ARAULLO

 v.  AQUINO  (JT)   (There   was   also   an   issue   on   impoundment.   But   di   impoundment   yung   DAP.   Impoundment  
GR  No.  209287,  et  al   entails   deduction   of   appropriations,   and   not   transfer,   which   is   precisely   what   the   DAP  
July  1,  2014   authorizes.)  
Bersamin,  J.    
  Hence,  DAP  is  unconstitutional.  
Petitioners/Respondents:   ANG   DAMI.   Basta   main   respondent   si   Noynoy   in   his   capacity   as   the    
Fresident  of  the  Philippines   Intro,   parang   thesis   lang:   The   petitioners   are   assailing   the   constitutionality   of   the   (1)  
  Disbursement  Acceleration  Program  [DAP],  (2)  National  Budget  Circular  [NBC]  No.  41,  and  (3)  
Summary   related   issuance   of   the   Dept   of   Budget   and   Management   [DBM]   implementing   the   DAP.    
The   DAP   is   basically   a   program   where   savings   of   government   projects   from   unreleased   Basically,   the   main   point   is   that   the   DAP   violates   Sections   25(5)   &   29(1),   Article   VI   of   the  
appropriations   and   withdrawal   of   unobligated   allotments,   as   well   as   unprogrammed   funds,   Consti.  
were  used  in  order  to  augment  the  funding  of  another  government  project.  This  is  a  system    
under   the   DBM   designed   to   help   boost   the   Philippine   economy.   Pursuant   to   the   DAP,   NBC   Facts  
No.  41  was  issued  to  implement  the  DAP.     This  all  started  when  Jinggoy  delivered  a  frivileged  speech  wherein  he  revealed  that  certain  
  senators,   himself   included,   received   50M   pesos   each   as   incentive   for   voting   in   favor   of  
Basically,  the  NBC  No  41  allows  the  augmentation  of  projects  not  considered  in  the  budget   Corona’s  impeachment.  As  a  response,  Sec.  Abad  of  DBM  released  a  pubic  statement  which  
expected   to   be   implemented   during   the   year.   (The   budget   is   pursuant   to   the   general   stated  that  the  funds  given  to  the  senators  were  part  of  the  DAP,  which  was  in  place  since  
appropriations  act,  or  GAA,  for  that  given  fiscal  year.)  So…The  government  declares  savings   2011.    
coming  from  unobligated  allotments  and  withdrawing  unreleased  appropriations,  which  are    
later  released  and  applied  to  augment  existing  projects  and  support  other  priority  projects.   What  is  DAP  in  the  first  place?  According  to  Sec.  Abad,  DAP  is  a  program  designed  by  DBM  to  
  ramp  up  the  spending  (of  the  govt)  to  accelerate  economic  expansion.  Basically,  the  less  the  
Now,   DAP   is   NOT   an   appropriation   measure,   because   there   was   no   law   required   to   government   spends,   the   slower   the   GDP   of   the   country   rises.   Kaya   may   DAP   para   tumaas  
implement  it.  This  is  pursuant  to  Sec  29(1)  of  Article  VI,  where  the  president  may  adapt  the   GDP  natin.  Abad  also  said  that  it  was  the  senators  were  the  ones  that  requested  the  funding.      
budget  to  changes  depending  on  the  country’s  economy.    
  The  funds  under  the  DAP  are  taken  from:  
However,  the  unreleased  appropriations  and  withdrawn  obligated  allotments  under  the  DAP   1. unreleased  appropriations  under  Personnel  Services  
were  NOT  savings.  Thus,  transferring  them  would  contravene  sec.25(5)  of  Art  VI.  Said  section   2. unprogrammed  funds  
requires   that   there   be   a   LAW   authorizing   the   transfer,   and   in   that   section,   the   funds   to   be   3. carry-­‐over  appropriations  unreleased  from  the  previous  year,  and  
transferred   must   be   SAVINGS   and   the   purpose   is   to   AUGMENT   an   item   for   the   respective   4. budgets   for   slow-­‐moving   items   or   projects   that   had   been   realigned   to   support  
offices  of  the  Pres,  Senate  Pres,  Speaker,  Chief  Justice,  and  heads  of  Consti  Comms.     faster-­‐disbursing  projects  
   
First,   for   compliance   with   25(5),   there   must   be   a   LAW.   However,   the   GAAs   of   2011   and   2012   But  the  DBM  later  claimed  that  the  DAP  releases  were  sourced  from:  
authorizing  the  transfer  of  funds  were  unconstitutional.  Why?  Because  the  GAAs  allowed  the   1. savings  of  the  government,  derived  from:  
augmentation   of   any   item   in   the   act,   even   if   the   item   belonged   to   an   office   outside   the   a. pooling   of   unreleased  appropriations,   like   unreleased   Personnel   Services  
Executive.   appropriations,   and   appropriations   from   slow-­‐moving/discontinued  
  projects,  and  
Next,   there   were   NO   SAVINGS   from   which   funds   could   be   sourced   for   the   DAP.   Why?   b. the   withdrawal   of   unobligated   allotments,   also   for   slow-­‐moving  
Because  the  funds  in  the  DAP  were  not  actually  savings.  How?  Because  savings  means  excess   programs,  earlier  released  to  govt  agencies;  and  
money  after  the  items  that  needed  funding  have  been  funded.  In  NBC  No.  541,  no  legal  basis   2. unprogrammed  funds  
was  given  as  to  justify  the  treatment  of  unreleased  or  unalloted  appropriations  as  savings.    
