ARAULLO v.

AQUINO (JT)
GR No. 209287, et al
July 1, 2014
Bersamin, J.
Petitioners/Respondents: ANG DAMI. Basta main respondent si Noynoy in his
capacity as the Fresident of the Philippines

allowed cross-border augmentations, or transfers to funds that are not within the
respective offices of the Pres, Senate Pres, etc. Eh bawal yun. So ayun.
(There was also an issue on impoundment. But di impoundment yung DAP.
Impoundment entails deduction of appropriations, and not transfer, which is
precisely what the DAP authorizes.)
Hence, DAP is unconstitutional.

Summary
The DAP is basically a program where savings of government projects from
unreleased appropriations and withdrawal of unobligated allotments, as well as
unprogrammed funds, were used in order to augment the funding of another
government project. This is a system under the DBM designed to help boost the
Philippine economy. Pursuant to the DAP, NBC No. 41 was issued to implement
the DAP.
Basically, the NBC No 41 allows the augmentation of projects not considered in
the budget expected to be implemented during the year. (The budget is
pursuant to the general appropriations act, or GAA, for that given fiscal year.)
SoThe government declares savings coming from unobligated allotments and
withdrawing unreleased appropriations, which are later released and applied to
augment existing projects and support other priority projects.
Now, DAP is NOT an appropriation measure, because there was no law required
to implement it. This is pursuant to Sec 29(1) of Article VI, where the president
may adapt the budget to changes depending on the countrys economy.
However, the unreleased appropriations and withdrawn obligated allotments
under the DAP were NOT savings. Thus, transferring them would contravene
sec.25(5) of Art VI. Said section requires that there be a LAW authorizing the
transfer, and in that section, the funds to be transferred must be SAVINGS and
the purpose is to AUGMENT an item for the respective offices of the Pres, Senate
Pres, Speaker, Chief Justice, and heads of Consti Comms.
First, for compliance with 25(5), there must be a LAW. However, the GAAs of
2011 and 2012 authorizing the transfer of funds were unconstitutional. Why?
Because the GAAs allowed the augmentation of any item in the act, even if the
item belonged to an office outside the Executive.
Next, there were NO SAVINGS from which funds could be sourced for the DAP.
Why? Because the funds in the DAP were not actually savings. How? Because
savings means excess money after the items that needed funding have been
funded. In NBC No. 541, no legal basis was given as to justify the treatment of
unreleased or unalloted appropriations as savings.
Next, the funds under the DAP should not be used to augment items not
provided for in the GAA. But what happened was that the DAP authorized the
transfer of funds to projects not under the GAA. What was worse is that it

Intro, parang thesis lang: The petitioners are assailing the constitutionality of
the (1) Disbursement Acceleration Program [DAP], (2) National Budget Circular
[NBC] No. 41, and (3) related issuance of the Dept of Budget and Management
[DBM] implementing the DAP. Basically, the main point is that the DAP violates
Sections 25(5) & 29(1), Article VI of the Consti.
Facts
This all started when Jinggoy delivered a frivileged speech wherein he revealed
that certain senators, himself included, received 50M pesos each as incentive for
voting in favor of Coronas impeachment. As a response, Sec. Abad of DBM
released a pubic statement which stated that the funds given to the senators
were part of the DAP, which was in place since 2011.
What is DAP in the first place? According to Sec. Abad, DAP is a program
designed by DBM to ramp up the spending (of the govt) to accelerate economic
expansion. Basically, the less the government spends, the slower the GDP of the
country rises. Kaya may DAP para tumaas GDP natin. Abad also said that it
was the senators were the ones that requested the funding.
The funds under the DAP are taken from:
1. unreleased appropriations under Personnel Services
2. unprogrammed funds
3. carry-over appropriations unreleased from the previous year, and
4. budgets for slow-moving items or projects that had been realigned to
support faster-disbursing projects
But the DBM later claimed that the DAP releases were sourced from:
1. savings of the government, derived from:
a. pooling of unreleased appropriations, like unreleased
Personnel Services appropriations, and appropriations from slowmoving/discontinued projects, and
b. the withdrawal of unobligated allotments, also for slowmoving programs, earlier released to govt agencies; and
2. unprogrammed funds
Issues
Procedural Issue: W/N certiorari, prohibition and mandamus are proper
remediesNOT gonna include this na. So I dunno.
Substantive issues:
1. (relevant to our class) W/N DAP violates Sec 29 of Art VI

2.
3.
4.
5.

