The President has the power to veto "inappropriate provisions" in a general appropriations bill, treating them as items for veto purposes, even if they are not specific appropriations of money, particularly if such provisions attempt to amend substantive law or encroach on executive functions; however, the President cannot veto a provision that is directly related to an item of appropriation without vetoing the item itself.

The case arose from the enactment of Republic Act No. 7663, the General Appropriations Act (GAA) for 1994. After its passage by both houses of Congress, the President signed it into law but vetoed several provisions and imposed conditions on others through a Presidential Veto Message. Various groups, including the Philippine Constitution Association and several Senators, questioned the constitutionality of certain provisions of the GAA itself (like the Countrywide Development Fund and realignment of operational expenses) and the legality of the President's exercise of the veto power over specific items and special provisions, leading to these consolidated petitions before the Supreme Court.

• Congress passed House Bill No. 10900, the General Appropriation Bill (GAB) of 1994, which imposed conditions on certain appropriations and authorized members of Congress to propose and identify projects under the "Countrywide Development Fund" (CDF) and realign their operating budgets.
• On December 30, 1993, the President signed the GAB into law as Republic Act No. 7663 (GAA of 1994) but simultaneously issued a Veto Message, vetoing certain provisions and imposing conditions on others.
• G.R. No. 113105 (Philippine Constitution Association, et al.) challenged: (a) Article XLI (Countrywide Development Fund), the special provision in Article I on Realignment of Allocation for Operational Expenses, and Article XLVIII (Appropriation for Debt Service in excess of education budget); and (b) the President's veto of the Special Provision of Article XLVIII concerning the debt service.
• G.R. No. 113174 (Senators led by Angara) questioned: (1) conditions imposed by the President on items for the Supreme Court, COA, Ombudsman, CHR, CAFGU's, and SUC's; and (2) the constitutionality of the veto of the special provision in the appropriation for debt service.
• G.R. No. 113766 (Senators Tanada and Romulo, and Freedom from Debt Coalition) challenged the Presidential veto of the special provision in the appropriations for debt service and the automatic appropriation of funds therefor.
• G.R. No. 113888 (Senators Tanada and Romulo) contested: (1) the veto on four special provisions for the AFP and DPWH; and (2) conditions imposed on appropriations for CAFGUs, DPWH, and NHA.
• No step was taken in either House of Congress to override the vetoes.
• The Court invited former Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes as Amici Curiae.

• Members of the Senate have legal standing to question the validity of a presidential veto that impairs the powers of Congress.
• The power given to members of Congress to propose and identify projects under the Countrywide Development Fund (CDF) is an encroachment by the legislature on executive power.
• The special provision allowing a member of Congress to realign his allocation for operational expenses to any other expense category violates Section 25(5), Article VI of the Constitution, which authorizes only specific officials (like the Senate President and Speaker) to augment items from savings.
• Congress cannot give debt service a higher priority than education, which the Constitution mandates should have the highest budgetary priority.
• The President cannot veto a special provision in an appropriation item (e.g., for debt service, SUC revolving funds, DPWH road maintenance ratio, AFP medicine purchase) without vetoing the entire item to which it relates.
• The President's veto of the special provision in Article XLVIII (Debt Service) requiring Congressional concurrence for payments exceeding the appropriated amount is unconstitutional.
• The President acted with grave abuse of discretion in vetoing provisions for SUCs' use of income and revolving funds while allowing similar provisions for other agencies.
• The conditions imposed by the President on the implementation of appropriations for the Supreme Court, Ombudsman, COA, CHR, CAFGUs, DPWH, and NHA are unconstitutional.
• The President cannot impound or withhold expenditures authorized and appropriated by Congress for CAFGU deactivation.
• The President's veto of the special provision prohibiting the use of the AFP Modernization Fund for certain trainer planes and armored personnel carriers is unconstitutional as it impairs contractual obligations.

