CASE NO.

341
ART. VI, SEC. 29: Fiscal Powers of Congress; Limitations; Special Funds
Fiscal Powers of Congress
Pascual v. Secretary of Public Works 110 Phil 331

FACTS:
Petitioner Wenceslao Pascual, the Provincial Governer of Rizal, filed an action for
declaratory relief with injunction, assailing the validity of RA 920 (An Act Appropriating
Funds for Public Works), which contained an item of P85,000.00 for the construction,
reconstruction, repair, extension and improvement of Pasig feeder road terminals.
Petitioner contented that the said feeder roads were nothing but projected and planned
subdivisions that were not yet constructed. The property over which the feeder roads
will be constructed was privately owned by respondent Zulueta. Respondent offered to
donate the said feeder roads to the municipality of Pasig, Rizal, and the same was
accepted by the council, subject to a condition that the donor would submit a plan of the
roads and an agreement to change the names of two of the street. However, the said
donation was not executed, which prompted Zulueta to write a letter to the district
engineer calling the attention of RA 920. The district engineer, on the other hand, did
not endorse the letter inasmuch the feeder roads in question were private property at
the time of the passage and approval of RA 920, the appropriation was illegal and
therefore, void ab initio. Respondent contended that the same was for public purpose
because people living in the subdivision will directly be benefitted from the construction
of the roads, and the government also gains from the donation.

ISSUE:
Whether the incidental gains by the public is considered “for public purpose” to justify an
expenditure of the government.

RULING:
No. It is a general rule that the legislature is without power to appropriate public revenue
for anything but a public purpose. In this case, the appropriation was not for public
purpose. The subsequent donation of the road did not validate RA 920 because the
validity of a statute depends upon the powers of Congress at the time of its approval,
and not upon events occurring or acts subsequently. The test of the constitutionality of a
statute requiring the use of public funds is whether the statute is designed to promote
the public interest, as opposed to the furtherance of the advantage of individuals,
although each advantage to individuals might incidentally serve the public. Incidental to
the public or to the state, which results from the promotion of private interest and the
prosperity of private enterprises or business, does not justify their aid by the use public
money.

MAIN POINT:
The right of the legislature to appropriate public funds is correlative with its right to tax,
and, under the constitutional provisions against taxation except for public purposes, no
appropriation of state funds can be made for other than a public purpose. There is an
implicit limitation that public money can be appropriated only for a public purpose.
 CASE NO. 342
ART. VI, SEC. 29: Fiscal Powers of Congress; Limitations; Special Funds
Fiscal Powers of Congress
MIAA v. Hon. Mabunay, G.R. No. 126151

FACTS:
Respondent Lanting Security and Watchman Agency, a bonded security agency,
entered into an agreement with petitioner Manila International Airport Authority (MIAA)
to render security services on a month-to-month basis from 1988-1995. Upon the
recommendation of the MIAA's former General Manager for the privatization of the
Aviation Security Services of MIAA, a subsidiary company, the Philippine Aviation
Security Services Corporation (PASSCOR) was formed, and the MIAA Board of
Directors approved the award of security services in favor of PASSCOR effective
September 1, 1995. Having been informed that PASSCOR would take over the
operations and management of the security of the MIAA, and that the security services
contract that MIAA entered into with Lanting would be terminated by August 31, 1995,
respondent Lanting filed a complaint for injunction challenging the “highly irregular”
awarding by MIAA of the security services contract to PASSCOR without going through
public bidding, as being not only contrary to law, but likewise against public policy. The
RTC of Manila ordered MIAA not to terminate the security services of respondent
Lanting, and not to award the security contract in favor of PASSCOR.

ISSUE:
Whether the court erred in ruling that under existing laws and regulations the contract
for security services should be awarded through public bidding.

RULING:
No. Section 68 of RA 7845, or the General Appropriations Act for 1995, specifically
refers to contracts for services related to the functions and operations of the
government and its agencies. An appropriations act is primarily a special type of
legislation whose content is limited to specified sums of money dedicated to a specific
purpose or a separate fiscal unit. This law specifically authorizes expenditures for the
hiring of these personnel. It is not the governing law on the award of the service
contracts by government agencies nor does it do away with the general requirement of
public bidding. These provisions are not to be construed as doing away with the general
requirement of public bidding. Indeed, public bidding is the accepted method for arriving
at a fair and reasonable price and it ensures that overpricing and favoritism, and other
anomalous practices are eliminated or minimized.

MAIN POINT:
Government offices and agencies are authorized to enter into contracts for services
related or incidental to their respective functions and operations, either through public
bidding or negotiated contract, whenever it is impractical or more expensive for the
government to directly undertake such functions and operation, subject to accounting or
auditing rules and regulations. These provisions are not to be construed as doing away
with the general requirement of public bidding.
 CASE NO. 343
ART. VI, SEC. 29: Fiscal Powers of Congress; Limitations; Special Funds
Fiscal Powers of Congress
Guingona v. Carague 169 SCRA 221

FACTS:
The 1990 budget consists of P98.4 B in automatic appropriation (with P86.8 B for debt
service) and P155.3 B appropriated under Republic Act No. 6831, otherwise known as
the General Appropriations Act, or a total of P233.5 Billion. On the other hand, the
appropriations for the Department of Education, Culture and Sports amount to
P27,017,813,000.00. The said automatic appropriation for debt service is authorized by
P.D. No. 81, P.D. No. 1177, and by P.D. No. 1967.

Petitioner seeks the declaration of the unconstitutionality of P.D. No. 81, P.D. No. 1177,
and by P.D. No. 1967. It also seeks to restrain the disbursement for debt service under
the 1990 budget pursuant to said decrees. Respondents contend that the petition
involves a pure political question which is the repeal or amendment of said laws
addressed to the judgment, wisdom and patriotism of the legislative body and not this
Court.

