Case Digest for GR No. 209287 - Araullo vs. Aquino Digest

REQUIREMENTS AS TO CERTAIN LAWS: APPROPRIATION LAWS G.R. No. 209287 ARAULLO VS. AQUINO III BERSAMIN, J. Summarized by Katrina Mae Santos (Kim :3 for main ponencia and and Xave for dissents) This case is a consolidation of nine (9) cases, assailing the constitutionality of the Disbursement Acceleration Program (DAP) of the Department of Budget and Management (DBM) and in relation to this, National Budget Circular (NBC) No. 541 and related issuances of the DBM in the implementation of DAP. This issue exploded when the topic of the Congressional pork barrel was still fresh in the public mind. Belgica vs. Executive Secretary was just filed with the Supreme Court [which is subsequently declared unconstitutional (November 19, 2013)]. IMPORTANT PEOPLE  Sen. Jinggoy Ejercito Estrada – delivered the privilege speech on September 25, 2013 which prompted the DBM to issue a public statement and bring to the public consciousness the DAP  Araullo, Maria Carolina – Chairperson of Bagong Alyansang Makabayan; G.R. No. 2092871  Secretary Florencio Abad – Secretary of the Department of Budget and Management (DBM) FACTS 1. September 3, 2013 – Belgica, et. al. and Villegas filed an Urgent Petition for Certiorari and Prohibition with Prayer for the Immediate issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction seeking that the annual "Pork Barrel System," presently embodied in the provisions of the GAA of 2013 which provided for the 2013 PDAF, and the Executive‘s lump-sum, discretionary funds, such as the Malampaya Funds and the Presidential Social Fund, be declared unconstitutional and null and void for being acts constituting grave abuse of discretion 2. September 25, 2013 – Sen. Jinggoy Estrada delivered his privilege speech stating that some senators received Php 50 Million each as incentive for impeaching Chief Justice Corona. 3. Secretary Abad responded through a public statement explaining that the funds released were based on the Senators’ letters of request for funding and explained further that these funds were part of the DAP designed by the DBM to ramp up spending to accelerate economic expansion (they also made claims in their website regarding DAP and where it comes from). 4. DBM cited the following as legal bases for DAP’s use for savings: a. Section 25(5) Article VI, 1987 Constitution b. Section 39 (Authority to use Savings for Certain Purposes) and Section 38 (Suspension of Expenditure Appropriations, Chapter 5, Book VI of EO 292 (Administrative Code of 1987) c. General Appropriations Acts of 2011, 2012 and 2013 provisions on the following: i. Use of savings ii. Meaning of savings iii. Priority in the use of savings d. For the use of the unprogrammed funds, DBM cited provisions in the GAA 2011-2013 as legal bases 5. Nine (9) petitions assailing the constitutionality are filed within days. 2

1 I think their case was chosen to represent all the nine cases is because Araullo’s case is the only one who brought to the Court’s attention NBC No. 541 (Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30).

2 G.R. No. 209135 (Syjuco) October 7, 2013; G.R. No. 209136 (Luna) October 7, 2013; G.R. No. 209164 (PHILCONSA) October 8, 2013); G.R. No. 209155 (Villegas) October 16, 2013; G.R. No. 209260 (IBP) October 16, 2013; G.R. No. 209287 (Araullo) October 17, 2013; G.R. No. 209442 (Belgica)

6. The Court consolidated these cases to form the case at hand. 7. Oral arguments were held on November 19, 2013 and the Court directed DBM Sec. Abad to submit the following: a. List of savings brought under DAP sourced from: i. Completed programs ii. Discontinued or abandoned programs iii. Unpaid appropriations for compensation b. Certified copy of the President’s directive dated June 27, 2012 referred to in NBC 541 c. All circulars and orders issued in relation to DAP 8. In compliance, the Office of the Solicitor General (OSG) (government’s counsel) submitted seven (7) evidence packets (please see Other Notes for the complete list of packets) OVERVIEW OF THE PHILIPPINE BUDGET SYSTEM ORIGIN AND EVOLUTION 

Financing public goals and activities was an idea that existed from the creation of the State  To protect the people, the territory and sovereignty, the government must perform vital functions that require public expenditures

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The Philippine Budget System is greatly influenced by western public financial institutions (Spain and US colonized us before)

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The Philippine Budget System is guided by two principal objectives: (1) To carry on all government activities under a comprehensive fiscal plan developed in accordance to the Constitution and prevailing statutes and sound public management (2) To provide for periodic review and disclosure of the budgetary status of Government so that the enlightened citizenry and persons entrusted with the law can determine the adequacy of the budget actions taken and the financial position of the Government

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Jones Law (1916) [Budget Office within Department of Finance] → 1935 Constitution (budget policy, procedure established, strengthened by EO 25 – Budget Commission) + CA No. 246 (1 st budget law – line item budget framework) → RA No. 992 Congress introduces performance-budgeting and enhanced the role of the Budget Commission → 1973 Constitution PD 1177 and 1405 (the latter created the Ministry of Budget) → EO 711 (Office of Budget and Management - OBM) → EO 292 (DBM)

THE BUDGET CYCLE Public or government expenditures are generally classified into two: (1) Capital Expenditures or outlays  Expenses whose usefulness last for more than one year  Add to the assets of government including investments in the capital of government-owned or controlled corporations and subsidiaries  Usually infrastructure (2) Current operating expenditures  Purchases of goods and services for current consumption  Benefit from this does not extend beyond fiscal year  Has two (2) components: i. Personal services (PS) – basically salaries of government employees October 29, 2013; G.R. No. 209517 (COURAGE) November 6, 2013; G.R. No. 209569 (VACC) November 8, 2013.

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ii. Maintenance and other operating expenses (MOOE) Public expenditures can also be grouped according to function: (1) Economic development expenditures (2) Social services or social development expenditures (3) General development or general public services (4) National defense (5) Public debt Or according to nature of funds: (1) General fund (2) Special fund Public revenues are generally derived from the following sources: (1) Tax revenues (2) Capital revenues  Examples: Sales of fixed assets or scrap thereof, Sale of public lands etc. (3) Grants  Like grants from Asian Development Bank, World Bank etc. (4) Extraordinary income  Example: repayment of loans by GOCCs (5) Public borrowing  Proceeds of repayable obligations with interest from domestic and foreign creditors. The Budget Cycle is enumerated below. There’s also an infographic here for a prettier description of things. Take note that the size of the page containing the infographic is A3. If you’re going to print this digest, I suggest you take it out so you can print the whole thing easily. Or convert this Word File into PDF and then print.

