REPUBLIC OF THE PHILIPPINES

SUPREME COURT
Manila
EN BANC
MARIA CAROLINA
G.R. NO. 209287
ARAULLO, et.al.,
Petitioners,
Vs.
BENIGNO SIMEON C.
AQUINO, et. al.,
Respondents,
x----------------------------------x
MEMORANDUM
COMES NOW, Respondents through the Office of the
Solicitor General unto this Honorable Court, most respectfully submits
this MEMORANDUM and states:

PREFATORY
I have nothing but contempt for the kind of governor who is
afraid, for whatever reason, to follow the course that he knows is best
for the State.

--Sophocles, Antigone
The progress of one nation lies on the good governance of
a leader. In order to have a progressive economy that will give every
Filipino a worthwhile living, the administration made an efficient and
transparent government spending by introducing Disbursement
Acceleration Program (DAP) as a remedy to speed up funding for
government projects.
President Benigno Simeon Aquino III has taken a bolder
stand when he initiated the Disbursement Acceleration Program to
stimulate the economy of our country. Thus, he paved the way for the
development and implementation of DAP as a stimulus package
intended to fast-track public spending and to push economic growth
by investing on high-impact budgetary PAPs to be funded from the
savings generated during the year as well as from unprogrammed
funds.
The Executive as the main actor in the budget execution
stage has sufficient discretion in the execution of budget and to adapt
the budget in case of changes in our economic situation. Congress
could only appropriate but would have nothing more to do during the
Budget Execution Stage. Under the constitutional mandate, the
Executive must faithfully execute the law, including GAA.

PARTIES
There are nine petitioners in this case who filed this Petition for
Certioriari,
Prohibition
and
Mandamus
challenging
the
constitutionality of the Disbursement Acceleration Program including
its legal bases.
The defendants in this case are the President and his chief
cabinet secretaries as well as the heads of the two houses of the
legislative department.

STATEMENT OF THE CASE

This is a consolidated petitions filed by Maria Carolina
Araullo, et.al., assailing the constitutionality of the Disbursement
Acceleration Program (DAP), National Budget Circular(NBC) No.541,
and the related issuances of the Department of Budget and
Management (DBM) implementing the DAP.
The Honorable Court in its decision penned by Justice
Bersamin partially declared that the implementation of DAP
contravened several provisions of the 1987 Constitution more
specifically Section 29(1) of Article VI and Section 25(5) of Article VI
of the 1987 Constitution. They posited that by allowing the Executive
in augmenting funds outside of his respective offices, augmentation
of PAP not included in the GAA, use of unreleased appropriation and
the release of unprogrammed funds for DAP violates the sacrosanct
principles of check and balance and separation of power.
STATEMENT OF FACTS
DAP was a program designed to promote economic growth
of the country. When President Benigno Aquino III took office in the
middle of 2010, he made efficiency and transparency in government
spending a significant focus of his administration. Said focus although
resulted in an improved fiscal deficit in the gross domestic product but
it decelerated government project implementation and payment
schedules. The World Bank advised that the economy needed a
stimulus plan for its economic growth. Thus, Budget Secretary
Florencio Abad came up with the program called Disbursement
Acceleration Program (DAP).
The DAP was considered as a remedy to speed up the
funding of the government projects, because it enables the Executive
to realign funds from slow moving projects to priority projects instead
of waiting for next years appropriation. Also, it may pool the
consolidated savings/unutilized balances in corresponding completed

or discontinued projects to fund additional projects or expenditures.

Other sources of DAP include the unprogrammed funds from the
General Appropriation Act (GAA), which funds are standby
appropriations made by Congress in the GAA.
Meanwhile, in September 25, 2013, Senator Jinggoy
Estrada made an expose claiming that he, and some other Senators
were given incentives of P50M for voting in favor of the impeachment
of Chief Justice Renato Corona. Secretary Florencio Abad of the
DBM rebutted, that said funds released to the Senators has been part
of the DAP. A program by the DBM designed to ramp up spending to
accelerate economic expansion and clarified that the disbursement of
funds was upon the request of the Senators. Apparently, it was on
this revelation that DAP comes into the consciousness of the Nation
and made this controversy inevitable. For it turns out that DAP does
not only realign funds within the Executive but even some nonExecutive projects were funded. This prompted several concerned
citizen who are petitioners herein, to file various petitions before the
Supreme Court questioning the validity of the DAP and the issuances
relating to the DAP.
Secretary Abad argued that the following are the legal
bases for the DAPs use of savings, namely: (1) Section 25 (5), Article
VI of the 1987 Constitution, which granted to the President the
authority to augment an item for his office in the general appropriation
law; (2) Section 49 (Authority to Use Savings for Certain Purposes),
Chapter 5, Book VI of Executive Order (EO) No.292 (Administrative
Code of 1987); and (3) the General Appropriation Acts (GAAs) of
2011, 2012 and 2013, particularly their provisions on the (a) use of
savings; (b) meanings of savings and augmentation; and (c) priority in
the use of savings.
STATEMENT OF THE ISSUES
1. Whether or not the interpretation of the President of Savings
violates Article VI, Section 25 (5) of the 1987 Constitution.