  Issues  
Next,  the  funds  under  the  DAP  should  not  be  used  to  augment  items  not  provided  for  in  the   Procedural   Issue:   W/N   certiorari,   prohibition   and   mandamus   are   proper   remedies—NOT    
GAA.  But  what  happened  was  that  the  DAP  authorized  the  transfer  of  funds  to  projects  not   gonna  include  this  na.  So  I  dunno.  
under  the  GAA.  What  was  worse  is  that  it  allowed  cross-­‐border  augmentations,  or  transfers   Substantive  issues:  
to  funds  that  are  not  within  the  respective  offices  of  the  Pres,  Senate  Pres,  etc.  Eh  bawal  yun.   1. (relevant  to  our  class)  W/N  DAP  violates  Sec  29  of  Art  VI  
So  ayun.   2. (relevant   to   our   class)   W/N   DAP,   NBC   No   541   and   other   implementing   issuances  
  violate  Sec  25(5)  of  Art  VI  
3. W/N   DAP   violates:   EPC,   system   of   checks   and   balances,   principle   of   public  
accountability  
 4. W/N  there  exists  a  factual  &  legal  justification  to  issue  a  TRO  against  the  DAP   § Once   approved   by   el   Presidente   and   the   Cabinet,   the   DBM  
5. W/N   the   release   of   unprogrammed   funds   under   the   DAP   was   in   accord   with   the   prepares   the   budget   documents   for   submission   to   Congress.  
GAAs  (gen.  appropriation  acts)   The  documents  consist  of:  (1)  President’s  Budget  Message,  and  
  (2)  the  BESF  (as  mandated  by  Article  VII,  Sec.  22),  and  the  NEP  
Ratio   § At   this   point,   the   ponente   discusses   definitions   of   all   sorts   of  
Overview  of  the  Philippine  Budget  System   government   expenditures   shiz.   Yes,   puro   definitions,   so   skip   if  
• Really  boring  shit,  but  I  will  include  it  anyway   you  want.  Super  boring.  Don’t  say  I  didn’t  warn  you.  
• “Budget”  is  defined  by  Commonwealth  Act  No.  246  as  “the  financial  program  of  the   § Basically   there   are   kinds   of   puhlic/government   expenditures,  
National  Government  for  a   designated   fiscal   year,  consisting  of  the  statements  of   classified  into  two  categories:    
estimated  receipts  and  expenditures.”   • (1)   capital   expenditures   or   those   whose   usefulness  
o Simply  put,  “budget”  is  the  “master  financial  plan  of  the  government”   lasts   for   more   than   one   year,   and   which   add   to   the  
o The   purpose   of   the   national   budget   is   to   protect   the   people,   the   territory   assets  of  the  government,  and    
and  sovereignty  of  the  State,  by  performing  vital  functions  which  require   • (2)   current   operating   expenditures,   or   purchases   of  
public  expenditures.   goods   and   services   the   benefit   of   which   does   not  
• Governments   raise   money   by—well,   you   should   know   this   by   now,   Montero   extend   beyond   the   fiscal   year.   Current   operating  
babies—taxation.     expenditures  consist  of:  (a)  personal   services   and  (b)  
• The   Philippine  budget  cycle  has  four  phases:   (skip   this   if   you   want.   Super   technical   maintenance  of  other  operating  expenses  
ng   shizniz   but   if   magtanong   sya   about   this,   well…sana   hindi.   Trolololol.   But   do   read   § Public   expenditures   are   also   broadly   grouped   into:   economic  
the  “budget  legislation”  and  “budget  execution”  parts,  he  might  ask  the  procedure   development   expenditures,   social   services   or   social  
in  Congress.)     development   expenditures,   general   government   expenditures,  
1. BUDGET  PREPARATION   national  defense  expenditures,  and  public  debt.    
§ the  DBM  issues  a  “budget  call”   § Public   revenues   cover   all   income   or   receipts   of   the   govt  
• The   budget   call   contains   the   parameters,   guidelines   treasury   used   to   support   govt   expenditures.   There   are   two  
and   procedures   set   by   the   Development   Budget   aspects  of  this:  
Coordination   Committee   (DBCC)   to   aid   government   • Quasi-­‐private   income   –   where   the   State   holds  
agencies   in   the   preparation   and   submission   of   their   property   and   engage   in   trade   which   generate  
budget  proposals   revenues  
• There  are  two  kinds  of  budget  calls:   • Taxes  –  lifeblood  of  the  govt  blah  blah  
o National   Budget   Call:   addressed   to   all   • Hi  Cler!    Sana  di  ako  matawag  today.  
agencies,   including   state   universities   and   • Look   at   the   full   text   to   see   where   the   govt   gets   its  
colleges;  and   revenue.  Basically  some  are  general   sources  (income  
o Corporate   Budget   Call,   addressed   to   all   from   business   operations,   interest   income,   forex  
GOCCs  and  gov’t  financial  institutions   gains,   grants/donations)   and   specific   sources   (taxes  
§ After   the   budget   call,   the   agencies   submit   their   respective   on   income,   property,   goods   and   services,   fines   and  
agency  budget  proposals   penalties,  etc.)  
• The   govt   agencies   partner   with   civil   society   2. BUDGET  LEGISLATION  (I  think  this  is  the  part  relevant  to  Sec.  25?)  
organizations   and   other   citizen-­‐stakeholders   in   the   § covers   the   period   commencing   from   the   time   the   Congress  
preparation  of  the  proposals   receives   the   President’s   budget,   inclusive   of   NEP   and   BESF,   up  
• The  proposals  are  presented  before  a  technical  panel   to   the   approval   by   the   President   of   the   GAA   (general  
of  the  DBM   appropriations  act).  
• DBM   reviews   the   budget   proposals,   comes   up   with   § Basically   the   President’s   Budget   is   assigned   to   the   House   of  
recommendations,   and   consolidates   the   Reps’  appropriations  committee  (AppCom)  on  first  reading.    
recommended  budgets  into  the  National   Expenditure   § The  AppCom  conduct  budget  hearings,  
Program   (NEP)   and   a   Budget   of   Expenditures   and   § Thereafter,   the   House   drafts   the   General   Appropriations   Bill  
Sources  Financing    (BESF)   (GAB.   Think   of   GAP,   but   B).   (Thus,   the   bill   “originates”   from   the  
§ Both   NEP   and   BESF   (besfrIend.   Lol.   Labo.   Sssh   Jates   House  of  Reps.)  
concentrate!)  are  again  presented  to  the  DBM  and  the  DBCC  for   • The   GAB   is   presented   by   the   AppCom   in   plenary  
reprioritization  and  refinements.     session.  