• The remedy of the Senators is political (to override the vetoes), thus they lack the requisite legal standing.
• The authority given to members of Congress under the CDF is merely recommendatory, with the President retaining implementation power.
• The realignment of operating expenses by members of Congress is subject to the approval of the Senate President or Speaker, who ensure funds are actual savings and used for augmentation.
• The constitutional mandate for education's highest budgetary priority is directory, and Congress has discretion to allocate funds based on national interest, including debt servicing.
• The President can veto "inappropriate provisions" in an appropriations bill, which are treated as items, especially if they amend other laws or are matters of general legislation.
• The vetoed special provision on debt service (requiring Congressional concurrence for excess payments) was an attempt to amend existing laws (Foreign Borrowing Act, P.D. No. 1177, E.O. No. 292) and was thus an "inappropriate provision."
• The President's veto of SUC income provisions was not discriminatory but aimed at rationalizing agency income use in line with the "One Fund Policy" and existing laws.
• The veto of the DPWH 70/30 road maintenance ratio was based on studies showing a different ratio would be more efficient and to comply with loan covenants. (The Court found this veto unconstitutional).
• The veto of AFP medicine purchase provision was to allow a transition period for compliance with the Generics Act. (The Court found this veto unconstitutional).
• The veto of the AFP modernization fund provisions (requiring Congressional approval and prohibiting certain purchases) was valid as these were "inappropriate provisions" constituting a legislative veto and impairing contractual obligations.
• The conditions imposed on various appropriations (e.g., CAFGU deactivation, SC/COA/Ombudsman/CHR funds) were mere reminders for compliance with existing laws or exercises of the President's power to ensure faithful execution of laws.

• Whether petitioners (particularly Senators) have locus standi to challenge the President's veto and certain provisions of the GAA.
• Whether Article XLI (Countrywide Development Fund) of the GAA of 1994 is unconstitutional for allowing members of Congress to propose and identify projects.
• Whether the special provision in Article I of the GAA of 1994, allowing members of Congress to realign allocations for operational expenses, is unconstitutional.
• Whether the appropriation for debt service in excess of the appropriation for education violates the constitutional mandate for education to have the highest budgetary priority.
• Whether the President's veto of the Special Provision in Article XLVIII (Debt Service), which required Congressional concurrence for payments exceeding the appropriated amount and prohibited use for Central Bank Board of Liquidators' liabilities, is constitutional.
• Whether the President's veto of special provisions authorizing State Universities and Colleges (SUCs) to use their income and maintain revolving funds is constitutional.
• Whether the President's veto of the special provision in the DPWH appropriation specifying a 70% (administrative)/30% (contract) ratio for road maintenance is constitutional.
• Whether the President's veto of the special provision requiring AFP medicine purchases to comply with the National Drug Policy formulary is constitutional.
• Whether the President's veto of special provisions in the AFP modernization fund requiring prior Congressional approval for fund release and prohibiting specific equipment purchases is constitutional.
• Whether the President's veto of the provision authorizing the AFP Chief of Staff to use savings to augment AFP pension funds is constitutional.
• Whether the President's imposition of a condition (prior Presidential approval) on the deactivation of CAFGUs and payment of their separation benefits is constitutional.
• Whether the conditions imposed by the President on the implementation of appropriations for the Supreme Court, Ombudsman, COA, CHR, DPWH, and NHA are constitutional.

