TABLE

 OF  CONTENTS  
Art.  VI  –  The  Legislative  Department  (cont.)  ...........................................................................   2  
Section  25(5)  Cross-­‐Border  Transfers  ................................................................................................  2  
Philippine  Constitution  Association  v.  Enriquez  (1994)  .......................................................................  2  
Sanchez  v.  Commission  on  Audit  (2008)  ..............................................................................................  3  
Araullo  v.  Aquino  III  (2015)  ..................................................................................................................  5  
Section  26(1)  One  Title-­‐One  Subject  Rule  .........................................................................................  8  
Philippine  Constitution  Assn.,  Inc.  v.  Gimenez  (1965)  .........................................................................  8  
Philippine  Judges  Association  v.  Prado  (1993)  .....................................................................................  9  
Tobias  v.  Abalos  (1994)  ......................................................................................................................  10  
Section  26(2)  Three  Readings  .........................................................................................................  10  
Tolentino  v.  Secretary  of  Finance  (1994)  ...........................................................................................  10  
Section  27(2)  Presidential  Veto   ......................................................................................................  12  
Gonzales  v.  Macaraig,  Jr.  (1990)  ........................................................................................................  12  
Bengzon  v.  Drilon  (1992)  ...................................................................................................................  13  
Philippine  Constitution  Association  v.  Enriquez  (1994)  .....................................................................  14  
Section  28(1)  Uniform,  Equitable  and  Progressive  Taxation  ............................................................  18  
Commissioner  of  lnternal  Revenue  v.  Court  of  Appeals  (1996)  .........................................................  18  
Tolentino  v.  Secretary  of  Finance  (1994)  ...........................................................................................  18  
Section  28(3)  Institutions  and  Property  Exemptions  from  Taxation   ................................................  19  
Abra  Valley  College,  Inc.  v.  Aquino  (1988)  .........................................................................................  19  
Section  29(1)  Money  Taken  from  Treasury  .....................................................................................  20  
Philippine  Coconut  Producers  Federation,  Inc.  (COCOFED)  v.  Republic  (2012)  .................................  20  
Planters  Products,  Inc.  v.  Fertiphil  Corporation  (2008)  .....................................................................  21  
Guingona,  Jr.  v.  Carague  (1991)  .........................................................................................................  22  

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 ART. VI – THE LEGISLATIVE DEPARTMENT (CONT.)

Section 25(5) Cross-Border Transfers

Philippine Constitution Association v. Enriquez (1994)

Same; Same; Same; Same; Executive function under the Countrywide Development Fund involves
implementation of the priority projects specified in the law while the authority given to members
of Congress is only to propose and identify projects to be implemented.—Executive function under
the Countrywide Development Fund involves implementation of the priority projects specified in
the law. The authority given to the members of Congress is only to propose and identify projects
to be implemented by the President. Under Article XLI of the GAA of 1994, the President must
perforce examine whether the proposals submitted by the members of Congress fall within the
specific items of expenditures for which the Fund was set up, and if qualified, he next determines
whether they are in line with other projects planned for the locality. Thereafter, if the proposed
projects qualify for funding under the Fund, it is the President who shall implement them. In short,
the proposals and identifications made by the members of Congress are merely recommendatory.

Same; Same; Same; Same; The procedure of proposing and identifying by members of Congress
of particular projects or activities under the General Appropriations Act of 1994 is imaginative as
it is innovative.—The procedure of proposing and identifying by members of Congress of
particular projects or activities under Article XLI of the GAA of 1994 is imaginative as it is
innovative. The Constitution is a framework of a workable government and its interpretation must
take into account the complexities, realities and politics attendant to the operation of the political
branches of government. Prior to the GAA of 1991, there was an uneven allocation of
appropriations for the constituents of the members of Congress, with the members close to the
Congressional leadership or who hold cards for “horse-trading,” getting more than their less
favored colleagues. The members of Congress also had to reckon with an unsympathetic President,
who could exercise his veto power to cancel from the appropriation bill a pet project of a
Representative or Senator. The Countrywide Development Fund attempts to make equal the
unequal. It is also a recognition that individual members of Congress, far more than the President
and their congressional colleagues are likely to be knowledgeable about the needs of their
respective constituents and the priority to be given each project.

Same; Appropriations; Fund Transfers; Under the Special Provisions applicable to Congress, the
members only determine the necessity of the realignment of the savings in the allotments for their
operating expenses but it is the Senate President and the Speaker of the House of Representatives
who shall approve the realignment.—Under the Special Provisions applicable to the Congress of
the Philippines, the members of Congress only determine the necessity of the realignment of the
savings in the allotments for their operating expenses. They are in the best position to do so because
they are the ones who know whether there are savings available in some items and whether there
are deficiencies in other items of their operating expenses that need augmentation. However, it is
the Senate President and the Speaker of the House of Representatives, as the case may be, who
shall approve the realignment. Before giving their stamp of approval, these two officials will have
to see to it that:

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 (1) The funds to be realigned or transferred are actually savings in the items of expenditures
from which the same are to be taken; and
(2) The transfer of realignment is for the purpose of augmenting the items of expenditure
to which said transfer or realignment is to be made.

Sanchez v. Commission on Audit (2008)

Same; Fund Transfers; Qualified Political Agency; It is important to underscore the fact that the
power to transfer savings under Sec. 25(5), Art. VI of the 1987 Constitution pertains exclusively
to 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 and no other; There
could be no valid transfer of funds within the Executive Department where the power and authority
to transfer was exercised not by the President but only at the instance of the Deputy Executive
Secretary, not the Executive Secretary himself.—It is important to underscore the fact that the
power to transfer savings under Sec. 25(5), Art. VI of the 1987 Constitution pertains exclusively
to 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 and no other. *** ***
Parenthetically, petitioners fail to point out to the Court the specific law and provision thereof
which authorizes the transfer of funds in this case. Thus, the submission that there was a valid
transfer of funds within the Executive Department should be rejected as it overlooks the fact that
the power and authority to transfer in this case was exercised not by the President but only at the
instance of the Deputy Executive Secretary, not the Executive Secretary himself. Even if the DILG
Secretary had corroborated the initiative of the Deputy Executive Secretary, it does not even appear
that the matter was authorized by the President. More fundamentally, as will be shown later, even
the President himself could not have validly authorized the transfer under the Constitution.

Same; Same; Requisites; There are two essential requisites in order that a transfer of
appropriation with the corresponding funds may legally be effected—first, there must be savings
in the programmed appropriation of the transferring agency, and, second, there must be an
existing item, project or activity with an appropriation in the receiving agency to which the savings
will be transferred.—Clearly, there are two essential requisites in order that a transfer of
appropriation with the corresponding funds may legally be effected.
First, there must be savings in the programmed appropriation of the transferring agency.
Second, there must be an existing item, project or activity with an appropriation in the
receiving agency to which the savings will be transferred.
Actual savings is a sine qua non to a valid transfer of funds from one government agency to
another. The word “actual” denotes that something is real or substantial, or exists presently in fact
as opposed to something which is merely theoretical, possible, potential or hypothetical. As a case
in point, the Chief Jus tice himself transfers funds only when there are actual savings, e.g., from
unfilled positions in the Judiciary.