(relevant to our class) W/N DAP, NBC No 541 and other implementing
issuances violate Sec 25(5) of Art VI
W/N DAP violates: EPC, system of checks and balances, principle of
public accountability
W/N there exists a factual & legal justification to issue a TRO against the
DAP
W/N the release of unprogrammed funds under the DAP was in accord
with the GAAs (gen. appropriation acts)

Ratio
Overview of the Philippine Budget System

Really boring shit, but I will include it anyway

Budget is defined by Commonwealth Act No. 246 as the financial

program of the National Government for a designated fiscal year,
consisting of the statements of estimated receipts and expenditures.
o Simply put, budget is the master financial plan of the
government
o The purpose of the national budget is to protect the people, the
territory and sovereignty of the State, by performing vital
functions which require public expenditures.

Governments raise money bywell, you should know this by now,

Montero babiestaxation.

The Philippine budget cycle has four phases: (skip this if you want.
Super technical ng shizniz but if magtanong sya about this, wellsana
hindi. Trolololol. But do read the budget legislation and budget
execution parts, he might ask the procedure in Congress.)
1. BUDGET PREPARATION

the DBM issues a budget call

The budget call contains the parameters,

guidelines
and
procedures
set
by
the
Development Budget Coordination Committee
(DBCC) to aid government agencies in the
preparation and submission of their budget
proposals

There are two kinds of budget calls:

o National Budget Call: addressed to all
agencies, including state universities and
colleges; and
o Corporate Budget Call, addressed to all
GOCCs and govt financial institutions

After the budget call, the agencies submit their

respective agency budget proposals

The govt agencies partner with civil society

organizations and other citizen-stakeholders in
the preparation of the proposals

The proposals are presented before a technical

panel of the DBM

DBM reviews the budget proposals, comes up

with recommendations, and consolidates the
recommended budgets into the National
Expenditure Program (NEP) and a Budget of
Expenditures
and
Sources
Financing
(BESF)
Both NEP and BESF (besfrIend. Lol. Labo. Sssh Jates
concentrate!) are again presented to the DBM and the
DBCC for reprioritization and refinements.
Once approved by el Presidente and the Cabinet, the
DBM prepares the budget documents for submission
to Congress. The documents consist of: (1) Presidents
Budget Message, and (2) the BESF (as mandated by
Article VII, Sec. 22), and the NEP
At this point, the ponente discusses definitions of all
sorts of government expenditures shiz. Yes, puro
definitions, so skip if you want. Super boring. Dont say I
didnt warn you.
Basically there are kinds of puhlic/government
expenditures, classified into two categories:

(1) capital expenditures or those whose

usefulness lasts for more than one year, and
which add to the assets of the government, and

(2) current operating expenditures, or

purchases of goods and services the benefit of
which does not extend beyond the fiscal year.
Current operating expenditures consist of: (a)
personal services and (b) maintenance of
other operating expenses
Public expenditures are also broadly grouped into:
economic development expenditures, social services or
social development expenditures, general government
expenditures, national defense expenditures, and public
debt.
Public revenues cover all income or receipts of the
govt treasury used to support govt expenditures. There
are two aspects of this:

Quasi-private income where the State holds

property and engage in trade which generate
revenues

Taxes lifeblood of the govt blah blah

Hi Cler! Sana di ako matawag today.

