G.R. No.

209287               July 1, 2014

MARIA CAROLINA P. ARAULLO et. Al vs. BENIGNO SIMEON C. AQUINO III, et.al
Facts:

When President Benigno Aquino III took office, his administration noticed the sluggish growth of the economy. The
World Bank advised that the economy needed a stimulus plan. Budget Secretary Florencio “Butch” Abad then came up
with a program called the Disbursement Acceleration Program (DAP).

The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the Executive to realign
funds from slow moving projects to priority projects instead of waiting for next year’s appropriation. So what happens
under the DAP was that if a certain government project is being undertaken slowly by a certain executive agency, the
funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared as “savings” by
the Executive and said funds will then be reallotted to other priority projects. The DAP program did work to stimulate
the economy as economic growth was in fact reported and portion of such growth was attributed to the DAP (as noted by
the Supreme Court). Other sources of the DAP include the unprogrammed funds from the General Appropriations Act
(GAA). Unprogrammed funds are standby appropriations made by Congress in the GAA.

On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the
Philippines to reveal that some Senators, including himself, had been allotted an additional P50 Million each as
"incentive" for voting in favor of the impeachment of Chief Justice Renato C. Corona..

Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the DBM issued a public statement entitled
Abad: Releases to Senators Part of Spending Acceleration Program, explaining that the funds released to the Senators had
been part of the DAP, a program designed by the DBM to ramp up spending to accelerate economic expansion.

The DBM soon came out to claim in its website that the DAP releases had been sourced from savings generated
by the Government, and from unprogrammed funds; and that the savings had been derived from (1) the pooling of
unreleased and (2) the withdrawal of unobligated allotments also for slow-moving programs and projects that had been
earlier released to the agencies of the National Government.

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

This apparently opened a can of worms as it turns out that the DAP does not only realign funds within the
Executive. It turns out that some non-Executive projects were also funded; to name a few: Php1.5B for the CPLA
(Cordillera People’s Liberation Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the Quezon
Province, P50-P100M for certain Senators each, P10B for Relocation Projects, etc.

This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan, and several other
concerned citizens to file various petitions with the Supreme Court questioning the validity of the DAP. Among their
contentions was:

DAP is unconstitutional because it violates the constitutional rule which provides that “no money shall be
paid out of the Treasury except in pursuance of an appropriation made by law.”

Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation
provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of
Executive Order 292 (power of the President to suspend expenditures and authority to use savings, respectively).

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

1. No. The OSG posits, however, that no law was necessary for the adoption and implementation of the DAP
because of being neither a fund nor an appropriation, but a program or an administrative system of prioritizing
spending; and that the adoption of the DAP was by virtue of the authority of the President as the Chief
Executive to ensure that laws were faithfully executed.

We agree with the OSG’s position.

The DAP was a government policy or strategy designed to stimulate the economy through accelerated
spending. In the context of the DAP’s adoption and implementation being a function pertaining to the Executive
as the main actor during the Budget Execution Stage under its constitutional mandate to faithfully execute the
laws, including the GAAs, Congress did not need to legislate to adopt or to implement the DAP. Congress could
appropriate but would have nothing more to do during the Budget Execution Stage. 

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 (program, activity or
project) 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.

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

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

(b)They authorize the disbursement of funds for projects or programs not provided in the GAAs for the Executive
Department; and

2. No. The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a concurrence
of the following requisites, namely:

(1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to
transfer funds within their respective offices;

(2) The funds to be transferred are savings generated from the appropriations for their respective offices; and

(3) The purpose of the transfer is to augment an item in the general appropriations law for their respective
offices.

GAA’s of 2011 and 2012 lacked a law to authorize transfers of funds under the DAP. Hence, transfers
under DAP were unconstitutional.

Section 25(5), supra, not being a self-executing provision of the Constitution, must have an implementing law
for it to be operative. That law, generally, is the GAA of a given fiscal year. To comply with the first
requisite, the GAAs should expressly authorize the transfer of funds.
In the 2011 GAA, the provision that gave the President and the other high officials the authority to transfer
funds was Section 59, as follows:

Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House
of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions
enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from
savings in other items of their respective appropriations.

In the 2012 GAA, the empowering provision was Section 53, to wit:

Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House
of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions
enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from
savings in other items of their respective appropriations.

A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012 were textually
unfaithful to the Constitution for NOT carrying the phrase "for their respective offices" contained in
Section 25(5), supra.

The impact of the phrase "for their respective offices" was to authorize only transfers of funds within their
offices (i.e., in the case of the President, the transfer was to an item of appropriation within the Executive).
The provisions carried a different phrase ("to augment any item in this Act"), and the effect was that the
2011 and 2012 GAAs thereby literally allowed the transfer of funds from savings to augment any item in the
GAAs even if the item belonged to an office outside the Executive. To that extent did the 2011 and 2012
GAAs contravene the Constitution.

There were no savings from which funds could be sourced for the DAP. Were the funds used in the
DAP actually savings?

The petitioners claim that the funds used in the DAP — the unreleased appropriations and withdrawn
unobligated allotments — were not actual savings within the context of Section 25(5), supra, and the relevant
provisions of the GAAs

We partially find for the petitioners.

