dap belgica partial reconsideration july 21

8/12/2019 Dap Belgica Partial Reconsideration July 21

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Budget Process Not Merely Descriptivebut Mandated By Law

The Decision of the Honorable Court on the substantive issues start

with a discussion on the Budget System of the Philippines characterized as

descriptive, not normative by Justice Leonen. The Honorable Courts

description and such characterization by Justice Leonen, it is respectfully

submitted, do not reflect the legal significance of the process described and

serve to mislead the public that the budget process has no legal basis and not

ordained by law.

It is unfortunate that the Honorable Court cited authors and

government internet sites but not the applicable law. While the Decision citedsome provisions of Presidential Decree No. 1177, it did not, in its entire

discussion on the budget process, cite even a single provision of the

Administrative Code of 1987.

As early as 1991, the four phases of the budget process enumerated in

the Decision was cited approvingly by the Honorable Court in the case of

Guingona vs. Carague1, as follows:

The Government budgetary process has been graphically

described to consist of four major phases as aptly discussed bythe Solicitor General:

The Government budgeting process consists of four

major phases:

1. Budget preparation. The first step is essentially taskedupon the Executive Branch and covers the estimation of

government revenues, the determination of budgetary

priorities and activities within the constraints imposedby available revenues and by borrowing limits, and the

translation of desired priorities and activities into

expenditure levels.

Budget preparation starts with the budget call issued

by the Department of Budget and Management. Each

agency is required to submit agency budget estimates in

line with the requirements consistent with the general

ceilings set by the Development Budget Coordinating

Council (DBCC).With regard to debt servicing, the DBCC staff,

based on the macro-economic projections of interest rates

(e.g. LIBOR rate) and estimated sources of domestic and

1G.R. No. 94571; 22 April 1991.


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foreign financing, estimates debt service levels. Upon

issuance of budget call, the Bureau of Treasury computes

for the interest and principal payments for the year for all

direct national government borrowings and other liabilities

assumed by the same.

2. Legislative authorization. At this stage, Congressenters the picture and deliberates or acts on the budget

proposals of the President, and Congress in the exercise of

its own judgment and wisdomformulates an appropriation

act precisely following the process established by the

Constitution, which specifies that no money may be paid

from the Treasury except in accordance with an

appropriation made by law.

Debt service is not included in the General

Appropriation Act, since authorization therefor already

exists under RA No. 4860 and 245, as amended and PD

1967. Precisely in the fight of this subsisting authorization

as embodied in said Republic Acts and PD for debt

service, Congress does not concern itself with details for

implementation by the Executive, but largely with

annual levels and approval thereof upon due

deliberations as part of the whole obligation program forthe year. Upon such approval, Congress has spoken and

cannot be said to have delegated its wisdom to the

Executive, on whose part lies

the implementation or execution of the legislative

wisdom.

3. Budget Execution. Tasked on the Executive, the thirdphase of the budget process covers the

various operational aspects of budgeting. Theestablishment of obligation authority ceilings, the

evaluation of work and financial plans for individual

activities, the continuing review of government fiscal

position, the regulation of funds releases, the

implementation of cash payment schedules, and other

related activities comprise this phase of the budget cycle.

Release from the debt service fired is triggered by a

request of the Bureau of the Treasury for allotments from

the Department of Budget and Management, one quarter

in advance of payment schedule, to ensure promptpayments. The Bureau of Treasury, upon receiving official

billings from the creditors, remits payments to creditors

through the Central Bank or to the Sinking Fund

established for government security issues (Annex F).


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4. Budget accountability. The fourth phase refers to theevaluation of actual performance and initially approved

work targets, obligations incurred, personnel hired and

work accomplished are compared with the targets set at

the time the agency budgets were approved.

There being no undue delegation of legislative

power as clearly above shown, petitioners insist

nevertheless that subject presidential decrees constitute

undue delegation of legislative power to the executive on

the alleged ground that the appropriations therein are

not exact, certain or definite,invoking in support therefor

the Constitution of Nebraska, the constitution under

which the case of State v. Moore, 69 NW 974, cited bypetitioners, was decided. Unlike the Constitution of

Nebraska, however, our Constitution does not require

a definite, certain, exact or "specific appropriation made

by law." Section 29, Article VI of our 1987 Constitution

omits any of these words and simply states:

Section 29(l). No money shall be paid out of the

treasury except in pursuance of an appropriation

made by law.

More significantly, there is no provision in our

Constitution that provides or prescribes any particular

form of words or religious recitals in which an

authorization or appropriation by Congress shall be made,

except that it be "made by law," such as precisely the

authorization or appropriation under the questioned

presidential decrees. In other words, in terms of time

horizons, an appropriation may be made impliedly (as by

past but subsisting legislations) as well as expressly for thecurrent fiscal year (as by enactment of laws by the present

Congress), just as said appropriation may be made in

general as well as in specific terms. The Congressional

authorization may be embodied in annual laws, such as a

general appropriations act or in special provisions of laws

of general or special application which appropriate public

funds for specific public purposes, such as the questioned

decrees. An appropriation measure is sufficient if the

legislative intention clearly and certainly appears from the

language employed (In re Continuing Appropriations, 32P. 272), whether in the past or in the present. 17

While the abovementioned case referred to the second phase of the

budget process as legislative authorization, the Decision refers to it as Budget

Legislation which pertains to one and same thing, that is, the enactment by


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Congress of the general appropriations act based on the budget submitted by

the President.2

Like the Decision in this case, however, the Guingona vs. Caraguecase,

while attributing the summation of the budgetary process to the Solicitor

General, failed to recognize the legal basis therefor.

