DAP and The Power of the Purse

In the rather recent case of Araullo v. Benigno Simeon Aquino III[1], involving the chronically divisive Disbursement Acceleration Program  (or the DAP), the Supreme Court adopted a strict review of the “savings” definition to determine the President’s power to transfer amounts between programs under the General 2011, 2012 and 2013 Appropriations Act. On the flip side, the Supreme Court refused to consider the DAP as an impoundment measure based on the narrow definition of Impoundment under the same years GAAs:

 “The petitioners assert that no law had authorized the withdrawal and transfer of unobligated allotments and the pooling of unreleased appropriations; and that the unbridled withdrawal of unobligated allotments and the retention of appropriated funds were akin to the impoundment of appropriations that could be allowed only in case of “unmanageable national government budget deficit” under the GAAs, thus violating the provisions of the GAAs of 2011, 2012 and 2013 prohibiting the retention or deduction of allotments.

In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not saving, policy as a last-ditch effort of the Executive to push agencies into actually spending their appropriations; that such policy did not amount to an impoundment scheme, because impoundment referred to the decision of the Executive to refuse to spend funds for political or ideological reasons; and that the withdrawal of allotments under NBC No. 541 was made pursuant to Section 38, Chapter 5, Book VI of the Administrative Code, by which the President was granted the authority to suspend or otherwise stop further expenditure of funds allotted to any agency whenever in his judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of unobligated allotments and the pooling of unreleased appropriations were invalid for being bereft of legal support. Nonetheless, such withdrawal of unobligated allotments and the retention of appropriated funds cannot be considered as impoundment. According to Philippine Constitution Association v. Enriquez (citation omitted): “Impoundment refers to a refusal by the President, for whatever reason, to spend funds made available by Congress. It is the failure to spend or obligate budget authority of any type.” Impoundment under the GAA is understood to mean the retention or deduction of appropriations. The 2011 GAA authorized impoundment only in case of unmanageable National Government budget deficit, to wit:

Section 66. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities authorized under this Act, except those covered under the Unprogrammed Fund, shall be released pursuant to Section 33 (3),Chapter 5, Book VI of E.O. No. 292.

Section 67. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations authorized in this Act shall be effected only in cases where there is an unmanageable national government budget deficit. Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the actual national government budget deficit has exceeded the quarterly budget deficit targets consistent with the full-year target deficit as indicated in the FY 2011 Budget of Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such condition, as determined by the Development Budget Coordinating Committee and approved by the President.

The 2012 and 2013 GAAs contained similar provisions.

The withdrawal of unobligated allotments under the DAP should not be regarded as impoundment because it entailed only the transfer of funds, not the retention or deduction of appropriations.”

This means that while the Court recognized that the power to define savings is primordially legislative, it also allowed wide leeway for the Executive to play around with appropriations in order to create savings. In other words, although the President, if allowed by law (remember that it is not an inherent power), can realign only those funds which are defined as “savings” by Congress, it seems that he can also create a new category of savings altogether by simply “withdrawing unobligated allotments”  and the act of withdrawing itself is not considered an impoundment within the statutory definition.

I for one am still on the fence regarding the DAP issue per se but I think this distinction made by the Supreme Court on the impoundment aspect is too sophisticated for its own good. DAP would allow the executive to  declare an allotment “unobligated” merely by cherry picking which PAPs to obligate. And that precisely is the essence of impoundment — the refusal of the executive to carry out an instruction by Congress.

The items in the appropriations act are permissions for the Executive to incur obligations for the corresponding items. At the same time, the  GAA also theoretically contains a corresponding negative instruction for the President NOT to incur obligations for programs where no appropriations were made by Congress. Thus, to the extent that President acts contrary to these instructions, can it not be said that he also violates his duty to “faithfully execute” the laws of the land?

Finally, I think that obligating items PRIOR to or independent of the GAA amounts to a kind of “executive appropriation” as it would have the unusual effect of forcing the legislature to enact an appropriation to cover the expenditure,  thus:

“While section 8 of article I enumerates the powers of the legislative branch, the appropriations clause in section 9 is not a grant of power.

Rather, the appropriations clause affirmatively obligates Congress to exercise a power already in its possession.

Congress’ power to appropriate originates in article I, section 8. The concept of “necessary and proper” legislation to carry out “all . . . Powers vested by this Constitution in the Government of the United States” includes the power to spend public funds on authorized federal activities

Article I, section 8 also grants Congress the obverse power: the power to prevent the spending of any public funds except as authorized by Congress.

That is, even if there were no appropriations clause in the Constitution, Congress would have the power to enact a statutory “appropriations clause,” worded exactly the same as the clause in article I, section 9, making Congress’ appropriations power exclusive. If Congress could not prohibit the Executive from withdrawing funds from the Treasury, then the constitutional grants of power to the legislature to raise taxes and to borrow money” would be for naught because the Executive could effectively compel such legislation by spending at will.

The `legislative Powers’ referred to in section 8 of article I would then be shared by the President in his executive as well as in his legislative capacity.

Since legislative appropriations power is rooted in article I, section 8, we may infer that a primary significance of the appropriations clause in section 9 lies in what it takes away from Congress: the option not to require legislative appropriations prior to expenditure. If the Constitution thus strictly forbids `executive appropriation’ of public funds, the exercise by Congress of its power of the purse is a structural imperative[2]. “

 

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[1] GR No. 289207

[2] Stith, Kate, “Congress’ Power of the Purse” (1988). Faculty Scholarship Series. Paper 1267. http://digitalcommons.law.yale.edu/fss_papers/1267

 

 

 


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