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MARIA CAROLINA P. ARAULLO v. BENIGNO SIMEON C. AQUINO III

FACTS:

The Disbursement Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and related issuances by the Department of Budget and Management (DBM) faced constitutional challenges. Central to the controversy was Section 29(1), Article VI of the 1987 Constitution, mandating that no money be paid out of the Treasury except via an appropriation made by law. This case also involved allegations that the DAP allowed improper allocation of public funds by the Executive and alleged transfers to entities outside the Executive branch.

The issue surfaced when Sen. Jinggoy Ejercito Estrada, in a Senate privilege speech, disclosed that Senators had received P50 Million each as incentives for voting favorably on the impeachment of Chief Justice Renato C. Corona. Secretary Florencio Abad of the DBM clarified that these funds were part of the DAP, a program designed to accelerate economic growth by releasing funds based on the senators' requests. He indicated that funds came from unreleased appropriations, unprogrammed funds, carry-over appropriations, and budgets from slow-moving projects.

The DBM maintained on its website that DAP funds were from government savings and unprogrammed funds, citing constitutional sections, the Administrative Code, and the General Appropriations Acts (GAAs) of 2011-2013. These legal bases permitted the President to manage savings to augment appropriations. However, the sudden awareness spurred by Sen. Estrada’s revelation led to several petitions challenging the program's constitutionality.

Nine petitions were filed, including those by Syjuco, Luna, Villegas, PHILCONSA, IBP, Araullo, Belgica, COURAGE, and VACC, with some questioning NBC No. 541 for mandating the withdrawal of unobligated allotments. Respondents prepared a consolidated comment and participated in oral arguments, while other parties submitted documents to comply with court orders and clarify budgetary actions under the DAP.

These petitions raised procedural issues, including whether certiorari, prohibition, and mandamus were appropriate remedies and two substantial issues: (1) violations of the constitutional provision that money should only be disbursed through legally appropriated funds, and (2) improper treatment and use of savings and unprogrammed funds. The controversies necessitated judicial review of these executive actions. The resulting debate addressed the procedural correctness and substantive constitutionality of the DAP and related budgetary practices.

ISSUES:

Procedural Issue

A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail the constitutionality and validity of the Disbursement Acceleration Program (DAP), National Budget Circular (NBC) No. 541, and all other executive issuances allegedly implementing the DAP. This includes determining whether there is a controversy ripe for judicial determination, and addressing the standing of petitioners.

Substantive Issues

B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which provides: "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law."

C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:

  1. They treat the unreleased appropriations and unobligated allotments withdrawn from government agencies as "savings" as the term is used.

  2. They authorize the disbursement of funds for projects or programs not provided in the GAAs for the Executive Department.

  3. They "augment" discretionary lump sum appropriations in the GAAs.

D. Whether or not the DAP violates:

  1. the Equal Protection Clause,

  2. the system of checks and balances, and

  3. the principle of public accountability enshrined in the 1987 Constitution considering that it authorizes the release of funds upon the request of legislators.

E. Whether or not factual and legal justification exists to issue a temporary restraining order to restrain the implementation of the DAP, NBC No. 541, and all other executive issuances allegedly implementing the DAP.

F. Whether or not the release of unprogrammed funds under the DAP was in accord with the GAAs.

RULING:

Procedural Issue

  • The petitions under Rule 65 are proper remedies.

  • The Court ruled that there was an actual controversy and the petitioners had the standing to file the suit. The petitions presented issues ripe for adjudication, satisfying the requisites for judicial review.

Substantive Issues

  • The DAP, NBC No. 541, and related executive issuances were declared unconstitutional in the following respects:

    1. 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.

    2. The cross-border transfers of the savings of the Executive to augment the appropriations of other offices outside the Executive.

    3. The funding of projects, activities, and programs that were not covered by any appropriation in the General Appropriations Act.

  • The Court declared 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.

PRINCIPLES:

  1. Judicial Power and Expanded Judicial Review: The judiciary has the duty to settle actual controversies involving legally demandable and enforceable rights and can determine grave abuse of discretion in any branch or instrumentality of the Government.

  2. Certiorari, Prohibition, and Mandamus under Rule 65: Appropriate legal remedies to challenge executive acts that are alleged to be made with grave abuse of discretion amounting to lack or excess of jurisdiction.

  3. Appropriation Law and Budget Execution: No money shall be paid out of the Treasury except pursuant to an appropriation made by law (Sec. 29(1), Art. VI of the 1987 Constitution).

  4. Savings and Augmentation: The Constitution and relevant GAAs limit the transfer of funds to savings realized from programs that are completed, finally discontinued, or abandoned and further permit augmentation only within the office of the official having control over the savings (Sec. 25(5), Art. VI of the 1987 Constitution).

  5. Equal Protection Clause: All persons similarly situated should be treated alike under the law.

  6. Separation of Powers and Checks and Balances: The doctrine mandates a distinct separation among the branches of Government, with each branch having certain powers with which it can resist encroachments by the others.

  7. Public Accountability: Public officials must be transparent and accountable in the execution of laws, including financial administration, under the principles enshrined in the 1987 Constitution.

  8. Doctrine of Operative Fact: Recognizes the existence of laws or executive acts prior to their judicial nullification as an operative fact, thus preserving the effects of such actions if their nullification would result in inequity or injustice.