President Aquino, in his national address on the Disbursement Acceleration Program (DAP), said that the Supreme Court did not take into account his administration’s legal basis for the program, in particular, Section 39 of the 1987 Administrative Code of the Philippines, which states that:
“Except as otherwise provided in the General Appropriations Act, any savings in the regular appropriations authorized 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 other item of the regular appropriations: Provided, that the creation of new 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 corresponding amounts appropriated for personal services are also deemed transferred, without, however increasing the total outlay for personal services of the department, office or agency concerned.”
The Supreme Court, in its ruling declaring the DAP unconstitutional, noted that the budget department listed Chapter 5, Book VI of Executive Order No. 292 (Administrative Code of 1987) as one of the legal bases for DAP’s use of savings.
It did not specifically mention Section 39 in its ruling but included Section 38, Chapter 5, Book VI of the Administrative Code of 1987. The ruling stated: “The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of 1987 to justify the withdrawal of unobligated allotments. But the provision authorized only the suspension or stoppage of further expenditures, not the withdrawal of unobligated allotments, to wit: “Section 38. Suspension of Expenditure of Appropriations. – Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees.”
However, Associate Justice Estela Perlas-Bernabe, in her separate concurring opinion, took note of Section 39. She said: “When the executive department exercises its power of fiscal management through, for instance, withdrawing unobligated allotments and pooling them under Sections 38 and 39, Chapter 5, Book VI of the Administrative Code of 1987 (Administrative Code)… the President acts within his sphere of authority for he is merely managing the execution of the budget taking into account existing fiscal deficits as well as the circumstances that occur during actual PAP implementation (the matter of fiscal deficits and implementation circumstances will be expounded on in the succeeding discussion). However, he must always observe and comply with existing constitutional and statutory limitations when doing so—that is, his directives in such respect should not authorize or allow expenditures for an unappropriated purpose nor sanction overspending or the modification of the purpose of the appropriation item, or even the suspension or stoppage of any expenditure without satisfying the public interest requirement, else he would be substituting his will over that of Congress and thereby violate the separation of powers principle, not to mention, act against his mandate to faithfully execute the laws.”
Source: Supreme Court decision on DAP