 • Ang  itim  ni  Nat.   § Actual   disbursement   or   spending   of   government   funds  
• As  with  other  laws,  the  GAB  is  approved  on  the  third   terminates  this  phase.    
reading  before  it  is  transferred  to  the  Senate   4. ACCOUNTABILITY  
§ The  Senate,  upon  receipt,  would  conduct  its  own  hearings.  The   § this   phase   ensures   that   the   govt   funds   have   been   effectively  
Senate   may   actually   conduct   the   hearings   simultaneously   with   and   efficiently   utilized   to   achieve   the   State’s   socio-­‐economic  
the  House’s  deliberations.   goals.  
• The   Senate’s   Finance   Committee   may   submit   § Aiza  can  I  have  extra  rice?  
proposed   amendments   only   after   the   House’s   version   § Accountability   may   be   examined   by   performance   targets   and  
is  formally  transmitted  to  the  Senate.   outcomes;   accountability   reports;   review   of   performance;   and  
§ Then   comes   the   Bicameral   Conference   Committee   for   the   COA  audits.  DONE.  BOOM.  TANGINA  THIS  PART.  
purpose  of  harmonizing  conflicting  provisions  of  the  GAB.      
§ Then,  the  GAB  is  presented  to  the  President  for  approval.   Nature  of  the  DAP  as  a  fiscal  plan  
§ President   (think   Your   Man,   Our   Man,   Armand   Dulay)   then   • The  DAP,  as  earlier  mentioned,  was  designed  to  promote  economic  growth.  
reviews  it.  He  may  veto  it  and  all,  or  even  identify  some  items   • When   Noynoy   made   pasok   to   the   presidency,   he   made   efficiency   and   transparency  
for  conditional  implementation.   in  govt  spending  a  significant  focus  of  his  administration.  
§ If,   by   the   end   of   the   fiscal   year,   Congress   shall   have   failed   to   • While   this   resulted   in   an   improved   fiscal   deficit   in   the   GDP   (5%),   it   also   decelerated  
pass   the   GAB,   the   GAA   for   the   preceding   fiscal   year   shall   be   govt  project  implementation  and  payment  schedules.  
deemed  reenacted  until  the  GAB  is  passed  by  Congress!   o The   World   Bank   opined   that   observed   because   of   this,   the   Philippine  
§ At  this  point,  pagod  na  ako,  so  bear  with  me.  Oso.  Bear.     economic  growth  could  be  reduced  
3. BUDGET  EXECUTION   • Hence,  DAP  was  created.  
§ The  budget  execution  phase  is  the  primary  function  of  the  DBM   o DAP  was  meant  to  be  a  stimulus  package”  for  fast-­‐track  public  spending  
§ The   DBM   (not   LBM   ah,   mind   you)   is   tasked   to   perform   the   ff   to   push   economic   growth   by   investing   on   high-­‐impact   projects   to   be  
procedures:   funded   from   the   savings   generated   during   the   year   as   well   as   from   as  
a. issue  programs  and  guidelines  for  the  release  of  funds   unprogrammed  funds.  
b. prepare  an  allotment  and  cash  release  program   o The   government,   by   spending   on   public   infrastructure,   would   signify   its  
c. release  allotments   commitment  of  ensuring  profitability  for  prospective  investors.  
d. issue  disbursement  authorities       o DAP  aims  to  stimulate  the  economy  by  way  of  accelerated  spending,  by:  
§ Prior  to  the  implementation,  the  various  dept  and  agencies  are   § Streamlining   the   implementation   processes   through  
required  to  submit  the  Budget  Execution  Documents  to  outline   infrastructure  projects  of  DPWH  and  DEPED,  and  
their  plans  and  performance  targets.  The  docs  must  contain  the   § Frontlining  PPP  (private-­‐public  partnership)  projects  
physical   and   financial   plans,   the   monthly   cash   program,   o But…did  the  stimulus  package  work?  
estimate  of  monthly  income,  and  list  of  obligations  not  yet  due   § Partially  yes.  
and  demandable.   § The   DAP   contributed   to   1.3%   GDP   growth   by   the   4th   quarter   of  
§ Upon   approval,   the   DBM   prepares   the   allotment   release   2011.  
program   (sets   a   limit   for   allotments   to   a   specific   agency)   and   § The   economy   grew   by   11.8%   year   on   year,   and   infrastructure  
cash   release   program  (fixes  the  monthly,  quarterly  and  annual   spending  grew  to  34%  by  Sept  2013.  
disbursements)   o But   how   were   the   projects   funded   under   the   DAP   chosen?   They   were  
§ Allotment  is  different  from  appropriation,  because  the  latter  is   chosen  based  on:  
the   general   legislative   authority   to   spend   (remember   this   § Multiplier  impact  on  the  economy  and  infrastructure  devt  
definition!).     § Beneficial  effect  on  the  poor  
§ To  settle  obligations  incurred  by  the  agencis,  the  DBM  issues  a   § Translation  into  disbursements  
disbursement   authority   known   as   notice   of   cash   allocation    
(NCA).  The  NCA  specifies  the  maximum  amount  of  cash  that  can   DAP  SOURCES  AND  DISBURSEMENTS—heto  na  ang  meat!  Ilabas  na  ang  extra  rice!  
