WHAT IS A CEASEFIRE AGREEMENT FOR? (Respecting the rules under the ceasefire agreement would have prevented the deadly misencounter at Mamasapano)

By Siesta-friendly

Despite the reported Philippine National Police – Special Action Forces’ killing of South East Asia’s most wanted terrorist Zulkifli bin Hir (aka Marwan) on January 25, 2015, the words the Fallen 44 are those that will be etched in our collective consciousness.

On January 30, 2015, in his eulogy during the memorial services for their fallen comrades, PNP-SAF officer-in-charge Chief Supt. Noli Taliño asked “Is it worth it? One international terrorist, equivalent to 44 SAF troopers?”

RETURN FIRE (Some possibilities to address indiscriminate firing)

By Siesta-friendly

Idiots’ Discharge

SENIOR’S MOMENT: Mandatory Philhealth Coverage For All Senior Citizens

By Siesta-friendly

This November 2014, the government enacted Republic Act No. 10645 (“An Act Providing For The Mandatory Philhealth Coverage For All Senior Citizens, Amending For The Purpose Republic Act No. 7432, As Amended By Republic Act No. 9994, Otherwise Known As The “Expanded Senior Citizens Act Of 2010″)  thereby providing Philhealth coverage to all our senior citizens.

Prior to the amendment, only indigent seniors were automatically covered by Philhealth.  Now, all seniors are automatically covered.

The new law amends Section 5, sub-paragraph h(2) of RA 7432, as amended by RA 9994, and now reads as follows:

“SEC. 5. Government Assistance. – The government shall provide the following:

x x x

(h) Additional Government Assistance

(1)   xxx

(2) Mandatory PhilHealth Coverage

“All senior citizens shall be covered by the national health insurance program of PhilHealth. Funds necessary to ensure the enrollment of all senior citizens not currently covered by any existing category shall be sourced from the National Health Insurance Fund of PhilHealth from proceeds of Republic Act No. 10351, in accordance with the pertinent laws and regulations.

(3) x x x.”

That’s the only amendment of the new law and so the rest of the rules apply, meaning, the same identification requirements apply. Under Art. 5.5 Rule III of the Implementing Rules and Regulations of RA 9994,   our seniors need only present any of the following proofs of identification:

“5.5 IDENTIFICATION DOCUMENT – refers to any document or proof of being a senior citizen which may be used for the availment of benefits and privileges under the Act and its Rules. It shall be any of the following:

a)      Senior Citizens’ Identification Card issued by the Office of Senior Citizens Affairs (OSCA) in the city or municipality where the elderly resides;

b)      The Philippine passport of the elderly person or senior citizen concerned; and

c)      Other valid documents that establish the senior citizen or elderly person as a citizen of the Republic and at least sixty (60) years of age, which shall include but not be limited to the following government-issued identification documents indicating an elderly’s birthdate or age: driver’s license, voters ID, SSS/GSIS ID, PRC card, postal ID.”

The aged do matter and this is the time when they need coverage the most.

An early Happy Christmas to all Seniors! 

 

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WHEN CAR MAKERS GIVE YOU LEMONS, YOU’D WISH YOU COULD MAKE LEMONADE: The “Philippine Lemon Law”

By Obiter07

First, we have to mention that prior to this new law, car buyers turned to the Civil Code provisions on warranties against hidden defects (Arts 1561-1581).  Under the Civil Code, car buyers have “6 months, from the delivery of the thing sold” (Art. 1571) to “elect between withdrawing from the contract and demanding a proportionate reduction of the price, with damages in either case” (Art 1567).

