MARIA CAROLINA P. ARAULLO v. BENIGNO SIMEON C.

AQUINO III
G.R. No. 209287 | July 1, 2014

SUBJECT: Political Law Constitutional Law Separation of

Powers Fund Realignment Constitutionality of the
Disbursement Acceleration Program
Power of the Purse Executive Impoundment

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 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 years 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funds allotted therefor will be withdrawn by the Executive.
Once withdrawn, these funds are declared as savings by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 expos 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.

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
Peoples 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).

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.

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.

II. No, there is no executive impoundment in the DAP.

Impoundment of funds refers to the Presidents 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, theres no impoundment in
the case at bar because whats 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.

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.
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.

GRECO ANTONIOUS BEDA B. BELGICA v. HONORABLE

EXECUTIVE SECRETARY PAQUITO N. OCHOA JR.,
SECRETARY OF BUDGET
G.R. No. 208566 | November 19, 2013

a. P70 million: for each member of the lower house;

broken down to P40 million for hard projects
(infrastructure projects like roads, buildings, schools,
etc.), and P30 million for soft projects (scholarship
grants, medical assistance, livelihood programs, IT
development, etc.);

SUBJECT: Political Law Constitutional

Government Invalid Delegation

b. P200 million: for each senator; broken down to

P100 million for hard projects, P100 million for soft
projects;

Law

Local

Legislative Department Invalid Delegation of Legislative

Power

This case is consolidated with G.R. No. 208493 and G.R. No.
209251.

c. P200 million: for the Vice-President; broken down to

P100 million for hard projects, P100 million for soft
projects.

FACTS:

The PDAF articles in the GAA do provide for realignment of

funds whereby certain cabinet members may request for
the realignment of funds into their department provided that
the request for realignment is approved or concurred by the
legislator concerned.

The so-called pork barrel system has been around in the

Philippines since about 1922. Pork Barrel is commonly
known as the lump-sum, discretionary funds of the members
of the Congress. It underwent several legal designations
from Congressional Pork Barrel to the latest Priority
Development Assistance Fund or PDAF. The allocation for
the pork barrel is integrated in the annual General
Appropriations Act(GAA).

Presidential Pork Barrel

Since 2011, the allocation of the PDAF has been done in the
following manner:

The president does have his own source of fund albeit not
included in the GAA. The so-called presidential pork barrel
comes from two sources: (a) the Malampaya Funds, from
the Malampaya Gas Project this has been around since
1976, and (b) the Presidential Social Fund which is derived

from the earnings of PAGCOR this has been around since

about 1983.
HELD:

Pork Barrel Scam Controversy

Ever since, the pork barrel system has been besieged by

allegations of corruption. In July 2013, six whistle blowers,
headed by Benhur Luy, exposed that for the last decade, the
corruption in the pork barrel system had been facilitated by
Janet Lim Napoles. Napoles had been helping lawmakers in
funneling their pork barrel funds into about 20 bogus NGOs
(non-government organizations) which would make it appear
that government funds are being used in legit existing
projects but are in fact going to ghost projects. An audit
was then conducted by the Commission on Audit and the
results thereof concurred with the exposes of Luy et al.

Motivated by the foregoing, Greco Belgica and several

others, filed various petitions before the Supreme Court
questioning the constitutionality of the pork barrel system.

ISSUES:
I.

Whether or not the congressional pork barrel

system is constitutional.

II.

Whether or not presidential pork barrel system is

constitutional.

I. No,
the
congressional
pork
barrel
system
is
unconstitutional. It is unconstitutional because it violates the
following principles:

a. Separation of Powers
As a rule, the budgeting power lies in Congress. It regulates
the release of funds (power of the purse). The executive, on
the other hand, implements the laws this includes the GAA
to which the PDAF is a part of. Only the executive may
implement the law but under the pork barrel system, whats
happening was that, after the GAA, itself a law, was
enacted, the legislators themselves dictate as to which
projects their PDAF funds should be allocated to a clear act
of implementing the law they enacted a violation of the
principle of separation of powers. (Note in the older case
of PHILCONSA vs Enriquez, it was ruled that pork barrel,
then called as CDF or the Countrywide Development Fund,
was constitutional insofar as the legislators only recommend
where their pork barrel funds go).

