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REQUIREMENTS AS TO CERTAIN LAWS: APPROPRIATION LAWS

G.R. No. 209287


ARAULLO VS. AQUINO III
BERSAMIN, J.
Summarized by Katrina Mae Santos (Kim :3 for main ponencia and and Xave for dissents)
This case is a consolidation of nine (9) cases, assailing the constitutionality of the Disbursement Acceleration Program
(DAP) of the Department of Budget and Management (DBM) and in relation to this, National Budget Circular (NBC) No.
541 and related issuances of the DBM in the implementation of DAP. This issue exploded when the topic of the
Congressional pork barrel was still fresh in the public mind. Belgica vs. Executive Secretary was just filed with the
Supreme Court [which is subsequently declared unconstitutional (November 19, 2013)].
IMPORTANT PEOPLE
Sen. Jinggoy Ejercito Estrada delivered the privilege speech on September 25, 2013 which prompted the DBM
to issue a public statement and bring to the public consciousness the DAP
Araullo, Maria Carolina Chairperson of Bagong Alyansang Makabayan; G.R. No. 2092871
Secretary Florencio Abad Secretary of the Department of Budget and Management (DBM)
FACTS
1. September 3, 2013 Belgica, et. al. and Villegas filed an Urgent Petition for Certiorari and Prohibition with
Prayer for the Immediate issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction
seeking that the annual "Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which
provided for the 2013 PDAF, and the Executives lump-sum, discretionary funds, such as the Malampaya
Funds and the Presidential Social Fund, be declared unconstitutional and null and void for being acts
constituting grave abuse of discretion
2. September 25, 2013 Sen. Jinggoy Estrada delivered his privilege speech stating that some senators
received Php 50 Million each as incentive for impeaching Chief Justice Corona.
3. Secretary Abad responded through a public statement explaining that the funds released were based on the
Senators letters of request for funding and explained further that these funds were part of the DAP designed
by the DBM to ramp up spending to accelerate economic expansion (they also made claims in their website
regarding DAP and where it comes from).
4. DBM cited the following as legal bases for DAPs use for savings:
a. Section 25(5) Article VI, 1987 Constitution
b. Section 39 (Authority to use Savings for Certain Purposes) and Section 38 (Suspension of
Expenditure Appropriations, Chapter 5, Book VI of EO 292 (Administrative Code of 1987)
c. General Appropriations Acts of 2011, 2012 and 2013 provisions on the following:
i. Use of savings
ii. Meaning of savings
iii. Priority in the use of savings
d. For the use of the unprogrammed funds, DBM cited provisions in the GAA 2011-2013 as legal bases
5. Nine (9) petitions assailing the constitutionality are filed within days. 2

1 I think their case was chosen to represent all the nine cases is because Araullos case is the only one who brought to the Courts attention NBC No.
541 (Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated Allotments as of June 30).

2 G.R. No. 209135 (Syjuco) October 7, 2013; G.R. No. 209136 (Luna) October 7, 2013; G.R. No. 209164 (PHILCONSA) October 8, 2013); G.R. No.
209155 (Villegas) October 16, 2013; G.R. No. 209260 (IBP) October 16, 2013; G.R. No. 209287 (Araullo) October 17, 2013; G.R. No. 209442 (Belgica)

6. The Court consolidated these cases to form the case at hand.


7. Oral arguments were held on November 19, 2013 and the Court directed DBM Sec. Abad to submit the
following:
a. List of savings brought under DAP sourced from:
i. Completed programs
ii. Discontinued or abandoned programs
iii. Unpaid appropriations for compensation
b. Certified copy of the Presidents directive dated June 27, 2012 referred to in NBC 541
c. All circulars and orders issued in relation to DAP
8. In compliance, the Office of the Solicitor General (OSG) (governments counsel) submitted seven (7) evidence
packets (please see Other Notes for the complete list of packets)
OVERVIEW OF THE PHILIPPINE BUDGET SYSTEM
ORIGIN AND EVOLUTION

Financing public goals and activities was an idea that existed from the creation of the State
To protect the people, the territory and sovereignty, the government must perform vital functions that
require public expenditures

The Philippine Budget System is greatly influenced by western public financial institutions (Spain and US
colonized us before)

The Philippine Budget System is guided by two principal objectives:


(1) To carry on all government activities under a comprehensive fiscal plan developed in accordance to
the Constitution and prevailing statutes and sound public management
(2) To provide for periodic review and disclosure of the budgetary status of Government so that the
enlightened citizenry and persons entrusted with the law can determine the adequacy of the budget
actions taken and the financial position of the Government

Jones Law (1916) [Budget Office within Department of Finance] 1935 Constitution (budget policy, procedure
established, strengthened by EO 25 Budget Commission) + CA No. 246 (1 st budget law line item budget
framework) RA No. 992 Congress introduces performance-budgeting and enhanced the role of the Budget
Commission 1973 Constitution PD 1177 and 1405 (the latter created the Ministry of Budget) EO 711 (Office
of Budget and Management - OBM) EO 292 (DBM)

THE BUDGET CYCLE


Public or government expenditures are generally classified into two:
(1) Capital Expenditures or outlays
Expenses whose usefulness last for more than one year
Add to the assets of government including investments in the capital of government-owned or controlled
corporations and subsidiaries
Usually infrastructure
(2) Current operating expenditures
Purchases of goods and services for current consumption
Benefit from this does not extend beyond fiscal year
Has two (2) components:
i. Personal services (PS) basically salaries of government employees
October 29, 2013; G.R. No. 209517 (COURAGE) November 6, 2013; G.R. No. 209569 (VACC) November 8, 2013.

ii. Maintenance and other operating expenses (MOOE)


Public expenditures can also be grouped according to function:
(1) Economic development expenditures
(2) Social services or social development expenditures
(3) General development or general public services
(4) National defense
(5) Public debt
Or according to nature of funds:
(1) General fund
(2) Special fund
Public revenues are generally derived from the following sources:
(1) Tax revenues
(2) Capital revenues
Examples: Sales of fixed assets or scrap thereof, Sale of public lands etc.
(3) Grants
Like grants from Asian Development Bank, World Bank etc.
(4) Extraordinary income
Example: repayment of loans by GOCCs
(5) Public borrowing
Proceeds of repayable obligations with interest from domestic and foreign creditors.
The Budget Cycle is enumerated below. Theres also an infographic here for a prettier description of things. Take note that
the size of the page containing the infographic is A3. If youre going to print this digest, I suggest you take it out so you
can print the whole thing easily. Or convert this Word File into PDF and then print.