Look at the full text to see where the govt gets

its revenue. Basically some are general
sources (income from business operations,
interest income, forex gains, grants/donations)
and specific sources (taxes on income,

property, goods and services, fines and

penalties, etc.)
2. BUDGET LEGISLATION (I think this is the part relevant to
Sec. 25?)

covers the period commencing from the time the

Congress receives the Presidents budget, inclusive of
NEP and BESF, up to the approval by the President of the
GAA (general appropriations act).

Basically the Presidents Budget is assigned to the House

of Reps appropriations committee (AppCom) on first
reading.

The AppCom conduct budget hearings,

Thereafter,
the
House
drafts
the
General
Appropriations Bill (GAB. Think of GAP, but B). (Thus,
the bill originates from the House of Reps.)

The GAB is presented by the AppCom in plenary

session.

Ang itim ni Nat.

As with other laws, the GAB is approved on the

third reading before it is transferred to the
Senate

The Senate, upon receipt, would conduct its own

hearings. The Senate may actually conduct the hearings
simultaneously with the Houses deliberations.

The Senates Finance Committee may submit

proposed amendments only after the Houses
version is formally transmitted to the Senate.

Then comes the Bicameral Conference Committee

for the purpose of harmonizing conflicting provisions of
the GAB.

Then, the GAB is presented to the President for approval.

President (think Your Man, Our Man, Armand Dulay) then

reviews it. He may veto it and all, or even identify some
items for conditional implementation.

If, by the end of the fiscal year, Congress shall have

failed to pass the GAB, the GAA for the preceding fiscal
year shall be deemed reenacted until the GAB is passed
by Congress!

At this point, pagod na ako, so bear with me. Oso. Bear.

3. BUDGET EXECUTION

The budget execution phase is the primary function of

the DBM

The DBM (not LBM ah, mind you) is tasked to perform

the ff procedures:
a. issue programs and guidelines for the release of
funds
b. prepare an allotment and cash release program
c. release allotments

d. issue disbursement authorities

Prior to the implementation, the various dept and
agencies are required to submit the Budget Execution
Documents to outline their plans and performance
targets. The docs must contain the physical and financial
plans, the monthly cash program, estimate of monthly
income, and list of obligations not yet due and
demandable.

Upon approval, the DBM prepares the allotment

release program (sets a limit for allotments to a
specific agency) and cash release program (fixes the
monthly, quarterly and annual disbursements)

Allotment is different from appropriation, because the

latter is the general legislative authority to spend
(remember this definition!).

To settle obligations incurred by the agencis, the DBM

issues a disbursement authority known as notice of
cash allocation (NCA). The NCA specifies the maximum
amount of cash that can be withdrawn from a govt
servicing bank for the period indicated.

Noncash disbursements may also be authorized.

A cash disbursement ceiling for overseas

operations is also authorized.

Actual disbursement or spending of government funds

terminates this phase.
4. ACCOUNTABILITY

this phase ensures that the govt funds have been

effectively and efficiently utilized to achieve the States
socio-economic goals.

Aiza can I have extra rice?

Accountability may be examined by performance targets

and outcomes; accountability reports; review of
performance; and COA audits. DONE. BOOM. TANGINA
THIS PART.

Nature of the DAP as a fiscal plan

The DAP, as earlier mentioned, was designed to promote economic

growth.

When Noynoy made pasok to the presidency, he made efficiency and

transparency in govt spending a significant focus of his administration.

While this resulted in an improved fiscal deficit in the GDP (5%), it also
decelerated govt project implementation and payment schedules.
o The World Bank opined that observed because of this, the
Philippine economic growth could be reduced

Hence, DAP was created.

o DAP was meant to be a stimulus package for fast-track
public spending to push economic growth by investing on
high-impact projects to be funded from the savings

o
o

generated during the year as well as from as

unprogrammed funds.
The government, by spending on public infrastructure, would
signify its commitment of ensuring profitability for prospective
investors.
DAP aims to stimulate the economy by way of accelerated
spending, by:

Streamlining the implementation processes through

infrastructure projects of DPWH and DEPED, and

Frontlining PPP (private-public partnership) projects

Butdid the stimulus package work?