Now here comes Republic Act No. 10642, “AN ACT STRENGTHENING CONSUMER PROTECTION IN THE PURCHASE OF BRAND NEW MOTOR VEHICLES” has been signed into law and is set to take effect on August 7, 2014 (The Philippine Star, July 20, 2013, p. B-2). This new “Philippine Lemon Law” has laudable objectives as it seeks to “to promote full protection to the rights of consumers in the sale of motor vehicles against business and trade practices which are deceptive, unfair or otherwise inimical to consumers and the public interest.”  In addition, it recognizes that “a motor vehicle is a major consumer purchase or investment and the rights of consumers should be clearly defined, including the means for redress for violations thereof (Section 2)”.

But a law truly aimed to protect consumers from defective products should at the onset already provide the alternative remedies of repair, replacement or refund.  This law does not and actually gives car manufacturers, distributors, dealers or retailers plenty of ways to delay a refund or replacement and even opportunities to earn from the defective product.

Period of Protection:

1 year or 20 kilometers

It should be noted that only brand-new vehicles are covered and provided that a “nonconformity” (non-repairable defect, to the layman) occurs within 12 months from delivery or up to 20,000 kilometers, whichever comes first”:

“SEC. 4. Coverage. – This Act shall cover brand new motor vehicles purchased in the Philippines reported by a consumer to be in nonconformity with the vehicle’s manufacturer or distributor’s standards or specifications within twelve (12) months from the date of original delivery to the consumer, or up to twenty thousand (20,000) kilometers of operation after such delivery, whichever comes first. xxx”

A nonconformity “refers to any defect or condition that substantially impairs the use, value or safety of a brand new motor vehicle which prevents it from conforming to the manufacturer’s or distributor’s standards or specifications, which cannot be repaired (Section 3 [k]).”  

Unfortunately and inexplicably, only four-wheel passenger vehicles are included. Purchasers of motorcycles, scooters and heavy equipment will just have to seek relief elsewhere. Under the Act -

“Motor vehicle refers to any self-propelled, four (4) wheeled road vehicle designed to carry passengers including, but not limited to, sedans, coupes, station wagons, convertibles, pick-ups, vans, sports utility vehicles (SUVs) and Asian Utility Vehicles (AUVs) but excluding motorcycles, delivery trucks, dump trucks, buses, road rollers, trolley cars, street sweepers, sprinklers, lawn mowers and heavy equipment such as, but not limited to, bulldozers, payloaders, graders, forklifts, amphibian trucks, cranes, and vehicles which run only on rails or tracks, and tractors, trailers and traction engines of all kinds used exclusively for agricultural purposes. Trailers having any number of wheels, when propelled or intended by attachment to a motor vehicle, shall be classified as separate motor vehicle with no power rating (Section 3 [j]);”

There can be no claim if the “nonconformity” arises from: “(a) Noncompliance by the consumer of the obligations under the warranty; (b) Modifications not authorized by the manufacturer, distributor, authorized dealer or retailer; (c) Abuse or neglect of the brand new motor vehicle; and (d) Damage to the vehicle due to accident or force majeure (Section 4).”  A purchaser would be well-advised not to dress up or modify his vehicle lest this void his possible claims under this law. Or he should get written confirmation that it is authorized.

The law may have been initially drafted to protect consumers but we wonder how much influence car manufacturers, distributors, dealers or retailers had in the final result.

3 plus 1 strikes

It could be supposed that for a brand new car, 1 or 2 repair attempts should be enough to correct the problem.  However, 4 attempts is what the law allows.  And having a replacement assembly so early seems doubtful.  And from when will the 12 months for the new assembly be reckoned from? 

What benefits does the law give to the consumer? After four strikes, the manufacturer, distributor, authorized dealer or retailer may be out. There are only four (4) repair attempts allowed.  However, these should be performed by the same entity.  A buyer should be wary of any attempt for the repairs to be passed on to another party.  

“SEC. 5. Repair Attempts. – At any time within the Lemon Law rights period, and after at least four (4) separate repair attempts by the same manufacturer, distributor, authorized dealer or retailer for the same complaint, and the nonconformity issue remains unresolved, the consumer may invoke his or her rights under this Act. (Emphasis supplied)

The repair may include replacement of parts components, or assemblies.”