be   withdrawn   from   a   govt   servicing   bank   for   the   period   • Based   on   a   memorandum   from   DBM   Secretary   Abad   dated   12   October   2011,   the  
indicated.   following  are  the  sources  of  DAP:  
• Noncash  disbursements  may  also  be  authorized.   o Unreleased  personal  services  appropriations  (30billion  php)  
• A   cash   disbursement   ceiling   for   overseas   operations   o Unreleased  appropriations  (482  million)  
is  also  authorized.   o Unprogrammed  fund  from  2010  (12.3  billion)  
 o Carryover  appropriation  from  2010  (21.5  billion)   and  (3)  personal  services  corresponding  to  unutilized  pension  benefits  declared  as  
o Budget  items  for  realignment  (7.7  billion)   savings  by  the  agencies  concerned.    
o TOTAL:  72,110,000,000  pesos   o However,  the  following  shall  not  be  covered:  
• Among  the  projects  to  benefit  from  the  DAP  are:   § Constitutional  offices  granted  fiscal  autonomy  by  the  consti  
o FOR  GOCCs  and  Govt  financial  instituions   § State   universities   and   colleges   that   adopted   a   predetermined  
§ Rehab  of  LRT  1  and  2   budget  ceiling  
§ National  Housing  Authority   § Operating   expenses   earmarked   for   specific   purposes,   or   subject  
§ Philippine  Heart  Center   to  realignment  conditions  accdg  to  the  GAA  
§ Credit  Info  Corp   § Foreign-­‐assisted  projects  
§ Bangko  Sentral  equity  infusion   § Special   purpose   funds   (e.g.   calamity   funds,   PDAF!!!,   E-­‐
§ Etc.,  totaling  an  allotment  of  26,945,000,000  pesos   government  fund,  etc)  (oo,  PDAF!!  Had  this  been  constitutional,  
o LGUs/Govt  agencies   it   means   na   bawal   i-­‐stop   ang   pagdisburse   ng   PDAF   under   NBC  
§ BIR  –  data  processing   No.  541!)  #quito  #qdaf  
§ COA  –  IT  infrastructure   • For  the  purpose  of  determining  the  amount  of  unobligated  allotments  that  shall  be  
§ DND  –  housing  facilities   withdrawn,   all   depts/agencies/etc     are   required   to   submit,   not   later   than   30   July  
§ DA  –  irrigation  and  the  Mindanao  Rural  Development  Project   2012,  accountability  reports  
§ DOJ  –  operating  requirements     • All   released   allotments   which   remained   unobligated   as   of   30   June   2012   shall   be  
§ DOST   –   establishment   of   the   National   Meteorological   and   immediately   considered   for   withdrawal,   based   on   substantial   carryover  
Climate  Center   appropriations  (but  not  if  the  project  has  a  two-­‐year  timeframe).  
§ DPWH  –  various  infrastructure  projects   • The  withdrawn  allotments  may  be:  
§ ARMM  –  comprehensive  peace  and  devt  intervention   o Reissued   for   the   original   programs   and   projects,   from   which   the  
§ LGU  support  fund   allotments   were   withdrawn   (in  other  words,  pwede  ibalik  sa  project  na  
§ “various  local  projects”   tinanggalan  ng  allotment);  
§ Quezon  province  –  Development  assistance   o Realigned  to  cover  additional  funding  for  other  existing  programs;  or  
§ Etc.,  totaling  44  billion  pesos   o Used   to   augment   existing   programs/projects   of   any   agency   to   fund  
o GRAND  TOTAL:  70.895  billion  pesos   priority  programs  not  considered  in  the  2012  budget  but  expected  to  be  
• Thereafter,   on   12   Dec   2011,   Abad   requested   Noynoy   for   omnibus   authority   to   started  or  implemented  during  the  year  (eh  gago  pala  eh!)  
consolidate  the  savings  and  unutilized  balances     • By   30   September   2012,   the   withdrawn   allotments   shall   be   pooled   and   form   part   of  
o The  purpose  of  the  request  for  omnibus  authority  is  that  it  will  allow  the   the  government’s  overall  savings  
DBM  to  undertake  projects,  even  if  their  implementation  carries  over  to   • Utilization   of   consolidated   withdrawn   allotments   for   other   priority   programs   and  
2012,  without  necessarily  impacting  the  budget  deficit  cap  in  2012.   projects  shall  be  subject  to  the  approval  of  Noynoy  
• This  request  for  omnibus  authority  was  followed  by  substantially  identical  requests   • TO  SUMMARIZE  HOW  THE  DAP  WORKS:  The  government  declares  savings  coming  
  from  unobligated  allotments  and  withdrawing  unreleased  appropriations,  which  
NBC  NO.  541  –  read  this  carefully.  The  bulk  of  the  issues  come  from  this  fucking  circular   are   later   released   and   applied   to   augment   existing   projects   and   support   other  
• To  implement  the  memo  of  Abad,  he  issued  NBC  No.  541,  addressed  to  all  heads  of   priority  projects.  Boompanis.  
departments,   agencies,   etc.,   with   the   subject   “Adoption   of   Operational   Efficiency    
Measure—Withdrawal  of  Agencies’  Unobligated  Allotments  as  of  June  30,  2012”   DAP   is   not   an   appropriation   measure,   so   no   appropriation   law   was   required   to   adopt   or  
• According  the  NBC  No.  541,  “In  the  event  that  a  measure  is  necessary  to  further   implement  it  
improve  the  operational  efficiency  of  the  government,  the  President  is  authorized   • Petitioners  (well,  some  of  them,  not  all)  said  that  the  Congress  did  not  enact  a  law  
to   suspend   or   stop   further   use   of   funds   allotted   for   any   agency   or   expenditure   to   establish   DAP.   But   the   OSG   said   that   since   DAP   is   neither   a   fund   nor   an  
authorized  in  the  GAA.”  (in  other  words,  withdrawal  of  unobligated  allotments)   appropriation,  but  a  program  for  spending,  the  law  was  not  necessary  
o This  is  because  for  from  Jan-­‐May  2012,  the  govt  didn’t  meet  its  spending   • SC  took  the  OSG’s  view.  Love  you  Mahrra!  