Partially yes.

The DAP contributed to 1.3% GDP growth by the 4th

quarter of 2011.

The economy grew by 11.8% year on year, and

infrastructure spending grew to 34% by Sept 2013.
But how were the projects funded under the DAP chosen?
They were chosen based on:

Multiplier impact on the economy and infrastructure devt

Beneficial effect on the poor

Translation into disbursements

DAP SOURCES AND DISBURSEMENTSheto na ang meat! Ilabas na ang

extra rice!

Based on a memorandum from DBM Secretary Abad dated 12 October

2011, the following are the sources of DAP:
o Unreleased personal services appropriations (30billion
php)
o Unreleased appropriations (482 million)
o Unprogrammed fund from 2010 (12.3 billion)
o Carryover appropriation from 2010 (21.5 billion)
o Budget items for realignment (7.7 billion)
o TOTAL: 72,110,000,000 pesos

Among the projects to benefit from the DAP are:

o FOR GOCCs and Govt financial instituions

Rehab of LRT 1 and 2

National Housing Authority

Philippine Heart Center

Credit Info Corp

Bangko Sentral equity infusion

Etc., totaling an allotment of 26,945,000,000 pesos

o LGUs/Govt agencies

BIR data processing

COA IT infrastructure

DND housing facilities

DA irrigation and the Mindanao Rural Development

Project

DOJ operating requirements

DOST establishment of the National Meteorological and
Climate Center

DPWH various infrastructure projects

ARMM comprehensive peace and devt intervention

LGU support fund

various local projects

Quezon province Development assistance

Etc., totaling 44 billion pesos

o GRAND TOTAL: 70.895 billion pesos
Thereafter, on 12 Dec 2011, Abad requested Noynoy for omnibus
authority to consolidate the savings and unutilized balances
o The purpose of the request for omnibus authority is that it will
allow the DBM to undertake projects, even if their
implementation carries over to 2012, without necessarily
impacting the budget deficit cap in 2012.
This request for omnibus authority was followed by substantially
identical requests

NBC NO. 541 read this carefully. The bulk of the issues come from this fucking
circular

To implement the memo of Abad, he issued NBC No. 541, addressed to

all heads of departments, agencies, etc., with the subject Adoption of
Operational Efficiency MeasureWithdrawal of Agencies Unobligated
Allotments as of June 30, 2012

According the NBC No. 541, In the event that a measure is

necessary to further improve the operational efficiency of the
government, the President is authorized to suspend or stop
further use of funds allotted for any agency or expenditure
authorized in the GAA. (in other words, withdrawal of
unobligated allotments)
o This is because for from Jan-May 2012, the govt didnt meet its
spending targets. Thus, in order to accelerate spending and
sustain fiscal targets, Abad deemed it necessary to implement
expenditure measures to optimize the use of available resources.

The unobligated allotments to be withdrawn shall cover those of all govt

agencies, pertaining to: (1) capital outlays, (2) maintenance and other
operating expenses, and (3) personal services corresponding to
unutilized pension benefits declared as savings by the agencies
concerned.
o However, the following shall not be covered:

