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Issues:

1. Whether or not Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution,
which provides: "No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law?
2. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly
implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

(a)They treat the unreleased appropriations and unobligated allotments withdrawn from
government agencies as "savings" as the term is used in Sec. 25(5), in relation to the provisions
of the GAAs of 2011, 2012 and 2013;

(b)They authorize the disbursement of funds for projects or programs not provided in the GAAs
for the Executive Department; and

3. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and
balances, and (3) the principle of public accountability enshrined in the 1987 Constitution
considering that it authorizes the release of funds upon the request of legislators?

4. Whether or not the Doctrine of Operative Fact is applicable?

Ruling:

1. No. The OSG posits, however, that no law was necessary for the adoption and implementation
of the DAP because of being neither a fund nor an appropriation, but a program or an
administrative system of prioritizing spending; and that the adoption of the DAP was by virtue of
the authority of the President as the Chief Executive to ensure that laws were faithfully executed.
We agree with the OSG’s position.

The DAP was a government policy or strategy designed to stimulate the economy through
accelerated spending. In the context of the DAP’s adoption and implementation being a function
pertaining to the Executive as the main actor during the Budget Execution Stage under its
constitutional mandate to faithfully execute the laws, including the GAAs, Congress did not need
to legislate to adopt or to implement the DAP. Congress could appropriate but would have
nothing more to do during the Budget Execution Stage.
The President, in keeping with his duty to faithfully execute the laws, had sufficient discretion
during the execution of the budget to adapt the budget to changes in the country’s economic
situation. He could adopt a plan like the DAP for the purpose. He could pool the savings and
identify the PAPs to be funded under the DAP. The pooling of savings pursuant to the DAP, and
the identification of the PAPs to be funded under the DAP did not involve appropriation in the
strict sense because the money had been already set apart from the public treasury by Congress
through the GAAs. In such actions, the Executive did not usurp the power vested in Congress
under Section 29(1), Article VI of the Constitution.

2. No. The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made
upon a concurrence of the following requisites, namely:

(1) There is a law authorizing 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 the
Constitutional Commissions to transfer funds within their respective offices;

(2) The funds to be transferred are savings generated from the appropriations for their
respective offices; and

(3) The purpose of the transfer is to augment an item in the general appropriations law for
their respective offices.

GAA’s of 2011 and 2012 lacked a law to authorize transfers of funds under the DAP.
Hence, transfers under DAP were unconstitutional.

Section 25(5), supra, not being a self-executing provision of the Constitution, must have an
implementing law for it to be operative. That law, generally, is the GAA of a given fiscal year.
To comply with the first requisite, the GAAs should expressly authorize the transfer of funds.

In the 2011 GAA, the provision that gave the President and the other high officials the
authority to transfer funds was Section 59, as follows:

Section 59. Use of Savings. The President of the Philippines, the Senate President, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads
of Constitutional

Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to
augment any item in this Act from savings in other items of their respective appropriations.

In the 2012 GAA, the empowering provision was Section 53, to wit:
Section 53. Use of Savings. The President of the Philippines, the Senate President, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads
of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby
authorized to augment any item in this Act from savings in other items of their respective
appropriations.

A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and 2012
were textually unfaithful to the Constitution for not carrying the phrase "for their respective
offices" contained in Section 25(5), supra. The impact of the phrase "for their respective
offices" was to authorize only transfers of funds within their offices (i.e., in the case of the
President, the transfer was to an item of appropriation within the Executive). The provisions
carried a different phrase ("to augment any item in this Act"), and the effect was that the 2011
and 2012 GAAs thereby literally allowed the transfer of funds from savings to augment any
item in the GAAs even if the item belonged to an office outside the Executive. To that extent
did the 2011 and 2012 GAAs contravene the Constitution.

There were no savings from which funds could be sourced for the DAP Were the funds
used in the DAP actually savings?

The petitioners claim that the funds used in the DAP — the unreleased appropriations and
withdrawn unobligated allotments — were not actual savings within the context of Section
25(5), supra, and the relevant provisions of the GAAs

We partially find for the petitioners.

The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected this
interpretation and made it operational, viz:

Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation
or encumbrance which are: (i) still available after the completion or final discontinuance or