Disbursement Acceleration Program

8/11/2019 Disbursement Acceleration Program

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ARAULLO v. AQUINO (JT)GR No. 209287, et alJuly 1, 2014Bersamin, J.

Petitioners/Respondents: ANG DAMI. Basta main respondent si Noynoy in his capacity as the Fresident of the Philippines

SummaryThe DAP is basically a program where savings of government projects from unreleased appropriations and withdrawal ofunobligated allotments, as well as unprogrammed funds, were used in order to augment the funding of another governmentproject. This is a system under the DBM designed to help boost the Philippine economy. Pursuant to the DAP, NBC No. 41 wasissued to implement the DAP.

Basically, the NBC No 41 allows the augmentation of projects not considered in the budget expected to be implemented duringthe year. (The budget is pursuant to the general appropriations act, or GAA, for that given fiscal year.) So…The governmentdeclares savings coming from unobligated allotments and withdrawing unreleased appropriations, which are later released andapplied 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) ofArticle VI, where the president may adapt the budget to chang es depending on the country’s 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However, the unreleased appropriations and withdrawn obligated allotments under the DAP were NOT savings.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, andin that section, the funds to be transferred must be SAVINGS and the purpose is to AUGMENT an item for the respective officesof 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 fundswere unconstitutional. Why? Because the GAAs allowed the augmentation of any item in the act, even if the item belonged toan 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 notactually 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 thatthe DAP authorized the transfer of funds to projects not under the GAA. What was worse is that it allowed cross-borderaugmentations, or transfers to funds that are not within the respective offices of the Pres, Senate Pres, etc. Eh bawal yun. Soayun.

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.

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.

FactsThis all started when Jinggoy delivered a frivileged speech wherein he revealed that certain senators, himself included, received50M pesos each as incentive for voting in favor of Corona’s impeachment. As a response, Sec. Abad of DBM released a pubicstatement 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 thegovt) 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 Services2. unprogrammed funds3. carry-over appropriations unreleased from the previous year, and4. 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, andappropriations from slow-moving/discontinued projects, and

b. the withdrawal of unobligated allotments , also for slow-moving programs, earlier released to govtagencies; and

2. unprogrammed funds

IssuesProcedural Issue: W/N certiorari, prohibition and mandamus are proper remedies —NOT gonna include this na. So I dunno.Substantive issues:

1. (relevant to our class) W/N DAP violates Sec 29 of Art VI2. (relevant to our class) W/N DAP, NBC No 541 and other implementing issuances violate Sec 25(5) of Art VI3. W/N DAP violates: EPC, system of checks and balances, principle of public accountability4. W/N there exists a factual & legal justification to issue a TRO against the DAP5. W/N the release of unprogrammed funds under the DAP was in accord with the GAAs (gen. appropriation acts)

RatioOverview of the Philippine Budget System

Really boring shit, but I will include i t anyway “Budget” is defined by Commonwealth Act No. 246 as “the financial program of the Nat ional 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 by —well, you should know this by now, Montero babies —taxation. The Philippine budget cycle has four phases: (skip this if you want. Super technical ng shizniz but if magtanong sya

about this, well…sana hindi. Trolololol. But do read the “budget legislation” and “budget execution” parts, he mightask the procedure in Congress.)

1. BUDGET PREPARATION the DBM issues a “ budget call ”

The budget call contains the parameters, guidelines and procedures set by theDevelopment Budget Coordination Committee (DBCC) to aid government agencies inthe 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; ando Corporate Budget Call, addressed to all GOCCs and gov’t 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 Budgetof Expenditures and Sources Financing (BESF)

Both NEP and BESF (besfrIend. Lol. Labo. Sssh Jates concentrate!) are again presented to the DBMand the DBCC for reprioritization and refinements.

Once approved by el Presidente and the Cabinet, the DBM prepares the budget documents forsubmission to Congress. The documents consist of: (1) President’ s Budget Message, and (2) theBESF (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. Don’t say I didn’ t 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, andwhich add to the assets of the government, and

(2) current operating expenditures , or purchases of goods and services the benefit ofwhich does not extend beyond the fiscal year. Current operating expenditures consistof: (a) personal services and (b) maintenance of other operating expenses

Public expenditures are also broadly grouped into: economic development expenditures, socialservices or social development expenditures, general government expenditures, national defenseexpenditures, and public debt.

