Facts:

The case involves multiple petitioners, including Maria Carolina P. Araullo, Judy M. Taguiwalo, and various representatives from political parties and organizations, who filed petitions against respondents Benigno Simeon C. Aquino III, the President of the Philippines, Paquito N. Ochoa, Jr., the Executive Secretary, and Florencio B. Abad, the Secretary of the Department of Budget and Management. The petitions were consolidated under G.R. No. 209287 and others, with the main issue revolving around the constitutionality of the Disbursement Acceleration Program (DAP) and National Budget Circular No. 541. The Supreme Court's decision was promulgated on July 1, 2014, and the case was resolved on February 3, 2015. The petitioners argued that the DAP violated the 1987 Philippine Constitution, particularly Section 25(5), Article VI, which prohibits the transfer of appropriations except under specific conditions. The lower courts had previously ruled on the legality of the DAP, le...

Facts:

Background and Implementation of the DAP

• The government introduced the Disbursement Acceleration Program (DAP) as a mechanism to speed up public spending and stimulate economic growth.
• The program’s design involved reallocating funds already appropriated by Congress rather than securing new appropriations.
• The Executive withdrew unobligated allotments from various agencies and declared these funds as “savings.”

Funding Mechanism and Alleged Irregularities

• Funds were reissued or realigned to augment priority programs and projects (PAPs) even when these projects did not originally have corresponding line-item coverage.
• There are allegations that the “savings” were declared prematurely—before the fiscal year’s work was completed or the projects had been finally discontinued or abandoned.
• The program involved cross-border transfers of savings from the Executive branch to other constitutional bodies such as the House of Representatives, the Senate, and other offices, raising questions about inter-branch separation of powers.
• The DAP also drew on unprogrammed funds supposedly released without proper certification that actual revenue collections exceeded prescribed revenue targets.

Legislative and Judicial Proceedings

• Questions were raised regarding the proper interpretation of key terms—especially “savings,” “augmentation,” and “unprogrammed funds”—under the General Appropriations Acts (GAAs) and related administrative codes.
• Motivated by these concerns, parties (both petitioners and respondents) filed motions for reconsideration, challenging the Court’s earlier rulings on both procedural and substantive grounds.
• Testimonies and documentary evidence focused on contrasting the executive’s practices against constitutional mandates and statutory definitions, particularly regarding the limits of augmentation and cross-branch fund transfers.

Reliance on the Doctrine of Operative Fact

• Beneficiaries of DAP-funded projects and third parties acted in good faith in reliance on the validity of the program.
• The controversy also turned on whether the doctrine of operative fact should be applied so that the effects of the previously valid acts would continue for the sake of equity—even though the underlying measures were later declared unconstitutional.
• The debate thus extended to whether this doctrine should shield project beneficiaries while excluding the authors and implementers of the unconstitutional transfers.

Issue:

Validity and Timing of Declaring Withdrawn Allotments as “Savings”

• Was it proper for the Executive to withdraw unobligated allotments and declare them as savings before the end of the fiscal year or before the related projects had been completed, discontinued, or abandoned?
• Did such a declaration comply with the statutory and constitutional meaning of “savings” as defined in the GAAs?

Constitutionality of Cross‑Branch (Cross‑Border) Transfers

• Does transferring savings from the Executive branch to augment appropriations of agencies or constitutional bodies outside the Executive violate Article VI, Section 25(5) of the 1987 Constitution?
• Is the practice of “cross‑border” fund transfers allowed under the constitutional scheme of separation of powers and control over public funds?

Use and Release of Unprogrammed Funds

• Are the mechanisms for releasing unprogrammed funds—particularly when done without a certified excess in revenue collections—consistent with both the statute and the Constitution?
• How should revenue targets be interpreted (total versus per income source) for the purposes of allowing the release of such funds?

Augmentation of Appropriated Items Beyond Their Original Limits

• Does the augmentation of appropriation items beyond the amounts recommended by the President or set by Congress (or funding non‑existent programs) violate the constitutional power of Congress over public funds?
• Should the focus be on the existence of a formal “appropriation item” or merely on eligible “expense categories” within it?

Application and Limits of the Operative Fact Doctrine

• To what extent does the operative fact doctrine protect third‑party beneficiaries of the DAP from retroactive nullification of funds spent in reliance on the program’s validity?
• Should this doctrine be limited only to those who acted in good faith as beneficiaries, while not extending to the authors, proponents, or implementers of the DAP’s unconstitutional measures?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)