DAP: Transfering of funds

Transfer of funds

Nobody is denying that President Aquino can transfer funds from his share in the budget. But some are asking: What did he transfer and where did he transfer them to? A ray of hope is that even the Palace has begun to admit that there are problems with the Disbursement Acceleration Program (DAP) which are now being attended to.

The constitutional rule on the transfer of funds is fairly simple: “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.”  Let us dissect this.

First, the President and six other top officials are authorized to transfer funds from their appropriations. This is an exclusive list. Hence, the chief of staff of the Armed Forces, for instance,  may not be given such authority. Likewise, individual members of Congress may not be given such authority and must seek approval from the Speaker or the Senate president if these latter have been authorized by law.

Second, this constitutional power to transfer is activated when Congress passes a law to implement it. For that reason, an authorization from Congress is invariably written in the annual General Appropriations Act.
Third, the named officials can transfer only “savings” in “items” allotted to them. An “item” is a specific amount of money set aside for a special purpose. Savings are leftovers after the purpose has been satisfied.
Fourth, they can transfer savings only to “augment” items in their appropriations. These items which are to be augmented must already be found in the appropriation for their respective departments in the same budget year. What this means is that the power to transfer is not authority to create new items not found in the appropriations act.

An almost identical provision was contained in Article VIII, Section 16(5) of the 1973 Constitution. Under the 1973 Constitution there was an attempt by the president to transfer funds anywhere he wanted. The attempt was based on a Marcos decree, Presidential Decree No. 1177, the Budget Reform Decree of 1977. Section 44 of which said:

The President shall have the authority 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. 

Clearly, Section 44 attempted to empower the president “to indiscriminately transfer funds. . . 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.” Hence, the law was declared unconstitutional in 1987.

Inappropriate provisions. There is another principle related to the budgetary process. And this was the subject of another controversy in 1989 and 1990. The General Appropriations Acts for those years contained similar limitations on the power of the president. The 1989 law said:

Section 55. Prohibition Against the Restoration or Increase of Recommended Appropriations Disapproved and/or Reduced by Congress: No item of appropriation recommended by the President . . . which has been disapproved or reduced in this Act shall be restored or increased by the use of appropriations authorized for other purposes by augmentation. An item of appropriation for any purpose recommended by the President in the Budget shall be deemed to have been disapproved by Congress if no corresponding appropriation for the specific purpose is provided in this act.

There was a similar law in 1990.

Exercising the power of “item veto” the president singled this out for disapproval. Could he do it? This question is important because when the President vetoes a law he should normally veto the entire law with the exception that he may veto “items” in an appropriation law. Were the 1989 and 1990 provisions “items”? They were not. Could the president veto them? Yes, because they were what are now called “inappropriate provisions.”

The Court ruled in 1994: “As the Constitution is explicit that the provision which Congress can include in an appropriations bill must ‘relate specifically to some particular appropriation therein’ and ‘be limited in its operation to the appropriation to which it relates,’ it follows that any provision which does not relate to any particular item, or which extends in its operation beyond an item of appropriation, is considered ‘an inappropriate provision’ which can be vetoed separately from an item.”  Since the 1989 and 1990 laws did not relate to any appropriation item, it was called an “inappropriate provision.” They were “riders” that could be shot down.  The president won.

The outcome of the controversy on the DAP will depend on the answer to factual questions:  Did he transfer “savings” and where did he put them?

source:  Philippine Daily Inquirer Column of Fr. Joaquin Bernas SJ