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,@ Republic of the Philippines

DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT


DILC NAPOLCOM Building, ITDSA comer Quezon Avenue, Quezon City
www.djlg.gov.ph

OFFICE OF THE UNDERSECRETARY FOR LOCAL GOVERNMENT

No' 3' s' 2014


?l!f"li;!*'?''-roN
DIR. TOSEFINA E. CASTILLA.GO
DILG Region IV
FTI Complex, Taguig City

Dear Dr. Castilla-Go:

This refers to your 25 November 2013 letter which requests the Central Office's guidance
relative to the purchase of motor vehicles utilizing the PDAF of Congresswoman Catalina G.
Leonen-Pizarro in light of DBM Circular letter No. 2013-8 and the Suprerne Coun Decision
in Greco Antonious Beda B. Belgica, et a|. *s. Hon. Exec. Secretary Paquito N. Ochoa, /r., et
a1. (G.R. No. 208566. November 19, 2013) declaring the unconstitutionality of the entire
2013 PDAF Article. The following issues are sought to be clarified:

a. 'Are we still allowed to contitue the procurement?"


b. 'k the payment ofsaid procurement still possible consideing the end ofFY2013?"

Below are the relevant facts and discussions in response thereto:

DBM Circular Letter No. 2013-8

It may be recalled that prior to the 19 November 2013 Decision of the Supreme En Banc
in the PDAF Case, the Department of Budget and Management (DBM) issued Circular
Letter No. 2013-8 on 27 September 2013 in light of the l1 Septernber 2013 Supreme
Court Resolution in said Case, which enjoins the DBM as well as implementing agencies
concerned from releasing the remaining PDAF allocation in the FY 2013 GAA, to wit:

"x x x ISSUE a Tantporanl llL-strLtining ()rder enjoining the


Department of Budget and Manug(t cnt, the National Treasurer, The
Executiue Secretartl, or anv pL'rsons utting undL:r their authority from
releasing: ('l) the remaining PriLtritrl l)aoL:lopment Assistance Funds (PDAF)
allocated to members of Congrcss nLL:r Ccneral Apptoptiations Act of
L.r

2013..."

Hence, in compliance thereto, the DBM informed all agencies concerned that it shall
withhold a1l remaining unreleased and unobligated allotments with the corresponding
cash allocation chargeable against PDAF under the FY 2013 GAA until the TRO is lifted
bv the Supreme Court.

The DBM however, excluded PDAF projects funded under the FY 2013 GAA, where a
Special Allotment Release Order (SARO) has been issued by the DBM and such SARO
o
has been obligated2 by implementing agenciesprior to the issuance of the TRO. In such
case, said PDAF projects may continually be implemented and disbursements thereto
effected by the agencies concerned.

The 19 November 2013 Supreme Court


En Banc Ruling on the PDAF Case and
its Consequential Effect to the
Disbursement/Release of the PDAF
Funds

In the 19 November 2013 ruling of the Supreme Court En Banc in the PDAF Case, it
held that the declaration of the unconstitutionality of the 2013 PDAF Article and all
legal provisions of past and present Congressional Pork Barrel Laws has the
consequential effect of converting the temporary injunction into a permanent one.
Hence the release of the remaining PDAF funds allocated for 2013, as well as for all
previous years among others, are enjoined.

The Supreme Court, in said Decision, resolved the propriety of the DBM's
interpretation of the concept of "release" as it has a practical impact on the execution of
the current Decision, particularly on the issue of whether or not PDAF funds covered
by obligated SAROs, at the time of the promulgation of the Decision, may srill be
disbursed following the DBM's interpretation in Circular Letter 2013-8.

Itheld that unless a Notice of Cash Allocation (NCA) has been issued, public funds
should not be treated as funds which have been "released." Hence, the disbursement of
the 2013 PDAF funds which are only covered by obligated SAROs, and without any
corresponding NCAs issued, must, at the time of the Decision's promulgation, be
enjoined and consequently reverted to the unappropriated surplus of the general fund,
viz.:

"At
the outset, it must be obserpetl tlnt the issue of uhether or not the
Court's September'10, 2013 TRO shoukl be lifted is n nntter rendered moot
by the present Decision. The unconstitntionality of the 2013 PDAF Article
ns declnred herein has the consequential effect of contterting the temporary
injunction into a permanent one. Hence, from the promulgation of this
Decision, the release of the remaining PDAF funils for 2073, among
others, is no?D permanently enjoineil.