BUDGET PREPARATION PHASE


BUDGET CALL
The Development Budget Coordination Committee (DBCC) sets budget parameters beforehand (including
macroeconomic and fiscal targets and agency budget ceilings) before the Budget Call
National Budget Call for National Government Agencies (NGAs)
Corporate Budget Call for Government Owned and/or Controlled Corporations (GOCCs) and Government
Financial Institutions (GFIs)
The DBM established an early budget prep in this administration. Say the Government was preparing for the
2016 budget. Before Aquino Administration: Budget call will be around April 2015. During Aquino
Administration: Budget call will be in December 2014.
In response, agencies will submit their AGENCY BUDGET PROPOSALS to the DBM.
STAKEHOLDER ENGAGEMENT
A new process in budget preparations which seeks to increase citizen participation in the budget process,
departments and agencies are tasked to partner with civil society organizations (CSOs) and other citizenstakeholders as they prepare their agency budget proposals
This was piloted in the preparation of the 2012 National Budget, is now being expanded towards
institutionalization
This wasn't cited in the ponencia, so this is just added information :))
TECHNICAL BUDGET HEARINGS
conducted after departments and agencies submit their Agency Budget Proposals (ABPs) to the DBM
agencies defend their proposed budgets before a technical panel of DBM, based on performance indicators on

output targets and absorptive capacity


DBM bureaus then review the agency proposals and prepare recommendations
DBM has a total of 7 Bureaus (A to G) which handle the different budgets of agencies/ offices submitted to
them
o Bureau A to E: National Government Agencies including Judiciary and Legislative Offices as well as
the Constitutional Commissions
o Bureau F: GOCCs and GFIs
o Bureau G: PDAF, Special Shares, Calamity Fund, IRA
EXECUTIVE REVIEW
DBM Bureaus review the ABPs and come up with recommendations for the Executive Review Board (ERB)
comprised of the DBM Secretary and DBM senior officials
Discussions here cover the prioritization of programs and corresponding support
CONSOLIDATION, VALIDATION AND CONFIRMATION
DBM consolidates the recommended agency budgets into the National Expenditure Program (NEP), the
Budget of Expenditures and Sources of Financing (BESF) and the Staffing Summary
The NEP:
o is submitted in the form of a proposed GAA (it is in book format, the same goes for the BESF and the
Staffing Summary, as well as the final GAA)
o provides details of spending for each department by agency and then by program, activity or project
(PAP)
o also contains Details of Selected Programs and Projects for a more detailed disaggregation of key
PAPs in the NEP (the GAA doesnt have this)
PRESENTATION TO PRESIDENT AND CABINET
DBM and the DBCC present the NEP and BESF to the President and Cabinet for further refinements or
reprioritization
After approval, the DBM prepares and finalizes the budget for submission to Congress (now called the
Presidents Budget) and submits the same which have the following:
o Presidents Budget Message (PBM)
o BESF
o NEP
Details of Selected Programs and Projects
Staffing Summary

BUDGET LEGISLATION PHASE


HOUSE DELIBERATIONS
First reading
o Presidents Budget is assigned to the House Appropriations Committee
o Committee and its Sub-committees schedule and conduct budget hearings of departments and
agencies
o Crafts the General Appropriations Bill (GAB)
o GAB is sponsored, presented and defended by the HoRs Appropriation Committee in plenary
session3
GAB is approved on Third Reading and is submitted to the Senate
SENATE DELIBERATIONS
Senate Finance Committee and Sub-Committee are in charge
To expedite proceedings, the Senate may conduct its committee hearings simultaneously with the HoRs
deliberations but the proposed amendments to the GAB are submitted to the Senate Plenary only after the

3 Personal comment: As I remember, what usually happens is the Appropriations Committee and Sub-Committee Chairmen will sponsor the budget
before the plenary (i.e., help defend it) and this is usually done per agency (i.e., a session for DOTC, then DBM, then DepEd etc.). The sponsoring
congressman usually knows what the other congressmen will look for in the agency budget and will usually advise the agency to prepare to include
additional projects (congressional insertions) requested by the other congressmen or prepare to defend certain projects that the plenary may criticize or
ask the agency to explain. The sponsoring congressman more often than not also requests for his/her own insertion in the agency budget as well.
Projects are added and/or deleted, budgets cut and/or added during the deliberations.

HoR has formally transmitted their approved GAB to the Senate


GAB is approved on Third Reading and shall be submitted for Bicameral Deliberations
BICAMERAL DELIBERATIONS
Constituted of a panel each for the Senate and the House of Representatives
Harmonizes conflicting provisions of their respective GAB versions
Harmonized GAB is produced
RATIFICATION AND ENROLLMENT
Submitted to both Houses which will vote to ratify the final GAB for submission to the President
Once submitted, it is considered enrolled
PRESIDENTS VETO MESSAGE
President and the DBM review the GAB and prepare a Veto Message where identified budget items are
submitted to direct veto or conditional implementation
Under the Constitution, the GAB is the only legislative measure where the President can impose a line-veto (in
all other cases, a law is either approved or vetoed in full) (check out Philconsa vs. Enriquez for veto doctrine)
ENACTMENT
If Congress fails to pass the GAB at the end of any fiscal year, the GAA for the previous year is automatically
re-enacted (this actually happened under GMAs time)
In the Aquino administration, the GAA is usually signed in December of the year before implementation