Same; Same; Same; The thesis that savings may and should be presumed from the mere transfer
of funds is plainly anathema to the doctrine laid down in Demetria v. Alba, 148 SCRA 208 (1987),
as it makes the prohibition against transfer of appropriations the general rule rather than the
stringent exception the constitutional framers clearly intended it to be; The President, Chief
Justice, Senate President, Speaker of the House of Representatives and the heads of constitutional

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commissions need to first prove and declare the existence of savings before transferring funds.—
The thesis that savings may and should be presumed from the mere transfer of funds is plainly
anathema to the doctrine laid down in Demetria v. Alba as it makes the prohibition against transfer
of appropriations the general rule rather than the stringent exception the constitutional framers
clearly intended it to be. It makes a mockery of Demetria v. Alba as it would have the Court allow
the mere expectancy of savings to be transferred. Contrary to another submission in this case, the
President, Chief Justice, Senate President, and the heads of constitutional commissions need not
first prove and declare the existence of savings before transferring funds, the Court in Philconsa
v. Enriquez, 235 SCRA 506 (1994), categorically declared that the Senate President and the
Speaker of the House of Representatives, as the case may be, shall approve the realignment (of
savings). However, “[B]efore giving their stamp of approval, these two officials will have to see
to it that:
(1) The funds to be realigned or transferred are actually savings in the items of expenditures
from which the same are to be taken; and
(2) The transfer or realignment is for the purpose of augmenting the items of expenditure
to which said transfer or realignment is to be made.”

xxx

Obviously, the amount transferred from the Fund did not constitute savings as there were no such
savings at the time of the transfer. It is preposterous to pronounce that savings already existed as
early as 31 January 1992. It is even more ridiculous to claim that savings may be presumed from
the mere transfer of funds.

xxx

Same; Same; Same; By the nature of maintenance and operating expenses, savings may generally
be determined at the end of the year, or earlier in case of completion, discontinuance or
abandonment of the work for which the appropriation was authorized, while, in contrast, savings
from personal services may generally be determined even at the opening of the fiscal year in case
of unpaid compensation pertaining to vacant positions and leaves of absence without pay.—By
the nature of maintenance and operating expenses, savings may generally be determined at the end
of the year, or earlier in case of completion, discontinuance or abandonment of the work for which
the appropriation was authorized. In contrast, savings from personal services may generally be
determined even at the opening of the fiscal year in case of unpaid compensation pertaining to
vacant positions and leaves of absence without pay. It should be emphasized that the 1992 GAA
did not provide an appropriation for personal services for the Capability Building Program.
Savings from vacant positions which pertain to personal services, therefore, may not be considered
savings from the Fund which may be transferred.

xxx

From the foregoing, there is no question that there were no savings from the Fund at the time of
the transfer. The Court cannot hold on to the disputable presumptions that official duty had been
regularly performed and that the law had been obeyed.

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xxx

Same; Same; Same; Augmentation denotes that an appropriation was determined to be deficient
after the implementation of the project or activity for which an appropriation was made, or after
an evaluation of the needed resources; The ad hoc nature of the task force whose operations the
illegally transferred funds were supposed to finance precisely underscores the impermanence and
transitoriness of the group and its activities—the ad hoc body itself is inconsistent with the notion
that there was an existing item of appropriation which needed to be augmented; The absence of
any item to be augmented starkly projects the illegality of the diversion of the funds and the
profligate spending thereof.—As regards the requirement that there be an item to be augmented,
which is also a sine qua non like the first requirement on the existence of savings, there was no
item for augmentation in the appropriation for the Office of the President at the time of the transfers
in question. Augmentation denotes that an appropriation was determined to be deficient after the
implementation of the project or activity for which an appropriation was made, or after an
evaluation of the needed resources. To say that the existing items in the appropriation for the Office
of the President already needed augmentation as early as 31 January 1992 is putting the cart before
the horse.

The task force spent the disallowed amount on behalf of the DILG allegedly to implement an item
of appropriation of the DILG. This evinces the fact that there was no item in the appropriation for
the Office of the President which the disallowed amount could have augmented. The ad hoc nature
of the task force whose operations the illegally transferred funds were supposed to finance
precisely underscores the impermanence and transitoriness of the group and its activities. Hence,
the ad hoc body itself is inconsistent with the notion that there was an existing item of appropriation
which needed to be augmented. The absence of any item to be augmented starkly projects the
illegality of the diversion of the funds and the profligate spending thereof.

Araullo v. Aquino III (2015)

Same; Same; Regardless of the perceived beneficial purposes of the Disbursement Acceleration
Program (DAP), and regardless of whether the DAP is viewed as an effective tool of stimulating
the national economy, the acts and practices under the DAP and the relevant provisions of
National Budget Circular (NBC) No. 541 cited in the Decision should remain illegal and
unconstitutional as long as the funds used to finance the projects mentioned therein are sourced
from savings that deviated from the relevant provisions of the General Appropriations Act (GAA),
as well as the limitation on the power to augment under Section 25(5), Article VI of the
Constitution.—Necessarily, savings, their utilization and their management will also be strictly
construed against expanding the scope of the power to augment. Such a strict interpretation is
essential in order to keep the Executive and other budget implementors within the limits of their
prerogatives during budget execution, and to prevent them from unduly transgressing Congress’
power of the purse. Hence, regardless of the perceived beneficial purposes of the DAP, and
regardless of whether the DAP is viewed as an effective tool of stimulating the national economy,
the acts and practices under the DAP and the relevant provisions of NBC No. 541 cited in the
Decision should remain illegal and unconstitutional as long as the funds used to finance the
projects mentioned therein are sourced from savings that deviated from the relevant provisions of
the GAA, as well as the limitation on the power to augment under Section 25(5), Article VI of the

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Constitution. In a society governed by laws, even the best intentions must come within the
parameters defined and set by the Constitution and the law. Laudable purposes must be carried out
through legal methods.

Same; Same; Savings; When the President suspends or stops expenditure of funds, savings are not
automatically generated until it has been established that such funds or appropriations are free
from any obligation or encumbrance, and that the work, activity or purpose for which the
appropriation is authorized has been completed, discontinued or abandoned.—Section 38 refers
to the authority of the President “to suspend or otherwise stop further expenditure of funds allotted
for any agency, or any other expenditure authorized in the General Appropriations Act.” When the
President suspends or stops expenditure of funds, savings are not automatically generated until it
has been established that such funds or appropriations are free from any obligation or
encumbrance, and that the work, activity or purpose for which the appropriation is authorized has
been completed, discontinued or abandoned.

Same; Same; Section 25(5) of the 1987 Constitution mentions of the term item that may be the
object of augmentation by the President, the Senate President, the Speaker of the House, the Chief
Jus tice, and the heads of the Constitutional Commissions.—Indeed, Section 25(5) of the 1987
Constitution mentions of the term item that may be the object of augmentation by the President,
the Senate President, the Speaker of the House, the Chief Justice, and the heads of the
Constitutional Commissions. In Belgica v. Ochoa, 710 SCRA 1 (2013), we said that an item that
is the distinct and several part of the appropriation bill, in line with the item-veto power of the
President, must contain “specific appropriations of money” and not be only general provisions.

