MARIA CAROLINA ARAULLO VS BENIGNO AQUINO III, FEBRUARY 3, 2015 (ENBANC)

ISSUE:  Whether or not the DAP realignments or transfers are  unconstitutional? 

FACTS:  Section 24 and 26(2), Article VI, 1987 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 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government project is being undertaken slowly by a certain executive agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared as “savings” by the Executive and said funds will then be reallotted to other priority projects.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). 

DECISION:  Yes. The Court held that for the transfer of  appropriated funds to be valid 

RATIO DECIDENDI:  Such transfer must be made upon the concurrence of the following requisites, namely:  (1) there is a law authorizing the president, the Senate President, the Speaker of the HOR, the Chief  Justice of the SC, and the heads of the Constitutional Commissions to transfer such funds within  their respective offices; (2) the funds to be transferred are savings, generated from the appropriations  for their respective offices; and (3) the purpose of the transfer is to augment an item in the General  Appropriations Law for their respective offices. That law, generally, is the GAA of a given fiscal  year. To comply with the first requisite, the GAAs should expressly authorize such transfers.  Whereas the GAAs of 2011 and 2012 lacked valid provisions to authorize transfers of funds under  the DAP, such transfers were unconstitutional. DAP also failed to comply with the second requisite  since the 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, discontinued, or 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 for the  transfers, further, savings should only be declared at the end of the fiscal year. However, under the  DAP, funds are already being withdrawn from certain projects in the middle of the year and  subsequently being declared as savings by the Executive through the DBM.