Business World, 8 July 2014


Amid the unanimous decision by the Supreme Court that the core of the Disbursement Acceleration Program (DAP) is unconstitutional, President Noynoy Aquino remains stubbornly unapologetic. Budget Secretary Butch Abad, on the other hand, has conveniently disappeared. It’s the Malacanang spokesmen who bravely faced the public and announced that the DAP was made with good intentions and that no apology is forthcoming. Honest? I have reproduced below a piece I wrote for Business World on Jan. 30:

“THE ROAD to hell is paved with good intentions,” as a famous saying goes. In last Tuesday’s [Jan. 28] oral argument on the Disbursement Acceleration Program (DAP) before the Supreme Court, Budget Secretary Abad made an exaggerated and outrageous appeal in favor of the DAP: without the DAP, the economy would not have grown by 6.8% in 2012; and without the DAP, the Philippines would not have gotten its investment grade rating.

Both claims are false. For how could the approximately P100 billion budgetary releases bring about the 6.8% GDP growth for the P11-trillion economy? The truth is a big chunk of these budgetary releases has not even been converted into real economic activities.

Most funds released ended up just parked in government corporations. They did not translate into more jobs, more housing, and more economic activities. The P20-billion budget support to Bangko Sentral ng Pilipinas (BSP) did not create a single job.

The claim that the DAP disbursements brought about the ratings upgrade is equally insulting to the intelligence of the man on the street. I would like to argue that the steady flow of overseas remittances in recent years — $20.1 billion (P884 billion) in 2011 and $21.4 billion (P942 billion) in 2012 — has contributed more to the ratings upgrade than the monstrosity called DAP.

Embarrassed by the criticisms that the Aquino III administration was a slow poke, that programs and projects were not moving, Mr. Abad concocted the DAP. The real intention was to show a faster spending record, not necessarily to perk up the economy. Quick disbursement does not necessarily result in a more vibrant economy.

Whatever are the assumed good intentions of the DAP, the important questions are: Was it constitutional? When the President authorized the DAP, rather belatedly, did he honor the trinity of separation of powers, wherein the President prepares and implements the budget, while Congress approves the General Appropriations Act (GAA)?

“The end does not justify the means. No matter how noble and worthy of admiration the purpose of an act; but if the means to be employed in accomplishing it is simply irreconcilable with constitutional parameters, then it cannot still be allowed,” the Supreme Court said in Biraogo vs. Philippine Truth Commission of 2010.

The Constitution is supreme. Both President Aquino III and Mr. Abad are not above the fundamental law of the land.

The President cannot slice, dice and rearrange the GAA without going back to Congress. The President and/or Secretary Abad cannot amend the GAA after it’s been signed into law.

Associate Justice Carpio said that the core of the DAP case is (a) how savings were generated, and (b) were the savings used to augment existing items in the GAA.

Article VI, Section 25 (5) of the Constitution provides: “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 other budget rule that flows from the above is that savings have to be generated from their respective appropriations and applied only to items of their respective appropriations.

General provisions in the GAA 2001, GAA 2002, and GAA 2003 uniformly provide that “in no case shall a non-existent program activity or project be funded by augmentation from savings or by the use of appropriations otherwise authorized in the act.”

Put simply, if a program, activity or project does not exist in the General Appropriations Act, then it cannot be augmented from savings.

Put differently, what is called “cross-border” augmentation as called by some associate justices — meaning the use of savings from one office to augment the budget of another office — is illegal. Yet, Secretary Abad admitted that DAP was used to augment the budgets of the House of Representatives and the Commission on Audit, and that savings of the Executive Department was used to augment the budget of the Commission on Elections. Fatal mistake.

Mr. Abad admitted that “the sources of funds are from, first, the legitimately generated savings of the government, and second, the Unprogrammed Fund authorized in any relevant GAA.”

But the use of the Unprogrammed Fund has to meet a strict condition: “The amounts…shall be released only when the revenue collections exceed the original revenue targets submitted by the President of the Philippines to Congress.” But, lo and behold, revenue shortfalls were consistently experienced in 2011 and 2012.

Clearly, since revenue collections failed to exceed revenue targets, the UF cannot be utilized as source of savings. Moreover, the concept of savings applies only to programmed appropriations. Another fatal mistake.

In the closing oral argument, an associate justice asked Budget Secretary Abad: “So is it your position that DAP 2011 was successful, yes?” Abad answered in the affirmative.

The justice continued: “And DAP 2012 was successful too, yes?” Abad said yes.

Now, came the coup de grace: “So, Mr. Secretary, if DAP was so successful, why stop it now?” [Laughter].

Mr. Abad was speechless. What a joke!