THE DISBURSEMENT ACCELERATION PROGRAM (DAP)

CASEG.R. Nos. 209287, 209135, 209136, 209155, 209164, 209260, 209442, 209517 & 209569,
ANDG.R. No. 209517, JULY 1, 2014
ARAULLO ET AL VS. AQUINO ET AL.

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 year’s 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 therefore will
be withdrawn by the Executive. Once withdrawn, these funds are declared as “savings” by the
Executive and said funds will then be re-allotted 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 exposé
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 People’s 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:

1. 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).
2. Whether or not the DAP realignments can be considered as impoundments by the executive
3. Whether or not the DAP realignments/transfers are constitutional. Whether or not the sourcing of
unprogrammed funds to the DAP is constitutional.
4. Whether or not the Doctrine of Operative Fact is applicable.

Held:

1. 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.
2. No, there is no executive impoundment in the DAP. Impoundment of funds refers to the
President’s 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, there’s no impoundment in the case at bar because what’s
involved in the DAP was the transfer of funds.
3. 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.
4. 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.
5. 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.
Araullo v. Aquino III
G.R. Nos. 209287, July 1, 2014

Facts:
On 25 September 2013, Senator Jinggoy Estrada delivered a privileged speech before the Senate,
alleging that Senators had received an “incentive” worth P50 million for voting in favor of the
impeachment of Chief Justice Renato C. Corona. This spurred Department of Budget
Management (DBM) Secretary Florencio Abad III to issue a statement that the funds released
were part of the Disbursement Acceleration Program (DAP), which was designed by the DBM as
a stimulus package to increase government spending.
The DAP was allegedly first evidenced by a memorandum of Sec. Abad dated 12 October 2011,
asking for the President’s approval for the implementation of the DAP. It listed sources of funds
amounting to P72.11 billion, along with proposed priority projects to be funded. The billions of
pesos for DAP, according to the DBM, were collected from the “savings” of the government and
its Unprogrammed Funds. The “savings” included:
(a) Unreleased appropriations for unfilled positions which will lapse at the end of the year;
(b) Available balances from completed or discontinued projects;
(c) Unreleased appropriations of slow moving projects and discontinued projects; and
(d) Withdrawn unobligated allotments which have earlier been released to NGA
All these events gave rise to questions on the legality of this move by the DBM. Nine petitions
were filed before the Supreme Court challenging the constitutionality of the DAP, National
Budget Circular (NBC) No. 542, and related issuances of the Department of Budget and
Management (DBM) implementing the DAP.

Issues:
1. Whether or not the appropriation and withdrawn unobligated allotments under the DAP
were savings in accordance with Section 25 (5), Article VI of the Constitution
2. Whether or not cross-border transfer or augmentations transpire in contravention of
Section 25 (5), Article VI of the Constitution
3. Whether or not the DAP violated the equal protection clause and the principle of
separation of powers
4. Whether or not the doctrine of operative fact should apply to projects funded by the DAP

Held/ Ratio:
1. No. The DAP did not meet the requisites of Section 25 (5) — First, the General
Appropriations Act (GAA) of 2011 and 2012 lacked provisions authorizing the transfer
of funds under DAP; second, there were no savings from which funds should be sourced;
and third, no funds from savings could be transferred under the DAP to augment deficient
items not provided in the GAA.
2. Yes. The records show that funds amounting to P143.7 million and P250 million were
transferred under the DAP respectively to the Commission on Audit and the House of Representatives.
The respondents in the case also stated that the President made available
to the Commission on Elections the savings of the executive department.
3. The Court ruled that the argument that the DAP was used to discriminate against some
legislators lacks factual and legal basis. Also, it pointed that it was merely speculative to
conclude that the DAP effectively stayed the hands of legislators from conducting
inquires on the executive department.
4. It depends. The doctrine of operative fact shall apply to government projects that can no
longer be undone and with beneficiaries who relied on the DAP in good faith. However,
it cannot apply to authors of the DAP, unless there are concrete findings of good faith.