G.R. No.

209287 July 1, 2014

Maria Carolina P. Araullo et. al., Petitioners

Vs.

Benigno Simeon C. Aquino et. al., Respondents

This is a consolidation of nine cases, assailing the constitutionality of the Disbursement

Acceleration Program (DAP).

FACTS:

On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the
Senate of the Philippines to reveal that some Senators, including himself, had been allotted an
additional P50,000,000.00 each as “incentive” for voting in favor of the impeachment of Chief
Justice Renato Corona.

Responding to Senator Estrada’s revelation, Secretary Florencio Abad explained that the
funds released to the Senators had been part of the DAP, a program designed by the DBM to
ramp up spending to accelerate economic expansion. He clarified that the funds had been released
to the Senators based on their letters of request for funding; and that it was not the first time that
releases from the DAP had been made because the DAP had already been instituted in 2011 to
ramp up spending after sluggish disbursements had caused the growth of the gross domestic
product (GDP) to slow down. He explained that the funds under the DAP were usually taken from
(1) unreleased appropriations under Personal Services; (2) unprogrammed funds; (3) carry-over
appropriations unreleased from the previous year; and (4) budgets for slow-moving items or
projects that had been realigned to support faster disbursing projects.

The DBM listed the following as the legal bases for the DAP’s use of savings, namely: (1)
Section 25(5), Article VI of the 1987 Constitution, which granted to the President the authority to
augment an item for his office in the general appropriations law; (2) Section 49 (Authority to Use
Savings for Certain Purposes) and Section 38 (Suspension of Expenditure Appropriations),
Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative Code of 1987); and (3) the
General Appropriations Acts (GAAs) of 2011, 2012 and 2013, particularly their provisions on the
(a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of savings.

The petitioners brought to the Court’s attention NBC No. 541 (Adoption of Operational
Efficiency Measure-Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012), alleging
that NBC No. 541, which was issued to implement the DAP, directed the withdrawal of
unobligated allotments as of June 30, 2012 of government agencies and offices with low levels of
obligations, both for continuing and current allotments.
ISSUES:

1. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution.
2. Whether or not the DAP realignments can be considered as impoundments by the
executive.
3. Whether or not the DAP realignments/transfers are constitutional.
4. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
5. Whether or not the Doctrine of Operative Fact is applicable.

RULING:

1. 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. 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.

2. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the
President’s 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. Nevertheless, there’s no
impoundment in the case at bar because what’s involved in the DAP was the transfer of
funds.

3. 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.

4. 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.

5. 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.