Requirement for Notice

            If the 4 repairs prove unavailing, then the consumer should send a written notice, the form of which must be based on what is prescribed in the warranty booklet. Why was discretion both for the manner and form of the notice given to the car sellers in this case?  It is worrying that unduly burdensome requirements may be imposed when a simple e-mail or facsimile should suffice.

“SEC. 6. Notice of Availment of Lemon Law Rights. – Before availing of any remedy under this Act and subject to compliance with the provisions of Section 5 hereof, the consumer shall, in writing, notify the manufacturer, distributor, authorized dealer or retailer of the unresolved complaint, and the consumer’s intention to invoke his or her rights under this Act within the Lemon Law rights period.

The warranty booklet issued by the manufacturer, distributor, authorized dealer or retailer shall clearly state the manner and form of such notice to constitute a valid and legal notice to the manufacturer, distributor, authorized dealer or retailer. It shall also clearly state the responsibility of the consumer under this section.” (Emphasis supplied)

3 plus 1 plus another one!

But wait, after 4 repair opportunities and the buyer having sent the notice, the seller is given one final opportunity to remedy the matter!   Considering how long some repairs might take, a buyer may just about consume almost a year just waiting for his car to be fixed.  And if the car doesn’t run or does not run well or safely, how is he is supposed to bring it in for repairs? If it’s towed, who pays for it?

“SEC. 7. Availment of Lemon Law Rights. – Subsequent to filing the notice of availment referred to in the preceding section, the consumer shall bring the vehicle to the manufacturer, distributor, authorized dealer or retailer from where the vehicle was purchased for a final attempt to address the complaint of the consumer to his or her satisfaction.

It shall be the duty of the manufacturer, distributor, authorized dealer or retailer, upon receipt of the motor vehicle and the notice of nonconformity required under Section 6 hereof, to attend to the complaints of the consumer including, as may be necessary, making the repairs and undertaking such actions to make the vehicle conform to the standards or specifications of the manufacturer, distributor, authorized dealer or retailer for such vehicle.”

One better return the vehicle within 30 days after this “final attempt” or else it is deemed successful and everything can start all over again! Section 7 states that: “if the vehicle is not returned for repair, based on the same complaint, within thirty (30) calendar days from the date of notice of release of the motor vehicle to the consumer following this repair attempt within the Lemon Law rights period, the repair is deemed successful: Provided, finally, That, in the event that the nonconformity issue still exists or persists after the thirty (30)-day period but still within the Lemon Law rights period, the consumer may be allowed to avail of the same remedies under Sections 5 and 6 hereof.”  Woe to you if a different problem manifests itself as only the “same complaint” is covered.

Filing the Complaint

If the conformity persists, the consumer may then file a complaint before the DTI.   But wait, wasn’t this venue open to the consumer even before this law was passed?  Anyway, under the Lemom Law –

“In case the nonconformity issue remains unresolved despite the manufacturer, distributor, authorized dealer or retailer’s efforts to repair the vehicle, pursuant to the consumer’s availment of his or her Lemon Law rights, the consumer may file a complaint before the DTI as provided for under this Act: xxx (Section 7)”.

Transportation Allowance

The new law does give the consumer a transportation allowance during the time of non-usage and while availing of his Lemon law rights.  We trust that the allowance is due as early as when the first repair was made necessary.

“To compensate for the non-usage of the vehicle while under repair and during the period of availment of the Lemon Law rights, the consumer shall be provided a reasonable daily transportation allowance, an amount which covers the transportation of the consumer from his or her residence to his or her regular workplace or destination and vice versa, equivalent to air-conditioned taxi fare, as evidenced by official receipt, or in such amount to be agreed upon by the parties, or a service vehicle at the option of the manufacturer, distributor, authorized dealer or retailer. Any disagreement on this matter shall be resolved by the DTI.

Nothing herein shall be construed to limit or impair the rights and remedies of a consumer under any other law (Section 7).”

