Supreme Court affirms decision declaring DAP unconstitutional

“The doctrine of operative fact cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.”

Read also: Demands for Aquino-Abad accountability on DAP mounting


MANILA – The Supreme Court stood pat on its July 2014 decision that certain acts and practices under the Disbursement Acceleration Program (DAP), National Budget Circular No. 541 and related issuances from the executive are unconstitutional.

During its en banc session today, Feb. 3, the Supreme Court maintained its ruling of last year that DAP and the related executive issuances violate Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers, with the following practices:

(a) “The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying with the statutory definition of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; and

(b) “The cross-border transfers of the savings of the Executive to augment the appropriations of other offices outside the Executive.

The Court also continues to declare as 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 Act.

For clarification though and to dispel further uncertainty, the Supreme Court said it “modified” certain declarations in its July 1, 2014 decision.

Executive justifications nixed

The DAP drew criticisms for the executive’s discretion of stopping expenditure and transferring it to other projects. This practice remains unconstitutional according to the Supreme Court, which clarified what the president can and cannot do with “savings” or funds with the use of Section 38, Chapter 5, Book VI of the Administrative Code.

The executive asserted the legality of the DAP’s use of “savings” which it sourced from stopped projects, citing Section 38, Chapter 5, Book VI of the Administrative Code.

The Supreme Court said today that this section refers to the President’s authority to “suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act.”

But the Court clarified that “When the President suspends or stops expenditures of funds, savings are not automatically generated until it has been established that such funds or appropriations are free from any obligation or encumbrance, and the work, activity or purpose for which the appropriation is authorized has been completed, discontinued or abandoned.”

Withdrawal and transfer of unobligated allotments remains unconstitutional, according to the Supreme Court, and it added that the “proper tribunal” can determine whether the withdrawn allotments have actually been reissued to their original programs or projects.

With regard to NBC No. 541’s withdrawal of allotted funds which shortened the availability of appropriations for MOOE and capital outlays, and which were transferred to Programs, Activities, Projects (PAPs) that were not determined to be deficient, the Supreme Court declared that these are “still constitutionally infirm and invalid.”

The Supreme Court also said section 39 (of Administrative Code) cannot serve as a valid authority to justify cross border transfers under the DAP, as it cited the plain text of section 25(5) [of Article VI of the 1987 Constitution], which expressly limits the authority of the President to augment an item in the GAA to only those in his department out of the savings in other items of his own department’s appropriations. As such, based on the Court’s decision, only the augmentations under the DAP made by the Executive along the lines prescribed by Section 25(5) are legal.

When diverting funds or “augmenting” is valid or not

With regard to the executive’s power to augment and fund non-existent provisions in the GAA (General Appropriations Act), an act in DAP which critics described as abuse of discretion, the Supreme Court partially granted some for the respondents.

Its decision said that so long as there is an “item” in the GAA for which Congress had set aside a specified amount of public funds, savings may be transferred there for augmentation purposes. It also agreed with the respondents that Congress can create allotment classes within an item, and “that what is required is for Congress to create items to comply with the line-item veto of the President.”

This means some of the 116 DAP funded projects were considered validly augmented and some were not. Whether the 116 DAP funded projects were within an item under GAA and were validly augmented would require factual determination which is not within the scope of the present consolidated petitions, the Supreme Court said.

Operative fact doctrine

President Aquino and Budget Secretary Butch Abad have repeatedly cited good faith in their implementation of DAP, and they demanded recognition of that from the Supreme Court. In response, the Supreme Court said in their decision February 3 that in fact, it still presumed their good faith, that as public officers, they “enjoy the presumption of regularity in the performance of their functions.”

But the Court also said in its decision that this presumption is “disputable and holds only when there is no deviation from the regular performance of duty.”

The Court pointed out that “the doctrine of operative fact xxx cannot apply to the authors, proponents and implementors of the DAP, unless there are concrete findings of good faith in their favor by the proper tribunals determining their criminal, civil, administrative and other liabilities.”

These “Concrete findings of good faith in their favor” can only be found by proper tribunals after a full hearing of all the parties in any given case, the Supreme Court said.

The Supreme Court reiterated that is not a trier of facts, and the determination of good faith or lack of it and exercise of jurisprudence or not, are questions of fact.

The Supreme Court also decided that the questioned Programs, Activities, Projects (PAPs) under the DAP remain valid “under the operative fact doctrine.”

Kabataan Partylist Terry Ridon, one of the petitioners against DAP, hailed the SC decision on unconstitutionality of certain acts and practices of DAP. In a statement, he especially welcomed the Court decision saying “authors” of the DAP may be held liable in “proper tribunals.” He said Aquino and Abad should resign pronto.

“As it is clear that President Aquino and Budget Sec. Florencio Abad were the authors of the unconstitutional program,” Ridon said, ” the two should not wait for formal charges to be filed, or on the part of the president, for another impeachment complaint.” (

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