“Budget Sec. Abad’s admission that there had been cross-border transfer of funds bolsters claims that the DAP and NBC 541 are unconstitutional.” – Bayan Muna Rep. Zarate
By RONALYN V. OLEA
MANILA – Supreme Court justices grilled Budget Secretary Florencio Abad and Solicitor General Francis Jardeleza for having transferred savings of the executive to other government agencies through the disbursement acceleration program (DAP).
The justices were one in saying that the 1987 Philippine Constitution prohibits the transfer of appropriations from one agency to another. Article V Section 25 of the1987 Philippine Constitution states, “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.”
During the oral arguments on DAP, January 28, Abad admitted the DAP was used to augment at least three projects of other agencies, two of which are Constitutional commissions.
Justice Lucas Bersamin said, “My reading of the constitutional provision regarding augmentation is that this is limited to augmentation within the executive department. Do you agree with me?”
Abad replied, “We submit to your interpretation, Your Honor.”
But asked whether the executive had redirected its savings to another agency, Abad replied yes. He admitted channeling the DAP to Congress to fund the building of E-library and to the Commission on Audit (COA) to fund its information technology equipment.
Power struggle over public purse, Constitutional interpretation
Abad also admitted that the DAP funds had been provided to the Commission on Elections (Comelec). Under questioning of Justice Arturo Brion, he said the additional funds were used in preparation for the May 2013 elections.
Asked about any other instances where savings had been used by the executive department for the purposes of other departments, Abad told Brion they will look into it.
In connection with the DAP, Bersamin asked Abad about allegations of bribery concerning former Chief Justice Corona’s impeachment trial. Abad denied they released funds to Senators in connection with Corona’s trial.
Bersamin next asked Solicitor General Francis Jardeleza if the President’s authority to spend [under the DAP] is unlimited. Jardeleza replied that it is unlimited as regards the initial appropriation cover. The solicitor Jardeleza said all of the 116 DAP projects have appropriation cover or items that are included in the General Appropriations Act (GAA).
Although Jardeleza admitted that augmentations were made for other agencies, he said these were “dictated by the necessities of the situation.” He cited the additional funds provided for the Disaster Risk Exposure and Assessment for Mitigation (Dream). He said the initial funds for Dream was insufficient and the DAP was used to augment it.
To which Justice Jose Perez said, “And the ‘necessities of the situation’ dictate how you will read the Constitution?”
Jardeleza replied: “We hope to persuade you to give room for interdependence given under separation of powers.”
Justice Antonio Carpio said the national budget circular (NBC) 541 allows augmentation of projects not stated in the General Appropriations Act (GAA). But, he stressed, “We want to be clear that the power to augment is the power to augment existing items (in the national budget). You cannot use that power to augment nonexistent items.”
The NBC 514 issued by DBM in July 2012 states that “withdrawn allotments may used to augment existing programs and projects of any agency and to fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented during the current year.”
Chief Justice Ma. Lourdes Sereno said there is the problem of language used in the NBC 514. “Is it possible that NBC 541 was drafted by someone being asked to monitor the performance of each agency and the excess of the language there is a result of the fact that within the flexibility the executive department has they could have juggled the items there?” Sereno said. “Is it possible that there has been a confusion in the language?” she asked.
But Brion said NBC 541 was not drafted by neophytes, noting that Secretary Abad is a lawyer and had served as a congressman. “You studied statutory construction in law school, right?” Brion asked Abad, who said yes.
When to declare “savings,” when to juggle funds
During his presentation, Secretary Abad said that the DAP was mainly from savings incurred by the executive. Justices asked Jardeleza and Abad who determines the savings and when are these determined.
Jardeleza said the DAP came from “unobligated allotments and unreleased appropriations.” Unobligated allotments refer to those that have been approved for release but the appropriations were not awarded to a supplier and unreleased appropriations are those that remain with the Department of Budget and Management (DBM).
The GAA defines “savings” as savings from unprogrammed appropriation, funds available after implementation of projects, funds available after final discontinuance, and funds available after final abandonment of work.
Carpio asked Jardeleza when does the executive consider the project as abandoned. Jardeleza said that it is not only on the 10th or 11th month that there can be abandonment of a project.
Carpio said, “Yes, but [abandonment of a project] is valid only in case it’s November. But what if it happens in June, in the middle of the year?” He noted that the NBC 514 declares unobligated allotments as of June 2012.
“By mid-year, the President can now dictate the power of the purse, is that what you’re saying?” Carpio asked. Jardeleza replied: “No, Your Honor. But President can declare the existence of savings.”
Justice Roberto Abad shared Carpio’s view. During his interpellation with Jardeleza, Justice Abad said, “Through the determination of whether a particular work is to be abandoned, the executive alters the will of the legislature regarding appropriation. Do you agree or not?”
Jardeleza disagreed. The solicitor general said that if government agencies are slow-moving, the executive comes in and says, ‘Spend it or lose it.’
Carpio noted that Abad, in his presentation, did not identify the sources and uses of the savings per project. “You have to identify to us where those savings came from per project,” he said. The budget secretary agreed to do that.
Justifications for DAP
The justices also asked Abad as to the rationale behind DAP.
Abad said the DAP was adopted in October 2011 to “spur the economy.” He also said that DAP is part of “reform interventions” in the budget process, citing leakages during the previous administration.
Bersamin then asked, “The Aquino administration is responsible for 2011 budget, how come there was a slowdown in economy?”
The DAP was again used in 2012. Abad cited low level of absorptive capacity of agencies, systemic deficiencies as reasons for the DAP.
Bersamin asked why the DBM used the term DAP. Abad replied the DAP is meant to accelerate spending of all agencies and the matter of savings is merely “incidental.”
Bersamin said the objective of stimulating the economy is not appearing in the language of the DBM memorandum, referring to the NBC 541.
Justice Marvic Leonen said the executive may go to Congress to ask for additional budget to stimulate the economy instead of having the DAP. Justice Abad also agreed, saying “the executive can stimulate the economy by going to Congress.”
Both Abad and Jardeleza declared that the DAP no longer exists.
“Because the DAP has fully served its purpose, the administration’s economic managers have recommended its termination to the President,” Secretary Abad said.
In his presentation, Secretary Abad said the DAP proved effective in spurring the economy, citing the credit ratings given by international creditors to the country.
Justice Abad then asked, citing Yolanda’s impacts on the economy, “If DAP worked, why stop it?”
Leonen asked Jardeleza if the petition against the DAP was the reason behind it. He denied it, but he insisted that petitions questioning the Constitutionality of the DAP are now rendered moot and academic.
Bolstering charges of unconstitutionality
Asked for comments, Bayan Muna Representative Carlos Zarate told the media, “Secretary Abad’s admission that there had been cross-border transfer of funds bolsters our claims that the DAP and NBC 541 are unconstitutional.”
“The DAP was used by the President to exert influence even on the independent commissions,” he said, referring to COA and Comelec.
“The executive, through the DAP, trampled upon the Constitution and did not respect the power of the purse of Congress,” Zarate added.
Zarate also criticized the Aquino administration for its “double talk” on transparency.
Jardeleza challenged the petitioners to choose among the 116 DAP projects to scrutinize. But requests to the DBM by Bayan Muna for documents about DAP releases have not been attended to until now, according to Zarate.