Constitutional offices granted fiscal autonomy by the

consti

State universities and colleges that adopted a

predetermined budget ceiling

Operating expenses earmarked for specific purposes, or

subject to realignment conditions accdg to the GAA

Foreign-assisted projects

Special purpose funds (e.g. calamity funds, PDAF!!!, Egovernment fund, etc) (oo, PDAF!! Had this been
constitutional, it means na bawal i-stop ang pagdisburse
ng PDAF under NBC No. 541!) #quito #qdaf
For the purpose of determining the amount of unobligated allotments
that shall be withdrawn, all depts/agencies/etc are required to submit,
not later than 30 July 2012, accountability reports
All released allotments which remained unobligated as of 30 June 2012
shall be immediately considered for withdrawal, based on
substantial carryover appropriations (but not if the project has a twoyear timeframe).
The withdrawn allotments may be:
o Reissued for the original programs and projects, from
which the allotments were withdrawn (in other words,
pwede ibalik sa project na tinanggalan ng allotment);
o Realigned to cover additional funding for other existing
programs; or
o Used to augment existing programs/projects of any
agency to fund priority programs not considered in the
2012 budget but expected to be started or implemented
during the year (eh gago pala eh!)
By 30 September 2012, the withdrawn allotments shall be pooled and
form part of the governments overall savings
Utilization of consolidated withdrawn allotments for other priority
programs and projects shall be subject to the approval of Noynoy
TO SUMMARIZE HOW THE DAP WORKS: The government declares
savings coming from unobligated allotments and withdrawing
unreleased appropriations, which are later released and applied
to augment existing projects and support other priority projects.
Boompanis.

DAP is not an appropriation measure, so no appropriation law was

required to adopt or implement it

Petitioners (well, some of them, not all) said that the Congress did not
enact a law to establish DAP. But the OSG said that since DAP is neither
a fund nor an appropriation, but a program for spending, the law was not
necessary

SC took the OSGs view. Love you Mahrra!

Also, Noynoy did not usurp the legislative power under Section 29(1)
of Article VI:
o The President has sufficient discretion during the execution of
the budget to adapt the budget to changes in the countrys
economic situation
o He could pool savings and identify projects to be funded under
the DAP
o No appropriation was involved, because money had already
been set apart by Congress through the GAA
o Thus, no usurpation of legislative power

Unreleased appropriations and withdrawn unobligated allotments

under the DAP were NOT SAVINGS, and the use of such appropriations
contravened Article VI, Sec 25(5)

BV ka Jag, ang short ng digest mo.

Ang haba talaga ng DAP case. I now know how Cler feels.

Anyway, although executive discretion and flexibility are

necessary in the execution of the budget, ANY TRANSFER OF
FUNDS SHOULD CONFORM TO SEC. 25(5), ART. VI
o The SC concedes that executive discretion is necessary to
achieve sound fiscal administration

Thus, the President and the heads of offices require

flexibility in making necessary adjustments
o The President has the power to transfer funds to meet
unforeseen events that may otherwise impede the efficient
implementation of projects under the GAA
o Congress has traditionally allowed much flexibility to the
President in allocating funds pursuant to the GAAs.

This flexibility comes in the form of policies that the

executive may adopt during the budget execution phase.

The DAP thus falls in this category as a policy.

o (Then comes a whole bunch of historical shit on how the
president has been given the authority to transfer funds blah
blah blah)
o Basically the SC ends this part by saying Sec 25(5) should be
interpreted in the context of a limitation on the
Presidents discretion over the appropriations during the
budget execution phase

Requisites for the valid transfer of appropriated funds under Sec

25(5):
o There is a law authorizing the President, Senate President,
Speaker, Chief Justice, and heads of the Consti Comms
o The funds to be transferred are savings generated from the
appropriations for their respective offices
o The purpose of the transfer is to augment an item in the
general appropriations law for their respective offices
DISCUSSION ON THE THREE REQUISITES:

FIRST REQUISITE: The GAAs of 2011 and 2012 lacked valid

provisions authorizing transfers of funds under the DAP. Thus,
unconstitutional.
o Section 25(5) is NOT a self-executing provision, so there must be
a law to implement it. That law is generally the GAA of a given
fiscal year.
o Under the GAAs of 2011 and 2012, the provision on the Use of
Savings says: The [people I mentioned earlier] are hereby
authorized to augment any item in this Act from savings in
other items of their respective appropriations.