2. Whether or not the transfer of funds from one department to

another department or cross-border transfer is allowed under
the present constitutional framework.

ARGUMENT
1. The President properly interpreted Savings under the 1987
Constitution and the General Appropriations Act.
The President did not violate Article VI, Section 25 (5) of the
1987 Constitution. His interpretations for the purpose of implementing
the Disbursement Acceleration Program is valid and do not violate the
constitution. The interpretation of savings must be interpreted in their
proper context through the system of separation powers among the
constitutional branches of the government. The three branches
should be familiar of the scope of their limitations and should not
encroached with the domain of other departments.
With due respect to the highest tribunal, the provision of Article
VI, Section 25 (5), which provides No law shall be passed
authorizing any transfer of appropriation; however, the President, the
President of the Senate, the Speaker of the House of
Representatives, 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
appropriations., is not a self-executing provision and it must have an
implementing law for it to be operative. The General Appropriation
Act or the GAA is the law implementing said constitutional provision
and consequently the authority to define savings is lodged with the
Congress of the Philippines. The question of whether the President
interpreted savings within the bounds of the statute must be resolved
by Congress being the body that deliberates on this law. It does not
include constitutional question.
The fact that Congress has not expressed disagreement with
the way the President has complied with the definition of savings

found in the provisions of the GAA. From 2010 to 2013, the

legislature has used the same set of definitions. In the absence of
such disagreement between the Executive and Congress, this
Honorable Court has no occasion to exercise its powers to allocate
constitutional boundaries.
Congress has the full constitutional
authority to define savings and they are doing that in every GAA.
Hence, they are the constitutional institution empowered to check
whether the Presidents accumulation of savings is consistent with
the definition of GAA. The truth of the matter is that the President
faithfully complies with the GAA and executes it within the definition.
The Honorable Court should respect the expertise and
competence of the Department of Budget and Management
responsible for the preparation of the national budget including the
items as savings. Congress ratified the proposal and enacted the
GAA. The mechanism instituted in the GAA to realize savings is not
prohibited by the Constitution. In fact this has been the practice of the
previous President of the Republic.
Withdrawn unobligated
allotments are savings pursuant to Book VI, Chapter 5, Section 38 of
the Administrative Code, which provides, 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 Appropriation Act, except for
personal services and appropriations. Hence, if the President so
decides that to stop the expenditure of funds from allotment given to
an agencies on the judgment that the public interest so requires, said
funds even obtain within the middle of the fiscal year are savings. In
the same manner, unreleased appropriations are savings.
Jurisprudence held that appropriations balances from unfulfilled
positions and leaves of absence without pay are savings although
unreleased. To deny the Executive Department or other department
and constitutional bodies of this privilege has no proper place in our
Constitution and existing laws.
The President as the chief economic manager should be given
the leeway within the bounds of his constitutional mandate. Using the
savings at the end of the year is impractical especially if there are