2Section 22, Article VII, 1987 Constitution.


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Constitution Requires the Form Contentand Manner of Budget Preparation beIn accordance with Law

Section 15 (1), Article VI of the 1987 Constitution requires that the

form, content, and manner of preparation of the budget shall be prescribed

by law. Pursuant to and in accordance with the said provision, the

Administrative Code of 1987 provided for an entire book of provisions

devoted solely on the form, content, and manner of preparation of the

budget.

Book VI of the Administrative Code of 1987 is all about National

Government Budgeting. It has for its chapters, the following:

Chapter 1 General Provisions

Chapter 2 Budget Policy and Approach

Chapter 3 Budget Preparation

Chapter 4 Budget Authorization

Chapter 5 Budget Execution

Chapter 6 Budget Accountability

Chapter 7 Expenditure of Appropriated Funds

Thus, and with due respect, to characterize the budget process as

merely descriptive, not normative and to propose a different treatment ofdepartments and offices granted fiscal autonomy is to demean the legal

significance thereof as if the process described is merely directory and not

mandatory.

President Does N ot have Free Rein onFiscal Planning and Budget Execution

This mischaracterization of the budget process sets the stage for the

erroneous appreciation of the DAP as a fiscal plan or a product of plainexecutive policy-making to stimulate the economy by way of accelerated

spending.3Under the DAP and the policy of accelerated spending, the

keyword is accelerated and presupposes a faster disbursement of public

funds. However, the unarticulated object of the acceleration in spending is

entirely different from the appropriations contained in the budget as the 116

list of Projects show and as the very provisions of National Budget Circular

541 provide. Instead of accelerating the implementation of these projects

covered by appropriations in the budget and thus accelerating the spending in

those projects, the government chose instead to defund said projects and used

the money to fund projects not otherwise covered by congressionalappropriations in the budget.

3Decision, p. 35.


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With that scheme, the principal question that must be asked is not

whether the money was wasted or pocketed by government officials or private

individuals. What must be asked is what such a move caused to the carefully

crafted budget of the government in relation to its development goals.

Spending per se is, after all, not the purpose of the enactment of the budget.

The budget is designed as a means for government to realize the goals of

development it sought to achieve as articulated in its short, medium and long-

term development plans.

It must be emphasized that the budget as proposed and enacted is

formulated as an instrument for the attainment as part of national

development goals and as part of the planning-programming-budgeting

continuum. 4It is required to be prepared as an integral part-of a long-term

budget picturespecifically in relation to the long-term economic and physicalframework plans of government, multi-year requirements of approved

programs and projects, organizational and personnel development strategies,

and other commitments entered into or otherwise assumed by government.5

The process starts with the submission of the request for budget

estimates/proposal which include various items providing the rationale,

background and linkages with development goals/plans6; it is prepared taking

into full and careful consideration the opportunities and requirements specific

to the various regions of the country and shall originate from regional offices

of the government agencies7; it is then evaluated using a zero-base approachand on the basis of (1) relationship with the approved development plan, (2)

agency capability as demonstrated by past performance, (3) complemented

role with related activities of other agencies, and (4) other similar criteria8;

and submitted for prior approval of the Head of the Department concerned

or by the Chairman or Chief Executive Officer of a Cabinet level body

before submission to the President and Congress.9The President, and in no

small measure, Congress spend considerable time and government resources

in the evaluation, assessment and approval of the budget for any given fiscal

year.

With respect to budget execution, the basic rule is that All money

appropriated for functions, activities, projects and programs shall be available

solely for the specific purposes forwhich these are appropriated.10

The President, though, is given authority to realign allotments (not

funds) the authority to modify or amend any allotment previously issued

and this can only be exercised in case the probable receipts from taxes or

4Section 4, Book VI, Administrative Code of 1987.

5Ibid., Section 7.

6Ibid., Section 14.

7Ibid., Section 15.

8Ibid., Section 16.

9Ibid., Section 22.

10Section 32.


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other sources of any fund will be less than anticipated and that as a

consequence the amount available for the remainder of the term of the

appropriations or for any allotment period will be less than the amount

estimated or allotted therefor.11This, in one provision of the Administrative

Code of 1987, is the subject of the long disquisition of Justice Leonen on the

subject of realignments. 12 But then again, as with the Honorable Courts

Decision, the good justice failed to cite the applicable provision of the law and

relied instead on the pronouncements of the executive and on constitutional

provisions by implication.

D Ps Disregard of the Budget ProcessWasted Government Time and Resourcesand Dam aged Developmental Goals

It is under such a framework that the successof the DAP as evaluated

by the Honorable Court should be viewed. When the DAP disregarded the

appropriations under the relevant laws by the withdrawal of unobligated

allotments for projects duly approved by the government agencies, the

President and Congress, the President disregarded such well-tailored

planning-programming-budgeting and approval process. The President wasted

not just the time of government personnel involved in the proposal,

formulation and approval of the budget but likewise wasted the financial

resources spent for the conduct of such elaborate approval process required

by law. On this very point alone, it cannot be said that the DAP has not doneany damage to the government.