Same; Same; So long as there is an item in the General Appropriations Act (GAA) for which
Congress had set aside a specified amount of public fund, savings may be transferred thereto for
augmentation purposes.—In Nazareth v. Villar, 689 SCRA 385 (2013), we clarified that there must
be an existing item, project or activity, purpose or object of expenditure with an appropriation to
which savings may be transferred for the purpose of augmentation. Accordingly, so long as there
is an item in the GAA for which Congress had set aside a specified amount of public fund, savings
may be transferred thereto for augmentation purposes. This interpretation is consistent not only
with the Constitution and the GAAs, but also with the degree of flexibility allowed to the Executive
during budget execution in responding to unforeseeable contingencies.

Constitutional Law; As a general rule, the nullification of an unconstitutional law or act carries
with it the illegality of its effects.—As a general rule, the nullification of an unconstitutional law
or act carries with it the illegality of its effects. However, in cases where nullification of the effects
will result in inequity and injustice, the operative fact doctrine may apply. In so ruling, the Court
has essentially recognized the impact on the beneficiaries and the country as a whole if its ruling
would pave the way for the nullification of the P144.378 Billion worth of infrastructure projects,
social and economic services funded through the DAP. Bearing in mind the disastrous impact of
nullifying these projects by virtue alone of the invalidation of certain acts and practices under the
DAP, the Court has upheld the efficacy of such DAP-funded projects by applying the operative
fact doctrine. For this reason, we cannot sustain the Motion for Partial Reconsideration of the
petitioners in G.R. No. 209442.

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Section 39 is evidently in conflict with the plain text of Section 25(5), Article VI of the Constitution
because it allows the President to approve the use of any savings in the regular appropriations
authorized in the GAA for programs and projects of any department, office or agency to cover a
deficit in any other item of the regular appropriations. As such, Section 39 violates the mandate of
Section 25(5) because the latter expressly limits the authority of the President to augment an item
in the GAA to only those in his own Department out of the savings in other items of his own
Department’s appropriations. Accordingly, Section 39 cannot serve as a valid authority to justify
cross-border transfers under the DAP. Augmentations under the DAP which are made by the
Executive within its department shall, however, remain valid so long as the requisites under
Section 25(5) are complied with.

x x x Augmentations under the DAP which are made by the Executive within its department shall,
however, remain valid so long as the requisites under Section 25(5) are complied with.

xxx

At the outset, we allay the respondents’ apprehension regarding the validity of the DAP-funded
projects. It is to be emphatically indicated that the Decision did not declare the en masse
invalidation of the 116 DAP-funded projects. To be sure, the Court recognized the encouraging
effects of the DAP on the country’s economy, x x x

The respondents assert, however, that there is no constitutional requirement for Congress to create
allotment classes within an item. What is required is for Congress to create items to comply with
the line-item veto of the President.

After a careful reexamination of existing laws and jurisprudence, we find merit in the respondents’
argument.

Indeed, Section 25(5) of the 1987 Constitution mentions of the term item that may be the object
of augmentation x x x an item that is the distinct and several part of the appropriation bill, in line
with the item-veto power of the President, must contain “specific appropriations of money” and
not be only general provisions x x x

Accordingly, the item referred to by Section 25(5) of the Constitution is the last and indivisible
purpose of a program in the appropriation law, which is distinct from the expense category or
allotment class. There is no specificity, indeed, either in the Constitution or in the relevant GAAs
that the object of augmentation should be the expense category or allotment class. In the same
vein, the President cannot exercise his veto power over an expense category; he may only veto the
item to which that expense category belongs to.

xxx

x x x Accordingly, so long as there is an item in the GAA for which Congress had set aside a
specified amount of public fund, savings may be transferred thereto for augmentation purposes.
This interpretation is consistent not only with the Constitution and the GAAs, but also with the

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degree of flexibility allowed to the Executive during budget execution in responding to
unforeseeable contingencies.

Section 26(1) One Title-One Subject Rule

Philippine Constitution Assn., Inc. v. Gimenez (1965)

Same; Same; Title of law not germane to the subject matter.—Under Republic Act No. 3836,
amending the first paragraph of section 12, subsection (c) of Commonwealth Act 186, as amended
by Republic Acts Nos, 660 and 3096, the retirement benefits are granted to members of the
Government Service Insurance System who have rendered at least twenty years of service
regardless of age. This provision is related and germane to the subject of Commonwealth Act 186.

On the other hand. the succeeding paragraph of Republic Act No. 3836 refers to members of
Congress and to elective officers thereof who are not members of the Government Service
Insurance System. To provide retirement benefits, therefore, for these officials would relate to
subject matter, which is not germane to Commonwealth Act No. No. 186.

Parenthetically, it may be added that the purpose of the requirement that the subject of an Act
should be expressed in its title is fully explained by Cooley, thus:
(1) to prevent surprise or fraud upon the Legislature; and
(2) to fairly apprise the people, through such publication of legislation that are being
considered, in order that they may have the opportunity of being heard thereon by petition
or otherwise, if they shall so desire.

xxx

“The Constitutional requirement with respect to titles of statutes as sufficient to reflect their
contents is satisfied if all parts of a law relate to the subject expressed in its title, and it is not
necessary that the title be a complete index of the content.”

“The Constitutional requirement that the subject of an act shall be expressed in its title should be
reasonably construed so as not to interfere unduly with the enactment of necessary legislation. It
should be given a practical, rather than technical construction. It should be a sufficient compliance
with such requirement if the title expresses the general subject and all the provisions of the statute
are germane to that general subject.”

Same; Same; Same; Duty of court to declare void the statute.—The requirement that the subject of
an act shall be expressed in its title is not a mere rule of legislative procedure, directory to
Congress; it is mandatory. It is the duty of the courts to declare void any statute not conforming to
the constitutional provision.

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Philippine Judges Association v. Prado (1993)

The purposes of this rule are:

(1) to prevent hodge-podge or “log-rolling” legislation;
(2) to prevent surprise or fraud upon the legislature by means of provisions in bills of which
the title gives no intimation, and which might therefore be overlooked and carelessly and
unintentionally adopted; and
(3) to fairly apprise the people, through such publication of legislative proceedings as is
usually made, of the subject of legislation that is being considered, in order that they may
have opportunity of being heard thereon, by petition or otherwise, if they shall so desire.

xxx

The title of the bill is not required to be an index to the body of the act, or to be comprehensive as
to cover every single detail of the measure. It has been held that if the title fairly indicates the
general subject, and reasonably covers all the provisions of the act, and is not calculated to mislead
the legislature or the people, there is sufficient compliance with the constitutional requirement.

To require every end and means necessary for the accomplishment of the general objectives of the
statute to be expressed in its title would not only be unreasonable but would actually render
legislation impossible. x x x

“The details of a legislative act need not be specifically stated in its title, but matter germane to
the subject as expressed in the title, and adopted to the accomplishment of the object in view, may
properly be included in the act. Thus, it is proper to create in the same act the machinery by which
the act is to be enforced, to prescribe the penalties for its infraction, and to remove obstacles in the
way of its execution. If such matters are properly connected with the subject as expressed in the
title, it is unnecessary that they should also have special mention in the title x x x.”

