SC: 2014 GAA’s Lump-Sum Discretionary Funds Constitutional

October 8, 2019

The Supreme Court, during its Session today, dismissed for lack of merit the petition for certiorari and prohibition assailing the constitutionality of the “lump-sum discretionary funds” in the 2014 General Appropriations Act (GAA).

In a per curiam ruling in G.R. No. 210503 (Belgica v. Executive Secretary), the Court held that the assailed appropriations in the 2014 GAA are valid items with discernible singular appropriation purpose in compliance with the rule on singular correspondence ─ the Unprogrammed Fund, to fund the identified programs; the Contingent Fund, to provide funding to meet contingencies or programs yet inexistent and unforeseen during budget authorization; the E-Government Fund, to fund the E-Government Program that subsumes the strategic ICT projects of various government agencies; and the Local Government Support Fund, to provide financial assistance to LGUs.

The case stemmed from the petition of former Manila city councilor Greco Antonious Beda Belgica who contended that the said lump-sum discretionary funds in the 2014 GAA was contrary to the Court’s November 19, 2013 Decision in Belgica v. Ochoa. The 2013 Belgica ruling abolished the “pork barrel system” in its latest iteration as the Priority Development Assistance Fund (PDAF) Article in the 2013 GAA, and similar informal practices that allowed individual legislators to participate in the execution of the budget through post-enactment measure of identification of projects, for violation of the separation of power ─ by impinging on the authority of the Executive to implement the national budget.

The Court held that the Unprogrammed Fund was constitutional as it specifically identified the public purposes for which the fund may be used and contained singularly corresponding purposes.  The Contingent Fund was also constitutional because its purpose was to cover the funding requirement of new or urgent projects that need to be implemented during the year, and the foreign travel expenses of the Office of the President which were not and could not have been anticipated during budget preparation and authorization. Hence, the same cannot be itemized. Further, the Court already held previously in the 2013 Belgica case that the Contingent Fund is a valid line-item appropriation.

On the E-Government Fund, the Court held that the same was  constitutional, noting that its nature as a cross-agency fund required it to be subject to the determination by the administrative agencies of the ongoing strategic information and communication technology projects in the priority sectors identified by the Legislature in the budget. Notably, these standards are already in place in existing executive issuances predating the assailed E-Government Fund provision, which the Court assumed the Legislature to have been aware of.

As for Local Government Support Fund provision of the 2014, the Court declared it constitutional because it provided sufficient standards which set the limits of the Executive’s authority to disburse the LGSF, the legislative policy behind the fund, and identified the conditions under which the fund may be utilized.

The Court ruled that petitioner’s heavy reliance on the 2013 Belgica case, as precedent to argue that lump-sum appropriations are unconstitutional, was misplaced. The 2013 Belgica case discussed what is a singular correspondence and distinguished what is a prohibited lump-sum.

In its 2013 Belgica ruling, the Court stressed that “xxx it must be observed that an appropriation may be validly apportioned into component percentages or values; however, it is crucial that each percentage or value must be allocated for its own corresponding purpose for such component to be considered as a proper line-item.”

The Court stressed that the requirement of singular correspondence does not mean that all lump-sum appropriations are unconstitutional per se; hence, the specifically assailed appropriations are constitutional.

The Supreme Court Public Information Office will be posting a copy of the decision in the SC website once it receives the official copy from the Office of the Clerk of Court En Banc. ###