BADGE:

ensue, the general rule that an unconstitutional law is totally

DISBURSEMENT ACCELERATION FUND; Operative Fact Doctrine; ineffective should apply. In that context, as Justice Brion has
clari􀁆ed, the doctrine of operative fact can apply only to the PAPs
CAPTION: that can no longer be undone, and whose bene􀁆ciaries relied in
Araullo vs. Aquino III, G.R. No. 209287. July 1, 2014, BERSAMIN, J. good faith on the validity of the DAP, but cannot apply to the
authors, proponents and implementors of the DAP, unless there are
FACTS concrete 􀁆ndings of good faith in their favor by the proper tribunals
determining their criminal, civil, administrative and other liabilities.
The DAP controversy transpired when Sen. Jinggoy Estrada in his
privilege revealed that senators including himself received 50 million For the operative fact doctrine to apply, there must be a
as an incentive for the impeachment Justice Renato Corona. “legislative or executive measure,” meaning a law or executive
issuance, that is invalidated by the court. From the passage of such law
The DBM, thru Sec. Florencio Abad, responded that the funds or promulgation of such executive issuance until its invalidation by the
released to them were part of the Disbursement Acceleration court, the effects of the law or executive issuance, when relied upon
Program to ramp up spending to accelerate national expansion. He by the public in good faith, may have to be recognized as valid. In the
held that the funds were released to the Senators based on their present case, however, there is no such law or executive issuance that
letter for funds were usually taken from savings generated by the has been invalidated by the Court except BIR Ruling No. DA-489-03.1
Governemnt from unreleased appropriations and withdrawal of San Roque assertion that “the BIR and the CTA in actual practice
unobligated allotments for slow moving projects. did not observe and did not require refund seekers to comply with the
120+30 day periods to justify the application of the doctrine of
DAP was to be implemented and funded, that is — (1) by operative fact as an exemption is wrong because an administrative
declaring "savings" coming from the various departments and practice is neither a law nor an executive issuance. There is even no
agencies derived from pooling unobligated allotments and such administrative practice by the BIR as claimed by San Roque.
withdrawing unreleased appropriations; (2) releasing unprogrammed Thus the doctrine of operative fact would only apply for
funds; and (3) applying the "savings" and unprogrammed funds to simultaneous filings during the period between 10 December 2003,
augment existing PAPs or to support other priority PAPs. when BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when
Ma. Carolina Araullo, Chairperson of Bagong Alyansang the Court promulgated Aichi declaring the 120+30 day periods
Makabayan and others assailed the constitutionality of the mandatory and jurisdictional and San Roque's claims were filed outside
Government’s Disbursement Acceleration Program. this period.
They held that the DAP is a violation of Sec. 29 Art VI of the SYLLABUS:
Constitution, which provides that “No money shall be paid out of Operative Fact Doctrine:
Treasury except in pursuance of the Appropriation made by law. The A legislative or executive act that is declared void for being
DAP contravened this provision by allowing the Executive to allocate unconstitutional cannot give rise to any right or obligation. 206
Vapublic money pooled from programmed and unprogrammed funds However, the generality of the rule makes us ponder whether rigidly
of its various agencies in the guise of the Presidents constitutional applying the rule may at times be impracticable or wasteful. Should we
Authority under Sec 25(5) Article VI of the 1987 constitution which not recognize the need to except from the rigid application of the rule
provides that no Laws shall be passed authorizing any transfer of the the instances in which the void law or executive act produced an
approprations; however the President, the President of the Senate, the almost irreversible result?
Speaker of the House of Representatives, The Chief Justice of the
The existence of a statute or executive order prior to its being
Supreme Court and the heads of the Costitutional Commissions may,
adjudged void is an operative fact to which legal consequences are
by law, be authorized to augment any item in the general
attached.
approprations law for their respective offices from savings in other
items in their appropriations. This issue was further complicated by the
We find the doctrine of operative fact applicable to the
allegations of transfer of funds to agencies or offices outside the adoption and implementation of the DAP. Its application to the DAP
executive. proceeds from equity and fair play. The consequences resulting
from the DAP and its related issuances could not be ignored or
could no longer be undone.
ISSUE: To be clear, the doctrine of operative fact extends to a void or
WON THE DOCTRINE OF OPERATIVE FACT WAS APPLICABLE ON THE unconstitutional executive act. The term executive act is broad
CASE enough to include any and all acts of the Executive, including those
that are quasi-legislative and quasi-judicial in nature.
RULING: (See Notes in PNB)

YES, Nonetheless, as Justice Brion has pointed out during the Philippine Budget System:
deliberations, the doctrine of operative fact does not always apply, (1) Budget Preparation- Budget Cal by the DBM (National and
and is not always the consequence of every declaration of Corporate)
constitutional invalidity. It can be invoked only in situations where (2) Budget Legislation; President’s Budget-Appropriations
the nullifcation of the effects of what used to be a valid law would Committee
result in inequity and injustice; but where no such result would (3) Budget Execution; and
(4) Accountability.

Valid Transfer of Funds:

1. There is a law authorizing 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
the Constitutional Commissions to transfer funds within
their respective offices;
2. The funds to be transferred are savings generated from the
appropriations for their respective offices; and
3. The purpose of the transfer is to augment an item in the
general appropriations law for their respective offices.
Cross-border augmentations from savings were prohibited by the
Constitution

Decision:
WHEREFORE, the Court PARTIALLY GRANTS the petitions for
certiorari and prohibition; and DECLARES the following acts and
practices under the Disbursement Acceleration Program,
National Budget Circular No. 541 and related executive
issuances UNCONSTITUTIONAL for being in violation of Section
25 (5), Article VI of the 1987 Constitution and the doctrine of
separation of powers, namely:

(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 􀁆scal year
and without complying with the statutory de􀁆nition of
savings contained in the General Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive
to augment the appropriations of other offices outside the
Executive; and
(c) The funding of projects, activities and programs that were
not covered by any appropriation in the General
Appropriations Act.

The Court further DECLARES VOID the use of unprogrammed

funds despite the absence of a certi􀁆cation 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.