BUDGET PREPARATION PHASE BUDGET CALL • The Development Budget Coordination Committee (DBCC) sets budget parameters beforehand (including macroeconomic and fiscal targets and agency budget ceilings) before the Budget Call • National Budget Call for National Government Agencies (NGAs) • Corporate Budget Call for Government Owned and/or Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs) • The DBM established an early budget prep in this administration. Say the Government was preparing for the 2016 budget. Before Aquino Administration: Budget call will be around April 2015. During Aquino Administration: Budget call will be in December 2014. • In response, agencies will submit their AGENCY BUDGET PROPOSALS to the DBM. STAKEHOLDER ENGAGEMENT • A new process in budget preparations which seeks to increase citizen participation in the budget process, departments and agencies are tasked to partner with civil society organizations (CSOs) and other citizenstakeholders as they prepare their agency budget proposals • This was piloted in the preparation of the 2012 National Budget, is now being expanded towards institutionalization • This wasn't cited in the ponencia, so this is just added information :)) TECHNICAL BUDGET HEARINGS  conducted after departments and agencies submit their Agency Budget Proposals (ABPs) to the DBM  agencies defend their proposed budgets before a technical panel of DBM, based on performance indicators on

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output targets and absorptive capacity DBM bureaus then review the agency proposals and prepare recommendations DBM has a total of 7 Bureaus (A to G) which handle the different budgets of agencies/ offices submitted to them o Bureau A to E: National Government Agencies including Judiciary and Legislative Offices as well as the Constitutional Commissions o Bureau F: GOCCs and GFIs o Bureau G: PDAF, Special Shares, Calamity Fund, IRA EXECUTIVE REVIEW  DBM Bureaus review the ABPs and come up with recommendations for the Executive Review Board (ERB) comprised of the DBM Secretary and DBM senior officials  Discussions here cover the prioritization of programs and corresponding support CONSOLIDATION, VALIDATION AND CONFIRMATION  DBM consolidates the recommended agency budgets into the National Expenditure Program (NEP), the Budget of Expenditures and Sources of Financing (BESF) and the Staffing Summary  The NEP: o is submitted in the form of a proposed GAA (it is in book format, the same goes for the BESF and the Staffing Summary, as well as the final GAA) o provides details of spending for each department by agency and then by program, activity or project (PAP) o also contains Details of Selected Programs and Projects for a more detailed disaggregation of key PAPs in the NEP (the GAA doesn’t have this) PRESENTATION TO PRESIDENT AND CABINET  DBM and the DBCC present the NEP and BESF to the President and Cabinet for further refinements or reprioritization  After approval, the DBM prepares and finalizes the budget for submission to Congress (now called the President’s Budget) and submits the same which have the following: o President’s Budget Message (PBM) o BESF o NEP  Details of Selected Programs and Projects  Staffing Summary  

BUDGET LEGISLATION PHASE HOUSE DELIBERATIONS  First reading o President’s Budget is assigned to the House Appropriations Committee o Committee and its Sub-committees schedule and conduct budget hearings of departments and agencies o Crafts the General Appropriations Bill (GAB) o GAB is sponsored, presented and defended by the HoR’s Appropriation Committee in plenary session3  GAB is approved on Third Reading and is submitted to the Senate SENATE DELIBERATIONS  Senate Finance Committee and Sub-Committee are in charge  To expedite proceedings, the Senate may conduct its committee hearings simultaneously with the HoR’s deliberations but the proposed amendments to the GAB are submitted to the Senate Plenary only after the

3 Personal comment: As I remember, what usually happens is the Appropriations Committee and Sub-Committee Chairmen will “sponsor” the budget before the plenary (i.e., help defend it) and this is usually done per agency (i.e., a session for DOTC, then DBM, then DepEd etc.). The sponsoring congressman usually knows what the other congressmen will look for in the agency budget and will usually advise the agency to prepare to include additional projects (“congressional insertions”) requested by the other congressmen or prepare to defend certain projects that the plenary may criticize or ask the agency to explain. The sponsoring congressman more often than not also requests for his/her own insertion in the agency budget as well. Projects are added and/or deleted, budgets cut and/or added during the deliberations.

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HoR has formally transmitted their approved GAB to the Senate  GAB is approved on Third Reading and shall be submitted for Bicameral Deliberations BICAMERAL DELIBERATIONS  Constituted of a panel each for the Senate and the House of Representatives  Harmonizes conflicting provisions of their respective GAB versions  Harmonized GAB is produced RATIFICATION AND ENROLLMENT  Submitted to both Houses which will vote to ratify the final GAB for submission to the President  Once submitted, it is considered enrolled PRESIDENT’S VETO MESSAGE  President and the DBM review the GAB and prepare a Veto Message where identified budget items are submitted to direct veto or conditional implementation  Under the Constitution, the GAB is the only legislative measure where the President can impose a line-veto (in all other cases, a law is either approved or vetoed in full) (check out Philconsa vs. Enriquez for veto doctrine) ENACTMENT  If Congress fails to pass the GAB at the end of any fiscal year, the GAA for the previous year is automatically re-enacted (this actually happened under GMA’s time)  In the Aquino administration, the GAA is usually signed in December of the year before implementation

