Case Summary (G.R. No. 219649)
Petitioners
Various petitioners sued either as taxpayers or as members of the Senate (both individually and representing other senators) challenging: (a) constitutionality of specific special provisions in the GAA of 1994 (e.g., Countrywide Development Fund, realignment authority, debt-service provisions, appropriations for CAFGUs, AFP, DPWH, SUCs, COA, CHR, Supreme Court, Ombudsman) and (b) the President’s vetoes and conditions on those provisions or items, asserting grave abuse of discretion or action without jurisdiction.
Respondents
Respondents are officials of the Executive Branch responsible for budget execution (Executive Secretary; Secretary of Budget and Management; National Treasurer), with the Commission on Audit implicated as an unwilling co-petitioner in some matters because of its audit role. Their actions include implementing the President’s veto messages and imposing conditions or guidelines on the execution of appropriations.
Key Dates and Procedural Background
- House Bill No. 10900 (GAB of 1994) passed Congress and was presented to the President.
- The President signed the bill into law on December 30, 1993, declaring it Republic Act No. 7663 (GAA of 1994), and on the same day issued a Presidential Veto Message specifying vetoed provisions and conditions.
- No congressional override attempts were taken. Multiple petitions (G.R. Nos. 113105, 113174, 113766, 113888) sought various writs (prohibition, certiorari, mandamus) and reliefs; the Court declined provisional reliefs and invited Amicus Curiae memoranda from former justices.
Applicable Law and Constitutional Framework
The Court applied the 1987 Constitution (relevant provisions cited include Article VI Sections 25 and 27, Article VII, Article XIV Section 5(5), Article IX-B Section 8, and separation-of-powers principles), and relevant statutes and executive orders referenced in the petitions and veto messages (e.g., Foreign Borrowing Act, P.D. No. 1177, Administrative Code of 1987 E.O. No. 292, Government Auditing Code P.D. No. 1445, various PDs and RAs affecting revolving funds and appropriations). Precedents relied upon included Gonzales v. Macaraig, Guingona v. Carague, Henry v. Edwards and other decisions cited in the record.
Threshold: Justiciability and Locus Standi
The Court reaffirmed the prerequisites for judicial review of constitutional questions: actual and appropriate case, personal and substantial interest, earliest opportunity to plead review, and that the constitutional question be the lis mota. It recognized that individual members of Congress have standing to challenge presidential actions (including vetoes) that allegedly intrude on congressional powers. The Court distinguished political remedies (e.g., override) from judicial remedies where the President’s act is claimed to be ultra vires; where an executive act impairs congressional powers, an individual legislator suffers a derivative but substantial institutional injury sufficient for standing.
Countrywide Development Fund — Nature and Constitutionality
Article XLI created a P2,977,000,000 Countrywide Development Fund, allocating specific sums to representatives, senators and the Vice-President and authorizing members of Congress to propose and identify projects and beneficiaries. Petitioners argued this delegated executive power to legislators. The Court held: (a) appropriation and specification of purposes are legislative functions legitimately vested in Congress; (b) the authority given to members of Congress to propose and identify projects is recommendatory — implementation and final determination of eligibility and execution remains an executive function; and (c) the special procedure in Article XLI is an innovative budgetary arrangement to equalize allocations and recognize members’ knowledge of local needs, and does not unconstitutionally delegate executive power.
Realignment of Operating Expenses for Members of Congress
The GAA allowed members to realign their allocation for operational expenses among expense categories so long as the total allocation is not exceeded, subject to approval of the Senate President or Speaker. Petitioners alleged violation of Article VI Section 25(5) (no law shall authorize transfer of appropriations, except by specified officials by law). The Court held the realignment provision lawful: realignment is permitted under the Constitution when effected under the mechanisms authorized (savings augmentation procedures) and the practical control rests with the Senate President or Speaker who must ensure savings are genuine and transfers serve proper augmentation purposes. Thus the provision was not an unconstitutional transfer of appropriations beyond the constitutional framework.
