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Internal Revenue Allotment: Issues, Incursions and Implications
by Atty. Dan Gatmaytan

I.                    INTRODUCTION

On July 19, 2000, the Supreme Court decided the case entitled Aquilino Q. Pimentel Jr., v. Hon. Alexander Aguirre and Emilia Boncodin.[i] In that decision, the Supreme Court ruled that the President of the Philippines could not withhold the Internal Revenue Allotments (IRA) of local government units.

Response to the decision varied.  While majority favored the Court’s ruling, some government officials expressed apprehension that they cannot comply with the Court’s ruling.  In either case, these reactions will show that very few correctly understood the implications of the Supreme Court’s pronouncement.

President Estrada welcomed the decision—a surprising reaction considering that the Supreme Court concluded that he violated the Constitution by preventing the release of five percent of the IRA of local governments.  More surprising is the fact that despite the statements of the President, other government officials including the Solicitor General were reportedly preparing to ask the Supreme Court to reconsider its decision.[ii]

Worse, Department of Budget Secretary Benjamin E. Diokno reportedly stated that the national government will release 7.5-billion pesos to local governments.  Diokno said that the release of the LGU budget was in response to a Supreme Court ruling that declared a P 7.5 billion “soft cut” from LGU allocations as unconstitutional.[iii]  The report continued by saying that the amount, representing the share of LGUs in national taxes, is part of P 10 billion slashed last January from this year's P 629-billion national budget.

On the other hand, the Union of Local Authorities of the Philippines (ULAP) hailed the decision by saying, “We have been right all along in our struggle against the illegal and whimsical intrusion by Congress into the rightful share of LGUs.”  ULAP leaders called the decision a “landmark ruling because the principles enshrined in the Supreme Court's decision cover all cases concerning IRA reduction which is now deemed violative of the Constitution.”[iv]

The problem is that there is no Supreme Court decision that said anything like the views expressed in these statements.  If Secretary Diokno and ULAP were referring to the case of Pimentel v. Aguirre, the confusion is evident because Pimentel v. Aguirre dealt exclusively with the validity of Administrative Order No. 372, issued by then President Ramos on December 27 1997, and Administrative Order No. 43, which was issued by President Estrada on December 10, 1998.

Pimentel said absolutely nothing about the decision of Congress to slash the IRA of local government units for the year 2000.  Obviously, there is a need to clarify what the Supreme Court said in Pimentel and what it did not.

II.                 THE INTERNAL REVENUE ALLOTMENT

The IRA is mandated by the Constitution.  Article X, Section 6 of the Constitution provides that “Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.”

Congress determined the “just share” through the provisions of the Local Government Code of 1991.  Under the provisions of the Code, local governments are now supposed to receive a yearly share of 40% of the national internal revenue collected three years earlier.  Indeed, the Local Government Code of 1991 was praised for increasing the financial resources available to local government units.[v]  The Code generated very high expectations from local officials and the general public since the average IRA of local governments from 1987 to 1990 was around 12.7%.[vi] 

The Code in part provides:

SECTION 284.  Allotment of Internal Revenue Taxes. — Local government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year as follows:

(a)        On the first year of the effectivity of this Code, thirty percent (30%);

(b)        On the second year, thirty-five percent (35%); and

(c)                On the third year and thereafter, forty percent (40%).

Provided, That in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the presiding officers of both Houses of Congress and the presidents of the “liga”, to make the necessary adjustments in the internal revenue allotment of local government units but in no case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year preceding the current fiscal year: Provided, further, That in the first year of the effectivity of this Code, the local government units shall, in addition to the thirty percent (30%) internal revenue allotment which shall include the cost of devolved functions for essential public services, be entitled to receive the amount equivalent to the cost of devolved personal services.[vii]

In addition, the Code reiterates the constitutional mandate for the automatic release of the IRA as follows:

SECTION 286.  Automatic Release of Shares. — (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose.  
(b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing laws.