BUDGET EXECUTION PHASE


RELEASE OF GUIDELINES AND PROGRAM
The budget execution phase begins with DBMs issuance of guidelines on the release and utilization of funds.
BUDGET EXECUTION DOCUMENTS (BEDs) SUBMISSION
Agencies are required to submit their BEDs at the start of budget execution. These documents outline
agency plans and performance targets. These BEDs include the (1) physical and financial plan, (2) monthly
cash program, (3) estimate of monthly income, and (4) list of obligations that are not yet due and demandable.
ALLOTMENT AND CASH RELEASE PROGRAMMING
To ensure that releases fit the approved Fiscal Program, the DBM prepares an Allotment Release Program
(ARP) to set a limit for allotments issued to an agency and on the aggregate. The ARP of each agency
corresponds to the total amount of the agency-specific budget under the GAA, as well as Automatic
Appropriations. A Cash Release Program (CRP) is also formulated alongside that to set a guide for
disbursement levels for the year and for every month and quarter.
ALLOTMENT RELEASE
Allotments, which authorize an agency to enter into an obligation, are either released by DBM to all agencies
comprehensively through the Agency Budget Matrix (ABM) and individually via Special Allotment Release
Orders (SAROs).
ABM. This document disaggregates all programmed appropriations for each agency into two main expenditure
categories: not needing clearance and needing clearance. The ABM is the comprehensive allotment
release document for appropriations which do not need clearance, or those which have already been itemized
and fleshed out in the GAA.
SARO. Items identified as needing clearance are those which require the approval of the DBM or the
President, as the case may be (for instance, lump sum funds and confidential and intelligence funds). For such
items, an agency needs to submit a Special Budget Request to the DBM with supporting documents. Once
approved, a SARO is issued.
INCURRING OBLIGATIONS
In implementing programs, activities and projects, agencies incur liabilities on behalf of the government.
Obligations are liabilities legally incurred, which the government will pay for. There are various ways that an
agency obligates: for example, when it hires staff (an obligation to pay salaries), receives billings for the use
of utilities, or enters into a contract with an entity for the supply of goods or services.
CASH ALLOCATION
To authorize an agency to pay the obligations it incurs, DBM issues a disbursement authority. Most of the
time, it takes the form of a Notice of Cash Allocation (NCA). This is a cash authority issued periodically by
the DBM to the operating units of agencies to cover their cash requirements. The NCA specifies the maximum
amount of cash that can be withdrawn from a government servicing bank for the period indicated. The release
of NCAs by DBM is based on an agencys submission of its Monthly Cash Program and other required

documents.
The DBM may issue Non-Cash Availment Authority (NCAA) (for non-cash disbursements) and Cash
Disbursement Ceiling (CDC) for departments with overseas operations to allow the use of income collected
by their foreign posts for their operating requirements
DISBURSEMENT
This is the final step of the budget execution phase, where government monies are actually spent. The
Modified Disbursement Scheme is mostly used, where disbursements of national government agencies
chargeable against the Treasury are made through government servicing banks, such as the Land Bank of the
Philippines.
The budget process, of course, does not end when government agencies spend public funds: each and every
peso must be accounted for to ensure that is used properly, contributing to the achievement of socio-economic
goals.

BUDGET ACCOUNTABILITY PHASE


This phase happens alongside Budget Execution Phase
PERFORMANCE AND TARGET OUTCOMES
Agencies are held accountable not only for how these use public funds ethically, but also on how these attain
performance targets and outcomes using available resources.
Performance measures are set alongside the preparation of the National Budget
Prior to the execution of the enacted National Budget, these performance targets are firmed up during the
preparation of BEDs.
BUDGET ACCOUNTABILITY REPORTS (BARS)
Submitted by agencies on a monthly and quarterly basis, BARs are required reports that show how agencies
used their funds and identify their corresponding physical accomplishments. These include quarterly physical
and financial reports of operations; quarterly income reports, a monthly statement of allotments, obligations
and balances; and monthly report of disbursements.
REVIEW OF AGENCY PERFORMANCE
The DBM regularly reviews the financial and physical performance of agencies. Actual utilization of funds and
physical accomplishments, as indicated in the agencies BARs, are evaluated against their targets as identified
via OPIF and in the agencies BEDs.
Agency Performance Reviews (APRs) are conducted quarterly or every semester, as the case may be. An
annual Budget Performance Assessment Review (BPAR) is conducted to determine each agencys
accomplishments and performance by the year-end.
The DBM regularly reports results to the President.
AUDIT
Auditing is not within the DBMs jurisdiction, and is instead lodged under the Commission on Audit (COA).
Auditing is critical in ensuring agency accountability in the use of public funds.
The DBM uses COAs audit reports in confirming agency performance, determining budgetary levels for
agencies and addressing issues in fund usage

THE NATURE OF DAP


A. DAP WAS A PROGRAM DESIGNED TO PROMOTE ECONOMIC GROWTH
Focus on transparency and efficiency in the Administration resulted in a decelerated government project
implementation and payment schedule
Economic situation paved the way for DAP as a stimulus package to fast-track public spending and push
economic growth
Invests in high-impact budgetary PAPs to be funded from savings within the year
Accelerate by:
Streamlining implementation process through clustering of infrastructure projects of DPWH and
DepEd
Front loading of Public Private Partnerships related projects

DAP was partially successful


Contributed 1.3 percentage points to GDP growth by 4th QTR 2011
Strengthened growth by 11.8% year on year
Infrastructure rebounded from a 29% contraction to a 38% growth as of September 2013

PAPs under DAP chosen based on their


Multiplier impact (The multiplier effect is an economic term referring to how an increase in one
economic activity can cause an increase throughout many other related economic activities) on
economy and infra development
Beneficial effect on the poor
Translation to disbursements

B. HISTORY OF DAP AND SOURCES OF DAP FUNDS


October 12, 2011 - Earliest document regarding its inception is the memorandum from Sec. Abad to the
President seeking the approval to implement DAP
The memorandum contained a list of funding sources for a total of Php 72.11 Billion as well as the
projects to be funded
December 12, 2011 Requesting omnibus authority to consolidate the savings and unutilized balances
for fiscal year 2011
On utilization of pooled savings: to pool savings/ unutilized balances in FY 2010 last
November 25, 2010.
Requested omnibus authority to consolidate FY 2011 savings/ unutilized balances and
realignment
Requested approval for the proposed additional projects identified for funding

June 25, 2012, September 4, 2012, December 19, 2012, May 20, 2013, and September 25, 2013 Identical requests for authority to pool savings (all approved by PNoy)
NBC No. 541 says:
President has authorized withdrawal of unobligated allotments of agencies with low levels of
obligations as of June 30, 2012 both for continuing and current allotments
Covers:
1. Capital Outlays
2. MOOE
3. PS
The withdrawal of unobligated allotments may cover unidentified programs, projects, activities of
the department/ agencies reflected in the DBM list
Listed funds that were exempted
NGAs shall continue to undertake procurement activities short of award notwithstanding the
implementation of the withdrawal policy until the end of the third quarter (September) (in laymans

terms: you can go on buying things, but just dont award it to the winning bidder yet. Wait for
funds, there will be money, dont worry)
If agencies cannot provide budget accountability reports in time, the DBM will use the agencys
latest report available as basis for the withdrawal of allotment (since this is not updated
All released allotments in FY 2011 which remained unobligated as of June 30, 2012 shall be
immediately considered for withdrawal
Withdrawn allotments may be:
Reissued for the original programs and projects of the agencies/ OUs concerned, from
which the allotments were withdrawn (take note of this it means they arent really
savings in the strictest sense since they can still be used for the same project i.e. the
project has not been abandoned or discontinued or completed)
Realigned to cover additional funding for other existing programs and projects
Used to augment existing programs and projects of ANY agency and to fund priority
programs and projects NOT CONSIDERED IN THE 2012 budget but expected to be
started or implemented in the current year

ISSUES with HOLDING


I.

