Activity 1 - ACT 1 PDF

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CASE DIGEST Disbursement Acceleration Program Maria Carolina P. Araullo (Petitioner) v. Benigno Simeon C. Aquino III (Respondent), G.R. No. 209287, 1 July 2014 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 has been used as a remedy to speed up government project funding. It makes the realignment of funds from slow-moving projects to priority projects instead of waiting for appropriations next year. So, what happens under the DAP is that if a certain executive department is slowly implementing a certain government program, the funds allocated for it will be withdrawn by the Executive. When withdrawn, these funds are declared by the Executive as "savings" and these funds are then reallocated to other priority projects. On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the Philippines to reveal that some Senators, including himself, had been allotted an additional P50 Million each as incentive for voting in favor of the impeachment of Chief Justice Renato C. Corona. Secretary Abad claimed that the money was taken from the DAP but was disbursed upon the request of the Senators This opened a can of worms, evidently, as it turns out that the DAP not only realigns funds inside the executive branch. It turns out that several non-executive projects have also been funded, to name only a few. A few: Php1.5B for the CPLA (Cordillera People's Liberation Army), Php1.8B for the CPLA (Cordillera People's Liberation Army), MNLF (Moro National Liberation Front), Quezon Province P700M, Senators P50-P100M, Resettlement Projects P10B, etc. The revelation also 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.” But Secretary Abad argued that the DAP is based on certain laws particularly the General Appropriations Act (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. V. Whether or not the Doctrine of Operative Fact is applicable.

Ruling: 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 policy that prioritizes public investment. As such, it did not breach the constitutional provision referred to in Article 29(1), Art. VI of civil law. No additional funds were removed from the Treasury within the DAP, otherwise an allocation made by law would have been needed. Funds, already appropriated by the GAA, were merely 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. Under the DAP, while some of the projects were under the Executive, these projects are non-existent as far as the GAA is concerned since no funds were allocated to them under the GAA. While some of these ventures may be legitimate, under the GAA they are still non-existent since the GAA did not pay for them.

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.

V.

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....