This is particularly true of the repealing clause, on which Cooley writes: “The repeal of a statute
on a given subject is properly connected with the subject matter of a new statute on the same
subject; and therefore a repealing section in the new statute is valid, notwithstanding that the title
is silent on the subject. It would be difficult to conceive of a matter more germane to an act and to
the object to be accomplished thereby than the repeal of previous legislations connected
therewith.”

The reason is that where a statute repeals a former law, such repeal is the effect and not the subject
of the statute; and it is the subject, not the effect of a law, which is required to be briefly expressed
in its title. x x x if the title of an act embraces only one subject, we apprehend it was never claimed
that every other act which it repeals or alters by implication must be mentioned in the title of the
new act. Any such rule would be neither within the reason of the Constitution, nor practicable.

We are convinced that the withdrawal of the franking privilege from some agencies is germane to
the accomplishment of the principal objective of R.A. No. 7354, which is the creation of a more
efficient and effective postal service system. Our ruling is that, by virtue of its nature as a repealing
clause, Section 35 did not have to be expressly included in the title of the said law.

  9  
Tobias v. Abalos (1994)

Same; Same; Statutory Construction; Statutes; Titles of Bills; The creation of a separate
congressional district for Mandaluyong is not a subject separate and distinct from the subject of
its conversion into a highly urbanized city but is a natural and logical consequence of such
conversion.—Contrary to petitioners’ assertion, the creation of a separate congressional district
for Mandaluyong is not a subject separate and distinct from the subject of its conversion into a
highly urbanized city but is a natural and logical consequence of its conversion into a highly
urbanized city. Verily, the title of R.A. No. 7675, “An Act Converting the Municipality of
Mandaluyong Into a Highly Urbanized City of Manda-luyong” necessarily includes and
contemplates the subject treated under Section 49 regarding the creation of a separate
congressional district for Mandaluyong.

Same; Same; Same; Same; Same; A liberal construction of the “one title-one subject” rule has
been invariably adopted by the Supreme Court so as not to cripple or impede legislation.—
Moreover, a liberal construction of the “one title-one subject” rule has been invariably adopted by
this court so as not to cripple or impede legislation. Thus, in Sumulong v. Comelec (73 Phil. 288
[1941]), we ruled that the constitutional requirement as now expressed in Article VI, Section 26(1)
“should be given a practical rather than a technical construction. It should be sufficient compliance
with such requirement if the title expresses the general subject and all the provisions are germane
to that general subject.”

[Other Doctrines]

Same; Same; Same; Same; It is not required that all laws emanating from the legislature must
contain all relevant data considered by Congress in the enactment of said laws.—Proceeding now
to the other constitutional issues raised by petitioners to the effect that there is no mention in the
assailed law of any census to show that Mandaluyong and San Juan had each attained the minimum
requirement of 250,000 inhabitants to justify their separation into two legislative districts, the same
does not suffice to strike down the validity of R.A. No. 7675. The said Act enjoys the presumption
of having passed through the regular congressional processes, including due consideration by the
members of Congress of the minimum requirements for the establishment of separate legislative
districts. At any rate, it is not required that all laws emanating from the legislature must contain all
relevant data considered by Congress in the enactment of said laws.

Section 26(2) Three Readings

Tolentino v. Secretary of Finance (1994)

Second. Enough has been said to show that it was within the power of the Senate to propose S. No.
1630. We now pass to the next argument of petitioners that S. No. 1630 did not pass three readings
on separate days as required by the Constitution because the second and third readings were done
on the same day, March 24, 1994. But this was because on February 24, 1994 and again on March
22, 1994, the President had certified S. No. 1630 as urgent. The presidential certification dispensed
with the requirement not only of printing but also that of reading the bill on separate days. The

  10  
phrase “except when the President certifies to the necessity of its immediate enactment, etc.” in
Art. VI, § 26(2) qualifies the two stated conditions before a bill can become a law:
(i) the bill has passed three readings on separate days and
(ii) it has been printed in its final form and distributed three days before it is finally
approved.

In other words, the “unless” clause must be read in relation to the “except” clause, because the two
are really coordinate clauses of the same sentence. To construe the “except” clause as simply
dispensing with the second requirement in the “unless” clause (i.e., printing and distribution three
days before final approval) would not only violate the rules of grammar. It would also negate the
very premise of the “except” clause: the necessity of securing the immediate enactment of a bill
which is certified in order to meet a public calamity or emergency. For if it is only the printing that
is dispensed with by presidential certification, the time saved would be so negligible as to be of
any use in insuring imme-diate enactment. It may well be doubted whether doing away with the
necessity of printing and distributing copies of the bill three days before the third reading would
insure speedy enactment of a law in the face of an emergency requiring the calling of a special
election for President and Vice-President. Under the Constitution such a law is required to be made
within seven days of the convening of Congress in emergency session.

xxx

It is nonetheless urged that the certification of the bill in this case was invalid because there was
no emergency, the condition stated in the certification of a “growing budget deficit” not being an
unusual condition in this country.

It is noteworthy that no member of the Senate saw fit to controvert the reality of the factual basis
of the certification. To the contrary, by passing S. No. 1630 on second and third readings on March
24, 1994, the Senate accepted the President’s certification. Should such certification be now
reviewed by this Court, especially when no evidence has been shown that, because S. No. 1630
was taken up on second and third readings on the same day, the members of the Senate were
deprived of the time needed for the study of a vital piece of legislation?

The sufficiency of the factual basis of the suspension of the writ of habeas corpus or declaration
of martial law under Art. VII, § 18, or the existence of a national emergency justifying the
delegation of extraordinary powers to the President under Art. VI, § 23(2), is subject to judicial
review because basic rights of individuals may be at hazard. But the factual basis of presidential
certification of bills, which involves doing away with procedural requirements designed to insure
that bills are duly considered by members of Congress, certainly should elicit a different standard
of review.

Petitioners also invite attention to the fact that the President certified S. No. 1630 and not H. No.
11197. That is because S. No. 1630 was what the Senate was considering. When the matter was
before the House, the President likewise certified H. No. 9210 then pending in the House.

[See Separate Opinions]

  11  
Section 27(2) Presidential Veto

Gonzales v. Macaraig, Jr. (1990)

The focal issue for resolution is whether or not the President exceeded the item-veto power
accorded by the Constitution. Or differently put, has the President the power to veto “provisions”
of an Appropriations Bill?

x x x The veto power of the President is expressed in Article VI, Section 27 of the 1987
Constitution x x x

Paragraph (1) refers to the general veto power of the President and if exercised would result in the
veto of the entire bill, as a general rule. Paragraph (2) is what is referred to as the item-veto power
or the line-veto power. It allows the exercise of the veto over a particular item or items in an
appropriation, revenue, or tariff bill. As specified, the President may not veto less than all of an
item of an Appropriations Bill. In other words, the power given the executive to disapprove any
item or items in an Appropriations Bill does not grant the authority to veto a part of an item and to
approve the remaining portion of the same item.

Originally, item veto exclusively referred to veto of items of appropriation bills and first came into
being in the former Organic Act, the Act of Congress of 29 August 1916. This was followed by
the 1935 Constitution, which contained a similar provision in its Section 11 (2), Article VI, except
that the veto power was made more expansive by the inclusion of this sentence:

“x x x When a provision of an appropriation bill affects one or more items of the same, the
President can not veto the provision without at the same time vetoing the particular item or items
to which it relates x x x.”