BUDGET EXECUTION PHASE RELEASE OF GUIDELINES AND PROGRAM  The budget execution phase begins with DBM’s issuance of guidelines on the release and utilization of funds. BUDGET EXECUTION DOCUMENTS (BEDs) SUBMISSION  Agencies are required to submit their BEDs at the start of budget execution. These documents outline agency plans and performance targets. These BEDs include the (1) physical and financial plan, (2) monthly cash program, (3) estimate of monthly income, and (4) list of obligations that are not yet due and demandable. ALLOTMENT AND CASH RELEASE PROGRAMMING  To ensure that releases fit the approved Fiscal Program, the DBM prepares an Allotment Release Program (ARP) to set a limit for allotments issued to an agency and on the aggregate. The ARP of each agency corresponds to the total amount of the agency-specific budget under the GAA, as well as Automatic Appropriations. A Cash Release Program (CRP) is also formulated alongside that to set a guide for disbursement levels for the year and for every month and quarter. ALLOTMENT RELEASE  Allotments, which authorize an agency to enter into an obligation, are either released by DBM to all agencies comprehensively through the Agency Budget Matrix (ABM) and individually via Special Allotment Release Orders (SAROs).  ABM. This document disaggregates all programmed appropriations for each agency into two main expenditure categories: “not needing clearance” and “needing clearance.” The ABM is the comprehensive allotment release document for appropriations which do not need clearance, or those which have already been itemized and fleshed out in the GAA.  SARO. Items identified as “needing clearance” are those which require the approval of the DBM or the President, as the case may be (for instance, lump sum funds and confidential and intelligence funds). For such items, an agency needs to submit a Special Budget Request to the DBM with supporting documents. Once approved, a SARO is issued. INCURRING OBLIGATIONS  In implementing programs, activities and projects, agencies incur liabilities on behalf of the government. Obligations are liabilities legally incurred, which the government will pay for. There are various ways that an agency “obligates:” for example, when it hires staff (an obligation to pay salaries), receives billings for the use of utilities, or enters into a contract with an entity for the supply of goods or services. CASH ALLOCATION  To authorize an agency to pay the obligations it incurs, DBM issues a disbursement authority. Most of the time, it takes the form of a Notice of Cash Allocation (NCA). This is a cash authority issued periodically by the DBM to the operating units of agencies to cover their cash requirements. The NCA specifies the maximum amount of cash that can be withdrawn from a government servicing bank for the period indicated. The release of NCAs by DBM is based on an agency’s submission of its Monthly Cash Program and other required

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documents. The DBM may issue Non-Cash Availment Authority (NCAA) (for non-cash disbursements) and Cash Disbursement Ceiling (CDC) for departments with overseas operations to allow the use of income collected by their foreign posts for their operating requirements DISBURSEMENT  This is the final step of the budget execution phase, where government monies are actually spent. The Modified Disbursement Scheme is mostly used, where disbursements of national government agencies chargeable against the Treasury are made through government servicing banks, such as the Land Bank of the Philippines.  The budget process, of course, does not end when government agencies spend public funds: each and every peso must be accounted for to ensure that is used properly, contributing to the achievement of socio-economic goals. 

BUDGET ACCOUNTABILITY PHASE This phase happens alongside Budget Execution Phase PERFORMANCE AND TARGET OUTCOMES  Agencies are held accountable not only for how these use public funds ethically, but also on how these attain performance targets and outcomes using available resources.  Performance measures are set alongside the preparation of the National Budget  Prior to the execution of the enacted National Budget, these performance targets are firmed up during the preparation of BEDs. BUDGET ACCOUNTABILITY REPORTS (BARS)  Submitted by agencies on a monthly and quarterly basis, BARs are required reports that show how agencies used their funds and identify their corresponding physical accomplishments. These include quarterly physical and financial reports of operations; quarterly income reports, a monthly statement of allotments, obligations and balances; and monthly report of disbursements. REVIEW OF AGENCY PERFORMANCE  The DBM regularly reviews the financial and physical performance of agencies. Actual utilization of funds and physical accomplishments, as indicated in the agencies’ BARs, are evaluated against their targets as identified via OPIF and in the agencies’ BEDs.  Agency Performance Reviews (APRs) are conducted quarterly or every semester, as the case may be. An annual Budget Performance Assessment Review (BPAR) is conducted to determine each agency’s accomplishments and performance by the year-end.  The DBM regularly reports results to the President. AUDIT  Auditing is not within the DBM’s jurisdiction, and is instead lodged under the Commission on Audit (COA).  Auditing is critical in ensuring agency accountability in the use of public funds.  The DBM uses COA’s audit reports in confirming agency performance, determining budgetary levels for agencies and addressing issues in fund usage

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THE NATURE OF DAP A. DAP WAS A PROGRAM DESIGNED TO PROMOTE ECONOMIC GROWTH  Focus on transparency and efficiency in the Administration resulted in a decelerated government project implementation and payment schedule  Economic situation paved the way for DAP as a stimulus package to fast-track public spending and push economic growth  Invests in high-impact budgetary PAPs to be funded from “savings” within the year  Accelerate by:  Streamlining implementation process through clustering of infrastructure projects of DPWH and DepEd  Front loading of Public Private Partnerships related projects 

DAP was partially successful  Contributed 1.3 percentage points to GDP growth by 4th QTR 2011  Strengthened growth by 11.8% year on year  Infrastructure rebounded from a 29% contraction to a 38% growth as of September 2013

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PAPs under DAP chosen based on their  Multiplier impact (The multiplier effect is an economic term referring to how an increase in one economic activity can cause an increase throughout many other related economic activities) on economy and infra development  Beneficial effect on the poor  Translation to disbursements

B. HISTORY OF DAP AND SOURCES OF DAP FUNDS  October 12, 2011 - Earliest document regarding its inception is the memorandum from Sec. Abad to the President seeking the approval to implement DAP  The memorandum contained a list of funding sources for a total of Php 72.11 Billion as well as the projects to be funded  December 12, 2011 – Requesting omnibus authority to consolidate the savings and unutilized balances for fiscal year 2011  On utilization of pooled savings: “…to pool savings/ unutilized balances in FY 2010 last November 25, 2010.”  Requested omnibus authority to consolidate FY 2011 savings/ unutilized balances and realignment  Requested approval for the proposed additional projects identified for funding  

June 25, 2012, September 4, 2012, December 19, 2012, May 20, 2013, and September 25, 2013 Identical requests for authority to pool savings (all approved by PNoy) NBC No. 541 says:  President has authorized withdrawal of unobligated allotments of agencies with low levels of obligations as of June 30, 2012 both for continuing and current allotments  Covers: 1. Capital Outlays 2. MOOE 3. PS  The withdrawal of unobligated allotments may cover unidentified programs, projects, activities of the department/ agencies reflected in the DBM list  Listed funds that were exempted  NGAs shall continue to undertake procurement activities short of award notwithstanding the implementation of the withdrawal policy until the end of the third quarter (September) (in layman’s