targets.   Thus,   in   order   to   accelerate   spending   and   sustain   fiscal   targets,   • Also,  Noynoy  did  not  usurp  the  legislative  power  under  Section  29(1)  of  Article  VI:  
Abad   deemed   it   necessary   to   implement   expenditure   measures   to   o The  President  has  sufficient  discretion  during  the  execution  of  the  budget  
optimize  the  use  of  available  resources.   to  adapt  the  budget  to  changes  in  the  country’s  economic  situation  
• The  unobligated  allotments  to  be  withdrawn  shall  cover  those  of  all  govt  agencies,   o He  could  pool  savings  and  identify  projects  to  be  funded  under  the  DAP  
pertaining   to:   (1)   capital   outlays,   (2)   maintenance   and   other   operating   expenses,   o No   appropriation   was   involved,   because   money   had   already   been   set  
apart  by  Congress  through  the  GAA  
 o Thus,  no  usurpation  of  legislative  power   § The   phrase   “for   their   respective   offices”   was   to   authorize   only  
  transfers  of  funds  within  their  offices  
Unreleased   appropriations   and   withdrawn   unobligated   allotments   under   the   DAP   were   § What   was   included   in   the   GAAs   was   the   phrase   “to   augment  
NOT  SAVINGS,  and  the  use  of  such  appropriations  contravened  Article  VI,  Sec  25(5)   any   item   in   this   Act”,   thereby   allowing   the   transfer   of   funds  
• BV  ka  Jag,  ang  short  ng  digest  mo.   from  savings  to  augment  any  item  in  the  GAA,  even  if  the  item  
• Ang  haba  talaga  ng  DAP  case.  I  now  know  how  Cler  feels.   belonged   to   an   office   outside   the   Executive   (see   the   list   I   placed  
• Anyway,   although   executive   discretion   and   flexibility   are   necessary   in   the   sa  taas)  
execution   of   the   budget,   ANY   TRANSFER   OF   FUNDS   SHOULD   CONFORM   TO   SEC.   § At   the   very   least,   the   provisions   cannot   be   used   to   claim  
25(5),  ART.  VI   authority   to   transfer   appropriations   from   the   Executive   to  
o The  SC  concedes  that  executive  discretion  is  necessary  to  achieve  sound   another  branch  
fiscal  administration   o After  realizing  the  problem,  Congress  inserted  the  omitted  phrase  in  the  
§ Thus,  the  President  and  the  heads  of  offices  require  flexibility  in   counterpart   provision   in   the   2013   GAA:   “The   [insert   the   people]   are  
making  necessary  adjustments   hereby   authorized   to   use   savings   in   their   respective   appropriations   to  
o The  President  has  the  power  to  transfer  funds  to  meet  unforeseen  events   augment  actual  deficiencies  incurred  for  the  current  year  in  any  item  of  
that   may   otherwise   impede   the   efficient   implementation   of   projects   their  respective  appropriations”  
under  the  GAA   • SECOND   REQUISITE:  There   were   NO   savings   from   which   funds   could   be   sourced  
o Congress   has   traditionally   allowed   much   flexibility   to   the   President   in   for  the  DAP  
allocating  funds  pursuant  to  the  GAAs.     o The   central   question   to   be   asked   is:   Were   the   funds   used   in   the   DAP  
§ This  flexibility  comes  in  the  form  of  policies  that  the  executive   actually  savings?  Answer  is  a  resounding  NO.  
may  adopt  during  the  budget  execution  phase.   o Petitioners  argue  that  the  term  “savings”  should  be  understood  to  refer  
§ The  DAP  thus  falls  in  this  category  as  a  policy.   to   the   excess   money   after   the   items   that   needed   funding   have   been  
o (Then   comes   a   whole   bunch   of   historical   shit   on   how   the   president   has   funded.  Thus,  there  could  only  be  savings  when  the  projects  (for  which  
been  given  the  authority  to  transfer  funds  blah  blah  blah)   the  funds  had  been  appropriated)  were  actually  implemented  
o Basically  the  SC  ends  this  part  by  saying  Sec  25(5)  should  be  interpreted   o OSG   argues   differently,   by   saying   that   “savings”   were   “appropriations  
in   the   context   of   a   limitation   on   the   President’s   discretion   over   the   balances,”  being  the  difference  between  the  appropriation  authorized  by  
appropriations  during  the  budget  execution  phase     congress,  and  the  actual  amount  allotted  for  the  appropriation.  
• Requisites  for  the  valid  transfer  of  appropriated  funds  under  Sec  25(5):   o SC  sided  partially  with  the  petitioners  
o There  is  a  law  authorizing  the  President,  Senate  President,  Speaker,  Chief   o SC  thereafter  enumerated  certain  principles  in  ascertaining  the  meaning  
Justice,  and  heads  of  the  Consti  Comms     of  “savings,”  to  wit:  
o The   funds   to   be   transferred   are   savings   generated   from   the   § First  principle:  Congress  wields  the  power  of  the  purse;  that  is,  
appropriations  for  their  respective  offices   Congress  decides  how  the  budget  will  be  spend,  what  projects  
o The   purpose   of   the   transfer   is   to   augment   an   item   in   the   general   to  fund,  and  how  much  is  to  be  spent  for  each  project  
appropriations  law  for  their  respective  offices   § Second   principle:   The   Executive   is   expected   to   faithfully   execute  
  the  GAA  and  to  spend  the  budget  in  accordance  with  the  GAA  
DISCUSSION  ON  THE  THREE  REQUISITES:   § Third   principle:   In   making   the   President’s   power   to   augment  
• FIRST  REQUISITE:  The  GAAs  of  2011  and  2012  lacked  valid  provisions  authorizing   operative   under   the   GAA,   Congress   recognizes   the   need   for  
transfers  of  funds  under  the  DAP.  Thus,  unconstitutional.   flexibility   in   budget   execution.   Thus,   Congress   diminishes   its  
o Section   25(5)   is   NOT   a   self-­‐executing   provision,   so   there   must   be   a   law   to   own  power  of  the  purse  by  delegating  a  fraction  of  its  power  to  
implement  it.  That  law  is  generally  the  GAA  of  a  given  fiscal  year.   the   Executive.   BUT,   Congress   does   not   thereby   allow   the  
o Under   the   GAAs   of   2011   and   2012,   the   provision   on   the   Use   of   Savings   Executive   to   override   its   authority   thereby   exceeding   the  
says:   “The   [people   I   mentioned   earlier]   are   hereby   authorized   to   delegated  authority.  