PROCEDURAL ISSUES

A. WHETHER OR NOT CERTIORARI, PROHIBITION AND MANDAMUS ARE PROPER REMEDIES


TO ASSAIL THE CONSTITUTIONALITY AND VALIDITY OF DAP, NBC 541 AND ALL OTHER
EXECUTIVE ISSUANCES ALLEGEDLY IMPLEMENTING DAP

YES. COURT SAYS ALL PETITIONS UNDER RULE 65 ARE PROPER REMEDIES
(CERTIORARI, PROHIBITION AND MANDAMUS)
The remedies of certiorari and prohibition are broader in scope and reach and may be issued
to correct errors of jurisdiction as well as set right, undo, and restrain any act of grave abuse
of discretion amounting to excess or lack of jurisdiction by any branch or instrumentality of
Government even if the latter does not exercise judicial, quasi-judicial or ministerial
functions.
This is expressly authorized by Section 1, Rule 65 of the rules of court.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional
issues and to review and/or prohibit or nullify the acts of legislative and executive officials

B. WHETHER OR NOT THERE IS A CONTROVERSY RIPE FOR JUDICIAL DETERMINATION

YES. THERE IS AN ACTUAL CONTROVERSY RIPE FOR JUDICIAL DETERMINATION.


The Court quotes Belgica vs. ES Ochoa
O xxx is one which involves a conflict of legal rights, an assertion of opposite legal
claimsthere must be a contrariety of legal rights that can be interpreted and
enforced on the basis of existing law and jurisprudencea question is ripe for
adjudication when the act being challenged has had a direct adverse effect on the
individual challenging it
The incompatibility of the perspectives of the parties on the constitutionality of DAP and its
relevant issuances satisfy the requirement for a conflict between legal rights.
They meet the ripeness requirement since these allegedly unconstitutional acts acts were
already being implemented by the DBM. Moreover, DAP entailed the allocation and
expenditure of huge sums of public funds.

In addition, the fact that funds have been allocated or utilized give rise to an actual
controversy
Respondents claim that since DAP has been discontinued, the challenges are now moot and
academic. The Court says: the discontinuing of DAP did not moot the challenges to its
constitutionality. because it falls under all exceptions for mootness to be disregarded: (1)
there was a grave violation of the constitution, (2) the case involves a paramount public
interest, (3) the constitutional issue raised here requires formulation of controlling principles to
guide the Bench, the Bar and the public and (4) this case is capable of repetition yet evading
review (there is nothing to stop the DBM from re-implementing DAP).

C. WHETHER OR NOT THE PETITIONERS HAVE STANDING

YES PETITIONERS HAVE LOCUS STANDI. THE ISSUANCE AND IMPLEMENTATION OF


DAP AND ISSUANCES INVOLVED ILLEGAL DISBURSEMENTS OF PUBLIC FUNDS.
Except for PHILCONSA, the petitioners have invoked their capacities as tax payers and thus
have an interest in further dissipation of public funds.
PHILCONSA simply reminds that the Court has long recognized its legal standing to bring
cases upon constitutional issues.
IBP stands by its avowed duty to work for the rule of law and civic duty as the official
association of lawyers in this country.
In any case, the Court adds that these cases pose issues that are of transcendental
importance to the entire nation (so procedural technicalities can be waived).

II.

SUBSTANTIVE ISSUES

A. WHETHER OR NOT DAP VIOLATES SECTION 29 ARTICLE VI OF THE 1987 CONSTITUTION4

NO. DAP WAS NOT AN APPROPRIATION MEASURE HENCE, NO APPROPRIATION LAW


WAS REQUIRED TO ADOPT OR IMPLEMENT IT.
DAP was only a program or an administrative system of prioritizing spending the adoption of
which was by virtue of the authority of the President to ensure laws are properly executed.
It is the Executive playing its role as the main actor during the Budget Execution Stage under
its constitutional mandate to faithfully execute laws including GAAs
Congress did not need to legislate to adopt or implement DAP
Thus Executive did not usurp the power vested in Congress under Section 29(1) Article VI of
the Constitution

B. WHETHER OR NOT DAP, NBC 541 AND ALL OTHER EXECUTIVE ISSUANCES IMPLEMENTING
DAP VIOLATE SECTION 25(5) ARTICLE VI OF THE 1987 CONSTITUTION 5:

YES THE VIOLATED SECTION 25(5) ARTICLE VI OF THE CONSTITUTION.


To discuss this, we follow the three (3) requisites set out in Section 25(5) of Article VI:
(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

4 No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.
5 No law shall be passed authorizing any transfer of appropriations; however, 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 Constitutional Commissions may, by law, be authorized to augment any item
in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

heads of the Constitutional Commissions to transfer funds within their respective


offices.
(2) The funds to be transferred are savings generated from the appropriations of their
respective offices; and
(3) The purpose of the transfer is to augment an item in the general appropriations law
for their respective offices.
(1)
FIRST REQUISITE: THERE IS A LAW AUTHORIZING THE PRESIDENT TO
TRANSFER FUNDS WITHIN HIS OFFICE

THIS REQUISITE IS NOT MET. GAA OF 2011 AND 2012 LACKED VALID (FAITHFUL
TO THE CONSITUTION) PROVISIONS TO AUTHORIZE TRANSFER OF FUNDS
UNDER THE DAP, HENCE THE TRANSFERS WERE UNCONSTITUTIONAL.
Section 25(5) is not a self-executing provision and must have a law implementing it.
Generally this is the GAA.
A reading of the 2011 and 2012 GAAs show that its provisions were textually unfaithful
(hehe) to the Constitution for not carrying the phrase for their respective offices 6 and
literally allowed the transfer of funds from savings to augment any item in the GAAs even
if the item belonged to another office and thus contravene the Constitution
Thus these provisions cannot be used by the Executive to claim authority to transfer
appropriations.
The missing phrase was inserted in the 2013 GAA, however, even with a valid law for the
authorization of transfer of funds, there are still two more requisites to be met
(2)
SECOND REQUISITE: THE FUNDS TO BE TRANSFERRED ARE SAVINGS
GENERATED FROM THE APPROPRIATIONS OF THEIR RESPECTIVE OFFICES
WHERE THERE ACTUALLY SAVINGS?