This is also highlighted by the fact that in realigning the

PDAF, the executive will still have to get the concurrence of
the legislator concerned.

b. Non-delegability of Legislative Power

As a rule, the Constitution vests legislative power in

Congress alone. (The Constitution does grant the people
legislative power but only insofar as the processes of
referendum and initiative are concerned). That being,
legislative power cannot be delegated by Congress for it
cannot delegate further that which was delegated to it by
the Constitution.

Exceptions to the rule are:

(i)

delegated legislative power to local government

units but this shall involve purely local matters;

(ii)

authority of the President to, by law, exercise

powers necessary and proper to carry out a
declared national policy in times of war or other
national emergency, or fix within specified limits,
and subject to such limitations and restrictions as
Congress may impose, tariff rates, import and
export quotas, tonnage and wharfage dues, and
other duties or imposts within the framework of
the national development program of the
Government.

In this case, the PDAF articles which allow the individual

legislator to identify the projects to which his PDAF money
should go to is a violation of the rule on non-delegability of
legislative power. The power to appropriate funds is solely
lodged in Congress (in the two houses comprising it)
collectively and not lodged in the individual members.
Further, nowhere in the exceptions does it state that the

Congress can delegate the power to the individual member

of Congress.

c. Principle of Checks and Balances

One feature in the principle of checks and balances is the
power of the president to veto items in the GAA which he
may deem to be inappropriate. But this power is already
being undermined because of the fact that once the GAA is
approved, the legislator can now identify the project to
which he will appropriate his PDAF. Under such system, how
can the president veto the appropriation made by the
legislator if the appropriation is made after the approval of
the GAA again, Congress cannot choose a mode of
budgeting which effectively renders the constitutionallygiven power of the President useless.

d. Local Autonomy
As a rule, the local governments have the power to manage
their local affairs. Through their Local Development Councils
(LDCs), the LGUs can develop their own programs and
policies concerning their localities. But with the PDAF,
particularly on the part of the members of the house of
representatives, whats happening is that a congressman
can either bypass or duplicate a project by the LDC and later
on claim it as his own. This is an instance where the national
government (note, a congressman is a national officer)
meddles with the affairs of the local government and this
is contrary to the State policy embodied in the Constitution
on local autonomy. Its good if thats all that is happening
under the pork barrel system but worse, the PDAF becomes
more of a personal fund on the part of legislators.

II. Yes, the presidential pork barrel is valid.

(i)

PD 910: Section 8 thereof provides that all fees,

among others, collected from certain energyrelated ventures shall form part of a special fund
(the Malampaya Fund) which shall be used to
further finance energy resource development and
for other purposes which the President may
direct;

(ii)

PD 1869, as amended: Section 12 thereof

provides that a part of PAGCORs earnings shall
be allocated to a General Fund (the Presidential
Social Fund) which shall be used in government
infrastructure projects.

The main issue raised by Belgica et al against the

presidential pork barrel is that it is unconstitutional because
it violates Section 29 (1), Article VI of the Constitution which
provides:

No money shall be paid out of the Treasury except in

pursuance of an appropriation made by law.

Belgica et al emphasized that the presidential pork comes

from the earnings of the Malampaya and PAGCOR and not
from any appropriation from a particular legislation.

The Supreme Court disagrees as it ruled that PD 910, which

created the Malampaya Fund, as well as PD 1869 (as
amended by PD 1993), which amended PAGCORs charter,
provided for the appropriation, to wit:

These are sufficient laws which met the requirement of

Section 29, Article VI of the Constitution. The appropriation
contemplated therein does not have to be a particular
appropriation as it can be a general appropriation as in the
case of PD 910 and PD 1869.