More importantly, when the President, through the DAP, withdrew the

unobligated allotments earmarked for the appropriations items approved by

Congress, the President deprived the recipients or beneficiaries of such

appropriations items to the extent of the withdrawn unobligated allotments, if

not the entire appropriations themselves.

Thus, in the Memorandum to the President dated 12 October 2011

13

,the P30 Billion in Unreleased Personnel Services constitutes a

corresponding deprivation of the public of government services by

government personnel who could otherwise have provided the required

service if they were only hired by the government. In this case, to be true to its

nomenclature, the Disbursement Acceleration Program should have required

the concerned government agencies to fast track the hiring of personnel so as

to meet the requirements of public service. To the extent that the proposed

hiring was not done, to such extent is the damage caused to the public. And it

is damage worth P30 Billion. This figure is just a portion of the total funds

taken from Unreleased Personnel Services disclosed by the government in itsConsolidated Comment filed with the Honorable Court. The amount for

11Section 33 (6).

12See Concurring Opinion, pp. 7-12.

13See Decision, pp. 37-40.


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2012, of the total P59,882,977,000 in augmentations, P42,426,362,000 came

from appropriation balances from Personnel Services.14

To give a more concrete picture of the effect of such deprivation of

government service to the public, a simple comparison of the P42.4 Billion

unreleased budget for personnel services under the given example is almost

equivalent to the combined/total 2013 budget for personnel services, capital

outlay and maintenance and other operating expenses of all the other

departments of the government, to wit:

1. Congress - P10 Billion;

2. Judiciary - P17 Billion;

3. Commission on Elections - P8.2 Billion;

4. Civil Service Commission - P935 Million;5. Commission on Audit - P7.6 Billion;

6. Office of the Ombudsman - P1 Billion;

7. CHR - P298 Million;

---------------------------- ____________

TOTAL - P45.0 Billion

Imagine if the foregoing departments and constitutional commissions

were not funded the effect on the services of the government could be

anything but horrendous. The extent of lost opportunity or more accurately,

the deprivation of public service because of the present administrationsfailure to employ P42 BILLION for personnel services is incalculable. How

this affects the development goals that the government set for itself is quite

unclear.

With respect to the second item in the memorandum where P482

Million came from Unreleased appropriations (slow moving projects and

programs for discontinuance), there were certainly corresponding projects

totaling the same amount that were not implemented. To such an extent, it

can be said that the public was deprived of the projects otherwise provided forby law. Again, if accelerated spending is the aim of the fiscal policy, the

required action is to prompt the agencies concerned to expedite in

accordance with law, the procurement for such project and not use the money

for altogether different projects.

Overall, the concept of DAP as a stimulus package does not simply

hold water. This is so because in public finance, a stimulus package requires

congressional enactment over and above the regular budget of the

government. It requires Congressional approval and cannot be done solely by

the executive considering that No money shall be paid out of the Treasuryexcept in pursuance of an appropriation made by law.15 This is because there

was nothing in DAP that authorized the use of money over and above the

appropriations authorized under the relevant General Appropriations Acts

14Par. 38.

15Section 29 (1), Article Vi, 1987 Constitution.


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(GAA). To the extent that unobligated allotments for certain projects ,

activities or programs (PAP) were withdrawn under cover of savings, it is only

to such an extent that the country was benefitted, if at all, by the DAP. It is a

case of transferring money from one pocket to the other, from one

appropriation item to other new projects in either case, there was no

increase of the money from the original amount.

In other words, if only the present administration stuck to the

implementation of the GAAs, the same total amount stated in the budget

would have been expended and all the elaborate and complicated planning,

budgeting and approval process would not have been put to naught and

government would have ensured that spending was in line with approved long-

term development goals.

With all due respect, Justice Leonens invocation of the Presidents

power of control over the executive department to justify what he suggests as

realignments or savings due to final discontinuance can just as well be

applied for accelerating the implementation of the PAPs as provided for in

the relevant GAAs. The reasoning seems to be that with respect to the

implementation of the slow-moving projects, the President can use another

hat aside from his exclusive control of the executive department to justify final

discontinuance or withdrawal of unobligated allotments, but claim credit for

fast tracking DAP PAPs funded by the withdrawn allotments. It is like saying

that if the Presidents right hand is lazy, wounded or what have you andcannot therefore fire a pistol, he is justified in using his left hand to fire an

automatic rifle forgetting that in both cases, he is the only actor.

There is simply no amount of ratiocination based on the Presidents

power of control of the executive department that can justify taking funds

from slow-moving projects and using the same to fund his pet projects,

especially considering that the original projects were products of carefully

crafted joint executive and legislative efforts while the DAP projects were not

even provided for under the general appropriations law.

Transfer of Appropriations versusTransfer of Funds

This brings the matter to the seeming confusion over terminologies,

specifically the use of the phrase transfer of funds as a term equivalent to the

concept of transfer of appropriations.16Petitioners respectfully submit that

the two terms are not the same.