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terms: you can go on buying things, but just don’t award it to the winning bidder yet. Wait for funds, there will be money, don’t worry) If agencies cannot provide budget accountability reports in time, the DBM will use the agency’s latest report available as basis for the withdrawal of allotment (since this is not updated All released allotments in FY 2011 which remained unobligated as of June 30, 2012 shall be immediately considered for withdrawal Withdrawn allotments may be:  Reissued for the original programs and projects of the agencies/ OUs concerned, from which the allotments were withdrawn (take note of this – it means they aren’t really “savings” in the strictest sense since they can still be used for the same project i.e. the project has not been abandoned or discontinued or completed)  Realigned to cover additional funding for other existing programs and projects  Used to augment existing programs and projects of ANY agency and to fund priority programs and projects NOT CONSIDERED IN THE 2012 budget but expected to be started or implemented in the current year

ISSUES with HOLDING I.

PROCEDURAL ISSUES

A. WHETHER OR NOT CERTIORARI, PROHIBITION AND MANDAMUS ARE PROPER REMEDIES TO ASSAIL THE CONSTITUTIONALITY AND VALIDITY OF DAP, NBC 541 AND ALL OTHER EXECUTIVE ISSUANCES ALLEGEDLY IMPLEMENTING DAP  

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YES. COURT SAYS ALL PETITIONS UNDER RULE 65 ARE PROPER REMEDIES (CERTIORARI, PROHIBITION AND MANDAMUS) The remedies of certiorari and prohibition are broader in scope and reach and may be issued to correct errors of jurisdiction as well as set right, undo, and restrain any act of grave abuse of discretion amounting to excess or lack of jurisdiction by any branch or instrumentality of Government even if the latter does not exercise judicial, quasi-judicial or ministerial functions. This is expressly authorized by Section 1, Rule 65 of the rules of court. Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to review and/or prohibit or nullify the acts of legislative and executive officials

B. WHETHER OR NOT THERE IS A CONTROVERSY RIPE FOR JUDICIAL DETERMINATION  

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YES. THERE IS AN ACTUAL CONTROVERSY RIPE FOR JUDICIAL DETERMINATION. The Court quotes Belgica vs. ES Ochoa O xxx is one which involves a conflict of legal rights, an assertion of opposite legal claims…there must be a contrariety of legal rights that can be interpreted and enforced on the basis of existing law and jurisprudence…a question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual challenging it…” The incompatibility of the perspectives of the parties on the constitutionality of DAP and its relevant issuances satisfy the requirement for a conflict between legal rights. They meet the “ripeness” requirement since these allegedly unconstitutional acts acts were already being implemented by the DBM. Moreover, DAP entailed the allocation and expenditure of huge sums of public funds.

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In addition, the fact that funds have been allocated or utilized give rise to an actual controversy Respondents claim that since DAP has been discontinued, the challenges are now moot and academic. The Court says: the discontinuing of DAP did not moot the challenges to its constitutionality. because it falls under all exceptions for mootness to be disregarded: (1) there was a grave violation of the constitution, (2) the case involves a paramount public interest, (3) the constitutional issue raised here requires formulation of controlling principles to guide the Bench, the Bar and the public and (4) this case is capable of repetition yet evading review (there is nothing to stop the DBM from re-implementing DAP).

C. WHETHER OR NOT THE PETITIONERS HAVE STANDING     

YES PETITIONERS HAVE LOCUS STANDI. THE ISSUANCE AND IMPLEMENTATION OF DAP AND ISSUANCES INVOLVED ILLEGAL DISBURSEMENTS OF PUBLIC FUNDS. Except for PHILCONSA, the petitioners have invoked their capacities as tax payers and thus have an interest in further dissipation of public funds. PHILCONSA simply reminds that the Court has long recognized its legal standing to bring cases upon constitutional issues. IBP stands by its avowed duty to work for the rule of law and civic duty as the official association of lawyers in this country. In any case, the Court adds that these cases pose issues that are of transcendental importance to the entire nation (so procedural technicalities can be waived).

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SUBSTANTIVE ISSUES

A. WHETHER OR NOT DAP VIOLATES SECTION 29 ARTICLE VI OF THE 1987 CONSTITUTION4     

NO. DAP WAS NOT AN APPROPRIATION MEASURE HENCE, NO APPROPRIATION LAW WAS REQUIRED TO ADOPT OR IMPLEMENT IT. DAP was only a program or an administrative system of prioritizing spending the adoption of which was by virtue of the authority of the President to ensure laws are properly executed. It is the Executive playing its role as the main actor during the Budget Execution Stage under its constitutional mandate to faithfully execute laws including GAAs Congress did not need to legislate to adopt or implement DAP Thus Executive did not usurp the power vested in Congress under Section 29(1) Article VI of the Constitution

B. WHETHER OR NOT DAP, NBC 541 AND ALL OTHER EXECUTIVE ISSUANCES IMPLEMENTING DAP VIOLATE SECTION 25(5) ARTICLE VI OF THE 1987 CONSTITUTION 5:  

YES THE VIOLATED SECTION 25(5) ARTICLE VI OF THE CONSTITUTION. To discuss this, we follow the three (3) requisites set out in Section 25(5) of Article VI: (1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the

4 No money shall be paid out of the Treasury except in pursuance of an appropriation made by law. 5 No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

heads of the Constitutional Commissions to transfer funds within their respective offices. (2) The funds to be transferred are savings generated from the appropriations of their respective offices; and (3) The purpose of the transfer is to augment an item in the general appropriations law for their respective offices. (1) FIRST REQUISITE: THERE IS A LAW AUTHORIZING THE PRESIDENT TO TRANSFER FUNDS WITHIN HIS OFFICE 

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THIS REQUISITE IS NOT MET. GAA OF 2011 AND 2012 LACKED VALID (FAITHFUL TO THE CONSITUTION) PROVISIONS TO AUTHORIZE TRANSFER OF FUNDS UNDER THE DAP, HENCE THE TRANSFERS WERE UNCONSTITUTIONAL. Section 25(5) is not a self-executing provision and must have a law implementing it. Generally this is the GAA. A reading of the 2011 and 2012 GAAs show that its provisions were textually unfaithful (hehe) to the Constitution for not carrying the phrase “for their respective offices 6” and literally allowed the transfer of funds from savings to augment any item in the GAAs even if the item belonged to another office and thus contravene the Constitution Thus these provisions cannot be used by the Executive to claim authority to transfer appropriations. The missing phrase was inserted in the 2013 GAA, however, even with a valid law for the authorization of transfer of funds, there are still two more requisites to be met (2) SECOND REQUISITE: THE FUNDS TO BE TRANSFERRED ARE SAVINGS GENERATED FROM THE APPROPRIATIONS OF THEIR RESPECTIVE OFFICES – WHERE THERE ACTUALLY SAVINGS?