Priority of Debt Service versus Education Funding
Petitioners argued debt service could not be afforded higher priority than education, invoking Article XIV Section 5(5) which directs the State to assign highest budgetary priority to education. The Court reiterated Guingona v. Carague: Section 5(5) is directory not self-executing to the extent of restraining Congress from responding to other national imperatives. Congress may appropriate more for debt service than education if justified by national interest and fiscal considerations. Thus the appropriation for debt service larger than the allocation for education was not per se unconstitutional.
Veto of Special Provision Limiting Debt Payments (Item Veto Doctrine)
Congress added a proviso to the debt-service item attempting to subject payments in excess of the appropriation to presidential approval with congressional concurrence. The President vetoed that proviso. Petitioners argued the President could not veto the proviso without vetoing the entire item; the Solicitor General contended the proviso was severable and thus proper subject to an item veto. Relying on Gonzales v. Macaraig and related doctrine, the Court reaffirmed that the President may exercise the item veto on "inappropriate provisions" in an appropriation bill—provisions that do not specifically or exclusively relate to the item or attempt to amend substantive law outside the appropriations context. The veto of the proviso that attempted to change automatic debt appropriation mechanisms and repeal provisions of other statutes was sustained to the extent the proviso was an inappropriate provision. Conversely, the Court held that provisos that are germane and directly connected to the item (e.g., declaring that the appropriation shall be used for payment of principal and interest and prohibiting use for specific liabilities) are appropriate and inseparable from the item; vetoes of those connected provisos were not sustained.
Vetoes Affecting State Universities and Colleges (Use of Income and Revolving Funds)
Several special provisions authorizing SUCs to retain and use income and to create revolving funds were vetoed. The President justified these vetoes under the One Fund Policy and statutory requirements for creating revolving funds. Petitioners claimed disproportionate treatment and grave abuse of discretion. The Court observed that exceptions to the one-fund rule historically exist based on specific statutory authorizations, and that the President’s veto was grounded in legal and fiscal rationales; disparate treatment did not amount to unconstitutional discrimination given prior statutory exceptions. The Court sustained the President’s approach to rationalize and discourage proliferating revolving funds absent separate statutory authorization.
Veto of DPWH 70%/30% Contracting Ratio (Unconstitutional Veto)
Congress imposed a cap: a maximum of 30% of road maintenance funds could be contracted out, leaving 70% for force account. The President vetoed this paragraph and explained that policy and loan covenants favored contracting out up to 70% to maximize private-sector participation and comply with international-lender covenants. The Court held the attempted presidential line-veto of this special provision to be unconstitutional because the provision was an appropriate and germane limitation tied to the specific appropriation; it could not be severed from the item. The veto of the second paragraph of Special Provision No. 2 (DPWH) was annulled.
Veto of AFP Medicines Provision (Unconstitutional Veto)
Congress required AFP purchases of medicines to comply strictly with the National Drug Policy formulary (Generics Law). The President vetoed the provision, citing need for a transition period. The Court found the provision to be directly related and inseparable from the appropriation item for medicines; as such it was an appropriate provision and could not be validly vetoed separately from the item. The veto of that provision was annulled.
Vetoes Relating to AFP Modernization and Congressional Approval of Purchases
Congress imposed conditions requiring submission and congressional approval of a Table of Organization and Equipment before release of AFP modernization funds and specified prohibitions concerning certain equipment payments. The President vetoed these provisions as unlawful legislative encroachment (legislative veto and impairment of contractual obligations). The Court treated the contested provisions as inappropriate for inclusion in the appropriations act because they attempted to change the substantive law or to require legislative approval of executive military procurement decisions (a form of congressional veto). The vetoes of Special Provisions Nos. 2 and 3 (AFP modernization) were sustained.
Veto of Provision Allowing AFP Chief of Staff to Use Savings to Augment Pension Fund
Congress authorized the Chief of Staff to use AFP savings to augment pension/gratuity funds, subject to Defense Secretary approval. The President vetoed on grounds that transfers and use of savings to augment retirement benefits must be effected by the officials enumerated in Article VI Section 25(5) and by law, and that pensions should be covered by d
Case Syllabus (G.R. No. 219649)
Case Caption, Citation and Nature of Action
- Reported as 305 Phil. 546, En Banc, decided August 19, 1994, covering multiple consolidated petitions (G.R. Nos. 113105, 113174, 113766, 113888).
