MA. CAROLINA P. ARAULLO ET AL. v. BENIGNO SIMEON C. AQUINO III ET AL., G.R. NO. 209287, July 1, 2014

In a Decision dated July 1, 2014, the Supreme Court partially granted the consolidated petitions for certiorari and prohibition and declared the following acts and practices under the Disbursement Acceleration Program (DAP), National Budget Circular No. 541 and related executive issuances unconstitutional for violating Section 25(5), Article  VI of the 1987 Constitution and the doctrine of separation of powers, namely:

(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying with the statutory definition of savings contained in the General Appropriations Acts;

(b) The cross-border transfers of the savings of the Executive to augment the appropriations of other offices outside the Executive; and

(c) The funding of projects, activities and programs that were not covered by any appropriation in the General Appropriations Acts.

The Court further declared void the use of unprogrammed funds despite the absence of a certification by the National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the conditions provided in the relevant General Appropriations Acts (GAAs).

Remedial law; Certiorari and prohibition. The remedies of certiorari and prohibition are necessarily broader in scope and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not only by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions but also to set right, undo and restrain any act of grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or ministerial functions. Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to review and/or prohibit or nullify the acts of legislative and executive officials.

Remedial law; Locus standi. Citing De Castro v. Judicial and Bar Council, the Supreme Court ruled that the assertion of a public right as a predicate for challenging a supposedly illegal or unconstitutional executive or legislative action rests on the theory that the petitioner represents the public in general. Although such petitioner may not be as adversely affected by the action complained against as are others, it is enough that he sufficiently demonstrates in his petition that he is entitled to protection or relief from the Court in the vindication of a public right. The Court likewise cited Agan, Jr. v. Philippine International Air Terminals Co., Inc., to explain that “[s]tanding is a peculiar concept in constitutional law because in some cases, suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest.”

Transcendental importance as a ground to waive locus standi. Each of the petitioners has established sufficient interest in the outcome of the controversy as to confer locus standi on each of them. In addition, considering that the issues center on the extent of the power of the Chief Executive to disburse and allocate public funds, whether appropriated by Congress or not, these cases pose issues that are of transcendental importance to the entire Nation, the petitioners included. As such, the determination of such important issues call for the Court’s exercise of its broad and wise discretion “to waive the requirement and so remove the impediment to its addressing and resolving the serious constitutional questions raised.”

Administrative law; Budget process; Implementation and funding of the Disbursement Allocation Program (DAP). Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget Legislation; (3) Budget Execution; and (4) Accountability.

The DAP was to be implemented and funded (1) by declaring “savings” coming from the various departments and agencies derived from pooling unobligated allotments and withdrawing unreleased appropriations; (2) releasing unprogrammed funds; and (3) applying the “savings” and unprogrammed funds to augment existing [program, activity or project] or to support other priority PAPs.

Administrative law; Nature of the DAP. The DAP was a government policy or strategy designed to stimulate the economy through accelerated spending. In the context of the DAP’s adoption and implementation being a function pertaining to the Executive as the main actor during the Budget Execution Stage under its constitutional mandate to faithfully execute the laws, including the GAAs, Congress did not need to legislate to adopt or to implement the DAP.

Constitutional law; The DAP is not an appropriation measure and does not contravene Section 29(1), Article VI. The President, in keeping with his duty to faithfully execute the laws, had sufficient discretion during the execution of the budget to adapt the budget to changes in the country’s economic situation. He could adopt a plan like the DAP for the purpose. He could pool the savings and identify the PAPs to be funded under the DAP. The pooling of savings pursuant to the DAP, and the identification of the PAPs to be funded under the DAP did not involve appropriation in the strict sense because the money had been already set apart from the public treasury by Congress through the GAAs. In such actions, the Executive did not usurp the power vested in Congress under Section 29(1), Article VI of the Constitution [that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law].

Requisites of a valid transfer of appropriated funds under Section 25(5), Article VI. The transfer of appropriated funds, to be valid under Section 25(5), [Article VI of the Constitution], must be made upon a concurrence of the following requisites, namely: (1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to transfer funds within their respective offices; (2) The funds to be transferred are savings generated from the appropriations for their respective offices; and (3) The purpose of the transfer is to augment an item in the general appropriations law for their respective offices.

It is then indubitable that the power to augment was to be used only when the purpose for which the funds had been allocated were already satisfied, or the need for such funds had ceased to exist, for only then could savings be properly realized. This interpretation prevents the Executive from unduly transgressing Congress’ power of the purse.

Savings, defined. The definition of “savings” under the 2011, 2012 and 2013 GAAs refer to portions or balances of any programmed appropriation in this Act free from any obligation or encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (iii) from appropriations balances realized from the implementation of measures resulting in improved systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets.