The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this interpretation
and made it operational, viz:

Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation
or encumbrance which are:

(i) still available after the completion or final discontinuance or abandonment of the work, activity or
purpose for which the appropriation is authorized;

(ii) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant
positions and leaves of absence without pay; and

(iii) from appropriations balances realized from the implementation of measures resulting in improved
systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets,
programs and services approved in this Act at a lesser cost.
 In ascertaining the meaning of savings, certain principles should be borne in mind. The first principle is
that Congress wields the power of the purse. Congress decides how the budget will be spent; what PAPs to
fund; and the amounts of money to be spent for each PAP.

The second principle is that the Executive, as the department of the Government tasked to enforce the
laws, is expected to faithfully execute the GAA and to spend the budget in accordance with the provisions of
the GAA. The Executive is expected to faithfully implement the PAPs for which Congress allocated funds,
and to limit the expenditures within the allocations, unless exigencies result to deficiencies for which
augmentation is authorized, subject to the conditions provided by law.

The third principle is that in making the President’s power to augment operative under the GAA,
Congress recognizes the need for flexibility in budget execution. In so doing, Congress diminishes its own
power of the purse, for it delegates a fraction of its power to the Executive. But Congress does not thereby
allow the Executive to override its authority over the purse as to let the Executive exceed its delegated
authority.

And the fourth principle is that savings should be actual. "Actual" denotes something that is real or
substantial, or something that exists presently in fact, as opposed to something that is merely theoretical,
possible, potential or hypothetical.

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

The DBM declares that part of the savings brought under the DAP came from "pooling of unreleased
appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the year,
unreleased appropriations of slow moving projects and discontinued projects per Zero-Based Budgeting
findings. The fact alone that the appropriations are unreleased or unalloted is a mere description of the status
of the items as unalloted or unreleased. They have not yet ripened into categories of items from which savings
can be generated. 

Unobligated allotments, on the other hand, were encompassed by the first part of the definition of
"savings" in the GAA, that is, as "portions or balances of any programmed appropriation in this Act free
from any obligation or encumbrance." But the first part of the definition was further qualified by the three
enumerated instances of when savings would be realized. As such, unobligated allotments could not be
indiscriminately declared as savings without first determining whether any of the three instances
existed. This signified that the DBM’s withdrawal of unobligated allotments had disregarded the definition of
savings under the GAAs.

* These DAP transfers are not “savings” contrary to what was being declared by the Executive. Under the definition of
“savings” in the GAA, savings only occur, among other instances, when there is an excess in the funding of a certain
project once it is completed, finally discontinued, or finally abandoned. The GAA does not refer to “savings” as funds
withdrawn from a slow moving project. Thus, since the statutory definition of savings was not complied with under the
DAP, there is no basis at all for the transfers. Further, savings should only be declared at the end of the fiscal year.
But under the DAP, funds are already being withdrawn from certain projects in the middle of the year and then being
declared as “savings” by the Executive particularly by the DBM.

No funds from savings could be transferred under DAP to augment deficient items not provided in the
GAA.
 The third requisite for a valid transfer of funds is that the purpose of the transfer should be " to augment an
item in the general appropriations law for the respective offices." The term "augment" means to enlarge or
increase in size, amount, or degree.

The failure of the GAAs to set aside any amounts for an expense category sufficiently indicated that Congress
purposely did not see fit to fund, much less implement, the PAP concerned. This indication becomes clearer
when even the President himself did not recommend in the NEP to fund the PAP. The consequence was that
any PAP requiring expenditure that did not receive any appropriation under the GAAs could only be a new
PAP, any funding for which would go beyond the authority laid down by Congress in enacting the GAAs.

Cross-border augmentations from savings were prohibited by the Constitution.

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

To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the entire Executive, with
respect to the President; the Senate, with respect to the Senate President; the House of Representatives, with
respect to the Speaker; the Judiciary, with respect to the Chief Justice; the Constitutional Commissions, with
respect to their respective Chairpersons.

The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00 were transferred
under the DAP respectively to the COA and the House of Representatives. Those transfers of funds, which
constituted cross-border augmentations for being from the Executive to the COA and the House of
Representatives.

The respondents further stated in their memorandum that the President "made available" to the "Commission
on Elections the savings of his department upon [its] request for funds…" This was another instance of a
cross-border augmentation.

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

Sourcing the DAP from unprogrammed funds despite the original revenue targets not having been
exceeded was invalid.

The documents contained in the Evidence Packets by the OSG have confirmed that the unprogrammed funds
were treated as separate sources of funds. Even so, the release and use of the unprogrammed funds were still
subject to restrictions, for, to start with, the GAAs precisely specified the instances when the unprogrammed
funds could be released and the purposes for which they could be used.

The respondents disagree, holding that the release and use of the unprogrammed funds under the DAP were in
accordance with the pertinent provisions of the GAAs. In particular, the DBM avers that the unprogrammed
funds could be availed of when any of the following three instances occur, to wit: (1) the revenue collections
exceeded the original revenue targets proposed in the BESFs submitted by the President to Congress; (2) new
revenues were collected or realized from sources not originally considered in the BESFs; or(3) newly-
approved loans for foreign assisted projects were secured, or when conditions were triggered for other sources
 of funds, such as perfected loan agreements for foreign-assisted projects. This view of the DBM was adopted
by all the respondents in their Consolidated Comment.

The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations" as
appropriations that provided standby authority to incur additional agency obligations for priority
PAPs when revenue collections exceeded targets, and when additional foreign funds are
generated. Contrary to the DBM’s averment that there were three instances when unprogrammed funds could
be released, the BESFs envisioned only two instances. The third mentioned by the DBM – the collection of
new revenues from sources not originally considered in the BESFs – was not included. This meant that the
collection of additional revenues from new sources did not warrant the release of the unprogrammed funds.
Hence, even if the revenues not considered in the BESFs were collected or generated, the basic condition that
the revenue collections should exceed the revenue targets must still be complied with in order to justify the
release of the unprogrammed funds.

