & 797.

24 United States of America v. Ruiz, 221 Phil. 179, 182-183 & 184 (1985).

25 G.R. No. 90314, November 27, 1990, 191 SCRA 713.

26 Id. at 727-728.

27 24 F Supp. 2d 155, 159 (D.P.R. 1997).

28 Merlin M. Magallona, A Primer on the Law of the Sea, 1997, p. 1.

29 Bertrand Theodor L. Santos, "Untangling a Tangled Net of Confusion: Reconciling the Philippine
Fishery Poaching Law and the UNCLOS' World Bulletin, Vol. 18: 83-116 (July-December 2002), p. 96.

30 Anne Bardin, "Coastal State's Jurisdiction Over Foreign Vessels" 14 Pace Int'!. Rev. 27, 28 (2002).

31 Id. at 29.

32 Art. 2, UNCLOS.

33 Art. 29 of UNCLOS defines warship as "a ship belonging to the armed forces of a State bearing the
external marks distinguishing such ships of its nationality, under the command of an officer duly
commissioned by the government of the State and whose name appears in the appropriate service
list or its equivalent, and manned by a crew which is under regular armed forces discipline."
34 Commander Robert C. "Rock" De Tolve, JAGC, USN, "At What Cost? Americas UNCLOS Allergy in
the Time of 'Lav.fare'", 61 Naval L. Rev. 1, 3 (2012).

35 <http://www.jag.navy.mil/organizationlcode10lawofthesea.htm>.

36 See BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora, 396 Phil. 623, 652 (2000).

37 Rule 10, RULES OF PROCEDURE FOR ENVIRONMENTAL CASES.

38 USS Port Royal (CG73)" - <http://navysite.de/cg/cg73.html>; "USS Port Royal Returns to

Homeport", Navy Military Home Page, Story Number NNS0902 l l-02 Release Date: 2/11/2009 6:00
AM -<http://www.navymillsubmit/display.asp?story_id=42502>; "Navy, state reach settlement on
USS Port Royal damage'', posted Feb. 05, 2011 8:26 AM -
<http:/!www.hawaiinewsnow.com!story/13974224/navystate-reach-settlement-on-uss-port-royal-
reef-damage>.

39 <http://manila.usembassy.gov/usgtargetedassistancetubbataha. html>.

40 Vinuya v. Romulo, G.R. No. 162230, April 28, 2010, 619 SCRA 533, 559, citing Detjen v. Central
Leather Co., 246 U.S. 297, 302 (1918).

41 Supra note 36.

42 Nicolas v. Secretary Romulo, et al., 598 Phil. 262. 280 & 285.

The Lawphil Project - Arellano Law Foundation

MOST REV. PEDRO D. ARIGO v. SCOTT H. SWIFT, GR No. 206510, 2014-09-16

Facts:
ssuance of a Writ of Kalikasan with prayer for the issuance of a Temporary
Environmental Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8-SC, otherwise
known as the Rules of Procedure for Environmental
Cases (Rules), involving violations of environmental laws and regulations in relation to the
grounding of the US military ship USS Guardian over the Tubbataha Reefs.
In 1988, Tubbataha was declared a National Marine Park by virtue of Proclamation No.
306 issued by President Corazon C. Aquino on August 11, 1988. Located in the middle of
Central Sulu Sea, 150 kilometers southeast of Puerto Princesa City, Tubbataha lies at the
heart of the
Coral Triangle, the global center of marine biodiversity.
In 1993, Tubbataha was inscribed by the United Nations Educational Scientific and
Cultural Organization (UNESCO) as a World Heritage Site. It was recognized as one of
the Philippines' oldest ecosystems, containing excellent examples of pristine reefs and a
high diversity of... marine life. The 97,030-hectare protected marine park is also an
important habitat for internationally threatened and endangered marine species.
UNESCO cited Tubbataha's outstanding universal value as an important and significant
natural habitat for in situ conservation... of biological diversity; an example representing
significant on-going ecological and biological processes; and an area of exceptional
natural beauty and aesthetic importance.[2]
On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067,[3] otherwise known as
the "Tubbataha Reefs Natural Park (TRNP) Act of 2009" "to ensure the protection and
conservation of the globally significant economic, biological, sociocultural,... educational
and scientific values of the Tubbataha Reefs into perpetuity for the enjoyment of present
and future generations."  Under the "no-take" policy, entry into the waters of TRNP is
strictly regulated and many human activities are prohibited and penalized or fined,...
including fishing, gathering, destroying and disturbing the resources within the TRNP. 
The law likewise created the Tubbataha Protected Area Management Board (TPAMB)
which shall be the sole policy-making and permit-granting body of the TRNP.
he USS Guardian is an Avenger-class mine countermeasures ship of the US Navy. In
December 2012, the US Embassy in the Philippines requested diplomatic clearance for
the said vessel "to enter and exit the territorial waters of the Philippines and to arrive at
the port of
Subic Bay for the purpose of routine ship replenishment, maintenance, and crew
liberty."[4]  On January 6, 2013, the ship left Sasebo, Japan for Subic Bay, arriving on
January 13, 2013 after a brief stop for fuel in Okinawa, Japan.
On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in
Makassar, Indonesia. On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the
ship ran aground on the northwest side of South Shoal of the Tubbataha Reefs, about 80
miles... east-southeast of Palawan. No one was injured in the incident, and there have
been no reports of leaking fuel or oil.
On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift, expressed
regret for the incident in a press statement.[5]Likewise, US Ambassador to the
Philippines Harry K. Thomas, Jr., in a meeting at the Department of
Foreign Affairs (DFA) on February 4, "reiterated his regrets over the grounding incident
and assured Foreign Affairs Secretary Albert F. del Rosario that the United States will
provide appropriate compensation for damage to the reef caused by the ship."[6]
By March 30, 2013, the US Navy-led salvage team had finished removing the last piece
of the grounded ship from the coral reef.
including minors or generations yet unborn
Scott H. Swift in his capacity as Commander of the US
7th Fleet, Mark A. Rice in his capacity as Commanding Officer of the USS Guardian and
Lt. Gen. Terry G. Robling, US Marine Corps Forces, Pacific and Balikatan 2013 Exercises
Co-Director ("US respondents"... etitioners claim that the grounding, salvaging and post-
salvaging operations of the USS Guardian cause and continue to cause environmental
damage of such magnitude as to affect the provinces of Palawan, Antique, Aklan,
Guimaras, Iloilo, Negros Occidental, Negros
Oriental, Zamboanga del Norte, Basilan, Sulu, and Tawi-Tawi, which events violate their
constitutional rights to a balanced and healthful ecology. They also seek a directive from
this Court for the institution of civil, administrative and criminal suits for acts committed
in... violation of environmental laws and regulations in connection with the grounding
incident.
Specifically, petitioners cite the following violations committed by US respondents under
R.A. No. 10067: unauthorized entry (Section 19); non-payment of conservation fees
(Section 21); obstruction of law enforcement officer (Section 30); damages to the reef
(Section 20); and... destroying and disturbing resources (Section 26[g]).  Furthermore,
petitioners assail certain provisions of the Visiting Forces Agreement (VFA) which they
want this Court to nullify for being unconstitutional.
Immediately issue upon the filing of this petition a Temporary Environmental Protection
Order (TEPO) and/or a Writ of Kalikasan, which shall, in particular,... Order Respondents
and any person acting on their behalf, to cease and desist all operations over the
Guardian grounding incident;
Initially demarcating the metes and bounds of the damaged area as well as an additional
buffer zone;... v
Order Respondents to stop all port calls and war games under 'Balikatan' because of the
absence of clear guidelines, duties, and liability schemes for breaches of those duties, and
require Respondents to assume responsibility for prior and future... environmental
damage in general, and environmental damage under the Visiting Forces Agreement in
particular.
After summary hearing, issue a Resolution extending the TEPO until further orders of the
Court;... onvene a multisectoral technical working group to provide scientific and
technical support to the TPAMB;... review the Visiting Forces Agreement and the Mutual
Defense Treaty
Narrowly tailor the provisions of the Visiting Forces Agreement for purposes of
protecting the damaged areas of TRNP;
Declare the grant of immunity found in Article V ("Criminal Jurisdiction") and Article VI of
the Visiting Forces Agreement unconstitutional for violating equal protection and/or for
violating the preemptory norm of nondiscrimination incorporated as part of the law of...
the land under Section 2, Article II, of the Philippine Constitution;
Allow for continuing discovery measures;
Supervise marine wildlife rehabilitation in the Tubbataha Reefs in all other respects; and...
just and equitable environmental rehabilitation measures... the grounds relied upon for
the issuance of a TEPO or writ of Kalikasan have become fait accompli as the salvage...
operations on the USS Guardian were already completed; (2) the petition is defective in
form and substance; (3) the petition improperly raises issues involving the VFA between
the Republic of the Philippines and the United States of America; and (4) the
determination of... the extent of responsibility of the US Government as regards the
damage to the Tubbataha Reefs rests exclusively with the executive branch.
declared
Issues:
the grounds relied upon for the issuance of a TEPO or writ of Kalikasan have become fait
accompli as the salvage... operations on the USS Guardian were already completed...
whether this Court has jurisdiction over the US respondents who did not submit any
pleading or manifestation in this case.
foreign warship's unauthorized entry into our internal waters with resulting damage to
marine resources is one situation in which the above provisions may apply.But what if the
offending warship is a non-party to the UNCLOS, as in this case, the US?
Ruling:
balanced and healthful ecology need not be written in the Constitution for it is assumed,
like other civil and political rights guaranteed in the Bill of Rights, to exist from the
inception of mankind and it is an issue of transcendental importance... with
intergenerational implications. Such right carries with it the correlative duty to refrain
from impairing the environment.[14]
As applied to the local state, the doctrine of state immunity is based on the justification
given by Justice Holmes that "there can be no legal right against the authority which
makes the law on which the right depends."[Kawanakoa v. Polybank, 205 U.S. 349] There
are... other practical reasons for the enforcement of the doctrine. In the case of the
foreign state sought to be impleaded in the local jurisdiction, the added inhibition is
expressed in the maxim par in parem, non habet imperium. All states are sovereign equals
and cannot... assert jurisdiction over one another. A contrary disposition would, in the
language of a celebrated case, "unduly vex the peace of nations." [De Haber v. Queen of
Portugal, 17 Q. B. 171]
While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties.
If the acts giving rise to a suit are those of a foreign government done by its foreign
agent, although not necessarily a... diplomatic personage, but acting in his official
capacity, the complaint could be barred by the immunity of the foreign sovereign from
suit without its consent. Suing a representative of a state is believed to be, in effect, sui
In the same case we also mentioned that in the case of diplomatic immunity, the privilege
is not an immunity from the observance of the law of the territorial sovereign or from
ensuing legal liability; it is, rather, an immunity from the exercise of territorial...
jurisdiction.[22]... his traditional rule of State immunity which exempts a State from being
sued in the courts of another State without the former's consent or waiver has evolved
into a restrictive doctrine which distinguishes sovereign and governmental acts (jure
imperii) from private,... commercial and proprietary acts (jure gestionis). Under the
restrictive rule of State immunity, State immunity extends only to acts jure imperii.  The
restrictive application of State immunity is proper only when the proceedings arise out of
commercial... transactions of the foreign sovereign, its commercial activities or economic
affairs.[24]... he aforecited authorities are clear on the matter. They state that the
doctrine of immunity from suit will not apply and may not be invoked where the public
official is being sued in his private and personal capacity as an ordinary citizen. The cloak
of protection... afforded the officers and agents of the government is removed the
moment they are sued in their individual capacity. This situation usually arises where the
public official acts without authority or in excess of the powers vested in him. It is a well-
settled principle of law... that a public official may be liable in his personal private capacity
for whatever damage he may have caused by his act done with malice and in bad faith, or
beyond the scope of his authority or jurisdiction.[26] (Emphasis suppli
In this case, the US respondents were sued in their official capacity as commanding
officers of the US Navy who had control and supervision over the USS Guardian and its
crew. The alleged act or omission resulting in the unfortunate grounding of the USS
Guardian on... the TRNP was committed while they were performing official military
duties. Considering that the satisfaction of a judgment against said officials will require
remedial actions and appropriation of funds by the US government, the suit is deemed to
be one against the US itself.
The principle of State immunity therefore bars the exercise of jurisdiction by this Court
over the persons of respondents Swift, Rice and Robling.
During the deliberations, Senior Associate Justice Antonio T. Carpio took the position
that the conduct of the US in this case, when its warship entered a restricted area in
violation of R.A. No. 10067 and caused damage to the TRNP reef system, brings the
matter within the ambit... of Article 31 of the United Nations Convention on the Law of
the Sea (UNCLOS). He explained that while historically, warships enjoy sovereign
immunity from suit as extensions of their flag State, Art. 31 of the UNCLOS creates an
exception to this rule in cases where they fail to... comply with the rules and regulations
of the coastal State regarding passage through the latter's internal waters and the
territorial sea.
According to Justice Carpio, although the US to date has not ratified the UNCLOS, as a
matter of long-standing policy the US considers itself bound by customary international
rules on the "traditional uses of the oceans" as codified in UNCLOS, as can be gleaned
from previous... declarations by former Presidents Reagan and Clinton, and the US
judiciary in the case of United States v. Royal Caribbean Cruise Lines, Ltd.[27]
The international law of the sea is generally defined as "a body of treaty rules and
customary norms governing the uses of the sea, the exploitation of its resources, and the
exercise of jurisdiction over maritime regimes. It is a branch of public international law,...
regulating the relations of states with respect to the uses of the oceans."[28]  The
UNCLOS is a multilateral treaty which was opened for signature on December 10, 1982
at Montego Bay, Jamaica. It was ratified by the Philippines in 1984 but came into... force
on November 16, 1994 upon the submission of the 60th ratification.
The UNCLOS is a product of international negotiation that seeks to balance State
sovereignty (mare clausum) and the principle of freedom of the high seas (mare liberum).
[29] The freedom to use the world's marine waters is one of the oldest... customary
principles of international law.[30] The UNCLOS gives to the coastal State sovereign
rights in varying degrees over the different zones of the sea which are: 1) internal waters,
2) territorial sea, 3) contiguous zone, 4) exclusive economic zone,... and 5) the high seas. It
also gives coastal States more or less jurisdiction over foreign vessels depending on
where the vessel is located.[31]
Insofar as the internal waters and territorial sea is concerned, the Coastal State exercises
sovereignty, subject to the UNCLOS and other rules of international law. Such
sovereignty extends to the air space over the territorial sea as well as to its bed and
subsoil.[32]
In the case of warships,[33] as pointed out by Justice Carpio, they continue to enjoy
sovereign immunity subject to the following exceptions:
While the Reagan administration was instrumental in UNCLOS' negotiation and drafting,
the U.S. delegation ultimately voted against and refrained from signing it due to concerns
over deep seabed mining technology transfer provisions contained in Part XI. In a...
remarkable, multilateral effort to induce U.S. membership, the bulk of UNCLOS member
states cooperated over the succeeding decade to revise the objectionable provisions.
Justice Carpio invited our attention to the policy statement given by President Reagan on
March 10, 1983 that the US will "recognize the rights of the other states in the waters off
their coasts, as reflected in the convention [UNCLOS], so long as the rights and freedom
of the
United States and others under international law are recognized by such coastal states",
and President Clinton's reiteration of the US policy "to act in a manner consistent with its
[UNCLOS] provisions relating to traditional uses of the oceans and to encourage other
countries... to do likewise."  Since Article 31 relates to the "traditional uses of the
oceans," and "if under its policy, the US 'recognize[s] the rights of the other states in the
waters off their coasts,'" Justice Carpio postulates that "there is more reason to expect it
to... recognize the rights of other states in their internal waters, such as the Sulu Sea in
this case."
As to the non-ratification by the US, Justice Carpio emphasizes that "the US' refusal to
join the UNCLOS was centered on its disagreement with UNCLOS' regime of deep
seabed mining (Part XI) which considers the oceans and deep seabed commonly owned
by mankind," pointing out that... such "has nothing to do with its [the US'] acceptance of
customary international rules on navigation."... t may be mentioned that even the US
Navy Judge Advocate General's Corps publicly endorses the ratification of the UNCLOS,
as shown by the following statement posted on its official website:
We fully concur with Justice Carpio's view that non-membership in the UNCLOS does
not mean that the US will disregard the rights of the Philippines as a Coastal State over
its internal waters and territorial sea. We thus expect the US to bear "international
responsibility" under
Art. 31 in connection with the USS Guardian grounding which adversely affected the
Tubbataha reefs. Indeed, it is difficult to imagine that our long-time ally and trading
partner, which has been actively supporting the country's efforts to preserve our vital
marine... resources, would shirk from its obligation to compensate the damage caused by
its warship while transiting our internal waters. Much less can we comprehend a
Government exercising leadership in international affairs, unwilling to comply with the
UNCLOS directive for all nations... to cooperate in the global task to protect and preserve
the marine environment as provided in Article 197, viz:... n fine, the relevance of
UNCLOS provisions to the present controversy is beyond dispute. Although the said
treaty upholds the immunity of warships from the jurisdiction of Coastal States while
navigating the latter's territorial sea, the flag States shall be required to leave... the
territorial sea immediately if they flout the laws and regulations of the Coastal State, and
they will be liable for damages caused by their warships or any other government vessel
operated for non-commercial purposes under Article 31.
Petitioners argue that there is a waiver of immunity from suit found in the VFA. Likewise,
they invoke federal statutes in the US under which agencies of the US have statutorily
waived their immunity to any action. Even under the common law tort claims, petitioners
asseverate... that the US respondents are liable for negligence, trespass and nuisance.
We are not persuaded.
The VFA is an agreement which defines the treatment of United States troops and
personnel visiting the Philippines to promote "common security interests" between the
US and the Philippines in the region. It provides for the guidelines to govern such visits of
military personnel,... and further defines the rights of the United States and the Philippine
government in the matter of criminal jurisdiction, movement of vessel and aircraft,
importation and exportation of equipment, materials and supplies.[36] The invocation of
US federal... tort laws and even common law is thus improper considering that it is the
VFA which governs disputes involving US military ships and crew navigating Philippine
waters in pursuance of the objectives of the agreement.
As it is, the waiver of State immunity under the VFA pertains only to criminal jurisdiction
and not to special civil actions such as the present petition for issuance of a writ of
Kalikasan. In fact, it can be inferred from Section 17, Rule 7 of the Rules that a... criminal
case against a person charged with a violation of an environmental law is to be filed
separately:
Sec. 17. Institution of separate actions. The filing of a petition for the issuance of the writ
of kalikasan shall not preclude the filing of separate civil, criminal or administrative
actions.
In any case, it is our considered view thata ruling on the application or non-application of
criminal jurisdiction provisions of the VFA to US personnel who may be found
responsible for the grounding of the USS Guardian, would be premature and beyond the
province of a... petition for a writ of Kalikasan. We also find it unnecessary at this point to
determine whether such waiver of State immunity is indeed absolute. In the same vein,
we cannot grant damages which have resulted from the violation of environmental laws.
The Rules... allows the recovery of damages, including the collection of administrative
fines under R.A. No. 10067, in a separate civil suit or that deemed instituted with the
criminal action charging the same violation of an environmental law.[37]
Section 15, Rule 7 enumerates the reliefs which may be granted in a petition for issuance
of a writ of Kalikasan, to wit:
Sec. 15. Judgment. Within sixty (60) days from the time the petition is submitted for
decision, the court shall render judgment granting or denying the privilege of the writ of
kalikasan.
The reliefs that may be granted under the writ are the following:
(a) Directing respondent to permanently cease and desist from committing acts or
neglecting the performance of a duty in violation of environmental laws resulting in
environmental destruction or damage;
(b) Directing the respondent public official, government agency, private person or entity
to protect, preserve,rehabilitate or restore the environment;
(c) Directing the respondent public official, government agency, private person or entity
to monitor strict compliance with the decision and orders of the court;
(d) Directing the respondent public official, government agency, or private person or
entity to make periodic reports on the execution of the final judgment; and
(e) Such other reliefs which relate to the right of the people to a balanced and healthful
ecology or to the protection,preservation, rehabilitation or restoration of the
environment, except the award of damages to individual petitioners. (Emphasis supplied.)
We agree with respondents (Philippine officials) in asserting that this petition has become
moot in the sense that the salvage operation sought to be enjoined or restrained had
already been accomplished when petitioners sought recourse from this Court. But insofar
as the... directives to Philippine respondents to protect and rehabilitate the coral reef
structure and marine habitat adversely affected by the grounding incident are concerned,
petitioners are entitled to these reliefs notwithstanding the completion of the removal of
the USS
Guardian from the coral reef.
However, we are mindful of the fact that the US and Philippine governments both
expressed readiness to negotiate and discuss the matter of compensation for the damage
caused by the USS Guardian. The US Embassy has also declared it is closely coordinating
with local... scientists and experts in assessing the extent of the damage and appropriate
methods of rehabilitation.
Exploring avenues for settlement of environmental cases is not proscribed by the Rules.
As can be gleaned from the following provisions, mediation and settlement are available
for the consideration of the parties, and which dispute resolution methods are
encouraged by the... court, to wit:
Section 1. Reliefs in a citizen suit. If warranted, the court may grant to the plaintiff proper
reliefs which shall include the protection, preservation or rehabilitation of the
environment and the payment of attorney's fees, costs of suit and other litigation
expenses.
It may also require the violator to submit a program of rehabilitation or restoration of the
environment, the costs of which shall be borne by the violator, or to contribute to a
special trust fund for that purpose subject to the control of the court.
In the light of the foregoing, the Court defers to the Executive Branch on the matter of
compensation and rehabilitation measures through diplomatic channels.  Resolution of
these issues impinges on our relations with another State in the context of common
security... interests under the VFA. It is settled that "[t]he conduct of the foreign relations
of our government is committed by the Constitution to the executive and legislative "the
political"--departments of the government, and the propriety of what may be done in the
exercise of this... political power is not subject to judicial inquiry or decision."[40]
On the other hand, we cannot grant the additional reliefs prayed for in the petition to
order a review of the VFA and to nullify certain immunity provisions thereof.
As held in BAYAN (Bagong Alyansang Makabayan) v. Exec. Sec. Zamora,[41] the VFA was
duly concurred in by the Philippine Senate and has been recognized as a treaty by the
United States as attested and certified by the duly authorized representative of... the
United States government. The VFA being a valid and binding agreement, the parties are
required as a matter of international law to abide by its terms and provisions.[42]  The
present petition under the Rules is not the proper remedy to... assail the constitutionality
of its provisions.
Principles:
Locus standi
"a right of appearance in a court of justice on a given question.
a party's personal and substantial interest in a case where he has sustained or will sustain
direct injury as a result
The immunity of the State from suit, known also as the doctrine of sovereign immunity or
non-suability of the State,[17] is expressly provided in Article XVI of the 1987
Constitution which states:
Even without such affirmation, we would still be bound by the generally accepted
principles of international law under the doctrine of incorporation. Under this doctrine, as
accepted by the majority of states, such principles are deemed incorporated in the law of
every civilized... state as a condition and consequence of its membership in the society of
nations. Upon its admission to such society, the state is automatically obligated to comply
with these principles in its relations with other states.
clerk of court or legal researcher for mediation.
Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-30671 November 28, 1973

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.

HON. GUILLERMO P. VILLASOR, as Judge of the Court of First Instance of Cebu, Branch I, THE
PROVINCIAL SHERIFF OF RIZAL, THE SHERIFF OF QUEZON CITY, and THE SHERIFF OF THE CITY OF
MANILA, THE CLERK OF COURT, Court of First Instance of Cebu, P. J. KIENER CO., LTD., GAVINO
UNCHUAN, AND INTERNATIONAL CONSTRUCTION CORPORATION, respondents.

Office of the Solicitor General Felix V. Makasiar and Solicitor Bernardo P. Pardo for petitioner.

Andres T. Velarde and Marcelo B. Fernan for respondents.

FERNANDO, J.:

The Republic of the Philippines in this certiorari and prohibition proceeding challenges the validity of
an order issued by respondent Judge Guillermo P. Villasor, then of the Court of First Instance of
Cebu, Branch I,1 declaring a decision final and executory and of an alias writ of execution directed
against the funds of the Armed Forces of the Philippines subsequently issued in pursuance thereof,
the alleged ground being excess of jurisdiction, or at the very least, grave abuse of discretion. As
thus simply and tersely put, with the facts being undisputed and the principle of law that calls for
application indisputable, the outcome is predictable. The Republic of the Philippines is entitled to
the writs prayed for. Respondent Judge ought not to have acted thus. The order thus impugned and
the alias writ of execution must be nullified.

In the petition filed by the Republic of the Philippines on July 7, 1969, a summary of facts was set
forth thus: "7. On July 3, 1961, a decision was rendered in Special Proceedings No. 2156-R in favor of
respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International Construction Corporation, and
against the petitioner herein, confirming the arbitration award in the amount of P1,712,396.40,
subject of Special Proceedings. 8. On June 24, 1969, respondent Honorable Guillermo P. Villasor,
issued an Order declaring the aforestated decision of July 3, 1961 final and executory, directing the
Sheriffs of Rizal Province, Quezon City [as well as] Manila to execute the said decision. 9. Pursuant to
the said Order dated June 24, 1969, the corresponding Alias Writ of Execution [was issued] dated
June 26, 1969, .... 10. On the strength of the afore-mentioned Alias Writ of Execution dated June 26,
1969, the Provincial Sheriff of Rizal (respondent herein) served notices of garnishment dated June
28, 1969 with several Banks, specially on the "monies due the Armed Forces of the Philippines in the
form of deposits sufficient to cover the amount mentioned in the said Writ of Execution"; the
Philippine Veterans Bank received the same notice of garnishment on June 30, 1969 .... 11. The
funds of the Armed Forces of the Philippines on deposit with the Banks, particularly, with the
Philippine Veterans Bank and the Philippine National Bank [or] their branches are public funds duly
appropriated and allocated for the payment of pensions of retirees, pay and allowances of military
and civilian personnel and for maintenance and operations of the Armed Forces of the Philippines,
as per Certification dated July 3, 1969 by the AFP Controller,..."2. The paragraph immediately
succeeding in such petition then alleged: "12. Respondent Judge, Honorable Guillermo P. Villasor,
acted in excess of jurisdiction [or] with grave abuse of discretion amounting to lack of jurisdiction in
granting the issuance of an alias writ of execution against the properties of the Armed Forces of the
Philippines, hence, the Alias Writ of Execution and notices of garnishment issued pursuant thereto
are null and void."3 In the answer filed by respondents, through counsel Andres T. Velarde and
Marcelo B. Fernan, the facts set forth were admitted with the only qualification being that the total
award was in the amount of P2,372,331.40.4

The Republic of the Philippines, as mentioned at the outset, did right in filing this certiorari and
prohibition proceeding. What was done by respondent Judge is not in conformity with the dictates
of the Constitution. .

It is a fundamental postulate of constitutionalism flowing from the juristic concept of sovereignty

that the state as well as its government is immune from suit unless it gives its consent. It is readily
understandable why it must be so. In the classic formulation of Holmes: "A sovereign is exempt from
suit, not because of any formal conception or obsolete theory, but on the logical and practical
ground that there can be no legal right as against the authority that makes the law on which the
right depends."5 Sociological jurisprudence supplies an answer not dissimilar. So it was indicated in a
recent decision, Providence Washington Insurance Co. v. Republic of the Philippines,6 with its
affirmation that "a continued adherence to the doctrine of non-suability is not to be deplored for as
against the inconvenience that may be caused private parties, the loss of governmental efficiency
and the obstacle to the performance of its multifarious functions are far greater if such a
fundamental principle were abandoned and the availability of judicial remedy were not thus
restricted. With the well known propensity on the part of our people to go to court, at the least
provocation, the loss of time and energy required to defend against law suits, in the absence of such
a basic principle that constitutes such an effective obstacle, could very well be imagined."7
This fundamental postulate underlying the 1935 Constitution is now made explicit in the revised
charter. It is therein expressly provided: "The State may not be sued without its consent."8 A
corollary, both dictated by logic and sound sense from a basic concept is that public funds cannot be
the object of a garnishment proceeding even if the consent to be sued had been previously granted
and the state liability adjudged. Thus in the recent case of Commissioner of Public Highways v. San
Diego,9 such a well-settled doctrine was restated in the opinion of Justice Teehankee: "The universal
rule that where the State gives its consent to be sued by private parties either by general or special
law, it may limit claimant's action 'only up to the completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when the judgment is rendered, since government
funds and properties may not be seized under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy. Disbursements of public funds must
be covered by the corresponding appropriation as required by law. The functions and public services
rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as appropriated by law." 10 Such a principle applies
even to an attempted garnishment of a salary that had accrued in favor of an employee. Director of
Commerce and Industry v. Concepcion, 11 speaks to that effect. Justice Malcolm as ponente left no
doubt on that score. Thus: "A rule which has never been seriously questioned, is that money in the
hands of public officers, although it may be due government employees, is not liable to the creditors
of these employees in the process of garnishment. One reason is, that the State, by virtue of its
sovereignty, may not be sued in its own courts except by express authorization by the Legislature,
and to subject its officers to garnishment would be to permit indirectly what is prohibited directly.
Another reason is that moneys sought to be garnished, as long as they remain in the hands of the
disbursing officer of the Government, belong to the latter, although the defendant in garnishment
may be entitled to a specific portion thereof. And still another reason which covers both of the
foregoing is that every consideration of public policy forbids it." 12

In the light of the above, it is made abundantly clear why the Republic of the Philippines could
rightfully allege a legitimate grievance.