The term appropriation has been defined by law as referring to anauthorization made by law or other legislative enactment, directing payment

out of government funds under specified conditions or for specified

16Decision, pp. 49-55.


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purposes.17Such definition is substantially the same as those cited 18by the

Honorable Court in its Decision as follows:

Indeed, appropriation was the act by which Congress

designates a particular fund, or sets apart a specified portion of

the public revenue or of the money in the public treasury, to be

applied to some general object of government expenditure, or to

some individual purchase or expense. As pointed out in

Gonzales v. Raquiza: In a strict sense, appropriation has been

defined as nothing more than the legislative authorization

prescribed by the Constitution that money may be paid out of

the Treasury, while appropriation made by law refers to the act

of the legislature setting apart or assigning to a particular use a

certain sum to be used in the payment of debt or dues from theState to its creditors.

When there is an appropriation or appropriations law, it does not

mean that there exist automatically, actual government funds to back it. In

fact, upon enactment of an appropriations law such as the GAAs (unless it is a

case of a special appropriations with existing funding), the money to fund the

appropriations still have to be sourced from the revenues of the government.

The concept of appropriation is therefore separate from that of funds

consisting of the money that pays for the appropriation.

What the Constitution prohibits is the transfer of appropriations and

not the mere transfer of funds and this is clear from Section 25 (5), Article VI

of the 1987 Constitution which reads:

5) No law shall be passed authorizing any transfer ofappropriations; however, the President, the President of theSenate, 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 inthe general appropriations law for their respective offices from

savings in other items of their respective appropriations.

(Emphasis supplied)

On the other hand, there are few constitutional provisions that deal

with or entail the transfer of fund but not transfer of appropriations. These

are:

17Section 2 (1), Chapter 1, Book VI, Administrative Code of 1987.

18As is the case with the budgetary process, it is disturbing that the Honorable Court failed

to cite the relevant provision of the law and presented the definition in the dictionary and

in case law when it is the law that requires or demands compliance, not court decisions.

The primacy of the law is paramount and the role of case law is secondary, used only as an

aid in the understanding of the law.


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Section 29. (1) No money shall be paid out of theTreasuryexcept in pursuance of an appropriation made by law.xxx

(3) All money collected on any tax levied for a special

purpose shall be treated as a special fund and paid out for suchpurposeonly. If the purpose for which a special fund was createdhas been fulfilled or abandoned, the balance, if any, shall betransferred to the general funds of the Government. (Emphasissupplied)

From the foregoing provisions, it is clear that transfer of funds, per se

as in paying money out from the Treasury to cover for an appropriation or

simply the release of funds, or transferring a special fund to the General fund

after the fulfillment or abandonment of the purpose of the special fund areallowed.

Aside from the foregoing provisions of the Constitution, the

Administrative Code of 1987 provide for the reversion of funds or

unexpended balances of appropriations and continuing appropriations 19 as

well as provisions on the expenditure of funds or fund release.20

What then constitutes transfer of appropriations? Or more accurately,

when and how does a transfer of appropriation take place? In the

determination of this issue, the exposition by the Honorable Court of thebudget execution stage would be of invaluable help, to wit:

c.3. Budget ExecutionWith the GAA now in full force and effect, the next step is

the implementation of the budget. The Budget Execution Phaseis primarily the function of the DBM, which is tasked to perform

the following procedures, namely: (1) to issue the programs and

guidelines for the release of funds; (2) to prepare an Allotmentand Cash Release Program; (3) to release allotments; and (4) toissue disbursement authorities.

The implementation of the GAA is directed by the

guidelines issued by the DBM. Prior to this, the various

departments and agencies are required to submit BudgetExecution Documents (BED) to outline their plans andperformance targets by laying down the physical and financialplan, the monthly cash program, the estimate of monthlyincome, and the list of obligations that are not yet due anddemandable.

19Section 28.

20Section 34.


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Thereafter, the DBM prepares an Allotment ReleaseProgram (ARP) and a Cash Release Program (CRP). The ARPsets a limit for allotments issued in general and to a specific

agency. The CRP fixes the monthly, quarterly and annualdisbursement levels.

Allotments, which authorize an agency to enter intoobligations, are issued by the DBM. Allotments are lesser inscope than appropriations, in that the latter embrace the generallegislative authority to spend. Allotments may be released in twoforms through a comprehensive Agency Budget Matrix(ABM), or, individually, by SARO.

Armed with either the ABM or the SARO, agenciesbecome authorized to incur obligations on behalf of the

Government in order to implement their PAPs. Obligations may

be incurred in various ways, like hiring of personnel, entering

into contracts for the supply of goods and services, and using

utilities.

In order to settle the obligations incurred by the agencies,

the DBM issues a disbursement authority so that cash may beallocated in payment of the obligations. A cash or disbursementauthority that is periodically issued is referred to as a Notice ofCash Allocation (NCA), which issuance is based upon anagencys submission of its Monthly Cash Program and otherrequired documents. The NCA specifies the maximum amountof cash that can be withdrawn from a government servicing bank

for the period indicated. Apart from the NCA, the DBM may

issue a Non-Cash Availment Authority (NCAA) to authorizenon-cash disbursements, or a Cash Disbursement Ceiling (CDC)for departments with overseas operations to allow the use of

income collected by their foreign posts for their operatingrequirements.