Public revenues cover all income or receipts of the govt treasury used to support govtexpenditures. There are two aspects of this:

Quasi-private income – where the State holds property and engage in trade whichgenerate 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 President’s budget,

inclusive of NEP and BESF, up to the approval by the President of the GAA (general appropriationsact).

Basically the President’s 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 House’s deliberations. The Senate’s Finance Committee may submit proposed amendments only after the

House’s version is formally transmitted to the Senate. Then comes the Bicameral Conference Committee for the purpose of harmonizing conflictingprovisions 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 fundsb. prepare an allotment and cash release program

c. release allotmentsd. issue disbursement authorities

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

Upon approval, the DBM prepares the allotment release program (sets a limit for allotments to aspecific agency) and cash release program (fixes the monthly, quarterly and annualdisbursements)



Allotment is different from appropriation , because the latter is the general legislative authorityto spend (remember this definition!).

To settle obligations incurred by the agencis, the DBM issues a disbursement authority known asnotice of cash allocation (NCA). The NCA specifies the maximum amount of cash that can bewithdrawn 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.

4. ACCOUNTABILITY this phase ensures that the govt funds have been effectively and efficiently utilized to achieve the

State’s so cio-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 generated during the year as well asfrom as unprogrammed funds.

o The government, by spending on public infrastructure, would signify its commitment of ensuringprofitability for prospective investors.

o 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

o But…did 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. o 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 DISBURSEMENTS—heto 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

balanceso 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 Ef ficiency Measure —Withdrawal of Agencies’ Unobligated Allotments as of June30, 2012”

According the NBC No. 541, “In the event that a measure is necessary to further improve the operational efficiencyof the government, the President is authorized to suspend or stop further use of funds allotted for any agency orexpenditure authorized in the GAA.” (in other words, withdrawal of unobligated allotments )

o This is because for from Jan- May 2012, the govt didn’t meet its spending targets. Thus, in order toaccelerate spending and sustain fiscal targets, Abad deemed it necessary to implement expendituremeasures 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 benefi ts 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!!!, E-government 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/etcare 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 forwithdrawal , based on substantial carryover appropriations (but not if the project has a two-year 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 inthe 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 government’s 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 andsupport 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 saidthat since DAP is neither a fund nor an appropriation, but a program for spending, the law was not necessary

SC took the OSG’s 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 inthe country’s economic situation

o He could pool savings and identify projects to be funded under the DAPo No appropriation was involved, because money had already been set apart by Congress through the GAAo Thus, no usurpation of legislative power

Unreleased appropriations and withdrawn unobligated allotments under the DAP were NOT SAVINGS, and the use of suchappropriations 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 adjustmentso The President has the power to transfer funds to meet unforeseen events that may otherwise impede the

efficient implementation of projects under the GAAo 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 budgetexecution 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 President’s 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 ConstiComms

o The funds to be transferred are savings generated from the appropriations for their respective officeso 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 theirrespective 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.

transfers of funds within their offices

What was included in the GAAs was the phrase “to augment any item in this Act” , therebyallowing the transfer of funds from savings to augment any item in the GAA, even if the itembelonged 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 appropriationsfrom the Executive to another branch

o After realizing the problem, Congress inserted the omitted phrase in the counterpart provision in the 2013GAA: “The *insert the people+ are hereby authorized to use savings in their respective appropr iations toaugment 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 aresounding NO.

o Petitioners argue that the term “savings” should be understood to refer to the excess money after the itemsthat needed funding have been funded. Thus, there could only be savings when the projects (for which thefunds had been appropriated) were actually implemented

o OSG argues differently, by saying that “savings” were “appropriations balances,” being the differencebetween 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 budgetwill 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 budgetin accordance with the GAA

Third principle: In making the President’s power t o augment operative under the GAA, Congressrecognizes the need for flexibility in budget execution . Thus, Congress diminishes its own power ofthe purse by delegating a fraction of its power to the Executive. BUT, Congress does not therebyallow 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 notsomething theoretical, possible or hypothetical.

o Thus, “savings” should be construed strictly against expanding the scope of the power to augment. o 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 anyobligation of encumbrance which are (i) still available after the completion or final discontinuanceor 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 tovacant positions and leaves of absence without pay; and (iii) from appropriations balancesrealized from the implementation of measures resulting in improved systems and efficiencies andthus enabled agencies to meet and deliver the required or planned targets, programs and servicesapproved in this Act at a lesser cost.

The three instances basically say that savings could be generated only upon the purpose of theappropriation 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 theappropriation 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 lessercost.

o 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. o 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 appropriationsof slow-moving and discontinued projects.