Petitioners claim that the unreleased appropriations and withdrawn unobligated


allotments were not ACTUAL savings within the context of Section 25(5) Art. 6 of the
Constitution.
Petitioners also argue that savings should be understood to refer to the excess money
after the items that needed to be funded have been funded, or those that needed to be
paid have been paid and they insist that savings cannot be realized with certainty in the
middle of the fiscal year.
Petitioners also say that slow-moving PAPs could not be savings as they actually have
not been abandoned yet (remember the note earlier in NBC 541)
The OSG represents that savings meant appropriations balances the difference
between the appropriation authorized by Congress (the Program Amount in the GAA) and
the actual amount allotted for the appropriation.
Personal Note: If youre confused as to what the OSG means, Ill try to explain through
an example and I hope I get it right haha.

6 Section 25(5) of the Constitution says: No law shall be passed authorizing any transfer of appropriations; however, 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 Constitutional Commissions may, by
law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective
appropriations.
2011 GAA says: 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.
2012 GAA says: 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.

Lets say the DOTC wants to buy a lot of trains. Congress gives them 300 Billion for this,
which is a ballpark figure (this is an estimate since you cant really know how much you
need to buy trains nowadays but you have to give a figure during budget preparation so
its in your budget.)
To buy the trains, DOTC has to pass through public bidding (this usually how
Government buys things, they dont just get money and buy anytime they want, they
have to pass through competitive bidding and give it to the lowest bidder). By law,
when you advertise that opportunity to bid, you have to prepare an Approved Budget for
the Contract (ABC). This sets the ceiling amount on how much the bidders will bid. They
cannot bid above this. If they do, they get disqualified. The ABC is always culled from
market study how much are trains in the market? The market says, around 250 Billion.
The difference between the 300B (appropriation authorized by Congress) and the
250B (actual amount allotted for the appropriation) are the savings that OSG
meant.
So you advertise: inviting bidders for 250Billion contract for trains! Bidders bid
competitively. The lowest bidder wins which is, say around 100Billion. You now have
actual savings of 150Billion (250 Approved Budget for the Contract -100 Billion Contract
amount).
If youre more confused now, please forget what I just said. :))))

To ascertain the meaning of savings, there are four principles:


(1) Congress wields the power of the purse and therefore chooses how the budget
shall be spent.
(2) The Executive is expected to faithfully implement the PAPs which Congress
allocated for.
(3) To make the power of the President to augment operative under the GAA,
Congress recognizes the need for flexibility in budget execution.
(4) Savings should be actual, something real and substantial. Not possible, potential
or hypothetical.
This interpretation prevents the Executive from transgressing Congress power of the purse.
Definition of savings in the GAAs reflected this interpretation. Savings are any programmed appropriation in the
GAA free from any obligation which are:
(1) Still available after the completion/ final discontinuance/ abandonment for which
the appropriation is authorized
(2) Appropriation balances from unpaid compensation and vacant positions/ LOA
without pay
(3) Appropriations balances realized from improved systems/ measures in
implementation
The DBM declares that part of the savings brought under DAP came from pooling
unreleased appropriations such as unreleased Personnel Services which will lapse at the
end of the year, unreleased appropriations of slow moving projects, and discontinued
projects per Zero-Based Budgeting findings.
There is no clear legal basis for this declaration of DBM and their treatment of unreleased
or unallotted appropriations as savings.
THUS THE SECOND REQUISITE IS NOT MET. THE COURT SAYS: THESE ITEMS
HAVE NOT YET RIPENED INTO CATEGORIES OF ITEMS FROM WHICH SAVINGS
CAN BE GENERATED THEY HAVENT EVEN REACHED THE AGENCY TO WHICH
THEY WERE ALLOTTED TO UNDER THE GAA. THESE DO NOT FALL UNDER THE
DEFINITION OF SAVINGS REFLECTED IN THE GAA (ITEMS 1 TO 3
AFOREMENTIONED).

Thus, unobligated allotments cannot be indiscriminately declared as savings without first


determining whether any of the three instances stated earlier existed. This means that
DBMs withdrawal of the unobligated allotments disregarded the definition of
savings under the GAAs.
The GAA has a 2-year validity, however DBM declared that 2013 shall have a one year
validity to force the agencies to plan properly and expedite expenditures. This means that
DBMs withdrawal of unobligated allotments of agencies with low levels of obligations to
fund fast-moving projects meant a complete disregard for the 2-year validity of the
budgets for 2011 and 2012 (and the 1-year validity for the 2013 budget). This is
because if youre an agency, and you wanted to use the unobligated budget you have left
from last year to fund a project for this year, you cant anymore because DBM has
withdrawn it and distributed it to faster moving projects.
The respondents insist that these were being withdrawn upon the instance of the
implementing agencies based on their own assessment that they could not obligate these
allotments. However, the Court states that the withdrawals were upon the initiative of
the DBM itself, based on the text of NBC 541. (Personal Note: I guess the DBM was
not able to show evidence to back up their claim because this is isnt entirely true, the
agency always has a chance not to allow DBM to withdraw their unobligated funds and
can always write a letter to get back the funds that DBM has withdrawn as long as they
do it as early as possible)
The petitioners claim that the retention of these funds were akin to impoundment and that
there was no law authorizing the withdrawal of the unobligated allotments.
The Court says: The withdrawal and transfer of unobligated allotments and pooling
of unreleased appropriations were invalid for being bereft of legal support.
Nonetheless, such withdrawal cannot be considered as impoundment as they
entitled only the transfer of funds and not the retention or reduction of
appropriations
The Court adds: relevant to remind that the balances of appropriations that
remained unused at the end of the year are to be reverted to the General Fund
(Treasury). This is the mandate of Section 28, Chapter IV, Book VI of EO 292.
The Executive cannot circumvent this provision by declaring unreleased appropriations
and unobligated allotments as savings prior to the end of the fiscal year.
(3)
THIRD REQUISITE: THE PURPOSE OF THE TRANSFER IS TO AUGMENT
AN ITEM IN THE GENERAL APPROPRIATIONS LAW FOR THEIR RESPECTIVE
OFFICES

