This is a ninety-two page decision, excluding the separate opinions. But it can be distilled to the basic findings in its dispositive portion. The following acts under the Development Acceleration Program (“DAP”) of the Executive Department were declared unconstitutional in the case of Araullo, et al. vs. Aquino, et al. G.R. No. 209287:
(a)
The withdrawal of
unobligated allotments from the implementing agencies, and the declaration of
the withdrawn unobligated allotments and without complying with the statutory
definition 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.
In addition, 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”.
Interestingly, the decision begins with the privilege speech
of currently-detained Senator Jinggoy Estrada declaring that Senators,
including himself, had been allotted P50M for voting in favor of the
impeachment of a former Chief Justice. To which Secretary Abad of the
Department of Budget and Management responded, justifying the DAP as a “program
designed to ramp up spending to accelerate economic expansion.” Ironically, a DAP beneficiary would start the
ball rolling for this declaration of unconstitutionality by the Supreme
Court. The President has defended the
DAP anew notwithstanding the opinion of the Court.
The DAP while
constitutional as a plan was implemented contrary to the Constitution
We proceed directly to the issues with respect to the DAP. The Court correctly stated that while the
Executive has some discretion with respect to the budget, any transfer or
appropriation of funds has to conform with Section 25(5) of Article VI of the
Constitution which provides:
“Section
25. x x x
x
x x x
5)
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.
x x x x”
This was intended to keep a “tight rein on the exercise of
the power to transfer funds appropriated by Congress, by the President and the
other high officials of the Government named therein.” The limit on the
authority to transfer savings only to augment another item in the
appropriations is “strictly but reasonably construed as exclusive.” The phrase “by law” would be crucial to the
determination made by the Court.
For a transfer of funds that have already been appropriated
to be valid under this constitutional provision, the following are the
requisites: (1) a law authorizing the transfer of funds within their respective
offices (a law like the GAA); (2) the funds are savings generated from the
appropriations for their respective offices; and (3) the purpose for the
transfer is to augment an item in the general appropriations law for their
respective offices.
Requisites for the valid transfer of appropriated
funds under the Constitution -
1. There must
be a law authorizing the transfer funds within respective offices
While the 2011 and 2012 GAAs allowed the augmentation of
items, these failed to include the phrase “for their respective offices” as
stated in the Constitution. Thus, the
GAAs invalidly allowed the transfers of funds for any item even if to an office
not belonging to the Executive. Hence, these particular GAAs could not be
relied upon to justify the transfer of funds.
The 2013 GAA sought to remedy the lack of legal authorization
in the 2011 and 2012 GAAs by indicating that the augmentation of deficiencies
refers only to any item of an office’s respective appropriation.
2. The funds to
be transferred must be savings generated from the appropriations for their
respective offices
At the outset, the Court found that there were no savings to
speak of which the Executive could have juggled. First of all, it is Congress that has the
power of the purse, deciding on how the budget will be spent consisting of the
projects to be funded and the amounts allocated for the same. The Executive is expected to execute the GAA
and to spend the budget accordingly. In
allowing the Executive to augment items in the GAA, it is given flexibility but
not to the extent of overriding the authority of Congress.
Thus, the 2011 – 2013 GAAs contain a
definition of savings:
“Savings refer to portions or
balances of any programmed appropriation in this Act free from any obligation
or encumbrance which are: (i) still
available after the completion or final discontinuance or abandonment of the
work, activity or purpose for which the appropriation is authorized; (ii) from
appropriations balances arising from
unpaid compensation and related costs pertaining to vacant positions and leaves
of absence without pay; and (iii) from appropriations balances realized from
the implementation of measures resulting in improved systems and efficiencies
and thus enabled agencies to meet and deliver the required or planned targets,
programs and services approved in this Act at a lesser cost.” [emphasis supplied]
There are savings only when the purpose for an appropriation
has been fulfilled or if the need for the appropriation no longer exists. The
three possible sources of savings have been outlined above. There can be savings only when the appropriation
was already obligated and released.
It is only at the agency level where it could be said whether the program,
activity or project (“PAP”) was completed, discontinued or abandoned, if there
are vacant positions or leaves without pay or if the required targets, programs
and services were realized at lesser cost.
Unobligated allotments should also fall under any of the three
aforementioned instances before these can be considered as savings.
The DBM admitted that
part of the savings came from “pooling of unreleased appropriations such as
unreleased Personnel Services appropriations which will lapse at the end of the
year, unreleased appropriations of slow moving projects and discontinued
projects per Zero-Based Budgeting findings.” In this case, unreleased
appropriations were treated as savings.
The Court found that these, in fact, only refer to appropriations with
allotments albeit without disbursement authority. It could not subscribe to the definition
espoused by the Executive as this would undermine Congress’ power of the purse. In effect, funds were used for the DAP when
the purpose for those funds had not yet been finally discontinued or
abandoned. With the purpose still
unfulfilled or otherwise existing, there could have been no declaration of
savings from these funds. The Executive even shortened the availability of the
funds for their original purposes, in order to declare them as savings. The
Court ruled that there can be no withdrawal and transfer of unobligated
allotments and no pooling of unreleased appropriations as there is no legal
basis for the same. Section 38 of the
Administrative Code cannot be relied upon to justify the withdrawal of
unobligated allotments as it only allows the suspension or stoppage of
expenditures, not the transfer of funds to other PAPs.