WHEREFORE, the writs of certiorari and prohibition are granted, nullifying and setting aside both the
order of June 24, 1969 declaring executory the decision of July 3, 1961 as well as the alias writ of
execution issued thereunder. The preliminary injunction issued by this Court on July 12, 1969 is
hereby made permanent.

Zaldivar (Chairman), Antonio, Fernandez and Aquino, JJ., concur.

Barredo, J, took no part.

Footnotes
1 The other respondents are the Provincial Sheriff of Rizal, the Sheriff of Quezon City, the Sheriff of
the City of Manila, the Clerk of Court, Court of First Instance of Cebu, P. J. Kiener Co., Ltd., Gavino
Unchuan, and International Construction Corporation.

2 Petition, pars. 7-11.

3 Ibid, par. 12.

4 Answer, par. III.

5 Kawananakoa v. Polyblank 205 U.S. 349 (1907).

6 L-26386, September 30, 1969, 29 SCRA 598.

7 Ibid, 601-602.

8 Article XV, Sec. 16.

9 L-30098, February 8, 1970, SCRA 616.

10 Ibid, 625. The opinion cited among others the following decisions: Merritt v. Government, 34 Phil.
311 (1916); Visayan Refining Co. v. Camus, 40 Phil. 550 (1919); Director of Commerce v. Concepcion,
43 Phil. 384 (1922); Belleng Republic, L-19856, Sept. 16, 1963, 9 SCRA 6; Republic v. Palacio, L-20322,
May 29, 1968, 23 SCRA 899.

11 43 Phil. 384 (1922).

12 Ibid, 386.

DOCTRINE OF STATE IMMUNITY

Under this doctrine, the State cannot be sued without its
consent. (Sec. 3, Art. XVI, 1987 Constitution). It reflects
nothing less than recognition of the sovereign character of
the State and an express affirmation of the unwritten rule
effectively insulating it from the jurisdiction of courts. It is
based on the very essence of sovereignty. (Department of
Agriculture v. NLRC, G.R. No. 104269, November 11, 1993)

There can be no legal right against the authority which

makes the law on which the right depends (Republic vs.
Villasor, GRN L‐30671,   November 28, 1973). However, it
may be sued if it gives consent, whether express or implied.  

Express consent of the State may be manifested through

general or special law. Solicitor General cannot validly waive
immunity from suit. Only the Congress can (Republic v.
Purisima, G.R. No.  L‐36084, Aug.31, 1977). 

Implied consent is given when the State itself commences

litigation or when it enters into a contract. There is an
implied consent when the state enters into a business
contract. (US v. Ruiz, G.R. No. L‐35645 May 22, 1985).
However, this rule is not absolute.  

Not all contracts entered into by the government operate as

a waiver of its nonsuability. Distinction must still be made
between one which is executed in the exercise of its
sovereign function and another which is done in its
proprietary capacity. A State may be said to have descended
to the level of an individual and can this be deemed to have
actually given its consent to be sued only when it enters into
business contracts. It does not apply where the contract
relates to the exercise of its sovereign functions.
(Department of Agriculture vs. NLRC G.R. No. 104269,
November 11, 1993) 

A suit considered as suit against the State under the

following instances:
1. When the Republic is sued by name;  
2. When the suit is against an unincorporated government
agency; 
3. When the suit is on its face against a government officer
but the case is such.

While the doctrine appears to prohibit only suits against the state without
its consent, it is also applicable to complaints filed against officials of the
state for acts allegedly performed by them in the discharge of their
duties. The rule is that if the judgment against such officials will require
the state itself to perform an affirmative act to satisfy the same, such as
the appropriation of the amount needed to pay the damages awarded
against them, the suit must be regarded as against the state itself,
although it has not been formally impleaded.  

It is a different matter where the public official is made to account in his

capacity as such for acts contrary to law and injurious to the rights of
plaintiff. Inasmuch as the State authorizes only legal acts by its officers,
unauthorized acts of govt. officials or officers are not acts of the State,
and an action against the officials or officers by one whose rights have
been invaded or violated by such acts, for the protection of his rights, is
not a suit against the State within the rule of immunity of the State from
suit. The doctrine of state immunity cannot be used as an instrument for
perpetrating an injustice.

The cloak of immunity is removed from the moment the public official is
sued in his individual capacity such as where he acts without authority or
in excess of the powers vested in him. A public official may be liable in his
personal capacity for whatever damage he may have caused by his act
done with malice and in bad faith, or beyond the scope of his authority or
jurisdiction. In this case, the officers are liable for damages.

The doctrine is also available to foreign States insofar as they are sought
to be sued in the courts of the local State. The added basis in this case is
the principle of the sovereign equality of States, under w/c one State
cannot assert jurisdiction over another in violation of the maxim par in
parem non habet imperium. To do so would "unduly vex the peace of
nations." 

Political Law
Share
STATE IMMUNITY OF FOREIGN STATES

THE DOCTRINE OF STATE IMMUNITY APPLIES TO FOREIGN STATES SUED IN

THIS JURISDICTION. There should be no question by now that such complaint
cannot prosper unless the government sought to be held ultimately liable has given
its consent to be sued. So, the Supreme Court has ruled not only in Baer but in
many other decisions where it was upheld that the doctrine of state immunity is
applicable not only to our own government but also to foreign states sought to be
subjected to the jurisdiction of our courts.

The practical justification for the doctrine, as Holmes put it, is that "there can be no
legal right against the authority which makes the law on which the right depends."
In the case of foreign states, the rule is derived from the principle of the sovereign
equality of states which wisely admonishes that par in parem non habet imperium
and that a contrary attitude would "unduly vex the peace of nations." Our adherence
to this precept is formally expressed in Article II, Section 2, of our Constitution,
where it is reiterated from our previous charters that the Philippines "adopts the
generally accepted principles of international law as part of the law of the land. Par
in parem non habet imperium, meaning: an equal has no authority over an equal.
(Sanders vs. Veridiano, G.R. No. L-46930, June 10, 1988)
Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-46930 June 10, 1988

DALE SANDERS, AND A.S. MOREAU, JR, petitioners,

vs.

HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales,
Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

CRUZ, J.:

The basic issue to be resolved in this case is whether or not the petitioners were performing their
official duties when they did the acts for which they have been sued for damages by the private
respondents. Once this question is decided, the other answers will fall into place and this petition
need not detain us any longer than it already has.

Petitioner Sanders was, at the time the incident in question occurred, the special services director of
the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding officer
of the Subic Naval Base, which includes the said station. 2 Private respondent Rossi is an American
citizen with permanent residence in the Philippines,3 as so was private respondent Wyer, who died
two years ago. 4 They were both employed as gameroom attendants in the special services
department of the NAVSTA, the former having been hired in 1971 and the latter in 1969. 5

On October 3, 1975, the private respondents were advised that their employment had been
converted from permanent full-time to permanent part-time, effective October 18, 1975. 6 Their
reaction was to protest this conversion and to institute grievance proceedings conformably to the
pertinent rules and regulations of the U.S. Department of Defense. The result was a
recommendation from the hearing officer who conducted the proceedings for the reinstatement of
the private respondents to permanent full-time status plus backwages. The report on the hearing
contained the observation that "Special Services management practices an autocratic form of
supervision." 7

In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders
disagreed with the hearing officer's report and asked for the rejection of the abovestated
recommendation. The letter contained the statements that: a ) "Mr. Rossi tends to alienate most co-
workers and supervisors;" b) "Messrs. Rossi and Wyers have proven, according to their immediate
supervisors, to be difficult employees to supervise;" and c) "even though the grievants were under
oath not to discuss the case with anyone, (they) placed the records in public places where others not
involved in the case could hear."

On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the
complaint) purportedly corning from petitioner Moreau as the commanding general of the U.S.
Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the change of the
private respondent's employment status and requesting concurrence therewith. The letter did not
carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of Moreau.

On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of
Olongapo City a for damages against the herein petitioners on November 8, 1976.8 The plaintiffs
claimed that the letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance proceedings was an
invasion of their personal and proprietary rights.

The private respondents made it clear that the petitioners were being sued in their private or
personal capacity. However, in a motion to dismiss filed under a special appearance, the petitioners
argued that the acts complained of were performed by them in the discharge of their official duties
and that, consequently, the court had no jurisdiction over them under the doctrine of state
immunity.

After extensive written arguments between the parties, the motion was denied in an order dated
March 8, 1977, 9 on the main ground that the petitioners had not presented any evidence that their
acts were official in nature and not personal torts, moreover, the allegation in the complaint was
that the defendants had acted maliciously and in bad faith. The same order issued a writ of
preliminary attachment, conditioned upon the filing of a P10,000.00 bond by the plaintiffs, against
the properties of petitioner Moreau, who allegedly was then about to leave the Philippines.
Subsequently, to make matters worse for the defendants, petitioner Moreau was declared in a
default by the trial court in its order dated August 9, 1977. The motion to lift the default order on the
ground that Moreau's failure to appear at the pre-trial conference was the result of some
misunderstanding, and the motion for reconsideration of the denial of the motion to dismiss, which
was filed by the petitioner's new lawyers, were denied by the respondent court on September 7,
1977.
This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this
Court, on the contention that the above-narrated acts of the respondent court are tainted with
grave abuse of discretion amounting to lack of jurisdiction.

We return now to the basic question of whether the petitioners were acting officially or only in their
private capacities when they did the acts for which the private respondents have sued them for
damages.

It is stressed at the outset that the mere allegation that a government functionary is being sued in
his personal capacity will not automatically remove him from the protection of the law of public
officers and, if appropriate, the doctrine of state immunity. By the same token, the mere invocation
of official character will not suffice to insulate him from suability and liability for an act imputed to
him as a personal tort committed without or in excess of his authority. These well-settled principles
are applicable not only to the officers of the local state but also where the person sued in its courts
pertains to the government of a foreign state, as in the present case.

The respondent judge, apparently finding that the complained acts were prima facie personal and
tortious, decided to proceed to trial to determine inter alia their precise character on the strength of
the evidence to be submitted by the parties. The petitioners have objected, arguing that no such
evidence was needed to substantiate their claim of jurisdictional immunity. Pending resolution of
this question, we issued a temporary restraining order on September 26, 1977, that has since then
suspended the proceedings in this case in the court a quo.

In past cases, this Court has held that where the character of the act complained of can be
determined from the pleadings exchanged between the parties before the trial, it is not necessary
for the court to require them to belabor the point at a trial still to be conducted. Such a proceeding
would be superfluous, not to say unfair to the defendant who is subjected to unnecessary and
avoidable inconvenience.

Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding
general of the Olongapo Naval Base should not have been denied because it had been sufficiently
shown that the act for which he was being sued was done in his official capacity on behalf of the
American government. The United States had not given its consent to be sued. It was the reverse
situation in Syquia v. Almeda Lopez," where we sustained the order of the lower court granting a
where we motion to dismiss a complaint against certain officers of the U.S. armed forces also shown
to be acting officially in the name of the American government. The United States had also not
waived its immunity from suit. Only three years ago, in United States of America v. Ruiz, 12 we set
aside the denial by the lower court of a motion to dismiss a complaint for damages filed against the
United States and several of its officials, it appearing that the act complained of was governmental
rather than proprietary, and certainly not personal. In these and several other cases 13 the Court
found it redundant to prolong the other case proceedings after it had become clear that the suit
could not prosper because the acts complained of were covered by the doctrine of state immunity.

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of the
special services department of NAVSTA, undoubtedly had supervision over its personnel, including
the private respondents, and had a hand in their employment, work assignments, discipline,
dismissal and other related matters. It is not disputed that the letter he had written was in fact a
reply to a request from his superior, the other petitioner, for more information regarding the case of
the private respondents.14 Moreover, even in the absence of such request, he still was within his
rights in reacting to the hearing officer's criticism—in effect a direct attack against him—-that Special
Services was practicing "an autocratic form of supervision."

As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for
concurrence with the conversion of the private respondents' type of employment even before the
grievance proceedings had even commenced. Disregarding for the nonce the question of its
timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior of
Sanders and directly answerable to Naval Personnel in matters involving the special services
department of NAVSTA In fact, the letter dealt with the financial and budgetary problems of the
department and contained recommendations for their solution, including the re-designation of the
private respondents. There was nothing personal or private about it.

Given the official character of the above-described letters, we have to conclude that the petitioners
were, legally speaking, being sued as officers of the United States government. As they have acted
on behalf of that government, and within the scope of their authority, it is that government, and not
the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed and
it is proved that the claimants have a right to the payment of damages, such award will have to be
satisfied not by the petitioners in their personal capacities but by the United States government as
their principal. This will require that government to perform an affirmative act to satisfy the
judgment, viz, the appropriation of the necessary amount to cover the damages awarded, thus
making the action a suit against that government without its consent.

There should be no question by now that such complaint cannot prosper unless the government
sought to be held ultimately liable has given its consent to' be sued. So we have ruled not only in
Baer but in many other decisions where we upheld the doctrine of state immunity as applicable not
only to our own government but also to foreign states sought to be subjected to the jurisdiction of
our courts. 15

The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right
against the authority which makes the law on which the right depends.16 In the case of foreign
states, the rule is derived from the principle of the sovereign equality of states which wisely
admonishes that par in parem non habet imperium and that a contrary attitude would "unduly vex
the peace of nations." 17 Our adherence to this precept is formally expressed in Article II, Section 2,
of our Constitution, where we reiterate from our previous charters that the Philippines "adopts the
generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous consent
of the state. To be sure, there are a number of well-recognized exceptions. It is clear that a public
officer may be sued as such to compel him to do an act required by law, as where, say, a register of
deeds refuses to record a deed of sale; 18 or to restrain a Cabinet member, for example, from
enforcing a law claimed to be unconstitutional; 19 or to compel the national treasurer to pay
damages from an already appropriated assurance fund; 20 or the commissioner of internal revenue
to refund tax over-payments from a fund already available for the purpose; 21 or, in general, to
secure a judgment that the officer impleaded may satisfy by himself without the government itself
having to do a positive act to assist him. We have also held that where the government itself has
violated its own laws, the aggrieved party may directly implead the government even without first
filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity
"cannot be used as an instrument for perpetrating an injustice." 22

This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the Court
held that a bureau director could be sued for damages on a personal tort committed by him when he
acted without or in excess of authority in forcibly taking private property without paying just
compensation therefor although he did convert it into a public irrigation canal. It was not necessary
to secure the previous consent of the state, nor could it be validly impleaded as a party defendant,
as it was not responsible for the defendant's unauthorized act.

The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions.
The government of the United States has not given its consent to be sued for the official acts of the
petitioners, who cannot satisfy any judgment that may be rendered against them. As it is the
American government itself that will have to perform the affirmative act of appropriating the
amount that may be adjudged for the private respondents, the complaint must be dismissed for lack
of jurisdiction.

The Court finds that, even under the law of public officers, the acts of the petitioners are protected
by the presumption of good faith, which has not been overturned by the private respondents. Even
mistakes concededly committed by such public officers are not actionable as long as it is not shown
that they were motivated by malice or gross negligence amounting to bad faith.24 This, to, is well
settled .25 Furthermore, applying now our own penal laws, the letters come under the concept of
privileged communications and are not punishable, 26 let alone the fact that the resented remarks
are not defamatory by our standards. It seems the private respondents have overstated their case.

A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the
petitioners in the performance of their official duties and the private respondents are themselves
American citizens, it would seem only proper for the courts of this country to refrain from taking
cognizance of this matter and to treat it as coming under the internal administration of the said
base.

The petitioners' counsel have submitted a memorandum replete with citations of American cases, as
if they were arguing before a court of the United States. The Court is bemused by such attitude.
While these decisions do have persuasive effect upon us, they can at best be invoked only to support
our own jurisprudence, which we have developed and enriched on the basis of our own persuasions
as a people, particularly since we became independent in 1946.

We appreciate the assistance foreign decisions offer us, and not only from the United States but also
from Spain and other countries from which we have derived some if not most of our own laws. But
we should not place undue and fawning reliance upon them and regard them as indispensable
mental crutches without which we cannot come to our own decisions through the employment of
our own endowments We live in a different ambience and must decide our own problems in the
light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice.

The private respondents must, if they are still sominded, pursue their claim against the petitioners in
accordance with the laws of the United States, of which they are all citizens and under whose
jurisdiction the alleged offenses were committed. Even assuming that our own laws are applicable,
the United States government has not decided to give its consent to be sued in our courts, which
therefore has not acquired the competence to act on the said claim,.

WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August 9,1977,
and September 7, 1977, are SET ASIDE. The respondent court is directed to DISMISS Civil Case No.
2077-O. Our Temporary restraining order of September 26,1977, is made PERMANENT. No costs.

SO ORDERED.

Narvasa, Gancayco, Grino-Aquiño and Medialdea, JJ., Concur.

Footnotes

1 Rollo, pp. 2, 26.

2 Ibid.

3 Id.

4 Id., p. 319.

5 Id., pp. 4, 27, 91.

6 Id., pp. 5, 91.

7 Id., p. 5, 28, 91.

8 Id., pp- 26-34.

9 Id., pp- 90-94.

10 57 SCRA 1.

11 84 Phil. 312.

12 136 SCRA 487.

13 Lim v. Brownell, et al., 107 Phil. 344; Parreño v. McGranery, 92 Phil. 791; Lim v. Nelson, 87 Phil.
328; Marvel Building Corp. v. Philippine War Damage Commission, 85 Phil. 27.

14 Rollo, pp. 35-40.

15 Syquia v. Almeda Lopez, supra; Marvel Building Corp. v. Philippine War Damage Commission,
supra; Lim v. Nelson, supra; Philippine Alien Property Administration v. Castelo, 89 Phil. 568; Parreño
v. McGranery, supra; Johnson v. Turner, 94 Phil. 807-all cited in Baer case; United States of America
v. Ruiz, supra.
16 Kawanakoa v. Polybank, 205 U.S. 349.

17 De Haber v. Queen of Portugal, 17 QB 171.

18 Krivenko v. Register of Deeds, 79 Phil. 461.

19 Javellana v. Executive Secretary, 50 SCRA 30: Ichong v. Hernandez, 101 Phil. 1155.

20 Treasurer of the Philippines v. Court of Appeals, G.R. No. L-42805, August 31, 1987.

21 National Development Company v. Commissioner of Internal Revenue, 151 SCRA 472.

22 Amigable v. Cuenca, 43 SCRA 360, reiterating Ministerio v. Court of First Instance of Cebu, 40
SCRA 464.

23 50 O.G. 1556.

24 Philippine Racing Club, Inc., et al. v. Bonifacio, et al., 109 Phil. 233.

25 Cabungcal, et al. v. Cordova, et al., 11 SCRA 584, cited in Mabutol v. Pascual, 124 SCRA 867;
Mindanao Realty Corp. v. Kintanar, 6 SCRA 814; U.S. v. Santos, 36 Phil. 853. 2'

26 Art. 354, par. 1, Revised Penal Code; see also U.S. v. Bustos, 37 Phil. 731; and Deano v. Godinez,
12 SCRA 843.

Case Digest: Araullo v Abad GR 209287

6/21/2020

0 COMMENTS
ISSUE: Whether or not the DAP, and all other executive issuances allegedly implementing the DAP,
violated Sec 25(5) of Article VI of the 1987 Constitution

FACTS: Maria Carolina Araullo filed a petition before the Supreme Court questioning the validity of
DAP (Disbursement Accellaration Program). That, it 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. DBM Secretary Abad argued that the DAP is based on
GAA (General Appropriations Act) (Savings and augmentation provisions)

DECISION: Partly Granted

RATIO DECIDENDI: Yes, it violated Sec 25 (5) of Article VI of the Costitution. The augmentation is,
according to the ponencia, and defined in Art. VI, Sec. 25 (5) of the 1987 Constitution, and
authorized within each year’s General Appropriations Act (GAA), is the use of clearly-identified
savings in the expenditures of government departments and offices to augment clearly-identified,
actual deficiencies within those respective government departments and offices. What
augmentation is not, however, is to allocate what was not authorized as an expenditure in the GAA.
It is not a transfer of executive department savings to legislative lump sum allocations (cross-border
augmentation) – by virtue of the latter’s unconstitutionality, or at the very least, because such itself
violates Art. VI Sec. 25 (5)

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-46930 June 10, 1988

DALE SANDERS, AND A.S. MOREAU, JR, petitioners,

vs.

HON. REGINO T. VERIDIANO II, as Presiding Judge, Branch I, Court of First Instance of Zambales,
Olongapo City, ANTHONY M. ROSSI and RALPH L. WYERS, respondents.

CRUZ, J.:
The basic issue to be resolved in this case is whether or not the petitioners were performing their
official duties when they did the acts for which they have been sued for damages by the private
respondents. Once this question is decided, the other answers will fall into place and this petition
need not detain us any longer than it already has.

Petitioner Sanders was, at the time the incident in question occurred, the special services director of
the U.S. Naval Station (NAVSTA) in Olongapo City. 1 Petitioner Moreau was the commanding officer
of the Subic Naval Base, which includes the said station. 2 Private respondent Rossi is an American
citizen with permanent residence in the Philippines,3 as so was private respondent Wyer, who died
two years ago. 4 They were both employed as gameroom attendants in the special services
department of the NAVSTA, the former having been hired in 1971 and the latter in 1969. 5

On October 3, 1975, the private respondents were advised that their employment had been
converted from permanent full-time to permanent part-time, effective October 18, 1975. 6 Their
reaction was to protest this conversion and to institute grievance proceedings conformably to the
pertinent rules and regulations of the U.S. Department of Defense. The result was a
recommendation from the hearing officer who conducted the proceedings for the reinstatement of
the private respondents to permanent full-time status plus backwages. The report on the hearing
contained the observation that "Special Services management practices an autocratic form of
supervision." 7

In a letter addressed to petitioner Moreau on May 17, 1976 (Annex "A" of the complaint), Sanders
disagreed with the hearing officer's report and asked for the rejection of the abovestated
recommendation. The letter contained the statements that: a ) "Mr. Rossi tends to alienate most co-
workers and supervisors;" b) "Messrs. Rossi and Wyers have proven, according to their immediate
supervisors, to be difficult employees to supervise;" and c) "even though the grievants were under
oath not to discuss the case with anyone, (they) placed the records in public places where others not
involved in the case could hear."

On November 7, 1975, before the start of the grievance hearings, a-letter (Annex "B" of the
complaint) purportedly corning from petitioner Moreau as the commanding general of the U.S.
Naval Station in Subic Bay was sent to the Chief of Naval Personnel explaining the change of the
private respondent's employment status and requesting concurrence therewith. The letter did not
carry his signature but was signed by W.B. Moore, Jr. "by direction," presumably of Moreau.

On the basis of these antecedent facts, the private respondent filed in the Court of First Instance of
Olongapo City a for damages against the herein petitioners on November 8, 1976.8 The plaintiffs
claimed that the letters contained libelous imputations that had exposed them to ridicule and
caused them mental anguish and that the prejudgment of the grievance proceedings was an
invasion of their personal and proprietary rights.
The private respondents made it clear that the petitioners were being sued in their private or
personal capacity. However, in a motion to dismiss filed under a special appearance, the petitioners
argued that the acts complained of were performed by them in the discharge of their official duties
and that, consequently, the court had no jurisdiction over them under the doctrine of state
immunity.

After extensive written arguments between the parties, the motion was denied in an order dated
March 8, 1977, 9 on the main ground that the petitioners had not presented any evidence that their
acts were official in nature and not personal torts, moreover, the allegation in the complaint was
that the defendants had acted maliciously and in bad faith. The same order issued a writ of
preliminary attachment, conditioned upon the filing of a P10,000.00 bond by the plaintiffs, against
the properties of petitioner Moreau, who allegedly was then about to leave the Philippines.
Subsequently, to make matters worse for the defendants, petitioner Moreau was declared in a
default by the trial court in its order dated August 9, 1977. The motion to lift the default order on the
ground that Moreau's failure to appear at the pre-trial conference was the result of some
misunderstanding, and the motion for reconsideration of the denial of the motion to dismiss, which
was filed by the petitioner's new lawyers, were denied by the respondent court on September 7,
1977.

This petition for certiorari, prohibition and preliminary injunction was thereafter filed before this
Court, on the contention that the above-narrated acts of the respondent court are tainted with
grave abuse of discretion amounting to lack of jurisdiction.

We return now to the basic question of whether the petitioners were acting officially or only in their
private capacities when they did the acts for which the private respondents have sued them for
damages.

It is stressed at the outset that the mere allegation that a government functionary is being sued in
his personal capacity will not automatically remove him from the protection of the law of public
officers and, if appropriate, the doctrine of state immunity. By the same token, the mere invocation
of official character will not suffice to insulate him from suability and liability for an act imputed to
him as a personal tort committed without or in excess of his authority. These well-settled principles
are applicable not only to the officers of the local state but also where the person sued in its courts
pertains to the government of a foreign state, as in the present case.

The respondent judge, apparently finding that the complained acts were prima facie personal and
tortious, decided to proceed to trial to determine inter alia their precise character on the strength of
the evidence to be submitted by the parties. The petitioners have objected, arguing that no such
evidence was needed to substantiate their claim of jurisdictional immunity. Pending resolution of
this question, we issued a temporary restraining order on September 26, 1977, that has since then
suspended the proceedings in this case in the court a quo.
In past cases, this Court has held that where the character of the act complained of can be
determined from the pleadings exchanged between the parties before the trial, it is not necessary
for the court to require them to belabor the point at a trial still to be conducted. Such a proceeding
would be superfluous, not to say unfair to the defendant who is subjected to unnecessary and
avoidable inconvenience.

Thus, in Baer v. Tizon, 10 we held that a motion to dismiss a complaint against the commanding
general of the Olongapo Naval Base should not have been denied because it had been sufficiently
shown that the act for which he was being sued was done in his official capacity on behalf of the
American government. The United States had not given its consent to be sued. It was the reverse
situation in Syquia v. Almeda Lopez," where we sustained the order of the lower court granting a
where we motion to dismiss a complaint against certain officers of the U.S. armed forces also shown
to be acting officially in the name of the American government. The United States had also not
waived its immunity from suit. Only three years ago, in United States of America v. Ruiz, 12 we set
aside the denial by the lower court of a motion to dismiss a complaint for damages filed against the
United States and several of its officials, it appearing that the act complained of was governmental
rather than proprietary, and certainly not personal. In these and several other cases 13 the Court
found it redundant to prolong the other case proceedings after it had become clear that the suit
could not prosper because the acts complained of were covered by the doctrine of state immunity.

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of the
special services department of NAVSTA, undoubtedly had supervision over its personnel, including
the private respondents, and had a hand in their employment, work assignments, discipline,
dismissal and other related matters. It is not disputed that the letter he had written was in fact a
reply to a request from his superior, the other petitioner, for more information regarding the case of
the private respondents.14 Moreover, even in the absence of such request, he still was within his
rights in reacting to the hearing officer's criticism—in effect a direct attack against him—-that Special
Services was practicing "an autocratic form of supervision."

As for Moreau,what he is claimed to have done was write the Chief of Naval Personnel for
concurrence with the conversion of the private respondents' type of employment even before the
grievance proceedings had even commenced. Disregarding for the nonce the question of its
timeliness, this act is clearly official in nature, performed by Moreau as the immediate superior of
Sanders and directly answerable to Naval Personnel in matters involving the special services
department of NAVSTA In fact, the letter dealt with the financial and budgetary problems of the
department and contained recommendations for their solution, including the re-designation of the
private respondents. There was nothing personal or private about it.