The present controversy on the unprogrammed funds was rooted in the correct interpretation of the phrase
"revenue collections should exceed the original revenue targets." The petitioners take the phrase to mean
that the total revenue collections must exceed the total revenue target stated in the BESF, but the respondents
understand the phrase to refer only to the collections for each source of revenue as enumerated in the BESF,
with the condition being deemed complied with once the revenue collections from a particular source already
exceeded the stated target.

However, the requirement that revenue collections exceed the original revenue targets was to be construed in
light of the purpose for which the unprogrammed funds were incorporated in the GAAs as standby
appropriations to support additional expenditures for certain priority PAPs should the revenue collections
exceed the resource targets assumed in the budget or when additional foreign project loan proceeds were
realized. The unprogrammed funds were included in the GAAs to provide ready cover so as not to delay the
implementation of the PAPs should new or additional revenue sources be realized during the year. Given the
tenor of the certifications, the unprogrammed funds were thus not yet supported by the corresponding
resources.

The revenue targets stated in the BESF were intended to address the funding requirements of the proposed
programmed appropriations. In contrast, the unprogrammed funds, as standby appropriations, were to be
released only when there were revenues in excess of what the programmed appropriations required. As such,
the revenue targets should be considered as a whole, not individually; otherwise, we would be dealing with
artificial revenue surpluses. The requirement that revenue collections must exceed revenue target should be
understood to mean that the revenue collections must exceed the total of the revenue targets stated in the
BESF. Moreover, to release the unprogrammed funds simply because there was an excess revenue as to one
source of revenue would be an unsound fiscal management measure because it would disregard the budget
plan and foster budget deficits, in contravention of the Government’s surplus budget policy.

We cannot, therefore, subscribe to the respondents’ view.

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

3. No. With respect to the challenge against the DAP under the Equal Protection Clause, Luna argues that the
implementation of the DAP was "unfair as it [was] selective" because the funds released under the DAP was not
made available to all the legislators, with some of them refusing to avail themselves of the DAP funds, and others
being unaware of the availability of such funds. Thus, the DAP practised "undue favoritism" in favor of select
legislators in contravention of the Equal Protection Clause.
COURAGE contends that the DAP violated the Equal Protection Clause because no reasonable classification was
used in distributing the funds under the DAP; and that the Senators who supposedly availed themselves of said
funds were differently treated as to the amounts they respectively received.

The OSG counters the challenges, stating that the supposed discrimination in the release of funds under the DAP
could be raised only by the affected Members of Congress themselves, and if the challenge based on the violation
of the Equal Protection Clause was really against the constitutionality of the DAP, the arguments of the
petitioners should be directed to the entitlement of the legislators to the funds, not to the proposition that all of the
legislators should have been given such entitlement.

Equal Protection Clause

The challenge based on the contravention of the Equal Protection Clause, which focuses on the release of funds
under the DAP to legislators, lacks factual and legal basis. The allegations about Senators and Congressmen
being unaware of the existence and implementation of the DAP, and about some of them having refused to
accept such funds were unsupported with relevant data. Also, the claim that the Executive discriminated
against some legislators on the ground alone of their receiving less than the others could not of itself warrant a
finding of contravention of the Equal Protection Clause. The denial of equal protection of any law should be an
issue to be raised only by parties who supposedly suffer it, and, in these cases, such parties would be the few
legislators claimed to have been discriminated against in the releases of funds under the DAP. The reason for the
requirement is that only such affected legislators could properly and fully bring to the fore when and how the
denial of equal protection occurred, and explain why there was a denial in their situation. The requirement was
not met here. Consequently, the Court was not put in the position to determine if there was a denial of
equal protection.

Separation of Powers

Although the OSG rightly contends that the Executive was authorized to spend in line with its mandate to
faithfully execute the laws (which included the GAAs), such authority did not translate to unfettered discretion
that allowed the President to substitute his own will for that of Congress. He was still required to remain
faithful to the provisions of the GAAs, given that his power to spend pursuant to the GAAs was but a delegation
to him from Congress. Verily, the power to spend the public wealth resided in Congress, not in the
Executive. Moreover, leaving the spending power of the Executive unrestricted would threaten to undo the
principle of separation of powers.

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 .
For this purpose, appropriation involves two governing principles, namely: (1) "a Principle of the Public Fisc,
asserting that all monies received from whatever source by any part of the government are public funds;" and (2)
"a Principle of Appropriations Control, prohibiting expenditure of any public money without legislative
authorization.” To conform to the governing principles, the Executive cannot circumvent the prohibition by
Congress of expenditure for a PAP by resorting to either public or private funds. Nor could the Executive transfer
appropriated funds resulting in an increase in the budget for one PAP, for by so doing the appropriation for
another PAP is necessarily decreased. The terms of both appropriations will thereby be violated.
 Principle of Accountability with regard to DAP

Anent the principle of public accountability being transgressed because the adoption and implementation of the
DAP constituted an assumption by the Executive of Congress’ power of appropriation, we have already held that
the DAP and its implementing issuances were policies and acts that the Executive could properly adopt and do in
the execution of the GAAs to the extent that they sought to implement strategies to ramp up or accelerate the
economy of the country.