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Petitioners claim that the unreleased appropriations and withdrawn unobligated allotments were not ACTUAL savings within the context of Section 25(5) Art. 6 of the Constitution. Petitioners also argue that “savings” should be understood to refer to the excess money after the items that needed to be funded have been funded, or those that needed to be paid have been paid and they insist that savings cannot be realized with certainty in the middle of the fiscal year. Petitioners also say that “slow-moving” PAPs could not be savings as they actually have not been abandoned yet (remember the note earlier in NBC 541) The OSG represents that “savings” meant “appropriations balances” – the difference between the appropriation authorized by Congress (the Program Amount in the GAA) and the actual amount allotted for the appropriation. Personal Note: If you’re confused as to what the OSG means, I’ll try to explain through an example and I hope I get it right haha.

6 Section 25(5) of the Constitution says: “No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.” 2011 GAA says: Section 59. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other items of their respective appropriations. 2012 GAA says: Section 53. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to augment any item in this Act from savings in other items of their respective appropriations.

Let’s say the DOTC wants to buy a lot of trains. Congress gives them 300 Billion for this, which is a ballpark figure (this is an estimate since you can’t really know how much you need to buy trains nowadays – but you have to give a figure during budget preparation so it’s in your budget.) To buy the trains, DOTC has to pass through public bidding (this usually how Government buys things, they don’t just get money and buy anytime they want, they have to pass through competitive bidding – and give it to the lowest bidder). By law, when you advertise that opportunity to bid, you have to prepare an “Approved Budget for the Contract” (ABC). This sets the ceiling amount on how much the bidders will bid. They cannot bid above this. If they do, they get disqualified. The ABC is always culled from market study – how much are trains in the market? The market says, around 250 Billion. The difference between the 300B (appropriation authorized by Congress) and the 250B (actual amount allotted for the appropriation) are the savings that OSG meant. So you advertise: inviting bidders for 250Billion contract for trains! Bidders bid competitively. The lowest bidder wins which is, say around 100Billion. You now have actual savings of 150Billion (250 Approved Budget for the Contract -100 Billion Contract amount). If you’re more confused now, please forget what I just said. :)))) 

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To ascertain the meaning of savings, there are four principles: (1) Congress wields the power of the purse and therefore chooses how the budget shall be spent. (2) The Executive is expected to faithfully implement the PAPs which Congress allocated for. (3) To make the power of the President to augment operative under the GAA, Congress recognizes the need for flexibility in budget execution. (4) Savings should be actual, something real and substantial. Not possible, potential or hypothetical. This interpretation prevents the Executive from transgressing Congress’ power of the purse. Definition of savings in the GAAs reflected this interpretation. Savings are any programmed appropriation in the GAA free from any obligation which are: (1) Still available after the completion/ final discontinuance/ abandonment for which the appropriation is authorized (2) Appropriation balances from unpaid compensation and vacant positions/ LOA without pay (3) Appropriations balances realized from improved systems/ measures in implementation  The DBM declares that part of the savings brought under DAP came from “pooling unreleased appropriations such as unreleased Personnel Services which will lapse at the end of the year, unreleased appropriations of slow moving projects, and discontinued projects per Zero-Based Budgeting findings.”  There is no clear legal basis for this declaration of DBM and their treatment of unreleased or unallotted appropriations as savings.  THUS THE SECOND REQUISITE IS NOT MET. THE COURT SAYS: THESE ITEMS HAVE NOT YET RIPENED INTO CATEGORIES OF ITEMS FROM WHICH SAVINGS CAN BE GENERATED – THEY HAVEN’T EVEN REACHED THE AGENCY TO WHICH THEY WERE ALLOTTED TO UNDER THE GAA. THESE DO NOT FALL UNDER THE DEFINITION OF SAVINGS REFLECTED IN THE GAA (ITEMS 1 TO 3 AFOREMENTIONED).

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Thus, unobligated allotments cannot be indiscriminately declared as savings without first determining whether any of the three instances stated earlier existed. This means that DBM’s withdrawal of the unobligated allotments disregarded the definition of savings under the GAAs. The GAA has a 2-year validity, however DBM declared that 2013 shall have a one year validity to force the agencies to plan properly and expedite expenditures. This means that DBM’s withdrawal of unobligated allotments of agencies with low levels of obligations to fund fast-moving projects meant a complete disregard for the 2-year validity of the budgets for 2011 and 2012 (and the 1-year validity for the 2013 budget). This is because if you’re an agency, and you wanted to use the unobligated budget you have left from last year to fund a project for this year, you can’t anymore because DBM has withdrawn it and distributed it to faster moving projects. The respondents insist that these were being withdrawn upon the instance of the implementing agencies based on their own assessment that they could not obligate these allotments. However, the Court states that the withdrawals were upon the initiative of the DBM itself, based on the text of NBC 541. (Personal Note: I guess the DBM was not able to show evidence to back up their claim because this is isn’t entirely true, the agency always has a chance not to allow DBM to withdraw their unobligated funds – and can always write a letter to get back the funds that DBM has withdrawn – as long as they do it as early as possible) The petitioners claim that the retention of these funds were akin to impoundment and that there was no law authorizing the withdrawal of the unobligated allotments. The Court says: The withdrawal and transfer of unobligated allotments and pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such withdrawal cannot be considered as impoundment as they entitled only the transfer of funds and not the retention or reduction of appropriations The Court adds: relevant to remind that the balances of appropriations that remained unused at the end of the year are to be reverted to the General Fund (Treasury). This is the mandate of Section 28, Chapter IV, Book VI of EO 292. The Executive cannot circumvent this provision by declaring unreleased appropriations and unobligated allotments as savings prior to the end of the fiscal year. (3) THIRD REQUISITE: THE PURPOSE OF THE TRANSFER IS TO AUGMENT AN ITEM IN THE GENERAL APPROPRIATIONS LAW FOR THEIR RESPECTIVE OFFICES

