National budget and the meaning of savings and augmentation according to the Supreme Court

Prior to the disbursement acceleration program (DAP) cases, the essence, breadth and scope of “savings” and “augmentation” as referred to in the 1987 Philippine Constitution have already been discussed by the Supreme Court (en banc) in the 2008 case of “Sanchez, et. al. vs. Commission on Audit (COA).” The Highest Court, through Justice Tinga, explains, to wit-    

“Sec. 25(5), Art. VI of the 1987 Constitution, in turn, provides:

Sec. 25(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.

The deliberations of the Constitutional Commission are instructive as regards the extent of the President’s power to augment:

  

MR. SARMENTO:      I have one last question. Section 25, paragraph (5) authorizes the Chief Justice of the Supreme Court, the Speaker of the House of Representatives, the President, the President of the Senate to augment any item in the General Appropriations Law. Do we have a limit in terms of percentage as to how much they should augment any item in the General Appropriations Law?

MR. AZCUNA: The limit is not in percentage but “from savings.” So it is only to the extent of their savings.

Construing this provision, the Court ruled in the pre-eminent case of Demetria v. Alba: 

 The prohibition to transfer an appropriation for one item to another was explicit and categorical under the 1973 Constitution. However, to afford the heads of the different branches of the government and those of the constitutional commissions considerable flexibility in the use of public funds and resources, the constitution allowed the enactment of a law authorizing the transfer of funds for the purpose of augmenting an item from savings in another item in the appropriation concerned. The leeway granted was thus limited. The purpose and conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if there are savings from another item in the appropriation of the government branch or constitutional body. [Emphasis supplied]

Thus, we declared unconstitutional par. 1, Sec. 44 of Presidential Decree No. 1177 which authorized the President “to transfer any fund, appropriated for the different departments, bureaus, offices and agencies of the Executive Department, which are included in the General Appropriations Act, to any program, project or activity of any department, bureau or office included in the General Appropriations Act or approved after its enactment”  because it unduly overextends the privilege granted under Sec. 16(5) of the 1973 Constitution. 

We ruled that the President cannot indiscriminately transfer funds from one department, bureau, office or agency of the Executive Department to any program, project or activity of any department, bureau or office included in the General Appropriations Act or approved after its enactment, without regard to whether the funds to be transferred are actually savings in the item from which the same are to be taken, or whether or not the transfer is for the purpose of augmenting the item to which the transfer is to be made.

R.A. 7180 contains a similar provision on the President’s power to augment and provides the meaning of “savings” and “augmentation,” thus:

  

Sec. 17. Use of Savings. The President of the Philippines, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions under Article IX of the Constitution, the Ombudsman and the Commission on Human Rights are hereby authorized to augment any item in this Act for their respective offices from savings in other items of their respective appropriations.

x x x

Sec. 19. Meaning of Savings and Augmentation.  Savings refer to portions or balances of any programmed appropriation free of any obligation or encumbrance still available after the satisfactory completion or unavoidable discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized, or arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay. Augmentation implies the existence in this Act of an item, project, activity or purpose with an appropriation which upon implementation or subsequent evaluation of needed resources is determined to be deficient. In no case, therefore, shall a non-existent item, project, activity, purpose or object of expenditure be funded by augmentation from savings or by the use of appropriations authorized otherwise in this act.

  

Clearly, there are two essential requisites in order that a transfer of appropriation with the corresponding funds may legally be effected. First, there must be savings in the programmed appropriation of the transferring agency.  Second, there must be an existing item, project or activity with an appropriation in the receiving agency to which the savings will be transferred.

Actual savings is a sine qua non to a valid transfer of funds from one government agency to another.  The word “actual” denotes that something is real or substantial, orexists presently in fact as opposed to something which is merely theoretical, possible, potential or hypothetical.

As a case in point, the Chief Justice himself transfers funds only when there are actual savings, e.g., from unfilled positions in the Judiciary.

The thesis that savings may and should be presumed from the mere transfer of funds is plainly anathema to the doctrine laid down in Demetria v. Alba as it makes the prohibition against transfer of appropriations the general rule rather than the stringent exception the constitutional framers clearly intended it to be.  It makes a mockery of Demetria v. Alba as it would have the Court allow the mere expectancy of savings to be transferred. 

Contrary to another submission in this case, the President, Chief Justice, Senate President, and the heads of constitutional commissions need not first prove and declare the existence of savings before transferring funds, the Court in Philconsa v. Enriquez, supra, categorically declared that the Senate President and the Speaker of the House of Representatives, as the case may be, shall approve the realignment (of savings). However, “[B]efore giving their stamp of approval, these two officials will have to see to it that: (1)The funds to be realigned or transferred are actually savings in the items of expenditures from which the same are to be taken; and (2) The transfer or realignment is for the purpose of augmenting the items of expenditure to which said transfer or realignment is to be made.”

As it is, the fact that the permissible transfers contemplated by Section 25(5), Article VI of the 1987 Constitution would occur entirely within the framework of the executive, legislative, judiciary, or the constitutional commissions, already makes wanton and unmitigated malversation of public funds all too easy, without the Court abetting it by ruling that transfer of funds ipso facto denotes the existence of savings.

Precisely, the restriction on the transfer of funds, and similar constitutional limitations such as the specification of purpose for special appropriations bill, the restriction on disbursement of discretionary funds, the conditions on the release of money from the Treasury, among others, “were all safeguards designed to forestall abuses in the expenditure of public funds.” (emphases by the Court; G.R. No. 127545)

As such settled jurisprudence, would the impending redefinition by Congress of "savings" and "augmentation" be vulnerable to judicial review due to apparent grave abuse of discretion amounting to lack or excess of jurisdiction, and thus, be declared as invalid and unlawful by the Supreme Court? Grave abuse of discretion is defined as "capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility." (Ganaden, et. al.  vs. The Hon. Court of Appeals, et. al., G.R. Nos. 170500 & 170510-11 [2011]). Or, on the other hand, would the Supreme Court apply the political question doctrine and/or succumb to the adage, "vox populi, vox Dei?"

Abangan!