MIRIAM: SCANDALOUS DAP IS PRESIDENTIAL PORK / DIOKNO: DAP IS UNCONSTITUTIONAL

MANILA NOVEMBER 11, 2013 (ABS-CBN) by Ira Pedrasa - Senator Miriam Defensor Santiago said the Disbursement Acceleration Program (DAP) is illegal and a mere presidential pork.

She said the “scandalous” DAP may even destroy the congressional power of the purse, noting that it was not contained in the 2011 and 2012 budgets.

In a statement, Santiago cited the Constitution that provides that, “No law shall be passed authorizing any transfer of appropriations; however, the President…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.”

While fund transfers are allowed, she said this can only be legal if the savings came from projects completed – not merely deferred.

“The first issue is that the DAP was not taken from savings.

"The second issue is that the DAP was not used to augment items in the budget that were previously authorized by Congress.

"The alleged savings were used to augment new budget items not previously authorized by Congress,” she said.

Thus, the Department of Budget and Management (DBM) should have sought the approval of Congress for the transfers, Santiago said.

No Congressional approval

She noted that President Benigno Aquino III authorized the DBM to set aside P85.5 billion for the DAP in 2011 without congressional approval.

“The budget secretary released a list of the beneficiaries of the DAP. The variance of the beneficiaries – lumping together P10 billion to the National Housing Authority, with P50 million for every senator in 2012 – indicates that the DAP is nothing more or less than the huge pork barrel of the President, spent without the participation of the Congress,” she said.

To prevent the DAP from destroying the congressional power of the purse, Congress should enact a law similar to the 1974 Congressional Budget and Impoundment Control Act of the United States.

Santiago said that it was Aquino himself who first proposed a Budget Control and Impoundment Act when he was still senator.

“Under American law, if the President discovers an enacted appropriation which has not been spent, the President cannot just cancel the appropriation. The President must first ask Congress for a rescission, meaning a cancellation or cut-back of appropriated funds for a project no longer considered necessary. The President cannot act by himself alone. Such a law would restore the balance of power between the executive and legislative branches,” she said.

“Pres. Aquino’s proposed impoundment law takes a fiscally responsible position. If he doesn’t mind, I will simply refile it in the Senate, with an explanatory note that it was originally filed by Pres. Aquino,” Santiago said.

FROM MANILA SPEAK.COM
BEN DIOKNO: ECONOMIC UNDERSTANDING

Dr. Benjamin Diokno is a Professor of Economics at the University of the Philippines. He was Secretary of the Department of Budget and Management during the Estrada Administration and Undersecretary for Budget Operations during the first Aquino Administration. Under the regime of President Corazon Aquino, Diokno was responsible for major reforms during the Freedom Constitution such as the design of the 1986 Tax Reform Program which introduced the value-added tax (VAT). Under President Estrada, he introduced the "what you see is what you get" or WYSIWIG Policy which simplified the system of fund release for the General Appropriations Act (GAA).

There’s No DAP in the 2011 Budget Law; Therefore the DAP is Unconstitutional: Part I http://www.manilaspeak.com/author/ben-diokno/

The Philippine Constitution allows the use of ‘savings’ to augment any item in the General Appropriations law for their respective offices — the President for the Office of the President, the Senate President for the Senate, the Speaker for the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions.

NoDAP

A major puzzle in the Disbursement Acceleration Program (DAP) controversy is the source of P72.2-billion ‘savings’ — later expanded to P85.5 billion.

This puzzle will be clarified or further obfuscated when the cases questioning the constitutionality of the DAP are finally heard by the Supreme Court on November 11th.

The focus of this piece is on the item or items in the general appropriations law that were augmented.

Were the items new or existing? The augmentation is unconstitutional if the item or items augmented were new, meaning not specified in the General Appropriations Law (GAA). If the item augmented does not exist, it cannot be augmented. Put differently, by definition, it is not possible to augment a non-existent item.

Sadly, there is no formal legal issuance creating the DAP.

But I suspect that somewhere in the bowels of Malacañang, there exists a Memorandum for the President that originated from the Department of Budget and Management (DBM) seeking presidential approval for the creation of the DAP.

On the surface, however, a press release was issued by DBM announcing the creation of the DAP. The announcement stated some of the uses of the DAP.

In many cases, the appropriations of an agency were augmented by huge amounts.

The question is: how were the equivalent ‘savings’ generated? For example, the NHA budget was augmented by P11.05 billion which leads to the question: how much ‘savings’ did NHA generate from its the authorized appropriations? Another example: The DILG budget was augmented by P7.25 billion. Where did its savings come from? The list could go on and on.