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THIS REQUISITE IS NOT MET AS SOME OF THE SAVINGS POOLED UNDER DAP WERE ALLOCATED TO PAPS THAT WERE NOT COVERED BY ANY APPROPRIATION IN THE PERTINENT GAA. This means that the Executive seemed to be specifying the PAPs where the money shall be spent – which is the power of the purse that resides in Congress alone. An example was the Disaster Risk, Exposure, Assessment and Mitigation (DREAM) Project under the DOST which when broken down did not have an item for personnel services and capital outlays, only for MOOE. Aside from transferring funds to the DREAM project exceeding by almost 300%, DAP allotted funds for personnel services and capital outlays which Congress did not appropriate for in the first place. AGAIN, PROOF OF NON-COMPLIANCE TO THIS REQUISITE ARE THE CROSS BORDER AUGENTATIONS FROM SAVINGS WHICH ARE CLEARLY PROHIBITED BY THE CONSTITUTION. SECTION 25(5) ARTICLE VI ONLY ALLOWS AUGMENTATION WITHIN THE RESPECTIVE OFFICES STATED THEREIN.

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During the oral arguments, Secretary Abad stated the following instances wherein crossborder transfers/ augmentations transpired: (1) Request from the House of Representatives for e-library funds (Legislative Library and Archives Building/ Congressional e-library) (they lacked 43 Million). The HoR were constrained to finish this project because COA informed them that failure to do so will cause serious deterioration of the building and equipments therein. They wrote to the President requesting for an augmentation of that item, which was granted. (2) Request from the Commission on Audit for their good governance programs. The COA needed IT equipment and consultants and litigators to help with their audit work and they requested funds form the Executive Department. When the President saw that it was important for the Commission to be provided those equipment, the request was granted. (3) President made available to the Commission on Elections the savings of his department upon their request for funds.

C. WHETHER OR NOT THE RELEASE OF UNPROGRAMMED FUNDS UNDER DAP WAS IN ACCORD WITH THE GAAS7 

DBM avers that there are three instances wherein unprogrammed funds can be availed of: (1) Revenue collections exceeded original revenue targets proposed in the BESF submitted by the president to congress (2) New revenues were collected or realized from sources not originally considered in the BESF (3) Newly approved loans for foreign assisted projects secured  NO. THE RELEASE OF UNPROGRAMMED FUNDS WERE NOT IN ACCORD WITH THE GAAS. THE COURT RULES THAT THERE ARE ONLY TWO INSTANCES WHEN THE UNPROGRAMMED FUNDS CAN BE RELEASED (WHICH ARE BOLSTERED BY THE TEXTS IN THE 2011 AND 2012 GAA AND MORE CLEARLY BY GAA 2013)8  The controversy arises due to the difference in the interpretation of the phrase “revenue collections must exceed the original revenue targets.” DBM construes this as to refer only to the collections for each source of revenue in the BESF, the condition is complied as long as one source of revenue exceeds its target.

7 This issue is raised by Araullo and Belgica in their respective memoranda. 8 2011 GAA 1. Release of Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution, including savings generated from programmed appropriations for the year: PROVIDED, That collections arising from sources not considered in the aforesaid original revenue targets may be used to cover releases from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds: PROVIDED, FURTHERMORE, That if there are savings generated from the programmed appropriations for the first two quarters of the year, the DBM may, subject to the approval of the President, release the pertinent appropriations under the Unprogrammed Fund corresponding to only fifty percent (50%) of the said savings net of revenue shortfall: PROVIDED, FINALLY, That the release of the balance of the total savings from programmed appropriations for the year shall be subject to fiscal programming and approval of the President. 2012 GAA 1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution: PROVIDED, That collections arising from sources not considered in the aforesaid original revenue targets may be used to cover releases from appropriations in this Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds. 2013 GAA 1. Release of the Fund. The amounts authorized herein shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress pursuant to Section 22, Article VII of the Constitution, including collections arising from sources not considered in the aforesaid original revenue target, as certified by the BTr: PROVIDED, That in case of newly approved loans for foreign-assisted projects, the existence of a perfected loan agreement for the purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.

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The petitioners, on the other hand (and the Court sides with them on this) take the phrase to mean the total revenue collections must exceed the total revenue target in the BESF. This requirement should be construed in light of the purpose of the unprogrammed funds – as standby appropriations to support additional expenditures. In the even that the revenue collections exceed targets, the government shall have more than enough to cover additional expenditures – thus the unprogrammed funds can be dispensed with and disbursed. Following the DBM’s definition would create “fake surplus” since exceeding targets in one revenue stream did not necessarily mean that the government indeed had exceeded revenue targets as a whole.

D. WHETHER OR NOT DAP VIOLATES: (1)

EQUAL PROTECTION CLAUSE Petitioners say that DAP practiced undue favoritism in favor of select legislators in contravention of this clause when it released funds upon their request.  They add that no reasonable classification was used in distributing funds under DAP.  COURT: THIS ALLEGATION LACKS FACTUAL BASIS. Claims are unsupported with relevant data. On the discrimination against legislators: cannot warrant a finding of contravention of the equal protection clause. The denial of equal protection can only be raised by the parties who suffer it, and in these cases, none of the legislators brought to the fore when and how the denial of equal protection occurred and explain why there was a denial in their situation. Ruling on this will cause the Court to speculate. Guesswork and speculation cannot overcome the presumption of the constitutionality of the assailed executive act. 