That provision was used by the DBM to justify the use of

savings under the DAP.
o But..a fair reading of this shows that the GAAs of both 2011 and
2012 did not carry the phrase for their respective
offices as contained in Sec 25(5). Thus, the provision is
textually unfaithful to the Consti.
The phrase for their respective offices was to
authorize only transfers of funds within their
offices
What was included in the GAAs was the phrase to
augment any item in this Act, thereby allowing the
transfer of funds from savings to augment any item in
the GAA, even if the item belonged to an office outside
the Executive (see the list I placed sa taas)
At the very least, the provisions cannot be used to
claim authority to transfer appropriations from
the Executive to another branch
o After realizing the problem, Congress inserted the omitted
phrase in the counterpart provision in the 2013 GAA: The
[insert the people] are hereby authorized to use savings in their
respective appropriations to augment actual deficiencies
incurred for the current year in any item of their respective
appropriations
SECOND REQUISITE: There were NO savings from which funds
could be sourced for the DAP
o The central question to be asked is: Were the funds used in
the DAP actually savings? Answer is a resounding NO.
o Petitioners argue that the term savings should be understood
to refer to the excess money after the items that needed
funding have been funded. Thus, there could only be
savings when the projects (for which the funds had been
appropriated) were actually implemented
o OSG argues differently, by saying that savings were
appropriations balances, being the difference between the
appropriation authorized by congress, and the actual amount
allotted for the appropriation.
o SC sided partially with the petitioners
o SC thereafter enumerated certain principles in ascertaining the
meaning of savings, to wit:
First principle: Congress wields the power of the purse;
that is, Congress decides how the budget will be spend,
what projects to fund, and how much is to be spent for
each project
Second principle: The Executive is expected to faithfully
execute the GAA and to spend the budget in accordance
with the GAA
Third principle: In making the Presidents power to
augment operative under the GAA, Congress recognizes

o
o

the need for flexibility in budget execution. Thus,

Congress diminishes its own power of the purse by
delegating a fraction of its power to the Executive. BUT,
Congress does not thereby allow the Executive to
override its authority thereby exceeding the delegated
authority.
Fourth principle: Savings should be actual, or something
that exists presently in fact and not something
theoretical, possible or hypothetical.
Thus, savings should be construed strictly against
expanding the scope of the power to augment.
Under the GAA of 2011, 2012 and 2013, the following definition
of savings can be found:

Savings refer to portions or balances of any programmed

appropriation in this Act free from any obligation of
encumbrance which are (i) still available after the
completion or final discontinuance or abandonment of
the work, activity or purpose for which the appropriation
is authorized; (ii) from appropriations balances arising
from unpaid compensation and related costs pertaining
to vacant positions and leaves of absence without pay;
and (iii) from appropriations balances realized from the
implementation of measures resulting in improved
systems and efficiencies and thus enabled agencies to
meet and deliver the required or planned targets,
programs and services approved in this Act at a lesser
cost.
The three instances basically say that savings
could be generated only upon the purpose of the
appropriation being fulfilled, or upon the need for
the appropriation being no longer existent.
Likewise, the phrase free from any obligation or
encumbrance also implies that the appropriation was at
that stage when the appropriation was already obligated
and released.
Thus, the appropriation must have reached the
agency.
It is only at the agency level when it could be
determined that the project was completed,
discontinued or abandoned; or that the targets
were realized at a lesser cost.
What are unreleased appropriations anyway?
According to DBM, these are those that are, well,
unreleased. Duh.
They were unreleased because of either noncompliance
with documentary requirements, or unavailability of
funds.