augment   any   item   in   this   Act   from   savings   in   other   items   of   their   § Fourth   principle:   Savings   should   be   actual,   or   something   that  
respective  appropriations.”   exists  presently  in  fact  and  not  something  theoretical,  possible  
§ That   provision   was   used   by   the   DBM   to   justify   the   use   of   or  hypothetical.  
savings  under  the  DAP.   o Thus,  “savings”  should  be  construed  strictly  against  expanding  the  scope  
o But..a  fair  reading  of  this  shows  that  the  GAAs  of  both  2011  and  2012   did   of  the  power  to  augment.  
not   carry   the   phrase   “for   their   respective   offices”   as   contained   in   Sec   o Under   the   GAA   of   2011,   2012   and   2013,   the   following   definition   of  
25(5).  Thus,  the  provision  is  textually  unfaithful  to  the  Consti.   “savings”  can  be  found:  
§ Savings   refer   to   portions   or   balances   of   any   programmed  
 appropriation   in   this   Act   free   from   any   obligation   of   § Eh  diba  the  definition  of  “savings”  should  be  that  it  must  have  
encumbrance  which  are  (i)  still  available  after  the  completion  or   been   used   first?   How   can   you   use   funds   when   the   funds   had  
final   discontinuance   or   abandonment   of   the   work,   activity   or   not  even  reached  the  agency?  
purpose   for   which   the   appropriation   is   authorized;   (ii)   from   o For  unobligated  allotments,  these  were  encompassed  by  the  definition  
appropriations  balances  arising  from  unpaid  compensation  and   of   savings   in   the   GAA.   But   according   to   the   provision   cited,   the  
related   costs   pertaining   to   vacant   positions   and   leaves   of   unobligated   allotments   are   qualified   by   three   enumerated   instances   of  
absence   without   pay;   and   (iii)   from   appropriations   balances   when  savings  would  be  realized.  
realized   from   the   implementation   of   measures   resulting   in   § As   such,   unobligated   allotments   could   not   be   indiscriminately  
improved  systems  and  efficiencies  and  thus  enabled  agencies  to   declared   as   savings   without   first   determining   whether   any   of  
meet   and   deliver   the   required   or   planned   targets,   programs   the  three  instances  existed.  
and  services  approved  in  this  Act  at  a  lesser  cost.   § This   signified   that   the   DBM’s   withdrawal   of   unobligated  
§ The   three   instances   basically   say   that   savings   could   be   allotments   had   disregarded   the   definition   of   “savings”   under  
generated   only   upon   the   purpose   of   the   appropriation   being   the  GAAs  
fulfilled,   or   upon   the   need   for   the   appropriation   being   no   o Likewise,   petitioners   accuse   respondents   of   forcing   the   generation   of  
longer  existent.   savings   in   order   to   have   a   larger   fund   available   for   discretionary  
§ Likewise,   the   phrase   “free   from   any   obligation   or   spending.   This   would   effectively   deprive   funding   for   projects   with  
encumbrance”   also   implies   that   the   appropriation   was   at   that   existing   appropriations   under   the   GAAs.   SC   sided   with   them   on   this  
stage   when   the   appropriation   was   already   obligated   and   point.  
released.   § This   is   because   there’s   no   law   authorizing   the   withdrawal   and  
• Thus,   the   appropriation   must   have   reached   the   transfer   of   unobligated   allotments   and   the   pooling   of  
agency.     unreleased  appropriations.  
• It   is   only   at   the   agency   level   when   it   could   be   o Nonetheless,  such  withdrawal  and  the  retention  of  appropriated  funds  
determined   that   the   project   was   completed,   cannot  be  considered  as  impoundment  
discontinued  or  abandoned;  or  that  the  targets  were   § Impoundment   refers   to   the   refusal   by   the   President,   for  
realized  at  a  lesser  cost.   whatever  reason,  to  spend  funds  made  available  by  Congress.  It  
o What  are  unreleased  appropriations  anyway?   is  the  failure  to  spend  or  obligate  budget  authority  of  any  type.  
§ According   to   DBM,   these   are   those   that   are,   well,   unreleased.   § The   withdrawal   of   unobligated   allotments   should   not   be  
Duh.   regarded   as   impoundment   because   it   only   entailed   the  transfer  
§ They   were   unreleased   because   of   either   noncompliance   with   of  funds,  not  the  retention  or  deduction  of  appropriations.  
documentary  requirements,  or  unavailability  of  funds.     o Lastly   under   this   point,   the   Executive   could   not   circumvent   the   Admin  
§ But   the   funds   of   these   do   not   reach   the   agencies,   but   remain   Code  by  declaring  unreleased  appropriations  and  unobligated  allotments  
with  the  DBM.   as  savings  prior  to  the  end  of  the  fiscal  year.  
