MariaCarolinaAraullovsBenigno

AquinoIII
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agency, the funds allotted therefor will be withdrawn by the Executive.
Once withdrawn, these funds are declared as savings by the Executive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.
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.