Given the official character of the above-described letters, we have to conclude that the petitioners
were, legally speaking, being sued as officers of the United States government. As they have acted
on behalf of that government, and within the scope of their authority, it is that government, and not
the petitioners personally, that is responsible for their acts. Assuming that the trial can proceed and
it is proved that the claimants have a right to the payment of damages, such award will have to be
satisfied not by the petitioners in their personal capacities but by the United States government as
their principal. This will require that government to perform an affirmative act to satisfy the
judgment, viz, the appropriation of the necessary amount to cover the damages awarded, thus
making the action a suit against that government without its consent.

There should be no question by now that such complaint cannot prosper unless the government
sought to be held ultimately liable has given its consent to' be sued. So we have ruled not only in
Baer but in many other decisions where we upheld the doctrine of state immunity as applicable not
only to our own government but also to foreign states sought to be subjected to the jurisdiction of
our courts. 15

The practical justification for the doctrine, as Holmes put it, is that "there can be no legal right
against the authority which makes the law on which the right depends.16 In the case of foreign
states, the rule is derived from the principle of the sovereign equality of states which wisely
admonishes that par in parem non habet imperium and that a contrary attitude would "unduly vex
the peace of nations." 17 Our adherence to this precept is formally expressed in Article II, Section 2,
of our Constitution, where we reiterate from our previous charters that the Philippines "adopts the
generally accepted principles of international law as part of the law of the land.

All this is not to say that in no case may a public officer be sued as such without the previous consent
of the state. To be sure, there are a number of well-recognized exceptions. It is clear that a public
officer may be sued as such to compel him to do an act required by law, as where, say, a register of
deeds refuses to record a deed of sale; 18 or to restrain a Cabinet member, for example, from
enforcing a law claimed to be unconstitutional; 19 or to compel the national treasurer to pay
damages from an already appropriated assurance fund; 20 or the commissioner of internal revenue
to refund tax over-payments from a fund already available for the purpose; 21 or, in general, to
secure a judgment that the officer impleaded may satisfy by himself without the government itself
having to do a positive act to assist him. We have also held that where the government itself has
violated its own laws, the aggrieved party may directly implead the government even without first
filing his claim with the Commission on Audit as normally required, as the doctrine of state immunity
"cannot be used as an instrument for perpetrating an injustice." 22

This case must also be distinguished from such decisions as Festejo v. Fernando, 23 where the Court
held that a bureau director could be sued for damages on a personal tort committed by him when he
acted without or in excess of authority in forcibly taking private property without paying just
compensation therefor although he did convert it into a public irrigation canal. It was not necessary
to secure the previous consent of the state, nor could it be validly impleaded as a party defendant,
as it was not responsible for the defendant's unauthorized act.
The case at bar, to repeat, comes under the rule and not under any of the recognized exceptions.
The government of the United States has not given its consent to be sued for the official acts of the
petitioners, who cannot satisfy any judgment that may be rendered against them. As it is the
American government itself that will have to perform the affirmative act of appropriating the
amount that may be adjudged for the private respondents, the complaint must be dismissed for lack
of jurisdiction.

The Court finds that, even under the law of public officers, the acts of the petitioners are protected
by the presumption of good faith, which has not been overturned by the private respondents. Even
mistakes concededly committed by such public officers are not actionable as long as it is not shown
that they were motivated by malice or gross negligence amounting to bad faith.24 This, to, is well
settled .25 Furthermore, applying now our own penal laws, the letters come under the concept of
privileged communications and are not punishable, 26 let alone the fact that the resented remarks
are not defamatory by our standards. It seems the private respondents have overstated their case.

A final consideration is that since the questioned acts were done in the Olongapo Naval Base by the
petitioners in the performance of their official duties and the private respondents are themselves
American citizens, it would seem only proper for the courts of this country to refrain from taking
cognizance of this matter and to treat it as coming under the internal administration of the said
base.

The petitioners' counsel have submitted a memorandum replete with citations of American cases, as
if they were arguing before a court of the United States. The Court is bemused by such attitude.
While these decisions do have persuasive effect upon us, they can at best be invoked only to support
our own jurisprudence, which we have developed and enriched on the basis of our own persuasions
as a people, particularly since we became independent in 1946.

We appreciate the assistance foreign decisions offer us, and not only from the United States but also
from Spain and other countries from which we have derived some if not most of our own laws. But
we should not place undue and fawning reliance upon them and regard them as indispensable
mental crutches without which we cannot come to our own decisions through the employment of
our own endowments We live in a different ambience and must decide our own problems in the
light of our own interests and needs, and of our qualities and even idiosyncrasies as a people, and
always with our own concept of law and justice.

The private respondents must, if they are still sominded, pursue their claim against the petitioners in
accordance with the laws of the United States, of which they are all citizens and under whose
jurisdiction the alleged offenses were committed. Even assuming that our own laws are applicable,
the United States government has not decided to give its consent to be sued in our courts, which
therefore has not acquired the competence to act on the said claim,.
WHEREFORE, the petition is GRANTED. The challenged orders dated March 8,1977, August 9,1977,
and September 7, 1977, are SET ASIDE. The respondent court is directed to DISMISS Civil Case No.
2077-O. Our Temporary restraining order of September 26,1977, is made PERMANENT. No costs.

SO ORDERED.

Narvasa, Gancayco, Grino-Aquiño and Medialdea, JJ., Concur.

Footnotes

1 Rollo, pp. 2, 26.

2 Ibid.

3 Id.

4 Id., p. 319.

5 Id., pp. 4, 27, 91.

6 Id., pp. 5, 91.

7 Id., p. 5, 28, 91.

8 Id., pp- 26-34.

9 Id., pp- 90-94.

10 57 SCRA 1.
11 84 Phil. 312.

12 136 SCRA 487.

13 Lim v. Brownell, et al., 107 Phil. 344; Parreño v. McGranery, 92 Phil. 791; Lim v. Nelson, 87 Phil.
328; Marvel Building Corp. v. Philippine War Damage Commission, 85 Phil. 27.

14 Rollo, pp. 35-40.

15 Syquia v. Almeda Lopez, supra; Marvel Building Corp. v. Philippine War Damage Commission,
supra; Lim v. Nelson, supra; Philippine Alien Property Administration v. Castelo, 89 Phil. 568; Parreño
v. McGranery, supra; Johnson v. Turner, 94 Phil. 807-all cited in Baer case; United States of America
v. Ruiz, supra.

16 Kawanakoa v. Polybank, 205 U.S. 349.

17 De Haber v. Queen of Portugal, 17 QB 171.

18 Krivenko v. Register of Deeds, 79 Phil. 461.

19 Javellana v. Executive Secretary, 50 SCRA 30: Ichong v. Hernandez, 101 Phil. 1155.

20 Treasurer of the Philippines v. Court of Appeals, G.R. No. L-42805, August 31, 1987.

21 National Development Company v. Commissioner of Internal Revenue, 151 SCRA 472.

22 Amigable v. Cuenca, 43 SCRA 360, reiterating Ministerio v. Court of First Instance of Cebu, 40
SCRA 464.

23 50 O.G. 1556.

24 Philippine Racing Club, Inc., et al. v. Bonifacio, et al., 109 Phil. 233.
25 Cabungcal, et al. v. Cordova, et al., 11 SCRA 584, cited in Mabutol v. Pascual, 124 SCRA 867;
Mindanao Realty Corp. v. Kintanar, 6 SCRA 814; U.S. v. Santos, 36 Phil. 853. 2'

26 Art. 354, par. 1, Revised Penal Code; see also U.S. v. Bustos, 37 Phil. 731; and Deano v. Godinez,
12 SCRA 843.

Case Digest: Sanders and Moreau, Jr. vs. Veridiano II

10 June 1988 G.R. No. L-56930

FACTS:

Rossi and Wyer were advised that their employment had been converted from permanent full-time
to permanent part-time. Their reaction was to protest this conversion and to institute grievance
proceedings conformably to the pertinent rules and regulations of the US DoD. Moreau sent to the
Chief of Naval Personnel explaining the change of employment status of the two from which Rossi
and Wyer filed in the Court of First Instance of Olongapo City a complaint for damages against the
herein petitioners claiming that the letters contained libellous imputations against the two. Due to
the failure to appear in the court, Moreau and Sanders were declared in default.

ISSUE:

Whether the petitioners were performing their official duties when they did the acts for which they
have been sued for damages.

RULING:

It is abundantly clear in the present case that the acts for which the petitioners are being called to
account were performed by them in the discharge of their official duties. Sanders, as director of the
special services department of NAVSTA, undoubtedly had supervision over its personnel and had a
hand in their employment, work assignments, discipline, dismissal and other related matters. The
same can be said for Moreau. Given the official character of the above-described letters, it can be
concluded that the petitioners were being sued as officers of the United States government. There
should be no question by now that such complaint cannot prosper unless the government sought to
be held ultimately liable has given its consent to be sued.

Republic of the Philippines

SUPREME COURT

Manila
EN BANC

G.R. No. 209287 July 1, 2014

MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG MAKABAYAN; JUDY M.

TAGUIWALO, PROFESSOR, UNIVERSITY OF THE PHILIPPINES DILIMAN, CO-CHAIRPERSON,
PAGBABAGO; HENRI KAHN, CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA
WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAY AN MUNA PARTY-LIST
REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT,
CHAIRMAN, ANG KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN;
VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners,

vs.

BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO N.
OCHOA, JR., EXECUTIVE SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF
BUDGET AND MANAGEMENT, Respondents.

x-----------------------x

G.R. No. 209135

AUGUSTO L. SY JUCO JR., Ph.D., Petitioner,

vs.

FLORENCIO B. ABAD, IN HIS CAPACITY AS THE SECRETARY OF DEPARTMENT OF BUDGET AND

MANAGEMENT; AND HON. FRANKLIN MAGTUNAO DRILON, IN HIS CAP A CITY AS THE SENATE
PRESIDENT OF THE PHILIPPINES, Respondents.

x-----------------------x

G.R. No. 209136

MANUELITO R. LUNA, Petitioner,

vs.
SECRETARY FLORENCIO ABAD, IN HIS OFFICIAL CAPACITY AS HEAD OF THE DEPARTMENT OF BUDGET
AND MANAGEMENT; AND EXECUTIVE SECRETARY PAQUITO OCHOA, IN HIS OFFICIAL CAPACITY AS
ALTER EGO OF THE PRESIDENT, Respondents.

x-----------------------x

G.R. No. 209155

ATTY. JOSE MALV AR VILLEGAS, JR., Petitioner,

vs.

THE HONORABLE EXECUTIVE SECRETARY PAQUITO N. OCHOA, JR.; AND THE SECRETARY OF BUDGET
AND MANAGEMENT FLORENCIO B. ABAD, Respondents.

x-----------------------x

G.R. No. 209164

PHILIPPINE CONSTITUTION ASSOCIATION (PHILCONSA), REPRESENTED BY DEAN FROILAN M.

BACUNGAN, BENJAMIN E. DIOKNO AND LEONOR M. BRIONES, Petitioners,

vs.

DEPARTMENT OF BUDGET AND MANAGEMENT AND/OR HON. FLORENCIO B. ABAD, Respondents.

x-----------------------x

G.R. No. 209260

INTEGRATED BAR OF THE PHILIPPINES (IBP), Petitioner,

vs.

SECRETARY FLORENCIO B. ABAD OF THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM),

Respondent.

x-----------------------x
G.R. No. 209442

GRECO ANTONIOUS BEDA B. BELGICA; BISHOP REUBEN MABANTE AND REV. JOSE L. GONZALEZ,
Petitioners,

vs.

PRESIDENT BENIGNO SIMEON C. AQUINO III, THE SENATE OF THE PHILIPPINES, REPRESENTED BY
SENATE PRESIDENT FRANKLIN M. DRILON; THE HOUSE OF REPRESENTATIVES, REPRESENTED BY
SPEAKER FELICIANO BELMONTE, JR.; THE EXECUTIVE OFFICE, REPRESENTED BY EXECUTIVE
SECRETARY PAQUITO N. OCHOA, JR.; THE DEPARTMENT OF BUDGET AND MANAGEMENT,
REPRESENTED BY SECRETARY FLORENCIO ABAD; THE DEPARTMENT OF FINANCE, REPRESENTED BY
SECRETARY CESAR V. PURISIMA; AND THE BUREAU OF TREASURY, REPRESENTED BY ROSALIA V. DE
LEON, Respondents.

x-----------------------x

G.R. No. 209517

CONFEDERATION FOR UNITY, RECOGNITION AND ADV AN CEMENT OF GOVERNMENT EMPLOYEES

(COURAGE), REPRESENTED BY ITS 1ST VICE PRESIDENT, SANTIAGO DASMARINAS, JR.; ROSALINDA
NARTATES, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE CONSOLIDATED UNION OF
EMPLOYEES NATIONAL HOUSING AUTHORITY (CUENHA); MANUEL BACLAGON, FOR HIMSELF AND
AS PRESIDENT OF THE SOCIAL WELFARE EMPLOYEES ASSOCIATION OF THE PHILIPPINES,
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT CENTRAL OFFICE (SWEAP-DSWD CO);
ANTONIA PASCUAL, FOR HERSELF AND AS NATIONAL PRESIDENT OF THE DEPARTMENT OF
AGRARIAN REFORM EMPLOYEES ASSOCIATION (DAREA); ALBERT MAGALANG, FOR HIMSELF AND AS
PRESIDENT OF THE ENVIRONMENT AND MANAGEMENT BUREAU EMPLOYEES UNION (EMBEU); AND
MARCIAL ARABA, FOR HIMSELF AND AS PRESIDENT OF THE KAPISANAN PARA SA KAGALINGAN NG
MGA KAW ANI NG MMDA (KKKMMDA), Petitioners,

vs.

BENIGNO SIMEON C. AQUINO Ill, PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES; PAQUITO
OCHOA, JR., EXECUTIVE SECRETARY; AND HON. FLORENCIO B. ABAD, SECRETARY OF THE
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

x-----------------------x

G.R. No. 209569

VOLUNTEERS AGAINST CRIME AND CORRUPTION (VACC), REPRESENTED BY DANTE L. JIMENEZ,
Petitioner,

vs.

PAQUITO N. OCHOA, EXECUTIVE SECRETARY, AND FLORENCIO B. ABAD, SECRETARY OF THE

DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents.

DECISION

BERSAMIN, J.:

For resolution are the consolidated petitions assailing the constitutionality of the Disbursement
Acceleration Program(DAP), National Budget Circular (NBC) No. 541, and related issuances of the
Department of Budget and Management (DBM) implementing the DAP.

At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a provision of
the fundamental law that firmly ordains that "[n]o money shall be paid out of the Treasury except in
pursuance of an appropriation made by law." The tenor and context of the challenges posed by the
petitioners against the DAP indicate that the DAP contravened this provision by allowing the
Executive to allocate public money pooled from programmed and unprogrammed funds of its
various agencies in the guise of the President exercising his constitutional authority under Section
25(5) of the 1987 Constitution to transfer funds out of savings to augment the appropriations of
offices within the Executive Branch of the Government. But the challenges are further complicated
by the interjection of allegations of transfer of funds to agencies or offices outside of the Executive.

Antecedents

What has precipitated the controversy?

On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of
the Philippines to reveal that some Senators, including himself, had been allotted an additional ₱50
Million each as "incentive" for voting in favor of the impeachment of Chief Justice Renato C. Corona.

Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the DBM issued a public
statement entitled Abad: Releases to Senators Part of Spending Acceleration Program,1 explaining
that the funds released to the Senators had been part of the DAP, a program designed by the DBM
to ramp up spending to accelerate economic expansion. He clarified that the funds had been
released to the Senators based on their letters of request for funding; and that it was not the first
time that releases from the DAP had been made because the DAP had already been instituted in
2011 to ramp up spending after sluggish disbursements had caused the growth of the gross domestic
product (GDP) to slow down. He explained that the funds under the DAP were usually taken from (1)
unreleased appropriations under Personnel Services;2 (2) unprogrammed funds; (3) carry-over
appropriations unreleased from the previous year; and (4) budgets for slow-moving items or projects
that had been realigned to support faster-disbursing projects.

The DBM soon came out to claim in its website3 that the DAP releases had been sourced from
savings generated by the Government, and from unprogrammed funds; and that the savings had
been derived from (1) the pooling of unreleased appropriations, like unreleased Personnel Services4
appropriations that would lapse at the end of the year, unreleased appropriations of slow-moving
projects and discontinued projects per zero based budgeting findings;5 and (2) the withdrawal of
unobligated allotments also for slow-moving programs and projects that had been earlier released
to the agencies of the National Government.

The DBM listed the following as the legal bases for the DAP’s use of savings,6 namely: (1) Section
25(5), Article VI of the 1987 Constitution, which granted to the President the authority to augment
an item for his office in the general appropriations law; (2) Section 49 (Authority to Use Savings for
Certain Purposes) and Section 38 (Suspension of Expenditure Appropriations), Chapter 5, Book VI of
Executive Order (EO) No. 292 (Administrative Code of 1987); and (3) the General Appropriations Acts
(GAAs) of 2011, 2012 and 2013, particularly their provisions on the (a) use of savings; (b) meanings
of savings and augmentation; and (c) priority in the use of savings.

As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the special
provisions on unprogrammed fund contained in the GAAs of 2011, 2012 and 2013.

The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the DAP to the
consciousness of the Nation for the first time, and made this present controversy inevitable. That the
issues against the DAP came at a time when the Nation was still seething in anger over Congressional
pork barrel – "an appropriation of government spending meant for localized projects and secured
solely or primarily to bring money to a representative’s district"7 – excited the Nation as heatedly as
the pork barrel controversy.

Nine petitions assailing the constitutionality of the DAP and the issuances relating to the DAP were
filed within days of each other, as follows: G.R. No. 209135 (Syjuco), on October 7, 2013; G.R. No.
209136 (Luna), on October 7, 2013; G.R. No. 209155 (Villegas),8 on October 16, 2013; G.R. No.
209164 (PHILCONSA), on October 8, 2013; G.R. No. 209260 (IBP), on October 16, 2013; G.R. No.
209287 (Araullo), on October 17, 2013; G.R. No. 209442 (Belgica), on October 29, 2013; G.R. No.
209517 (COURAGE), on November6, 2013; and G.R. No. 209569 (VACC), on November 8, 2013.

In G.R. No. 209287 (Araullo), the petitioners brought to the Court’s attention NBC No. 541 (Adoption
of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30,
2012), alleging that NBC No. 541, which was issued to implement the DAP, directed the withdrawal
of unobligated allotments as of June 30, 2012 of government agencies and offices with low levels of
obligations, both for continuing and current allotments.

In due time, the respondents filed their Consolidated Comment through the Office of the Solicitor
General (OSG).

The Court directed the holding of oral arguments on the significant issues raised and joined.

Issues

Under the Advisory issued on November 14, 2013, the presentations of the parties during the oral
arguments were limited to the following, to wit:

Procedural Issue:

A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the
constitutionality and validity of the Disbursement Acceleration Program (DAP), National Budget
Circular (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.

Substantive Issues:

B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides: "No
money shall be paid out of the Treasury except in pursuance of an appropriation made by law."

C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing
the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

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

(b)They authorize the disbursement of funds for projects or programs not provided in the GAAs for
the Executive Department; and
(c)They "augment" discretionary lump sum appropriations in the GAAs.

D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and
balances, and (3) the principle of public accountability enshrined in the 1987 Constitution
considering that it authorizes the release of funds upon the request of legislators.

E. Whether or not factual and legal justification exists to issue a temporary restraining order to
restrain the implementation of the DAP, NBC No. 541, and all other executive issuances allegedly
implementing the DAP.

In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in order to support
its argument regarding the President’s power to spend. During the oral arguments, the propriety of
releasing unprogrammed funds to support projects under the DAP was considerably discussed. The
petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) dwelled on unprogrammed
funds in their respective memoranda. Hence, an additional issue for the oral arguments is stated as
follows:

F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.

During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to submit a list
of savings brought under the DAP that had been sourced from (a) completed programs; (b)
discontinued or abandoned programs; (c) unpaid appropriations for compensation; (d) a certified
copy of the President’s directive dated June 27, 2012 referred to in NBC No. 541; and (e) all circulars
or orders issued in relation to the DAP.9

In compliance, the OSG submitted several documents, as follows:

(1) A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority
to Consolidate Savings/Unutilized Balances and their Realignment);10

(2) Circulars and orders, which the respondents identified as related to the DAP, namely:

a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);

b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY 2012);
c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure – Withdrawal of
Agencies’ Unobligated Allotments as of June 30, 2012);

d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);

e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of
Commitments/Obligations of the National Government);

f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the Submission
of Quarterly Accountability Reports on Appropriations, Allotments, Obligations and Disbursements);

g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in the
Government).

(3) A breakdown of the sources of savings, including savings from discontinued projects and unpaid
appropriations for compensation from 2011 to 2013

On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014 directing
the respondents to submit the documents not yet submitted in compliance with the directives of the
Court or its Members, submitted several evidence packets to aid the Court in understanding the
factual bases of the DAP, to wit:

(1) First Evidence Packet11 – containing seven memoranda issued by the DBM through Sec. Abad,
inclusive of annexes, listing in detail the 116 DAP identified projects approved and duly signed by the
President, as follows:

a. Memorandum for the President dated October 12, 2011 (FY 2011 Proposed Disbursement
Acceleration Program (Projects and Sources of Funds);

b. Memorandum for the President dated December 12, 2011 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and its Realignment);

c. Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment);
d. Memorandum for the President dated September 4, 2012 (Release of funds for other priority
projects and expenditures of the Government);

e. Memorandum for the President dated December 19, 2012 (Proposed Priority Projects and
Expenditures of the Government);

f. Memorandum for the President dated May 20, 2013 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment to Fund the Quarterly Disbursement Acceleration
Program); and

g. Memorandum for the President dated September 25, 2013 (Funding for the Task Force Pablo
Rehabilitation Plan).

(2) Second Evidence Packet12 – consisting of 15 applications of the DAP, with their corresponding
Special Allotment Release Orders (SAROs) and appropriation covers;

(3) Third Evidence Packet13 – containing a list and descriptions of 12 projects under the DAP;

(4) Fourth Evidence Packet14 – identifying the DAP-related portions of the Annual Financial Report
(AFR) of the Commission on Audit for 2011 and 2012;

(5) Fifth Evidence Packet15 – containing a letter of Department of Transportation and

Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the withdrawal of
funds from his agency, inclusive of annexes; and

(6) Sixth Evidence Packet16 – a print-out of the Solicitor General’s visual presentation for the January
28, 2014 oral arguments.

On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet,18 which listed the sources
of funds brought under the DAP, the uses of such funds per project or activity pursuant to DAP, and
the legal bases thereof.

On February 14, 2014, the OSG submitted another set of documents in further compliance with the
Resolution dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect that the
revenue collections exceeded the original revenue targets for the years 2011, 2012 and 2013,
including collections arising from sources not considered in the original revenue targets, which
certifications were required for the release of the unprogrammed funds as provided in Special
Provision No. 1 of Article XLV, Article XVI, and Article XLV of the 2011, 2012 and 2013 GAAs; and (2)
A report on releases of savings of the Executive Department for the use of the Constitutional
Commissions and other branches of the Government, as well as the fund releases to the Senate and
the Commission on Elections (COMELEC).

RULING

I.

Procedural Issue:

a) The petitions under Rule 65 are proper remedies

All the petitions are filed under Rule 65 of the Rules of Court, and include applications for the
issuance of writs of preliminary prohibitory injunction or temporary restraining orders. More
specifically, the nature of the petitions is individually set forth hereunder, to wit:

G.R. No. 209135 (Syjuco) Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna) Certiorariand Prohibition

G.R. No. 209155 (Villegas) Certiorariand Prohibition

G.R. No. 209164 (PHILCONSA) Certiorariand Prohibition

G.R. No. 209260 (IBP) Prohibition

G.R. No. 209287 (Araullo) Certiorariand Prohibition

G.R. No. 209442 (Belgica) Certiorari

G.R. No. 209517 (COURAGE) Certiorari and Prohibition

G.R. No. 209569 (VACC) Certiorari and Prohibition

The respondents submit that there is no actual controversy that is ripe for adjudication in the
absence of adverse claims between the parties;19 that the petitioners lacked legal standing to sue
because no allegations were made to the effect that they had suffered any injury as a result of the
adoption of the DAP and issuance of NBC No. 541; that their being taxpayers did not immediately
confer upon the petitioners the legal standing to sue considering that the adoption and
implementation of the DAP and the issuance of NBC No. 541 were not in the exercise of the taxing or
spending power of Congress;20 and that even if the petitioners had suffered injury, there were plain,
speedy and adequate remedies in the ordinary course of law available to them, like assailing the
regularity of the DAP and related issuances before the Commission on Audit (COA) or in the trial
courts.21

The respondents aver that the special civil actions of certiorari and prohibition are not proper
actions for directly assailing the constitutionality and validity of the DAP, NBC No. 541, and the other
executive issuances implementing the DAP.22

In their memorandum, the respondents further contend that there is no authorized proceeding
under the Constitution and the Rules of Court for questioning the validity of any law unless there is
an actual case or controversy the resolution of which requires the determination of the
constitutional question; that the jurisdiction of the Court is largely appellate; that for a court of law
to pass upon the constitutionality of a law or any act of the Government when there is no case or
controversy is for that court to set itself up as a reviewer of the acts of Congress and of the President
in violation of the principle of separation of powers; and that, in the absence of a pending case or
controversy involving the DAP and NBC No. 541, any decision herein could amount to a mere
advisory opinion that no court can validly render.23

The respondents argue that it is the application of the DAP to actual situations that the petitioners
can question either in the trial courts or in the COA; that if the petitioners are dissatisfied with the
ruling either of the trial courts or of the COA, they can appeal the decision of the trial courts by
petition for review on certiorari, or assail the decision or final order of the COA by special civil action
for certiorari under Rule 64 of the Rules of Court.24

The respondents’ arguments and submissions on the procedural issue are bereft of merit.

Section 1, Article VIII of the 1987 Constitution expressly provides:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.

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

Thus, the Constitution vests judicial power in the Court and in such lower courts as may be
established by law. In creating a lower court, Congress concomitantly determines the jurisdiction of
that court, and that court, upon its creation, becomes by operation of the Constitution one of the
repositories of judicial power.25 However, only the Court is a constitutionally created court, the rest
being created by Congress in its exercise of the legislative power.

The Constitution states that judicial power includes the duty of the courts of justice not only "to
settle actual controversies involving rights which are legally demandable and enforceable" but also
"to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government." It has
thereby expanded the concept of judicial power, which up to then was confined to its traditional
ambit of settling actual controversies involving rights that were legally demandable and enforceable.

The background and rationale of the expansion of judicial power under the 1987 Constitution were
laid out during the deliberations of the 1986 Constitutional Commission by Commissioner Roberto R.
Concepcion (a former Chief Justice of the Philippines) in his sponsorship of the proposed provisions
on the Judiciary, where he said:–

The Supreme Court, like all other courts, has one main function: to settle actual controversies
involving conflicts of rights which are demandable and enforceable. There are rights which are
guaranteed by law but cannot be enforced by a judicial party. In a decided case, a husband
complained that his wife was unwilling to perform her duties as a wife. The Court said: "We can tell
your wife what her duties as such are and that she is bound to comply with them, but we cannot
force her physically to discharge her main marital duty to her husband. There are some rights
guaranteed by law, but they are so personal that to enforce them by actual compulsion would be
highly derogatory to human dignity." This is why the first part of the second paragraph of Section 1
provides that: Judicial power includes the duty of courts to settle actual controversies involving
rights which are legally demandable or enforceable…

The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a presidential
system of government, the Supreme Court has, also, another important function. The powers of
government are generally considered divided into three branches: the Legislative, the Executive and
the Judiciary. Each one is supreme within its own sphere and independent of the others. Because of
that supremacy power to determine whether a given law is valid or not is vested in courts of justice.

Briefly stated, courts of justice determine the limits of power of the agencies and offices of the
government as well as those of its officers. In other words, the judiciary is the final arbiter on the
question whether or not a branch of government or any of its officials has acted without jurisdiction
or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass
judgmenton matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter
evade the duty to settle matters of this nature, by claiming that such matters constitute a political
question. (Bold emphasis supplied)26

Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the scope of

judicial power in the following manner:–

MR. NOLLEDO. x x x

The second paragraph of Section 1 states: "Judicial power includes the duty of courts of justice to
settle actual controversies…" The term "actual controversies" according to the Commissioner should
refer to questions which are political in nature and, therefore, the courts should not refuse to decide
those political questions. But do I understand it right that this is restrictive or only an example? I
know there are cases which are not actual yet the court can assume jurisdiction. An example is the
petition for declaratory relief.

May I ask the Commissioner’s opinion about that?

MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory judgments.

MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is not vested in the
Supreme Court alone but also in other lower courts as may be created by law.