§ Ergo,   unreleased   appropriations   refer   to   appropriations   with   § Under  the  Admin  Code,  the  President  is  authorized  to  suspend  
allotments  but  without  disbursement  authority.   the  further  expenditure  of  funds  for  any  agency.  
o Now,  the  DBM  (in  NBC  No.  541)  declared  that  part  of  the  savings  brought   § It   must   be   noted   that   DBM   did   not   suspend   or   stop   further  
under  the  DAP  came  from  the  pooling  of  unreleased  appropriations,  such   expenditures.  Rather,  it  contemplated  a  transfer  of  funds.  
as  personnel  services  appropriations,  unreleased  appropriations  of  slow-­‐ § Thus,  walang  savings  because  the  funds  were  transferred  and  
moving  and  discontinued  projects.   not  retained.  This  is  inconsistent  with  the  definition  of  savings  
§ This  declaration  by  the  DBM  by  itself  does   not   state   the   clear   na  dapat,  may  excess  money  after  the  items  that  needed  to  be  
legal   basis   for   the   treatment   of   unreleased   or   unalloted   funded  have  been  funded.    
appropriations  as  savings.   • THIRD   REQUISITE:   The   rule   is   that   no   funds   from   savings   could   be   transferred  
§ They  have  not  yet  ripened  into  categories  of  items  from  which   under  the  DAP  to  augment  deficient  items  not  provided  in  the  GAA.  But  the  DAP  
savings  can  be  generated.   allows  the  augmentation  of  projects  not  in  the  GAP.  Thus,  unconsti!  
o For   the   SC   to   consider   unreleased   appropriations   as   savings   would   o The   term   augment   means   to   enlarge   or   increase   in   size,   amount   or  
undercut  the  Congress’  power  of  the  purse.   degree.  This  applies  to  funds,  and  not  something  else…well,  basta.  Labo.  
§ Such   appropriations   had   not   even   reached   the   agency   o The   GAAs   of   2011-­‐2013   set   as   a   condition   for   augmentation   that   the  
concerned   vis-­‐à-­‐vis   the   projects   for   which   the   Congress   had   appropriation  for  the  project  item  to  be  augmented  must  be  deficient.  (In  
allocated  them   other  words,  kulang  yung  pera  for  a  specific  project)  
 o Thus,   an   appropriation   for   any   project   must   first   be   determined   to   be   § But…Justice   Mendoza,   representing   the   Congress   in   this   case,  
deficient  before  it  could  be  augmented  from  savings.   argued   that   the   cross-­‐border   transfers   were   in   the   nature   of  
o In   2013,   a   total   of   144.4   billion   pesos   worth   of   projects   were   “aid”  instead  of  “augmentation”  
implemented   through   DAP.   However,   upon   careful   review   of   the   • He   said   that   they   felt   there   would   be   chaos   if   no  
documents   contained   in   seven   evidence   packets,   the   “savings”   pooled   money  is  given  as  aid  
under   the   DAP   were   allocated   to   projects   not   covered   by   any   • But,   the   court   said   that,   regardless   of   the  
appropriations  in  the  pertinent  GAAs.   characterization   as   augmentation   or   aid,   cross-­‐
§ For   instance,   funds   were   transferred   to   the   Disaster   risk,   border  transfers  were  prohibited  under  Sec  25(5)  of  
Exposure,  Assessment  and  Mitigation  (DREAM)  Project  of  DOST.   Article  VI.  
While  appropriation  was  provided  by  Congress,  under  the  DAP    
the   Executive   allotted   funds   for   personnel   services   and   capital   Sourcing   the   DAP   from   unprogrammed   funds   despite   the   original   revenue   targets   not  
outlays  which  were  not  included  in  the  appropriation  made  by   having  been  exceeded  was  invalid  
Congress.   • The  2011,  2012  and  2013  BESFs  defined  “unprogrammed  appropriations”  as  those  
§ A   similar   situation   occurred   with   the   project   called   that   provided   standby   authority   to   incur   additional   agency   obligations   for   priority  
“establishment  of  the  advanced  failure  analysis  laboratory”  for   projects   when   revenue   collections   exceeded   targets,   and   when   additional   foreign  
DOST,  where  particular  disbursements  were  allowed  under  the   funds  are  generated.  
DAP,  but  were  not  included  in  the  GAAs.  This  was  unlawful.   • The   DBM   contemplated   that   the   unprogrammed   funds   could   be   availed   of   when  
§ It  must  be  worth  stressing  that  if  a  particular  project  proposed   any  of  the  three  instances  occur:  
by   the   President   was   not   included   in   the   GAAs,   it   means   that   (1) the   revenue   collections   exceeded   the   original   revenue   targets   in   the   BESFs  
Congress   did   not   see   it   fit   to   receive   funds.   And   the   President   submitted  by  the  Pres  to  Congress  
should  respect  that.   (2) New   revenues   were   collected   from   sources   not   originally   considered   in   the  
o Although  the  Executive  was  authorized  to  spend  in  line  with  its  mandate   BESFs  
to   faithfully   execute   laws,   such   authority   did   not   translate   to   an   (3) Newly-­‐approved  loans  for  foreign-­‐assisted  projects  were  secured  
unfettered  discretion  to  submit  his  own  will  for  that  of  Congress.   o Thus   under   this   system,   even   if   the   revenues   not   considered   in   the   BESFs  
• THIRD   REQUISITE   (ALSO):   CROSS-­‐BORDER   AUGMENTATIONS   FROM   SAVINGS   were   collected,   the   basic   condition   that   the   revenue   collections   should  
WERE  PROHIBITED  BY  THE  CONSTITUTION   exceed  the  revenue  targets  must  still  be  complied  with  in  order  to  justify  
o By   providing   that   the   Pres,   Senate   Pres,   Speaker,   Chief   Justice,   Heads   of   the  release  of  unprogrammed  funds.  