But the funds of these do not reach the agencies, but

remain with the DBM.
Ergo, unreleased appropriations refer to appropriations
with allotments but without disbursement authority.
Now, the DBM (in NBC No. 541) declared that part of the savings
brought under the DAP came from the pooling of unreleased
appropriations, such as personnel services appropriations,
unreleased appropriations of slow-moving and discontinued
projects.
This declaration by the DBM by itself does not state
the clear legal basis for the treatment of
unreleased
or
unalloted
appropriations
as
savings.
They have not yet ripened into categories of items from
which savings can be generated.
For the SC to consider unreleased appropriations as savings
would undercut the Congress power of the purse.
Such appropriations had not even reached the
agency concerned vis--vis the projects for which
the Congress had allocated them
Eh diba the definition of savings should be that it must
have been used first? How can you use funds when the
funds had not even reached the agency?
For unobligated allotments, these were encompassed by
the definition of savings in the GAA. But according to the
provision cited, the unobligated allotments are qualified by three
enumerated instances of when savings would be realized.
As such, unobligated allotments could not be
indiscriminately declared as savings without first
determining whether any of the three instances existed.
This signified that the DBMs withdrawal of
unobligated allotments had disregarded the
definition of savings under the GAAs
Likewise, petitioners accuse respondents of forcing the
generation of savings in order to have a larger fund
available for discretionary spending. This would
effectively deprive funding for projects with existing
appropriations under the GAAs. SC sided with them on this
point.
This is because theres no law authorizing the withdrawal
and transfer of unobligated allotments and the pooling of
unreleased appropriations.
Nonetheless, such withdrawal and the retention of
appropriated
funds
cannot
be
considered
as
impoundment
Impoundment refers to the refusal by the President, for
whatever reason, to spend funds made available by

Congress. It is the failure to spend or obligate budget

authority of any type.
The withdrawal of unobligated allotments should not be
regarded as impoundment because it only entailed the
transfer of funds, not the retention or deduction of
appropriations.
o Lastly under this point, the Executive could not circumvent the
Admin Code by declaring unreleased appropriations and
unobligated allotments as savings prior to the end of the fiscal
year.
Under the Admin Code, the President is authorized to
suspend the further expenditure of funds for any agency.
It must be noted that DBM did not suspend or stop
further expenditures. Rather, it contemplated a transfer
of funds.
Thus, walang savings because the funds were
transferred and not retained. This is inconsistent
with the definition of savings na dapat, may
excess money after the items that needed to be
funded have been funded.
THIRD REQUISITE: The rule is that no funds from savings could be
transferred under the DAP to augment deficient items not
provided in the GAA. But the DAP allows the augmentation of
projects not in the GAP. Thus, unconsti!
o The term augment means to enlarge or increase in size,
amount or degree. This applies to funds, and not something
elsewell, basta. Labo.
o The GAAs of 2011-2013 set as a condition for augmentation that
the appropriation for the project item to be augmented must be
deficient. (In other words, kulang yung pera for a specific
project)
o Thus, an appropriation for any project must first be
determined to be deficient before it could be augmented
from savings.
o In 2013, a total of 144.4 billion pesos worth of projects were
implemented through DAP. However, upon careful review of
the documents contained in seven evidence packets, the
savings pooled under the DAP were allocated to
projects not covered by any appropriations in the
pertinent GAAs.
For instance, funds were transferred to the Disaster risk,
Exposure, Assessment and Mitigation (DREAM) Project of
DOST. While appropriation was provided by Congress,
under the DAP the Executive allotted funds for personnel
services and capital outlays which were not included in
the appropriation made by Congress.
A similar situation occurred with the project called
establishment of the advanced failure analysis
laboratory for DOST, where particular disbursements

were allowed under the DAP, but were not included in

the GAAs. This was unlawful.
It must be worth stressing that if a particular project
proposed by the President was not included in the GAAs,
it means that Congress did not see it fit to receive funds.
And the President should respect that.
o Although the Executive was authorized to spend in line with its
mandate to faithfully execute laws, such authority did not
translate to an unfettered discretion to submit his own will for
that of Congress.
THIRD REQUISITE (ALSO): CROSS-BORDER AUGMENTATIONS FROM
SAVINGS WERE PROHIBITED BY THE CONSTITUTION
o By providing that the Pres, Senate Pres, Speaker, Chief
Justice, Heads of Consti Commissions may be authorized
to augment any item in the GAA for their respective
offices, the Consti delineated borders between their
offices.
Funds appropriated for one office are prohibited
from crossing over to another office, even in the
guise of augmentation.
Such unconstitutional transfers are called cross-border
augmentations
o In the oral arguments held for the case, Secretary Abad
admitted to making some cross-border augmentations.
Two instances of cross-border augmentations were
narrated:
(1) The House of Representatives requested the
President to grant them an augmentation for the
building of their e-library, because according to the
House, failure to do so may result to serious
deterioration
(2) COA (yes, COA!!!) asked for extra funds from the
Pres for information technology equipment, as well
as fees for consultants.
Eh super obvious that these are cross-border
augmentations not supported by appropriations under
the GAA!
ButJustice Mendoza, representing the Congress in this
case, argued that the cross-border transfers were in the
nature of aid instead of augmentation
He said that they felt there would be chaos if no
money is given as aid
But, the court said that, regardless of the
characterization as augmentation or aid,
cross-border transfers were prohibited
under Sec 25(5) of Article VI.