The 1935 Constitution further broadened the President’s veto power to include the veto of item or
items of revenue and tariff bills. x x x

It is to be noted that the counterpart provision in the 1987 Constitution is a verbatim reproduction
[of the 1973 Constitution] except for the public official concerned. In other words, also eliminated
has been any reference to the veto of a provision. The vital question is: should this exclusion be
interpreted to mean as a disallowance of the power to veto a provision, as petitioners urge?

The terms item and provision in budgetary legislation and practice are concededly different. An
item in a bill refers to the particulars, the details, the distinct and severable parts x x x of the bill
(Bengzon, supra, at 916). It is an indivisible sum of money dedicated to a stated purpose x x x.
The United States Supreme Court, x x x declared “that an ‘item’ of an appropriation bill obviously
means an item which in itself is a specific appropriation of money, not some general provision of
law, which happens to be put into an appropriation bill.”

It is our considered opinion that, notwithstanding the elimination in Article VI, Section 27 (2) of
the 1987 Constitution of any reference to the veto of a provision, the extent of the President’s veto
power as previously defined by the 1935 Constitution has not changed. This is because the

  12  
eliminated proviso merely pronounces the basic principle that a distinct and severable part of a bill
may be the subject of a separate veto x x x.

The restrictive interpretation urged by petitioners that the President may not veto a provision
without vetoing the entire bill not only disregards the basic principle that a distinct and severable
part of a bill may be the subject of a separate veto but also overlooks the Constitutional mandate
that any provision in the general appropriations bill shall relate specifically to some particular
appropriation therein and that any such provision shall be limited in its operation to the
appropriation to which it relates (1987 Constitution, Article VI, Section 25 [2]). In other words, in
the true sense of the term, a provision in an Appropriations Bill is limited in its operation to some
particular appropriation to which it relates, and does not relate to the entire bill.

Petitioners’ further submission that, since the exercise of the veto power by the President partakes
of the nature of legislative powers it should be strictly construed, is negatived by the following
dictum in Bengzon x x x

“The Constitution is a limitation upon the power of the legislative department of the government,
but in this respect it is a grant of power to the executive department. The Legislature has the
affirmative power to enact laws; the Chief Executive has the negative power by the constitutional
exercise of which he may defeat the will of the Legislature. It follows that the Chief Executive
must find his authority in the Constitution. But in exercising that authority he may not be confined
to rules of strict construction or hampered by the unwise interference of the judiciary. The courts
will indulge every intendment in favor of the constitutionality of a veto the same as they will
presume the constitutionality of an act as originally passed by the Legislature”

[Other Doctrines]

Explicit is the requirement that a provision in the Appropriations Bill should relate specifically to
some “particular appropriation” therein. The challenged “provisions” fall short of this requirement.
Firstly, the vetoed “provisions” do not relate to any particular or distinctive appropriation. They
apply generally to all items disapproved or reduced by Congress in the Appropriations Bill.
Secondly, the disapproved or reduced items are nowhere to be found on the face of the Bill. To
discover them, resort will have to be made to the original recommendations made by the President
and to the source indicated by petitioners themselves, i.e., the “Legislative Budget Research and
Monitoring Office” (Annex B-1 and B-2, Petition). Thirdly, the vetoed Sections are more of an
expression of Congressional policy in respect of augmentation from savings rather than a
budgetary appropriation. Consequently, Section 55 (FY ’89) and Section 16 (FY ’90) although
labelled as “provisions,” are actually inappropriate provisions that should be treated as items for
the purpose of the President’s veto power. x x x

[See Dissenting Opinion]

Bengzon v. Drilon (1992)

Same; Same; Same; The power to disapprove any item or items in an appropriate bill does not
grant the authority to veto a part of an item and to approve the remaining portion of the same

  13  
item.—The Constitution provides that only a particular item or items may be vetoed. The power to
disapprove any item or items in an appropriate bill does not grant the authority to veto a part of an
item and to approve the remaining portion of the same item.
Same; Same; Same; The President cannot set aside or reverse a final and executory judgment of
this Court through the exercise of the veto power.—We need no lengthy justifications or citations
of authorities to declare that no President may veto the provisions of a law enacted thirty-five (35)
years before his or her terms of office. Neither may the President set aside or reverse a final and
executory judgment of this Court through the exercise of the veto power.

Same; Same; Same; The Executive has no authority to set aside and overrule a decision of the
Supreme Court.—The challenged veto has far-reaching implications which the Court can not
countenance as they undermine the principle of separation of powers. The Executive has no
authority to set aside and overrule a decision of the Supreme Court.

Same; Same; Same; The President has no power to enact or amend statutes promulgated by her
predecessors much less to repeal existing laws.—Neither may the veto power of the President be
exercised as a means of repealing RA 1797. This is arrogating unto the Presidency legislative
powers which are beyond its authority. The President has no power to enact or amend statutes
promulgated by her predecessors much less to repeal existing laws. The President’s power is
merely to execute the laws as passed by Congress.

Philippine Constitution Association v. Enriquez (1994)

Where the veto is claimed to have been made without or in excess of the authority vested on the
President by the Constitution, the issue of an impermissible intrusion of the Executive into the
domain of the Legislature arises x x x

It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]).
Said remedy, however, is available only when the presidential veto is based on policy or political
considerations but not when the veto is claimed to be ultra vires. In the latter case, it becomes the
duty of the Court to draw the dividing line where the exercise of executive power ends and the
bounds of legislative jurisdiction begin.

xxx

A general appropriations bill is a special type of legislation, whose content is limited to specified
sums of money dedicated to a specific purpose or a separate fiscal unit x x x.

As the Constitution is explicit that the provision which Congress can include in an appropriations
bill must “relate specifically to some particular appropriation therein” and “be limited in its
operation to the appropriation to which it relates,” it follows that any provision which does not
relate to any particular item, or which extends in its operation beyond an item of appropriation,
is considered “an inappropriate provision” which can be vetoed separately from an item. Also to
be included in the category of “inappropriate provisions” are unconstitutional provisions and
provisions which are intended to amend other laws, because clearly these kind of laws have no

  14  
place in an appropriations bill. These are matters of general legislation more appropriately dealt
with in separate enactments. x x x

The President vetoed the entire paragraph one of the Special Provision of the item on debt service,
including the provisos that the appropriation authorized in said item
“shall be used for payment of the principal and interest of foreign and domestic
indebtedness” and that
“in no case shall this fund be used to pay for the liabilities of the Central Bank Board of
Liquidators.”
These provisos are germane to and have a direct connection with the item on debt service. Inherent
in the power of appropriation is the power to specify how the money shall be spent x x x. The said
provisos, being appropriate provisions, cannot be vetoed separately. Hence the item veto of said
provisions is void.

We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of the
Special Provision of the item on debt service only with respect to the proviso therein requiring that
“any payment in excess of the amount herein, appropriated shall be subject to the approval
of the President of the Philippines with the concurrence of the Congress of the Philippines
x x x.”

The second paragraph of Special Provision No. 2 brings to fore the divergence in policy of
Congress and the President. While Congress expressly laid down the condition that only 30% of
the total appropriation for road maintenance should be contracted out, the President, on the basis
of a comprehensive study, believed that contracting out road maintenance projects at an option of
70% would be more efficient, economical and practical.

