ARAULLO VS AQUINO

FACTS
Economic condition in 2011 paved way for the development and
implementation of the DAP intended to hasten public spending and
to push economic growth or DAP was the product of plain excutive
policy making to stimulate economy by accelerating spending. It
was partially successful as revealed by the report of the World Bank
In Sept 2013, Senator Estrada delivered a speech claiming that they
were given 50 Million as an incentive for voting in favor of the
impeachment of former Chief Justice Corona
Sec. Abad of DBM responded and explained that the funds
released to the Senators were part of the DAP
Disbursement Allocation Program (DAP) is a program designed to
ramp up spending to accelerate economic expansion; DAP were
taken and sourced from the savings generated by the Government
from unprogrammed funds, unreleased appropriations, withdrawal
of unobligated allotments for slow-moving programs and projects;
its legal basis of using the saving: Sec 25 (5) of the 1987 Consti, Sec
49 and 38 Chapter 5, Book VI of EO 292, and GAA of 2011, 2012, and
2013; and of unprogrammed funds in GAA 2011, 2012, and 2013.
Petitioners assailed the constitutionality of DAP contending that it is
violative of Sec 29 (1) of Article 6 of the 1987 Constitution

Substantive Issues:
Whether DAP violates Sec 29 (1) of Article 6
Court: NO. It did not violate the said provision
No law necessary for the adoption and implementation of DAP
because it is not a fund nor appropriation BUT a program of
prioritizing spending; that the President had sufficient discretion to
adapt budget changes in the countrys economic situation.
Whether DAP violates Sec 25 (5), Article 6
Pre: Congress cannot anticipate issues and needs that may come
into play once the budget reaches execution stage so Congress
allowed the President flexibility in allocating funds pursuant to GAA
GR: Congress will determine budget allocation for agencies
EX: President is one of the exemptions authorized to transfer
appropriations and augment any item in GAA to their respective
offices
Court: YES. It violate said provision and requisites were not met
Requisites for valid transfer of appropriated funds under Sec 25 (5):
(1) there is law authorizing transfer of funds w/in their respective
offices; (2) funds to be transferred are savings generated from the
appropriations for their resp. offices; (3) purpose of transfer is to
augment an item in GA law for their respective offices
(1)

ISSUES:
Procedural
whether there is a controversy ripe for judicial
determination and the standing of petitioners
Substantive
Whether or not DAP violates Sec 29, Article 6 of the
Consti
Whether or not DAP violates Sec 25 (5), Article 6 of the
Consti
Whether or not release of unprogrammed funds under
DAP in accordance with GAAs

Sec 25(5) is not self-executing and need law to operate

and that law is the GAA; In first requisite, the GAA should
expressly authorize the transfer of funds

Did GAA expressly authorize the transfer of funds? NO,

GAA 2011 and 2012 are inconsistent with the CONSTI not
bearing the phrase for their respective offices HENCE, no
authority to transfer appropriations from the Executive
branch to another BUT only that the source of funds to be
transferred were saving from appropriations within
respective offices

Were the funds in DAP savings? NO. Savings could be

generated only upon the purpose of the appropriation
being fulfilled, or upon the need for the appropriation
being no longer existent OR
Saving is properly realized when the purpose for the
funds had been allocated was already satisfied or the
need for such funds ceased to exist.
In the DAP, the withdrawn funds that had been
appropriated was not yet fulfilled or did not yet cease to
exist making the funds AS SAVINGS IMPOSSIBLE
ALSO, the DAP shortened the period of availability of the
appropriations which was on a quarterly basis (middle of
the fiscal year) instead on the end of the fiscal year
thereby depriving funding for PAP with existing
appropriations under the GAA

(2)

HELD
Procedural Issue: Actual Controversy and Legal Standing
Court:

There is actual and justiciable controversy in the cases:

there is a conflict of legal rights in the incompatibility of
the parties perspective on the constitutionality of DAP;
ripeness is met considering the executive acts were
already being implemented; implementation of DAP
entailed allocation and expenditure of huge sums of public
funds;

The case is not moot and academic by supervening event

(that DAP had been discontinued because it fully served its
purpose) because it falls under the exemptions. Hence,
court can exercise judicial review

The petitioners have legal standing and have established

sufficient interest in the outcome of the case (e.g. one of
the petitioners invoked their capacities as taxpayers;
others as their rights as citizen to sue for enforcement and
observance of consti limitations). In addition, the cases are
of transcendental importance (considering the issue is on
the extent of the power of President to disburse and
allocate funds whether appropriated by Congress or not)

Impoundment

Withdrawal of unobligated allotments cannot be

considered impoundment

Impoundment refers to a 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.

In the DAP, it entailed only the transfer of fund not

retention/deduction

(3)

Was the purpose of transfer to augment items in GAA to

respective office? NO. No funds from saving could be
transferred under DAP to augment deficient items not
provided in GAA
An appropriation for any PAP must first be determined to
be deficient before it could be augmented from savings
We conclude that the "savings" pooled under the DAP
were allocated to PAPs that were not covered by any
appropriations in the pertinent GAAs.

(4)

Did any cross border transfer transpired? YES. Sec. Abad

admitted that there was such cross-border transfer (e.g.
record show that funds were transferred under DAP to
COA and House of Rep)
Cross border transfer are prohibited in the Consti whether
as augmentation or aid
Sec 25(5) has delineated borders between their offices,
such that funds appropriated for one office are
prohibited from crossing over to another office even in
the guise of augmentation of a deficient item or items.
Thus, we call such transfers of funds cross-border transfers
or cross-border augmentations

Whether or not release of unprogrammed funds under DAP in

accordance with GAAs

Court: 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.

Release of unprogrammed funds are subject to restriction

provided by GAA
Doctrine of Operative Fact

Court: YES. The doctrine of operative fact is applicable to

the adoption and implementation of the DAP

DAP produced consequences in the real as well as juristic

worlds of the Government and the Nation

DAP yielded undeniably positive results that enhanced the

economic welfare of the country.

The doctrine of operative fact can apply only to the PAPs

that can no longer be undone, and whose beneficiaries
relied in good faith on the validity of the DAP
DECISION
Court partially grants the petitions and declares the following acts
under DAP as UNCONSTITUTIONAL