Actual disbursement or spending of government funds

terminates the Budget Execution Phase and is usuallyaccomplished through the Modified Disbursement Schemeunder wehich disbursements chargeable against the National

Treasury are coursed through the government servicing banks.

Given the foregoing process in the allotment, obligation and releases of

appropriation, what is the reasonable interpretation of when there merely atransfer of funds and when there is a transfer of appropriation? What

interpretation will give effect to the prohibition against transfer of

appropriation but will not unduly stifle the Presidents power and discretion

on realignment of allotment and transfer of funds?


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It is respectfully submitted that the overriding qualification is the

purpose of the movement being sought and its effect on the appropriation

item under the GAA.

A transfer of appropriationstakes place anywhere between the passageof the GAA and before the actual release of cash to pay for the expenditure

subject of the appropriation item with the appropriated funds being taken out

and used for purposes other than the one specified in the appropriation item.

The resultant effect is the actual de-funding of the appropriation item

regardless of whether the move qualifies as a declaration of savings.

On the other hand, a realignment of allotmenthappens only from theapproval of the Allotment Release Program (ARP) and upto the release of the

Special Appropriation Release Order (SARO) but before a Notice of CashAllocation (NCA) is issued. A transfer of fundsmay cover the whole spectrumwhen there is actual movement of funds from the Treasury to the respective

accounts of the government agencies as when a release of cash or an NCA is

issued, or from the special accounts to the general fund when the purpose of

the special fund was already accomplished, or from the accounts of

government agencies to the general fund in case of reversion of balances.

Applied to the DAP, the withdrawal of unobligated allotments has for

its purpose the financing of projects other than those subject of the

appropriation items thereby resulting in the actual de-funding of the itemssubject of the appropriations. This is a clear case of transfer of appropriations.

It is not merely a case of realignment of allotments as there is an actual de-

funding of the original appropriation item and the money is used for purposes

other than the one identified in the appropriations law.

Justice Leonen put this concept from the perspective of the recipient of

the transferred funds in relation to the concept of augmentation as a

permissible transfer of appropriation, to wit:

Any expenditure beyond the maximum amount provided

for the item in the appropriations act is an augmentation of that

item. It amounts to a transfer of appropriation. This is generally

prohibited except for instances when upon implementation or

subsequent evaluation of needed resources, [the appropriation

for a program, activity or project existing in the General

Appropriations Act] is determined to be deficient. In which

case, all the conditions provided in Article VI, Section 25 (5) of

the Constitution must first be met.

While Petitioners do not agree fully with the sweeping statement that

Any expenditure beyond the maximum amount provided for in the item in

the appropriations act is an augmentation of that item, the quoted passage

nonetheless shows one example, but not the only instance, of a transfer of

appropriations. This is because a transfer of appropriations is not principally


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defined by its effects on its recipient but on the consequence of de-funding the

original appropriation subject thereof and there is always the possibility, as in

the DAP, that the money taken out from the original appropriation is used for

purposes that have no appropriation cover.

Unconstitutional and Illegal AugmentationsGiven the foregoing clarification on the concepts of transfer of

appropriations, realignment of allotments and transfer of funds, we can now

focus on the one and only instance of permissible transfer of appropriations,

that is, augmentation of appropriations.

Any discussion of augmentation with the use of savings in the sense

used in the Constitution should start with Section 29 (1), Article VI of theConstitution on when public money can be paid out of the Treasury. The

provision reads:

Section 29. (1) No money shall be paid out of the

Treasury except in pursuance of an appropriation made by law.

Thus, the basic rule is that money can only be paid out of the Treasury

when there is an appropriation made by law.

However, the Constitution laid out limitations on the power ofCongress to enact appropriations laws. One such limitation is with respect to

the maximum amount that it can allot for a particular appropriation. The

Constitution prohibits Congress from increasing the appropriations

recommended by the President in his budget submissions. Section 25 (1),

Article VI of the Constitution states:

Section 25. (1) The Congress may not increase theappropriations recommended by the Presidentfor the operationof the Government as specified in the budget. The form,content, and manner of preparation of the budget shall be

prescribed by law. (Emphasis supplied)

Given the foregoing limitation, it is thus the President who sets themaximum amountthat may be appropriated for any item in the budget. Suchinitial determination by the President is an expression of his departments

good faith assessment that the PAP subject of the appropriation would require

that amount of money for its successful implementation. However, it isCongress that finally decides, subject to the maximum amount recommendedby the President, how much of governments money should e spentfor thePAP for the subject fiscal year.

It is under such context that the Presidents power to augment by the

use of savings should be viewed. The constitutional provision states:


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Section 25. (5) No law shall be passed authorizing anytransfer of appropriations; however, the President, the Presidentof the Senate, the Speaker of the House of Representatives, the

Chief Justice of the Supreme Court, and the heads of the

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. (Emphasis supplied)

In implementation of Sections 29 (1) in relation to the first sentence of

Section 25 (5) of Article VI of the Constitution, the Administrative Code of

1987 laid down a restrictive rule on the use of public funds thus:

Section 32. Use of Appropriated Funds. All moneysappropriated for functions, activities, projects and programs shall

be available solely for the specific purposes for which these areappropriated. (Emphasis supplied)Thus, the general rule is that transfer of appropriations is prohibited

since a transfer of appropriation necessarily involves the use of the money

appropriated for purposes other than what is specified in the appropriation

item involved.