MR. CONCEPCION. Yes.

MR. NOLLEDO. And so, is this only an example?

MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political questions with
jurisdictional questions. But there is a difference.

MR. NOLLEDO. Because of the expression "judicial power"?

MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where there is a
question as to whether the government had authority or had abused its authority to the extent of
lacking jurisdiction or excess of jurisdiction, that is not a political question. Therefore, the court has
the duty to decide.27
Our previous Constitutions equally recognized the extent of the power of judicial review and the
great responsibility of the Judiciary in maintaining the allocation of powers among the three great
branches of Government. Speaking for the Court in Angara v. Electoral Commission,28 Justice Jose P.
Laurel intoned:

x x x In times of social disquietude or political excitement, the great landmarks of the Constitution
are apt to be forgotten or marred, if not entirely obliterated. In cases of conflict, the judicial
department is the only constitutional organ which can be called upon to determine the proper
allocation of powers between the several department and among the integral or constituent units
thereof.

xxxx

The Constitution is a definition of the powers of government. Who is to determine the nature, scope
and extent of such powers? The Constitution itself has provided for the instrumentality of the
judiciary as the rational way. And when the judiciary mediates to allocate constitutional boundaries,
it does not assert any superiority over the other department; it does not in reality nullify or
invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it
by the Constitution to determine conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights which that instrument secures and
guarantees to them. This is in truth all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the Constitution. x x x29

What are the remedies by which the grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government may be determined
under the Constitution?

The present Rules of Court uses two special civil actions for determining and correcting grave abuse
of discretion amounting to lack or excess of jurisdiction. These are the special civil actions for
certiorari and prohibition, and both are governed by Rule 65. A similar remedy of certiorari exists
under Rule 64, but the remedy is expressly applicable only to the judgments and final orders or
resolutions of the Commission on Elections and the Commission on Audit.

The ordinary nature and function of the writ of certiorari in our present system are aptly explained in
Delos Santos v. Metropolitan Bank and Trust Company:30

In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued
out of Chancery, or the King’s Bench, commanding agents or officers of the inferior courts to return
the record of a cause pending before them, so as to give the party more sure and speedy justice, for
the writ would enable the superior court to determine from an inspection of the record whether the
inferior court’s judgment was rendered without authority. The errors were of such a nature that, if
allowed to stand, they would result in a substantial injury to the petitioner to whom no other
remedy was available. If the inferior court acted without authority, the record was then revised and
corrected in matters of law. The writ of certiorari was limited to cases in which the inferior court was
said to be exceeding its jurisdiction or was not proceeding according to essential requirements of
law and would lie only to review judicial or quasi-judicial acts.

The concept of the remedy of certiorari in our judicial system remains much the same as it has been
in the common law. In this jurisdiction, however, the exercise of the power to issue the writ of
certiorari is largely regulated by laying down the instances or situations in the Rules of Court in
which a superior court may issue the writ of certiorari to an inferior court or officer. Section 1, Rule
65 of the Rules of Court compellingly provides the requirements for that purpose, viz:

xxxx

The sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the
commission of grave abuse of discretion amounting to lack of jurisdiction. In this regard, mere abuse
of discretion is not enough to warrant the issuance of the writ. The abuse of discretion must be
grave, which means either that the judicial or quasi-judicial power was exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal or
board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or quasi-judicial
powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction.31

Although similar to prohibition in that it will lie for want or excess of jurisdiction, certiorari is to be
distinguished from prohibition by the fact that it is a corrective remedy used for the re-examination
of some action of an inferior tribunal, and is directed to the cause or proceeding in the lower court
and not to the court itself, while prohibition is a preventative remedy issuing to restrain future
action, and is directed to the court itself.32 The Court expounded on the nature and function of the
writ of prohibition in Holy Spirit Homeowners Association, Inc. v. Defensor:33

A petition for prohibition is also not the proper remedy to assail an IRR issued in the exercise of a
quasi-legislative function. Prohibition is an extraordinary writ directed against any tribunal,
corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial
functions, ordering said entity or person to desist from further proceedings when said proceedings
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. Prohibition lies against judicial or ministerial functions, but not against
legislative or quasi-legislative functions. Generally, the purpose of a writ of prohibition is to keep a
lower court within the limits of its jurisdiction in order to maintain the administration of justice in
orderly channels. Prohibition is the proper remedy to afford relief against usurpation of jurisdiction
or power by an inferior court, or when, in the exercise of jurisdiction in handling matters clearly
within its cognizance the inferior court transgresses the bounds prescribed to it by the law, or where
there is no adequate remedy available in the ordinary course of law by which such relief can be
obtained. Where the principal relief sought is to invalidate an IRR, petitioners’ remedy is an ordinary
action for its nullification, an action which properly falls under the jurisdiction of the Regional Trial
Court. In any case, petitioners’ allegation that "respondents are performing or threatening to
perform functions without or in excess of their jurisdiction" may appropriately be enjoined by the
trial court through a writ of injunction or a temporary restraining order.

With respect to the Court, however, the remedies of certiorari and prohibition are necessarily
broader in scope and reach, and the writ of certiorari or prohibition may be issued to correct errors
of jurisdiction committed not only by a tribunal, corporation, board or officer exercising judicial,
quasi-judicial or ministerial functions but also to set right, undo and restrain any act of grave abuse
of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the
Government, even if the latter does not exercise judicial, quasi-judicial or ministerial functions. This
application is expressly authorized by the text of the second paragraph of Section 1, supra.

Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues
and to review and/or prohibit or nullify the acts of legislative and executive officials.34

Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act of grave
abuse of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of
the Government, the Court is not at all precluded from making the inquiry provided the challenge
was properly brought by interested or affected parties. The Court has been thereby entrusted
expressly or by necessary implication with both the duty and the obligation of determining, in
appropriate cases, the validity of any assailed legislative or executive action. This entrustment is
consistent with the republican system of checks and balances.35

Following our recent dispositions concerning the congressional pork barrel, the Court has become
more alert to discharge its constitutional duty. We will not now refrain from exercising our expanded
judicial power in order to review and determine, with authority, the limitations on the Chief
Executive’s spending power.

b) Requisites for the exercise of the

power of judicial review were

complied with

The requisites for the exercise of the power of judicial review are the following, namely: (1) there
must bean actual case or justiciable controversy before the Court; (2) the question before the Court
must be ripe for adjudication; (3) the person challenging the act must be a proper party; and (4) the
issue of constitutionality must be raised at the earliest opportunity and must be the very litis mota of
the case.36

The first requisite demands that there be an actual case calling for the exercise of judicial power by
the Court.37 An actual case or controversy, in the words of Belgica v. Executive Secretary Ochoa:38

x x x is one which involves a conflict of legal rights, an assertion of opposite legal claims, susceptible
of judicial resolution as distinguished from a hypothetical or abstract difference or dispute. In other
words, "[t]here must be a contrariety of legal rights that can be interpreted and enforced on the
basis of existing law and jurisprudence." Related to the requirement of an actual case or controversy
is the requirement of "ripeness," meaning that the questions raised for constitutional scrutiny are
already ripe for adjudication. "A question is ripe for adjudication when the act being challenged has
had a direct adverse effect on the individual challenging it. It is a prerequisite that something had
then been accomplished or performed by either branch before a court may come into the picture,
and the petitioner must allege the existence of an immediate or threatened injury to itself as a result
of the challenged action." "Withal, courts will decline to pass upon constitutional issues through
advisory opinions, bereft as they are of authority to resolve hypothetical or moot questions."

An actual and justiciable controversy exists in these consolidated cases. The incompatibility of the
perspectives of the parties on the constitutionality of the DAP and its relevant issuances satisfy the
requirement for a conflict between legal rights. The issues being raised herein meet the requisite
ripeness considering that the challenged executive acts were already being implemented by the
DBM, and there are averments by the petitioners that such implementation was repugnant to the
letter and spirit of the Constitution. Moreover, the implementation of the DAP entailed the
allocation and expenditure of huge sums of public funds. The fact that public funds have been
allocated, disbursed or utilized by reason or on account of such challenged executive acts gave rise,
therefore, to an actual controversy that is ripe for adjudication by the Court.

It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the DAP as a
program had been meanwhile discontinued because it had fully served its purpose, saying: "In
conclusion, Your Honors, may I inform the Court that because the DAP has already fully served its
purpose, the Administration’s economic managers have recommended its termination to the
President. x x x."39

The Solicitor General then quickly confirmed the termination of the DAP as a program, and urged
that its termination had already mooted the challenges to the DAP’s constitutionality, viz:

DAP as a program, no longer exists, thereby mooting these present cases brought to challenge its
constitutionality. Any constitutional challenge should no longer be at the level of the program, which
is now extinct, but at the level of its prior applications or the specific disbursements under the now
defunct policy. We challenge the petitioners to pick and choose which among the 116 DAP projects
they wish to nullify, the full details we will have provided by February 5. We urge this Court to be
cautious in limiting the constitutional authority of the President and the Legislature to respond to
the dynamic needs of the country and the evolving demands of governance, lest we end up straight
jacketing our elected representatives in ways not consistent with our constitutional structure and
democratic principles.40

A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value.41

The Court cannot agree that the termination of the DAP as a program was a supervening event that
effectively mooted these consolidated cases. Verily, the Court had in the past exercised its power of
judicial review despite the cases being rendered moot and academic by supervening events, like: (1)
when there was a grave violation of the Constitution; (2) when the case involved a situation of
exceptional character and was of paramount public interest; (3) when the constitutional issue raised
required the formulation of controlling principles to guide the Bench, the Bar and the public; and (4)
when the case was capable of repetition yet evading review.42

Assuming that the petitioners’ several submissions against the DAP were ultimately sustained by the
Court here, these cases would definitely come under all the exceptions. Hence, the Court should not
abstain from exercising its power of judicial review.

Did the petitioners have the legal standing to sue?

Legal standing, as a requisite for the exercise of judicial review, refers to "a right of appearance in a
court of justice on a given question."43 The concept of legal standing, or locus standi, was
particularly discussed in De Castro v. Judicial and Bar Council,44 where the Court said:

In public or constitutional litigations, the Court is often burdened with the determination of the locus
standi of the petitioners due to the ever-present need to regulate the invocation of the intervention
of the Court to correct any official action or policy in order to avoid obstructing the efficient
functioning of public officials and offices involved in public service. It is required, therefore, that the
petitioner must have a personal stake in the outcome of the controversy, for, as indicated in Agan,
Jr. v. Philippine International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation
of issues upon which the court so largely depends for illumination of difficult constitutional
questions." Accordingly, it has been held that the interest of a person assailing the constitutionality
of a statute must be direct and personal. He must be able to show, not only that the law or any
government act is invalid, but also that he sustained or is in imminent danger of sustaining some
direct injury as a result of its enforcement, and not merely that he suffers thereby in some indefinite
way. It must appear that the person complaining has been or is about to be denied some right or
privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or
penalties by reason of the statute or act complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for
determining whether a petitioner in a public action had locus standi. There, the Court held that the
person who would assail the validity of a statute must have "a personal and substantial interest in
the case such that he has sustained, or will sustain direct injury as a result." Vera was followed in
Custodio v. President of the Senate, Manila Race Horse Trainers’ Association v. De la Fuente, Anti-
Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere procedural
technicality, can be waived by the Court in the exercise of its discretion. For instance, in 1949, in
Araneta v. Dinglasan, the Court liberalized the approach when the cases had "transcendental
importance." Some notable controversies whose petitioners did not pass the direct injury test were
allowed to be treated in the same way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues
raised by the petition due to their "far reaching implications," even if the petitioner had no
personality to file the suit. The liberal approach of Aquino v. Commission on Elections has been
adopted in several notable cases, permitting ordinary citizens, legislators, and civic organizations to
bring their suits involving the constitutionality or validity of laws, regulations, and rulings.

However, the assertion of a public right as a predicate for challenging a supposedly illegal or
unconstitutional executive or legislative action rests on the theory that the petitioner represents the
public in general. Although such petitioner may not be as adversely affected by the action
complained against as are others, it is enough that he sufficiently demonstrates in his petition that
he is entitled to protection or relief from the Court in the vindication of a public right.

Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain locus
standi. That is not surprising, for even if the issue may appear to concern only the public in general,
such capacities nonetheless equip the petitioner with adequate interest to sue. In David v.
Macapagal-Arroyo, the Court aptly explains why:

Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in public actions.
The distinction was first laid down in Beauchamp v. Silk, where it was held that the plaintiff in a
taxpayer’s suit is in a different category from the plaintiff in a citizen’s suit. In the former, the
plaintiff is affected by the expenditure of public funds, while in the latter, he is but the mere
instrument of the public concern. As held by the New York Supreme Court in People ex rel Case v.
Collins: "In matter of mere public right, however…the people are the real parties…It is at least the
right, if not the duty, of every citizen to interfere and see that a public offence be properly pursued
and punished, and that a public grievance be remedied." With respect to taxpayer’s suits, Terr v.
Jordan held that "the right of a citizen and a taxpayer to maintain an action in courts to restrain the
unlawful use of public funds to his injury cannot be denied."45

The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals Co., Inc.46 that
"[s]tanding is a peculiar concept in constitutional law because in some cases, suits are not brought
by parties who have been personally injured by the operation of a law or any other government act
but by concerned citizens, taxpayers or voters who actually sue in the public interest."

Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked their capacities
as taxpayers who, by averring that the issuance and implementation of the DAP and its relevant
issuances involved the illegal disbursements of public funds, have an interest in preventing the
further dissipation of public funds. The petitioners in G.R. No. 209287 (Araullo) and G.R. No. 209442
(Belgica) also assert their right as citizens to sue for the enforcement and observance of the
constitutional limitations on the political branches of the Government.47

On its part, PHILCONSA simply reminds that the Court has long recognized its legal standing to bring
cases upon constitutional issues.48 Luna, the petitioner in G.R. No. 209136, cites his additional
capacity as a lawyer. The IBP, the petitioner in G.R. No. 209260, stands by "its avowed duty to work
for the rule of law and of paramount importance of the question in this action, not to mention its
civic duty as the official association of all lawyers in this country."49

Under their respective circumstances, each of the petitioners has established sufficient interest in
the outcome of the controversy as to confer locus standi on each of them.

In addition, considering that the issues center on the extent of the power of the Chief Executive to
disburse and allocate public funds, whether appropriated by Congress or not, these cases pose
issues that are of transcendental importance to the entire Nation, the petitioners included. As such,
the determination of such important issues call for the Court’s exercise of its broad and wise
discretion "to waive the requirement and so remove the impediment to its addressing and resolving
the serious constitutional questions raised."50

II.

Substantive Issues

1.

Overview of the Budget System

An understanding of the Budget System of the Philippines will aid the Court in properly appreciating
and justly resolving the substantive issues.

a) Origin of the Budget System

The term "budget" originated from the Middle English word bouget that had derived from the Latin
word bulga (which means bag or purse).51

In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined "budget" as the
financial program of the National Government for a designated fiscal year, consisting of the
statements of estimated receipts and expenditures for the fiscal year for which it was intended to be
effective based on the results of operations during the preceding fiscal years. The term was given a
different meaning under Republic Act No. 992 (Revised Budget Act) by describing the budget as the
delineation of the services and products, or benefits that would accrue to the public together with
the estimated unit cost of each type of service, product or benefit.52 For a forthright definition,
budget should simply be identified as the financial plan of the Government,53 or "the master plan of
government."54

The concept of budgeting has not been the product of recent economies. In reality, financing public
goals and activities was an idea that existed from the creation of the State.55 To protect the people,
the territory and sovereignty of the State, its government must perform vital functions that required
public expenditures. At the beginning, enormous public expenditures were spent for war activities,
preservation of peace and order, security, administration of justice, religion, and supply of limited
goods and services.56 In order to finance those expenditures, the State raised revenues through
taxes and impositions.57 Thus, budgeting became necessary to allocate public revenues for specific
government functions.58 The State’s budgeting mechanism eventually developed through the years
with the growing functions of its government and changes in its market economy.

The Philippine Budget System has been greatly influenced by western public financial institutions.
This is because of the country’s past as a colony successively of Spain and the United States for a
long period of time. Many aspects of the country’s public fiscal administration, including its Budget
System, have been naturally patterned after the practices and experiences of the western public
financial institutions. At any rate, the Philippine Budget System is presently guided by two principal
objectives that are vital to the development of a progressive democratic government, namely: (1) to
carry on all government activities under a comprehensive fiscal plan developed, authorized and
executed in accordance with the Constitution, prevailing statutes and the principles of sound public
management; and (2) to provide for the periodic review and disclosure of the budgetary status of
the Government in such detail so that persons entrusted by law with the responsibility as well as the
enlightened citizenry can determine the adequacy of the budget actions taken, authorized or
proposed, as well as the true financial position of the Government.59
b) Evolution of the Philippine Budget System

The budget process in the Philippines evolved from the early years of the American Regime up to the
passage of the Jones Law in 1916. A Budget Office was created within the Department of Finance by
the Jones Law to discharge the budgeting function, and was given the responsibility to assist in the
preparation of an executive budget for submission to the Philippine Legislature.60

As early as under the 1935 Constitution, a budget policy and a budget procedure were established,
and subsequently strengthened through the enactment of laws and executive acts.61 EO No. 25,
issued by President Manuel L. Quezon on April 25, 1936, created the Budget Commission to serve as
the agency that carried out the President’s responsibility of preparing the budget.62 CA No. 246, the
first budget law, went into effect on January 1, 1938 and established the Philippine budget process.
The law also provided a line-item budget as the framework of the Government’s budgeting
system,63 with emphasis on the observance of a "balanced budget" to tie up proposed expenditures
with existing revenues.

CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic Act (RA) No.
992,whereby Congress introduced performance-budgeting to give importance to functions, projects
and activities in terms of expected results.64 RA No. 992 also enhanced the role of the Budget
Commission as the fiscal arm of the Government.65

The 1973 Constitution and various presidential decrees directed a series of budgetary reforms that
culminated in the enactment of PD No. 1177 that President Marcos issued on July30, 1977, and of
PD No. 1405, issued on June 11, 1978. The latter decree converted the Budget Commission into the
Ministry of Budget, and gave its head the rank of a Cabinet member.

The Ministry of Budget was later renamed the Office of Budget and Management (OBM) under EO
No. 711. The OBM became the DBM pursuant to EO No. 292 effective on November 24, 1989.

c) The Philippine Budget Cycle66

Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget
Legislation; (3) Budget Execution; and (4) Accountability. Each phase is distinctly separate from the
others but they overlap in the implementation of the budget during the budget year.

c.1.Budget Preparation67
The budget preparation phase is commenced through the issuance of a Budget Call by the DBM. The
Budget Call contains budget parameters earlier set by the Development Budget Coordination
Committee (DBCC) as well as policy guidelines and procedures to aid government agencies in the
preparation and submission of their budget proposals. The Budget Call is of two kinds, namely: (1) a
National Budget Call, which is addressed to all agencies, including state universities and colleges; and
(2) a Corporate Budget Call, which is addressed to all government-owned and -controlled
corporations (GOCCs) and government financial institutions (GFIs).

Following the issuance of the Budget Call, the various departments and agencies submit their
respective Agency Budget Proposals to the DBM. To boost citizen participation, the current
administration has tasked the various departments and agencies to partner with civil society
organizations and other citizen-stakeholders in the preparation of the Agency Budget Proposals,
which proposals are then presented before a technical panel of the DBM in scheduled budget
hearings wherein the various departments and agencies are given the opportunity to defend their
budget proposals. DBM bureaus thereafter review the Agency Budget Proposals and come up with
recommendations for the Executive Review Board, comprised by the DBM Secretary and the DBM’s
senior officials. The discussions of the Executive Review Board cover the prioritization of programs
and their corresponding support vis-à-vis the priority agenda of the National Government, and their
implementation.

The DBM next consolidates the recommended agency budgets into the National Expenditure
Program (NEP)and a Budget of Expenditures and Sources of Financing (BESF). The NEP provides the
details of spending for each department and agency by program, activity or project (PAP), and is
submitted in the form of a proposed GAA. The Details of Selected Programs and Projects is the more
detailed disaggregation of key PAPs in the NEP, especially those in line with the National
Government’s development plan. The Staffing Summary provides the staffing complement of each
department and agency, including the number of positions and amounts allocated.

The NEP and BESF are thereafter presented by the DBM and the DBCC to the President and the
Cabinet for further refinements or reprioritization. Once the NEP and the BESF are approved by the
President and the Cabinet, the DBM prepares the budget documents for submission to Congress.
The budget documents consist of: (1) the President’s Budget Message, through which the President
explains the policy framework and budget priorities; (2) the BESF, mandated by Section 22, Article VII
of the Constitution,68 which contains the macroeconomic assumptions, public sector context,
breakdown of the expenditures and funding sources for the fiscal year and the two previous years;
and (3) the NEP.

Public or government expenditures are generally classified into two categories, specifically: (1)
capital expenditures or outlays; and (2) current operating expenditures. Capital expenditures are the
expenses whose usefulness lasts for more than one year, and which add to the assets of the
Government, including investments in the capital of government-owned or controlled corporations
and their subsidiaries.69 Current operating expenditures are the purchases of goods and services in
current consumption the benefit of which does not extend beyond the fiscal year.70 The two
components of current expenditures are those for personal services (PS), and those for maintenance
and other operating expenses(MOOE).

Public expenditures are also broadly grouped according to their functions into: (1) economic
development expenditures (i.e., expenditures on agriculture and natural resources, transportation
and communications, commerce and industry, and other economic development efforts);71 (2)
social services or social development expenditures (i.e., government outlay on education, public
health and medicare, labor and welfare and others);72 (3) general government or general public
services expenditures (i.e., expenditures for the general government, legislative services, the
administration of justice, and for pensions and gratuities);73 (4) national defense expenditures (i.e.,
sub-divided into national security expenditures and expenditures for the maintenance of peace and
order);74 and (5) public debt.75

Public expenditures may further be classified according to the nature of funds, i.e., general fund,
special fund or bond fund.76

On the other hand, public revenues complement public expenditures and cover all income or
receipts of the government treasury used to support government expenditures.77

Classical economist Adam Smith categorized public revenues based on two principal sources, stating:
"The revenue which must defray…the necessary expenses of government may be drawn either, first
from some fund which peculiarly belongs to the sovereign or commonwealth, and which is
independent of the revenue of the people, or, secondly, from the revenue of the people."78 Adam
Smith’s classification relied on the two aspects of the nature of the State: first, the State as a juristic
person with an artificial personality, and, second, the State as a sovereign or entity possessing
supreme power. Under the first aspect, the State could hold property and engage in trade, thereby
deriving what is called its quasi private income or revenues, and which "peculiarly belonged to the
sovereign." Under the second aspect, the State could collect by imposing charges on the revenues of
its subjects in the form of taxes.79

In the Philippines, public revenues are generally derived from the following sources, to wit: (1) tax
revenues(i.e., compulsory contributions to finance government activities); 80 (2) capital
revenues(i.e., proceeds from sales of fixed capital assets or scrap thereof and public domain, and
gains on such sales like sale of public lands, buildings and other structures, equipment, and other
properties recorded as fixed assets); 81 (3) grants(i.e., voluntary contributions and aids given to the
Government for its operation on specific purposes in the form of money and/or materials, and do
not require any monetary commitment on the part of the recipient);82 (4) extraordinary income(i.e.,
repayment of loans and advances made by government corporations and local governments and the
receipts and shares in income of the Banko Sentral ng Pilipinas, and other receipts);83 and (5) public
borrowings(i.e., proceeds of repayable obligations generally with interest from domestic and foreign
creditors of the Government in general, including the National Government and its political
subdivisions).84
More specifically, public revenues are classified as follows:85

General Income

1. Subsidy Income from National

Government

2. Subsidy from Central Office

3. Subsidy from Regional

Office/Staff Bureaus

4. Income from Government

Services

5. Income from Government

Business Operations

6. Sales Revenue

7. Rent Income

8. Insurance Income

9. Dividend Income

10. Interest Income

11. Sale of Confiscated Goods and

Properties

12. Foreign Exchange (FOREX)

Gains

13. Miscellaneous Operating and

Service Income

14. Fines and Penalties-Government

Services and Business Operations

15. Income from Grants and

Donations

Specific Income

1. Income Taxes

2. Property Taxes
3. Taxes on Goods and Services

4. Taxes on International Trade and

Transactions

5. Other Taxes 6.Fines and Penalties-Tax Revenue

7. Other Specific Income

c.2. Budget Legislation86

The Budget Legislation Phase covers the period commencing from the time Congress receives the
President’s Budget, which is inclusive of the NEPand the BESF, up to the President’s approval of the
GAA. This phase is also known as the Budget Authorization Phase, and involves the significant
participation of the Legislative through its deliberations.

Initially, the President’s Budget is assigned to the House of Representatives’ Appropriations

Committee on First Reading. The Appropriations Committee and its various Sub-Committees
schedule and conduct budget hearings to examine the PAPs of the departments and agencies.
Thereafter, the House of Representatives drafts the General Appropriations Bill (GAB).87

The GABis sponsored, presented and defended by the House of Representatives’ Appropriations
Committee and Sub-Committees in plenary session. As with other laws, the GAB is approved on
Third Reading before the House of Representatives’ version is transmitted to the Senate.88

After transmission, the Senate conducts its own committee hearings on the GAB. To expedite
proceedings, the Senate may conduct its committee hearings simultaneously with the House of
Representatives’ deliberations. The Senate’s Finance Committee and its Sub-Committees may submit
the proposed amendments to the GAB to the plenary of the Senate only after the House of
Representatives has formally transmitted its version to the Senate. The Senate version of the GAB is
likewise approved on Third Reading.89

The House of Representatives and the Senate then constitute a panel each to sit in the Bicameral
Conference Committee for the purpose of discussing and harmonizing the conflicting provisions of
their versions of the GAB. The "harmonized" version of the GAB is next presented to the President
for approval.90 The President reviews the GAB, and prepares the Veto Message where budget items
are subjected to direct veto,91 or are identified for conditional implementation.

If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the ensuing fiscal
year, the GAA for the preceding fiscal year shall be deemed re-enacted and shall remain in force and
effect until the GAB is passed by the Congress.92
c.3. Budget Execution93

With the GAA now in full force and effect, the next step is the implementation of the budget. The
Budget Execution Phase is primarily the function of the DBM, which is tasked to perform the
following procedures, namely: (1) to issue the programs and guidelines for the release of funds; (2)
to prepare an Allotment and Cash Release Program; (3) to release allotments; and (4) to issue
disbursement authorities.

The implementation of the GAA is directed by the guidelines issued by the DBM. Prior to this, the
various departments and agencies are required to submit Budget Execution Documents(BED) to
outline their plans and performance targets by laying down the physical and financial plan, the
monthly cash program, the estimate of monthly income, and the list of obligations that are not yet
due and demandable.

Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release Program
(CRP).The ARP sets a limit for allotments issued in general and to a specific agency. The CRP fixes the
monthly, quarterly and annual disbursement levels.

Allotments, which authorize an agency to enter into obligations, are issued by the DBM. Allotments
are lesser in scope than appropriations, in that the latter embrace the general legislative authority to
spend. Allotments may be released in two forms – through a comprehensive Agency Budget Matrix
(ABM),94 or, individually, by SARO.95

Armed with either the ABM or the SARO, agencies become authorized to incur obligations96 on
behalf of the Government in order to implement their PAPs. Obligations may be incurred in various
ways, like hiring of personnel, entering into contracts for the supply of goods and services, and using
utilities.

In order to settle the obligations incurred by the agencies, the DBM issues a disbursement authority
so that cash may be allocated in payment of the obligations. A cash or disbursement authority that is
periodically issued is referred to as a Notice of Cash Allocation (NCA),97 which issuance is based
upon an agency’s submission of its Monthly Cash Program and other required documents. The NCA
specifies the maximum amount of cash that can be withdrawn from a government servicing bank for
the period indicated. Apart from the NCA, the DBM may issue a Non-Cash Availment
Authority(NCAA) to authorize non-cash disbursements, or a Cash Disbursement Ceiling(CDC) for
departments with overseas operations to allow the use of income collected by their foreign posts for
their operating requirements.
Actual disbursement or spending of government funds terminates the Budget Execution Phase and is
usually accomplished through the Modified Disbursement Scheme under which disbursements
chargeable against the National Treasury are coursed through the government servicing banks.

c.4. Accountability98

Accountability is a significant phase of the budget cycle because it ensures that the government
funds have been effectively and efficiently utilized to achieve the State’s socio-economic goals. It
also allows the DBM to assess the performance of agencies during the fiscal year for the purpose of
implementing reforms and establishing new policies.

