When President Benigno Aquino III took office, his administration noticed the sluggish growth of the

economy. The World Bank advised that the economy needed a stimulus plan. Budget ecretary !lorencio
"Butch# A$ad then came up with a program called the %is$ursement Acceleration Program &%AP'.
The %AP was seen as a remedy to speed up the funding of government pro(ects. %AP ena$les the
)*ecutive to realign funds from slow moving pro(ects to priority pro(ects instead of waiting for ne*t year+s
appropriation. o what happens under the %AP was that if a certain government pro(ect is $eing
undertaken slowly $y a certain e*ecutive agency, the funds allotted therefor will $e withdrawn $y the
)*ecutive. ,nce withdrawn, these funds are declared as "savings# $y the )*ecutive and said funds will
then $e reallotted to other priority pro(ects. The %AP program did work to stimulate the economy as
economic growth was in fact reported and portion of such growth was attri$uted to the %AP &as noted $y
the upreme -ourt'.
,ther sources of the %AP include the unprogrammed funds from the .eneral Appropriations Act &.AA'.
/nprogrammed funds are stand$y appropriations made $y -ongress in the .AA.
0eanwhile, in eptem$er 1234, enator 5inggoy )strada made an e*pos6 claiming that he, and other
enators, received Php720 from the President as an incentive for voting in favor of the impeachment of
then -hief 5ustice 8enato -orona. ecretary A$ad claimed that the money was taken from the %AP $ut
was dis$ursed upon the request of the enators.
This apparently opened a can of worms as it turns out that the %AP does not only realign funds within the
)*ecutive. It turns out that some non9)*ecutive pro(ects were also funded: to name a few; Php3.7B for
the -P<A &-ordillera People+s <i$eration Army', Php3.=B for the 0><! &0oro >ational <i$eration !ront',
P?220 for the @ueAon Province, P729P3220 for certain enators each, P32B for 8elocation Pro(ects, etc.
This prompted 0aria -arolina Araullo, -hairperson of the Bagong Alyansang 0aka$ayan, and several
other concerned citiAens to file various petitions with the upreme -ourt questioning the validity of the
%AP. Among their contentions was;
%AP is unconstitutional $ecause it violates the constitutional rule which provides that "no money shall $e
paid out of the Treasury e*cept in pursuance of an appropriation made $y law.#
ecretary A$ad argued that the %AP is $ased on certain laws particularly the .AA &savings and
augmentation provisions thereof', ec. 17&7', Art. BI of the -onstitution &power of the President to
augment', ecs. 4= and CD of )*ecutive ,rder 1D1 &power of the President to suspend e*penditures and
authority to use savings, respectively'.
Issues:
I. Whether or not the %AP violates the principle "no money shall $e paid out of the Treasury e*cept in
pursuance of an appropriation made $y law# &ec. 1D&3', Art. BI, -onstitution'.
II. Whether or not the %AP realignments can $e considered as impoundments $y the e*ecutive.
III. Whether or not the %AP realignmentsEtransfers are constitutional.
IB. Whether or not the sourcing of unprogrammed funds to the %AP is constitutional.
B. Whether or not the %octrine of ,perative !act is applica$le.
HELD:
I. >o, the %AP did not violate ection 1D&3', Art. BI of the -onstitution. %AP was merely a program $y the
)*ecutive and is not a fund nor is it an appropriation. It is a program for prioritiAing government
spending. As such, it did not violate the -onstitutional provision cited in ection 1D&3', Art. BI of the
-onstitution. In %AP no additional funds were withdrawn from the Treasury otherwise, an appropriation
made $y law would have $een required. !unds, which were already appropriated for $y the .AA, were
merely $eing realigned via the %AP.
II. >o, there is no e*ecutive impoundment in the %AP. Impoundment of funds refers to the President+s
power to refuse to spend appropriations or to retain or deduct appropriations for whatever reason.
Impoundment is actually prohi$ited $y the .AA unless there will $e an unmanagea$le national
government $udget deficit &which did not happen'. >evertheless, there+s no impoundment in the case at
$ar $ecause what+s involved in the %AP was the transfer of funds.
III. >o, the transfers made through the %AP were unconstitutional. It is true that the President &and even
the heads of the other $ranches of the government' are allowed $y the -onstitution to make realignment
of funds, however, such transfer or realignment should only $e made "within their respective offices#.
Thus, no cross9$order transfersEaugmentations may $e allowed. But under the %AP, this was violated
$ecause funds appropriated $y the .AA for the )*ecutive were $eing transferred to the <egislative and
other non9)*ecutive agencies.
!urther, transfers "within their respective offices# also contemplate realignment of funds to an e*isting
pro(ect in the .AA. /nder the %AP, even though some pro(ects were within the )*ecutive, these pro(ects
are non9e*istent insofar as the .AA is concerned $ecause no funds were appropriated to them in the
.AA. Although some of these pro(ects may $e legitimate, they are still non9e*istent under the .AA
$ecause they were not provided for $y the .AA. As such, transfer to such pro(ects is unconstitutional and
is without legal $asis.
,n the issue of what are "savings#
These %AP transfers are not "savings# contrary to what was $eing declared $y the )*ecutive. /nder the
definition of "savings# in the .AA, savings only occur, among other instances, when there is an e*cess in
the funding of a certain pro(ect once it is completed, finally discontinued, or finally a$andoned. The .AA
does not refer to "savings# as funds withdrawn from a slow moving pro(ect. Thus, since the statutory
definition of savings was not complied with under the %AP, there is no $asis at all for the transfers.
!urther, savings should only $e declared at the end of the fiscal year. But under the %AP, funds are
already $eing withdrawn from certain pro(ects in the middle of the year and then $eing declared as
"savings# $y the )*ecutive particularly $y the %B0.
IV. >o. /nprogrammed funds from the .AA cannot $e used as money source for the %AP $ecause under
the law, such funds may only $e used if there is a certification from the >ational Treasurer to the effect
that the revenue collections have e*ceeded the revenue targets. In this case, no such certification was
secured $efore unprogrammed funds were used.
V. Fes. The %octrine of ,perative !act, which recogniAes the legal effects of an act prior to it $eing
declared as unconstitutional $y the upreme -ourt, is applica$le. The %AP has definitely helped stimulate
the economy. It has funded numerous pro(ects. If the )*ecutive is ordered to reverse all actions under
the %AP, then it may cause more harm than good. The %AP effects can no longer $e undone. The
$eneficiaries of the %AP cannot $e asked to return what they received especially so that they relied on
the validity of the %AP. Gowever, the %octrine of ,perative !act may not $e applica$le to the authors,
implementers, and proponents of the %AP if it is so found in the appropriate tri$unals &civil, criminal, or
administrative' that they have not acted in good faith.