CASE No. 1 7.
Secretary Abad argued that the DAP is based on certain laws particularly the
TITLE: G.R. No. 209287
Maria Paulina P. Araullo, et. al. vs. Benigno Aquino III
Date: July 1, 2014
Doctrine: DOCTRINE OF OPERATIVE FACTS
FACTS:
1. 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).
2. 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be withdrawn by the Executive. Once withdrawn, these funds are declared as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).
3. 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.
4. 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.
5. 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.
6. 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.”
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).
Issue/s:
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). NO
2. Whether or not the DAP realignments can be considered as impoundments by
the executive. NO
3. Whether or not the DAP realignments/transfers are constitutional. NO
4. Whether or not the sourcing of unprogrammed funds to the DAP is
constitutional. NO
5. Whether or not the Doctrine of Operative Fact is applicable. YES
Ruling:
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.