An agency’s accountability may be examined and evaluated through (1) performance targets and
outcomes; (2) budget accountability reports; (3) review of agency performance; and (4) audit
conducted by the Commission on Audit(COA).

2.

Nature of the DAP as a fiscal plan

a. DAP was a program designed to

promote economic growth

Policy is always a part of every budget and fiscal decision of any Administration.99 The national
budget the Executive prepares and presents to Congress represents the Administration’s "blueprint
for public policy" and reflects the Government’s goals and strategies.100 As such, the national
budget becomes a tangible representation of the programs of the Government in monetary terms,
specifying therein the PAPs and services for which specific amounts of public funds are proposed and
allocated.101 Embodied in every national budget is government spending.102

When he assumed office in the middle of 2010, President Aquino made efficiency and transparency
in government spending a significant focus of his Administration. Yet, although such focus resulted in
an improved fiscal deficit of 0.5% in the gross domestic product (GDP) from January to July of 2011,
it also unfortunately decelerated government project implementation and payment schedules.103
The World Bank observed that the Philippines’ economic growth could be reduced, and potential
growth could be weakened should the Government continue with its underspending and fail to
address the large deficiencies in infrastructure.104 The economic situation prevailing in the middle
of 2011 thus paved the way for the development and implementation of the DAP as a stimulus
package intended to fast-track public spending and to push economic growth by investing on high-
impact budgetary PAPs to be funded from the "savings" generated during the year as well as from
unprogrammed funds.105 In that respect, the DAP was the product of "plain executive policy-
making" to stimulate the economy by way of accelerated spending.106 The Administration would
thereby accelerate government spending by: (1) streamlining the implementation process through
the clustering of infrastructure projects of the Department of Public Works and Highways (DPWH)
and the Department of Education (DepEd),and (2) front loading PPP-related projects107 due for
implementation in the following year.108

Did the stimulus package work?

The March 2012 report of the World Bank,109 released after the initial implementation of the DAP,
revealed that the DAP was partially successful. The disbursements under the DAP contributed 1.3
percentage points to GDP growth by the fourth quarter of 2011.110 The continued implementation
of the DAP strengthened growth by 11.8% year on year while infrastructure spending rebounded
from a 29% contraction to a 34% growth as of September 2013.111

The DAP thus proved to be a demonstration that expenditure was a policy instrument that the
Government could use to direct the economies towards growth and development.112 The
Government, by spending on public infrastructure, would signify its commitment of ensuring
profitability for prospective investors.113 The PAPs funded under the DAP were chosen for this
reason based on their: (1) multiplier impact on the economy and infrastructure development; (2)
beneficial effect on the poor; and (3) translation into disbursements.114

b. History of the implementation of

the DAP, and sources of funds

under the DAP

How the Administration’s economic managers conceptualized and developed the DAP, and finally
presented it to the President remains unknown because the relevant documents appear to be
scarce.

The earliest available document relating to the genesis of the DAP was the memorandum of October
12,2011 from Sec. Abad seeking the approval of the President to implement the proposed DAP. The
memorandum, which contained a list of the funding sources for ₱72.11 billion and of the proposed
priority projects to be funded,115 reads:

MEMORANDUM FOR THE PRESIDENT

xxxx

SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM (PROJECTS AND SOURCES

OF FUNDS)

DATE: OCTOBER 12, 2011

Mr. President, this is to formally confirm your approval of the Disbursement Acceleration Program
totaling ₱72.11 billion. We are already working with all the agencies concerned for the immediate
execution of the projects therein.

A. Fund Sources for the Acceleration Program

Fund Sources Amount

(In million

Php) Description Action

Requested

FY 2011

Unreleased

Personal

Services (PS)

Appropriations 30,000 Unreleased Personnel

Services (PS)

appropriations which

will lapse at the end of

FY 2011 but may be

pooled as savings and

realigned for priority

programs that require

immediate funding Declare as

savings and

approve/
authorize its use

for the 2011

Disbursement

Acceleration

Program

FY 2011

Unreleased

Appropriations 482 Unreleased

appropriations (slow

moving projects and

programs for

discontinuance)

FY 2010

Unprogrammed

Fund 12,336 Supported by the GFI

Dividends Approve and

authorize its use

for the 2011

Disbursement

Acceleration

Program

FY 2010

Carryover

Appropriation 21,544 Unreleased

appropriations (slow

moving projects and

programs for

discontinuance) and

savings from Zero-based Budgeting

Initiative With prior

approval from
the President in

November 2010

to declare as

savings and with

authority to use

for priority

projects

FY 2011 Budget

items for

realignment 7,748 FY 2011 Agency

Budget items that can

be realigned within the

agency to fund new fast

disbursing projects

DPWH-3.981 Billion

DA – 2.497 Billion

DOT – 1.000 Billion

DepEd – 270 Million For information

TOTAL 72.110

B. Projects in the Disbursement Acceleration Program

(Descriptions of projects attached as Annex A)

GOCCs and GFIs

Agency/Project

(SARO and NCA Release) Allotment

(in Million Php)

1. LRTA: Rehabilitation of LRT 1 and 2 1,868

2. NHA:

a. Resettlement of North Triangle residents to

Camarin A7

b. Housing for BFP/BJMP

c. On-site development for families living

along dangerous

d. Relocation sites for informal settlers

along Iloilo River and its tributaries 11,050

450

500

10,000

100

3. PHIL. HEART CENTER: Upgrading of

ageing physical plant and medical equipment 357

4. CREDIT INFO CORP: Establishment of

centralized credit information system

75

5. PIDS: purchase of land to relocate the PIDS

office and building construction

100

6. HGC: Equity infusion for credit insurance

and mortgage guaranty operations of HGC

400

7. PHIC: Obligations incurred (premium

subsidy for indigent families) in January-June

2010, booked for payment in Jul[y] – Dec

2010. The delay in payment is due to the

delay in the certification of the LGU

counterpart. Without it, the NG is obliged to

pay the full amount. 1,496

8. Philpost: Purchase of foreclosed property.

Payment of Mandatory Obligations, (GSIS,

PhilHealth, ECC), Franking Privilege 644

9. BSP: First equity infusion out of Php 40B

capitalization under the BSP Law

10,000

10. PCMC: Capital and Equipment Renovation

280

11. LCOP:

a. Pediatric Pulmonary Program

b. Bio-regenerative Technology Program

(Stem-Cell Research – subject to legal

review and presentation) 105

35

70

12. TIDCORP: NG Equity infusion

570

TOTAL 26,945

NGAs/LGUs

Agency/Project Allotment

(SARO)

(In Million

Php)

Cash

Requirement
(NCA)

13. DOF-BIR: NPSTAR

centralization of data

processing and others (To be

synchronized with GFMIS

activities)

758

758

14. COA: IT infrastructure

program and hiring of

additional litigational experts

144

144

15. DND-PAF: On Base Housing

Facilities and Communication

Equipment

30

30

16. DA:

a. Irrigation, FMRs and

Integrated Community Based Multi-Species

Hatchery and Aquasilvi

Farming

b. Mindanao Rural

Development Project 2,959

1,629

919 2,223

1,629

183

c. NIA Agno River Integrated

Irrigation Project

411

411

17. DAR:

a. Agrarian Reform

Communities Project 2

b. Landowners Compensation 1,293

1,293 1,293

132

5,432

18. DBM: Conduct of National

Survey of
Farmers/Fisherfolks/Ips

625

625

19. DOJ: Operating requirements

of 50 investigation agents and

15 state attorneys

11

11

20. DOT: Preservation of the Cine

Corregidor Complex

25

25

21. OPAPP: Activities for Peace

Process (PAMANA- Project

details: budget breakdown,

implementation plan, and

conditions on fund release

attached as Annex B)

1,819
1,819

22. DOST

a. Establishment of National

Meterological and Climate

Center

b. Enhancement of Doppler

Radar Network for National

Weather Watch, Accurate

Forecasting and Flood Early

Warning 425

275

190 425

275

190

23. DOF-BOC: To settle the

principal obligations with

PDIC consistent with the

agreement with the CISS and

SGS
2,800

2,800

24. OEO-FDCP: Establishment of

the National Film Archive and

local cinematheques, and other

local activities

20

20

25. DPWH: Various infrastructure

projects

5,500

5,500

26. DepEd/ERDT/DOST: Thin

Client Cloud Computing

Project

270

270

27. DOH: Hiring of nurses and

midwives
294

294

28. TESDA: Training Program in

partnership with BPO industry

and other sectors

1,100

1,100

29. DILG: Performance Challenge

Fund (People Empowered

Community Driven

Development with DSWD and

NAPC)

250

50

30. ARMM: Comprehensive Peace

and Development Intervention

8,592

8,592

31. DOTC-MRT: Purchase of

additional MRT cars

4,500

32. LGU Support Fund 6,500 6,500

33. Various Other Local Projects 6,500 6,500

34. Development Assistance to the

Province of Quezon

750

750

TOTAL 45,165 44,000

C. Summary

Fund Sources

Identified for

Approval

(In Million

Php)

Allotments

for Release

Cash

Requirements for

Release in FY

2011

Total 72,110 72,110 70,895

GOCCs 26,895 26,895

NGAs/LGUs 45,165 44,000

For His Excellency’s Consideration

(Sgd.) FLORENCIO B. ABAD

[/] APPROVED

[ ] DISAPPROVED

(Sgd.) H.E. BENIGNO S. AQUINO, III

OCT 12, 2011

The memorandum of October 12, 2011 was followed by another memorandum for the President
dated December 12, 2011116 requesting omnibus authority to consolidate the savings and
unutilized balances for fiscal year 2011. Pertinent portions of the memorandum of December 12,
2011 read:

MEMORANDUM FOR THE PRESIDENT

xxxx

SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment

DATE: December 12, 2011

This is to respectfully request for the grant of Omnibus Authority to consolidate savings/unutilized
balances in FY 2011 corresponding to completed or discontinued projects which may be pooled to
fund additional projects or expenditures.

In addition, Mr. President, this measure will allow us to undertake projects even if their
implementation carries over to 2012 without necessarily impacting on our budget deficit cap next
year.

BACKGROUND

1.0 The DBM, during the course of performance reviews conducted on the agencies’ operations,
particularly on the implementation of their projects/activities, including expenses incurred in
undertaking the same, have identified savings out of the 2011 General Appropriations Act. Said
savings correspond to completed or discontinued projects under certain departments/agencies
which may be pooled, for the following:

1.1 to provide for new activities which have not been anticipated during preparation of the budget;

1.2 to augment additional requirements of on-going priority projects; and

1.3 to provide for deficiencies under the Special Purpose Funds, e.g., PDAF, Calamity Fund,
Contingent Fund

1.4 to cover for the modifications of the original allotment class allocation as a result of on-going
priority projects and implementation of new activities

2.0 x x x x

2.1 x x x

2.2 x x x

ON THE UTILIZATION OF POOLED SAVINGS

3.0 It may be recalled that the President approved our request for omnibus authority to pool
savings/unutilized balances in FY 2010 last November 25, 2010.

4.0 It is understood that in the utilization of the pooled savings, the DBM shall secure the
corresponding approval/confirmation of the President. Furthermore, it is assured that the proposed
realignments shall be within the authorized Expenditure level.

5.0 Relative thereto, we have identified some expenditure items that may be sourced from the said
pooled appropriations in FY 2010 that will expire on December 31, 2011 and appropriations in FY
2011 that may be declared as savings to fund additional expenditures.

5.1 The 2010 Continuing Appropriations (pooled savings) is proposed to be spent for the projects
that we have identified to be immediate actual disbursements considering that this same fund
source will expire on December 31, 2011.

5.2 With respect to the proposed expenditure items to be funded from the FY 2011 Unreleased
Appropriations, most of these are the same projects for which the DBM is directed by the Office of
the President, thru the Executive Secretary, to source funds.
6.0 Among others, the following are such proposed additional projects that have been chosen given
their multiplier impact on economy and infrastructure development, their beneficial effect on the
poor, and their translation into disbursements. Please note that we have classified the list of
proposed projects as follows:

7.0 x x x

FOR THE PRESIDENT’S APPROVAL

8.0 Foregoing considered, may we respectfully request for the President’s approval for the following:

8.1 Grant of omnibus authority to consolidate FY 2011 savings/unutilized balances and its
realignment; and

8.2 The proposed additional projects identified for funding.

For His Excellency’s consideration and approval.

(Sgd.)

[/] APPROVED

[ ] DISAPPROVED

(Sgd.) H.E. BENIGNO S. AQUINO, III

DEC 21, 2011

Substantially identical requests for authority to pool savings and to fund proposed projects were
contained in various other memoranda from Sec. Abad dated June 25, 2012,117 September 4,
2012,118 December 19, 2012,119 May 20, 2013,120 and September 25, 2013.121 The President
apparently approved all the requests, withholding approval only of the proposed projects contained
in the June 25, 2012 memorandum, as borne out by his marginal note therein to the effect that the
proposed projects should still be "subject to further discussions."122
In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541 (Adoption of
Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30,
2012),123 reproduced herein as follows:

NATIONAL BUDGET CIRCULAR No. 541

July 18, 2012

TO: All Heads of Departments/Agencies/State Universities and Colleges and other Offices of the
National Government, Budget and Planning Officers; Heads of Accounting Units and All Others
Concerned

SUBJECT : Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated

Allotments as of June 30, 2012

1.0 Rationale

The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of 1987), periodically
reviews and evaluates the departments/agencies’ efficiency and effectiveness in utilizing budgeted
funds for the delivery of services and production of goods, consistent with the government
priorities.

In the event that a measure is necessary to further improve the operational efficiency of the
government, the President is authorized to suspend or stop further use of funds allotted for any
agency or expenditure authorized in the General Appropriations Act. Withdrawal and pooling of
unutilized allotment releases can be effected by DBM based on authority of the President, as
mandated under Sections 38 and 39, Chapter 5, Book VI of EO 292.

For the first five months of 2012, the National Government has not met its spending targets. In order
to accelerate spending and sustain the fiscal targets during the year, expenditure measures have to
be implemented to optimize the utilization of available resources.

Departments/agencies have registered low spending levels, in terms of obligations and

disbursements per initial review of their 2012 performance. To enhance agencies’ performance, the
DBM conducts continuous consultation meetings and/or send call-up letters, requesting them to
identify slow-moving programs/projects and the factors/issues affecting their performance (both
pertaining to internal systems and those which are outside the agencies’ spheres of control). Also,
they are asked to formulate strategies and improvement plans for the rest of 2012.

Notwithstanding these initiatives, some departments/agencies have continued to post low

obligation levels as of end of first semester, thus resulting to substantial unobligated allotments.

In line with this, the President, per directive dated June 27, 2012 authorized the withdrawal of
unobligated allotments of agencies with low levels of obligations as of June 30, 2012, both for
continuing and current allotments. This measure will allow the maximum utilization of available
allotments to fund and undertake other priority expenditures of the national government.

2.0 Purpose

2.1 To provide the conditions and parameters on the withdrawal of unobligated allotments of
agencies as of June 30, 2012 to fund priority and/or fast-moving programs/projects of the national
government;

2.2 To prescribe the reports and documents to be used as bases on the withdrawal of said
unobligated allotments; and

2.3 To provide guidelines in the utilization or reallocation of the withdrawn allotments.

3.0 Coverage

3.1 These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 of all
national government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A.
No.10147) and FY 2012 Current Appropriation (R.A. No. 10155), pertaining to:

3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of
programs and projects, as well as capitalized MOOE; and

3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by the
agencies concerned based on their updated/validated list of pensioners.
3.2 The withdrawal of unobligated allotments may cover the identified programs, projects and
activities of the departments/agencies reflected in the DBM list shown as Annex A or specific
programs and projects as may be identified by the agencies.

4.0 Exemption

These guidelines shall not apply to the following:

4.1 NGAs

4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal autonomy under the Philippine
Constitution; and

4.1.2 State Universities and Colleges, adopting the Normative Funding allocation scheme i.e.,
distribution of a predetermined budget ceiling.

4.2 Fund Sources

4.2.1 Personal Services other than pension benefits;

4.2.2 MOOE items earmarked for specific purposes or subject to realignment conditions per General
Provisions of the GAA:

• Confidential and Intelligence Fund;

• Savings from Traveling, Communication, Transportation and Delivery, Repair and Maintenance,
Supplies and Materials and Utility which shall be used for the grant of Collective Negotiation
Agreement incentive benefit;

• Savings from mandatory expenditures which can be realigned only in the last quarter after taking
into consideration the agency’s full year requirements, i.e., Petroleum, Oil and Lubricants, Water,
Illumination, Power Services, Telephone, other Communication Services and Rent.
4.2.3 Foreign-Assisted Projects (loan proceeds and peso counterpart);

4.2.4 Special Purpose Funds such as: E-Government Fund, International Commitments Fund,
PAMANA, Priority Development Assistance Fund, Calamity Fund, Budgetary Support to GOCCs and
Allocation to LGUs, among others;

4.2.5 Quick Response Funds; and

4.2.6 Automatic Appropriations i.e., Retirement Life Insurance Premium and Special Accounts in the
General Fund.

5.0 Guidelines

5.1 National government agencies shall continue to undertake procurement activities

notwithstanding the implementation of the policy of withdrawal of unobligated allotments until the
end of the third quarter, FY 2012. Even without the allotments, the agency shall proceed in
undertaking the procurement processes (i.e., procurement planning up to the conduct of bidding but
short of awarding of contract) pursuant to GPPB Circular Nos. 02-2008 and 01-2009 and DBM
Circular Letter No. 2010-9.

5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn,
all departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the
following budget accountability reports as of June 30, 2012;

• Statement of Allotments, Obligations and Balances (SAOB);

• Financial Report of Operations (FRO); and

• Physical Report of Operations.

5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agency’s
latest report available shall be used by DBM as basis for withdrawal of allotment. The DBM shall
compute/approximate the agency’s obligation level as of June 30 to derive its unobligated
allotments as of same period. Example: If the March 31 SAOB or FRO reflects actual obligations of P
800M then the June 30 obligation level shall approximate to ₱1,600 M (i.e., ₱800 M x 2 quarters).
5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained unobligated
as of June 30, 2012 shall be immediately considered for withdrawal. This policy is based on the
following considerations:

5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be
implementation-ready and doable during the given fiscal year; and

5.4.2 The practice of having substantial carryover appropriations may imply that the agency has a
slower-than-programmed implementation capacity or agency tends to implement projects within a
two-year timeframe.

5.5. Consistent with the President’s directive, the DBM shall, based on evaluation of the reports
cited above and results of consultations with the departments/agencies, withdraw the unobligated
allotments as of June 30, 2012 through issuance of negative Special Allotment Release Orders
(SAROs).

5.6 DBM shall prepare and submit to the President, a report on the magnitude of withdrawn
allotments. The report shall highlight the agencies which failed to submit the June 30 reports
required under this Circular.

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.

5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit to DBM a Special Budget
Request (SBR), supported with the following:

5.8.1 Physical and Financial Plan (PFP);

5.8.2 Monthly Cash Program (MCP); and

5.8.3 Proof that the project/activity has started the procurement processes i.e., Proof of Posting
and/or Advertisement of the Invitation to Bid.

5.9 The deadline for submission of request/s pertaining to these categories shall be until the end of
the third quarter i.e., September 30, 2012. After said cut-off date, the withdrawn allotments shall be
pooled and form part of the overall savings of the national government.

5.10 Utilization of the consolidated withdrawn allotments for other priority programs and projects as
cited under item 5.7.3 of this Circular, shall be subject to approval of the President. Based on the
approval of the President, DBM shall issue the SARO to cover the approved priority expenditures
subject to submission by the agency/OU concerned of the SBR and supported with PFP and MCP.

5.11 It is understood that all releases to be made out of the withdrawn allotments (both 2011 and
2012 unobligated allotments) shall be within the approved Expenditure Program level of the national
government for the current year. The SAROs to be issued shall properly disclose the appropriation
source of the release to determine the extent of allotment validity, as follows:

• For charges under R.A. 10147 – allotments shall be valid up to December 31, 2012; and

• For charges under R.A. 10155 – allotments shall be valid up to December 31, 2013.

5.12 Timely compliance with the submission of existing BARs and other reportorial requirements is
reiterated for monitoring purposes.

6.0 Effectivity

This circular shall take effect immediately.

(Sgd.) FLORENCIO B. ABAD

Secretary
As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies and
departments as of June 30, 2012 that were charged against the continuing appropriations for fiscal
year 2011 and the 2012 GAA (R.A. No. 10155) were subject to withdrawal through the issuance of
negative SAROs, but such allotments could be either: (1) reissued for the original PAPs of the
concerned agencies from which they were withdrawn; or (2) realigned to cover additional funding
for other existing PAPs of the concerned agencies; or (3) used to augment existing PAPs of any
agency and to fund priority PAPs not considered in the 2012 budget but expected to be started or
implemented in 2012. Financing the other priority PAPs was made subject to the approval of the
President. Note here that NBC No. 541 used terminologies like "realignment" and "augmentation" in
the application of the withdrawn unobligated allotments.

Taken together, all the issuances showed how the DAP was to be implemented and funded, that is
— (1) by declaring "savings" coming from the various departments and agencies derived from
pooling unobligated allotments and withdrawing unreleased appropriations; (2) releasing
unprogrammed funds; and (3) applying the "savings" and unprogrammed funds to augment existing
PAPs or to support other priority PAPs.

c. DAP was not an appropriation

measure; hence, no appropriation

law was required to adopt or to

implement it

Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a law to establish
the DAP, or to authorize the disbursement and release of public funds to implement the DAP.
Villegas, PHILCONSA, IBP, Araullo, and COURAGE observe that the appropriations funded under the
DAP were not included in the 2011, 2012 and 2013 GAAs. To petitioners IBP, Araullo, and COURAGE,
the DAP, being actually an appropriation that set aside public funds for public use, should require an
enabling law for its validity. VACC maintains that the DAP, because it involved huge allocations that
were separate and distinct from the GAAs, circumvented and duplicated the GAAs without
congressional authorization and control.

The petitioners contend in unison that based on how it was developed and implemented the DAP
violated the mandate of Section 29(1), Article VI of the 1987 Constitution that "[n]o money shall be
paid out of the Treasury except in pursuance of an appropriation made by law."

The OSG posits, however, that no law was necessary for the adoption and implementation of the
DAP because of its being neither a fund nor an appropriation, but a program or an administrative
system of prioritizing spending; and that the adoption of the DAP was by virtue of the authority of
the President as the Chief Executive to ensure that laws were faithfully executed.
We agree with the OSG’s position.

The DAP was a government policy or strategy designed to stimulate the economy through
accelerated spending. In the context of the DAP’s adoption and implementation being a function
pertaining to the Executive as the main actor during the Budget Execution Stage under its
constitutional mandate to faithfully execute the laws, including the GAAs, Congress did not need to
legislate to adopt or to implement the DAP. Congress could appropriate but would have nothing
more to do during the Budget Execution Stage. Indeed, appropriation was the act by which Congress
"designates a particular fund, or sets apart a specified portion of the public revenue or of the money
in the public treasury, to be applied to some general object of governmental expenditure, or to
some individual purchase or expense."124 As pointed out in Gonzales v. Raquiza:125 ‘"In a strict
sense, appropriation has been defined ‘as nothing more than the legislative authorization prescribed
by the Constitution that money may be paid out of the Treasury,’ while appropriation made by law
refers to ‘the act of the legislature setting apart or assigning to a particular use a certain sum to be
used in the payment of debt or dues from the State to its creditors.’"126

On the other hand, the President, in keeping with his duty to faithfully execute the laws, had
sufficient discretion during the execution of the budget to adapt the budget to changes in the
country’s economic situation.127 He could adopt a plan like the DAP for the purpose. He could pool
the savings and identify the PAPs to be funded under the DAP. The pooling of savings pursuant to
the DAP, and the identification of the PAPs to be funded under the DAP did not involve
appropriation in the strict sense because the money had been already set apart from the public
treasury by Congress through the GAAs. In such actions, the Executive did not usurp the power
vested in Congress under Section 29(1), Article VI of the Constitution.

3.

Unreleased appropriations and withdrawn

unobligated allotments under the DAP

were not savings, and the use of such

appropriations contravened Section 25(5),

Article VI of the 1987 Constitution.

Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by the Executive
to ramp up spending to accelerate economic growth, the challenges posed by the petitioners
constrain us to dissect the mechanics of the actual execution of the DAP. The management and
utilization of the public wealth inevitably demands a most careful scrutiny of whether the
Executive’s implementation of the DAP was consistent with the Constitution, the relevant GAAs and
other existing laws.
a. Although executive discretion

and flexibility are necessary in

the execution of the budget, any

transfer of appropriated funds

should conform to Section 25(5),

Article VI of the Constitution

We begin this dissection by reiterating that Congress cannot anticipate all issues and needs that may
come into play once the budget reaches its execution stage. Executive discretion is necessary at that
stage to achieve a sound fiscal administration and assure effective budget implementation. The
heads of offices, particularly the President, require flexibility in their operations under performance
budgeting to enable them to make whatever adjustments are needed to meet established work
goals under changing conditions.128 In particular, the power to transfer funds can give the President
the flexibility to meet unforeseen events that may otherwise impede the efficient implementation of
the PAPs set by Congress in the GAA.

Congress has traditionally allowed much flexibility to the President in allocating funds pursuant to
the GAAs,129 particularly when the funds are grouped to form lump sum accounts.130 It is assumed
that the agencies of the Government enjoy more flexibility when the GAAs provide broader
appropriation items.131 This flexibility comes in the form of policies that the Executive may adopt
during the budget execution phase. The DAP – as a strategy to improve the country’s economic
position – was one policy that the President decided to carry out in order to fulfill his mandate under
the GAAs.

Denying to the Executive flexibility in the expenditure process would be counterproductive. In

Presidential Spending Power,132 Prof. Louis Fisher, an American constitutional scholar whose
specialties have included budget policy, has justified extending discretionary authority to the
Executive thusly:

[T]he impulse to deny discretionary authority altogether should be resisted. There are many number
of reasons why obligations and outlays by administrators may have to differ from appropriations by
legislators. Appropriations are made many months, and sometimes years, in advance of
expenditures. Congress acts with imperfect knowledge in trying to legislate in fields that are highly
technical and constantly undergoing change. New circumstances will develop to make obsolete and
mistaken the decisions reached by Congress at the appropriation stage. It is not practicable for
Congress to adjust to each new development by passing separate supplemental appropriation bills.
Were Congress to control expenditures by confining administrators to narrow statutory details, it
would perhaps protect its power of the purse but it would not protect the purse itself. The realities
and complexities of public policy require executive discretion for the sound management of public
funds.
xxxx

x x x The expenditure process, by its very nature, requires substantial discretion for administrators.
They need to exercise judgment and take responsibility for their actions, but those actions ought to
be directed toward executing congressional, not administrative policy. Let there be discretion, but
channel it and use it to satisfy the programs and priorities established by Congress.

In contrast, by allowing to the heads of offices some power to transfer funds within their respective
offices, the Constitution itself ensures the fiscal autonomy of their offices, and at the same time
maintains the separation of powers among the three main branches of the Government. The Court
has recognized this, and emphasized so in Bengzon v. Drilon,133 viz:

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

In the case of the President, the power to transfer funds from one item to another within the
Executive has not been the mere offshoot of established usage, but has emanated from law itself. It
has existed since the time of the American Governors-General.134 Act No. 1902 (An Act authorizing
the Governor-General to direct any unexpended balances of appropriations be returned to the
general fund of the Insular Treasury and to transfer from the general fund moneys which have been
returned thereto), passed on May 18, 1909 by the First Philippine Legislature,135 was the first
enabling law that granted statutory authority to the President to transfer funds. The authority was
without any limitation, for the Act explicitly empowered the Governor-General to transfer any
unexpended balance of appropriations for any bureau or office to another, and to spend such
balance as if it had originally been appropriated for that bureau or office.

From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that could be
transferred, thereby limiting the power to transfer funds. Only 10% of the amounts appropriated for
contingent or miscellaneous expenses could be transferred to a bureau or office, and the transferred
funds were to be used to cover deficiencies in the appropriations also for miscellaneous expenses of
said bureau or office.