• Yes, members of the Senate have legal standing to question the validity of a presidential veto or a condition imposed on an item in an appropriation bill if it is claimed to be an impermissible intrusion of the Executive into the legislative domain, impairing their powers.
• No, the Countrywide Development Fund (Article XLI) is constitutional. The power of members of Congress to propose and identify projects is merely recommendatory; the President retains the authority to examine and implement them if they fall within the Fund's purposes and align with local plans.
• No, the special provision allowing realignment of operational expenses by members of Congress (Article I) is constitutional. Members of Congress determine the necessity for realignment, but the Senate President or Speaker must approve it, ensuring funds are actual savings and used for augmentation as per Art. VI, Sec. 25(5) of the Constitution and Sec. 16 of the GAA's General Provisions.
• No, appropriating a larger amount for debt service than for education does not violate Art. XIV, Sec. 5(5) of the Constitution. This provision is directory, and Congress has discretion to respond to national interest imperatives, including servicing national debt.
• The President's veto of the proviso in the Special Provision on debt service requiring Congressional concurrence for payments in excess of the appropriated amount is VALID, as this is an "inappropriate provision" attempting to amend substantive laws (Foreign Borrowing Act, P.D. No. 1177, E.O. No. 292) through an appropriations bill. However, the veto of the provisos that the fund "shall be used for payment of principal and interest of foreign and domestic indebtedness" and "in no case shall this fund be used to pay for the liabilities of the Central Bank Board of Liquidators" is VOID, as these are appropriate provisions directly related to the debt service item and cannot be vetoed separately.
• Yes, the President's veto of special provisions for SUCs' use of income and revolving funds is constitutional. These vetoes were justified by the "One Fund Policy" and the need for substantive law to authorize revolving funds, preventing an increase in expenditures beyond rationalized levels. No undue discrimination was found.
• No, the President's veto of the second paragraph of Special Provision No. 2 for the DPWH (specifying a 30% maximum for contracted road maintenance) is UNCONSTITUTIONAL. This provision is not inappropriate and directly relates to how the appropriated item should be expended; it cannot be vetoed separately from the item.
• No, the President's veto of Special Provision No. 12 for AFP medicine purchases (requiring compliance with the National Drug Policy formulary) is UNCONSTITUTIONAL. This is an "appropriate" provision, merely adverting to an existing law (Generics Act of 1988), and is directly related to the appropriation item for medicine purchases; it cannot be vetoed separately.
• Yes, the President's veto of the proviso in Special Provision No. 2 (requiring prior Congressional approval for AFP modernization fund release) and the entirety of Special Provision No. 3 (prohibiting specific equipment purchases) for the AFP modernization fund is VALID. These are "inappropriate provisions" constituting a legislative veto (violating separation of powers) and impairing contractual obligations.
• Yes, the President's veto of the provision authorizing the AFP Chief of Staff to use savings to augment AFP pension funds is VALID. This violates Art. VI, Sec. 25(5) (only specified officials can augment) and Sec. 29(1) (money paid out only by appropriation) of the Constitution.
• Yes, the President's imposition of a condition (prior Presidential approval) for CAFGU deactivation is constitutional. The appropriation law is not the proper vehicle to deny the President the right to defer or reduce spending or to amend existing laws on CAFGU creation (P.D. No. 1597, R.A. No. 6758). This involves the President's power as Commander-in-Chief and the power to impound funds under certain circumstances.
• Yes, the conditions imposed by the President on appropriations for the Supreme Court, Ombudsman, COA, CHR (regarding compensation standardization), COA revolving fund, DPWH overhead, and NHA project releases are constitutional. These are mere reminders for compliance with existing laws and regulations or are exercises of the President's power to issue guidelines for the faithful execution of laws. Until guidelines are issued, their impropriety cannot be determined.

