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Araullo vs.

Aquino
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allotted therefor will be withdrawn by the Executive. Once withdrawn, these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 nonExecutive 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, finallydiscontinued, 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.