The propriety of tlrc DBM's interpretntion of the concept of "release"


must, neztcrtheless, he resohled as it hfis n practical impnct on the execution
of the current Decision. ln particulnr, tlrc Court must resolae the issue of
uthether or not PDAF funds coztered hy ohligated SAROs, at the time of this
Decision is promulgated, may still be disbursed follouting the DBM's
interpretation in DBM Circular 20'1i-8.

? ]n general, a SARo is obligated by lhe agency when it has already commilted to perform an underlaking relaling lo programs, projecb and adivits
Accordingly the speclfic inslances of when a SARo s obl galed shall depend on lhe implementing agencies concerned.
7 OO
un tnts s(ore, the Lourt agrees t\ith petitioners' posturing fol the
fundamen,tal reaso.n that funds ,cozieret) by an'obligatetl SARO are"yit to be
'.'relcosed," under legnl
contempl ion. A SARO, as-tlefined by the OEM itself
in. it.s toebsite, is [a] specific authority issued to ideniified agencies
to incur
obligatio.ns-.not e.xceeding a git'en imount during a'specifed period
purpose indicnted. It shall cooer expenditures ihe reliase'oy zoiich for the
is
subject to compliance aith specific latos or regulations, or ii subject to
sep-arate approaal or clearance by competeni authority. Basetl
on this
definition, it may be gleanetl thnt a SARCj only ettinces thi existence
of an
obligation and not the directizte to pny. practicilly spenking, the SARO
does
not haue the direct awi immediate effect of placiig pubtic"funcls beyond
the
control of the tlishursing authority. In
fuct, a SARb mau euen be zoithdrnzpn
under certain circumstances uhich tuill preuent the reliase of
other hand, the actual release of
funds. On the
furu)s is brought about by thi issuance of the
\CA, uthisll is subsequent to the issuance oyi SanO. As may be determinetl
from the stntements of the DBM representniiae during the Oil Argu*rntr,.

xxx
Tltus, unless nn NCA lms been issuett, public
funds shoulil not be trented. ns
funds ultich hnpe been "relensetl.i ln this respect, therefore, the
tl-isbursement of 2013 PDAF
funds ruhich we only coaered by obligated
a.nd zpithout any corresponding NCA issuei, must, at ihe ttie o7
f,A.R?,
t.his Decision's promulgation, he enjoined and consequently reoerteil to
the
.unappropriateil surplus of the general funil. Verity, in oieto of the
declared. unconstitutionality of the 2013 ?DAF Ariicle, the jttnds
appropriated pursuant thereto cannot be disbursed. ez,en though aireadll
obligated, else the Court sanctions the dealing of
funds comiig ftom ai
unconsti tutional source."

Hence, the PDAF funds allocated to implementing agencies which were issued an NCA
prior to the promulgation of the Supreme court En Banc Decision are treated as
"released" funds which may be disbursed for obligations incurred in the implementation
of the project. However, the disbursement/release of the remaining pDAF funds
allocated for the year 2013, as well as for all previous years, which at the time of the
Decision are not covered by NCA but only sARo, whether obligated or not, are
permanently enioined.

Anent the query on whether the payment of the procured vehicles funded by the pDAF
is still possible considering the end of Fy 2013, the same may only find relevance if the
PDAF allocated have been issued an NCA prior to the promulgation of the above
Supreme court Decision. It bears stressing that the disbursement authority issued by
the DBM in the form of a Notice of cash Allocation (NCA) comes after obligations have
been incurred.

In the present case, it appears rhat the pDAF allocated for purchase of vehicles has not
been issued an NCA prior to 19 November 2013 considering that at thar time the
procurement of the vehicles are still in the advertisement/publication stage.
In view of the foregoing, the release as well as utilization of Representative Leonen-
Pizarro's PDAF for the procurement of vehicles, although covered by a SARO, is
covered by the suprene court zln ,Baac's permanent injunction in light of its ruling on
the unconstitutiondity of the entire 2013 PDAF Article.

We hope to have enlightened you on the matter.

Very truly youn,

TEREEFANADERO

,n':* " ro I

:t

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