The only exception allowed under Section 25 (5), Article VI of theConstitution that nevertheless requires an enabling law, is augmentation with

the use of savings from the same department of the government. It is worthy

to note that the said constitutional provision did not define augmentation.

Pursuant thereto, the enabling law promulgated is Section 39 of Book

VI of the Administrative Code of 1987 which states:

Section 39.Authority to Use Savings in Appropriations to

Cover Deficits. Except as otherwise provided in the GeneralAppropriations Act, any savings in the regular appropriationsauthorized in the General Appropriations Act for programs and

projects of any department, office or agency, may, with the

approval of the President, be used to cover a deficit in any otheritem of the regular appropriations; provided, that the creation ofnew positions or increase of salaries shall not be allowed to be

funded from budgetary savings except when specifically

authorized by law; provided, further, that whenever authorized

positions are transferred from one program or project to another

within the same department, office or agency, the correspondingamounts appropriated for personal services are also deemed

transferred, without, however increasing the total outlay for

personal services of the department, office or agency concerned.

(Emphasis supplied)


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A closer examination of the provision, however, reveals that, aside from

being subject to the provisions of relevant general appropriations acts, it did

not hew closely to Section 25 (5), Article VI of the Constitution in that it gave

the President power to declare savings from appropriation involving any

department of the government (including, presumably, Congress and the

constitutional commission) and to use the same to cover a deficit in any other

item in the regular appropriations. Thus, it is covered by the constitutional

prohibition that no law shall be passed authorizing any transfer of

appropriations unless its interpretation is limited to the executive

department. The President, based on the said provision alone and without

consideration of the relevant constitutional provisions, cannot claim validity of

his actions by relying mainly on the said provision for he has likewise sworn to

uphold and defend the Constitution and not merely to execute the laws. Being

the head of state, the President is the first among Filipinos, tasked with theobservance of the provisions of the Constitution.

It has to be emphasized at this point that Section 39 requires that

savings may only be used to cover a deficit in an appropriation. Although

the provision did not define what constitutes a deficit, there is no

controversy as regards its ordinary signification. Blacks Law Dictionary21

defines deficit as follows:

Deficit.An excess of expenditures over revenues. Excessof liabilities and debts over income and assets. A negativebalance in the earnings and profits account. Financial loss in

operation of business. Something wanting, generally in the

accounts of one intrusted with money, or in the money received

by him. The term is broad enough to cover defalcation,

misappropriation, shrinkage, or costs, and, in its popular

meaning, signifies deficiency from any cause.

In accounting, opposite of surplus on the balance sheet.

May represent accumulated losses. A negative balance in the

earnings and profits account.

More importantly, however, the applicable general appropriations acts

in this case defined what constitutes augmentation. By the very terms of

Section 39 Book VI of the Administrative Code of 1987, the provision was

rendered inoperative by the enactment of the GAAs with provisions on

augmentation with the use of savings. The GAAs for 2011, 2012 and 2013 all

provide the following permissible transfers of appropriation, to wit:

A. General Provisions on the Use of Savings, R.A. 10147 (GAA FY

2011)

Sec. 59. Use of Savings. The President of the Philippines, the Senate

President, the Speaker of the House of Representatives, the Chief Justice of

the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal

autonomy, and the Ombudsman are hereby authorized to augment any item

21Sixth Edition, @1990 at p. 422.


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in this Act from savings in other items of their respective appropriations.

Sec. 60. Meaning of Savings and Augmentation. 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.

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.

Sec. 61. Priority in the Use of Savings. In the use of savings, priority shall

be given to the augmentation of the amounts set aside for compensation,

year-end bonus and cash gift, retirement gratuity, terminal leave benefits,

old-age pension of veterans and other personnel benefits authorized by law,

and those expenditure items authorized in agency special provisions, in

Section 16 and in other sections of the General Provisions of this Act.

B. General Provisions on the Use of Savings, RA 10155 (FY2012 GAA)

Sec. 53. Use of Savings. The President of the Philippines, the SenatePresident, the Speaker of the House of Representatives, the Chief Justice of


autonomy, and the Ombudsman are hereby authorized to augment any item

in this Act from savings in other items of their respective appropriations.

Sec. 54. Meaning of Savings and Augmentation.Savings refer to portions







balances realized from the implementation of measures resulting inimproved systems and efficiencies and thus enabled agencies to meet and




project with an appropriation, which upon implementation or subsequent




Act.



year-end bonus and cash gift, retirement gratuity, terminal leave benefits,old-age pension of veterans and other personnel benefits authorized by law,

and those expenditure items authorized in agency special provisions and in

other sections of the General Provisions of this Act.

C. General Provisions on the Use of Savings, RA 10352 (FY2013 GAA)


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Sec. 52. Use of Savings. The President of the Philippines, the Senate

President, the Speaker of the House of Representatives, the Chief Justice of


autonomy and the Ombudsman are hereby authorized to use savings in the

their respective appropriations to augment actual deficiencies incurred for

the current year in any item of their respective appropriations.