The significance of the IRA cannot be understated.  The allocation of internal revenue does not flow from the generosity of central government—it is a right that accrues to local governments by virtue of the additional responsibilities that they bear under the Constitution.  The Supreme Court in Alvarez v. Guingona, Jr.[viii] explained its importance in the following words:

The practical side to development through a decentralized local government system certainly concerns the matter of financial resources. With its broadened powers and increased responsibilities, a local government unit must now operate on a much wider scale. More extensive operations, in turn, entail more expenses. Understandably, the vesting of duty, responsibility and accountability in every local government unit is accompanied with a provision for reasonably adequate resources to discharge its powers and effectively carry out its functions.  Availment of such resources is effectuated through the vesting in every local government unit of (1) the right to create and broaden its own source of revenue; (2) the right to be allocated a just share in national taxes such share being in the form of internal revenue allotments (IRAs); and (3) the right to be given its equitable share in the proceeds of the utilization and development of the national wealth, if any, within its territorial boundaries.

The funds generated from local taxes, IRAs and national wealth utilization proceeds accrue to the general fund of the local government and are used to finance its operations subject to specified modes of spending the same as provided for in the Local Government Code and its implementing rules and regulations. For instance, not less than twenty percent (20%) of the IRAs must be set aside for local development projects.  As such, for purposes of budget preparation, which budget should reflect the estimates of the income of the local government unit, among others, the IRAs and the share in the national wealth utilization proceeds are considered items of income. This is as it should be, since income is defined in the Local Government Code to be all revenues and receipts collected or received forming the gross accretions of funds of the local government unit.

The IRAs are items of income because they form part of the gross accretion of the funds of the local government unit. The IRAs regularly and automatically accrue to the local treasury without need of any further action on the part of the local government unit.  They thus constitute income which the local government can invariably rely upon as the source of much needed funds....

The impact of the increase in the internal revenue allotment is tremendous.  From 1985-1991, total receipts of local governments amounted to 1.7 percent of the gross national product (GNP).  This amount was divided equally between local and external sources of revenue, the latter being almost exclusively from the IRA.[ix]

In 1992-1997, after the Local Government Code went into effect, external revenues expanded from 52.0 percent in the earlier period to 64.7 percent after 1992. Local government income from external sources shot up from 0.9 percent to 2.2 percent of GNP.  LGU local source revenues moved upwards from 0.8 percent to 1.2 percent of GNP.[x]  The ratio of local revenue to the GNP increased during the effectivity of the Code, only in cities.[xi]  In every local government unit, the share of externally-generated revenue expanded between 1992-1997.[xii]

In a study conducted by the Local Development Assistance Program noted that in the past decade, the IRA accounted for at least 36% of the total local revenues.  This went up to almost 56% in 1992, after the Local Government Code took effect.  The study noted that in lower income municipalities, the IRA contributes from 65% to 90% of their total revenues.[xiii]  The IRA now remains a major revenue source of local governments as their share to total local income swelled from 50.4% in 1991 to 67.7% in 1994.[xiv]

The increase in the IRA also produced some unintended effects. 

Automatic appropriations obviously appeal to many politicians.  The attractiveness and availability of the IRA fuels the fragmentation of local government units.  The Bureau of Local Government Supervision in a recent study claimed that the proliferation of local government units (43,621 at present) is fueled by parochial concerns—the product of a strong political lobby, which increased after the enactment of the Local Government Code.[xv]  In aiming for a piece of the IRA pie, fragmentation of local government units ironically reduces the available IRA because a fixed amount of money is now divided among several governments.[xvi]

Worse, the limited tax base also accounts for the failure of local governments to generate local income to match the IRA.  In other words, without a corresponding increase in the number of taxable entities, local governments cannot increase the locally-generated revenue.  

This could help explain why—as officials of the Department of Finance claim— local government officials are “totally dependent” on their IRA and are neglecting other revenue-generating mechanisms that are available.[xvii]

III.               THE CASE

On December 27, 1997, President Fidel V. Ramos issued Administrative Order No. 372, which requires local government units to reduce their expenditures by 25% of their authorized regular appropriations for non-personal services, and withholds 10% of the IRA of local government units.  On December 10, 1998, President Estrada issued Administrative Order No. 43 and reduced the amount to be withheld from the LGUs to five percent.

The pertinent provisions of the Administrative Order No. 372 are as follows:

SECTION 1. All government departments and agencies, including state universities and colleges, government-owned and controlled corporations and local governments units will identify and implement measures in FY 1998 that will reduce total expenditures for the year by at least 25% of authorized regular appropriations for non-personal services items, along the following suggested areas...