THIS REQUISITE IS NOT MET AS SOME OF THE SAVINGS POOLED UNDER DAP
WERE ALLOCATED TO PAPS THAT WERE NOT COVERED BY ANY
APPROPRIATION IN THE PERTINENT GAA. This means that the Executive seemed to
be specifying the PAPs where the money shall be spent which is the power of the purse
that resides in Congress alone.
An example was the Disaster Risk, Exposure, Assessment and Mitigation (DREAM)
Project under the DOST which when broken down did not have an item for personnel
services and capital outlays, only for MOOE.
Aside from transferring funds to the DREAM project exceeding by almost 300%, DAP
allotted funds for personnel services and capital outlays which Congress did not
appropriate for in the first place.
AGAIN, PROOF OF NON-COMPLIANCE TO THIS REQUISITE ARE THE CROSS
BORDER AUGENTATIONS FROM SAVINGS WHICH ARE CLEARLY PROHIBITED BY
THE CONSTITUTION. SECTION 25(5) ARTICLE VI ONLY ALLOWS AUGMENTATION
WITHIN THE RESPECTIVE OFFICES STATED THEREIN.

During the oral arguments, Secretary Abad stated the following instances wherein crossborder transfers/ augmentations transpired:
(1) Request from the House of Representatives for e-library funds (Legislative
Library and Archives Building/ Congressional e-library) (they lacked 43 Million).
The HoR were constrained to finish this project because COA informed them
that failure to do so will cause serious deterioration of the building and
equipments therein. They wrote to the President requesting for an
augmentation of that item, which was granted.
(2) Request from the Commission on Audit for their good governance programs.
The COA needed IT equipment and consultants and litigators to help with their
audit work and they requested funds form the Executive Department. When
the President saw that it was important for the Commission to be provided
those equipment, the request was granted.
(3) President made available to the Commission on Elections the savings of his
department upon their request for funds.

C. WHETHER OR NOT THE RELEASE OF UNPROGRAMMED FUNDS UNDER DAP WAS IN


ACCORD WITH THE GAAS7

DBM avers that there are three instances wherein unprogrammed funds can be availed
of:
(1) Revenue collections exceeded original revenue targets proposed in the BESF
submitted by the president to congress
(2) New revenues were collected or realized from sources not originally considered
in the BESF
(3) Newly approved loans for foreign assisted projects secured
NO. THE RELEASE OF UNPROGRAMMED FUNDS WERE NOT IN ACCORD WITH
THE GAAS. THE COURT RULES THAT THERE ARE ONLY TWO INSTANCES WHEN
THE UNPROGRAMMED FUNDS CAN BE RELEASED (WHICH ARE BOLSTERED
BY THE TEXTS IN THE 2011 AND 2012 GAA AND MORE CLEARLY BY GAA 2013)8
The controversy arises due to the difference in the interpretation of the phrase revenue
collections must exceed the original revenue targets. DBM construes this as to refer
only to the collections for each source of revenue in the BESF, the condition is
complied as long as one source of revenue exceeds its target.

7 This issue is raised by Araullo and Belgica in their respective memoranda.


8 2011 GAA
1. Release of Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the
Philippines to Congress pursuant to Section 22, Article VII of the Constitution, including savings generated from programmed appropriations for the year: PROVIDED, That
collections arising from sources not considered in the aforesaid original revenue targets may be used to cover releases from appropriations in this Fund: PROVIDED,
FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the
issuance of a SARO covering the loan proceeds: PROVIDED, FURTHERMORE, That if there are savings generated from the programmed appropriations for the first two
quarters of the year, the DBM may, subject to the approval of the President, release the pertinent appropriations under the Unprogrammed Fund corresponding to only fifty
percent (50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That the release of the balance of the total savings from programmed appropriations for the
year shall be subject to fiscal programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of
the Philippines to Congress pursuant to Section 22, Article VII of the Constitution: PROVIDED, That collections arising from sources not considered in the aforesaid original
revenue targets may be used to cover releases from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-assisted projects,
the existence of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.
2013 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of
the Philippines to Congress pursuant to Section 22, Article VII of the Constitution, including collections arising from sources not considered in the aforesaid original revenue
target, as certified by the BTr: PROVIDED, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose
shall be sufficient basis for the issuance of a SARO covering the loan proceeds.

The petitioners, on the other hand (and the Court sides with them on this) take the
phrase to mean the total revenue collections must exceed the total revenue target
in the BESF.
This requirement should be construed in light of the purpose of the unprogrammed
funds as standby appropriations to support additional expenditures. In the even that
the revenue collections exceed targets, the government shall have more than enough to
cover additional expenditures thus the unprogrammed funds can be dispensed with
and disbursed.
Following the DBMs definition would create fake surplus since exceeding targets in
one revenue stream did not necessarily mean that the government indeed had
exceeded revenue targets as a whole.

D. WHETHER OR NOT DAP VIOLATES:


(1)

EQUAL PROTECTION CLAUSE


Petitioners say that DAP practiced undue favoritism in favor of select legislators in
contravention of this clause when it released funds upon their request.
They add that no reasonable classification was used in distributing funds under DAP.
COURT: THIS ALLEGATION LACKS FACTUAL BASIS. Claims are unsupported with
relevant data. On the discrimination against legislators: cannot warrant a finding of
contravention of the equal protection clause. The denial of equal protection can only
be raised by the parties who suffer it, and in these cases, none of the legislators brought
to the fore when and how the denial of equal protection occurred and explain why there
was a denial in their situation. Ruling on this will cause the Court to speculate.
Guesswork and speculation cannot overcome the presumption of the constitutionality of
the assailed executive act.

(2)

SYSTEM OF CHECKS AND BALANCES


Petitioners claim that the system of checks and balances was compromised because
some legislators were forced to be silent about the issues and anomalies surrounding
DAP when they were given funds from it
The President arrogated unto himself the power of appropriation vested in the Congress
because of NBC No. 541
COURT: EARLIER DISCUSSIONS ON THE INFRIGEMENT OF THE DOCTRINE OF
SEPARATION OF POWERS HAVE RESOLVED THIS ISSUE.