ISSUE:
Whether the automatic appropriation for debt service is unconstitutional for not
appropriating a fixed amount and is therefore an undue delegation of legislative power.

RULING:
No. Our Constitution does not require a definite, certain, exact or “specific appropriation
made by law.” Section 29(1), Article VI of our 1987 Constitution omits any of these
words and simply states: No money shall be paid out of the treasury except in
pursuance of an appropriation made by law. More significantly, there is no provision in
our Constitution that provides or prescribes any particular form of words or religious
recitals in which an authorization or appropriation by Congress shall be made, except
that it be “made by law,” such as precisely the authorization or appropriation under the
questioned presidential decrees. Although the subject presidential decrees do not state
specific amounts to be paid, the amounts nevertheless are made certain by the
legislative parameters provided in the decrees. No uncertainty arises in executive
implementation as the limit will be the exact amounts as shown by the books of the
Treasury.

MAIN POINT:
The amount is fixed by the parameters of the law itself which requires the simple act of
looking into the books of the Treasure. The Executive is not of unlimited discretion as to
the amounts to be disbursed for debt servicing.
 CASE NO. 344
ART. VI, SEC. 29: Fiscal Powers of Congress; Limitations; Special Funds
Fiscal Powers of Congress
COMELEC v. Hon. Quijano, G.R. No. 151992

FACTS:
Congress enacted RA 8189 or the Voter’s Registration Act of 1996, which provided for
the modernization and computerization of the voter’s registration list, and appropriated
funds therefor. With this, the COMELEC promulgated a Resolution approving the
Voter’s Registration and Identification System (VRIS) Project that envisions a
computerized database system for the May 2004 elections. The COMELEC issued
invitations to pre-qualify and bid for the supply and installations of information
technology equipment and ancillary services for its VRIS project. PHOTOKINA
Marketing Corporation was then declared the winning bidder for receiving the highest
total weighted score which was P6.5 Billion. However, under RA 8760, the budget
appropriated by Congress for the COMELEC’s modernization project was only P1
Billion and that the actual available funds under the Certificate of Availability of Funds
(CAF) issued by the Chief Accountant of the COMELEC were only P1.2 Billion.

PHOTOKINA requested for the formal execution of the contract, but to no avail.
PHOTOKINA filed a petition with the RTC of Quezon for mandamus, prohibition and
damages against COMELEC and the same was granted. On the other hand, the
COMELEC filed a complaint against respondent Hon. Quijano.

ISSUE:
Whether a successful bidder can compel a government agency to formalize a contract
with it notwithstanding that its bid exceeds the amount appropriated by Congress for
said project.

RULING:
No. Enshrined in the Constitution is the mandate that “no money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.” Thus, in the execution
of government contracts, the precise import of this constitutional restriction is to require
the various agencies to limit their expenditures within the appropriations made by law
for each fiscal year. In the case at bar, the amount appropriated is clearly insufficient to
cover the cost of the entire VRIS project. There is no way that the COMELEC could
enter into a contract with PHOTOKINA, whose accepted bid was beyond the amount
appropriated by law for the project. It cannot compel the COMELEC to formalize the
contract. Since PHOTOKINA’s bid is beyond the amount appropriated by Congress for
the VRIS Project, the proposed contract is not binding upon the COMELEC and is
considered void.

MAIN POINT:
No money shall be paid out of the Treasury except in pursuance of an appropriation
made by law. Government agencies should limit their expenditures within the
appropriations made by law.
 CASE NO. 345
ART. VI, SEC. 29. Fiscal Powers of Congress; Limitations; Special Funds
Special Funds
Gaston v. Republic Planters Bank 158 SCRA 626

FACTS:
Petitioners herein are sugar producers, sugarcane planters and millers, who have come
to this Court, in their individual capacities and in representation of other sugar
producers, planters and millers, for a writ of mandamus to implement and accomplish
the privatization of Republic Planters Bank by the transfer and distribution of the shares
of stock in the said bank on the ground that they are the true beneficial owners of the
Bank since they pay P1.00 per picul of sugar from the proceeds of sugar producers as
stabilization fees pursuant to P.D. 388.

Respondents Philippine Sugar Commission (PHILSUCOM) and Sugar Regulatory

Administration (SRA) traverses the petition arguing that no trust fund results from P.D.
388; that the stabilization fees collected are considered government funds under the
Government Auditing Code; that the transfer of shares of stocks from PHILSUCOM to
the sugar producers would be irregular, if not illegal; and that this suit is barred by
laches.

ISSUE:
Whether the stabilization fees collected from sugar planters and millers pursuant to P.D.
388 are funds in trust for them.

RULING:
No, the funds were public funds. The stabilization fees collected are in the nature of a
tax, which is within the power of the State to impose for the promotion of the sugar
industry. The tax collected is not in a pure exercise of the taxing power. It is levied with
a regulatory purpose, to provide means for the stabilization of the sugar industry. The
levy is primarily in the exercise of the police power of the State. They are levied by the
State upon sugar millers, planters and producers for a special purpose of financing the
growth and development of the sugar industry and all its components, stabilization of
the domestic market including the foreign market. Having been levied for a special
purpose, the revenues collected are to be treated as a special fund that is “administered
in trust” for the purpose intended. Once the purpose has been fulfilled or abandoned,
the balance, if any, is to be transferred to the general funds of the Government. That is
the essence of the trust intended.

MAIN POINT:
All money collected on any tax levied for a special purpose shall be treated as a special
fund and paid out for such purpose only. Once the purpose has been fulfilled or
abandoned, the balance, if any, is to be transferred to the general funds of the
Government.