The Court agreed with petitioners that respondents were forcing the generation of savings in order to have a larger fund available for discretionary spending. Respondents, by withdrawing unobligated allotments in the middle of the fiscal year, in effect deprived funding for PAPs with existing appropriations under the GAAs.

The mandate of Section 28, Chapter IV, Book VI of the Administrative Code is to revert to the General Fund balances of appropriations that remained unexpended at the end of the fiscal year. The Executive could not circumvent this provision by declaring unreleased appropriations and unobligated allotments as savings prior to the end of the fiscal year.

Augmentation is valid only when funding is deficient. The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the appropriation for the PAP item to be augmented must be deficient, to wit: – x x x Augmentation implies the existence in this Act of a program, activity, or project with an appropriation, which upon implementation, or subsequent evaluation of needed resources, is determined to be deficient. In no case shall a non-existent program, activity, or project, be funded by augmentation from savings or by the use of appropriations otherwise authorized in this Act.

The President cannot substitute his own will for that of Congress. The Court held that the “savings” pooled under the DAP were allocated to PAPs that were not covered by any appropriations in the pertinent GAAs. Although the [Office of the Solicitor General] rightly contends that the Executive was authorized to spend in line with its mandate to faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered discretion that allowed the President to substitute his own will for that of Congress. He was still required to remain faithful to the provisions of the GAAs, given that his power to spend pursuant to the GAAs was but a delegation to him from Congress. Verily, the power to spend the public wealth resided in Congress, not in the Executive. Moreover, leaving the spending power of the Executive unrestricted would threaten to undo the principle of separation of powers.

Cross-border transfers or augmentations are prohibited. By providing that the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the Heads of the Constitutional Commissions may be authorized to augment any item in the GAA “for their respective offices,” Section 25(5) has delineated borders between their offices, such that funds appropriated for one office are prohibited from crossing over to another office even in the guise of augmentation of a deficient item or items. Thus, we call such transfers of funds cross-border transfers or cross-border augmentations.

Regardless of the variant characterizations of the cross-border transfers of funds, the plain text of Section 25(5) disallowing cross-border transfers was disobeyed. Cross-border transfers, whether as augmentation, or as aid, are prohibited under Section 25(5).

No violation of equal protection. Petitioners claim that the Executive discriminated against some legislators on the ground alone of their receiving less than the others could not of itself warrant a finding of contravention of the Equal Protection Clause. The denial of equal protection of any law should be an issue to be raised only by parties who supposedly suffer it, and, in these cases, such parties would be the few legislators claimed to have been discriminated against in the releases of funds under the DAP. The reason for the requirement is that only such affected legislators could properly and fully bring to the fore when and how the denial of equal protection occurred, and explain why there was a denial in their situation. The requirement was not met here.

Operative fact doctrine. The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive act but sustains its effects.  It provides an exception to the general rule that a void or unconstitutional law produces no effect. But its use must be subjected to great scrutiny and circumspection, and it cannot be invoked to validate an unconstitutional law or executive act, but is resorted to only as a matter of equity and fair play. It applies only to cases where extraordinary circumstances exist, and only when the extraordinary circumstances have met the stringent conditions that will permit its application.

The operative fact doctrine applies to the implementation of the DAP. To declare the implementation of the DAP unconstitutional without recognizing that its prior implementation constituted an operative fact that produced consequences in the real as well as juristic worlds of the Government and the Nation is to be impractical and unfair. Unless the doctrine is held to apply, the Executive as the disburser and the offices under it and elsewhere as the recipients could be required to undo everything that they had implemented in good faith under the DAP. That scenario would be enormously burdensome for the Government. Equity alleviates such burden.

Full text here.

 

 

 

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OFFICEMETRO PHILIPPINES, INC. (formerly REGUS CENTRES, INC.) v. COMMISSIONER OF INTERNAL REVENUE, CTA Case No. 8382, June 3, 2014

Taxation; Association/condominium dues and other fees and charges collected from members that are used solely for administrative purposes are not subject to income tax and withholding tax. The BIR in its various rulings, held that association/condominium dues, membership fees and other assessment/charges collected from the members, which are merely held in trust and which are to be used solely for administrative expenses in implementing their purpose(s), viz., to protect and safeguard the welfare of the owners, lessees and occupants; provide utilities and amenities for their members, and from which the corporation could not realize any gain or profit as a result of their receipt thereof, must not be included in said corporation’s gross income. This means that the same are not subject to income tax and to withholding tax.

Full text here.

HISTORICAL FACTS, HISTORICAL LIES, AND HISTORICAL RIGHTS IN THE WEST PHILIPPINE SEA by Justice Antonio T. Carpio (June 6, 2014)

On June 6, 2014, Senior Associate Justice Antonio T. Carpio delivered a lecture at De La Salle University where he addressed China’s assertion to so-called “historical facts” that now appear to be driving its maritime claims in the West Philippine Sea.