Whether or not the Doctrine of Operative Fact is applicable?

4. Yes. Doctrine of operative fact was applicable.

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.

We find the doctrine of operative fact applicable to the adoption and implementation of the DAP. Its application
to the DAP proceeds from equity and fair play. The consequences resulting from the DAP and its related
issuances could not be ignored or could no longer be undone.

To be clear, the doctrine of operative fact extends to a void or unconstitutional executive act. The term executive
act is broad enough to include any and all acts of the Executive, including those that are quasi legislative and
quasi-judicial in nature.

Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of operative fact does not
always apply, and is not always the consequence of every declaration of constitutional invalidity. It can be
invoked only in situations where the nullification of the effects of what used to be a valid law would result in
inequity and injustice; but where no such result would ensue, the general rule that an unconstitutional law is
totally ineffective should apply.

In that context, as Justice Brion has clarified, the doctrine of operative fact can apply only to the PAPs that can no
longer be undone, and whose beneficiaries relied in good faith on the validity of the DAP, but cannot apply to the
authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor
by the proper tribunals determining their criminal, civil, administrative and other liabilities.

WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES
the following acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541
and related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the
1987 Constitution and the doctrine of separation of powers, namely:

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

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

(c) The funding of projects, activities and programs that were not covered by any appropriation in the General
Appropriations Act.
 The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the
National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.

2015 SC: We deny the motion for reconsideration of the petitioners in G.R. No. 209442, and partially grant
the motion for reconsideration of the respondents.

The procedural challenges raised by the respondents, being a mere rehash of their earlier arguments herein, are
dismissed for being already passed upon in the assailed decision.

1.) The Court’s power of judicial review

Argument: The respondents argue that the Executive has not violated the GAA because savings as a concept is
an ordinary species of interpretation that calls for legislative, instead of judicial, determination.

Held: Untenable. The interpretation of the GAA and its definition of savings is a foremost judicial function. This
is because the power of judicial review vested in the Court is exclusive.

Endencia and Jugo v. David: The interpretation and application of said laws belong exclusively to the judicial
department. And this authority to interpret and apply the laws extends to the Constitution. Before the courts can
determine whether a law is constitutional or not, it will have to interpret and ascertain the meaning not only of
said law, but also of the pertinent portion of the Constitution in order to decide whether there is a conflict between
the two, because if there is, then the law will have to give way and has to be declared invalid and unconstitutional.

2.) Strict construction on the accumulation and utilization of savings

The exercise of the power to augment shall be strictly construed by virtue of its being an exception to the general
rule that the funding of PAPs shall be limited to the amountfixed by Congress for the purpose. Necessarily,
savings, their utilization and their management will also be strictly construed against expanding the scope of the
power to augment.15 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.

Pertinent provisions

Section 25(5), Article VI of the Constitution states:

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

xxxx

Section 38 and Section 39, Chapter 5, Book VI of the Administrative Code provide:

Section 38. Suspension of Expenditure of Appropriations. – Except as otherwise provided in the General
Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the
head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any
agency, or any other expenditure authorized in the General Appropriations Act, except for personal services
appropriations used for permanent officials and

employees.
Section 39. Authority to Use Savings in Appropriations to Cover Deficits.—Except as otherwise provided in
the General Appropriations Act, any savings in the regular appropriations authorized in the General
Appropriations Act for programs and projects of any department, office or agency, may, with the approval
of the President, be used to cover a deficit in any other item of the regular appropriations: Provided, that the
creation of new positions or increase of salaries shall not be allowed to be funded from budgetary savings except
when specifically authorized by law: Provided, further, that whenever authorized positions are transferred from
one program or project to another within the same department, office or agency, the corresponding amounts
appropriated for personal services are also deemed transferred, without, however increasing the total outlay for
personal services of the department, office or agency concerned.

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.

Although the withdrawal of unobligated allotments may have effectively resulted in the suspension or stoppage of
expenditures through the issuance of negative Special Allotment Release Orders (SARO), the reissuance of
withdrawn allotments to the original programs and projects is a clear indication that the program or project from
which the allotments were withdrawn has not been discontinued or abandoned.

At this point, it is likewise important to underscore that the reversion to the General Fund of
unexpended balances of appropriations – savings included – pursuant to Section 28 Chapter IV, Book VI of the
Administrative Code does not apply to the Constitutional Fiscal Autonomy Group (CFAG), which include the
Judiciary, Civil Service Commission, Commission on Audit, Commission on Elections, Commission on Human
Rights, and the Office of the Ombudsman.

On the other hand, 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.

3.) The power to augment cannot be used to fund non-existent provisions in the GAA

Argument: 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.

Held: Tenable. The Court reversed its ruling.

 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, 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.

Item, definition: the particulars, the details, the distinct and severable parts of the appropriation or of the bill. an
item of appropriation must be an item characterized by singular correspondence – meaning an allocation of a
specified singular amount for a specified singular purpose, otherwise known as a “line-item.” This treatment not
only allows the item to be consistent with its definition as a “specific appropriation of money” but also ensures
that the President may discernibly veto the same.

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.

Further, in Nazareth v. Villar, 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.

Nonetheless, this modified interpretation does not take away the caveat that only DAP projects found in the
appropriate GAAs may be the subject of augmentation by legally accumulated savings. Whether or not the
116 DAP-funded projects had appropriation cover and were validly augmented require factual determination that
is not within the scope of the present consolidated petitions under Rule 65.