While useful, it does not take into account the added hassle of finding a taxi during rush hour.

Dispute Resolution

The consumer will then go before the DTI for mediation with the costs thereof to be borne jointly by the parties (Section 8).  Why not let the winning party recover his losses, costs and expenses?  If this is unsuccessful, then the dispute will be resolved by either arbitration, if voluntarily agreed upon by both parties or an adjudication before the DTI which can be commenced by either party.

SEC. 8. Remedies for Dispute Resolution. – The DTI shall exercise exclusive and original jurisdiction over disputes arising from the provisions of this Act. Thus, car buyers can no longer go straight to court but have to go through dispute resolution first before the DTI. And remember, DTI dispute resolution only happens after 5 repair attempts.  All disputes arising from the provisions of this Act shall be settled by the DTI in accordance with the following dispute resolution mechanisms:

(a) Mediation

(1) The principles of negotiation, conciliation and mediation towards amicable settlement between the manufacturer, distributor, authorized dealer or retailer and the consumer shall be strictly observed;

(2) In the course of its dispute resolution efforts, the DTI shall endeavor to independently establish the validity of the consumer’s outstanding complaint. The DTI shall likewise retain the services of other government agencies or qualified independent private entities in the ascertainment of the validity of the consumer’s complaint. Any cost incurred in establishing the validity of the consumer’s complaint shall be borne jointly by the consumer and the manufacturer, distributor, authorized dealer or retailer;

(3) The complaint shall be deemed valid if it is independently established that the motor vehicle does not conform to the standards or specifications set by the manufacturer, distributor, authorized dealer or retailer (shouldn’t this determination already settle the matter in the consumer’s favor?)  ;

(4) Upon failure of the negotiation or mediation between the manufacturer, distributor, authorized, dealer or retailer and the consumer, the parties shall execute a certificate attesting to such failure; and

(5) At any time during the dispute resolution period, the manufacturer, distributor, authorized dealer or retailer and the consumer shall be encouraged to settle amicably. All disputes that have been submitted for mediation shall be settled not later than ten (10) working days from the date of filing of the complaint with the DTI.

(b) Arbitration

In the event there is a failure to settle the complaint during the mediation proceedings, both parties may voluntarily decide to undertake arbitration proceedings.

(c) Adjudication

(1) In the event that both parties do not undertake arbitration proceedings, at least one of the parties may commence adjudication proceedings, administered by the DTI. The DTI shall rely on the qualified independent findings as to conformity to standards and specifications established herein. In no case shall adjudication proceedings exceed twenty (20) working days;

(2) In case a finding of nonconformity is arrived at, the DTI shall rule in favor of the consumer and direct the manufacturer, distributor, authorized dealer or retailer to grant either of the following remedies to the consumer:

(i) Replace the motor vehicle with a similar or comparable motor vehicle in terms of specifications and values, subject to availability; or

(ii) Accept the return of the motor vehicle and pay the consumer the purchase price plus the collateral charges.

In case the consumer decides to purchase another vehicle with a higher value and specifications from the same manufacturer, distributor, authorized dealer or retailer, the consumer shall pay the difference in cost.

In both cases of replacement and repurchase, the reasonable allowance for use, as defined in this Act, shall be deducted in determining the value of the nonconforming motor vehicle (Amazing. Charging the consumer for using a defective product which he was not allowed to have replaced or returned and be refunded for in the first place); and

(3) In case a nonconformity of the motor vehicle is not found by the DTI (which nonconformity was already determined upon filing of the complaint), it shall rule in favor of the manufacturer, distributor, authorized dealer or retailer, and direct the consumer to reimburse the manufacturer, distributor, authorized dealer or retailer the costs incurred by the latter in validating the consumer’s complaints.”