SECTION 4. Pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging fiscal situation, the amount equivalent to 10% of the internal revenue allotment to local government units shall be withheld.

Aquilino Pimentel who was the principal author of the Local Government Code, filed a Petition with the Supreme Court, asking it:

a.       to annul Section 1 of AO No. 372, insofar as it requires local government units to reduce their expenditures by 25 percent of their authorized regular appropriations for non-personal services; and

b.      to enjoin respondents from implementing Section 4 of the Order, which withholds a portion of their internal revenue allotments.

The Issues

The main issue in the case is the validity of Administrative Order No. 372 insofar as LGUs are concerned.

Senator Pimentel was of the opinion that Section 1 of the Order is in effect a form of “control” over local government officials prohibited by the Constitution.  On the other hand, the government claimed that Section 1 of the Order was a mere act of “supervision”.

Pimentel also claimed that Section 4 violates the Constitution and the Local Government Code, because it prevents the automatic release of the IRA.  The government defended Section 4 by saying that there is no violation of the laws because the withholding was merely temporary.

Before resolving the main issue, the Court reviewed the scope of the President's power of general supervision over local governments, and the extent of the local governments' autonomy under Philippine law.

Scope of President's Power of Supervision Over LGUs

Section 4 of Article X of the Constitution confines the President's power over local governments to one of general supervision. It provides that, “The President of the Philippines shall exercise general supervision over local governments. x x x”

According to the Court, this provision excludes the power of control. The Court distinguished them as follows:

x x x In administrative law, supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or step as prescribed by law to make them perform their duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his duties and to substitute the judgment of the former for that of the latter.”[xviii]

The Supreme Court explained that supervisory power is the power of mere oversight over an inferior body; it does not include any restraining authority over such body. 

Officers in control lay down the rules in the performance or accomplishment of an act.  If these rules are not followed, they may, in their discretion, order the act undone or redone by their subordinates or even decide to do it themselves.  On the other hand, supervision does not cover such authority.  Supervising officials merely see to it that the rules are followed, but they themselves do not lay down such rules, nor do they have the discretion to modify or replace them.  If the rules are not observed, they may order the work done or redone, but only to conform to such rules.  They may not prescribe their own manner of execution of the act.  They have no discretion on this matter except to see to it that the rules are followed.

While the members of the Cabinet are subject to the power of control of the President, the people elect the heads of political subdivisions.  As such, local officials derive powers from the electorate “to whom they are directly accountable.”  Thus, “the President may not withhold or alter any authority or power given them by the Constitution and the law.”

Extent of Local Autonomy

The Court also touched on the policy of ensuring local autonomy,[xix] and explained that local autonomy signified “a more responsive and accountable local government structure instituted through a system of decentralization.” Autonomy, according to the Court, is intended to “break up the monopoly of the national government over the affairs of local governments, not to end the relation of partnership and interdependence between the central administration and local government units.”

Under the Philippine concept of local autonomy, the national government has not completely relinquished all its powers over local governments:

Only administrative powers over local affairs are delegated to political subdivisions. The purpose of the delegation is to make governance more directly responsive and effective at the local levels. In turn, economic, political and social development at the smaller political units are expected to propel social and economic growth and development.  But to enable the country to develop as a whole, the programs and policies effected locally must be integrated and coordinated towards a common national goal.  Thus, policy-setting for the entire country still lies in the President and Congress... 

Having laid down the parameters of local autonomy law, the Court then proceeded to assess the validity of Administrative Order No. 372.

Pimentel pointed out that the President failed to comply with these requisites before the issuance and the implementation of the Order.  The Supreme Court, however, saw nothing wrong with Section 1:

While the wordings of Section 1 of AO 372 have a rather commanding tone, and while we agree with petitioner that the requirements of Section 284 of the Local Government Code have not been satisfied, we are prepared to accept the solicitor general's assurance that the directive to “identify and implement measures x x x that will reduce total expenditures x x x by at least 25% of authorized regular appropriation” is merely advisory in character, and does not constitute a mandatory or binding order that interferes with local autonomy. The language used, while authoritative, does not amount to a command that emanates from a boss to a subaltern.