- Multiple petitioners: taxpayers (Philippine Constitution Association, Exequiel B. Garcia, Ramon A. Gonzales), several Senators (including Raul S. Roco, Neptali A. Gonzales, Edgardo J. Angara, Wigberto E. Tanada, Alberto G. Romulo), and the Freedom from Debt Coalition.
- Respondents included Executive Secretary, Secretary of the Department of Budget and Management (DBM), National Treasurer, and the Commission on Audit (COA) impleaded as an unwilling co-petitioner.
- Reliefs sought: writs of prohibition, certiorari, and mandamus; annulment of presidential vetoes and of conditions imposed by the President on items of the General Appropriations Act of 1994 (GAA/GAB of 1994); requests for provisional relief (temporary restraining orders) that were declined.
Facts and Legislative History
- House Bill No. 10900 (General Appropriation Bill of 1994) was passed by both Houses on December 17, 1993, imposing conditions and limitations on certain appropriations, authorizing members of Congress to propose/identify projects in a Countrywide Development Fund ("pork barrels"), and allowing realignment of operating budgets for members of Congress.
- The bill was presented to the President pursuant to constitutional procedure and was signed into law on December 30, 1993, becoming Republic Act No. 7663 (GAA of 1994). On that day the President delivered a Veto Message specifying provisions vetoed and conditions imposed.
- No action was taken in either House to override any of the vetoes.
- Four petitions, consolidated for decision, challenged: constitutionality of specified Articles, special provisions and presidential vetoes/conditions, and asked for annulment of vetoes and preventive writs against enforcement of certain provisions.
Procedural Posture and Court Action
- Petitioners sought provisional reliefs (temporary restraining orders) to stop enforcement of certain GAA provisions; the Court declined such provisional reliefs citing presumption of validity of statutes and regularity of official acts.
- Because of the importance and novelty of issues, the Court invited former Justices Enrique M. Fernando and Irene Cortes to file memoranda as Amici Curiae, which they did.
- The cases raised issues of separation of powers between Legislative and Executive, scope of presidential veto power (item veto), scope of appropriations power, and permissible conditions in appropriations acts.
Legal Standards for Judicial Review and Locus Standi
- The Court reiterated requisites for judicial review of constitutionality: (1) existence of an actual and appropriate case, (2) personal and substantial interest of the party raising the question, (3) exercise of judicial review pleaded at earliest opportunity, and (4) constitutional question is the lis mota of the case (cases cited: Luz Farms v. Secretary of DAR; Dumlao v. COMELEC; People v. Vera).
- The Solicitor General questioned the Senators’ standing in some petitions, asserting their remedy was political (override) and thus lacking legal standing.
- Court analyzed precedents recognizing institutional standing of a legislative chamber (Gonzales v. Macaraig, Jr., 191 SCRA 452) and U.S. authorities on congressional standing.
- Court held that an individual member of the Senate (and of the House) has legal standing to challenge the validity of a presidential veto or a condition imposed on an appropriation item when the veto is claimed to be ultra vires or to impair legislative powers.
- Rationale: an Executive act that injures the institution of Congress gives rise to a derivative but substantial injury to each member, who has a right to participate in institutional powers; judicial intervention is proper when veto exceeds constitutional authority.
- Amicus Fernando’s memorandum emphasized that Senators have substantial interest and injury when intrusions into the Senate’s domain occur, and that members have standing to protect prerogatives conferred by the Constitution.
- The Court recognized that the constitutional override mechanism (Art. VI, Sec. 27[1]) is available for policy vetoes but not a substitute when the veto is ultra vires; in the latter, judicial determination is required to draw the line between executive and legislative domains.
Issues Presented (Overall)
- Legality and constitutionality of:
- Article XLI (Countrywide Development Fund) and members of Congress proposing/identifying projects therein.
- Special Provision on Realignment of Allocation for Operational Expenses for members of Congress.
- Priority and appropriateness of debt service appropriations vis-à-vis education (Art. XIV, Sec. 5[5]).
- Validity of the Presidential vetoes on special provisions (notably the special provision in Article XLVIII re: debt service), and the President’s item-veto authority over provisions vs. items.