4. Cross-border transfers are constitutionally impermissible

Argument: Section 25(5), Article VI of the Constitution prohibits only the transfer of appropriation, not savings.

Held:  Section 25(5) is clear. The Court stood by its previous pronouncement.

ATONG PAGLAUM v COMELEC

April 2, 2013 | Davide, Jr., J.

Petitioner: (See Original. ANG DAMI)

Respondents: Commission on Elections

NATURE

54 Petitions for Certiorari and Petitions for Certiorari and Prohibition filed by 52 party-list groups and organizations

assailing the Resolutions issued by the Commission on Elections (COMELEC) disqualifying them from participating in
the 13 May 2013 party-list elections, either by denial of their petitions for registration under the party-list system, or
cancellation of their registration and accreditation as party-list organizations.
DOCTRINE

Party-list Representatives

BRIEF

The COMELEC disqualified groups and organizations from participating in the 13 May 2013 party-list elections based on
jurisprudence. However, since the Court adopts in this Decision new parameters in the qualification of national, regional,
and sectoral parties under the party-list system, thereby abandoning the rulings in the decisions applied by the COMELEC
in disqualifying petitioners, the case is remanded to the COMELEC to determine who are qualified to register under the
party-list system, and to participate in the coming 13 May 2013 party-list elections, under the new parameters prescribed
in the Decision. (Bulk of the case explains the Party-list system)

FACTS

1. Pursuant to the provisions of Republic Act No. 7941 (R.A. No. 7941) and COMELEC Resolution Nos. 9366 and
9531, approximately 280 groups and organizations registered and manifested their desire to participate in the 13
May 2013 party-list elections.

2. The COMELEC disqualified groups and organizations from participating in the 13 May 2013 party-list elections

3. PBB (Partido ng Bayan ng Bida) was denied participation in the 13 May 2013 party-list elections because

a. PBB does not represent any "marginalized and underrepresented" sector;

b. PBB failed to apply for registration as a party-list group;

c. PBB failed to establish its track record as an organization that seeks to uplift the lives of the
"marginalized and underrepresented.

4. The COMELEC excluded from participating in the 13 May 2013 party-list elections those that did not satisfy
these two criteria:

a. all national, regional, and sectoral groups or organizations must represent the "marginalized and
underrepresented" sectors

b. all nominees must belong to the "marginalized and underrepresented" sector they represent.

c. as political or regional parties they are not organized along sectoral lines and do not represent the
"marginalized and underrepresented."

d. petitioners' nominees who do not belong to the sectors they represent may have been disqualified,
although they may have a track record of advocacy for their sectors.

e. nominees of non-sectoral parties may have been disqualified because they do not belong to any sector.

f. a party may have been disqualified because one or more of its nominees failed to qualify, even if the party
has at least one remaining qualified nominee.
Supreme Court: ISSUES of the CASE

ISSUE: WON the COMELEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in
disqualifying petitioners from participating in the 13 May 2013 party-list elections, either by denial of their new petitions
for registration under the party-list system, or by cancellation of their existing registration and accreditation as party-list
organizations (NO)

RATIO

1. COMELEC did not commit grave abuse of discretion in following prevailing decisions of this Court in
disqualifying petitioners from participating in the coming 13 May 2013 party-list elections

2. However, since the Court adopts in this Decision new parameters in the qualification of national, regional, and
sectoral parties under the party-list system, thereby abandoning the rulings in the decisions applied by the
COMELEC in disqualifying petitioners, the court decided to remand to the COMELEC all the present
petitions for the COMELEC to determine who are qualified to register under the party-list system, and to
participate in the coming 13 May 2013 party-list elections, under the new parameters prescribed in the
Decision

The Party-List System

1. The voter elects two representatives in the House of Representatives

a. one for his or her legislative district

b. another for his or her party-list group or organization of choice

2. Section 5 Article VI of the Constitution

(1) The House of Representatives shall be composed of not more than two hundred and fifty members, unless
otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and the
Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and
progressive ratio, and those who, as provided by law, shall be elected through a party-list system of registered national,
regional, and sectoral parties or organizations.

(2) The party-list representatives shall constitute twenty per centum of the total number of representatives including
those under the party list. For three consecutive terms after the ratification of this Constitution, one-half of the seats
allocated to party-list representatives shall be filled, as provided by law, by selection or election from the labor, peasant,
urban poor, indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except
the religious sector.

3. Sections 7 and 8, Article IX-C

Sec. 7. No votes cast in favor of a political party, organization, or coalition shall be valid, except for those registered
under the party-list system as provided in this Constitution.

Sec. 8. Political parties, or organizations or coalitions registered under the party-list system, shall not be represented in the
voters’ registration boards, boards of election inspectors, boards of canvassers, or other similar bodies. However, they
shall be entitled to appoint poll watchers in accordance with law
4. Christian S. Monsod: "the party-list system is not synonymous with that of the sectoral representation."

5. sectoral representation in the Assembly: certain sectors would have reserved seats; that they will choose among
themselves who would sit in those reserved seats

a. problem #1: which sector? Nine sectors cited in Proclamation No. 9

b. the longer the enumeration, the more limiting the law becomes because enumeration results in the
exclusion of those not in the enumeration.

c. Problem #2: Hyphenated citizens: who is a farmer? Doctor-farmer? Lawyer-farmer?

d. Problem #3: giving some people two votes and other people one vote

6. Political parties, particularly minority political parties, are not prohibited to participate in the party list election if
they can prove that they are also organized along sectoral lines.