Clearly, the augmentation for many agencies came not from their own savings but from DAP — a huge receptacle of all ‘savings’ from all authorized appropriations (agency and special purpose funds).

DAP is a colossal laundering machine where all ‘savings’ are cleansed, dried, pressed, and then reissued as new authorities to spend for programs, projects and activities that have not gone through prior congressional review.

Interestingly, DAP was not an item in the 2011 and 2012 general appropriations laws. Since DAP did not exist in the budget law, it stands to reason that it cannot be augmented.

Savings and Augmentation

The controversial Disbursement Acceleration Program of 2011(DAP 2011) is much bigger than we originally thought. When first announced via a press statement posted on the Department of Budget and Management (DBM) website on October 12, 2011, DAP 2011 was worth P72.1 billion. Four months later, on January 9, 2012, a press release posted on www.gov.ph said that the President has approved an additional P13.4 billion. In sum, DAP 2011 was worth P85.5 billion, not P72.1 billion.

Questions: How did DBM Secretary Butch Abad generate so much savings? Was the savings real or contrived?

The budget rules on savings and augmentation follow from the Constitution and the General Appropriations Act (GAA). The rules are sound but apparently largely ignored. The 1987 Constitution states:

“Sec.25(5) 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 Constitution 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.”

Executive Order 292 otherwise known as the Revised Administrative Code of 1987; issued on July 25, 1987, four months after the 1987 Constitution was ratified; is consistent with the above provision.

The general rule is that no law shall be passed authorizing any transfer of appropriations. The term ‘realignment’ is not even mentioned in the Constitution.

The GAA of 2011 (and prior and subsequent years) defines savings and augmentation as follows:

“Section 60. Meaning of Savings and Augmentation. Savings refer to portions of balances of any programmed appropriation in this Act, free from any obligation or encumbrances or encumbrance which are: (i) still available from the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (iii) from appropriations balances realized from the implementation of measures resulting in improved systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and services approved in this Act at a lower cost.”

“Augmentation implies the existence in this Act of a program, activity, or project with an appropriation, which upon implementation, or subsequent evaluation of needed resources, is determined to be deficient. 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 this Act.”

Under (i), savings is generated after completion of a project. For example, if a P10-million project is completed at a cost of P8 million, the P2 million savings is generated. It has to be completed, not simply awarded, because there is a possibility of change order down the road. Question: how can the Aquino administration generate so much savings when precisely it has failed to move its projects? No progress, no savings.

For projects that are abandoned or discontinued, the decision to do so has to be final, that is, the discontinued project will not reappear in future budgets. Postponing the implementation of a slow-moving project does not create savings. The decision to postpone has monetary implications in the next fiscal years. Note that the agency concerned has two years to implement capital projects; some projects may even be implemented over several years.

Of course, savings due to efficiency gains is allowed. That’s the spirit of item (iii) above. Adoption of new or improved technology which allows an agency to deliver what was promised for less is real savings.

Given the above, I’m amazed at the ability of Mr. Abad and DBM to put together P85.5 billion worth of savings for 2011. Note, too, that the DAP 2011 was assembled even when the fiscal year was still in progress, meaning agencies of government still have a full quarter left before the end of the fiscal year.

Augmentation of appropriations within the respective offices from savings is allowed. But for this to happen, the following necessary conditions must be present and observed:

First, the savings must come from items included in the General Appropriations Act (GAA); second, the item(s) to be augmented exist or included in the GAA; third, the item(s)/sources of savings and item(s) to be augmented must be within the appropriations of the authorized official; and fourth, ‘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 this Act (meaning the GAA).

Savings-and-Augmentation2

When Secretary Abad declared it as ‘savings’, in the middle of the fiscal year, part of the appropriation of an agency because it is slow moving, that effectively denies the head of the agency the ability to catch up and deliver what he promised Congress. That’s unfair and illegal.

And when Mr. Abad caused the realignment of ‘savings’ for some new projects, without getting congressional approval, he effectively created a new budget within the budget as approved by Congress, altered the authorized priorities, and changed the targeted beneficiaries. Such act is patently illegal.

DAP 2011 which generated P85.5 billion ‘savings’ and its subsequent use for items not in the GAA have raised a lot of legal issues.

It is hoped that the Supreme Court will exercise its constitutional duty as the ultimate arbiter of the law, define clearly the balance of powers, and rule in a manner that will strengthen political institutions and the system of checks and balances.

Will a stronger, more respectable and truly independent Supreme Court emerge from this budget controversy?


Chief News Editor: Sol Jose Vanzi

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