Araullo vs.

Aquino (2014)

FACTS: The consolidated petitions assailed the constitutionality of the Disbursement

Acceleration Program (DAP) and other issuances of the Department of Budget and Management
(DBM) implementing the DAP for violating Article VI Sec. 29(1) of the 1987 Constitution, which
provides that no money shall be paid out of the Treasury except in pursuance of an appropriation
made by law. The DAP allows the President to pool money from programmed and
unprogrammed funds of its various agencies in the guise of the exercise of his authority under
Sec 25(5) of the Constitution to transfer funds out of savings to augment the appropriations of
offices within the Executive Branch.

On Sept. 2013, Sen. Jinggoy Estrada revealed that some Senators, including himself, received
P50 Million each as incentive for voting in favor of Chief Justice Renato Coronas impeachment.
In response, DBM Secretary Florencio Abad issued a public statement that the money given to
Senators were under the DAP which sought to accelerate economic expansion, and that the
funds had been released in view of the senators request. Abad said it was not the first time such
funds were released under the DAP because it had been ongoing since 2011 to ramp up
spending after sluggish disbursements had caused the growth of the GDP to slow down.
According to Abad, funds under DAP were derived from: unreleased appropriations under
Personnel Services, unprogrammed funds, carry-over appropriations unreleased from the
previous year, and budgets for slow-moving items or projects that had been realigned to support
faster-disbursing projects.

The DBM then issued another statement that the DAP was sourced out from the pooling of
unreleased appropriations and withdrawal of unobligated allotments also for slow-moving
programs. The DBM said that DAP was legally based on the following: Article VI Sec. 25(5) of the
1987 Constitution, Chapter 5, Book VI, Sections 38 and 49 of EO no. 292 (Administrative Code of
1987), and the General Appropriations Act from 2011-2013.

ISSUES and RATIO DECIDENDII:

I. 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.
- NO. The DAP aimed to stimulate the economy through accelerated
spending. DAPs adoption and implantation is a function pertaining to
the Executive as the main actor during the Budget Execution Stage.
Congress did not need to legislate to implement the DAP because
Congress can only appropriatedesignate a particular fund for a
general object of governmental expenditurebut it would have nothing
to do with the budget execution stage. The President had sufficient
discretion, in his power to execute the budget, to adapt the budget to
changes in the countrys economic situation. Pooling of savings
pursuant to the DAP did not involve appropriation because the money
had already been set apart from the public treasury by Congress
through the GAAs, thus the Executive did not usurp the power vested
in Congress under Sec. 29(1) Art. VI of the Constitution.
II. 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
(1) They treat the unreleased appropriations and unobligated allotments withdrawn
from government agencies as savings, (2) they authorize the disbursement of funds
for projects or programs not provided in the GAAs for the Executive Department, and
(3) they augment discretionary lump sum appropriations in the GAAs.
- (1) The budget execution stage requires executive discretion to
achieve a sound fiscal administration and assure effective budget
implementation. The power to transfer funds can give the President the
flexibility to meet unforeseen events that may otherwise impede the
efficient implementation of the budget set by Congress in the GAA.
The Constitution itself allows fiscal autonomy of its offices, as the
power to transfer funds within their respective offices but at the same
time maintain the separation of powers among the three main
branches of the government. But under Sect. 25(5) Art. VI of the
Constitution, several governmental offices are merely authorized to
transfer appropriations to augment any item in the GAA for their
respective offices.

But for the valid transfer of funds under the aforesaid provision in the
Constitution, first, an implementing law (the GAA) is needed to make
Sec. 25(5), a non-self-executing provision, operative, expressly
authorizing the transfer of funds. The 2011 and 2012 GAAs did not
include the phrase for their respective offices, thus they allowed that
funds may be transferred from savings to augment any item under the
GAA even outside the office, in this case the Executive. Transfers
under the DAP were unconstitutional because of the lack of provisions
authorizing said transfers. The savings to augment items under an
office shall also be derived from that same office.

Petitioners claim that the funds used in DAPunreleased

appropriations and withdrawn unobligated allotmentswere not actual
savings. They argue that savings should be understood to refer to
money after the items that needed to be funded have been funded, or
those that needed to be paid have been pursuant to the budget.
Congress has the power of the purse, the Executive is expected to
faithfully execute the GAA, Congress should recognize the need for
flexibility in budget execution, and that savings should be actual. But
that the DAP was derived from unreleased or unalloted items, these do
not constitute savings for they have not yet ripened in categories of
items from which savings can be generated. Unobligated allotments
(portions or balances of any programmed appropriation in this Act free
from any obligation or encumberance) cannot also be readily accepted
as savings. The Court agrees with petitioners that respondents forced
the generation of savings in order to have a larger fund available for
discretionary spending, withdrawing unobligated allotments in the
middle of the fiscal year. Moreover, Section 38 Chapter 5 Book VI of
the Administrative Code of 1987 only allows stoppage of certain
expenditures, but not withdrawal of unobligated allotments for transfer
to other items.