Sourcing the DAP from unprogrammed funds despite the original

revenue targets not having been exceeded was invalid

The 2011, 2012 and 2013 BESFs defined unprogrammed

appropriations as those that provided standby authority to incur
additional agency obligations for priority projects when revenue
collections exceeded targets, and when additional foreign funds are
generated.

The DBM contemplated that the unprogrammed funds could be availed

of when any of the three instances occur:
(1) the revenue collections exceeded the original revenue targets in the
BESFs submitted by the Pres to Congress
(2) New revenues were collected from sources not originally considered
in the BESFs
(3) Newly-approved loans for foreign-assisted projects were secured
o Thus under this system, even if the revenues not considered in
the BESFs were collected, the basic condition that the revenue
collections should exceed the revenue targets must still be
complied with in order to justify the release of unprogrammed
funds.
o In other words, marerelease lang ang unprogrammed funds if
may sobrang revenue.

The 2011 and 2012 GAAs, however, contemplated only the first two
scenarios enumerated above

However, a fair reading of the provisions of the two GAAs (medyo

mahaba so look at the full text na lang) would show that the provisions
did not at all waive compliance with the basic requirement that revenue
collections must still exceed the original revenue targets

However, when the SC required the respondents (Noynoy and friends) to

submit a certification form the Treasure to the effect that the revenue
collections had exceeded the original targets, they submitted
certifications pertaining to only one source of revenue: dividends from
the shares held by the govt in GOCCs.

However (again. But bawal daw magstart ng sentences with however), it

must be noted that the unprogrammed funds, being standby
appropriations, were to be released only when there were
revenues in excess of what the programmed appropriations
required. As such, the revenue targets should be considered as
a whole and not individually.
o Otherwise, we would be dealing with artificial revenue surpluses.
o Thus, the revenue collections as a whole must exceed the total
of the revenue targets stated in the BESF.
Next is a challenge to EPC, checks and balances, and public accountability
charges.

For EPC, the SC was not in the position to rule on it because kulang yung
evidence

On checks and balanceswell the doctrine on separation on powers

answers this one.

As for public accountabilitywell good intention naman yung paggawa

sa DAP (given that the aim is to boost the Philippine economy). Mali lang
talaga yung konsepto ng DAP

As for the doctrine of operative fact

A legislative or executive act that is declared void for being

unconstitutional cannot give rise to any right or obligation
o The term executive act is broad enough to encompass
decisions of admin bodies and agencies under the Exec
department

However, at times, rigidly applying the rule may at times be

impracticable and wasteful

It is applicable in this case.

Given that the DAP and the related issuances were executive
acts, the consequences resulting from them could not be
ignored or could no longer be done

As already mentioned, the implementation of the DAP resulted into the

use of savings pooled by the Executive to finance the PAPs that were not
covered in the GAA, or that did not have proper appropriation covers, as
well as to augment items pertaining to other departments of the
Government in clear violation of the Constitution.
o To declare the implementation of the DAP unconstitutional
without recognizing that its prior implementation constituted an
operative fact that produced consequences in the real as well is
unfair and impractical
o Unless the doctrine is held to apply, the Executive as the
disburser and the offices under it and elsewhere as the
recipients could be required to undo everything that they
had implemented in good faith under the DAP.

That scenario would be enormously burdensome for the

Government. Equity alleviates such burden.

WHEREFORE, 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.