(2)

SYSTEM OF CHECKS AND BALANCES Petitioners claim that the system of checks and balances was compromised because some legislators were forced to be silent about the issues and anomalies surrounding DAP when they were given funds from it  The President arrogated unto himself the power of appropriation vested in the Congress because of NBC No. 541  COURT: EARLIER DISCUSSIONS ON THE INFRIGEMENT OF THE DOCTRINE OF SEPARATION OF POWERS HAVE RESOLVED THIS ISSUE. 

(3) PRINCIPLE OF PUBLIC ACCOUNTABILITY  Petitioners insist that DAP is repugnant to this principle because the legislators relinquished the power of appropriation to the Executive and exhibited a reluctance to inquire into DAP’s legality  COURT: WE HAVE HELD THAT DAP AND ITS IMPLEMENTING ISSUANCES WERE POLICIES AND ACTS THAT THE EXECUTIVE COULD PROPERLY ADOPT AND DO IN THE EXECUTION OF GAAs to the extent that they sought to implement strategies to ramp up and accelerate the economy of the country.

E. WHETHER OR NOT FACTUAL AND LEGAL JUSTIFICATION EXISTS TO ISSUE A TEMPORARY RESTRAINING ORDER (TRO) TO RESTRAIN IMPLEMENTATION OF DAP, NBC 541 AND ALL OTHER EXECUTIVE ISSUANCES IMPLEMENTING DAP

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COURT: THE DOCTRINE OF OPERATIVE FACT SHALL APPLY. A blanket TRO should not be applied. It is said that a legislative or executive act is declared void for being unconstitutional cannot give rise to any right or obligation. But the Court asks: should we not recognize the need to except from the rigid application of the rule the instances in which the void law or executive act produced an almost irreversible result? This is answered by the doctrine of operative fact. This doctrine recognizes the existence of the law or act prior to the determination of its constitutionality as an operative fact that produced consequences that cannot always be erased. The past cannot always be erased by a new judicial declaration. This doctrine’s application to DAP proceeds from equity and fair play. The Court cites the following cases to support its position: O Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council  “Prior to the declaration of unconstitutionality of the said executive act, certain acts or transactions were made in good faith…which cannot be just set aside or invalidated by its subsequent invalidation.” O Tan v. Barrios – court held that despite invalidity of military courts over civilians, certain operative facts should be acknowledged to have existed so as not to trample upon the rights of the accused O Olaguer v. Military Commisssion “The operative fact doctrine is not confined to statutes and rules and regulations, but can also be applied by analogy to decisions made by the President or agencies under the executive department. In the interest of justice and equity, this doctrine can be applied liberally and in a broad sense to encompass said decisions of the executive branch. It can be applied to acts and consequences resulting from the reliance not only on a law or executive act which is quasi-legislative in nature but also on decision or orders from the executive branch which were later nullified. This Court is not mindful that such acts and consequences must be recognized in the higher interest of justice, equity and fairness.” DAP yielded undeniable positive results that enhanced the economic welfare of the country. Not applying this doctrine would result in the undoing of worthy results such as infrastructure and would result in the most undesirable wastefulness. Justice Brion: Operative fact can only apply to the PAPs that can no longer be undone whose beneficiaries relied in good faith on the validity of the DAP but not to the authors, proponents, and implementors of DAP unless there are concrete findings of good faith in their favor by the proper tribunals.

DISPOSITIVE PORTION

The Court PARTIALLY GRANTS the petitions for certiorari and prohibition; and DECLARES the following acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541 and related executive issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers, namely: (a) The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying 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 the Executive; and (c) The funding of projects, activities and programs that were not covered by any appropriation in the General Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed funds despite the absence of a certification by the National Treasurer that the revenue collections exceeded the revenue targets for non-compliance with the conditions provided in the relevant General Appropriations Acts. DOCTRINE Doctrine of Operative Fact Separation of Powers Power of the Purse (Congress) RELEVANCE TO THE LESSON Provisions on Appropriation were discussed, particularly the ones cited below.

PROVISION Section 25(5) Article VI of the 1987 Constitution

Sec. 38, Ch.5, Bk. 6, EO 292

Sec. 39, Ch.5, Bk. 6, EO 292

WHAT IT SAYS “No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.”

Suspension of Expenditure of Appropriations. Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees. Authority to Use Savings in Appropriations to Cover Deficits. - Except as otherwise provided in the General Appropriations Act, any savings in the regular appropriations authorized in the General Appropriations Act for programs and projects of any department, office or agency, may, with the approval of the President, be used to cover a deficit in any other item of the regular appropriations: provided, that the creation of new positions or increase of salaries shall not be

WHY WAS IT CITED DBM used its GAA 2011 and 2012 as legal bases for the transfer of funds under DAP, however, the provisions in GAA 2011 and 2012 lacked the underlined phrase here. This was clearly violated by the DBM when: (1) It failed to have a law that authorized the augmentation of items in the GAA (GAA 2011 and 2012 provisions, were not textually faithful to the Constitution) (2) It declared as savings the funds that did not fall under the definition of savings (3) It did cross-boarder fund transfers. DBM’s justification on its withdrawal and pooling of unutilized allotment releases

DBM’s justification on its withdrawal and pooling of unutilized allotment releases

Section 29(1) Article VI of the Constitution

allowed to be funded from budgetary savings except when specifically authorized by law: provided, further, that whenever authorized positions are transferred from one program or project to another within the same department, office or agency, the corresponding amounts appropriated for personal services are also deemed transferred, without, however increasing the total outlay for personal services of the department, office or agency concerned. No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.

Petitioners argue that there was a violation of this section. The Court ruled that there was none, as DAP did not appropriate funds but was only an administrative measure for stimulating government expenditure.

