7/2/2017 Maria Carolina Araullo vs Benigno Aquino III | Uber Digests

Political Law Constitutional Law Separation of Powers Fund Realignment Constitutionality of the
Disbursement Acceleration Program
Power of the Purse Executive Impoundment

W hen 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 years 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agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared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 expos 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 Peoples 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.
Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation
provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of
Executive Order 292 (power of the President to suspend expenditures and authority to use savings, respectively).
Issues:
I. 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. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments can be considered as impoundments by the executive.
III. Whether or not the DAP realignments/transfers are constitutional.
IV. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.
V. Whether or not the Doctrine of Operative Fact is applicable.
HELD:
I. 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. It is a program for prioritizing government spending. As such,
it did not violate the Constitutional provision cited in Section 29(1), Art. VI of the Constitution. 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.
II. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the Presidents 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 (which did not
happen). Nevertheless, theres no impoundment in the case at bar because whats involved in the DAP was the
transfer of funds.
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7/2/2017 Maria Carolina Araullo vs Benigno Aquino III | Uber Digests

III. 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.
Further, transfers within their respective offices also contemplate realignment of funds to an existing project in the
GAA. Under the DAP, even though some projects were within the Executive, these projects are non-existent
insofar as the GAA is concerned because no funds were appropriated to them in the GAA. Although some of these
projects may be legitimate, they are still non-existent under the GAA because they were not provided for by the
GAA. As such, transfer to such projects is unconstitutional and is without legal basis.
On the issue of what are savings
These DAP transfers are not savings contrary to what was being declared by the Executive. Under the definition
of savings in the GAA, savings only occur, among other instances, when there is an excess in the funding of a
certain project once it is completed, finally discontinued, or finally abandoned. The GAA does not refer to savings
as funds withdrawn from a slow moving project. Thus, since the statutory definition of savings was not complied
with under the DAP, there is no basis at all for the transfers. Further, savings should only be declared at the end of
the fiscal year. But under the DAP, 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.
IV. 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.
V. 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. The beneficiaries of the DAP cannot be asked to
return what they received especially so that they relied on the validity of the DAP. However, the Doctrine of
Operative Fact may not be applicable to the authors, implementers, and proponents of the DAP if it is so found in
the appropriate tribunals (civil, criminal, or administrative) that they have not acted in good faith.

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