The term “reasonable allowance for use” shall be computed at “twenty percent (20%) per annum deduction from the purchase price, or the product of the distance traveled in kilometers and the purchase price divided by one hundred thousand (100,000) kilometers, whichever is lower (Section 9).”   Why does have one to pay 20% for a vehicle which failed to run correctly in the first place and still doesn’t do so after 5 repair attempts? 

Collateral charges are “fees paid’ to the Land Transportation Office (LTO) for the registration of a brand new motor vehicle and other incidental expenses such as, but not limited to, the cost of insurance pertaining to the vehicle, chattel mortgage fees and interest expenses if applicable (Section 3 [b]).” [Italics supplied]

The decision can be appealed to the DTI Secretary on grounds of: “(i) Grave abuse of discretion; (ii) The decision/order is in excess of jurisdiction or authority of the Adjudication Officer; and (iii) The decision/order is not supported by the evidence or there is serious error in the findings of facts.”  This is to be decided within thirty (30) days. If unsatisfied with the decision, a party may only file a case for certiorari with the Court of Appeals under Section 4, Rule 65 of the Revised Rules of Court. (Section 8)

The vehicle in question can still be resold subject to a proper disclosure on certain facts on pain of being held liable for damages in the amount of One hundred thousand pesos (P100,000.00) “without prejudice to any civil or criminal liability they and/or the responsible officer may incur under existing laws (Section 11).”  After this disclosure, the “lemon law rights” seem to disappear although it is unclear what “section” is being referred to:

“SEC. 10. Disclosure on Resale. – Should the returned motor vehicle be made available for resale, the manufacturer, distributor, authorized dealer or retailer shall, prior to sale or transfer, disclose in writing to the next purchaser of the same vehicle the following information:

(a) The motor vehicle was returned to the manufacturer, distributor, authorized dealer or retailer;

(b) The nature of the nonconformity which caused the return; and

(c) The condition of the motor vehicle at the time of the transfer to the manufacturer, distributor, authorized dealer or retailer.

The responsibility of the manufacturer, distributor, authorized dealer or retailer under this section shall cease upon the sale of the affected motor vehicle to the first purchaser.” (Emphasis supplied)

The Implementing Rules are still to be issued but, offhand, the law does not seem to add that much in terms of consumer protection except to clarify the possible entitlement to transportation allowance.  Worse, a consumer can be in the hole for the “reasonable allowance for use” of a clearly defective vehicle. What does one do when the legislators give you a law that appears to be a lemon?  Unfortunately, there is no law against that yet and our only remedy is to replace them (the law and maybe the lawmaker).

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DAP if you do, DAP if you don’t: A question of constitutionality

By Obiter07

This is a ninety-two page decision, excluding the separate opinions.  But it can be distilled to the basic findings in its dispositive portion.   The following acts under the Development Acceleration Program (“DAP”) of the Executive Department were declared unconstitutional in the case of Araullo, et al. vs. Aquino, et al. G.R. No. 209287:

(a)    The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and without complying with the statutory definition of savings contained in the General Appropriations Acts;

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

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

In addition, the Court 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”.

Interestingly, the decision begins with the privilege speech of currently-detained Senator Jinggoy Estrada declaring that Senators, including himself, had been allotted P50M for voting in favor of the impeachment of a former Chief Justice. To which Secretary Abad of the Department of Budget and Management responded, justifying the DAP as a “program designed to ramp up spending to accelerate economic expansion.”  Ironically, a DAP beneficiary would start the ball rolling for this declaration of unconstitutionality by the Supreme Court.  The President has defended the DAP anew notwithstanding the opinion of the Court. 

The DAP while constitutional as a plan was implemented contrary to the Constitution

We proceed directly to the issues with respect to the DAP.  The Court correctly stated that while the Executive has some discretion with respect to the budget, any transfer or appropriation of funds has to conform with Section 25(5) of Article VI of the Constitution which provides:

“Section 25. x x x

x x x x

5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

x x x x”

This was intended to keep a “tight rein on the exercise of the power to transfer funds appropriated by Congress, by the President and the other high officials of the Government named therein.” The limit on the authority to transfer savings only to augment another item in the appropriations is “strictly but reasonably construed as exclusive.”  The phrase “by law” would be crucial to the determination made by the Court.