7. The COMELEC may look into the truth of whether or not a political party is really organized along a specific
sectoral line.

a. If such is verified or confirmed, the political party may submit a list of individuals who are actually
members of such sectors.

b. The lists are to be published to give individuals or organizations belonging to such sector the chance to
present evidence contradicting claims of membership in the said sector or to question the claims of the
existence of such sectoral organizations or parties.

c. This proceeding shall be conducted by the COMELEC and shall be summary in character. In other words,
COMELEC decisions on this matter are final and unappealable

8. Commissioner Wilfredo Villacorta: political parties can participate in the party-list system "For as long as they
field candidates who come from the different marginalized sectors that we shall designate in this Constitution."

9. The common denominator between sectoral and non-sectoral parties is that they cannot expect to win in
legislative district elections but they can garner, in nationwide elections, at least the same number of votes that
winning candidates can garner in legislative district elections. The party-list system will be the entry point to
membership in the House of Representatives for both these non-traditional parties that could not compete in
legislative district elections.

10. The party-list system is composed of three different groups: 

a. (1) national parties or organizations;

b. (2) regional parties or organizations; and

c. (3) sectoral parties or organizations.

11. National and regional parties or organizations are different from sectoral parties or organizations. National and
regional parties or organizations need not be organized along sectoral lines and need not represent any particular
sector.

12. the party-list system is not exclusively for sectoral parties for 2 reasons:
 a. one-half of the seats allocated to party-list representatives would naturally be open to non-sectoral party-
list representatives, clearly negating the idea that the party-list system is exclusively for sectoral parties
representing the "marginalized and underrepresented."

b. the reservation of one-half of the party-list seats to sectoral parties applies only for the first "three
consecutive terms after the ratification of this Constitution," making the party-list system fully open after
the end of the first three congressional terms. After this period, there will be no seats reserved for any
class or type of party that qualifies under the three groups constituting the party-list system.

13. Republic Act No. 7941 or the Party-List System Act

a. Party: either a political party or a sectoral party or a coalition of parties

b. political party: organized group of citizens advocating an ideology or platform, principles and policies for
the general conduct of government and which, as the most immediate means of securing their adoption,
regularly nominates and supports certain of its leaders and members as candidates for public office.

c. sectoral party: organized group of citizens belonging to any of the sectors enumerated in Section 5 hereof
whose principal advocacy pertains to the special interest and concerns of their sector

14. In the case of sectoral parties, to be a bona fide party-list nominee one must either belong to the sector
represented, or have a track record of advocacy for such sector

ISSUE: WON the criteria for participating in the party-list system laid down in   Ang Bagong Bayani and Barangay
Association for National Advancement and Transparency v. Commission on Elections 49  (BANAT) should be applied by
the COMELEC in the coming 13 May 2013 party-list elections (NO)

RATIO

1. Ang Bagong Bayani: “while even major political parties are expressly allowed by RA 7941 and the Constitution
to participate in the party-list system, they must comply with the declared statutory policy of enabling ‘Filipino
citizens belonging to marginalized and underrepresented sectors xxx to be elected to the House of
Representatives.’

2. Bagong Bayani guidelines for qualifying those who desire or participate in party-list systems:

a. The political party, sector, organization or coalition must represent the marginalized and underrepresented
groups identified in Section 5 of RA 7941

b. while even major political parties are expressly allowed by RA 7941 and the Constitution to participate in
the party-list system, they must comply with the declared statutory policy of enabling "Filipino citizens
belonging to marginalized and underrepresented sectors x x x to be elected to the House of
Representatives”

c. the religious sector may not be represented in the party-list system

d. a party or an organization must not be disqualified under Section 6 of RA 7941, which enumerates the
grounds for disqualification as follows:

i. It is a religious sect or denomination, organization or association, organized for religious

purposes
 ii. It advocates violence or unlawful means to seek its goal

iii. It is receiving support from any foreign government, foreign political party, foundation,
organization, whether directly or through any of its officers or members or indirectly through
third parties for partisan election purposes

iv. It violates or fails to comply with laws, rules or regulations relating to elections

v. It declares untruthful statements in its petition

vi. It has ceased to exist for at least one (1) year

vii. It fails to participate in the last two (2) preceding elections or fails to obtain at least two per
centum (2%) of the votes cast under the party-list system in the two (2) preceding elections for
the constituency in which it has registered

e. the party or organization must not be an adjunct of, or a project organized or an entity funded or assisted
by, the government

f. the party must not only comply with the requirements of the law; its nominees must likewise do so.
Section 9 of RA 7941 reads as follows:

No person shall be nominated as party-list representative unless

1. he is a natural-born citizen of the Philippines,

2. a registered voter a resident of the Philippines for a period of not less than one (1)year
immediately preceding the day of the election,

3. able to read and write,

4. a bona fide member of the party or organization which he seeks to represent for at least ninety
(90) days preceding the day of the election,

5. is at least twenty-five (25) years of age on the day of the election

In case of a nominee of the youth sector, he must

1. at least be twenty-five (25) but not more than thirty (30) years of age on the day of the election.

2. Any youth sectoral representative who attains the age of thirty (30) during his term shall be
allowed to continue in office until the expiration of his term.

g. not only the candidate party or organization must represent marginalized and underrepresented sectors; so
also must its nominees

h. the nominee must likewise be able to contribute to the formulation and enactment of appropriate
legislation that will benefit the nation as a whole.

3. COMELEC did not commit grave abuse of discretion, In following prevailing jurisprudence, the COMELEC
could not have committed grave abuse of discretion.