• Locus Standi of Legislators — A member of Congress has legal standing to question an act of the Executive that injures the institution of Congress, causing a derivative but substantial injury to the member's right to participate in the exercise of Congress's powers. Applied to allow Senators to challenge the President's vetoes.
• Separation of Powers — The principle that the legislative, executive, and judicial branches of government are co-equal and have distinct powers, and one branch cannot encroach upon the powers of another. Invoked in discussing the Countrywide Development Fund (legislative proposal vs. executive implementation) and the legislative veto (Congressional attempt to share administration).
• Power of the Purse (Power of Appropriation) — The power to determine how public funds are to be spent, which belongs to Congress, subject to the President's veto power. Congress can specify the project or activity to be funded. Applied in upholding the Countrywide Development Fund's purpose specification by Congress.
• Presidential Item Veto Power (Art. VI, Sec. 27[2], Constitution) — The President has the power to veto any particular item or items in a general appropriations bill, but not provisions, unless such provisions are "inappropriate." Defined an "item" as a specific sum of money dedicated to a specific purpose. The Court affirmed that the President can veto "inappropriate provisions" (those that are unconstitutional, amend other laws, or are matters of general legislation) by treating them as items. If a provision is appropriate and directly related to an item, it cannot be vetoed separately from the item.
• Doctrine of Inappropriate Provision — Provisions in an appropriations bill that do not relate to a particular appropriation or extend beyond an item, or are unconstitutional, or attempt to amend other laws, are considered "inappropriate" and can be vetoed separately by the President as if they were items. Applied to uphold vetoes of provisions attempting to amend debt laws or constituting legislative vetoes.
• Faithful Execution Clause (Art. VII, Sec. 17, Constitution) — The President has the constitutional duty to ensure that laws are faithfully executed. This includes the power to take necessary and proper steps, such as issuing administrative guidelines for the use of public funds. Applied to uphold the President's imposition of conditions requiring adherence to guidelines for certain appropriations.
• Presumption of Constitutionality/Validity of Official Acts — Statutes and official acts (including a presidential veto) are presumed to be constitutional/valid, and the burden is on the challenger to prove otherwise. Mentioned in the context of the veto power.
• Constitutional Mandate on Education Budget (Art. XIV, Sec. 5[5], Constitution) — The State shall assign the highest budgetary priority to education. The Court reiterated its ruling in Guingona, Jr. v. Carague that this provision is directory, not mandatory in a way that hamstrings Congress from addressing other national imperatives like debt service.
• Augmentation of Appropriations from Savings (Art. VI, Sec. 25[5], Constitution) — Only the President, Senate President, Speaker of the House, Chief Justice, and heads of Constitutional Commissions are authorized by law to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations. Applied to validate the realignment of congressional operating expenses (subject to Senate President/Speaker approval) and invalidate the AFP Chief of Staff's authority to use savings for pension funds.
• Non-Impairment of Contracts (Art. III, Sec. 10, Constitution) — No law impairing the obligation of contracts shall be passed. Invoked to validate the veto of a provision prohibiting payment for already contracted AFP equipment.
• Judicial Review Requisites — For the Court to exercise its power of judicial review, there must be: (1) an actual case, (2) personal and substantial interest of the party, (3) plea at the earliest opportunity, and (4) the constitutional question as the lis mota. Mentioned in the discussion of locus standi.
• Legislative Veto — A means by which the legislature can block or modify administrative action taken under a statute, often by requiring legislative approval for executive acts. Deemed an "inappropriate provision" subject to presidential veto due to separation of powers concerns. Applied to the veto of the provision requiring Congressional approval for AFP modernization fund release.
• Presidential Impoundment — The refusal by the President to spend funds made available by Congress. The Court found no clear intent by Congress in the CAFGU provision to deny the President the right to defer or reduce spending, and noted appropriation law is not the proper vehicle for such.

• "Where the veto is claimed to have been made without or in excess of the authority vested on the President by the Constitution, the issue of an impermissible intrusion of the Executive into the domain of the Legislature arises."
• "In short, the proposals and identifications made by the members of Congress [under the CDF] are merely recommendatory."
• "As the Constitution is explicit that the provision which Congress can include in an appropriations bill must 'relate specifically to some particular appropriation therein' and 'be limited in its operation to the appropriation to which it relates,' it follows that any provision which does not relate to any particular item, or which extends in its operation beyond an item of appropriation, is considered 'an inappropriate provision' which can be vetoed separately from an item."
• "Just as the President may not use his item-veto to usurp constitutional powers conferred on the legislature, neither can the legislature deprive the Governor [President] of the constitutional powers conferred on him as chief executive officer of the state by including in a general appropriation bill matters more properly enacted in separate legislation." (Quoting Henry v. Edwards)
• "When the legislature inserts inappropriate provisions in a general appropriation bill, such provisions must be treated as 'items' for purposes of the Governor's [President's] item veto power over general appropriation bills." (Quoting Henry v. Edwards)
• "The Court will indulge every intendment in favor of the constitutionality of a veto, the same as it will presume the constitutionality of an act of Congress."