(3)
PRINCIPLE OF PUBLIC ACCOUNTABILITY
Petitioners insist that DAP is repugnant to this principle because the legislators
relinquished the power of appropriation to the Executive and exhibited a reluctance to
inquire into DAPs legality
COURT: WE HAVE HELD THAT DAP AND ITS IMPLEMENTING ISSUANCES WERE
POLICIES AND ACTS THAT THE EXECUTIVE COULD PROPERLY ADOPT AND DO
IN THE EXECUTION OF GAAs to the extent that they sought to implement
strategies to ramp up and accelerate the economy of the country.

E. WHETHER OR NOT FACTUAL AND LEGAL JUSTIFICATION EXISTS TO ISSUE A TEMPORARY


RESTRAINING ORDER (TRO) TO RESTRAIN IMPLEMENTATION OF DAP, NBC 541 AND ALL
OTHER EXECUTIVE ISSUANCES IMPLEMENTING DAP

COURT: THE DOCTRINE OF OPERATIVE FACT SHALL APPLY. A blanket TRO should
not be applied.
It is said that a legislative or executive act is declared void for being unconstitutional
cannot give rise to any right or obligation. But the Court asks: should we not recognize
the need to except from the rigid application of the rule the instances in which the
void law or executive act produced an almost irreversible result? This is answered
by the doctrine of operative fact.
This doctrine recognizes the existence of the law or act prior to the determination of its
constitutionality as an operative fact that produced consequences that cannot always be
erased. The past cannot always be erased by a new judicial declaration.
This doctrines application to DAP proceeds from equity and fair play.
The Court cites the following cases to support its position:
O Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council
Prior to the declaration of unconstitutionality of the said executive act,
certain acts or transactions were made in good faithwhich cannot be
just set aside or invalidated by its subsequent invalidation.
O Tan v. Barrios court held that despite invalidity of military courts over civilians,
certain operative facts should be acknowledged to have existed so as not to
trample upon the rights of the accused
O Olaguer v. Military Commisssion
The operative fact doctrine is not confined to statutes and rules and regulations, but can
also be applied by analogy to decisions made by the President or agencies under the
executive department. In the interest of justice and equity, this doctrine can be applied
liberally and in a broad sense to encompass said decisions of the executive branch. It
can be applied to acts and consequences resulting from the reliance not only on a law or
executive act which is quasi-legislative in nature but also on decision or orders from the
executive branch which were later nullified. This Court is not mindful that such acts and
consequences must be recognized in the higher interest of justice, equity and fairness.
DAP yielded undeniable positive results that enhanced the economic welfare of the
country. Not applying this doctrine would result in the undoing of worthy results such as
infrastructure and would result in the most undesirable wastefulness.
Justice Brion: Operative fact can only apply to the PAPs that can no longer be undone
whose beneficiaries relied in good faith on the validity of the DAP but not to the authors,
proponents, and implementors of DAP unless there are concrete findings of good faith in
their favor by the proper tribunals.

DISPOSITIVE PORTION

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
(c) The funding of projects, activities and programs that were not covered by any appropriation in the
General Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the
National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the
conditions provided in the relevant General Appropriations Acts.
DOCTRINE
Doctrine of Operative Fact
Separation of Powers
Power of the Purse (Congress)
RELEVANCE TO THE LESSON
Provisions on Appropriation were discussed, particularly the ones cited below.

PROVISION
Section
25(5)
Article VI of the
1987 Constitution

Sec. 38, Ch.5, Bk.


6, EO 292

Sec. 39, Ch.5, Bk.


6, EO 292

WHAT IT SAYS
No law shall be passed authorizing any transfer of
appropriations; however, 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 Constitutional
Commissions may, by law, be authorized to
augment any item in the general appropriations law
for their respective offices from savings in other
items of their respective appropriations.

Suspension of Expenditure of Appropriations. Except as otherwise provided in the General


Appropriations Act and whenever in his judgment
the public interest so requires, the President, upon
notice to the head of office concerned, is
authorized to suspend or otherwise stop further
expenditure of funds allotted for any agency, or any
other expenditure authorized in the General
Appropriations Act, except for personal services
appropriations used for permanent officials and
employees.
Authority to Use Savings in Appropriations to
Cover Deficits. - Except as otherwise provided in
the General Appropriations Act, any savings in the
regular appropriations authorized in the General
Appropriations Act for programs and projects of
any department, office or agency, may, with the
approval of the President, be used to cover a
deficit in any other item of the regular
appropriations: provided, that the creation of new
positions or increase of salaries shall not be

WHY WAS IT CITED


DBM used its GAA 2011 and 2012 as
legal bases for the transfer of funds under
DAP, however, the provisions in GAA
2011 and 2012 lacked the underlined
phrase here.
This was clearly violated by the DBM
when:
(1)
It failed to have a law that
authorized the augmentation of items
in the GAA (GAA 2011 and 2012
provisions, were not textually faithful
to the Constitution)
(2)
It declared as savings the funds
that did not fall under the definition of
savings
(3)
It did cross-boarder fund
transfers.
DBMs justification on its withdrawal and
pooling of unutilized allotment releases

DBMs justification on its withdrawal and


pooling of unutilized allotment releases

Section
29(1)
Article VI of the
Constitution

allowed to be funded from budgetary savings


except when specifically authorized by law:
provided, further, that whenever authorized
positions are transferred from one program or
project to another within the same department,
office or agency, the corresponding amounts
appropriated for personal services are also
deemed transferred, without, however increasing
the total outlay for personal services of the
department, office or agency concerned.
No money shall be paid out of the Treasury except
in pursuance of an appropriation made by law.

Petitioners argue that there was a


violation of this section. The Court ruled
that there was none, as DAP did not
appropriate funds but was only an
administrative measure for stimulating
government expenditure.