- Constitutionality of several specific vetoes/conditions imposed by the President affecting SUCs revolving funds, DPWH contracting ratios, AFP medicine procurement, AFP modernization release and prohibitions, AFP pension augmentation from savings, CAFGU deactivation implementation, and conditions imposed on budgets of the Supreme Court, COA, Ombudsman, CHR, DPWH, and NHA.
- The extent (if any) of Presidential impoundment authority.
Countrywide Development Fund (Article XLI) — Contentions and Ruling
- Text of Article XLI: P2,977,000,000 fund for infrastructure, ambulances, computers, priority projects, and credit facilities; explicit allocations per Representative (P12.5M), Senator (P18M), Vice-President (P20M); directives on revolving credit facilities to be administered by GFIs; automatic quarterly release; DBM quarterly reporting requirement to Senate Finance and House Appropriations.
- Petitioners’ contention: empowering members of Congress to propose/identify projects is an encroachment on executive power because the implementation of appropriations is an executive function.
- Court’s analysis and holding:
- The spending power belongs to Congress (power of the purse), subject to President’s veto.
- Congress has power to specify projects/activities under appropriation laws; it determined purposes for this Fund explicitly.
- The Executive’s role under the Fund is implementation. Members of Congress’ authority is limited to proposing and identifying projects; such identifications are recommendatory, not final.
- The President must examine proposals for conformity with the Fund’s purposes and implement qualified projects.
- The procedure is innovative and responsive to prior inequities in allocation and recognizes members’ knowledge of constituent needs; it does not impermissibly delegate executive power.
- Conclusion: the power given to Members to propose/identify projects does not constitute unconstitutional encroachment on executive authority.
Realignment of Operating Expenses for Members of Congress — Contentions and Ruling
- GAA appropriation figures: Senate current operating expenditures P464,447,000; House current operating expenditures P1,165,297,000; member-specific allocations within those appropriations.
- Special Provision: "A member of Congress may realign his allocation for operational expenses to any other expense category provided the total of said allocation is not exceeded."
- Petitioners’ contention: provision violates Art. VI, Sec. 25(5) which prohibits any law authorizing transfer of appropriations, except augmentation from savings authorized by law to certain officials (President, Pres. of the Senate, Speaker, Chief Justice, heads of Constitutional Commissions).
- Court’s analysis and holding:
- Section 16 of GAA (Expenditure Components) precludes change in expenditure items except by act of Congress or via augmentations from savings as authorized under Sec. 25(5).
- The special provision permits members to determine necessity of realignment but the actual approval rests with the Senate President or Speaker.
- The President of the Senate and Speaker must verify: (1) funds to be realigned are actual savings in original items, and (2) the transfer realigns to augment other items legitimately.
- Conclusion: the provision permits internal realignment within the member’s allotted operating expenses subject to institutional approval and safeguards; it does not contravene Sec. 25(5) as implemented.
Highest Budgetary Priority and Debt Service vis-à-vis Education — Contentions and Ruling
- Congress appropriated P86,323,438,000 for debt service, while Department of Education, Culture and Sports received P37,780,450,000.
- Petitioners argued education must be assigned highest budgetary priority under Art. XIV, Sec. 5(5), and Congress cannot give debt service the highest priority.
- Court’s analysis:
- Cited Guingona v. Carague (196 SCRA 221): Section 5(5) is directory, not mandatory; Congress can respond to national interest and provide appropriations for debt service larger than education allocations without offending the Constitution, especially given debt servicing imperatives and prior compliance by Congress in past budgets.
- Conclusion: appropriation favoring debt service over education cannot be assailed as unconstitutional given Guingona precedent and Congress’ discretion guided by national interest.
Veto of Special Provision on Debt Ceiling (Article XLVIII) — Text, Contentions and Ruling
- Congress added a Special Provision: payments in excess of the amount appropriated for debt service shall be subject to approval of the President with concurrence of Congress; proviso also exempting payments for Central Bank Board of Liquidators’ liabilities.
- President vetoed that first Special Provision but did not veto the P86,323,438,000 item.
- President’s rationale: GAA is not appropriate vehicle to amend Foreign Borrowing Act, P.D. No. 1177, or Administrative Code provisions; automatic appropriation for debt service already provided by law; Gon