The Special Provision in question is not an inappropriate provision which can be the subject of a
veto. It is not alien to the appropriation for road maintenance, and on the other hand, it specifies
how the said item shall be expended—70% by administrative and 30% by contract.

The 1987 Constitution allows the addition by Congress of special provisions, conditions to items
in an expenditure bill, which cannot be vetoed separately from the items to which they relate so
long as they are “appropriate” in the budgetary sense (Art. VII, Sec. 25[2]).

The Solicitor General was hard put in justifying the veto of this special provision. He merely
argued that the provision is a complete turnabout from an entrenched practice of the government
to maximize contract maintenance x x x . That is not a ground to veto a provision separate
from the item to which it refers.

The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is therefore
unconstitutional.

xxx

  15  
The Special Provision which requires that all purchases of medicines by the AFP should strictly
comply with the formulary embodied in the National Drug Policy of the Department of Health is
an “appropriate” provision. x x x

Being directly related to and inseparable from the appropriation item on purchases of medicines
by the AFP, the special provision cannot be vetoed by the President without also vetoing the said
item x x x.

In the appropriation for the modernization of the AFP, the President vetoed the underlined proviso
of Special Provision No. 2 on the “Use of Fund,” which requires the prior approval of Congress
for the release of the corresponding modernization funds x x x

As reason for the veto, the President stated that the said condition and prohibition violate the
Constitutional mandate of non-impairment of contractual obligations, and if allowed, “shall
effectively alter the original intent of the AFP Modernization Fund to cover all military equipment
deemed necessary to modernize the Armed Forces of the Philippines” x x x

Petitioners claim that Special Provision No. 2 on the “Use of Fund” and Special Provision No. 3
are conditions or limitations related to the item on the AFP modernization plan.

The requirement in Special Provision No. 2 on the “Use of Fund” for the AFP modernization
program that the President must submit all purchases of military equipment to Congress for its
approval, is an exercise of the “congressional or legislative veto.” By way of definition, a
congressional veto is a means whereby the legislature can block or modify administrative action
taken under a statute. It is a form of legislative control in the implementation of particular executive
actions. The form may be either negative, that is requiring disapproval of the executive action, or
affirmative, requiring approval of the executive action. This device represents a significant attempt
by Congress to move from oversight of the executive to shared administration x x x.

A congressional veto is subject to serious questions involving the principle of separation of powers.

However the case at bench is not the proper occasion to resolve the issues of the validity of the
legislative veto as provided in Special Provisions Nos. 2 and 3 because the issues at hand can be
disposed of on other grounds. Any provision blocking an administrative action in implementing a
law or requiring legislative approval of executive acts must be incorporated in a separate and
substantive bill. Therefore, being “inappropriate” provisions, Special Provisions Nos. 2 and 3 were
properly vetoed.

As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: “What Congress
cannot do directly by law it cannot do indirectly by attaching conditions to the exercise of that
power (of the President as Commander-in-Chief) through provisions in the appropriation law.”

Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Fund for payment
of the trainer planes and armored personnel carriers, which have been contracted for by the AFP,
is violative of the Constitutional prohibition on the passage of laws that impair the obligation of

  16  
contracts (Art. III, Sec. 10), more so, contracts entered into by the Government itself. The veto of
said special provision is therefore valid.

xxx

[Other Doctrines]

This is the first case before this Court where the power of the President to impound is put in issue.
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 x x x

Those who deny to the President the power to impound argue that once Congress has set aside the
fund for a specific purpose in an appropriations act, it becomes mandatory on the part of the

President to implement the project and to spend the money appropriated therefor. The President
has no discretion on the matter, for the Constitution imposes on him the duty to faithfully execute
the laws.

In refusing or deferring the implementation of an appropriation item, the President in effect

exercises a veto power that is not expressly granted by the Constitution. As a matter of fact, the
Constitution does not say anything about impounding. The source of the Executive authority must
be found elsewhere.

Proponents of impoundment have invoked at least three principal sources of the authority of the
President.
Foremost is the authority to impound given to him either expressly or impliedly by
Congress.
Second is the executive power drawn from the President’s role as Commander-in-Chief.
Third is the Faithful Execution Clause which ironically is the same provision invoked by
petitioners herein.

The proponents insist that a faithful execution of the laws requires that the President desist from
implementing the law if doing so would prejudice public interest. x x x

We do not find anything in the language used in the challenged Special Provision that would imply
that Congress intended to deny to the President the right to defer or reduce the spending, much less
to deactivate 11,000 CAFGU members all at once in 1994. But even if such is the intention, the
appropriation law is not the proper vehicle for such purpose. Such intention must be embodied and
manifested in another law considering that it abrades the powers of the Commander-in-Chief and
there are existing laws on the creation of the CAFGU’s to be amended. Again we state: a provision
in an appropriations act cannot be used to repeal or amend other laws, in this case, P.D. No. 1597
and R.A. No. 6758.

[See Separate Opinions]

  17  
Section 28(1) Uniform, Equitable and Progressive Taxation

Commissioner of lnternal Revenue v. Court of Appeals (1996)

Article VI, Section 28, paragraph 1, of the 1987 Constitution mandates taxation to be uniform and
equitable. Uniformity requires that all subjects or objects of taxation, similarly situated, are to be
treated alike or put on equal footing both in privileges and liabilities. Thus, all taxable articles or
kinds of property of the same class must be taxed at the same rate and the tax must operate with
the same force and effect in every place where the subject may be found.

Apparently, RMC 37–93 would only apply to “Hope Luxury,” “Premium More” and “Champion”
cigarettes and, unless petitioner would be willing to concede to the submission of private
respondent that the circular should, as in fact my esteemed colleague Mr. Justice Bellosillo so
expresses in his separate opinion, be considered adjudicatory in nature and thus violative of due
process following the Ang Tibay doctrine, the measure suffers from lack of uniformity of taxation.
xxx

Tolentino v. Secretary of Finance (1994)

Petitioners contend that as a result of the uniform 10% VAT, the tax on consumption goods of
those who are in the higher-income bracket, which before were taxed at a rate higher than 10%,
has been reduced, while basic commodities, which before were taxed at rates ranging from 3% to
5%, are now taxed at a higher rate.

Just as vigorously as it is asserted that the law is regressive, the opposite claim is pressed by
respondents that in fact it distributes the tax burden to as many goods and services as possible
particularly to those which are within the reach of higher-income groups, even as the law exempts
basic goods and services. It is thus equitable. x x x

Lacking empirical data on which to base any conclusion regarding these arguments, any discussion
whether the VAT is regressive in the sense that it will hit the “poor” and middle-income group in
society harder than it will the “rich,” as the Cooperative Union of the Philippines (CUP) claims in
G.R. No. 115873, is largely an academic exercise. On the other hand, the CUP’s contention that
Congress’ withdrawal of exemption of producers cooperatives, marketing cooperatives, and
service cooperatives, while maintaining that granted to electric cooperatives, not only goes against
the constitutional policy to promote cooperatives as instruments of social justice (Art. XII, § 15)
but also denies such cooperatives the equal protection of the law is actually a policy argument. The
legislature is not required to adhere to a policy of “all or none” in choosing the subject of taxation.

xxx

Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required by
the Constitution to do is to “evolve a progressive system of taxation.” This is a directive to
Congress, just like the directive to it to give priority to the enactment of laws for the enhancement
of human dignity and the reduction of social, economic and political inequalities (Art. XIII, § 1),

  18  
or for the promotion of the right to “quality education” (Art. XIV, § 1). These provisions are put
in the Constitution as moral incentives to legislation, not as judicially enforceable rights.