Consti  Commissions  may  be  authorized  to  augment  any  item  in  the  GAA   o In   other   words,   marerelease   lang   ang   unprogrammed   funds   if   may  
for   their   respective   offices,   the   Consti   delineated   borders   between   their   sobrang  revenue.  
offices.   • The   2011   and   2012   GAAs,   however,   contemplated   only   the   first   two   scenarios  
§ Funds   appropriated   for   one   office   are   prohibited   from   enumerated  above  
“crossing   over   to   another   office,”   even   in   the   guise   of   • However,  a  fair  reading  of  the  provisions  of  the  two  GAAs  (medyo  mahaba  so  look  
augmentation.   at   the   full   text   na   lang)   would   show   that   the   provisions   did   not   at   all   waive  
§ Such   unconstitutional   transfers   are   called   cross-­‐border   compliance  with  the  basic  requirement  that  revenue  collections  must  still  exceed  
augmentations   the  original  revenue  targets  
o In   the   oral   arguments   held   for   the   case,   Secretary   Abad   admitted   to   • However,  when  the  SC  required  the  respondents  (Noynoy  and  friends)  to  submit  a  
making  some  cross-­‐border  augmentations.     certification   form   the   Treasure   to   the   effect   that   the   revenue   collections   had  
§ Two  instances  of  cross-­‐border  augmentations  were  narrated:   exceeded  the  original  targets,  they  submitted  certifications  pertaining  to  only  one  
(1) The   House   of   Representatives   requested   the   President   to   source  of  revenue:  dividends  from  the  shares  held  by  the  govt  in  GOCCs.  
grant   them   an   augmentation   for   the   building   of   their   e-­‐ • However  (again.  But  bawal  daw  magstart  ng  sentences  with  however),  it  must  be  
library,   because   according   to   the   House,   failure   to   do   so   noted  that  the   unprogrammed   funds,   being   standby   appropriations,   were   to   be  
may  result  to  serious  deterioration   released   only   when   there   were   revenues   in   excess   of   what   the   programmed  
(2) COA  (yes,  COA!!!)  asked  for  extra  funds  from  the  Pres  for   appropriations   required.   As   such,   the   revenue   targets   should   be   considered  as   a  
information   technology   equipment,   as   well   as   fees   for   whole  and  not  individually.  
consultants.   o Otherwise,  we  would  be  dealing  with  artificial  revenue  surpluses.  
§ Eh   super   obvious   that   these   are   cross-­‐border   augmentations   o Thus,   the   revenue   collections   as   a   whole   must   exceed   the   total   of   the  
not  supported  by  appropriations  under  the  GAA!   revenue  targets  stated  in  the  BESF.  
 
Next  is  a  challenge  to  EPC,  checks  and  balances,  and  public  accountability  charges.   (c) The   funding   of   projects,   activities   and   programs   that   were   not   covered   by   any  
• For  EPC,  the  SC  was  not  in  the  position  to  rule  on  it  because  kulang  yung  evidence   appropriation  in  the  General  Appropriations  Act.  
• On   checks   and   balances…well   the   doctrine   on   separation   on   powers   answers   this  
one.   The   Court   further   DECLARES  VOID  the   use   of   unprogrammed   funds   despite   the   absence   of   a  
• As   for   public   accountability…well   good   intention   naman   yung   paggawa   sa   DAP   certification   by   the   National   Treasurer   that   the   revenue   collections   exceeded   the   revenue  
(given   that   the   aim   is   to   boost   the   Philippine   economy).   Mali   lang   talaga   yung   targets   for   non-­‐compliance   with   the   conditions   provided   in   the   relevant   General  
konsepto  ng  DAP   Appropriations  Acts.  
 
As  for  the  doctrine  of  operative  fact…    
• A  legislative  or  executive  act  that  is  declared  void  for  being  unconstitutional  cannot  
give  rise  to  any  right  or  obligation    
o The   term   “executive   act”   is   broad   enough   to   encompass   decisions   of  
admin  bodies  and  agencies  under  the  Exec  department    
• However,   at   times,   rigidly   applying   the   rule   may   at   times   be   impracticable   and  
wasteful  
• It  is  applicable  in  this  case.  
• Given   that   the   DAP   and   the   related   issuances   were   executive   acts,   the  
consequences   resulting   from   them   could   not   be   ignored   or   could   no   longer   be  
done  
• As   already   mentioned,   the   implementation   of   the   DAP   resulted   into   the   use   of  
savings  pooled  by  the  Executive  to  finance  the  PAPs  that  were  not  covered  in  the  
GAA,  or  that  did  not  have  proper  appropriation  covers,  as  well  as  to  augment  items  
pertaining   to   other   departments   of   the   Government   in   clear   violation   of   the  
Constitution.    
o To   declare   the   implementation   of   the   DAP   unconstitutional   without  
recognizing   that   its   prior   implementation   constituted   an   operative   fact  
that  produced  consequences  in  the  real  as  well  is  unfair  and  impractical  
o Unless  the  doctrine  is  held  to  apply,  the  Executive  as  the  disburser  and  
the  offices  under  it  and  elsewhere  as  the  recipients  could  be  required  to  
undo   everything   that   they   had   implemented   in   good   faith   under   the  
DAP.    
o That   scenario   would   be   enormously   burdensome   for   the   Government.  
Equity  alleviates  such  burden.  

 
WHEREFORE,   the   Court   PARTIALLY   GRANTS   the   petitions   for   certiorari   and   prohibition;   and  
DECLARES   the   following   acts   and   practices   under   the   Disbursement   Acceleration   Program,  
National   Budget   Circular   No.   541   and   related   executive   issuances   UNCONSTITUTIONAL   for  
being   in   violation   of   Section   25(5),   Article   VI   of   the   1987   Constitution   and   the   doctrine   of  
separation  of  powers,  namely:  

(a) The   withdrawal   of   unobligated   allotments   from   the   implementing   agencies,   and  
the   declaration   of   the   withdrawn   unobligated   allotments   and   unreleased  
appropriations  as  savings  prior  to  the  end  of  the  fiscal  year  and  without  complying  
with   the   statutory   definition   of   savings   contained   in   the   General   Appropriations  
Acts;  
(b) The   cross-­‐border   transfers   of   the   savings   of   the   Executive   to   augment   the  
appropriations  of  other  offices  outside  the  Executive;  and