3. The purpose
of the transfer must be to augment a GAA item
for their respective offices
The 2011-2013 GAAs defined
augmentation, to wit:
“x x x Augmentation implies the
existence in this Act of a program, activity, or project with an appropriation,
which upon implementation, or subsequent evaluation of needed resources, is
determined to be deficient. In no case shall a non-existent program, activity,
or project, be funded by augmentation from savings or by the use of appropriations
otherwise authorized in this Act.
But the so-called savings pooled under the DAP were allocated
to projects that were not covered by any appropriation in the GAAs. In one
instance, the DAP allocated for one project funds in excess of 300% of what
Congress originally appropriated.
In effect, the Executive “substituted its will” over
Congress. While the Executive can spend
in line with its mandate to execute the laws, this does not translate to an
“unfettered discretion” that would allow the President to “substitute his own
will for that of Congress.” He still has
to abide by the GAA as the power to spend is with Congress and not the
Executive consistent with the principle of separation of powers. As opined by
the Court:
“Congress acts as the guardian of the
public treasury in faithful discharge of its power of the purse whenever it
deliberates and acts on the budget proposal submitted by the Executive. Its
power of the purse is touted as the very foundation of its institutional
strength, and underpins “all other legislative decisions and regulating the
balance of influence between the legislative and executive branches of
government.” Such enormous power encompasses the capacity to generate money for
the Government, to appropriate public funds, and to spend the money.
Pertinently, when it exercises its power of the purse, Congress wields control
by specifying the PAPs for which public money should be spent.
It is the President who proposes the
budget but it is Congress that has the final say on matters of appropriations.
xxx”
4.
No Cross-border transfers
As transfers under the DAP, for example, were made from the
Executive to the COA, to the House and even to the COMELEC, the Court said that
the Constitution mandates that any augmentation should only be for their
respective offices and there can be no cross-border transfers or cross-border
augmentations.
Respondent tried to reason out that cross-border transfers in
the form of aid and not augmentation do not fall under Section 25(5) of the
Constitution.
The Court said that the Section 25 (5) prohibits cross-border
transfers regardless of how they are characterized.
Sourcing DAP funds from unprogrammed funds (not
savings) requires revenue collections to exceed the total of revenue targets
Funds from the DAP were also sourced from unprogrammed funds
in the GAAs albeit not as “savings.”
However, these were supposed to be available only: (i) if revenue
collections exceed revenue targets based on the total of revenue targets stated
in the Budget of Expenditures and Sources of Financing (“BESF”) and (ii) from
newly-approved loans or when conditions were triggered for other sources of
funds such as perfected loan agreements for foreign-assisted projects. The requirement in the BESF for the use of
unprogrammed funds is for revenue collections to exceed the total of the original revenue target,
not just the collection from a particular revenue source. Hence, the release of unprogrammed funds
could not be justified by a certification that revenue collection had been
exceeded for only one identified source of revenue – that of dividends from
shares in government-owned and controlled corporations.
As for funds from loans, there is no need to exceed revenue
targets before these can be used.
Unprogrammed funds were intended as standby appropriations to
support additional expenditures for priority PAPs if revenue collections exceed
targets or if loan proceeds are realized.
Revenue targets are to be considered as a whole, not individually. It would contravene the surplus budget policy
if excess revenue from only one source would justify the release of
unprogrammed funds.
An attempt was made to include a third source for
unprogrammed funds: new revenues that were collected or realized from sources
not originally considered in the BESF, to justify the sourcing of these monies
for the DAP. But this source was not in
the BESF or GAAs, hence, this item could not serve as basis for the release of
unprogrammed funds for the DAP.
So what happens to all the DAP projects? The Court declared
that despite the infirmity of the DAP and its implementing issuances, the
“doctrine of operative fact recognizes the existence of the law or executive
act prior to the determination of its unconstitutionality as an operative fact
that produced consequences that cannot always be erased, ignored or
disregarded. In short, it nullifies the void law or executive act but sustains
its effects. It provides an exception to the general rule that a void or
unconstitutional law produces no effect.
xxx.” Hence, the positive results
of the DAP such as the construction of public infrastructure need not be
undone.
But while the doctrine of operative fact can apply to the
beneficiaries who “relied in good faith on the validity of the DAP”, it does
not 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.”
Fortunately for them, the Revised Rules on Evidence does provide for a
disputable presumption “That official duty has been regularly
performed (Section 3 (m), Rule 131).”
And “in the absence of evidence to the contrary, there is a presumption
that public officers performed their official duties regularly and legally and
in compliance with applicable laws, in good faith, and in the exercise of sound
judgment (]BUKLOD vs. E. M. RAMOS, G.R. No. 131481. March 16, 2011)”.
For the layman, what is this case all about? The President
decided to deviate from the shopping list of projects given to him by Congress,
the body which has the power under the Constitution to make this list and to
fund each item appearing on it. He argues
that he meant well and this actually did some good. The question is, do good
intentions trump what the law and the Constitution require? The President has challenged the Supreme
Court for this ruling. He may do well to
examine what the words of his oath of office say. It does include his promise to “preserve and
defend” the Constitution and to execute the country’s laws.
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