In 1921, the ceiling on the amounts of funds to be transferred from items under miscellaneous
expenses to any other item of a certain bureau or office was removed.
During the Commonwealth period, the power of the President to transfer funds continued to be
governed by the GAAs despite the enactment of the Constitution in 1935. It is notable that the 1935
Constitution did not include a provision on the power to transfer funds. At any rate, a shift in the
extent of the President’s power to transfer funds was again experienced during this era, with the
President being given more flexibility in implementing the budget. The GAAs provided that the
power to transfer all or portions of the appropriations in the Executive Department could be made in
the "interest of the public, as the President may determine."136

In its time, the 1971 Constitutional Convention wanted to curtail the President’s seemingly
unbounded discretion in transferring funds.137 Its Committee on the Budget and Appropriation
proposed to prohibit the transfer of funds among the separate branches of the Government and the
independent constitutional bodies, but to allow instead their respective heads to augment items of
appropriations from savings in their respective budgets under certain limitations.138 The clear
intention of the Convention was to further restrict, not to liberalize, the power to transfer
appropriations.139 Thus, the Committee on the Budget and Appropriation initially considered setting
stringent limitations on the power to augment, and suggested that the augmentation of an item of
appropriation could be made "by not more than ten percent if the original item of appropriation to
be augmented does not exceed one million pesos, or by not more than five percent if the original
item of appropriation to be augmented exceeds one million pesos."140 But two members of the
Committee objected to the ₱1,000,000.00 threshold, saying that the amount was arbitrary and
might not be reasonable in the future. The Committee agreed to eliminate the ₱1,000,000.00
threshold, and settled on the ten percent limitation.141

In the end, the ten percent limitation was discarded during the plenary of the Convention, which
adopted the following final version under Section 16, Article VIII of the 1973 Constitution, to wit:

(5) No law shall be passed authorizing any transfer of appropriations; however, the President, the
Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of Constitutional
Commissions may by law be authorized to augment any item in the general appropriations law for
their respective offices from savings in other items of their respective appropriations.

The 1973 Constitution explicitly and categorically prohibited the transfer of funds from one item to
another, unless Congress enacted a law authorizing the President, the Prime Minister, the Speaker,
the Chief Justice of the Supreme Court, and the heads of the Constitutional omissions to transfer
funds for the purpose of augmenting any item from savings in another item in the GAA of their
respective offices. The leeway was limited to augmentation only, and was further constricted by the
condition that the funds to be transferred should come from savings from another item in the
appropriation of the office.142

On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:
Section 44. Authority to Approve Fund Transfers. The President shall have the authority to transfer
any fund appropriated for the different departments, bureaus, offices and agencies of the Executive
Department which are included in the General Appropriations Act, to any program, project, or
activity of any department, bureau or office included in the General Appropriations Act or approved
after its enactment.

The President shall, likewise, have the authority to augment any appropriation of the Executive
Department in the General Appropriations Act, from savings in the appropriations of another
department, bureau, office or agency within the Executive Branch, pursuant to the provisions of
Article VIII, Section 16 (5) of the Constitution.

In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44 for
contravening Section 16(5)of the 1973 Constitution, ruling:

Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted under said
Section 16. It empowers the President to indiscriminately transfer funds from one department,
bureau, office or agency of the Executive Department to any program, project or activity of any
department, bureau or office included in the General Appropriations Act or approved after its
enactment, without regard as to whether or not the funds to be transferred are actually savings in
the item from which the same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only completely disregard the
standards set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render
the provision in question null and void.143

It is significant that Demetria was promulgated 25 days after the ratification by the people of the
1987 Constitution, whose Section 25(5) of Article VI is identical to Section 16(5), Article VIII of the
1973 Constitution, to wit:

Section 25. x x x

xxxx

5) No law shall be passed authorizing any transfer of appropriations; however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to
augment any item in the general appropriations law for their respective offices from savings in other
items of their respective appropriations.
xxxx

The foregoing history makes it evident that the Constitutional Commission included Section 25(5),
supra, to keep a tight rein on the exercise of the power to transfer funds appropriated by Congress
by the President and the other high officials of the Government named therein. The Court stated in
Nazareth v. Villar:144

In the funding of current activities, projects, and programs, the general rule should still be that the
budgetary amount contained in the appropriations bill is the extent Congress will determine as
sufficient for the budgetary allocation for the proponent agency. The only exception is found in
Section 25 (5), Article VI of the Constitution, by which the President, the President of the Senate, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of
Constitutional Commissions are authorized to transfer appropriations to augmentany item in the
GAA for their respective offices from the savings in other items of their respective appropriations.
The plain language of the constitutional restriction leaves no room for the petitioner’s posture,
which we should now dispose of as untenable.

It bears emphasizing that the exception in favor of the high officials named in Section 25(5), Article
VI of the Constitution limiting the authority to transfer savings only to augment another item in the
GAA is strictly but reasonably construed as exclusive. As the Court has expounded in Lokin, Jr. v.
Commission on Elections:

When the statute itself enumerates the exceptions to the application of the general rule, the
exceptions are strictly but reasonably construed. The exceptions extend only as far as their language
fairly warrants, and all doubts should be resolved in favor of the general provision rather than the
exceptions. Where the general rule is established by a statute with exceptions, none but the
enacting authority can curtail the former. Not even the courts may add to the latter by implication,
and it is a rule that an express exception excludes all others, although it is always proper in
determining the applicability of the rule to inquire whether, in a particular case, it accords with
reason and justice.

The appropriate and natural office of the exception is to exempt something from the scope of the
general words of a statute, which is otherwise within the scope and meaning of such general words.
Consequently, the existence of an exception in a statute clarifies the intent that the statute shall
apply to all cases not excepted. Exceptions are subject to the rule of strict construction; hence, any
doubt will be resolved in favor of the general provision and against the exception. Indeed, the liberal
construction of a statute will seem to require in many circumstances that the exception, by which
the operation of the statute is limited or abridged, should receive a restricted construction.
Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on the
President’s discretion over the appropriations during the Budget Execution Phase.

b. Requisites for the valid transfer of

appropriated funds under Section

25(5), Article VI of the 1987

Constitution

The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a
concurrence of the following requisites, namely:

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

(2) The funds to be transferred are savings generated from the appropriations for their respective
offices; and (3) The purpose of the transfer is to augment an item in the general appropriations law
for their respective offices.

b.1. First Requisite–GAAs of 2011 and

2012 lacked valid provisions to

authorize transfers of funds under

the DAP; hence, transfers under the

DAP were unconstitutional

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

Did the GAAs expressly authorize the transfer of funds?

In the 2011 GAA, the provision that gave the President and the other high officials the authority to
transfer funds was Section 59, as follows:
Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any
item in this Act from savings in other items of their respective appropriations.

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

Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any
item in this Act from savings in other items of their respective appropriations.

In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as justification
for the use of savings under the DAP.145

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

Apparently realizing the problem, Congress inserted the omitted phrase in the counterpart provision
in the 2013 GAA, to wit:

Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in
their respective appropriations to augment actual deficiencies incurred for the current year in any
item of their respective appropriations.

Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra, existed, there
still remained two other requisites to be met, namely: that the source of funds to be transferred
were savings from appropriations within the respective offices; and that the transfer must be for the
purpose of augmenting an item of appropriation within the respective offices.
b.2. Second Requisite – There were

no savings from which funds

could be sourced for the DAP

Were the funds used in the DAP actually savings?

The petitioners claim that the funds used in the DAP — the unreleased appropriations and
withdrawn unobligated allotments — were not actual savings within the context of Section 25(5),
supra, and the relevant provisions of the GAAs. Belgica argues that "savings" should be understood
to refer to the excess money after the items that needed to be funded have been funded, or those
that needed to be paid have been paid pursuant to the budget.146 The petitioners posit that there
could be savings only when the PAPs for which the funds had been appropriated were actually
implemented and completed, or finally discontinued or abandoned. They insist that savings could
not be realized with certainty in the middle of the fiscal year; and that the funds for "slow-moving"
PAPs could not be considered as savings because such PAPs had not actually been abandoned or
discontinued yet.147 They stress that NBC No. 541, by allowing the withdrawn funds to be reissued
to the "original program or project from which it was withdrawn," conceded that the PAPs from
which the supposed savings were taken had not been completed, abandoned or discontinued.148

The OSG represents that "savings" were "appropriations balances," being the difference between
the appropriation authorized by Congress and the actual amount allotted for the appropriation; that
the definition of "savings" in the GAAs set only the parameters for determining when savings
occurred; that it was still the President (as well as the other officers vested by the Constitution with
the authority to augment) who ultimately determined when savings actually existed because savings
could be determined only during the stage of budget execution; that the President must be given a
wide discretion to accomplish his tasks; and that the withdrawn unobligated allotments were savings
inasmuch as they were clearly "portions or balances of any programmed appropriation…free from
any obligation or encumbrances which are (i) still available after the completion or final
discontinuance or abandonment of the work, activity or purpose for which the appropriation is
authorized…"

We partially find for the petitioners.

In ascertaining the meaning of savings, certain principles should be borne in mind. The first principle
is that Congress wields the power of the purse. Congress decides how the budget will be spent; what
PAPs to fund; and the amounts of money to be spent for each PAP. The second principle is that the
Executive, as the department of the Government tasked to enforce the laws, is expected to faithfully
execute the GAA and to spend the budget in accordance with the provisions of the GAA.149 The
Executive is expected to faithfully implement the PAPs for which Congress allocated funds, and to
limit the expenditures within the allocations, unless exigencies result to deficiencies for which
augmentation is authorized, subject to the conditions provided by law. The third principle is that in
making the President’s power to augment operative under the GAA, Congress recognizes the need
for flexibility in budget execution. In so doing, Congress diminishes its own power of the purse, for it
delegates a fraction of its power to the Executive. But Congress does not thereby allow the Executive
to override its authority over the purse as to let the Executive exceed its delegated authority. And
the fourth principle is that savings should be actual. "Actual" denotes something that is real or
substantial, or something that exists presently in fact, as opposed to something that is merely
theoretical, possible, potential or hypothetical.150

The foregoing principles caution us to construe savings strictly against expanding the scope of the
power to augment. It is then indubitable that the power to augment was to be used only when the
purpose for which the funds had been allocated were already satisfied, or the need for such funds
had ceased to exist, for only then could savings be properly realized. This interpretation prevents the
Executive from unduly transgressing Congress’ power of the purse.

The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this
interpretation and made it operational, viz:

Savings refer to portions or balances of any programmed appropriation in this Act free from any
obligation or encumbrance which are: (i) still available after the completion or final discontinuance
or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from
appropriations balances arising from unpaid compensation and related costs pertaining to vacant
positions and leaves of absence without pay; and (iii) from appropriations balances realized from the
implementation of measures resulting in improved systems and efficiencies and thus enabled
agencies to meet and deliver the required or planned targets, programs and services approved in
this Act at a lesser cost.

The three instances listed in the GAAs’ aforequoted definition were a sure indication that savings
could be generated only upon the purpose of the appropriation being fulfilled, or upon the need for
the appropriation being no longer existent.

The phrase "free from any obligation or encumbrance" in the definition of savings in the GAAs
conveyed the notion that the appropriation was at that stage when the appropriation was already
obligated and the appropriation was already released. This interpretation was reinforced by the
enumeration of the three instances for savings to arise, which showed that the appropriation
referred to had reached the agency level. It could not be otherwise, considering that only when the
appropriation had reached the agency level could it be determined whether (a) the PAP for which
the appropriation had been authorized was completed, finally discontinued, or abandoned; or (b)
there were vacant positions and leaves of absence without pay; or (c) the required or planned
targets, programs and services were realized at a lesser cost because of the implementation of
measures resulting in improved systems and efficiencies.
The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriations such as unreleased Personnel Services appropriations which will lapse at the end of
the year, unreleased appropriations of slow moving projects and discontinued projects per Zero-
Based Budgeting findings."

The declaration of the DBM by itself does not state the clear legal basis for the treatment of
unreleased or unalloted appropriations as savings.

The fact alone that the appropriations are unreleased or unalloted is a mere description of the status
of the items as unalloted or unreleased. They have not yet ripened into categories of items from
which savings can be generated. Appropriations have been considered "released" if there has
already been an allotment or authorization to incur obligations and disbursement authority. This
means that the DBM has issued either an ABM (for those not needing clearance), or a SARO (for
those needing clearance), and consequently an NCA, NCAA or CDC, as the case may be.
Appropriations remain unreleased, for instance, because of noncompliance with documentary
requirements (like the Special Budget Request), or simply because of the unavailability of funds. But
the appropriations do not actually reach the agencies to which they were allocated under the GAAs,
and have remained with the DBM technically speaking. Ergo, unreleased appropriations refer to
appropriations with allotments but without disbursement authority.

For us to consider unreleased appropriations as savings, unless these met the statutory definition of
savings, would seriously undercut the congressional power of the purse, because such
appropriations had not even reached and been used by the agency concerned vis-à-vis the PAPs for
which Congress had allocated them. However, if an agency has unfilled positions in its plantilla and
did not receive an allotment and NCA for such vacancies, appropriations for such positions, although
unreleased, may already constitute savings for that agency under the second instance.

Unobligated allotments, on the other hand, were encompassed by the first part of the definition of
"savings" in the GAA, that is, as "portions or balances of any programmed appropriation in this Act
free from any obligation or encumbrance." But the first part of the definition was further qualified by
the three enumerated instances of when savings would be realized. As such, unobligated allotments
could not be indiscriminately declared as savings without first determining whether any of the three
instances existed. This signified that the DBM’s withdrawal of unobligated allotments had
disregarded the definition of savings under the GAAs.

Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE appropriations are
deemed divided into twelve monthly allocations within the fiscal year; hence, savings could be
generated monthly from the excess or unused MOOE appropriations other than the Mandatory
Expenditures and Expenditures for Business-type Activities because of the physical impossibility to
obligate and spend such funds as MOOE for a period that already lapsed. Following this observation,
MOOE for future months are not savings and cannot be transferred.
The DBM’s Memorandum for the President dated June 25, 2012 (which became the basis of NBC No.
541) stated:

ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS

5.0 The DBM, during the course of performance reviews conducted on the agencies’ operations,
particularly on the implementation of their projects/activities, including expenses incurred in
undertaking the same, have been continuously calling the attention of all National Government
agencies (NGAs) with low levels of obligations as of end of the first quarter to speedup the
implementation of their programs and projects in the second quarter.

6.0 Said reminders were made in a series of consultation meetings with the concerned agencies and
with call-up letters sent.

7.0 Despite said reminders and the availability of funds at the department’s disposal, the level of
financial performance of some departments registered below program, with the targeted
obligations/disbursements for the first semester still not being met.

8.0 In order to maximize the use of the available allotment, all unobligated balances as of June 30,
2012, both for continuing and current allotments shall be withdrawn and pooled to fund fast moving
programs/projects.

9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow
moving projects to be identified by the agencies and their catch up plans to be evaluated by the
DBM.

It is apparent from the foregoing text that the withdrawal of unobligated allotments would be based
on whether the allotments pertained to slow-moving projects, or not. However, NBC No. 541 did not
set in clear terms the criteria for the withdrawal of unobligated allotments, viz:

3.1. These guidelines shall cover the withdrawal of unobligated allotments as of June 30, 2012 ofall
national government agencies (NGAs) charged against FY 2011 Continuing Appropriation (R.A. No.
10147) and FY 2012 Current Appropriation (R.A. No. 10155), pertaining to:

3.1.1 Capital Outlays (CO);

3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the implementation of
programs and projects, as well as capitalized MOOE; and

3.1.3 Personal Services corresponding to unutilized pension benefits declared as savings by the
agencies concerned based on their undated/validated list of pensioners.

A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal of unobligated
allotments of agencies with low levels of obligations"151 "to fund priority and/or fast-moving
programs/projects."152 But the fact that the withdrawn allotments could be "[r]eissued for the
original programs and projects of the agencies/OUs concerned, from which the allotments were
withdrawn"153 supported the conclusion that the PAPs had not yet been finally discontinued or
abandoned. Thus, the purpose for which the withdrawn funds had been appropriated was not yet
fulfilled, or did not yet cease to exist, rendering the declaration of the funds as savings impossible.

Worse, NBC No. 541 immediately considered for withdrawal all released allotments in 2011 charged
against the 2011 GAA that had remained unobligated based on the following considerations, to wit:

5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be
implementation-ready and doable during the given fiscal year; and

5.4.2 The practice of having substantial carryover appropriations may imply that the agency has a
slower-than-programmed implementation capacity or agency tends to implement projects within a
two-year timeframe.

Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated allotments for
continuing and current appropriations as of June 30, 2012, disregarded the 2-year period of
availability of the appropriations for MOOE and capital outlay extended under Section 65, General
Provisions of the 2011 GAA, viz:

Section 65. Availability of Appropriations. — Appropriations for MOOE and capital outlays authorized
in this Act shall be available for release and obligation for the purpose specified, and under the same
special provisions applicable thereto, for a period extending to one fiscal year after the end of the
year in which such items were appropriated: PROVIDED, That appropriations for MOOE and capital
outlays under R.A. No. 9970 shall be made available up to the end of FY 2011: PROVIDED, FURTHER,
That a report on these releases and obligations shall be submitted to the Senate Committee on
Finance and the House Committee on Appropriations.

and Section 63 General Provisions of the 2012 GAA, viz:

Section 63. Availability of Appropriations. — Appropriations for MOOE and capital outlays authorized
in this Act shall be available for release and obligation for the purpose specified, and under the same
special provisions applicable thereto, for a period extending to one fiscal year after the end of the
year in which such items were appropriated: PROVIDED, That a report on these releases and
obligations shall be submitted to the Senate Committee on Finance and the House Committee on
Appropriations, either in printed form or by way of electronic document.154

Thus, another alleged area of constitutional infirmity was that the DAP and its relevant issuances
shortened the period of availability of the appropriations for MOOE and capital outlays.

Congress provided a one-year period of availability of the funds for all allotment classes in the 2013
GAA (R.A. No. 10352), to wit:

Section 63. Availability of Appropriations.— All appropriations authorized in this Act shall be
available for release and obligation for the purposes specified, and under the same special provisions
applicable thereto, until the end of FY 2013: PROVIDED, That a report on these releases and
obligations shall be submitted to the Senate Committee on Finance and House Committee on
Appropriations, either in printed form or by way of electronic document.

Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought omnibus authority
to consolidate savings and unutilized balances to fund the DAP on a quarterly basis, viz:

7.0 If the level of financial performance of some department will register below program, even with
the availability of funds at their disposal, the targeted obligations/disbursements for each quarter
will not be met. It is important to note that these funds will lapse at the end of the fiscal year if these
remain unobligated.

8.0 To maximize the use of the available allotment, all unobligated balances at the end of every
quarter, both for continuing and current allotments shall be withdrawn and pooled to fund fast
moving programs/projects.

9.0 It may be emphasized that the allotments to be withdrawn will be based on the list of slow
moving projects to be identified by the agencies and their catch up plans to be evaluated by the
DBM.

The validity period of the affected appropriations, already given the brief Lifes pan of one year, was
further shortened to only a quarter of a year under the DBM’s memorandum dated May 20, 2013.
The petitioners accuse the respondents of forcing the generation of savings in order to have a larger
fund available for discretionary spending. They aver that the respondents, by withdrawing
unobligated allotments in the middle of the fiscal year, in effect deprived funding for PAPs with
existing appropriations under the GAAs.155

The respondents belie the accusation, insisting that the unobligated allotments were being
withdrawn upon the instance of the implementing agencies based on their own assessment that
they could not obligate those allotments pursuant to the President’s directive for them to spend
their appropriations as quickly as they could in order to ramp up the economy.156

We agree with the petitioners.

Contrary to the respondents’ insistence, the withdrawals were upon the initiative of the DBM itself.
The text of NBC No. 541 bears this out, to wit:

5.2 For the purpose of determining the amount of unobligated allotments that shall be withdrawn,
all departments/agencies/operating units (OUs) shall submit to DBM not later than July 30, 2012, the
following budget accountability reports as of June 30, 2012;

• Statement of Allotments, Obligation and Balances (SAOB);

• Financial Report of Operations (FRO); and

• Physical Report of Operations.

5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the agency’s
latest report available shall be used by DBM as basis for withdrawal of allotment. The DBM shall
compute/approximate the agency’s obligation level as of June 30 to derive its unobligated
allotments as of same period. Example: If the March 31 SAOB or FRO reflects actual obligations of P
800M then the June 30 obligation level shall approximate to ₱1,600 M (i.e., ₱800 M x 2 quarters).

The petitioners assert that no law had authorized the withdrawal and transfer of unobligated
allotments and the pooling of unreleased appropriations; and that the unbridled withdrawal of
unobligated allotments and the retention of appropriated funds were akin to the impoundment of
appropriations that could be allowed only in case of "unmanageable national government budget
deficit" under the GAAs,157 thus violating the provisions of the GAAs of 2011, 2012 and 2013
prohibiting the retention or deduction of allotments.158

In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a
last-ditch effort of the Executive to push agencies into actually spending their appropriations; that
such policy did not amount to an impoundment scheme, because impoundment referred to the
decision of the Executive to refuse to spend funds for political or ideological reasons; and that the
withdrawal of allotments under NBC No. 541 was made pursuant to Section 38, Chapter 5, Book VI
of the Administrative Code, by which the President was granted the authority to suspend or
otherwise stop further expenditure of funds allotted to any agency whenever in his judgment the
public interest so required.

The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments
and the pooling of unreleased appropriations were invalid for being bereft of legal support.
Nonetheless, such withdrawal of unobligated allotments and the retention of appropriated funds
cannot be considered as impoundment.

According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers to a refusal

by the President, for whatever reason, to spend funds made available by Congress. It is the failure to
spend or obligate budget authority of any type." Impoundment under the GAA is understood to
mean the retention or deduction of appropriations. The 2011 GAA authorized impoundment only in
case of unmanageable National Government budget deficit, to wit:

Section 66. 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.

Section 67. 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 FY 2011 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.

The 2012 and 2013 GAAs contained similar provisions.

The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment
because it entailed only the transfer of funds, not the retention or deduction of appropriations.

Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013 GAAs) be
applicable. They uniformly stated:

Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from

appropriations provided in this Act shall be transmitted intact or in full to the office or agency
concerned. No retention or deduction as reserves or overhead shall be made, except as authorized
by law, or upon direction of the President of the Philippines. The COA shall ensure compliance with
this provision to the extent that sub-allotments by agencies to their subordinate offices are in
conformity with the release documents issued by the DBM.

The provision obviously pertained to the retention or deduction of allotments upon their release
from the DBM, which was a different matter altogether. The Court should not expand the meaning
of the provision by applying it to the withdrawal of allotments.

The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify
the withdrawal of unobligated allotments. But the provision authorized only the suspension or
stoppage of further expenditures, not the withdrawal of unobligated allotments, to wit:

Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise provided in the

General Appropriations Act and whenever in his judgment the public interest so requires, the
President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop
further expenditure of funds allotted for any agency, or any other expenditure authorized in the
General Appropriations Act, except for personal services appropriations used for permanent officials
and employees.

Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38,
supra, but instead transferred the funds to other PAPs.
It is relevant to remind at this juncture that the balances of appropriations that remained
unexpended at the end of the fiscal year were to be reverted to the General Fund.1âwphi1 This was
the mandate of Section 28, Chapter IV, Book VI of the Administrative Code, to wit:

Section 28. Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.-

Unexpended balances of appropriations authorized in the General Appropriation Act shall revert to
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 meet non-recurring expenditures in a subsequent year.

The balances of continuing appropriations shall be reviewed as part of the annual budget
preparation process and the 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 Executive could not circumvent this provision by declaring unreleased appropriations and
unobligated allotments as savings prior to the end of the fiscal year.

b.3. Third Requisite – No funds from

savings could be transferred under

the DAP to augment deficient items

not provided in the GAA

The third requisite for a valid transfer of funds is that the purpose of the transfer should be "to
augment an item in the general appropriations law for the respective offices." The term "augment"
means to enlarge or increase in size, amount, or degree.160

The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for
the PAP item to be augmented must be deficient, to wit: –

x x x Augmentation implies the existence in this Act of a program, activity, or project with an
appropriation, which upon implementation, or subsequent evaluation of needed resources, is
determined to be deficient. In no case shall a non-existent program, activity, or project, be funded
by augmentation from savings or by the use of appropriations otherwise authorized in this Act.
In other words, an appropriation for any PAP must first be determined to be deficient before it could
be augmented from savings. Note is taken of the fact that the 2013 GAA already made this quite
clear, thus:

Section 52. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the
House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional
Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in
their respective appropriations to augment actual deficiencies incurred for the current year in any
item of their respective appropriations.

As of 2013, a total of ₱144.4 billion worth of PAPs were implemented through the DAP.161

Of this amount ₱82.5 billion were released in 2011 and ₱54.8 billion in 2012.162 Sec. Abad has
reported that 9% of the total DAP releases were applied to the PAPs identified by the legislators.163

The petitioners disagree, however, and insist that the DAP supported the following PAPs that had
not been covered with appropriations in the respective GAAs, namely:

(i) ₱1.5 billion for the Cordillera People’s Liberation Army;

(ii) ₱1.8 billion for the Moro National Liberation Front;

(iii) ₱700 million for assistance to Quezon Province;164

(iv) ₱50 million to ₱100 (million) each to certain senators;165

(v) ₱10 billion for the relocation of families living along dangerous zones under the National Housing
Authority;

(vi) ₱10 billion and ₱20 billion equity infusion under the Bangko Sentral;

(vii) ₱5.4 billion landowners’ compensation under the Department of Agrarian Reform;
(viii) ₱8.6 billion for the ARMM comprehensive peace and development program;

(ix) ₱6.5 billion augmentation of LGU internal revenue allotments

(x) ₱5 billion for crucial projects like tourism road construction under the Department of Tourism
and the Department of Public Works and Highways;

(xi) ₱1.8 billion for the DAR-DPWH Tulay ng Pangulo;

(xii) ₱1.96 billion for the DOH-DPWH rehabilitation of regional health units; and

(xiii) ₱4 billion for the DepEd-PPP school infrastructure projects.166

In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented, had
appropriation covers, and could properly be accounted for because the funds were released
following and pursuant to the standard practices adopted by the DBM.167 In support of its
argument, the OSG has submitted seven evidence packets containing memoranda, SAROs, and other
pertinent documents relative to the implementation and fund transfers under the DAP.168

Upon careful review of the documents contained in the seven evidence packets, we conclude that
the "savings" pooled under the DAP were allocated to PAPs that were not covered by any
appropriations in the pertinent GAAs.

For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster Risk, Exposure,
Assessment and Mitigation (DREAM) project under the Department of Science and Technology
(DOST) covered the amount of ₱1.6 Billion,169 broken down as follows:

APPROPRIATION

CODE PARTICULARS AMOUNT

AUTHORIZED

A.03.a.01.a Generation of new knowledge and technologies and research capability building in
priority areas identified as strategic to National Development

Personnel Services

Maintenance and Other Operating Expenses

Capital Outlays

P 43,504,024

1,164,517,589

391,978,387

P 1,600,000,000

the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had appropriated
only ₱537,910,000 for MOOE, but nothing for personnel services and capital outlays, to wit:

Personnel

Services Maintenance

and Other

Operating

Expenditures Capital

Outlays TOTAL

III. Operations

a. Funding Assistance to Science

and Technology Activities 177,406,000 1,887,365,000 49,090,000 2,113,861,000

1. Central Office 1,554,238,000

1,554,238,000

a. Generation of new

knowledge and

technologies and research

capability building in

priority areas identified as

strategic to National

Development

537,910,000
537,910,000

Aside from this transfer under the DAP to the DREAM project exceeding by almost 300% the
appropriation by Congress for the program Generation of new knowledge and technologies and
research capability building in priority areas identified as strategic to National Development, the
Executive allotted funds for personnel services and capital outlays. The Executive thereby
substituted its will to that of Congress. Worse, the Executive had not earlier proposed any amount
for personnel services and capital outlays in the NEP that became the basis of the 2011 GAA.170

It is worth stressing in this connection that the failure of the GAAs to set aside any amounts for an
expense category sufficiently indicated that Congress purposely did not see fit to fund, much less
implement, the PAP concerned. This indication becomes clearer when even the President himself did
not recommend in the NEP to fund the PAP. The consequence was that any PAP requiring
expenditure that did not receive any appropriation under the GAAs could only be a new PAP, any
funding for which would go beyond the authority laid down by Congress in enacting the GAAs. That
happened in some instances under the DAP.

