Ronel U.

Buenaventura

Araullo vs Aquino (DAP)

Facts: To address probable economic growth reduction due to underspending and large deficiencies in infrastructure in 2011, the
PNoy Administration developed and implemented the Disbursement Acceleration Program (DAP) as a stimulus package intended to
fast-track public spending and to push economic growth by investing on high-impact budgetary projects, activities or programs (PAP),
to be funded from savings generated during the year as well as from unprogrammed funds.
Following, however, the privilege speech of Sen. Jinggoy Estrada concerning the P50M alleged incentive given to him for
voting in favor of impeachment of Chief Justice Corona and the public statement reactions of Secretary Abad of DBM explaining that
such incentive is actually part of the DAP, nine petitions assailed the constitutionality of DAP, National Budget Circular (NBC) 541
and other DAP-related issuances, primarily on the ground that it violated Section 29(1), Section 25(5), Article VI of the 1987
Constitution. The DBM, on the other hand, listed as legal bases for DAPs use of savings the same provision, Section 38 of the EO
292 or Administrative Code, and General Appropriations Acts (GAA) of 2011, 2012 and 2013.

Issue: W/N DAP is constitutional.

Held: DAP, as policy program designed to promote economic growth, is constitutional in the context of budget execution stage,
where the Executive is mandated to faithfully execute the laws, including the GAA. As it is a policy or strategy to stimulate economy
through accelerated spending, it did not violate Section 29(1) which provides that no money shall be paid out of the Treasury except
in pursuance of an appropriation made by law. Nevertheless, certain acts and practices are unconstitutional for being in violation of
Section 25(5), Article VI. The requisites of said provision are: (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 heads of Constitutional Commissions to
transfer funds within their respective offices; (2) the funds to be transferred are savings generated from the appropriations for their
respective offices; and (3) the purpose of the transfer is to augment an item in the general appropriations law for their respective
offices.
As to first requisite, the GAAs of 2011 and 2012 lacked valid provisions to authorize transfers of funds under the DAP;
hence, transfers under the DAP were unconstitutional. The GAA provision on use of savings lacked the phrase for their respective
offices which consequently allowed the transfer of funds from savings to augment any item in the GAA even if the item belonged to
an office outside the Executive. Thus, such provision cannot be used to justify transfer of appropriations from the Executive to another
branch or a constitutional commission.
As to second requisite, there were no savings from which the funds could be sourced for the DAP. Savings, under 2011, 2012
and 2013 GAAs, could only be generated when appropriation was already obligated (meaning free from obligation or encumbrance)
and released, but the purpose of the appropriation has been fulfilled, or the need for the appropriation is no longer existent, either
because of discontinuance of PAP, vacancies in positions, or implementation of cost-reduction systems. Likewise under the GAA,
Congress provided certain appropriations that extended to one fiscal year, and a one-year period of availability of the funds for all
allotment classes. NBC 541, however, ordered the withdrawal and transfer of unreleased appropriations and unobligated allotments
and the pooling of unreleased appropriations as of midyear or June 30, 2012. This in effect deprived funding for PAPs with existing
appropriations under the GAAs. For their defense, the respondents relied on Section 38, Chapter 5, Book VI of Administrative Code,
which is misplaced as it only authorized suspension or stoppage and not withdrawal of unobligated appropriations.
As to third requisite, no funds from savings could be transferred under the DAP to augment deficient items not provided in
GAA. From the evidence packets submitted by OSG, it appears that some of the savings pooled under the DAP were allocated to
PAPs that were not covered by any appropriation in the pertinent GAAs, such as the funding of personnel services of Disaster Risk,
Exposure, Assessment, and Mitigation under the DOST. Only the Congress wields the power of the purse by specifying the PAPs for
which public money should be spent, otherwise it infringes the principle of separation of powers. Moreover, cross-border
augmentations, or those made outside respective offices, from savings are prohibited by the Constitution. During oral arguments,
Secretary Abad admitted that cross-border augmentations took place, such as those given to the House of Representatives to augment
the building of e-library and to COA for IT infrastructure program.
Furthermore, sourcing the DAP from unprogrammed funds, as separate source, despite the original revenue targets not
having been exceeded was invalid. Unprogrammed appropriations are appropriations that provided standby authority to incur
additional agency obligations for priority PAPs when revenue collections exceeded targets, and when additional foreign funds are
generated. What the respondents submitted is only a certification from Bureau of Treasury and Department of Finance that revenue
collection had exceeded the original revenue target of only one source the dividends from the shares of stock held by GOCCs. The
revenue targets, however, should be considered as a whole, not individually; otherwise, there would only be artificial revenue
surpluses resulting to an unsound fiscal management measure.
Hence, the acts and practices under DAP declared as unconstitutional are: (1) withdrawal of unobligated allotments from
implementing agencies, declaring them as savings prior to the end of the fiscal year and without complying with the statutory
definition of savings; (2) cross-border transfers of the savings of Executive to augment appropriations of other offices outside the
Executive; (3) funding of projects, activities and programs that were not covered by any appropriation in the GAA; and (4) use of
unprogrammed funds despite absence of certification by the National Treasurer that the revenue collections exceeded the revenue
targets for non-compliance with the conditions provided in relevant GAAs.