Sec. 53. Meaning of Savings and Augmentation.Savings refer to portions







balances realized from the implementation of measures resulting in

improved systems and efficiencies and thus enabled agencies to meet and




project with an appropriation, which upon implementation or subsequent




Act.



year-end bonus and cash gift, retirement gratuity, terminal leave benefits,

old-age pension of veterans and other personnel benefits authorized by law,

and those expenditure items authorized in agency special provisions and in

other sections of the General Provisions of this Act.

Augmentation, therefore, has a clear legal meaning under the statutes

and presupposes a deficiency in an existing appropriation before an

augmentation can be made. More specifically, the law uses the term

deficient determined after implementation or subsequent evaluation of

needed resources.

Under the context where the President determines and sets the

maximum amount of money for any given appropriation item, coupled with

the prohibition against Congress increasing the appropriation amountrecommended by the President, there exists a clear constitutional policy

against expenditure of public money over and beyond that recommended by

the President.

To allow otherwise would be to sanction fiscal irresponsibility on the

part of the President. To do so would mean giving the President more money

for a project that he failed to properly assess and evaluate how much it would

cost to implement. To allow him to use more money than he initially

determined would be required for a certain project would be to disregard the

process of budgeting required to be observed under the law.

More importantly, allowing such a prerogative on the part of the

President would defeat entirely the concept of checks and balances in the

preparation and enactment of the budget. The Congress limited power to

decrease or delete any appropriation item would be put to naught by the


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Presidents power to augment by latching on an existing appropriation cover

however tenuous its terms may be on the pretext that it is deficient.

Applied to the legislative department, the judiciary and other

constitutional commissions especially those with fiscal autonomy whose

budgets are released to them in full, the concept of deficiency in

appropriation would be a near impossibility and augmentation can only mean

giving money over and above the amounts appropriated under the law.

Put another way, considering that appropriations for these offices are

fully funded, any savings generated would fund no deficiency and its

expenditure would be over and above that provided by law.

A good illustration of this point would be in case of a hypothetical re-construction of the Supreme Courts building with an appropriation of say, P2

Billion for 2015. In the event the Honorable Court saves about P200 Million

from the total cost of the building, the savings of P200 Million would be over

and above all the other appropriations for the entire judiciary considering its

fiscal autonomy. And with a loose definition of deficiency, deficient or

deficit in relation to the term augmentation proposed as Any expenditure

beyond the maximum amount provided for the item in the appropriation

act,22any expenditure of such savings to other appropriation items would be

more than the maximum amount recommended by the President in his

budget submissions to Congress.

The glaring effect of such statutory and constitutional interpretation in

such an example would be best illustrated for the next succeeding fiscal year

(2016) wherein the President and Congress would then be prohibited, by

virtue of fiscal autonomy, from decreasing the budget of the Judiciary. What

then would be the character of the P2 Billion once appropriated for the SC

building after its construction is already completed? Would it be considered

savings available for augmentation of other items in the budget of the judiciary

which are already fully funded? Would it mean that from thereon, theJudiciary would have an additional P2 Billion that it can treat as its own

version of the DAP?

As regards the DAP augmentations, examples that really challenge

ones understanding of the concept of deficiency have already been cited by

Petitioners as follows:

35. To illustrate, Respondents Table to has for its first

item the DREAM Project of the Department of Science and

Technology under the 2011 budget (R.A. No. 10147) with anaugmentation of One Billion Six Hundred Million Pesos

(P1,600,000,000.00).23 A check with Republic Act No. 10147

disclosed that the project referred to by Respondents had only a

22Leonen, Dissenting Opinion, p. 7.

23Consolidated Comment, par. 33.


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total appropriation of Five Hundred Thirty Seven Million, Nine

Hundred Ten Thousand Pesos (P537,910,000.00) under the

category of Maintenance and Other Operating Expenses

(MOOE). How could a P537,910,000.00 appropriation be

augmented by almost three times such amount, that is, P1.6

Billion for a total expenditure of P2.137 Billion?

36. The same thing is true with respect to the second item

wherein the total appropriation under R.A. No. 10147, p. 711,

under Section A.II.a is P8,003,000.00 comprising of

P5,975,000.00 for Personal Services and P2,028,000.00 for

MOOE. Yet, this was augmented by P300 Million, an amount

more than twenty six (26) times the original appropriation.

37. Item 3 of Respondents Table 2 pertains to the

Repair/Rehabilitation of the PNP Crime Laboratory under R.A.

No. 10147, p. 502 under Section A.III.a.1.a on Conduct of

operation and other related confidential activities against

dissidents, subversives, lawless elements and organized crime

syndicates and campaign against kidnapping, trafficking of

women and minors, smuggling, carnapping, gunrunning, illegal

fishing and trafficking of illegal drugs. Clearly, the activity to be

funded is a operational activity and not a capital outlay. However,

the augmentation expense of P3,255,837,000.00 is one forcapital outlay for the Repair/Rehabilitation of the PNP Crime

Laboratory. What is worse is that out of the

P48,152,488,000.00 total appropriation for the item under Sec.

A.III.a.1.a, P47,476,814,000.00 was for Personal Services while

only P675,674,000.00 was for MOOE. There is no

appropriation for capital outlay. Thus, there existed no

appropriation that Respondent could latch on to for this

particular augmentation.