OTHER NOTES 

Pretty infographics are also available in the Budget ng Bayan website of the DBM (it’s a website specifically designed for citizens who want to know more about our national budget and how it’s made: http://budgetngbayan.com/the-budget-cycle/). Please do check it out! If you want a PDF copy of the budget cycle, it’s also uploaded in the GDrive

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The documents and the seven (7) evidence packets submitted by the OSG are as follows:

DOCUMENTS o A certified copy of the Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate Savings/Unutilized Balances and their Realignment); o Circulars and orders, which the respondents identified as related to the DAP, namely:  NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds for FY 2011);  NBC No. 535 dated December 29, 2011 (Guidelines on the Release of Funds for FY 2012);  NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency Measure – Withdrawal of Agencies’ Unobligated Allotments as of June 30, 2012);  NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds for FY 2013);  DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary Treatment of Commitments/Obligations of the National Government);  COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised Guidelines on the Submission of Quarterly Accountability Reports on Appropriations, Allotments, Obligations and Disbursements);  NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund Release System in the Government). o A breakdown of the sources of savings, including savings from discontinued projects and unpaid appropriations for compensation from 2011 to 2013 o

Another set of documents in further compliance with the Court’s request  Certified copies of the certifications issued by the Bureau of Treasury to the effect that the revenue collections exceeded the original revenue targets for the years 2011, 2012 and 2013, including collections arising from sources not considered in the original revenue targets, which certifications were required for the release of the unprogrammed funds as provided in Special Provision No. 1 of Article XLV, Article XVI, and Article XLV of the 2011, 2012 and 2013 GAAs

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A report on releases of savings of the Executive Department for the use of the Constitutional Commissions and other branches of the Government, as well as the fund releases to the Senate and the Commission on Elections (COMELEC).

SEVEN EVIDENCE PACKETS o 1st Evidence Packet: containing seven memoranda issued by the DBM through Sec. Abad, inclusive of annexes, listing in detail the 116 DAP identified projects approved and duly signed by the President, as follows:  Memorandum for the President dated October 12, 2011 (FY 2011 Proposed Disbursement Acceleration Program (Projects and Sources of Funds);  Memorandum for the President dated December 12, 2011 (Omnibus Authority to Consolidate Savings/Unutilized Balances and its Realignment);  Memorandum for the President dated June 25, 2012 (Omnibus Authority to Consolidate Savings/Unutilized Balances and their Realignment);  Memorandum for the President dated September 4, 2012 (Release of funds for other priority projects and expenditures of the Government);  Memorandum for the President dated December 19, 2012 (Proposed Priority Projects and Expenditures of the Government);  Memorandum for the President dated May 20, 2013 (Omnibus Authority to Consolidate Savings/Unutilized Balances and their Realignment to Fund the Quarterly Disbursement Acceleration Program); and  Memorandum for the President dated September 25, 2013 (Funding for the Task Force Pablo Rehabilitation Plan). o 2nd Evidence Packet: 15 applications of the DAP, with their corresponding Special Allotment Release Orders (SAROs) and appropriation covers o 3rd Evidence Packet: list and descriptions of 12 projects under the DAP o 4th Evidence Packet: identifying the DAP-related portions of the Annual Financial Report (AFR) of the Commission on Audit for 2011 and 2012 o 5th Evidence Packet: a letter of Department of Transportation and Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad recommending the withdrawal of funds from his agency, inclusive of annexes o 6th Evidence Packet: a print-out of the Solicitor General’s visual presentation for the January 28, 2014 oral arguments o 7th Evidence Packet: listed the sources of funds brought under the DAP, the uses of such funds per project or activity pursuant to DAP, and the legal bases thereof

DISSENTS: DEL CASTILLO, J.: DAP, under NBC 541 is only partially unconstitutional. The following were NOT violations of the law or the Constitution: 1. The President validly ordered slow-moving projects to be discontinued or abandoned, pursuant to his power to permanently stop expenditure under Sec 38 of the Administrative Code. “Sec 38: Except as otherwise provided in the GAA and whenever in his judgement the public interest so requires, the President upon notice of the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the GAA, except for personal services appropriations used for permanent officials and employees.”

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The burden of proof rests on the petitioners to show that the permanent stoppage of expenditure on slow-moving projects does not meet the “public interest” standard under section 38. Petitioners failed to clearly and convincingly show: o that the DAP was a mere subterfuge by the gov’t to frustrate the legislative will as expressed in the GAA o the discontinued slow-moving projects were not actually slow-moving and the discontinuance was motivated by malice or ill will o no actual and legitimate public interest was served by the DAP

2. Provisions in the GAA giving Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO) a period of two years simply means the work or activity may be pursued within the aforesaid period. It does not prevent the President from discontinuing such projects if public interest so requires. 

GAA provision on the availability for release and obligation of the appropriations relative to the MOOE and CO for a period of two years is not a ground to declare the DAP invalid because the power of the President to permanently stop expenditure under sec 38 of the administrative code is not expressly abrogated by this provision.

3. It is inaccurate to state that the unobligated allotments were indiscriminately declared as savings, considering that there was a legitimate state interest involved in ordering their withdrawal.  Burden of proof was on petitioners to show that such State interest failed to comply with the “public interest” standard in Sec 38. 4. Augmentations of projects is allowed as per Sec 25(5), Art VI of the Consti, and sheer magnitude of the augmentation is not a ground to declare such augmentation unconstitutional.  Even if Congress appropriated only P1.00 for a particular project in the Appropriations of the Executive Department, and the Executive generated savings in the amount of P1Billion, it is theoretically possible to use that money for the one peso project.  The Court cannot speculate by the sheer magnitude of the augmentations that a constitutional breach occurred.  Substantial augmentations in this particular case, without more, cannot be declared unconstitutional absent showing a grave abuse of discretion. 5. There was no unlawful release of the Unprogrammed Funds through the DAP.  Certain provisos in the 2011, 2012, and 2013 GAA’s were exceptions to the general rule that unprogrammed funds may only be released when the revenue collections exceeded the original revenue targets.  Even if the revenue collections do not exceed the original revenue targets, funds from the Unprogrammed Funds can still be released. 6. Unprogrammed Funds does not equate to “savings.”  The Executive Department never claimed that the Unprogrammed Funds are “savings.” What it stated is that the funds released from the Unprogrammed Funds were one of the sources of funds for DAP.  All funds released under the DAP have a corresponding appropriation cover. They were released pursuant to a legitimate work, activity or purpose for which they were authorized.  Petitioners failed to prove that Unprogrammed Funds were released to finance projects that did not fall under specific items on the GAA provision on the Unprogrammed Fund.  There is no basis as of yet to rule that the UNprogrammed Fund was unlawfully released. CONCURS WITH EVERYTHING ELSE.