Araullo v. Aquino
G.R. No. 209287July 1, 2014
Study material, not legal advice. Written and checked by the PhilippineLaws team to the best of our knowledge; not reviewed by a lawyer. A digest is a summary — the full decision is the authority, so read it before you cite it.
Cited for
Transfer of Appropriations and Savings — Section 25(5), Article VI (DAP)
Why it matters
Declared unconstitutional specific acts and practices under the Disbursement Acceleration Program: declaring unobligated allotments and unreleased appropriations as savings before year-end, cross-border transfers of Executive savings to other branches and constitutional bodies, and funding projects with no appropriation in the GAA (this third declaration was deleted on reconsideration on February 3, 2015). The Court held the DAP itself was an executive policy, not an appropriation, and applied the operative fact doctrine to DAP-funded projects.
Digest
On September 25, 2013, Sen. Jinggoy Ejercito Estrada revealed in a privilege speech that some Senators, including himself, had been allotted an additional P50 Million each as an 'incentive' for voting in favor of the impeachment of Chief Justice Renato C. Corona. DBM Secretary Florencio Abad explained that the releases were part of the Disbursement Acceleration Program (DAP), instituted in 2011 to ramp up spending. The DBM said the DAP was funded from savings and from unprogrammed funds. The savings came from pooling unreleased appropriations (such as unreleased Personnel Services appropriations and those of slow-moving and discontinued projects) and from withdrawing unobligated allotments of slow-moving programs. The DBM cited Section 25(5), Article VI of the Constitution, Sections 38 and 49, Chapter 5, Book VI of the Administrative Code, and the 2011–2013 General Appropriations Acts (GAAs) as legal bases. National Budget Circular (NBC) No. 541 directed the withdrawal of agencies' unobligated allotments as of June 30, 2012. Nine petitions for certiorari, prohibition and mandamus challenged the DAP, NBC No. 541 and related issuances. The Court consolidated them and heard oral arguments, and the OSG submitted evidence packets on the DAP.
- 1Whether the DAP violated Section 29(1), Article VI of the 1987 Constitution, which bars payment out of the Treasury except in pursuance of an appropriation made by law.
- 2Whether the DAP, NBC No. 541 and related issuances violated Section 25(5), Article VI by treating withdrawn unobligated allotments and unreleased appropriations as savings, funding projects not in the GAAs, and transferring funds to offices outside the Executive.
- 3Whether the release of unprogrammed funds under the DAP complied with the GAAs.
The petitions were partially granted. The Court held that the DAP was not an appropriation. It was a government policy or strategy that the Executive could adopt during budget execution, so no separate law was needed and Section 29(1) was not violated. Its implementation, however, had to comply with Section 25(5), Article VI. Under that provision, a valid transfer requires (1) a law authorizing the President, the Senate President, the Speaker, the Chief Justice and the heads of the Constitutional Commissions to transfer funds within their respective offices; (2) that the funds be savings from their respective offices' appropriations; and (3) that the transfer augment an item in the general appropriations law for their respective offices. The Executive could not withdraw unobligated allotments, pool unreleased appropriations, and declare them savings before the end of the fiscal year. Section 25(5) draws borders between offices, so cross-border transfers, whether called augmentation or aid, were prohibited. The transfers to the COA, the House of Representatives and the COMELEC violated this rule. Funding projects with no appropriation in the GAA was also invalid. Unprogrammed funds could be released only if total revenue collections exceeded the total revenue targets, which required a National Treasurer's certification. The equal protection challenge lacked factual and legal basis. The Court applied the operative fact doctrine to DAP-funded projects that could no longer be undone. The doctrine did not extend to the DAP's authors, proponents and implementors absent findings of good faith by the proper tribunals. Disposition: the three practices were declared unconstitutional under Section 25(5), Article VI and the separation of powers, and the use of unprogrammed funds without the Treasurer's certification was declared void.
Checked against the full decision by the PhilippineLaws team on September 21, 2026. Not reviewed by a lawyer.
Separate opinions
Votes to declare unconstitutional under Section 25(5) the transfers from the Executive to the Legislature, the COMELEC and the COA, the treatment of unobligated MOOE and Capital Outlay allotments as savings before they lapse, and realignment to items not in the GAA, and to void use of the Unprogrammed Fund without the Treasurer's certification. Also discusses standing and limits the operative fact doctrine to those who relied in good faith.
Styled a Concurring and Dissenting Opinion. Goes further than the ponencia and holds the DAP itself unconstitutional: it violates separation of powers and checks and balances, the Section 25(5) bans on transfers of appropriations and cross-branch transfers, and the conditions for releasing the Unprogrammed Fund. Generally agrees on the operative fact doctrine, in the formulation the ponencia adopts.
Would limit the declaration of unconstitutionality to what was actually proven: the three admitted cross-border transfers (to the COA, the House and the COMELEC), Sections 5.4, 5.5 and 5.7 of NBC 541 insofar as they withdrew allotments of slow-moving projects not discontinued and treated them as savings, and one phrase of Section 5.7.3. Disagrees with the majority's reading of Section 38 of the Administrative Code and the GAA provisions on savings and unprogrammed funds.
Concurs in the result and clarifies that withdrawing and pooling allotments is not 'augmentation' in the constitutional sense, which concerns changes in the statutory value of appropriation items.
Concurs in the result. Would declare the principles for the guidance of bench and bar, since the petitions were mooted, and leave their application to the 116 DAP expenditures and the operative fact doctrine to a proper forum.