The Court explained that the provision is merely “an advisory to prevail upon local executives to recognize the need for fiscal restraint in a period of economic difficulty,” and that no legal sanction may be imposed upon LGUs and their officials who do not follow such advice.

Withholding a Part of LGUs' IRA

On the other hand, Section 4 of Administrative Order No. 372 violates “a basic feature of local fiscal autonomy”, which is the automatic release of the shares of local governments in the national internal revenue.  The Section, violates the Constitution and the Local Government Code.  

According to the Court, the Local Government Code specifies that the release of the IRA shall be made directly to the LGU concerned within five days after every quarter of the year.  The Code also provides that the IRA “shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose.”  The Court held that the word “shall” is a word of command that must be given a compulsory meaning.  “The provision is, therefore, imperative.” 

The Court also brushed aside the government’s defense that the withholding of the IRA was merely temporary.

Although temporary, it is equivalent to a holdback, which means “something held back or withheld, often temporarily.”  Hence, the “temporary” nature of the retention by the national government does not matter. Any retention is prohibited.

...Section 4 thereof has no color of validity at all.  The latter provision effectively encroaches on the fiscal autonomy of local governments.  Concededly, the President was well-intentioned in issuing his Order to withhold the LGUs' IRA, but the rule of law requires that even the best intentions must be carried out within the parameters of the Constitution and the law.

Justice Kapunan's Dissent

The Court’s decision was not unanimous. Associate Justice Santiago M. Kapunan, who was joined by Associate Justices Fidel P. Purisima and Consuelo Ynares-Santiago, dissented on the grounds that:

(1)               the Petition is premature;

(2)               the Order falls within the powers of the President as chief fiscal officer; and

(3)               the withholding of the LGUs' IRA is implied in the President's authority to adjust it in case of an unmanageable public sector deficit.

The majority of the Court, however, refuted the dissent.

On the premature filing of the case.

The majority said that the issue is whether the Constitution and the law were violated by Section 4 of Administrative Order No. 372.  “[W]hen an act of the legislative department is seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court.  By the mere enactment of the questioned law or the approval of the challenged action, the dispute is said to have ripened into a judicial controversy even without any other overt act.  Indeed, even a singular violation of the Constitution and/or the law is enough to awaken judicial duty.

By the same token, when an act of the President, who in our constitutional scheme is a coequal of Congress, is seriously alleged to have infringed the Constitution and the laws, as in the present case, settling the dispute becomes the duty and the responsibility of the courts.

Besides, the issue that the Petition is premature was not raised by the parties in the case, and it is deemed waived.[xx]

On the President's power as chief fiscal officer of the country.

Justice Kapunan also claimed that Section 4 is consistent with the President's role as chief fiscal officer, who “is clothed by law with certain powers to ensure the observance of safeguards and auditing requirements, as well as the legal prerequisites in the release and use of IRAs, taking into account the constitutional and statutory mandates.”

The majority responded by saying that such powers have specifically been authorized by law and have not been challenged as violative of the Constitution.  On the other hand, Section 4 contravenes provisions of the Local Government Code and the Constitution.  Unlike the acts alluded to in the Justice Kapunan’s Dissent, which are authorized by law, Section 4 is bereft of any legal or constitutional basis.

On the President's authority to adjust the IRA of LGUs in case of an unmanageable public sector deficit.

This Court explained that in striking down Section 4 as unconstitutional, it did not rule out any form of reduction in the IRAs of LGUs.  But this can be done consistently with Section 284 of the Local Government Code.  The reduction is subject to consultation with the presiding officers of both Houses of Congress and, more importantly, with the presidents of the leagues of local governments.

IV.              STANDING TO SUE

There is one other issue that has to be addressed.  The Supreme Court deliberated on the question of whether Mr. Pimentel had the standing to bring the case, despite the fact that his personality to do so was not challenged by the government.  The Court did not resolve the issue because, said the Court, “the intervention of Roberto Pagdanganan has rendered academic any further discussion on this matter.”  In short, the Supreme Court did not determine whether Mr. Pimentel had the standing to file the case because Mr. Pagdanganan was allowed to intervene in the case.

