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Araullo, pettiotioner V.

Aquino III, Respondent

G.R. 209237

Feb 3, 2015

Facts: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 year’s 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agency, the funds allotted therefor will be withdrawn by the Executive.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withdrawn, these funds are declared as “savings” by the Executive and said funds will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 exposé 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 People’s 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. Art. Art. 38 and 49 of Executive Order 292 (power of the President to suspend expenditures and authority to use savings.” Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation provisions thereof). As such. respectively). there is no executive impoundment in the DAP. such transfer or realignment should only be made “within their respective offices”. Whether or not the Doctrine of Operative Fact is applicable. an appropriation made by law would have been required. VI of the Constitution. It is a program for prioritizing government spending. 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. DAP was merely a program by the Executive and is not a fund nor is it an appropriation. VI. II. V. which were already appropriated for by the GAA. Art. III. however. No. IV. Nevertheless. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional. Whether or not the DAP realignments/transfers are constitutional. Funds. 29(1). II. Sec. 25(5). III. it did not violate the Constitutional provision cited in Section 29(1). Whether or not the DAP realignments can be considered as impoundments by the executive. were merely being realigned via the DAP. no cross- . the DAP did not violate Section 29(1). In DAP no additional funds were withdrawn from the Treasury otherwise. No. HELD: I. Impoundment of funds refers to the President’s power to refuse to spend appropriations or to retain or deduct appropriations for whatever reason. No. Thus. Secs. the transfers made through the DAP were unconstitutional. there’s no impoundment in the case at bar because what’s involved in the DAP was the transfer of funds. Issues: I. Impoundment is actually prohibited by the GAA unless there will be an unmanageable national government budget deficit (which did not happen). 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. Art. Constitution). VI of the Constitution. VI of the Constitution (power of the President to augment).

or administrative) that they have not acted in good faith. Under the DAP. among other instances. IV. 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. Yes. or finally abandoned. If the Executive is ordered to reverse all actions under the DAP. since the statutory definition of savings was not complied with under the DAP. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the law.   . criminal. The Doctrine of Operative Fact. is applicable.border transfers/augmentations may be allowed. However. No. even though some projects were within the Executive. On the issue of what are “savings” These DAP transfers are not “savings” contrary to what was being declared by the Executive. which recognizes the legal effects of an act prior to it being declared as unconstitutional by the Supreme Court. It has funded numerous projects. they are still non-existent under the GAA because they were not provided for by the GAA. 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. Although some of these projects may be legitimate. In this case. The GAA does not refer to “savings” as funds withdrawn from a slow moving project. this was violated because funds appropriated by the GAA for the Executive were being transferred to the Legislative and other non-Executive agencies. there is no basis at all for the transfers. The DAP effects can no longer be undone. Under the definition of “savings” in the GAA. no such certification was secured before unprogrammed funds were used. The DAP has definitely helped stimulate the economy. transfers “within their respective offices” also contemplate realignment of funds to an existing project in the GAA. finally discontinued. V. The beneficiaries of the DAP cannot be asked to return what they received especially so that they relied on the validity of the DAP. But under the DAP. implementers. the Doctrine of Operative Fact may not be applicable to the authors. these projects are non-existent insofar as the GAA is concerned because no funds were appropriated to them in the GAA. But under the DAP. when there is an excess in the funding of a certain project once it is completed. As such. then it may cause more harm than good. Further. Further. savings should only be declared at the end of the fiscal year. Thus. and proponents of the DAP if it is so found in the appropriate tribunals (civil. savings only occur. transfer to such projects is unconstitutional and is without legal basis.