SYJUCO v.

ABAD
G.R. No. 209135 July 1, 2014
Case Digest
In relation to ARTICLE VI (Legislative Department)
FACTS:
When 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agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are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.