In relation to the December 22, 2011 SARO issued to the Philippine Council for Industry, Energy and
Emerging Technology Research and Development (DOST-PCIEETRD)171 for Establishment of the
Advanced Failure Analysis Laboratory, which reads:

APPROPRIATION

CODE PARTICULARS AMOUNT

AUTHORIZED

A.02.a

Development, integration and coordination of the National Research System for Industry, Energy
and Emerging Technology and Related Fields

Capital Outlays

P 300,000,000

the appropriation code and the particulars appearing in the SARO did not correspond to the program
specified in the GAA, whose particulars were Research and Management Services(inclusive of the
following activities: (1) Technological and Economic Assessment for Industry, Energy and Utilities; (2)
Dissemination of Science and Technology Information; and (3) Management of PCIERD Information
System for Industry, Energy and Utilities. Even assuming that Development, integration and
coordination of the National Research System for Industry, Energy and Emerging Technology and
Related Fields– the particulars stated in the SARO – could fall under the broad program description
of Research and Management Services– as appearing in the SARO, it would nonetheless remain a
new activity by reason of its not being specifically stated in the GAA. As such, the DBM, sans
legislative authorization, could not validly fund and implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the Executive enjoyed sound
discretion in implementing the budget given the generality in the language and the broad policy
objectives identified under the GAAs;172 and that the President enjoyed unlimited authority to
spend the initial appropriations under his authority to declare and utilize savings,173 and in keeping
with his duty to faithfully execute the laws.

Although the OSG rightly contends that the Executive was authorized to spend in line with its
mandate to faithfully execute the laws (which included the GAAs), such authority did not translate to
unfettered discretion that allowed the President to substitute his own will for that of Congress. He
was still required to remain faithful to the provisions of the GAAs, given that his power to spend
pursuant to the GAAs was but a delegation to him from Congress. Verily, the power to spend the
public wealth resided in Congress, not in the Executive.174 Moreover, leaving the spending power of
the Executive unrestricted would threaten to undo the principle of separation of powers.175

Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse
whenever it deliberates and acts on the budget proposal submitted by the Executive.176 Its power
of the purse is touted as the very foundation of its institutional strength,177 and underpins "all other
legislative decisions and regulating the balance of influence between the legislative and executive
branches of government."178 Such enormous power encompasses the capacity to generate money
for the Government, to appropriate public funds, and to spend the money.179 Pertinently, when it
exercises its power of the purse, Congress wields control by specifying the PAPs for which public
money should be spent.

It is the President who proposes the budget but it is Congress that has the final say on matters of
appropriations.180 For this purpose, appropriation involves two governing principles, namely: (1) "a
Principle of the Public Fisc, asserting that all monies received from whatever source by any part of
the government are public funds;" and (2) "a Principle of Appropriations Control, prohibiting
expenditure of any public money without legislative authorization."181 To conform with the
governing principles, the Executive cannot circumvent the prohibition by Congress of an expenditure
for a PAP by resorting to either public or private funds.182 Nor could the Executive transfer
appropriated funds resulting in an increase in the budget for one PAP, for by so doing the
appropriation for another PAP is necessarily decreased. The terms of both appropriations will
thereby be violated.

b.4 Third Requisite – Cross-border

augmentations from savings were

prohibited by the Constitution

By providing that the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the Heads of the Constitutional
Commissions may be authorized to augment any item in the GAA "for their respective offices,"
Section 25(5), supra, has delineated borders between their offices, such that funds appropriated for
one office are prohibited from crossing over to another office even in the guise of augmentation of a
deficient item or items. Thus, we call such transfers of funds cross-border transfers or cross-border
augmentations.

To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire
Executive, with respect to the President; the Senate, with respect to the Senate President; the House
of Representatives, with respect to the Speaker; the Judiciary, with respect to the Chief Justice; the
Constitutional Commissions, with respect to their respective Chairpersons.

Did any cross-border transfers or augmentations transpire?

During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-border
augmentations, to wit:

JUSTICE BERSAMIN:

Alright, the whole time that you have been Secretary of Department of Budget and Management,
did the Executive Department ever redirect any part of savings of the National Government under
your control cross border to another department?

SECRETARY ABAD:

Well, in the Memos that we submitted to you, such an instance, Your Honor

JUSTICE BERSAMIN:

Can you tell me two instances? I don’t recall having read your material.

SECRETARY ABAD:

Well, the first instance had to do with a request from the House of Representatives. They started
building their e-library in 2010 and they had a budget for about 207 Million but they lack about 43
Million to complete its 250 Million requirements. Prior to that, the COA, in an audit observation
informed the Speaker that they had to continue with that construction otherwise the whole building,
as well as the equipments therein may suffer from serious deterioration. And at that time, since the
budget of the House of Representatives was not enough to complete 250 Million, they wrote to the
President requesting for an augmentation of that particular item, which was granted, Your Honor.
The second instance in the Memos is a request from the Commission on Audit. At the time they
were pushing very strongly the good governance programs of the government and therefore, part of
that is a requirement to conduct audits as well as review financial reports of many agencies. And in
the performance of that function, the Commission on Audit needed information technology
equipment as well as hire consultants and litigators to help them with their audit work and for that
they requested funds from the Executive and the President saw that it was important for the
Commission to be provided with those IT equipments and litigators and consultants and the request
was granted, Your Honor.

JUSTICE BERSAMIN:

These cross border examples, cross border augmentations were not supported by appropriations…

SECRETARY ABAD:

They were, we were augmenting existing items within their… (interrupted)

JUSTICE BERSAMIN:

No, appropriations before you augmented because this is a cross border and the tenor or text of the
Constitution is quite clear as far as I am concerned. It says here, "The power to augment may only be
made to increase any item in the General Appropriations Law for their respective offices." Did you
not feel constricted by this provision?

SECRETARY ABAD:

Well, as the Constitution provides, the prohibition we felt was on the transfer of appropriations,
Your Honor. What we thought we did was to transfer savings which was needed by the Commission
to address deficiency in an existing item in both the Commission as well as in the House of
Representatives; that’s how we saw…(interrupted)

JUSTICE BERSAMIN:

So your position as Secretary of Budget is that you could do that?

SECRETARY ABAD:

In an extreme instances because…(interrupted)

JUSTICE BERSAMIN:

No, no, in all instances, extreme or not extreme, you could do that, that’s your feeling.

SECRETARY ABAD:

Well, in that particular situation when the request was made by the Commission and the House of
Representatives, we felt that we needed to respond because we felt…(interrupted).183

The records show, indeed, that funds amounting to ₱143,700,000.00 and ₱250,000,000.00 were
transferred under the DAP respectively to the COA184 and the House of Representatives.185 Those
transfers of funds, which constituted cross-border augmentations for being from the Executive to
the COA and the House of Representatives, are graphed as follows:186

OFFICE PURPOSE DATE

RELEASED AMOUNT

(In thousand pesos)

Reserve

Imposed Releases

Commission on

Audit IT Infrastructure Program and hiring of additional litigation experts 11/11/11

143,700

Congress –

House of

RepresentativesCompletion of the construction of the Legislative Library and Archives

Building/Congressional e-library 07/23/12 207,034

(Savings of HOR) 250,000

The respondents further stated in their memorandum that the President "made available" to the
"Commission on Elections the savings of his department upon [its] request for funds…"187 This was
another instance of a cross-border augmentation.

The respondents justified all the cross-border transfers thusly:

99. The Constitution does not prevent the President from transferring savings of his department to
another department upon the latter’s request, provided it is the recipient department that uses such
funds to augment its own appropriation. In such a case, the President merely gives the other
department access to public funds but he cannot dictate how they shall be applied by that
department whose fiscal autonomy is guaranteed by the Constitution.188

In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza, representing
Congress, announced a different characterization of the cross-border transfers of funds as in the
nature of "aid" instead of "augmentation," viz:

HONORABLE MENDOZA:

The cross-border transfers, if Your Honors please, is not an application of the DAP. What were these
cross-border transfers? They are transfers of savings as defined in the various General
Appropriations Act. So, that makes it similar to the DAP, the use of savings. There was a cross-border
which appears to be in violation of Section 25, paragraph 5 of Article VI, in the sense that the border
was crossed. But never has it been claimed that the purpose was to augment a deficient item in
another department of the government or agency of the government. The cross-border transfers, if
Your Honors please, were in the nature of [aid] rather than augmentations. Here is a government
entity separate and independent from the Executive Department solely in need of public funds. The
President is there 24 hours a day, 7 days a week. He’s in charge of the whole operation although six
or seven heads of government offices are given the power to augment. Only the President stationed
there and in effect in-charge and has the responsibility for the failure of any part of the government.
You have election, for one reason or another, the money is not enough to hold election. There would
be chaos if no money is given as an aid, not to augment, but as an aid to a department like COA. The
President is responsible in a way that the other heads, given the power to augment, are not. So, he
cannot very well allow this, if Your Honor please.189

JUSTICE LEONEN:

May I move to another point, maybe just briefly. I am curious that the position now, I think, of
government is that some transfers of savings is now considered to be, if I’m not mistaken, aid not
augmentation. Am I correct in my hearing of your argument?
HONORABLE MENDOZA:

That’s our submission, if Your Honor, please.

JUSTICE LEONEN:

May I know, Justice, where can we situate this in the text of the Constitution? Where do we actually
derive the concepts that transfers of appropriation from one branch to the other or what happened
in DAP can be considered a said? What particular text in the Constitution can we situate this?

HONORABLE MENDOZA:

There is no particular provision or statutory provision for that matter, if Your Honor please. It is
drawn from the fact that the Executive is the executive in-charge of the success of the government.

JUSTICE LEONEN:

So, the residual powers labelled in Marcos v. Manglapus would be the basis for this theory of the
government?

HONORABLE MENDOZA:

Yes, if Your Honor, please.

JUSTICE LEONEN:

A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress. That there are
opportunities and there have been opportunities of the President to actually go to Congress and ask
for supplemental budgets?

HONORABLE MENDOZA:
If there is time to do that, I would say yes.

JUSTICE LEONEN:

So, the theory of aid rather than augmentation applies in extra-ordinary situation?

HONORABLE MENDOZA:

Very extra-ordinary situations.

JUSTICE LEONEN:

But Counsel, this would be new doctrine, in case?

HONORABLE MENDOZA:

Yes, if Your Honor please.190

Regardless of the variant characterizations of the cross-border transfers of funds, the plain text of
Section 25(5), supra, disallowing cross border transfers was disobeyed. Cross-border transfers,
whether as augmentation, or as aid, were prohibited under Section 25(5), supra.

4.

Sourcing the DAP from unprogrammed

funds despite the original revenue targets

not having been exceeded was invalid

Funding under the DAP were also sourced from unprogrammed funds provided in the GAAs for
2011, 2012,and 2013. The respondents stress, however, that the unprogrammed funds were not
brought under the DAP as savings, but as separate sources of funds; and that, consequently, the
release and use of unprogrammed funds were not subject to the restrictions under Section 25(5),
supra.
The documents contained in the Evidence Packets by the OSG have confirmed that the
unprogrammed funds were treated as separate sources of funds. Even so, the release and use of the
unprogrammed funds were still subject to restrictions, for, to start with, the GAAs precisely specified
the instances when the unprogrammed funds could be released and the purposes for which they
could be used.

The petitioners point out that a condition for the release of the unprogrammed funds was that the
revenue collections must exceed revenue targets; and that the release of the unprogrammed funds
was illegal because such condition was not met.191

The respondents disagree, holding that the release and use of the unprogrammed funds under the
DAP were in accordance with the pertinent provisions of the GAAs. In particular, the DBM avers that
the unprogrammed funds could be availed of when any of the following three instances occur, to
wit: (1) the revenue collections exceeded the original revenue targets proposed in the BESFs
submitted by the President to Congress; (2) new revenues were collected or realized from sources
not originally considered in the BESFs; or(3) newly-approved loans for foreign assisted projects were
secured, or when conditions were triggered for other sources of funds, such as perfected loan
agreements for foreign-assisted projects.192 This view of the DBM was adopted by all the
respondents in their Consolidated Comment.193

The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as
appropriations that provided standby authority to incur additional agency obligations for priority
PAPs when revenue collections exceeded targets, and when additional foreign funds are
generated.194 Contrary to the DBM’s averment that there were three instances when
unprogrammed funds could be released, the BESFs envisioned only two instances. The third
mentioned by the DBM – the collection of new revenues from sources not originally considered in
the BESFs – was not included. This meant that the collection of additional revenues from new
sources did not warrant the release of the unprogrammed funds. Hence, even if the revenues not
considered in the BESFs were collected or generated, the basic condition that the revenue
collections should exceed the revenue targets must still be complied with in order to justify the
release of the unprogrammed funds.

The view that there were only two instances when the unprogrammed funds could be released was
bolstered by the following texts of the Special Provisions of the 2011 and 2012 GAAs, to wit:

2011 GAA

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

2012 GAA

1. Release of the Fund. The amounts authorized herein shall be released only when the revenue
collections exceed the original revenue targets submitted by the President of the Philippines to
Congress pursuant to Section 22, Article VII of the Constitution: PROVIDED, That collections arising
from sources not considered in the aforesaid original revenue targets may be used to cover releases
from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for
foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be
sufficient basis for the issuance of a SARO covering the loan proceeds.

As can be noted, the provisos in both provisions to the effect that "collections arising from sources
not considered in the aforesaid original revenue targets may be used to cover releases from
appropriations in this Fund" gave the authority to use such additional revenues for appropriations
funded from the unprogrammed funds. They did not at all waive compliance with the basic
requirement that revenue collections must still exceed the original revenue targets.

In contrast, the texts of the provisos with regard to additional revenues generated from newly-
approved foreign loans were clear to the effect that the perfected loan agreement would be in itself
"sufficient basis" for the issuance of a SARO to release the funds but only to the extent of the
amount of the loan. In such instance, the revenue collections need not exceed the revenue targets
to warrant the release of the loan proceeds, and the mere perfection of the loan agreement would
suffice.

It can be inferred from the foregoing that under these provisions of the GAAs the additional
revenues from sources not considered in the BESFs must be taken into account in determining if the
revenue collections exceeded the revenue targets. The text of the relevant provision of the 2013
GAA, which was substantially similar to those of the GAAs for 2011 and 2012, already made this
explicit, thus:
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue
collections exceed the original revenue targets submitted by the President of the Philippines to
Congress pursuant to Section 22, Article VII of the Constitution, including collections arising from
sources not considered in the aforesaid original revenue target, as certified by the BTr: PROVIDED,
That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan
agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan
proceeds.

Consequently, that there were additional revenues from sources not considered in the revenue
target would not be enough. The total revenue collections must still exceed the original revenue
targets to justify the release of the unprogrammed funds (other than those from newly-approved
foreign loans).

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

The BESF provided for the following sources of revenue, with the corresponding revenue target
stated for each source of revenue, to wit:

TAX REVENUES

Taxes on Net Income and Profits

Taxes on Property

Taxes on Domestic Goods and Services

General Sales, Turnover or VAT

Selected Excises on Goods

Selected Taxes on Services

Taxes on the Use of Goods or Property or Permission to Perform Activities

Other Taxes

Taxes on International Trade and Transactions

NON-TAX REVENUES

Fees and Charges

BTR Income

Government Services

Interest on NG Deposits

Interest on Advances to Government Corporations

Income from Investments

Interest on Bond Holdings

Guarantee Fee

Gain on Foreign Exchange

NG Income Collected by BTr

Dividends on Stocks

NG Share from Airport Terminal Fee

NG Share from PAGCOR Income

NG Share from MIAA Profit

Privatization

Foreign Grants

Thus, when the Court required the respondents to submit a certification from the Bureau of
Treasury (BTr) to the effect that the revenue collections had exceeded the original revenue
targets,195 they complied by submitting certifications from the BTr and Department of Finance
(DOF) pertaining to only one identified source of revenue – the dividends from the shares of stock
held by the Government in government-owned and controlled corporations.

To justify the release of the unprogrammed funds for 2011, the OSG presented the certification
dated March 4, 2011 issued by DOF Undersecretary Gil S. Beltran, as follows:
This is to certify that under the Budget for Expenditures and Sources of Financing for 2011, the
programmed income from dividends from shares of stock in government-owned and controlled
corporations is 5.5 billion.

This is to certify further that based on the records of the Bureau of Treasury, the National
Government has recorded dividend income amounting to ₱23.8 billion as of 31 January 2011.196

For 2012, the OSG submitted the certification dated April 26, 2012 issued by National Treasurer
Roberto B. Tan, viz:

This is to certify that the actual dividend collections remitted to the National Government for the
period January to March 2012 amounted to ₱19.419 billion compared to the full year program of
₱5.5 billion for 2012.197

And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by National
Treasurer Rosalia V. De Leon, to wit:

This is to certify that the actual dividend collections remitted to the National Government for the
period January to May 2013 amounted to ₱12.438 billion compared to the full year program of
₱10.0198 billion for 2013.

Moreover, the National Government accounted for the sale of the right to build and operate the
NAIA expressway amounting to ₱11.0 billion in June 2013.199

The certifications reflected that by collecting dividends amounting to ₱23.8 billion in 2011, ₱19.419
billion in 2012, and ₱12.438 billion in 2013 the BTr had exceeded only the ₱5.5 billion in target
revenues in the form of dividends from stocks in each of 2011 and 2012, and only the ₱10 billion in
target revenues in the form of dividends from stocks in 2013.

However, the requirement that revenue collections exceed the original revenue targets was to be
construed in light of the purpose for which the unprogrammed funds were incorporated in the GAAs
as standby appropriations to support additional expenditures for certain priority PAPs should the
revenue collections exceed the resource targets assumed in the budget or when additional foreign
project loan proceeds were realized. The unprogrammed funds were included in the GAAs to provide
ready cover so as not to delay the implementation of the PAPs should new or additional revenue
sources be realized during the year.200 Given the tenor of the certifications, the unprogrammed
funds were thus not yet supported by the corresponding resources.201
The revenue targets stated in the BESF were intended to address the funding requirements of the
proposed programmed appropriations. In contrast, the unprogrammed funds, as standby
appropriations, were to be released only when there were revenues in excess of what the
programmed appropriations required. As such, the revenue targets should be considered as a whole,
not individually; otherwise, we would be dealing with artificial revenue surpluses. The requirement
that revenue collections must exceed revenue target should be understood to mean that the
revenue collections must exceed the total of the revenue targets stated in the BESF. Moreover, to
release the unprogrammed funds simply because there was an excess revenue as to one source of
revenue would be an unsound fiscal management measure because it would disregard the budget
plan and foster budget deficits, in contravention of the Government’s surplus budget policy.202

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

5.

Equal protection, checks and balances,

and public accountability challenges

The DAP is further challenged as violative of the Equal Protection Clause, the system of checks and
balances, and the principle of public accountability.

With respect to the challenge against the DAP under the Equal Protection Clause,203 Luna argues
that the implementation of the DAP was "unfair as it [was] selective" because the funds released
under the DAP was not made available to all the legislators, with some of them refusing to avail
themselves of the DAP funds, and others being unaware of the availability of such funds. Thus, the
DAP practised "undue favoritism" in favor of select legislators in contravention of the Equal
Protection Clause.

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

Anent the petitioners’ theory that the DAP violated the system of checks and balances, Luna submits
that the grant of the funds under the DAP to some legislators forced their silence about the issues
and anomalies surrounding the DAP. Meanwhile, Belgica stresses that the DAP, by allowing the
legislators to identify PAPs, authorized them to take part in the implementation and execution of the
GAAs, a function that exclusively belonged to the Executive; that such situation constituted undue
and unjustified legislative encroachment in the functions of the Executive; and that the President
arrogated unto himself the power of appropriation vested in Congress because NBC No. 541
authorized the use of the funds under the DAP for PAPs not considered in the 2012 budget.

Finally, the petitioners insist that the DAP was repugnant to the principle of public accountability
enshrined in the Constitution,204 because the legislators relinquished the power of appropriation to
the Executive, and exhibited a reluctance to inquire into the legality of the DAP.

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

The challenge based on the contravention of the Equal Protection Clause, which focuses on the
release of funds under the DAP to legislators, lacks factual and legal basis. The allegations about
Senators and Congressmen being unaware of the existence and implementation of the DAP, and
about some of them having refused to accept such funds were unsupported with relevant data. Also,
the claim that the Executive discriminated against some legislators on the ground alone of their
receiving less than the others could not of itself warrant a finding of contravention of the Equal
Protection Clause. The denial of equal protection of any law should be an issue to be raised only by
parties who supposedly suffer it, and, in these cases, such parties would be the few legislators
claimed to have been discriminated against in the releases of funds under the DAP. The reason for
the requirement is that only such affected legislators could properly and fully bring to the fore when
and how the denial of equal protection occurred, and explain why there was a denial in their
situation. The requirement was not met here. Consequently, the Court was not put in the position to
determine if there was a denial of equal protection. To have the Court do so despite the inadequacy
of the showing of factual and legal support would be to compel it to speculate, and the outcome
would not do justice to those for whose supposed benefit the claim of denial of equal protection has
been made.

The argument that the release of funds under the DAP effectively stayed the hands of the legislators
from conducting congressional inquiries into the legality and propriety of the DAP is speculative.
That deficiency eliminated any need to consider and resolve the argument, for it is fundamental that
speculation would not support any proper judicial determination of an issue simply because nothing
concrete can thereby be gained. In order to sustain their constitutional challenges against official
acts of the Government, the petitioners must discharge the basic burden of proving that the
constitutional infirmities actually existed.205 Simply put, guesswork and speculation cannot
overcome the presumption of the constitutionality of the assailed executive act.

We do not need to discuss whether or not the DAP and its implementation through the various
circulars and memoranda of the DBM transgressed the system of checks and balances in place in our
constitutional system. Our earlier expositions on the DAP and its implementing issuances infringing
the doctrine of separation of powers effectively addressed this particular concern.

Anent the principle of public accountability being transgressed because the adoption and
implementation of the DAP constituted an assumption by the Executive of Congress’ power of
appropriation, we have already held that the DAP and its implementing issuances were policies and
acts that the Executive could properly adopt and do in the execution of the GAAs to the extent that
they sought to implement strategies to ramp up or accelerate the economy of the country.

6.

Doctrine of operative fact was applicable

After declaring the DAP and its implementing issuances constitutionally infirm, we must now deal
with the consequences of the declaration.

Article 7 of the Civil Code provides:

Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not
be excused by disuse, or custom or practice to the contrary.

When the courts declared a law to be inconsistent with the Constitution, the former shall be void
and the latter shall govern.

Administrative or executive acts, orders and regulations shall be valid only when they are not
contrary to the laws or the Constitution.

A legislative or executive act that is declared void for being unconstitutional cannot give rise to any
right or obligation.206 However, the generality of the rule makes us ponder whether rigidly applying
the rule may at times be impracticable or wasteful. Should we not recognize the need to except from
the rigid application of the rule the instances in which the void law or executive act produced an
almost irreversible result?

The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has
been exhaustively explained in De Agbayani v. Philippine National Bank:207
The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter
an executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the
source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to
the fundamental law once judicially declared results in its being to all intents and purposes a mere
scrap of paper. As the new Civil Code puts it: ‘When the courts declare a law to be inconsistent with
the Constitution, the former shall be void and the latter shall govern.’ Administrative or executive
acts, orders and regulations shall be valid only when they are not contrary to the laws of the
Constitution. It is understandable why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its terms cannot survive.

Such a view has support in logic and possesses the merit of simplicity. It may not however be
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force and had to be complied with. This is
so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience
and respect. Parties may have acted under it and may have changed their positions. What could be
more fitting than that in a subsequent litigation regard be had to what has been done while such
legislative or executive act was in operation and presumed to be valid in all respects. It is now
accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with.
This is merely to reflect awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may lead to a declaration
of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no
recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: ‘The actual existence of a statute, prior to
such a determination [of unconstitutionality], is an operative fact and may have consequences which
cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect
of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect
to particular relations, individual and corporate, and particular conduct, private and official.’"

The doctrine of operative fact recognizes the existence of the law or executive act prior to the
determination of its unconstitutionality as an operative fact that produced consequences that
cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive act
but sustains its effects. It provides an exception to the general rule that a void or unconstitutional
law produces no effect.208 But its use must be subjected to great scrutiny and circumspection, and
it cannot be invoked to validate an unconstitutional law or executive act, but is resorted to only as a
matter of equity and fair play.209 It applies only to cases where extraordinary circumstances exist,
and only when the extraordinary circumstances have met the stringent conditions that will permit its
application.

We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its
application to the DAP proceeds from equity and fair play. The consequences resulting from the DAP
and its related issuances could not be ignored or could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The
term executive act is broad enough to include any and all acts of the Executive, including those that
are quasi legislative and quasi-judicial in nature. The Court held so in Hacienda Luisita, Inc. v.
Presidential Agrarian Reform Council:210

Nonetheless, the minority is of the persistent view that the applicability of the operative fact
doctrine should be limited to statutes and rules and regulations issued by the executive department
that are accorded the same status as that of a statute or those which are quasi-legislative in nature.
Thus, the minority concludes that the phrase ‘executive act’ used in the case of De Agbayani v.
Philippine National Bank refers only to acts, orders, and rules and regulations that have the force
and effect of law. The minority also made mention of the Concurring Opinion of Justice Enrique
Fernando in Municipality of Malabang v. Benito, where it was supposedly made explicit that the
operative fact doctrine applies to executive acts, which are ultimately quasi-legislative in nature.

We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang case
elaborates what ‘executive act’ mean. Moreover, while orders, rules and regulations issued by the
President or the executive branch have fixed definitions and meaning in the Administrative Code and
jurisprudence, the phrase ‘executive act’ does not have such specific definition under existing laws. It
should be noted that in the cases cited by the minority, nowhere can it be found that the term
‘executive act’ is confined to the foregoing. Contrarily, the term ‘executive act’ is broad enough to
encompass decisions of administrative bodies and agencies under the executive department which
are subsequently revoked by the agency in question or nullified by the Court.

A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as Chairman of the
Presidential Commission on Good Government (PCGG) and as Chief Presidential Legal Counsel (CPLC)
which was declared unconstitutional by this Court in Public Interest Center, Inc. v. Elma. In said case,
this Court ruled that the concurrent appointment of Elma to these offices is in violation of Section 7,
par. 2, Article IX-B of the 1987 Constitution, since these are incompatible offices. Notably, the
appointment of Elma as Chairman of the PCGG and as CPLC is, without a question, an executive act.
Prior to the declaration of unconstitutionality of the said executive act, certain acts or transactions
were made in good faith and in reliance of the appointment of Elma which cannot just be set aside
or invalidated by its subsequent invalidation.

In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite the invalidity of
the jurisdiction of the military courts over civilians, certain operative facts must be acknowledged to
have existed so as not to trample upon the rights of the accused therein. Relevant thereto, in
Olaguer v. Military Commission No. 34, it was ruled that ‘military tribunals pertain to the Executive
Department of the Government and are simply instrumentalities of the executive power, provided
by the legislature for the President as Commander-in-Chief to aid him in properly commanding the
army and navy and enforcing discipline therein, and utilized under his orders or those of his
authorized military representatives.’
Evidently, the operative fact doctrine is not confined to statutes and rules and regulations issued by
the executive department that are accorded the same status as that of a statute or those which are
quasi-legislative in nature.

Even assuming that De Agbayani initially applied the operative fact doctrine only to executive
issuances like orders and rules and regulations, said principle can nonetheless be applied, by
analogy, to decisions made by the President or the agencies under the executive department. This
doctrine, in the interest of justice and equity, can be applied liberally and in a broad sense to
encompass said decisions of the executive branch. In keeping with the demands of equity, the Court
can apply the operative fact doctrine to acts and consequences that resulted from the reliance not
only on a law or executive act which is quasi-legislative in nature but also on decisions or orders of
the executive branch which were later nullified. This Court is not unmindful that such acts and
consequences must be recognized in the higher interest of justice, equity and fairness.

Significantly, a decision made by the President or the administrative agencies has to be complied
with because it has the force and effect of law, springing from the powers of the President under the
Constitution and existing laws. Prior to the nullification or recall of said decision, it may have
produced acts and consequences in conformity to and in reliance of said decision, which must be
respected. It is on this score that the operative fact doctrine should be applied to acts and
consequences that resulted from the implementation of the PARC Resolution approving the SDP of
HLI. (Bold underscoring supplied for emphasis)

In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court likewise
declared that "for the operative fact doctrine to apply, there must be a ‘legislative or executive
measure,’ meaning a law or executive issuance." Thus, the Court opined there that the operative fact
doctrine did not apply to a mere administrative practice of the Bureau of Internal Revenue, viz:

Under Section 246, taxpayers may rely upon a rule or ruling issued by the Commissioner from the
time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The reversal is
not given retroactive effect. This, in essence, is the doctrine of operative fact. There must, however,
be a rule or ruling issued by the Commissioner that is relied upon by the taxpayer in good faith. A
mere administrative practice, not formalized into a rule or ruling, will not suffice because such a
mere administrative practice may not be uniformly and consistently applied. An administrative
practice, if not formalized as a rule or ruling, will not be known to the general public and can be
availed of only by those with informal contacts with the government agency.