• Gonzales v. Macaraig, Jr., 191 SCRA 452 (1990) — Referenced extensively as controlling precedent for the President's power to veto "inappropriate provisions" in an appropriations bill, including those that attempt to amend substantive law or are matters of general legislation. The current case reiterated the principles laid down in Gonzales regarding item veto power over provisions.
• Guingona, Jr. v. Carague, 196 SCRA 221 (1991) — Cited to support the ruling that the constitutional mandate for education to receive the highest budgetary priority (Art. XIV, Sec. 5[5]) is directory and does not prevent Congress from appropriating a larger sum for debt service if national interest requires.
• Henry v. Edwards, La., 346 So. 2d 153 (1977) — Cited extensively (via Gonzales v. Macaraig) for the doctrine that "inappropriate provisions" inserted by the legislature into a general appropriations bill (i.e., matters more properly enacted in separate legislation) can be treated as "items" by the executive for veto purposes to prevent legislative encroachment on executive power and to avoid forcing the executive to approve unacceptable substantive legislation or veto essential expenditures.
• Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51 (1990) — Cited for the requisites of judicial review.
• Dumlao v. Commission on Elections, 95 SCRA 392 (1980) — Cited for the requisites of judicial review.
• People v. Vera, 65 Phil. 56 (1937) — Cited for the requisites of judicial review.
• Coleman v. Miller, 307 U.S. 433 (1939) — Cited to support the legal standing of legislators when their official powers are impaired.
• Holtzman v. Schlesinger, 484 F. 2d 1307 (1973) — Cited to support the legal standing of legislators.
• Kennedy v. Jones, 412 F. Supp. 353 (1976) — Cited for the principle that an act of the Executive injuring Congress causes derivative but substantial injury to its members, allowing them to sue.
• Bolinao Electronics Corporation v. Valencia, 11 SCRA 486 (1964) — Cited for the principle that a special provision directly related and inseparable from an appropriation item cannot be vetoed by the President without vetoing the item itself. Applied to declare unconstitutional the vetoes on AFP medicine purchase and DPWH road maintenance ratio provisions.
• Planas v. Gil, 67 Phil. 62 (1939) — Cited to support the President's power to issue administrative guidelines as part of the duty to faithfully execute laws.
• People v. Licera, 65 SCRA 270 (1975) — Cited for the principle that the Court's interpretation of a law is part of that law as of its enactment.
• Floresca v. Philex Mining Corporation, 136 SCRA 141 (1985) — Cited for the principle that Supreme Court decisions assume the same authority as statutes.