OTHER NOTES

Pretty infographics are also available in the Budget ng Bayan website of the DBM (its a website specifically
designed for citizens who want to know more about our national budget and how its made:
http://budgetngbayan.com/the-budget-cycle/). Please do check it out! If you want a PDF copy of the budget
cycle, its also uploaded in the GDrive

The documents and the seven (7) evidence packets submitted by the OSG are as follows:

DOCUMENTS
o A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and their Realignment);
o Circulars and orders, which the respondents identified as related to the DAP, namely:
NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);
NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY
2012);
NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure
Withdrawal of Agencies Unobligated Allotments as of June 30, 2012);
NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);
DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of
Commitments/Obligations of the National Government);
COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the
Submission of Quarterly Accountability Reports on Appropriations, Allotments,
Obligations and Disbursements);
NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in
the Government).
o A breakdown of the sources of savings, including savings from discontinued projects and unpaid
appropriations for compensation from 2011 to 2013
o

Another set of documents in further compliance with the Courts request


Certified copies of the certifications issued by the Bureau of Treasury to the effect that the
revenue collections exceeded the original revenue targets for the years 2011, 2012 and
2013, including collections arising from sources not considered in the original revenue
targets, which certifications were required for the release of the unprogrammed funds as
provided in Special Provision No. 1 of Article XLV, Article XVI, and Article XLV of the 2011,
2012 and 2013 GAAs

A report on releases of savings of the Executive Department for the use of the
Constitutional Commissions and other branches of the Government, as well as the fund
releases to the Senate and the Commission on Elections (COMELEC).

SEVEN EVIDENCE PACKETS


o 1st Evidence Packet: containing seven memoranda issued by the DBM through Sec. Abad,
inclusive of annexes, listing in detail the 116 DAP identified projects approved and duly signed by
the President, as follows:
Memorandum for the President dated October 12, 2011 (FY 2011 Proposed
Disbursement Acceleration Program (Projects and Sources of Funds);
Memorandum for the President dated December 12, 2011 (Omnibus Authority to
Consolidate Savings/Unutilized Balances and its Realignment);
Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment);
Memorandum for the President dated September 4, 2012 (Release of funds for other
priority projects and expenditures of the Government);
Memorandum for the President dated December 19, 2012 (Proposed Priority Projects
and Expenditures of the Government);
Memorandum for the President dated May 20, 2013 (Omnibus Authority to Consolidate
Savings/Unutilized Balances and their Realignment to Fund the Quarterly Disbursement
Acceleration Program); and
Memorandum for the President dated September 25, 2013 (Funding for the Task Force
Pablo Rehabilitation Plan).
o 2nd Evidence Packet: 15 applications of the DAP, with their corresponding Special Allotment
Release Orders (SAROs) and appropriation covers
o 3rd Evidence Packet: list and descriptions of 12 projects under the DAP
o 4th Evidence Packet: identifying the DAP-related portions of the Annual Financial Report (AFR) of
the Commission on Audit for 2011 and 2012
o 5th Evidence Packet: a letter of Department of Transportation and Communications(DOTC) Sec.
Joseph Abaya addressed to Sec. Abad recommending the withdrawal of funds from his agency,
inclusive of annexes
o 6th Evidence Packet: a print-out of the Solicitor Generals visual presentation for the January 28,
2014 oral arguments
o 7th Evidence Packet: listed the sources of funds brought under the DAP, the uses of such funds
per project or activity pursuant to DAP, and the legal bases thereof

DISSENTS:
DEL CASTILLO, J.:
DAP, under NBC 541 is only partially unconstitutional. The following were NOT violations of the law or the
Constitution:
1. The President validly ordered slow-moving projects to be discontinued or abandoned, pursuant to his power to
permanently stop expenditure under Sec 38 of the Administrative Code.
Sec 38: Except as otherwise provided in the GAA and whenever in his judgement the
public interest so requires, the President upon notice of the head of office concerned, is
authorized to suspend or otherwise stop further expenditure of funds allotted for any agency,
or any other expenditure authorized in the GAA, except for personal services appropriations
used for permanent officials and employees.

The burden of proof rests on the petitioners to show that the permanent stoppage of expenditure on slow-moving
projects does not meet the public interest standard under section 38.
Petitioners failed to clearly and convincingly show:
o that the DAP was a mere subterfuge by the govt to frustrate the legislative will as expressed in the GAA
o the discontinued slow-moving projects were not actually slow-moving and the discontinuance was
motivated by malice or ill will
o no actual and legitimate public interest was served by the DAP

2. Provisions in the GAA giving Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO) a
period of two years simply means the work or activity may be pursued within the aforesaid period. It does not
prevent the President from discontinuing such projects if public interest so requires.

GAA provision on the availability for release and obligation of the appropriations relative to the MOOE and CO for
a period of two years is not a ground to declare the DAP invalid because the power of the President to
permanently stop expenditure under sec 38 of the administrative code is not expressly abrogated by this
provision.

3. It is inaccurate to state that the unobligated allotments were indiscriminately declared as savings, considering
that there was a legitimate state interest involved in ordering their withdrawal.
Burden of proof was on petitioners to show that such State interest failed to comply with the public interest
standard in Sec 38.
4. Augmentations of projects is allowed as per Sec 25(5), Art VI of the Consti, and sheer magnitude of the
augmentation is not a ground to declare such augmentation unconstitutional.
Even if Congress appropriated only P1.00 for a particular project in the Appropriations of the Executive
Department, and the Executive generated savings in the amount of P1Billion, it is theoretically possible to use that
money for the one peso project.
The Court cannot speculate by the sheer magnitude of the augmentations that a constitutional breach occurred.
Substantial augmentations in this particular case, without more, cannot be declared unconstitutional absent
showing a grave abuse of discretion.
5. There was no unlawful release of the Unprogrammed Funds through the DAP.
Certain provisos in the 2011, 2012, and 2013 GAAs were exceptions to the general rule that unprogrammed
funds may only be released when the revenue collections exceeded the original revenue targets.
Even if the revenue collections do not exceed the original revenue targets, funds from the Unprogrammed Funds
can still be released.
6. Unprogrammed Funds does not equate to savings.
The Executive Department never claimed that the Unprogrammed Funds are savings. What it stated is that the
funds released from the Unprogrammed Funds were one of the sources of funds for DAP.
All funds released under the DAP have a corresponding appropriation cover. They were released pursuant to a
legitimate work, activity or purpose for which they were authorized.
Petitioners failed to prove that Unprogrammed Funds were released to finance projects that did not fall under
specific items on the GAA provision on the Unprogrammed Fund.
There is no basis as of yet to rule that the UNprogrammed Fund was unlawfully released.
CONCURS WITH EVERYTHING ELSE.