The Court explained that on November 17, 1998, Roberto Pagdanganan filed a Motion for Intervention, and that, “At the time, intervenor was the provincial governor of Bulacan, national president of the League of Provinces of the Philippines and chairman of the League of Leagues of Local Governments.”  In a footnote, the Court explained that:

Issues of mootness and locus standi were not raised by the respondents.  However, the intervention of Roberto Pagdanganan, as explained in the main text, has stopped any further discussion of petitioner's standing.  On the other hand, by the failure of respondents to raise mootness as an issue, the Court thus understands that the main issue is still justiciable.  In any case, respondents are deemed to have waived this defense or, at the very least, to have submitted the Petition for resolution on the merits, for the future guidance of the government, the bench and the bar.

Still, it should be noted that at the time the Motion for Intervention was filed, Mr. Pagdanganan was no longer a local official and he longer held any of the positions that the Supreme Court listed.  How the intervention mooted the question of standing, therefore, remains a mystery.

The above-quoted portions of the decision are susceptible of two interpretations.  The first is that the Supreme Court was mistaken when it said that Mr. Pagdanganan was still a local official on November 17, 1998.

The second is that the Court is saying that a former local official has standing to question official actions that were promulgated while he was still in office.

In any case, it should be emphasized the Court did not make any ruling on standing because the issue was never raised by the government.  Supreme Court decisions do not amount to doctrine unless they are intended to resolve an issue that was raised by the parties.

V.  THE OTHER CASE

As illustrated, there is nothing in Pimentel, which remotely dealt with the congressional slash of the IRA.  That issue arose out of the preparation of the national budget for the year 2000, long after Pimentel filed his case with the Supreme Court.

During the preparation of the 2000 budget, a Senate Finance Committee plan to slash the internal revenue share of local governments by some 30 billion pesos provoked a confrontation between ULAP and the Senate.

In response to the proposed cut, ULAP launched a campaign to compel the Senate Finance Committee to abort its plan.  In their official statement,[xxi] ULAP appealed to Congress to observe and “respect the Constitutional provision and its implementing law on the share of local governments from the national internal revenue taxes and its possible adjustments in case of an unmanageable public sector deficit.”  ULAP claimed that the cut would disrupt the delivery of basic services throughout the country, especially in the 5th and 6th class LGUs.[xxii]

Congress ignored the local officials’ position and decided to preserve the reduction of the IRA.

On February 16, 2000, President Estrada signed the national budget into law.  The President vetoed some items, but did not touch the P10 Billion cut imposed by Congress.   The General Appropriations Act (Republic Act No. 8760) in part provides:

XXXVII.                   ALLOCATIONS TO LOCAL GOVERNMENT UNITS

A.     INTERNAL REVENUE ALLOTMENT

For apportionment of the shares of local government units in the internal revenue taxes in accordance with the purpose indicated hereunder                                                                         P111,778,000,000

x x x                 x x x                 x x x

The amount withheld by Congress was moved under “unprogrammed funds”.  This is not a harmless window dressing because it has serious implications on the availability of the said amount.  The special provisions of Section 1, LIV, on the other hand, provides:

LIV.          UNPROGRAMMED FUND

x x x                 x x x                 x x x

Special Provisions

            1.         Release of the Fund.   The amounts herein appropriated shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution or when the corresponding funding or receipts for the purpose have been realized except in the special cases covered by specific procedures in Special Provision Nos. 2, 3, 4, 5, 7, 8, 9, 13 and 14 herein: PROVIDED, That in cases of foreign-assisted projects, the existence of a perfected loan agreement shall be sufficient compliance for the issuance of a Special Allotment Release Order covering the loan proceeds: PROVIDED, FURTHER, That no amount of the Unprogrammed Fund shall be funded out of the savings generated from programmed items in this Act....

            4.         Additional Operational Requirements and Projects of Agencies.   The appropriations for Purpose 6 – Additional Operational Requirements and Projects of Agencies herein indicated shall be released only when the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution can be realized based on a quarterly assessment of the Development Budget Committee, the Committee on Finance of the Senate and the Committee on Appropriations of the House of Representatives and shall be used to fund the following:

x x x                 x x x                 x x x

Internal Revenue Allotments

            Maintenance and Other Operating Expenses                         

                                                                                    P10,000,000,000

                                                                                      --------------------

            Total, IRA                                                                                                                                                                               P10,000,000,000

                                                                                                  --------------------

The P10 billion, which should have been given to local governments, therefore, has been conditioned upon the realization of the original revenue targets of the President.  In short, this amount will not be released if revenue generation goals are not met.  This allocation of funds under unprogrammed funds, therefore, makes the release of the fund conditional upon revenue collection efficiency.