For a transfer of funds that have already been appropriated to be valid under this constitutional provision, the following are the requisites: (1) a law authorizing the transfer of funds within their respective offices (a law like the GAA); (2) the funds are savings generated from the appropriations for their respective offices; and (3) the purpose for the transfer is to augment an item in the general appropriations law for their respective offices.

Requisites for the valid transfer of appropriated funds under the Constitution -

1.      There must be a law authorizing the transfer funds within respective offices

While the 2011 and 2012 GAAs allowed the augmentation of items, these failed to include the phrase “for their respective offices” as stated in the Constitution.   Thus, the GAAs invalidly allowed the transfers of funds for any item even if to an office not belonging to the Executive. Hence, these particular GAAs could not be relied upon to justify the transfer of funds.

The 2013 GAA sought to remedy the lack of legal authorization in the 2011 and 2012 GAAs by indicating that the augmentation of deficiencies refers only to any item of an office’s respective appropriation. 

2.      The funds to be transferred must be savings generated from the appropriations for their respective offices

At the outset, the Court found that there were no savings to speak of which the Executive could have juggled.  First of all, it is Congress that has the power of the purse, deciding on how the budget will be spent consisting of the projects to be funded and the amounts allocated for the same.  The Executive is expected to execute the GAA and to spend the budget accordingly.  In allowing the Executive to augment items in the GAA, it is given flexibility but not to the extent of overriding the authority of Congress.

Thus, the 2011 – 2013 GAAs contain a definition of savings:

“Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation or encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising  from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (iii) from appropriations balances realized from the implementation of measures resulting in improved systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and services approved in this Act at a lesser cost.” [emphasis supplied]

There are savings only when the purpose for an appropriation has been fulfilled or if the need for the appropriation no longer exists. The three possible sources of savings have been outlined above.  There can be savings only when the appropriation was already obligated and released. It is only at the agency level where it could be said whether the program, activity or project (“PAP”) was completed, discontinued or abandoned, if there are vacant positions or leaves without pay or if the required targets, programs and services were realized at lesser cost.  Unobligated allotments should also fall under any of the three aforementioned instances before these can be considered as savings.

The DBM admitted that part of the savings came from “pooling of unreleased appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the year, unreleased appropriations of slow moving projects and discontinued projects per Zero-Based Budgeting findings.” In this case, unreleased appropriations were treated as savings.  The Court found that these, in fact, only refer to appropriations with allotments albeit without disbursement authority.  It could not subscribe to the definition espoused by the Executive as this would undermine Congress’ power of the purse.  In effect, funds were used for the DAP when the purpose for those funds had not yet been finally discontinued or abandoned.   With the purpose still unfulfilled or otherwise existing, there could have been no declaration of savings from these funds. The Executive even shortened the availability of the funds for their original purposes, in order to declare them as savings. The Court ruled that there can be no withdrawal and transfer of unobligated allotments and no pooling of unreleased appropriations as there is no legal basis for the same.  Section 38 of the Administrative Code cannot be relied upon to justify the withdrawal of unobligated allotments as it only allows the suspension or stoppage of expenditures, not the transfer of funds to other PAPs.

3.      The purpose of the transfer must be to augment a GAA item  for their respective offices

The 2011-2013 GAAs defined augmentation, 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.

But the so-called savings pooled under the DAP were allocated to projects that were not covered by any appropriation in the GAAs. In one instance, the DAP allocated for one project funds in excess of 300% of what Congress originally appropriated.