38. Item No. 4 has an augmentation of

P2,516,167,000.00 for a P2 Billion original appropriation under

Republic Act No. 10352.

39. For Item No. 5, the original appropriation under R.A.

No. 10147 was only for Personal Services and MOOE and

nothing for capital outlay. However, judging from the description

of the project augmented which is (PAF) On-Base Housing

Facilities and Communication Equipment, the expenditure is of

the nature of a capital outlay.24

From the foregoing, there is an imperative need for a definitive ruling

from the Honorable Court on what constitutes augmentation of deficient

24See Petitioners Reply.


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appropriation items as required by law and not just the mere existence of

appropriation cover that can be augmented.

It has been proposed that the DAP expenditure by the President may

be justified under Section 49 of Book VI of the Administrative Code of 1987.

The provision reads in part thus:

Section 49.Authority to Use Savings for Certain Purposes.

Savings in the appropriations provided in the General

Appropriations Act may be used for the settlement of thefollowing obligations incurred during a current fiscal year orprevious fiscal years as may be approved by the Secretary inaccordance with rules and procedures as may be approved by the

President:xxx

(9) Priority activities that will promote the economic well-

being of the entire, including food production, agrarian reform,

energy development, disaster relief, and rehabilitation;

(10) Repair, improvement and renovation of government

buildings and infrastructure and other capital assets damaged by

natural calamities;

xxx (Emphasis supplied)

Suffice it to state the very same provision requires that the obligationsbeing funded from savings be incurred during a current fiscal year or

previous fiscal years. Hence, it can only refer to PAPs with existing

appropriation covers and to those unpaid obligations of the previous years,

especially contingent obligations that became due and demandable only

during the current fiscal year as borne by the enumeration in the cited

provision.

Given the foregoing discussion, it is respectfully submitted that

augmentations can only be made to cover deficient appropriation items up tothe extent of the maximum recommendation of the President for the PAPs

subject of the augmentation.

PRAYER

Premises considered, Petitioners respectfully move for a Partial

Reconsideration of its Decision dated 1 July 2014 and to declare as

UNCONSTITUTIONAL and ILLEGAL expenditures from theDisbursement Acceleration Program (DAP) used to augment appropriation

items over ans above the maximum amount recommended by the President

for the programs, activities and projects (PAPs) in the budget submitted by

him to Congress or otherwise not deemed deficient.


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Petitioners also pray for other just and equitable relief under the

premises.

Makati City, 21 July 2014.

ROQUE BUTUYAN LAW OFFICESCounsel for the Petitioners

Antel Corporate Center

Unit 1904, 19thFloor

121 Valero Street, Salcedo Village

Makati City 1227

Email:[email protected]

Tel. Nos. 887-4445; 887-3894Fax No. 887-3893

By:

H. HARRY L. ROQUE, JRRoll No. 36976

PTR No. 4264493/30 Jan 2014/Makati

IBP Lifetime No. 01749/PPLMMCLE Exemption No. IV-000513/15 Feb 2013

JOEL RUIZ BUTUYANRoll No. 36911

PTR No. 4264495 /30 Jan 2014 Makati

IBP Lifetime No. 01742/Quezon City

MCLE Comp. No. IV-0011417/Jan 11, 2013

ROGER R. RAYELRoll No. 44106

PTR No. 9308264/3 Feb 2014/Quezon City

IBP Lifetime No. 02159/Quezon City

MCLE Comp. No. IV-017519/19 Apr 2013

EXPLANATION
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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The foregoing pleading was served and filed by registered mail due to

time, distance and manpower constraints.

ROGER R. RAYEL

Copy furnished:

OFFICE OF THE SOLICITOR GENERAL

134 Amorsolo Street, Legaspi Village

Makati City

ATTY. VICENTE V. MENDOZA3 Aster Street, Fairview

Quezon City

AUGUSTO L. SYJUCO

No. 4 Rodriguez St., Sta. Barbara

Iloilo City

ATTY. WANDA M. TALOSIG

No. 321 FEMII Bldg., (Annex )

A. Soriano, Jr. Ave.Intramuros, Manila

ATTY. MANUELITO LUNA

No. 412 FEMII Bldg., (Annex )

A. Soriano, Jr. Ave.

Intramuros, Manila

ATTYS. PARSIFAL FORTUN & MARIA

ROMINA M. DALAGAN137 CRM Avenue cor. CRM Marina

BF Homes Almanza, Las Pinas City

ATTY. MANUEL LAZARO

Chatham House Bldg., Valero cor. Rufino Sts.

Salcedo Village, Makati City

ATTYS. FROILAN BACUNGAN, ET AL.

2NDFloor, Philtrust BuildingRemedios cor. M.H. Del Pilar Streets

Malate, Manila

ATTY. PACIFICO A. AGABIN


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26thFloor, Pacific Star Building

Gil Puyat cor. Makati Avenue

Makati City

ATTYS. JOVENCIO H. EVANGELISTA, ET AL.

No. 45 K-7thSt., Brgy. West Kamias

Quezon City

ATTYS. REMIGIO D. SALADERO, ET AL.

Pro-Labor Assistance Center

No. 33-B E. Rodriguez Sr. Avenue

Quezon CityDAP Belgica Partial Reconsideration/