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Araullo v. Aquino G.R. No.

209287
Political Law Constitutional Law Separation of Powers Fund Realignment Constitutionality of
the Disbursement Acceleration Program
Power of the Purse Executive Impoundment
When President Benigno Aquino III took office, his administration noticed the sluggish growth of the
economy. The World Bank advised that the economy needed a stimulus plan. Budget Secretary
Florencio Butch Abad then came up with a program called the Disbursement Acceleration Program
(DAP).
The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the
Executive to realign funds from slow moving projects to priority projects instead of waiting for next
years appropriation. So what happens under the DAP was that if a certain government project is
being undertaken slowly by a certain executive agency, the funds allotted therefor will be withdrawn
by the Executive. Once withdrawn, these funds are declared as savings by the Executive and said
funds will then be reallotted to other priority projects. The DAP program did work to stimulate the
economy as economic growth was in fact reported and portion of such growth was attributed to the
DAP (as noted by the Supreme Court).
Other sources of the DAP include the unprogrammed funds from the General Appropriations Act
(GAA). Unprogrammed funds are standby appropriations made by Congress in the GAA.
Meanwhile, in September 2013, Senator Jinggoy Estrada made an expos claiming that he, and
other Senators, received Php50M from the President as an incentive for voting in favor of the
impeachment of then Chief Justice Renato Corona. Secretary Abad claimed that the money was
taken from the DAP but was disbursed upon the request of the Senators.
This apparently opened a can of worms as it turns out that the DAP does not only realign funds
within the Executive. It turns out that some non-Executive projects were also funded; to name a few:
Php1.5B for the CPLA (Cordillera Peoples Liberation Army), Php1.8B for the MNLF (Moro National
Liberation Front), P700M for the Quezon Province, P50-P100M for certain Senators each, P10B for
Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan, and
several other concerned citizens to file various petitions with the Supreme Court questioning the
validity of the DAP. Among their contentions was:
DAP is unconstitutional because it violates the constitutional rule which provides that no money
shall be paid out of the Treasury except in pursuance of an appropriation made by law.
Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and
augmentation provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to
augment), Secs. 38 and 49 of Executive Order 292 (power of the President to suspend expenditures
and authority to use savings, respectively).
Issues:
I. Whether or not the DAP violates the principle no money shall be paid out of the Treasury except
in pursuance of an appropriation made by law (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as impoundments by the executive.
III. Whether or not the DAP realignments/transfers are constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program
by the Executive and is not a fund nor is it an appropriation. It is a program for prioritizing
government spending. As such, it did not violate the Constitutional provision cited in Section 29(1),
Art. VI of the Constitution. In DAP no additional funds were withdrawn from the Treasury otherwise,
an appropriation made by law would have been required. Funds, which were already appropriated
for by the GAA, were merely being realigned via the DAP.
II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the
Presidents power to refuse to spend appropriations or to retain or deduct appropriations for
whatever reason. Impoundment is actually prohibited by the GAA unless there will be an
unmanageable national government budget deficit (which did not happen). Nevertheless, theres no
impoundment in the case at bar because whats involved in the DAP was the transfer of funds.
III. No, the transfers made through the DAP were unconstitutional. It is true that the President (and
even the heads of the other branches of the government) are allowed by the Constitution to make
realignment of funds, however, such transfer or realignment should only be made within their
respective offices. Thus, no cross-border transfers/augmentations may be allowed. But under the
DAP, this was violated because funds appropriated by the GAA for the Executive were being
transferred to the Legislative and other non-Executive agencies.
Further, transfers within their respective offices also contemplate realignment of funds to an
existing project in the GAA. Under the DAP, even though some projects were within the Executive,
these projects are non-existent insofar as the GAA is concerned because no funds were
appropriated to them in the GAA. Although some of these projects may be legitimate, they are still
non-existent under the GAA because they were not provided for by the GAA. As such, transfer to
such projects is unconstitutional and is without legal basis.
On the issue of what are savings
These DAP transfers are not savings contrary to what was being declared by the Executive. Under
the definition of savings in the GAA, savings only occur, among other instances, when there is an
excess in the funding of a certain project once it is completed, finally discontinued, or finally
abandoned. The GAA does not refer to savings as funds withdrawn from a slow moving project.
Thus, since the statutory definition of savings was not complied with under the DAP, there is no
basis at all for the transfers. Further, savings should only be declared at the end of the fiscal year.
But under the DAP, funds are already being withdrawn from certain projects in the middle of the year
and then being declared as savings by the Executive particularly by the DBM.
IV. No. Unprogrammed funds from the GAA cannot be used as money source for the DAP because
under the law, such funds may only be used if there is a certification from the National Treasurer to
the effect that the revenue collections have exceeded the revenue targets. In this case, no such
certification was secured before unprogrammed funds were used.
V. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being
declared as unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped
stimulate the economy. It has funded numerous projects. If the Executive is ordered to reverse all
actions under the DAP, then it may cause more harm than good. The DAP effects can no longer be
undone. The beneficiaries of the DAP cannot be asked to return what they received especially so
that they relied on the validity of the DAP. However, the Doctrine of Operative Fact may not be
applicable to the authors, implementers, and proponents of the DAP if it is so found in the
appropriate tribunals (civil, criminal, or administrative) that they have not acted in good faith.