4. it would not be in accord with the 1987 Constitution and R.A. No. 7941 to apply the criteria in Ang Bagong
Bayani and BANAT in determining who are qualified to participate in the coming 13 May 2013 party-list
 elections. For this purpose, we suspend our rule that a party may appeal to this Court from decisions or
orders of the COMELEC only if the COMELEC committed grave abuse of discretion

5. exemptions or incentives granted to natural or juridical persons are withdrawn except those granted to local water
districts, cooperatives duly registered under RA 6938, non-stock and non-profit hospitals and educational
institutions, and otherwise provided by RA 7160.

6. the present petitions should be remanded to the COMELEC not because the COMELEC committed grave abuse
of discretion in disqualifying petitioners, but because petitioners may now possibly qualify to participate in the
coming 13 May 2013 party-list elections under the new parameters prescribed by this Court

RULING: all the present 54 petitions are GRANTED. The 13 petitions, which have been granted Status Quo Ante Orders
but without mandatory injunction to include the names of petitioners in the printing of ballots, are remanded to the
Commission on Elections only for determination whether petitioners are qualified to register under the party-list
system under the parameters prescribed in this Decision but they shall not participate in the 13 May 2013 part-list
elections. The 41 petitions, which have been granted mandatory injunctions to include the names of petitioners in the
printing of ballots, are remanded to the Commission on Elections for determination whether petitioners are
qualified to register under the party-list system and to participate in the 13 May 2013 party-list elections under the
parameters prescribed in this Decision. The Commission on Elections may conduct summary evidentiary hearings for
this purpose. This Decision is immediately executory.

BANAT v COMELEC GR 179271, April 21, 2009

BANAT v COMELEC GR 179271, April 21, 2009

http://www.lawphil.net/judjuris/juri2009/apr2009/gr_179271_2009.html

Facts:

On 27 June 2002, BANAT filed a Petition to Proclaim the Full Number of Party-List Representatives Provided by the
Constitution, docketed as NBC No. 07-041 (PL) before the NBC. BANAT filed its petition because "the Chairman and
the Members of the COMELEC have recently been quoted in the national papers that the COMELEC is duty bound to and
shall implement the Veterans ruling, that is, would apply the Panganiban formula in allocating party-list seats."

     BANAT filed a petition for certiorari and mandamus assailing the ruling in NBC Resolution No. 07-88. BANAT did
not file a motion for reconsideration of NBC Resolution No. 07-88.

     On 9 July 2007, Bayan Muna, Abono, and A Teacher asked the COMELEC, acting as NBC, to reconsider its decision
to use the Veterans formula as stated in its NBC Resolution No. 07-60 because the Veterans formula is violative of the
Constitution and of Republic Act No. 7941 (R.A. No. 7941). On the same day, the COMELEC denied reconsideration
during the proceedings of the NBC.

Issue:
 Considering the allegations in the petitions and the comments of the parties in these cases, we defined the following
issues in our advisory for the oral arguments set on 22 April 2008:

     1. Is the twenty percent allocation for party-list representatives in Section 5(2), Article VI of the Constitution
mandatory or merely a ceiling?

     2. Is the three-seat limit in Section 11(b) of RA 7941 constitutional?

     3. Is the two percent threshold prescribed in Section 11(b) of RA 7941 to qualify for one seat constitutional?

     4. How shall the party-list representative seats be allocated?

     5. Does the Constitution prohibit the major political parties from participating in the party-list elections? If not, can the
major political parties be barred from participating in the party-list elections?

Held:

 WHEREFORE we PARTIALLY GRANT the petition. We SET ASIDE the Resolution of the COMELEC dated 3
August 2007 in NBC No. 07-041 (PL) as well as the Resolution dated 9 July 2007 in NBC No. 07-60. We declare
unconstitutional the two percent threshold in the distribution of additional party-list seats.

Ratio: Neither the Constitution nor R.A. No. 7941 mandates the filling-up of the entire 20% allocation of party-list
representatives found in the Constitution. However, we cannot allow the continued existence of a provision in the law
which will systematically prevent the constitutionally allocated 20% party-list representatives from being filled. The
three-seat cap, as a limitation to the number of seats that a qualified party-list organization may occupy, remains a valid
statutory device that prevents any party from dominating the party-list elections.

     We rule that, in computing the allocation of additional seats, the continued operation of the two percent threshold for
the distribution of the additional seats as found in the second clause of Section 11(b) of R.A. No. 7941 is unconstitutional.
This Court finds that the two percent threshold makes it mathematically impossible to achieve the maximum number of
available party list seats when the number of available party list seats exceeds 50. The continued operation of the two
percent threshold in the distribution of the additional seats frustrates the attainment of the permissive ceiling.

     In declaring the two percent threshold unconstitutional, we do not limit our allocation of additional seats to the two-
percenters. The percentage of votes garnered by each party-list candidate is arrived at by dividing the number of votes
garnered by each party by 15,950,900, the total number of votes cast for party-list candidates. There are two steps in the
second round of seat allocation. First, the percentage is multiplied by the remaining available seats, 38, which is the
difference between the 55 maximum seats reserved under the Party-List System and the 17 guaranteed seats of the two-
percenters. The whole integer of the product of the percentage and of the remaining available seats corresponds to a
party’s share in the remaining available seats. Second, we assign one party-list seat to each of the parties next in rank until
all available seats are completely distributed. We distributed all of the remaining 38 seats in the second round of seat
allocation. Finally, we apply the three-seat cap to determine the number of seats each qualified party-list candidate is
entitled.