opportunities for the growth of the countrys economy, that any delay
on its implementation will render it a great loss. Savings must be
used in a timely manner so they could contribute to the economic
growth, like when DAP funds were poured into infrastructure projects
between 2011 and 2013. No less than the World Bank and the
Supreme Court had acknowledged that DAP had contributed
significantly to economic expansion.
When DAP was implemented by Pres. Aquino on 2011, nobody
raised question on it even Congress, for they have witnessed the
positive result of the program which boost the economy of our
country. Even the citizens had seen the outcome of the program,
which give rise to more projects that stimulate the economy, which
cannot be seen during the previous administration. All these are
because of the DAP.
Absence of constitutional violations, the ends justify the means.
2. The cross-border transfer is permitted under the present
constitutional framework.
Cross-border transfer is founded in the benign and necessary
interactions between interdependent departments grounded in our
constitution. The constitutional tradition of interdependence among
the departments does not prevent the President from transferring
savings of his department to another department upon the latters
request provided it is the recipient department that uses such funds to
augment its own appropriation. This practice merely gives the other
department access to public funds. The President never and cannot
dictate how they shall be applied by the department on the ground of
constitutional fiscal autonomy granted to them.
Article VI, Section 25 (5) of the Constitution provides:
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.
This constitutional provision should be interpreted in
view of the strong interdependence among the branches of
government.
This practice is not exclusive to the President. Even this
Honorable Court is practicing this cross-border transfer. It has
approved an allocation to augment items in the Executive from their
savings and requested transfer of funds from the Executive to the
Judiciary. The Honorable Court issued a resolution en banc on July
17, 2012 that earmarked its savings in the amount of P1.865 billion to
augment the existing budget for Manila Hall of Justice, which is an
item in the Executive Department under the Department of Justice.
Another en banc resolution dated March 5, 2013 is the request of the
Supreme Court to the DBM for the transfer of P100 million for the
construction of Manila Hall of Justice in the budget of the Secretary of
Justice to the Judiciary intended for the construction of Malabon Hall
of Justice. This means that the P 100 million allocations will be taken
away from the item in the 2013 GAA under the Executive, and used
for construction of another hall of justice, which has no item in the
GAA. This cross-border transfer has been the practice not only of this
administration but also by former presidents such as Ramos, Estrada
and Macapagal-Arroyo pursuant to their constitutional mandate.
These long standing practices and careful understanding of the
constitutional provision made the decision to transfer savings from
the Executive Department to the other departments. Far from being a
violation of the Constitution, this cross-border transfer of funds
reinforced the concept of interdependence without prejudicing the
limitations and separation of powers among the branches of
government.
PRAYER
WHEREFORE, it is respectfully prayed that the Honorable
Court partially reconsider its decision and declare that:

1.

Withdrawn unobligated allotment and unreleased

appropriations under the DAP as savings,

2.

Inter-departmental or cross-border transfer of

funds as constitutional

Respondents pray for such other reliefs as may be just and

equitable
Manila, February 8, 2015

GILDA A. SAY
Solicitor General
Roll No. 393939
IBP Lifetime No. 00014
MCLE Exemption No. INTSIKAKO1200
OFFICE OF THE SOLICITOR GENERAL
Legazpi Village, Makati City
Republic of the Philippines)
City of Makati
) S.S.
AFFIDAVIT OF SERVICE
I, Marion S. Juanito, as, Executive Secretary of, Solicitor
General Ryan Jay R. Ramos, with office address at Legazpi Village,
Makati Cty, after being duly sworn, depose and say: That on February
5, 2015 I served copies of the aforesaid Memorandum by registered
mail in accordance with Section 3 and 5 in relation to Section 10 of
Rule 13, Rules of Court.
Depositing copies in the post office, in sealed envelopes, plainly
addressed to the parties or counsels at their offices with postage fully

prepaid, as evidenced by Registry Receipt No. 23456 hereto

attached, and with instructions to the postmaster to return the mail to
the sender after ten (10) days if undelivered.
That the names and addressees are as follows:
His Excellency President Benigno S. Aquino, III
Malacanan Palace, Manila
Executive Secretary Paquito N. Ochoa
Office of the President, Malacanan Palace
Secretary Florencio B. Abad
DBM, San Miguel Manila
Senate President Franklin M. Drilon
Senate of the Philippines
Speaker Feliciano R. Belmonte
House of Representatives
Secretary Cesar V. Purisima
DOF, Roxa Blvd. Manila
National Treasurer Rosalia V. De Leon
Bureau of the Treasury, Intramuros, Manila
Prof. Harry Roque, Jr.
Attys. Jose Ruiz Butuyan and Roger R. Rayel
Counsels for the Petitioners
Roque and Botuyan Law Offices
121 Valero Street, Salcedo Village
Makati City
Dean Froilan M. Bacungan
Attys. Rita Linda V. Jimeno, Reynaldo Y. Maulit
and Romulo B. Lumauig
Counsels for the Petitioners

23, Philtrust Bldg. Malate, Manila

SUBSCRIBED AND SWORN to before me this 6 th day of
February 2015, affiant exhibiting to me his Office ID No. 256788
issued at the Office of the Solicitor General, Legazpi Village, Makti
City on May 25, 2012.
HILARION E. DEPEDRO
Assistant Solicitor