China points to ancient Chinese maps as “historical facts” to claim the islands, rocks, reefs and waters within its 9-dashed line claim in the South China Sea. However, Justice Carpio stressed that under international law a map per se does not constitute a territorial title or a legal document to establish territorial rights. For maps to constitute material and relevant evidence, the contending parties must agree to such maps.

Justice Carpio explains that since the start of the Song Dynasty in 960 AD until the end of the Qing Dynasty in 1912, all official and unofficial maps of China indicate that its southernmost territory has always been Hainan Island. This position was confirmed and reiterated in the Constitutions adopted by China from 1912 to 1946 and through a Note Verbale to France. These unilateral declarations are binding on China under international law.

Justice Carpio also noted that neither the Spratlys nor Scarborough Shoal appeared in any Chinese dynasty maps. Rightly so, since the Spratlys are more than 600 nautical miles, and Scarborough Shoal is more than 500 nautical miles from Hainan Island. According to Justice Carpio, China’s present claim that Scarborough Should is the Nanhai Island where Guo Shoujing visited in 1279 and erected a celestial observatory is a double lie because China already officially declared in 1982 that Nanhai is in the Paracels. Furthermore, it was physically impossible to install an observatory on the tiny Scarborough rocks.

On the other hand, Justice Carpio states that numerous ancient maps prepared by Westerners, and later by Philippine authorities, from 1636 to 1940 consistently showed that Scarborough Shoal (a.k.a. Panacot and Bajo de Masinloc) has always been part of Philippine territory.

Justice Carpio empahsizes that under the general principles and rules of international law, a claim of “historical rights” to internal waters or territorial sea must satisfy four conditions. One, the state must formally announce to the international community such claim to internal waters or territorial sea, clearly specifying the nature and scope of such claim. Two, the state must exercise sovereignty over the waters it claims as its own internal waters or territorial sea. Three, such exercise of sovereignty must be continuous over a substantial period of time. Four, other states must recognize, tolerate or acquiesce in to the exercise of such authority.

Justice Carpio asserts that China fails to comply with any of these four conditions. China officially notified the world of its 9-dashed line claim only in 2009. Not a single country in the world recognizes, respects, tolerates or acquiesces to the 9-dashed line claim. China has never effectively enforced its 9-dashed line claim from 1947 to 1994 when the United Nations Convention on the Law of the Sea took effect, or even after 1994 up to the present. Even assuming for the sake of argument that China indeed has “historical rights,” Justice Carpio explains that the entry into force of UNCLOS in 1994 extinguished such rights. Under UNCLOS, a state cannot claim any “historical right” to the Exclusive Economic Zone or Extended Continental Shelf of another state.

Full text here.

 

JOINT ADMINISTRATIVE ORDER NO. 2014-01 (June 2, 2014): REVISED SCHEDULE OF FINES AND PENALTIES FOR VIOLATIONS OF LAWS, RULES AND REGULATIONS GOVERNING LAND TRANSPORTATION

The Land Transportation Office and the Land Transportation Franchising and Regulatory Board issued new rules prescribing penalties for violations of licensing, motor vehicle registration/renewal/operation, dimension/specifications/weight and load limits, and franchise requirements.

All apprehensions are deemed admitted unless contested by filing a written contest within five (5) days from date of apprehension. Failure of the driver to pay the corresponding penalty within 15 days from date of apprehension shall cause the automatic suspension of his driver’s license for a period of 30 days from the date of apprehension, in addition to the prescribed fines and penalties.

Joint AO No 2014-01 Revised Schedule of Fines and Penalties

 

 

SEC-OGC OPINION No. 14-04 (April 21, 2014) Re: QUALIFICATION/DISQUALIFICATION OF BOARD OF DIRECTORS; CONFLICT OF INTEREST

The qualification that “a director shall not be the immediate member of the family of any stockholder in any other firm, company, or association which competes with the subject corporation” is a qualificational by-law provision which may be added to those specified in the Corporation Code, (i.e. Section 23 and Section 27), pursuant to the case of Gokongwei v. Securities and Exchange Commission et al (G.R. No. L-45911, 11 April 1979). Thus, corporations have the power to make by-laws declaring a person employed in the service of a rival company to be ineligible for the corporation’s Board of Directors and a provision which renders ineligible, or if elected, subjects to removal, a director is he be also a director in a corporation whose business is in competition with or is antagonistic to the other corporation is valid. However, these qualifications become effective only when the by-laws of the Corporation expressly provide for the same.

Full text here.