• Constitution, Article VI, Section 25(2) — "No provision or enactment shall be embraced in the general appropriations bill unless it relates specifically to some particular appropriation therein. Any such provision or enactment shall be limited in its operation to the appropriation to which it relates." Relevance: Basis for determining what provisions are "appropriate" in an appropriations bill and thus subject to item veto rules.
• Constitution, Article VI, Section 25(5) — "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." Relevance: Governs realignment of funds; used to assess constitutionality of congressional realignment provision and AFP Chief of Staff's authority to use savings.
• Constitution, Article VI, Section 27(1) — General veto power of the President (veto entire bill). Relevance: Contrasted with the item veto power.
• Constitution, Article VI, Section 27(2) — "The President shall have the power to veto any particular item or items in an appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object." Relevance: The core provision defining the President's item veto power, central to most issues in the case.
• Constitution, Article VI, Section 29(1) — "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law." Relevance: Used to assess the validity of the AFP Chief of Staff's authority to use savings for pension funds.
• Constitution, Article VII, Section 17 — "The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that the laws be faithfully executed." Relevance: Basis for the President's power to issue guidelines for fund implementation.
• Constitution, Article IX-B, Section 8 — "No elective or appointive public officer or employee shall receive additional, double, or indirect compensation unless specifically authorized by law." Relevance: Mentioned by the President in approving conditions on appropriations for SC, Ombudsman, COA, CHR regarding compensation.
• Constitution, Article XIV, Section 5(5) — "The State shall assign the highest budgetary priority to education..." Relevance: Addressed in relation to the debt service appropriation.
• Constitution, Article III, Section 10 — "No law impairing the obligation of contracts shall be passed." Relevance: Invoked regarding the veto of a provision prohibiting payment for already contracted AFP equipment.
• Republic Act No. 7663 (GAA of 1994), Article XLI (Countrywide Development Fund) — Challenged as unconstitutional. Relevance: The Court upheld its constitutionality.
• Republic Act No. 7663 (GAA of 1994), Article I, Special Provision on Realignment — Challenged as unconstitutional. Relevance: The Court upheld its constitutionality.
• Republic Act No. 7663 (GAA of 1994), Article XLVIII (Appropriation for Debt Service), Special Provision — Vetoed by the President. Relevance: The Court upheld parts of the veto and voided other parts.
• P.D. No. 1177 (Budget Reform Decree of 1977), Section 31 — Regarding automatic appropriation for debt service. Relevance: The President argued the vetoed debt service provision attempted to amend this.
• E.O. No. 292 (Administrative Code of 1987), Book VI, Chapter 4, Section 26 — Regarding automatic appropriation for debt service. Relevance: The President argued the vetoed debt service provision attempted to amend this.
• Foreign Borrowing Act (R.A. No. 4860, as amended) — Regarding foreign debt. Relevance: The President argued the vetoed debt service provision attempted to amend this.
• R.A. No. 6675 (Generics Act of 1988) — Regarding use of generic medicines. Relevance: The vetoed AFP medicine purchase provision referred to compliance with this Act.
• P.D. No. 1597 and R.A. No. 6758 — Laws on CAFGU creation. Relevance: The Court stated an appropriations act is not the proper vehicle to amend these laws regarding CAFGU deactivation.
• Government Auditing Code of the Philippines (P.D. No. 1445), Sections 65 & 66 — Regarding revolving funds. Relevance: Cited in the President's veto message concerning COA's revolving fund.
• E.O. No. 292, Book VI, Chapter 5, Section 35 — Regarding special budgets for SUC income. Relevance: Cited in the President's veto message for SUC income provisions and COA revolving fund.
• Civil Code, Article 8 — "Judicial decisions applying or interpreting the laws or the constitution shall form a part of the legal system of the Philippines." Relevance: Emphasized the binding effect of prior Supreme Court decisions like Gonzales and Guingona.

• Justice Jose C. Vitug — Concurred with the ponencia, but highlighted that while Congress determines activities and projects to be funded, once appropriation is done, the legislative act is complete, and implementation is exclusively for the Executive. He opined that Congress acts as a body, not as individuals, and individual members making recommendations to the President is permissible, but giving individual members authority over specific projects in whatever guise would be constitutionally impermissible.
• Justice Teodoro R. Padilla — Concurred with the ponencia except insofar as it reaffirmed Gonzales v. Macaraig. He reiterated his dissent in Gonzales, arguing that the President's veto power under Art. VI, Sec. 27(2) is limited to "items" (specific appropriations of money) and does not extend to "provisions" in an appropriations act. He maintained that construing the Constitution to allow veto of provisions, even if deemed "inappropriate," loads the scale in favor of the executive at the expense of the delicate balance of power.