Section 28(3) Institutions and Property Exemptions from Taxation

Abra Valley College, Inc. v. Aquino (1988)

In this regard petitioner argues that the primary use of the school lot and building is the basic and
controlling guide, norm and standard to determine tax exemption, and not the mere incidental use
thereof.

As early as 1916 in YMCA of Manila vs. Collector of Internal Revenue, 33 Phil. 217 [1916], this
Court ruled that while it may be true that the YMCA keeps a lodging and a boarding house and
maintains a restaurant for its members, still these do not constitute business in the ordinary
acceptance of the word, but an institution used exclusively for religious, charitable and educational
purposes, and as such, it is entitled to be exempted from taxation.

In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil. 352 [1972],
this Court included in the exemption a vegetable garden in an adjacent lot and another lot formerly
used as a cemetery. It was clarified that the term “used exclusively” considers incidental use also.
Thus, the exemption from payment of land tax in favor of the convent includes, not only the land
actually occupied by the building but also the adjacent garden devoted to the incidental use of the
parish priest. The lot which is not used for commercial purposes but serves solely as a sort of
lodging place, also quali-fies for exemption because this constitutes incidental use in religious
functions.

The phrase “exclusively used for educational purposes” was further clarified by this Court x x x

“Moreover, the exemption in favor of property used exclusively for charitable or educational
purposes is ‘not limited to property actually indispensable’ therefor x x x, but extends to facilities
which are incidental to and reasonably necessary for the accomplishment of said purposes, such
as in the case of hospitals, ‘a school for training nurses, a nurses’ home, property use to provide
housing facilities for interns, resident doctors, superintendents, and other members of the hospital
staff, and recreational facilities for student nurses, interns, and residents’ x x x, such as ‘Athletic
fields’ including ‘a firm used for the inmates of the institution.’ ” x x x

The test of exemption from taxation is the use of the property for purposes mentioned in the
Constitution x x x

It must be stressed however, that while this Court allows a more liberal and non-restrictive
interpretation of the phrase “exclusively used for educational purposes” as provided for in Article
VI, Section 22, paragraph 3 of the 1935 Philippine Constitution, reasonable emphasis has always
been made that exemption extends to facilities which are incidental to and reasonably necessary
for the accomplishment of the main purposes. Otherwise stated, the use of the school building or
lot for commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while the
use of the second floor of the main building in the case at bar for residential purposes of the

  19  
Director and his family, may find justification under the concept of incidental use, which is
complimentary to the main or primary purpose—educational, the lease of the first floor thereof to
the Northern Marketing Corporation cannot by any stretch of the imagination be considered
incidental to the purpose of education.

Section 29(1) Money Taken from Treasury

Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic (2012)

To recapitulate, Article VI, Section 29 (3) of the 1987 Constitution, restating a general principle
on taxation, enjoins the disbursement of a special fund in accordance with the special purpose for
which it was collected, the balance, if there be any, after the purpose has been fulfilled or is no
longer forthcoming, to be transferred to the general funds of the government x x x

x x x both P.D. Nos. 961 and 1468 provides that the CCSF shall not be construed by any law as a
special and/or trust fund, the stated intention being that actual ownership of the said fund shall
pertain to coconut farmers in their private capacities. Thus, in order to determine whether the
relevant provisions of P.D. Nos. 755, 961 and 1468 complied with Article VI, Section 29 (3) of
the 1987 Constitution, a look at the public policy or the purpose for which the CCSF levy was
imposed is necessary.

xxx

x x x P.D. No. 276 created and exacted the CCSF “to advance the government’s avowed policy of
protecting the coconut industry.” Evidently, the CCSF was originally set up as a special fund to
support consumer purchases of coconut products. To put it a bit differently, the protection of the
entire coconut industry, and even more importantly, for the consuming public provides the
rationale for the creation of the coconut levy fund. There can be no quibbling then that the
foregoing provisions of P.D. No. 276 intended the fund created and set up therein not especially
for the coconut farmers but for the entire coconut industry, albeit the improvement of the industry
would doubtless redound to the benefit of the farmers. Upon the foregoing perspective, the
following provisions of P.D. Nos. 755, 961 and 1468 insofar as they declared, as the case may be,
that: “[the coconut levy] fund and the disbursements thereof [shall be] authorized for the benefit
of the coconut farmers and shall be owned by them in their private capacities;”  or the coconut levy
fund shall not be construed by any law to be a special and/or fiduciary fund, and do not therefore
form part of the general fund of the national government later on; or the UCPB shares acquired
using the coconut levy fund shall be distributed to the coconut farmers for free, violated the special
public purpose for which the CCSF was established.

In sum, not only were the challenged presidential issuances unconstitutional for decreeing the
distribution of the shares of stock for free to the coconut farmers and, therefore, negating the public
purpose declared by P.D. No. 276, i.e., to stabilize the price of edible oil and to protect the coconut
industry. They likewise reclassified, nay treated, the coconut levy fund as private fund to be
disbursed and/or invested for the benefit of private individuals in their private capacities, contrary
to the original purpose for which the fund was created. To compound the situation, the offending
provisions effectively removed the coconut levy fund away from the cavil of public funds which

  20  
normally can be paid out only pursuant to an appropriation made by law. The conversion of public
funds into private assets was illegally allowed, in fact mandated, by these provisions. Clearly
therefore, the pertinent provisions of P.D. Nos. 755, 961 and 1468 are unconstitutional for violating
Article VI, Section 29 (3) of the Constitution. In this context, the distribution by PCA of the UCPB
shares purchased by means of the coconut levy fund—a special fund of the government—to the
coconut farmers, is therefore void.

Planters Products, Inc. v. Fertiphil Corporation (2008)

Same; The power to tax exists for the general welfare, hence, implicit in its power is the limitation
that it should be used only for a public purpose—it would be a robbery for the State to tax its
citizens and use the funds generated for a private purpose.—An inherent limitation on the power
of taxation is public purpose. Taxes are exacted only for a public purpose. They cannot be used
for purely private purposes or for the exclusive benefit of private persons. The reason for this is
simple. The power to tax exists for the general welfare; hence, implicit in its power is the limitation
that it should be used only for a public purpose. It would be a robbery for the State to tax its citizens
and use the funds generated for a private purpose. As an old United States case bluntly put it: “To
lay with one hand, the power of the government on the property of the citizen, and with the other
to bestow it upon favored individuals to aid private enterprises and build up private fortunes, is
nonetheless a robbery because it is done under the forms of law and is called taxation.”

