In his State of the Nation Address, President Aquino urged Congress to pass a joint resolution clarifying the definition of terms related to government spending—in particular, asking for a redefinition of savings. In addition, the administration is proposing a new definition of savings in the 2015 General Appropriations Act (GAA). It considers these two congressional actions necessary in the wake of the Supreme Court ruling that declared certain acts and practices under the Displacement Acceleration Program unconstitutional.

 

At the outset, let me be clear that I do not consider these proposals for remedial legislation as defiance to the Supreme Court. This is how the President should have reacted to the DAP decision in the first place, by proposing a solution rather than threatening intervention by a third branch. And it is certainly within the powers of Congress to define savings, subject of course to the relevant constitutional provisions and jurisprudence.

 

The executive and legislative branches must also be conscious of the basic principles of administrative law, in particular the rules for the proper delegation of legislative power and the two tests required for that: “completeness” and “sufficiency of standards”. As long as the constitutional parameters are respected and these two legal tests are complied with, there should be no legal issue to redefining savings to allow the President, the head of the executive department, and all other heads of departments, more flexibility.

 

When the 1986 Constitutional Commission deliberated on the extent of the President’s power to use savings to augment existing appropriations, the discussion on this topic was fairly limited. In fact, based on my research, we have on record only a single exchange between Commissioner Rene Sarmiento (later appointed in the Comelec) and Commissioner Adolf Azcuna (retired Supreme Court Justice and currently Chancellor of the Philippine Judicial Academy) where the latter qualified that the limit of what could be transferred was not a percentage but the extent of savings.

 

In the 2008 case of Sanchez vs. COA, the Court however gave two essential requisites in order that a transfer of appropriation 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. Further the Court made clear that one other sine qua non for a valid transfer is for the purpose of augmenting the item for which transfer it to be made. Hence, a valid transfer of funds from one government agency to another can only be made if there are actual savings which denotes that something is real or substantial, or exists presently in fact as opposed to something which is merely theoretical, possible, potential or hypothetical and an item to be augmented.

 

In the Sanchez decision, the Court also stated that by the nature of maintenance and operating expenses, savings may generally be determined at the end of the year, or earlier in case of completion, discontinuance or abandonment of the work for which the appropriation was authorized. In contrast, the Court added, savings from personal services may generally be determined even at the opening of the fiscal year in case of unpaid compensation pertaining to vacant positions and leaves of absence without pay. This seems to fortify the view that savings may be declared at anytime and not necessarily at the end of the fiscal year only since they occur at different periods depending on their nature.

 

The 1987 case of Demetria vs. Alba, still the leading authority on this topic, a decision brilliantly and clearly written Associate Justice, later Chief Justice, Marcelo Fernan, explains very well the rationale of these constitutional limitations. The wise and immortal words of Justice Fernan should guide Congress and the President on their next moves:

 

“Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under said Section 16[5]. It empowers the President to 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 as to whether or not 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 said transfer is to be made. It does not only completely disregard the standards set in the fundamental law, thereby amounting to an undue delegation of legislative powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the provision in question null and void.

 

‘For the love of money is the root of all evil: ...’ and money belonging to no one in particular, i.e. public funds, provide an even greater temptation for misappropriation and embezzlement. This, evidently, was foremost in the minds of the framers of the constitution in meticulously prescribing the rules regarding the appropriation and disposition of public funds as embodied in Sections 16 and 18 of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money from the treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)]; the prohibition to transfer an appropriation for an item to another [See. 16(5) and the requirement of specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as correctly observed by petitioners, in view of the unlimited authority bestowed upon the President, “... Pres. Decree No. 1177 opens the floodgates for the enactment of unfunded appropriations, results in uncontrolled executive expenditures, diffuses accountability for budgetary performance and entrenches the pork barrel system as the ruling party may well expand [sic] public money not on the basis of development priorities but on political and personal expediency.”

 

To conclude, Congress does have some latitude on how to define savings, subject to legal due diligence. And above, all it must do so without castrating itself and its power over the purse or turning us into a parliamentary system (which I support) prematurely.

 

"Eagle Eyes" is Dean Tony La Viña's column in Manila Standard Today.

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