     Neither the Constitution nor R.A. No. 7941 prohibits major political parties from participating in the party-list system.
On the contrary, the framers of the Constitution clearly intended the major political parties to participate in party-list
elections through their sectoral wings. In fact, the members of the Constitutional Commission voted down, 19-22, any
permanent sectoral seats, and in the alternative the reservation of the party-list system to the sectoral groups. In defining a
"party" that participates in party-list elections as either "a political party or a sectoral party," R.A. No. 7941 also clearly
intended that major political parties will participate in the party-list elections. Excluding the major political parties in
party-list elections is manifestly against the Constitution, the intent of the Constitutional Commission, and R.A. No. 7941.
This Court cannot engage in socio-political engineering and judicially legislate the exclusion of major political parties
from the party-list elections in patent violation of the Constitution and the law.

In view of the inclusion of major political parties (according to Puno, J.)

     The Court today effectively reversed the ruling in Ang Bagong Bayani v. COMELEC with regard to the computation
of seat allotments and the participation of major political parties in the party-list system. I vote for the formula
propounded by the majority as it benefits the party-list system but I regret that my interpretation of Article VI, Section 5
of the Constitution with respect to the participation of the major political parties in the election of party-list
representatives is not in direct congruence with theirs, hence

     There is no gainsaying the fact that the party-list parties are no match to our traditional political parties in the political
arena. This is borne out in the party-list elections held in 2001 where major political parties were initially allowed to
campaign and be voted for. The results confirmed the fear expressed by some commissioners in the Constitutional
Commission that major political parties would figure in the disproportionate distribution of votes: of the 162 parties which
participated, the seven major political parties made it to the top 50. These seven parties garnered an accumulated 9.54% of
the total number of votes counted, yielding an average of 1.36% each, while the remaining 155 parties (including those
whose qualifications were contested) only obtained 90.45% or an average of 0.58% each. Of these seven, three parties or
42.8% of the total number of the major parties garnered more than 2% of the total number of votes each, a feat that would
have entitled them to seat their members as party-list representatives. In contrast, only about 4% of the total number of the
remaining parties, or only 8 out of the 155 parties garnered more than 2%.

     In sum, the evils that faced our marginalized and underrepresented people at the time of the framing of the 1987
Constitution still haunt them today. It is through the party-list system that the Constitution sought to address this systemic
dilemma. In ratifying the Constitution, our people recognized how the interests of our poor and powerless sectoral groups
can be frustrated by the traditional political parties who have the machinery and chicanery to dominate our political
institutions. If we allow major political parties to participate in the party-list system electoral process, we will surely
suffocate the voice of the marginalized, frustrate their sovereignty and betray the democratic spirit of the Constitution.
That opinion will serve as the graveyard of the party-list system.

     IN VIEW WHEREOF, I dissent on the ruling allowing the entry of major political parties into the party-list system.

In view of 2% being unconstitutional (according to Nachura, J.)

     However, I wish to add a few words to support the proposition that the inflexible 2% threshold vote required for
entitlement by a party-list group to a seat in the House of Representatives in Republic Act (R.A.) No. 7941 is
unconstitutional. This minimum vote requirement ─ fixed at 2% of the total number of votes cast for the party list system
─ presents an unwarranted obstacle to the full implementation of Section 5 (2), Article VI, of the Philippine Constitution.
As such, it effectively defeats the declared constitutional policy, as well as the legislative objective expressed in the
enabling law, to allow the people’s broadest representation in Congress,the raison d’etre for the adoption of the party-list
system.

     Today, a little over eight (8) years after this Court’s decision in Veterans Federation Party, we see that in the 14th
Congress, 55 seats are allocated to party-list representatives, using the Veterans formula. But that figure (of 55) can never
be realized, because the 2% threshold vote requirement makes it mathematically impossible to have more than 50 seats.
After all, the total number of votes cast for the party-list system can never exceed 100%.
    Lest I be misunderstood, I do not advocate doing away completely with a threshold vote requirement. The need for such
a minimum vote requirement was explained in careful and elaborate detail by Chief Justice Puno in his separate
concurring opinion in Veterans Federation Party. I fully agree with him that a minimum vote requirement is needed --

1. to avoid a situation where the candidate will just use the party-list system as a fallback position;

2. to discourage nuisance candidates or parties, who are not ready and whose chances are very low, from participating in
the elections;

3. to avoid the reserve seat system by opening up the system;

4. to encourage the marginalized sectors to organize, work hard, and earn their seats within the system;

5. to enable sectoral representatives to rise to the same majesty as that of the elected representatives in the legislative
body, rather than owing to some degree their seats in the legislative body either to an outright constitutional gift or to an
appointment by the President of the Philippines;

6. if no threshold is imposed, this will actually proliferate political party groups and those who have not really been given
by the people sufficient basis for them to represent their constituents and, in turn, they will be able to get to the Parliament
through the backdoor under the name of the party-list system; and

7. to ensure that only those with a more or less substantial following can be represented.9

     However, with the burgeoning of the population, the steady increase in the party-list seat allotment as it keeps pace
with the creation of additional legislative districts, and the foreseeable growth of party-list groups, the fixed 2% vote
requirement is no longer viable. It does not adequately respond to the inevitable changes that come with time; and it is, in
fact, inconsistent with the Constitution, because it prevents the fundamental law from ever being fully operative.