It is clear from the foregoing that the adoption and the implementation of the DAP and its related
issuances were executive acts.1avvphi1 The DAP itself, as a policy, transcended a merely
administrative practice especially after the Executive, through the DBM, implemented it by issuing
various memoranda and circulars. The pooling of savings pursuant to the DAP from the allotments
made available to the different agencies and departments was consistently applied throughout the
entire Executive. With the Executive, through the DBM, being in charge of the third phase of the
budget cycle – the budget execution phase, the President could legitimately adopt a policy like the
DAP by virtue of his primary responsibility as the Chief Executive of directing the national economy
towards growth and development. This is simply because savings could and should be determined
only during the budget execution phase.

As already mentioned, the implementation of the DAP resulted into the use of savings pooled by the
Executive to finance the PAPs that were not covered in the GAA, or that did not have proper
appropriation covers, as well as to augment items pertaining to other departments of the
Government in clear violation of the Constitution. To declare the implementation of the DAP
unconstitutional without recognizing that its prior implementation constituted an operative fact that
produced consequences in the real as well as juristic worlds of the Government and the Nation is to
be impractical and unfair. Unless the doctrine is held to apply, the Executive as the disburser and the
offices under it and elsewhere as the recipients could be required to undo everything that they had
implemented in good faith under the DAP. That scenario would be enormously burdensome for the
Government. Equity alleviates such burden.

The other side of the coin is that it has been adequately shown as to be beyond debate that the
implementation of the DAP yielded undeniably positive results that enhanced the economic welfare
of the country. To count the positive results may be impossible, but the visible ones, like public
infrastructure, could easily include roads, bridges, homes for the homeless, hospitals, classrooms
and the like. Not to apply the doctrine of operative fact to the DAP could literally cause the physical
undoing of such worthy results by destruction, and would result in most undesirable wastefulness.

Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact
does not always apply, and is not always the consequence of every declaration of constitutional
invalidity. It can be invoked only in situations where the nullification of the effects of what used to
be a valid law would result in inequity and injustice;212 but where no such result would ensue, the
general rule that an unconstitutional law is totally ineffective should apply.

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

WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and
DECLARES the following acts and practices under the Disbursement Acceleration Program, National
Budget Circular No. 541 and related executive issuances UNCONSTITUTIONAL for being in violation
of Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers,
namely:
(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration
of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end
of the fiscal year and without complying with the statutory definition of savings contained in the
General Appropriations Acts;

(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other
offices outside the Executive; and

(c) The funding of projects, activities and programs that were not covered by any appropriation in
the General Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a
certification by the National Treasurer that the revenue collections exceeded the revenue targets for
non-compliance with the conditions provided in the relevant General Appropriations Acts.

SO ORDERED.

LUCAS P. BERSAMIN

Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice

See Dissenting Opinion

ANTONIO T. CARPIO

Associate Justice I join the Concurring and Dissenting Opinion of J. Del Castillo

PRESBITERO J. VELASCO, JR.

Associate Justice

No part:

TERSITA J. LEONARDO-DE CASTRO

Associate Justice See: Separate Opinion

ARTURO D. BRION

Associate Justice

DIOSDADO M. PERALTA

Associate Justice Pls. see separate concurring and dissenting opinion

MARIANO C. DEL CASTILLO

Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice JOSE PORTUGAL PEREZ

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice BIENVENIDO L. REYES

Associate Justice

Pls. see Separate Concurring Opinion

ESTELA M. PERLAS-BERNABE

Associate Justice See separate concurring opinion

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

CERTIFICATION

I certify that the conclusions in the above Decision had been reached in consultation before the
cases were assigned to the writer of the opinion of the court.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

1 <http://www.dbm.gov.ph/?p=7302> (visited May 27, 2014).

2 Labeled as "Personal Services" under the GAAs.

3 Frequently Asked Questions about the Disbursement Acceleration Program (DAP)
<http://www.dbm.gov.ph/?page_id=7362> (visited May 27, 2014).

4 See note 2.

5 Zero-based budgeting is a budgeting approach that involves the review/evaluation of on-going

programs and projects implemented by different departments/agencies in order to: (a) establish the
continued relevance of programs/projects given the current developments/directions; (b) assess
whether the program objectives/outcomes are being achieved; (c) ascertain alternative or more
efficient or effective ways of achieving the objectives; and (d) guide decision makers on whether or
not the resources for the program/project should continue at the present level or be increased,
reduced or discontinued. (see NBC Circular No. 539, March 21, 2012).

6 Constitutional and Legal Bases < http://www.dbm.gov.ph/?page_id=7364> (visited May 27, 2014).

7 Belgica v. Executive Secretary Ochoa, G.R. No. 208566, November 19, 2013.

8 The Villegas petition was originally undocketed due to lack of docket fees being paid;
subsequently, the docket fees were paid.

9 Rollo (G.R. No. 209287), p. 119.

10 Id. at 190-196. Sec. Abad manifested that the Memorandum for the President dated June 25,
2012 was the directive referred to in NBC No. 541; and that although the date appearing on the
Memorandum was June 25, 2012, the actual date of its approval was June 27, 2012.

11 Id. at 523-625.

12 Id. at 627-692.

13 Id. at 693-698.

14 Id. at 699-746.
15 Id. at 748-764.

16 Id. at 766-784.

17 Id. at 925.

18 Id. at 786-922.

19 Rollo (G.R. No. 209287), pp. 1050-1051 (Respondents’ Memorandum).

20 Id. at 1044.

21 Id. at 1048.

22 Id. at 1053.

23 Id. at 1053-1056.

24 Id. at 1056.

25 Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary, 2009 Edition, p.
959.

26 I RECORD of the 1986 Constitutional Commission 436 (July 10, 1986).

27 I RECORD of the 1986 Constitutional Commission, 439 (July 10, 1986).

28 63 Phil. 139 (1936).

29 Id. at 157-158.
30 G.R. No. 153852, October 24, 2012, 684 SCRA 410.

31 Id. at 420-423.

32 Municipal Council of Lemery v. Provincial Board of Batangas, No. 36201, October 29, 1931, 56
Phil. 260, 266-267.

33 G.R. No. 163980, August 3, 2006, 497 SCRA 581, 595-596.

34 Francisco, Jr. v. Toll Regulatory Board, G.R. No. 166910, October 19, 2010, 633 SCRA 470, 494.

35 Planas v. Gil, 67 Phil. 62, 73-74 (1939), with the Court saying:

It must be conceded that the acts of the Chief Executive performed within the limits of his
jurisdiction are his official acts and courts will neither direct nor restrain executive action in such
cases. The rule is non-interference. But from this legal premise, it does not necessarily follow that
we are precluded from making an inquiry into the validity or constitutionality of his acts when these
are properly challenged in an appropriate proceeding. xxx As far as the judiciary is concerned, while
it holds "neither the sword nor the purse" it is by constitutional placement the organ called upon to
allocate constitutional boundaries, and to the Supreme Court is entrusted expressly or by necessary
implication the obligation of determining in appropriate cases the constitutionality or validity of any
treaty, law, ordinance, or executive order or regulation. (Sec.2 [1], Art. VIII, Constitution of the
Philippines.) In this sense and to this extent, the judiciary restrains the other departments of the
government and this result is one of the necessary corollaries of the "system of checks and balances"
of the government established.

36 Funa v. Villar, G.R. No. 192791, April 24, 2012, 670 SCRA 579, 593. According to Black’s Law
Dictionary (Ninth Edition), lis motais "[a] dispute that has begun and later forms the basis of a
lawsuit."

37 Bernas, op. cit., at 970.

38 Supra note 7.

39 Oral Arguments, TSN of January 28, 2014, p. 14.

40 Id. at 23.

41 Funa v. Ermita, G.R. No. 184740, February 11, 2010, 612 SCRA 308, 319.

42 Funa v. Villar, supra note 36, at 592; citing David v. Macapagal-Arroyo, G.R. Nos. 171396, 171409,
171485, 171483, 171400, 171489 & 171424, May 3, 2006, 489 SCRA 160, 214-215.

43 Black’s Law Dictionary, 941 (6th Ed. 1991).

44 G.R. No. 191002, March 17, 2010, 615 SCRA 666.

45 Id. at 722-726.

46 G.R. No. 155001, May 5, 2003, 402 SCRA 612, 645.

47 Rollo (G.R. No. 209412), Petition, pp. 3-4.

48 Rollo (G.R. No. 209164), p. 5.

49 Rollo (G.R. No. 209260), p. 6.

50 Agan, Jr. v. Philippine International Air Terminals Co., Inc., note 46 at 645.

51 Magtolis-Briones, Leonor, Philippine Public Fiscal Administration, National Research Council of

the Philippines and Commission on Audit, 1983, p. 243.

52 Manasan, Rosario G., Public Finance in the Philippines: A Review of the Literature, Philippine
Institute for Development Studies Working Paper 81-03, March 1981, p. 37.

53 Magtolis-Briones, op. cit., p. 79.

54 American economist Prof. Philip E. Taylor has tendered the following understanding of the term
budget (as quoted in Magtolis-Briones, op. cit., p. 243), to wit:

The budget is the master plan of government. It brings together estimates of anticipated revenues
and proposed expenditures, implying the schedule of activities to be undertaken and the means of
financing those activities. In the budget, fiscal policies are coordinated, and only in the budget can a
more unified view of the financial direction which the government is going to be observed.

55 Id. at 10.

56 Id. at 10-11.

57 Id. at 11.

58 Id. at 12.

59 Manasan, op cit., at. 39; Manasan, Budget Operations Manual Revised Edition, Operations Budget
Commission (1968), p. 3.

60 Magtolis-Briones, op cit., at 80.

61 Id.

62 http://www.dbm.gov.ph/?page_id=352. Visited on May 27, 2014.

63 Id.

64 Magtolis-Briones, op cit., p. 269.

65 http://www.dbm.gov.ph/?page_id=352. Visited on March 27, 2014.

66 http://budgetngbayan.com/the-budget-cycle/. Visited on March 27, 2014.

67 http://budgetngbayan.com/budget-101/budget.preparation.

68 Section 22. The President shall submit to the Congress, within thirty days from the opening of
every regular session as the basis of the general appropriations bill, a budget of expenditures and
sources of financing, including receipts from existing and proposed revenue measures.

69 Section 2(e), P.D. No. 1177 states that capital expenditures « refer to appropriations for the
purchase of goods and services, the benefits of which extend beyond the fiscal year and which add
to the assets of Government, including investments in the capital of government-owned or
controlled corporations and their subsidiaries. »

70 Section 2(d), PD 1177 defines current oprating expenditures as « appropriations for the purchase
of goods and services for current consumption or within the fiscal year, including the acquisition of
furniture and equipment normally used in the conduct of government operations, and for temporary
construction of promotional, research and similar purposes. »

71 Manasan, op.cit.,at 32.

72 Id.

73 Id.

74 Id.

75 Id.; see also Banzon Abello, Amelia, Pattern of Philippine Public Expenditures and Revenue, UP
Institute of Economic Development and Research, p. 2 (1962).

76 Magtolis-Briones, op.cit.,at 383.

77 Id. at 139.

78 Quoted in Banzon Abello, op.cit., at 32-33.

79 Prof. Charles Bastable, a political economist, proposed a similar classification of public revenues
in Public Finance (3rd Edition (1917), Book II, Chapter I(2), London: McMillan and Co., Ltd.), to wit:

The widest division of public revenue is into (1) that obtained by the State in its various functions as
a great corporation or "juristic person," operating under the ordinary conditions that govern
individuals or private companies, and (2) that taken from the revenues of the society by the power
of the sovereign. To the former class belong the rents received by the State as landlord, rent charges
due to it, interest on capital lent by it, the earnings of its various employments, whether these cover
the expenses of the particular function or not, and finally the accrual of property by escheat or
absence of a visible owner. Under the second class have to be placed taxes, either general or special,
and finally all extra returns obtained by state industrial agencies through the privileges granted by
them.

80 Magtolis-Briones, supra at 140.

81 Id. at 141.

82 Id.

83 Id. at 142.

84 Id.

85 Manual on the New Government Accounting System, Accounting Policies, Volume I, Chapter 1,
Section 17 (For National Government Agencies).

86 http://budgetngbayan.com/budget-101/budget-legislation.

87 Article VI of the 1987 Constitution provides:

Section 24. All appropriation, revenue or tariff bills, bills authorizing 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.

88 Section 26, Article VI of the 1987 Constitution, to wit:

Section 26.

1. Every bill passed by the Congress shall embrace only one subject which shall be expressed in the
title thereof.

2. No bill passed by either House shall become a law unless it has passed three readings on separate
days, and printed copies thereof in its final form have been distributed to its Members three days
before its passage, except when the President certifies to the necessity of its immediate enactment
to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall
be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays
entered in the Journal.

89 Id.

90 Section 27,1, Article VI of the 1987 Constitution, viz:

Section 27.

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

91 Id.

92 Section 25, 7, Article VI of the 1987 Constitution, thus :

xxxx.

7. If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations
bill for the ensuing fiscal year, the general appropriations law for the preceding fiscal year shall be
deemed re-enacted and shall remain in force and effect until the general appropriations bill is
passed by the Congress.

xxxx.

93 http://budgetngbayan.com/budget-101/budget-execution.

94 The ABM disaggregates all programmed appropriations for each agency into two main
expenditure categories: "not needing clearance" and "needing clearance"; it is a comprehensive
allotment release document for all appropriations that do not need clearance, or those that have
already been itemized and fleshed out in the GAA.

95 Items identified as "needing clearance" are those that require the approval of the DBM or the
President, as the case may be (for instance, lump sum funds and confidential and intelligence funds).
For such items, an agency needs to submit a Special Budget Request to the DBM with supporting
documents. Once approved, a SARO is issued.

96 Liabilities legally incurred that the Government will pay for.

97 Belgica v. Executive Secretary, supra note 7 clarifies the distinction between an NCA and SARO,
viz:

A SARO, as defined by the DBM itself in its website, is "[a] specific authority issued to identified
agencies to incur obligations not exceeding a given amount during a specified period for the purpose
indicated. It shall cover expenditures the release of which is subject to compliance with specific laws
or regulations, or is subject to separate approval or clearance by competent authority." Based on
this definition, it may be gleaned that a SARO only evinces the existence of an obligation and not the
directive to pay. Practically speaking, the SARO does not have the direct and immediate effect of
placing public funds beyond the control of the disbursing authority. In fact, a SARO may even be
withdrawn under certain circumstances which will prevent the actual release of funds. On the other
hand, the actual release of funds is brought about by the issuance of the NCA, which is subsequent
to the issuance of a SARO.

xxxx
98 http://budgetngbayan.com/budget-101/budget-accountability.

99 Fisher, Presidential Spending Power, 1975, p. 165.

100 Keefe and Ogul, The American Legislative Process: Congress and the States, 1993, p. 359.

101 Magtolis-Briones, op. cit., p. 79.

102 Diokno, Philippine Fiscal Behavior in Recent History, The Philippine Review of Economics, Vol.
XLVII, No. 1, June 1, 2010, p. 53.

103 World Bank, Philippines Quarterly Update: Solid Economic Fundamentals Cushion External
Turmoil, available at http://www.investphilippines.info/arangkada/wp-content/uploads/2011/10/
WB-PhilippinesQuarterly-Update-Sept2011.pdf (last accessed March 31, 2014).

104 Id.

105 Department of Budget and Management, Frequently Asked Questions About the Disbursement
Acceleration Program (DAP), available at http://www.dbm.gov.ph/?page_id=7362 (last accessed,
December 3, 2013).

106 Respondent’s Consolidated Comment, p.8.

107 Public-Private Partnership.

108 Philippines Quarterly Update: Solid Economic Fundamentals Cushion External Turmoil, available
at http://www.investphilippines.info/arangkada/wp-content/uploads/2011/10/WB-Philippines-
QuarterlyUpdate-Sept2011.pdf (last accessed March 31, 2014).

109 Respondent’s Memorandum, p. 2, citing the Philippines Quarterly Update: From Stability to
Prosperity for All, available at
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/
2012/06/12/000333037_20120612011744/Rendered/PDF/698330WP0₱12740ch020120FINAL00510
12.pdf (last accessed March 31, 2014).
110 The research group IBON International contests this finding, saying that the contribution of the
DAP spending was only one-fourth of a percentage point at most during the last quarter of 2011, and
a "negligible fraction" for the entire year of 2011. See "DAP did not contribute 1.3 percentage points
to growth—IBON," available at http://ibon.org/ibon_articles.php?id=344 (last accessed April 5,
2014).

111 TSN, Oral Arguments, January 28, 2014, p. 12.

112 Diokno, Philippine Fiscal Behavior in Recent History, The Philippine Review of Economics, Vol.
XLVII, No. 1, June 1, 2010, p. 51.

113 Id. at 52.

114 Rollo (G.R. No. 209287), p. 539, (Respondent’s 1st Evidence Packet).

115 Id. at 526-529, (Respondent’s 1st Evidence Packet).

116 Id. at 537-540.

117 Id. at 549-555.

118 Id. at 563-568.

119 Id. at 579-587.

120 Id. at 601-608.

121 This memorandum was a request to fund the rehabilitation plan for the Typhoon Pablo-stricken
areas in Mindanao amounting to ₱10.534 billion to be sourced from the (i) 2012 and 2013 pooled
savings from programmed appropriations, and (ii) revenue windfall collections during the first
semester comprising the 2013 Unprogrammed Fund, Respondent’s 1st Evidence Packet, p. 609-B.

122 Rollo (G.R. No. 209287), p. 555, (Respondent’s 1st Evidence Packet).
123 Id. at 185-189, (Respondent’s Manifestation dated December 6, 2013).

124 Blacks’ Law Dictionary (6th Ed.) p. 102.

125 ] G.R. No. 29627, December 19, 1989, 180SCRA 254.

126 Id. at 160.

127 Daniel Tomassi, "Budget Execution," in Budgeting and Budgetary Institutions, ed. Anwar Shah
(Washington: The International Bank for Reconstruction and Development/World Bank, 2007), p.
279, available at
http://siteresources.worldbank.org/PSGLP/Resources/BudgetingandBudgetaryInstitutions.pdf (last
accessed April 9, 2014).

128 Budget Operations Manual (Revised Edition) 1968, Office of the President, Budget Commission.

129 Fujitani and Shirck, Executive Spending Powers: The Capacity to Reprogram, Rescind, and
Impound. Harvard Law School, Federal Budget Policy Seminar, Briefing Paper No. 8, p. 1, available at
http://www.law.harvard.edu/faculty/hjackson/ExecutiveSpendingPowers_8.pdf (last accessed
December 3, 2013).

130 Id. at 8.

131 Id.

132 Princeton University Press, 1975, pp. 261-262.

133 G.R. No. 103524, April 15, 1992, 208 SCRA 133, 150.

134 Waldby, Odell, Philippine Public Fiscal Administration, Institute of Public Administration,
University of the Philippines, 1954, p. 319.
135 The Philippine Commission, which lasted from 1900 to 1916, comprised the Upper House of the
Philippines Legislature. The Philippine Assembly, which existed from 1907 to 1916, served in its time
as the Lower House of the Philippine Legislature.

136 Waldby, op. cit., pp. 321-322.

137 In his Sponsorship Speech, Delegate Honesto Mendoza, the Chairman of the Committee on
Budget and Appropriations of the 1971 Constitutional Convention, stated that it was deemed
"absolutely necessary to remove the anomaly of illegal fund transfers of public funds to projects or
purposes not contemplated by law."

138 Minutes of the Meeting, Commission on Budget and Appropriations, 1971 Constitutional
Convention, November 4, 1971, p. 18.

139 Minutes of the Meeting, Commission on Budget and Appropriations, 1971 Constitutional
Convention, January 13, 1972, p. 10.

140 Id. at 9.

141 Id. at 10-11.

142 Demetria v. Alba, No. L-71977, February 27, 1987, 148 SCRA 208.

143 Id. at 214-215.

144 G.R. No. 188635, January 29, 2013, 689 SCRA 385, 402-404.

145 Constitutional and Legal Bases < http://www.dbm.gov.ph/?page_id=7364> (visited March 27,
2014)

146 Rollo (G.R. No. 209442), p. 7.

147 Rollo (G.R. No. 209260), p. 17; (G.R. No. 209517), p. 19; (G.R. No. 209155), p. 11; (G.R. No.
209135), p. 13.
148 Rollo (G.R. No. 209287), p. 6; (G.R. No. 209517), p. 19; (G.R. No. 209442), p. 23.

149 Section 17, Article VII of the 1987 Constitution provides:

Section 17. The President shall have control of all the executive departments, bureaus, and offices.
He shall ensure that the laws be faithfully executed.

150 Sanchez v. Commission on Audit, G.R. No. 127545, April 23, 2008, 552 SCRA 471, 497.

151 NBC No. 541 (Rationale); see also NBC No. 541 (5.3), which stated that, in case of failure to
submit budget accountability reports, the DBM would compute/approximate the agency’s obligation
level as of June 30 to derive its unobligated allotments as of the same period.

152 NBC No. 541 (2.1).

153 NBC No. 541 (5.7.1).

154 These GAA provisions are reflected, respectively, in NBC No. 528 (Guidelines on the Release of
funds for FY 2011), thus:

3.9.1.2 Appropriations under FY 2011 GAA, R.A. 10147 shall be available for release and obligations
up to December 31, 2012 with the exception of PS which shall lapse at the end of 2011.

and NBC No. 535 (Guidelines on the Release of funds for FY 2012), thus:

3.9.1.2 Appropriations under CY 2012 GAA, R.A. 10155 shall be available for release and obligations
up to December 31, 2013 with the exception of PS which shall lapse at the end of 2012.

155 Rollo (G.R. No. 209442), p. 23.

156 Rollo (G.R. No. 209287), p. 1060, (Memorandum for the Respondents).
157 Rollo (209287), pp. 18-19.

158 Rollo (209442), pp. 21-22.

159 G.R. No. 113105, August 19, 1994, 235 SCRA 506, 545.

160 Webster’s Third New International Dictionary.

161 TSN, January 28, 2014, p. 12.

162 DBM, "Sec. Abad: DAP used to buoy spending, not to buy votes," available at
http://www.dbm.gov.ph/?p=7328 (last accessed March 28, 2014).

163 DBM, "Sec. Abad: DAP used to buoy spending, not to buy votes," available at
http://www.dbm.gov.ph/?p=7328 (last accessed March 28, 2014).

164 Rollo (G.R. No. 209136), p. 18.

165 Rollo (G.R. No. 209136), p. 18; (G.R. No. 209442), p. 13.

166 Rollo (G.R. No. 209155), p. 9.

167 Rollo (G.R. No. 209287), pp. 68-104; (Respondents’ Consolidated Comment).

168 Rollo (G.R. No. 209287), pp. 524-922.

169 SARO No. E-11-02253; Rollo (G.R. No. 209287), p. 628, (Respondents’ 2nd Evidence Packet).

170 See FY2011 National Expenditure Program, p. 1186, available at

http://www.dbm.gov.ph/wpcontent/uploads/NE₱2011/DOSTG-GAA.pdf.

171 SARO No. E-14-02254; Rollo (G.R. No. 209287), p. 630, (Respondents’ 2nd Evidence Packet).
172 Rollo (G.R. No. 209287), p. 27, (Respondents’ Memorandum).

173 TSN, January 28, 2014, p. 26.

174 Section 29(1), Article VI of the 1987 Constitution provides that no money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.

175 According to Allen and Miller. The Constitutionality of Executive Spending Powers, Harvard Law
School, Federal Budget Policy Seminar, Briefing Paper No. 38, p. 16, available at
http://www.law.harvard.edu/faculty/hjackson/ConstitutionalityOfExecutive_38.pdf (December 3,
2013):

If the executive could spend under its own authority, "then the constitutional grants of power to the
legislature to raise taxes and to borrow money would be for naught because the Executive could
effectively compel such legislation by spending at will. The ‘[L]egislative Powers’ referred to in
section 8 of Article I would then be shared by the President in his executive as well as in his
legislative capacity" The framers intended the powers to spend and the powers to tax to be "two
sides of the same coin," and for good reason. Separating the two powers — or giving the President
one without the other — might reduce accountability and result in excessive spending: the President
would be able to spend and leave Congress to deal with the political repercussions of financing such
spending through heightened tax rates.

176 Bernas, op. cit., at 811.

177 Wander and Herbert (Ed.), Congressional Budgeting: Politics, Process and Power (1984), p. 3.

178 Wander and Herbert (Ed.), Congressional Budgeting: Politics, Process and Power (1984), at 133.

179 Bernas, op. cit., at 812.

180 Philippine Constitution Association v. Enriquez, supra, note 159, at 522.

181 Stith, Kate, "Congress’ Power of the Purse" (1988), Faculty Scholarship Series, Paper No. 1267, p.
1345, available at http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?
article=2282&context=fss_papers (last accessed March 29, 2014).
182 Id. at 1377.

183 TSN of January 28, 2014, pp. 42-45.

184 Rollo (G.R. No. 209287), p. 883, (Respondents’ 7th Evidence Packet).

185 Id. at 562, (Respondents’ 1st Evidence Packet).

186 See the OSG’s Compliance dated February 14, 2014, Annex B, p. 2.

187 Rollo (G.R. No. 209287), p. 35, (Memorandum for the Respondents).

188 Id.

189 TSN of February 18, 2014, p. 32.

190 TSN of February 18, 2014, pp. 45-46.

191 Rollo (G.R. No. 209287), p. 1027; (G.R. No. 209442), p. 8.

192 Other References: A Brief on the Special Purpose Funds in the National Budget
<http://www.dbm.gov.ph/?page_id=7366> (visited May 2, 2014).

193 Rollo (G.R. No. 209287), p. 95.

194 Glossary of Terms, BESF.

195 TSN, January 28, 2014, p. 106.

196 Rollo (G.R. No. 209155), pp. 327 & 337.

197 Id. at 337 & 338.

198 The target revenue for dividends on stocks of ₱5.5 billion was according to the BESF (2013),
Table C.1 Revenue Program, by Source 2011-2013.

199 Rollo (G.R. No. 209155), pp. 337 & 339.

200 Other References: A Brief on the Special Purpose Funds in the National Budget
<http://www.dbm.gov.ph/?page_id=7366> (visited May 2, 2014).

201 Basic Concepts in Budgeting <http://www.dbm.gov.ph/wp-content/uploads/2012/03/PGB-

B1.pdf> (visited May 2, 2014).

202 Id.

203 The Equal Protection Clause is found in Section 1, Article III of the 1987 Constitution, to wit:

Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws.

204 Article XI of the 1987 Constitution states:

Section 1. Public office is a public trust. 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.

205 See Fariñas v. Executive Secretary, G.R. No. 147387, December 10, 2003, 417 SCRA 503.

206 Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, October
8, 2013.

207 G.R. No. L-23127, April 29, 1971, 38 SCRA 429, 434-435.
208 Yap v. Thenamaris Ship’s Management, G.R. No. 179532, May 30 2011, 649 SCRA 369, 381.

209 League of Cities Philippines v. COMELEC, G.R. No. 176951, August 24, 2010, 628 SCRA 819, 833.

210 G.R. No. 171101, November 22, 2011, 660 SCRA 525, 545-548.

211 Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, October
8, 2013.

212 This view is similarly held by Justice Leonen, who asserts in his separate opinion that the
application of the doctrine of operative fact should be limited to situations (a) where there has been
a reliance in good faith in the acts involved, or (b) where in equity the difficulties that will be borne
by the public far outweigh the rigid application of the legal nullity of an act.

The Lawphil Project - Arellano Law Foundation

Case Digest: Araullo v Abad GR 209287

6/21/2020

0 COMMENTS

ISSUE: Whether or not the DAP, and all other executive issuances allegedly implementing the DAP,
violated Sec 25(5) of Article VI of the 1987 Constitution

FACTS: Maria Carolina Araullo filed a petition before the Supreme Court questioning the validity of
DAP (Disbursement Accellaration Program). That, it 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. DBM Secretary Abad argued that the DAP is based on
GAA (General Appropriations Act) (Savings and augmentation provisions)
DECISION: Partly Granted

RATIO DECIDENDI: Yes, it violated Sec 25 (5) of Article VI of the Costitution. The augmentation is,
according to the ponencia, and defined in Art. VI, Sec. 25 (5) of the 1987 Constitution, and
authorized within each year’s General Appropriations Act (GAA), is the use of clearly-identified
savings in the expenditures of government departments and offices to augment clearly-identified,
actual deficiencies within those respective government departments and offices. What
augmentation is not, however, is to allocate what was not authorized as an expenditure in the GAA.
It is not a transfer of executive department savings to legislative lump sum allocations (cross-border
augmentation) – by virtue of the latter’s unconstitutionality, or at the very least, because such itself
violates Art. VI Sec. 25 (5)