A.M. No. 12-11-2-SC (March 18, 2014): GUIDELINES FOR DECONGESTING HOLDING JAILS BY ENFORCING THE RIGHTS OF ACCUSED PERSONS TO BAIL AND TO SPEEDY TRIAL

The salient provisions on the guidelines issued by the Supreme Court with respect to bail include allowing the accused to move for fixing the amount of bail pending raffle of the case to a regular branch of the court, declaring that the order fixing the amount of bail is not subject to appeal, and releasing the accused upon service of the minimum imposable penalty. With respect to speedy trial, provisions include observance of time limits for arraignment (within 10 days from date the case is raffled), termination of regular trial (within 180 days) or trial by judicial affidavit (within 60 days), and service of subpoena through email, phone calls or SMS.

The guidelines shall take effect on May 1, 2014.

AM No 12-11-2-SC

 

IN THE MATTER OF THE PETITION FOR HABEAS CORPUS OF MINOR SHANG KO VINGSON YU, UDK No. 14817, January 13, 2014

Remedial law; Writ of Habeas Corpus; When the State may intervene in rearing children. Under Section 1, Rule 102 of the Rules of Court, the writ of habeas corpus is available, not only in cases of illegal confinement or detention by which any person is deprived of his liberty, but also in cases involving the rightful custody over a minor. The general rule is that parents should have custody over their minor children. But the State has the right to intervene where the parents, rather than care for such children, treat them cruelly and abusively, impairing their growth and well-being and leaving them emotional scars that they carry throughout their lives unless they are liberated from such parents and property counseled.

Full text here.

PEOPLE OF THE PHILIPPINES v. NOEL ENOJAS Y HINGPIT et al., G.R. No. 204894, March 10, 2014

Remedial Law; Admissibility of text messages as evidence. As to the admissibility of the text messages, the RTC admitted them in conformity with the Court’s earlier Resolution applying the Rules on Electronic Evidence to criminal actions. Text messages are to be proved by the testimony of a person who was a party to the same or has personal knowledge of them.

Remedial Law; Arrest without valid warrant is not a ground for acquittal. Accused lament that they were arrested without a valid warrant of arrest.  But, assuming that this was so, it cannot be a ground for acquitting them of the crime charged but for rejecting any evidence that may have been taken from them after an unauthorized search as an incident of an unlawful arrest.

Full text here.

REVENUE MEMORANDUM CIRCULAR 10-2014, February 10, 2014

Under the Department of Finance Department Order No. 12-2014, importers must secure an Importer Clearance Certificate from the BIR as part of their accreditation with the Bureau of Customs.

In turn, the BIR issued Revenue Memorandum Circular No. 10-2014 to prescribe the policies, guidelines and procedure to accredit and revoke the accreditation of importers and customs brokers. The documentary requirements in support of the Importer Clearance Certificate include: BIR Certificate of Registration, latest Annual Income Tax Return with Audited Financial Statements, latest Mayor’s Permit, and a Certificate of Good Standing issued by the SEC to prove compliance with reportorial requirements. To be eligible for accreditation, the applicant must satisfy criteria such as not having “stop-filer” cases, accounts receivable or delinquent accounts with the BIR. It should have no record of pending tax evasion cases or unresolved issues arising from discrepancies in its declared income or expenses as may be tagged under the BIR’s Reconciliation Lists for Enforcement (RELIEF) System and Tax Reconciliation System.

Accreditation shall be valid for three years from issuance but compliance with the criteria shall be verified on a semestral basis.

 

 

NARCISO G. DULALIA v. JUDGE AFABLE E. CAJIGAL, RTC, BR. 96, QUEZON CITY, A.M. No. OCA IPI No. 10-3492-RTJ, December 4, 2013

Legal Ethics; A judge cannot be subjected to liability for any of his official acts, no matter how erroneous, as long as he acts in good faith.  To hold otherwise would be to render judicial office untenable, for no one called upon to try the facts or interpret the law in the process of administering justice can be infallible in his judgment.

Administrative complaints against judges cannot be pursued simultaneously with the judicial remedies accorded to parties aggrieved by the erroneous orders or judgments of the former. Administrative remedies are neither alternative to judicial review nor do they cumulate thereto, where such review is still available to the aggrieved parties and the cases have not yet been resolved with finality. In the instant case, complainant had in fact availed of the remedy of a motion for reconsideration prior to his filing of the administrative complaint.

Undue delay. The rules and jurisprudence are clear on the matter of delay.  Failure to decide cases and other matters within the reglementary period constitutes gross inefficiency and warrants the imposition of administrative sanction against the erring magistrate.9The penalty to be imposed on the judge varies depending on the attending circumstances of the case.  In deciding the penalty to be imposed, the Court takes into consideration, among others, the period of delay, damage suffered by the parties as a result of the delay; complexity of the case; number of years the judge has been in the service; the health and age of the judge; and the case load of the court presided over by the judge.

Full text here.