This declaration by the DBM by itself does not state the clear legal basis for the treatment ofunreleased or unalloted appropriations as savings.

They have not yet ripened into categories of items from which savings can be generated. o 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-à-vis the projects for which

the Congress had allocated them

been used first? How can you use funds when the funds had not even reached the agency?



o For unobligated allotments, these were encompassed by the definition of savings in the GAA. Butaccording to the provision cited, the unobligated allotments are qualified by three enumerated instances ofwhen savings would be realized.

As such, unobligated allotments could not be indiscriminately declared as savings without firstdetermining whether any of the three instances existed.

This signified that the DBM’s withdrawal of unobligated allotments had disregarded thedefinition of “savings” under the GAAs

o Likewise, petitioners accuse respondents of forcing the generation of savings in order to have a largerfund available for discretionary spending. This would effectively deprive funding for projects with existingappropriations under the GAAs. SC sided with them on this point.

This is because there’s no law authorizing the withdrawal and transfer of unobligated allotmentsand the pooling of unreleased appropriations.

o Nonetheless, such withdrawal and the retention of appropriated funds cannot be considered asimpoundment

Impoundment refers to the refusal by the President, for whatever reason, to spend funds madeavailable 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 itonly 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 unreleasedappropriations 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 fundsfor any agency.

It must be noted that DBM did not suspend or stop further expenditures. Rather, it contemplateda transfer of funds.

Thus, walang savings because the funds were transferred and not retained. This is inconsistentwith the definition of savings na dapat, may excess money after the items that needed to befunded have been funded.

THIRD REQUISITE:The rule is that no funds from savings could be transferred under the DAP to augment deficientitems 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 notsomething else…well, basta. Labo.

o The GAAs of 2011-2013 set as a condition for augmentation that the appropriation for the project item tobe 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 beaugmented from savings.

o In 2013, a total of 144.4 billion pesos worth of projects were implemented through DAP. However, uponcareful review of the documents contained in seven evidence packets , the “savings” pooled under theDAP 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 theExecutive allotted funds for personnel services and capital outlays which were not included in theappropriation made by Congress.

A similar situation occurred with the project called “establishment of the advanced failure analysislaboratory” for DOST, where particular disbursem ents were allowed under the DAP, but were notincluded in the GAAs. This was unlawful.

It must be worth stressing that if a particular project proposed by the President was not includedin the GAAs, it means that Congress did not see it fit to receive funds. And the President shouldrespect that.

o Although the Executive was authorized to spend in line with its mandate to faithfully execute laws, suchauthority 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 THECONSTITUTION

o By providing that the Pres, Senate Pres, Speaker, Chief Justice, Heads of Consti Commissions may beauthorized to augment any item in the GAA for their respective off ices , the Consti delineated bordersbetween their offices.

Funds appropriated for one office are prohibited from “crossing over to another office,” even inthe 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-borderaugmentations.

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 toserious 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 appropriationsunder the GAA!

But…Justice Mendoza, representing the Congress in this case, argued that the cross -bordertransfers 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 whenadditional 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 conditionthat 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 stillexceed the original revenue targets

However, when the SC required the respondents (Noynoy and friends) to submit a certification form the Treasure tothe effect that the revenue collections had exceeded the original targets, they submitted certifications pertaining toonly 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 unprogrammedfunds, 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 notindividually .

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 balances…well the doctrine on separation on powers answers this one. As for public accountability…well good intention nam an 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 theExec 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 notbe 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 tofinance the PAPs that were not covered in the GAA, or that did not have proper appropriation covers, as well as toaugment 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 priorimplementation constituted an operative fact that produced consequences in the real as well is unfair andimpractical

o Unless the doctrine is held to apply, the Executive as the disburser and the offices under it and elsewhereas the recipients could be required to undo everything that they had implemented in good faith under theDAP.

o 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 andpractices under the Disbursement Acceleration Program, National Budget Circular No. 541 and related executive issuancesUNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation ofpowers, namely:

(a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawnunobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and withoutcomplying 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 theExecutive; and

(c) The funding of projects, activities and programs that were not covered by any appropriation in the GeneralAppropriations Act.

The Court further DECLARES VOIDthe use of unprogrammed funds despite the absence of a certification by the NationalTreasurer that the revenue collections exceeded the revenue targets for non-compliance with the conditions provided in therelevant General Appropriations Acts.

Disbursement Acceleration Program

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