In effect, the Executive “substituted its will” over Congress.  While the Executive can spend in line with its mandate to execute the laws, this does not translate to an “unfettered discretion” that would allow the President to “substitute his own will for that of Congress.”  He still has to abide by the GAA as the power to spend is with Congress and not the Executive consistent with the principle of separation of powers. As opined by the Court:

“Congress acts as the guardian of the public treasury in faithful discharge of its power of the purse whenever it deliberates and acts on the budget proposal submitted by the Executive. Its power of the purse is touted as the very foundation of its institutional strength, and underpins “all other legislative decisions and regulating the balance of influence between the legislative and executive branches of government.” Such enormous power encompasses the capacity to generate money for the Government, to appropriate public funds, and to spend the money. Pertinently, when it exercises its power of the purse, Congress wields control by specifying the PAPs for which public money should be spent.

It is the President who proposes the budget but it is Congress that has the final say on matters of appropriations. xxx”

4.      No Cross-border transfers

As transfers under the DAP, for example, were made from the Executive to the COA, to the House and even to the COMELEC, the Court said that the Constitution mandates that any augmentation should only be for their respective offices and there can be no cross-border transfers or cross-border augmentations. 

Respondent tried to reason out that cross-border transfers in the form of aid and not augmentation do not fall under Section 25(5) of the Constitution.

The Court said that the Section 25 (5) prohibits cross-border transfers regardless of how they are characterized.

Sourcing DAP funds from unprogrammed funds (not savings) requires revenue collections to exceed the total of revenue targets

Funds from the DAP were also sourced from unprogrammed funds in the GAAs albeit not as “savings.”  However, these were supposed to be available only: (i) if revenue collections exceed revenue targets based on the total of revenue targets stated in the Budget of Expenditures and Sources of Financing (“BESF”) and (ii) from newly-approved loans or when conditions were triggered for other sources of funds such as perfected loan agreements for foreign-assisted projects.  The requirement in the BESF for the use of unprogrammed funds is for revenue collections to exceed the total of the original revenue target, not just the collection from a particular revenue source.  Hence, the release of unprogrammed funds could not be justified by a certification that revenue collection had been exceeded for only one identified source of revenue – that of dividends from shares in government-owned and controlled corporations.

As for funds from loans, there is no need to exceed revenue targets before these can be used.

Unprogrammed funds were intended as standby appropriations to support additional expenditures for priority PAPs if revenue collections exceed targets or if loan proceeds are realized.  Revenue targets are to be considered as a whole, not individually.  It would contravene the surplus budget policy if excess revenue from only one source would justify the release of unprogrammed funds.

An attempt was made to include a third source for unprogrammed funds: new revenues that were collected or realized from sources not originally considered in the BESF, to justify the sourcing of these monies for the DAP.  But this source was not in the BESF or GAAs, hence, this item could not serve as basis for the release of unprogrammed funds for the DAP.

So what happens to all the DAP projects? The Court declared that despite the infirmity of the DAP and its implementing issuances, 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.  xxx.”  Hence, the positive results of the DAP such as the construction of public infrastructure need not be undone.

But while the doctrine of operative fact can apply to the beneficiaries who “relied in good faith on the validity of the DAP”, it does not apply “to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.” Fortunately for them, the Revised Rules on Evidence does provide for a disputable presumption “That official duty has been regularly performed (Section 3 (m), Rule 131).”  And “in the absence of evidence to the contrary, there is a presumption that public officers performed their official duties regularly and legally and in compliance with applicable laws, in good faith, and in the exercise of sound judgment (]BUKLOD vs. E. M. RAMOS, G.R. No. 131481.  March 16, 2011)”.

For the layman, what is this case all about? The President decided to deviate from the shopping list of projects given to him by Congress, the body which has the power under the Constitution to make this list and to fund each item appearing on it.  He argues that he meant well and this actually did some good. The question is, do good intentions trump what the law and the Constitution require?  The President has challenged the Supreme Court for this ruling.  He may do well to examine what the words of his oath of office say.  It does include his promise to “preserve and defend” the Constitution and to execute the country’s laws.

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