Same; Words and Phrases; Public purpose is the heart of a tax law; Public purpose is an elastic
concept that can be hammered to fit modern standards—it does not only pertain to those purposes
which are traditionally viewed as essentially government functions, such as building roads and
delivery of basic services, but also includes those purposes designed to promote social justice;
While the categories of what may constitute a public purpose are continually expanding in light of
the expansion of government functions, the inherent requirement that taxes can only be exacted
for a public purpose still stands.—The term “public purpose” is not defined. It is an elastic concept
that can be hammered to fit modern standards. Jurisprudence states that “public purpose” should
be given a broad interpretation. It does not only pertain to those purposes which are traditionally
viewed as essentially government functions, such as building roads and delivery of basic services,
but also includes those purposes designed to promote social justice. Thus, public money may now
be used for the relocation of illegal settlers, low-cost housing and urban or agrarian reform. While
the categories of what may constitute a public purpose are continually expanding in light of the
expansion of government functions, the inherent requirement that taxes can only be exacted for a
public purpose still stands. Public purpose is the heart of a tax law. When a tax law is only a mask
to exact funds from the public when its true intent is to give undue benefit and advantage to a
private enterprise, that law will not satisfy the requirement of “public purpose.” The purpose of a
law is evident from its text or inferable from other secondary sources. Here, We agree with the
RTC and that CA that the levy imposed under LOI No. 1465 was not for a public purpose.

Same; It is utterly repulsive that a tax law would expressly name a private company as the ultimate
beneficiary of the taxes to be levied from the public—it is a clear case of crony capitalism.—It is
a basic rule of statutory construction that the text of a statute should be given a literal meaning. In
this case, the text of the LOI is plain that the levy was imposed in order to raise capital for PPI.
The framers of the LOI did not even hide the insidious purpose of the law. They were cavalier

  21  
enough to name PPI as the ultimate beneficiary of the taxes levied under the LOI. We find it utterly
repulsive that a tax law would expressly name a private company as the ultimate beneficiary of the
taxes to be levied from the public. This is a clear case of crony capitalism.

Guingona, Jr. v. Carague (1991)

The legislative intention in R.A. No. 4860, as amended, Section 31 of P.D. No. 1177 and P.D. No.
1967 is that the amount needed should be automatically set aside in order to enable the Republic
of the Philippines to pay the principal, interest, taxes and other normal banking charges on the
loans, credits or indebtedness incurred as guaranteed by it when they shall become due without the
need to enact a separate law appropriating funds therefor as the need arises. The purpose of these
laws is to enable the government to make prompt payment and/ or advances for all loans to protect
and maintain the credit standing of the country.

Although the subject presidential decrees do not state specific amounts to be paid, necessitated by
the very nature of the problem being addressed, the amounts nevertheless are made certain by the
legislative parameters provided in the decrees. The Executive is not of unlimited discretion as to
the amounts to be disbursed for debt servicing. The mandate is to pay only the principal, interest,
taxes and other normal banking charges on the loans, credits or indebtedness, or on the bonds,
debentures or security or other evidences of indebtedness sold in international markets incurred by
virtue of the law, as and when they shall become due. No uncertainty arises in executive
implementation as the limit will be the exact amounts as shown by the books of the Treasury.

The Government budgetary process has been graphically described to consist of four major phases
as aptly discussed by the Solicitor General:

“The Government budgeting process consists of four major phases:

1. Budget preparation. The first step is essentially tasked upon the Executive Branch and covers
the estimation of government revenues, the determination of budgetary priorities and activities
within the constraints imposed by available revenues and by borrowing limits, and the translation
of desired priorities and activities into expenditure levels.
Budget preparation starts with the budget call issued by the Department of Budget and
Management. Each agency is required to submit agency budget estimates in line with the
requirements consistent with the general ceilings set by the Development Budget Coordinating
Council (DBCC).

With regard to debt servicing, the DBCC staff, based on the macroeconomic projections of interest
rates (e.g. LIBOR rate) and estimated sources of domestic and foreign financing, estimates debt
service levels. Upon issuance of budget call, the Bureau of Treasury computes for the interest and
principal payments for the year for all direct national government borrowings and other liabilities
assumed by the same.

2. Legislative authorization. At this stage, Congress enters the picture and deliberates or acts on
the budget proposals of the President, and Congress in the exercise of its own judgment and
wisdom formulates an appropriation act precisely following the process established by the

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Constitution, which specifies that no money may be paid from the Treasury except in accordance
with an appropriation made by law.

Debt service is not included in the General Appropriation Act, since authorization therefor already
exists under RA No. 4860 and 245, as amended and PD 1967. Precisely in the light of this
subsisting authorization as embodied in said Republic Acts and PD for debt service, Congress does
not concern itself with details for implementation by the Executive, but largely with annual levels
and approval thereof upon due deliberations as part of the whole obligation program for the year.
Upon such approval, Congress has spoken and cannot be said to have delegated its wisdom to the
Executive, on whose part lies the implementation or execution of the legislative wisdom.

3. Budget Execution. Tasked on the Executive, the third phase of the budget process covers the
various operational aspects of budgeting. The establishment of obligation authority ceilings, the
evaluation of work and financial plans for individual activities, the continuing review of
government fiscal position, the regulation of funds releases, the implementation of cash payment
schedules, and other related activities comprise this phase of the budget cycle.

Release from the debt service fund is triggered by a request of the Bureau of the Treasury for
allotments from the Department of Budget and Management, one quarter in advance of payment
schedule, to ensure prompt payments. The Bureau of Treasury, upon receiving official billings
from the creditors, remits payments to creditors through the Central Bank or to the Sinking Fund
established for government security issues (Annex F).

4. Budget accountability. The fourth phase refers to the evaluation of actual performance and
initially approved work targets, obligations incurred, personnel hired and work accomplished are
compared with the targets set at the time the agency budgets were approved.

There being no undue delegation of legislative power as clearly above shown, petitioners insist
nevertheless that subject presidential decrees constitute undue delegation of legislative power to
the executive on the alleged ground that the appropriations therein are not exact, certain or definite,
invoking in support therefor the Constitution of Nebraska, the constitution under which the case
of State v. Moore, 69 NW 974, cited by petitioners, was decided. Unlike the Constitution of
Nebraska, however, our Constitution does not require a definite, certain, exact or ‘specific
appropriation made by law.’ Section 29, Article VI of our 1987 Constitution omits any of these
words and simply states:

xxx

More significantly, there is no provision in our Constitution that provides or prescribes any
particular form of words or religious recitals in which an authorization or appropriation by
Congress shall be made, except that it be ‘made by law,’ such as precisely the authorization or
appropriation under the questioned presidential decrees. In other words, in terms of time horizons,
an appropriation may be made impliedly (as by past but subsisting legislations) as well as expressly
for the current fiscal year (as by enactment of laws by the present Congress), just as said
appropriation may be made in general as well as in specific terms. The Congressional authorization
may be embodied in annual laws, such as a general appropriations act or in special provisions of

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laws of general or special application which appropriate public funds for specific public purposes,
such as the questioned decrees. An appropriation measure is sufficient if the legislative intention
clearly and certainly appears from the language employed (In re Continuing Appropriations, 32 P.
272), whether in the past or in the present.”

xxx

The Court, therefor, finds that R.A. No. 4860, as amended by P.D. No. 81, Section 31 of P.D. 1177
and P.D. No. 1967 constitute lawful authorizations or appropriations, unless they are repealed or
otherwise amended by Congress. The Executive was thus merely complying with the duty to
implement the same.

[See Dissenting Opinions]

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