(2) No funds from savings could be transferred under the DAP to

augment deficient items not provided in the GAA. Before a PAP should
be augmented from savings, it must first be determined to be deficient.
However, the Court finds that the savings pooled under the DAP
were allocated to PAPs not covered by any appropriations in the
pertinent GAAs. For example, DAP funds were transferred to the
DREAM project by DOST though not included in the 2011 GAA. Even
the President did not initially recommend for it to be funded. The
Executive thus substituted its will to that of Congress. Though the OSG
is correct in arguing that the President has authority to declare and
utilize savings in keeping with his duty to execute the laws, such
authority does not translate to unfettered discretion. The President is
still required to remain faithful to the provisions of the GAAs since his
power to spend is merely delegated to him by Congress. Unrestricted
spending power would also threaten the principle of separation of
powers. It is the President who proposes the budget but it is Congress
that has the final say on matters of appropriations.

(3) The records show that funds were transferred under the DAP to the
Congress, COA, and Comelec. Cross-border augmentations, or
appropriating funds from one office to another, are prohibited in the
Constitution even in the guise of augmentation of a deficient item or
items. The President, Senate President, House Speaker, Chief Justice,
and heads of Constitutional Commissions are only authorized to
augment any item in the GAA for their respective offices.

Lastly, sourcing the DAP from unprogrammed funds despite the

original revenue targets not having been exceeded was invalid.
Funding under the DAP were sourced from unprogrammed funds
brought under the DAP not as savings, but as separate sources of
funds. Even if they were, release and use of unprogrammed funds
were still subject to restrictions of the GAAs as to when the said funds
could be released and the purposes for which they could be used.
Respondents averred that unprogrammed funds could be availed when
revenue collections exceeded the original revenue targets, new
revenues were collected or realized from sources not originally
considered, or newly approved loans for foreign assisted projects were
secured. That there were additional revenues from sources not
considered in the revenue target would not be enough; total revenue
collections must still exceed original revenue targets to justify the
release of the unprogrammed funds. These excess revenue collections
are stanby appropriations to support additional expenditures for certain
priority PAPs. The revenue targets should be considered as a whole,
not individually, as it would also be an unsound fiscal management
measure because it would disregard the budget plan and foster budget
deficits.
 III. 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 considering that it
authorizes the release of funds upon the request of legislators.
- (1) NO. Petitioners argue that the implementation of the DAP was
unfair and selective because it was not made available to all
legislators, as some of them refused to avail themselves of the fund
while still others are unaware that such fund exists. Because there is
no reasonable classification in distributing DAP, Senators who availed
themselves of the fund were treated differently in terms of the amounts
the received. Such allegations lack factual and legal bases as the
petitioners have not presented relevant data to support their claim.
Violation of the equal protection clause should also be raised only by
parties who have suffered deprivation of the equal protection, in this
case the legislators who have been discriminated.
- (2) NO. Petitioners said legislators who received DAP funds were
forced to be silent about the issues and anomalies surrounding the
DAP. This contention is speculative. It would not support any proper
judicial determination as nothing concrete could be gained. The
petitioners have the burden of proof that such constitutional violations
actually existed.
- (3) NO. Petitioners alleged that legislators relinquished the power of
appropriation to the Executive, and exhibited a reluctance to inquire
into the legality of the DAP, which is repugnant to the principle of public
accountability. The Court already held that the DAP and its
implementing issuances were policies the Executive may adopt in view
of the provisions of the GAAs in accelerating the economy of the
country.

NOTES:

The doctrine of operative fact is applicable only to the PAPs that can no longer be
undone, and whose beneficiaries relied in good faith on the validity of the DAP. However,
it cannot be applied to the authors, proponents, and implementors of the DAP unless
there are concrete findings of good faith in their favor by the proper tribunal determining
their civil, criminal, administrative, and other liabilities.
Two governing principles of appropriation:
o Principle of the Public Fisc all monies received from whatever source by any
part of the government are public funds.
o Principle of Appropriations Control prohibits expenditure of any public money
without legislative authorization.