As of this writing, the constitutionality of the congressional cut has never been questioned in court.

Local officials decided not to file a case after the President announced that he would release P 2.5 billion pesos representing the first quarter share of the IRA.  Thereafter, the President also said that the IRA would no longer be included in the national budget to be submitted to Congress, but will now be “released automatically’”.[xxiii]

What “released automatically” means remains unclear.  In the 2001 budget submitted by the President to Congress, an allocation for the IRA amounting to P131, 917,470,000 was still included.  The only difference is that it is placed under the sub-heading “Automatic Appropriations”.  Whether Congress will trifle with this amount remains to be seen.

VI.              THE IMPLICATIONS OF PIMENTEL

After analyzing the Supreme Court’s decision in Pimentel v. Aguirre, it becomes apparent that there are those who fail to correctly appreciate the implications of the case.

On the Acts of the Executive Branch

In reality, as important as Pimentel is, the impact of the case is very limited.  In that case, the Supreme Court merely struck down Section 4 of Administrative Order No. 273 as invalid because it violated the constitutional mandate for the automatic release of the IRA, and because it violated the provisions of the Local Government Code.  The Supreme Court said that the President could not withhold part of the IRA already allocated by Congress, no matter how commendable the motives for the holdback may have been.

Without a doubt, the principles adopted by the Supreme Court may be extended to all forms of control of the IRA, but it cannot be done automatically.  In other words, the Executive Branch of government should be wary about issuing guidelines on the release and use of the IRA because they make likewise amount to a violation of the Constitution.  Thus, even seemingly innocuous orders or directives may now be scrutinized under the standards set by the Supreme Court in Pimentel.  Do these orders or directives likewise amount to a violation of the Constitution and the Local Government Code?  Do they amount to a withholding of the entire or part of the IRA?

Pimentel should be used to challenge all other orders that have the effect of withholding or conditioning the release of the IRA. Here lies the value of the Supreme Court’s decision.  Unfortunately, under Philippine law, there is no such thing as an automatic application of a Supreme Court doctrine even to other orders that are similar to Administrative Order No. 273.  In every case, a government directive may be challenged as unconstitutional, but a case has to be filed in court to resolve the validity of the directive.

To be clear, the President is not under any legal obligation to release any amount beyond the five percent that he withheld under Administrative Order No. 43. Pimentel does not compel the President to release an amount equivalent to the P10 billion, which Congress placed under “unprogrammed funds” because there is nothing in the decision that remotely implicates any act of Congress.  He is not obligated to restore the “soft cut” engineered by Congress.

On the Acts of the Congress

The Supreme Court said nothing about the manner in which Congress moved 10 billion pesos of the IRA to “unprogrammed funds”.  This is an entirely different issue that may be phrased in this manner: whether Congress may place part of the IRA under “unprogrammed funds” without violating the Constitution.

It may be argued that Congress’ decision to place a portion of the IRA under “unprogrammed funds” is also unconstitutional because it amounts to placing conditions on its release.  It may be argued that placing this amount under “unprogrammed funds” transgresses the “automatic release” provisions of the law.

The fact is that there is no ruling from the Supreme Court on this issue as of now.  Congress is not under any legal obligation to allocate an additional 10 billion pesos to cover the amount that was placed under “unprogrammed funds” in the national budget.  To put it bluntly, Pimentel does not concern the actions of Congress.

Indeed, there is still a possibility that despite the designation of the IRA under the 2001 budget as “automatic appropriations” Congress will toy with the amount.  Again, it is because the Supreme Court has not said anything on what Congress can or cannot do regarding the allocation of the IRA under the budget.

If there is a view that Congress violated the Constitution by placing conditions on the release of the IRA, then similar cases may have to be filed in court to challenge its actions.

As momentous as Pimentel is, it is simply not enough.