Political Law – Constitutional Law – Separation of Powers – Fund Realignment –

Constitutionality of the Disbursement Acceleration Program

Power of the Purse – Executive Impoundment
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funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are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 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.
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:
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.
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
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.
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.