Government ‘stimulus’ unconstitutional — SC

Categories: Business Updates

Date Posted: 02 Jul 2014

THE SUPREME COURT yesterday struck down “acts and practices” under the Aquino administration’s Disbursement Acceleration Program (DAP) for violating constitutional provisions on the transfer of appropriations and separation of powers.

With one justice abstaining, the high court “partially granted” petitions for review and prohibition questioning the DAP’s validity and its related executive issuances, particularly National Budget Circular 541.

Among the practices voided was the withdrawal of unobligated allotments from implementing agencies and declaring these, as well as unreleased appropriations, part of savings before the end of a fiscal year. The SC said this did not conform to the definition of savings under the General Appropriations Act (GAA).

The “cross-border” transfer of funds from the executive to other branches of government and the funding of projects not included in the GAA were likewise struck down.

“The Court further declares void the use of unprogrammed funds… for noncompliance with the conditions provided in the relevant General Appropriation Acts,” SC Spokesperson Theodore O. Te said in a briefing where he also announced that the high court had upheld the constitutionality of the Reproductive Health Law.

Mr. Te said the DAP, in particular, violated Article 6, Section 25 (5) of the 1987 Constitution stating that “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.”

The DAP was a stimulus package designed to fast-track public spending and push economic growth. It was approved by President Benigno S. C. Aquino III on Oct. 12, 2011, with funds to be sourced and augmented out of “savings” generated during the year and additional revenue sources. A total of P83.53 billion was released under in 2011 and another P58.7 billion in 2012. The initiatives funded included P30 billion of the government’s required P50-billion equity infusion in the Bangko Sentral ng Pilipinas.

The government, in its defense, said it was within the President’s power to spend and augment the budget, insisting that the DAP is a “fund management system” and not a “fund” as claimed by petitioners.

The high court’s Mr. Te sidestepped a question on Budget Secretary Florencio B. Abad’s liability as one of the main defendants, but a legal expert from the University of the Philippines-College of Law said Mr. Abad could face administrative sanctions.

“It amounts to malversation except there’s no element of whether or not Secretary Abad benefited from it. At the very least, there is an administrative liability,” UP professor Herminio Harry L. Roque said.

Mr. Abad, for his part, said in a text message: “I will reserve my comment until I read the full text of the SC decision.” The Budget department, meanwhile, said: “We will yield to the Office of the President to issue a statement on the SC decision on the DAP.”

Deputy Presidential Spokesperson Abigail F. Valte said the Palace was deferring comment pending receipt of the court ruling.

A copy of the decision written by Associate Justice Lucas P. Bersamin was not made immediately available. Five other magistrates will likewise write separate opinions on the DAP’s constitutionality, namely Associate Justices Estela M. Perlas-Bernabe, Mario Victor F. Leonen, Arturo D. Brion, Mariano C. del Castillo and Antonio T. Carpio.

A member of the 15-person tribunal, who asked not to be named for lack of authority to speak to the press, said in a text message that the ruling, which strikes down the four practices, “effectively covers the entire DAP.”

“[The] word ‘partially grant’ was used because other prayers of petitioners, like disclosure of documents, were not granted because they were moot,” the Justice said.

Senator Miriam Defensor-Santiago, meanwhile, lauded the decision.

“It’s basically a no-brainer. The DAP is illegal because it was not contained in the 2011 or 2012 budgets, and because the alleged savings were used to augment new budget items which were not previously authorized by Congress,” she said in a statement.

Business groups, meanwhile, asked if the decision would affect the Aquino administration’s reform efforts.

Gregorio S. Navarro, Management Association of the Philippines president, said: “The SC has declared PDAF (Priority Development Assistance Fund) illegal, hence it would have been highly unusual not to likewise declare DAP illegal, at least partially so. The question is what next?”

Peter Angelo V. Perfecto, Makati Business Club executive director, who noted that the DAP had addressed the business sector’s concern over an infrastructure project slowdown, said the court ruling “will better guide our government in the prudent management and utilization of public resources.”

“We recall that DAP was the means by which government accelerated much needed infrastructure projects that had slowed down due to careful review by the Aquino administration of all projects in line with its policy of zero tolerance for corruption,” Mr. Perfecto said.

Nine petitions were filed questioning the DAP. These came from the Volunteers Against Crime and Corruption; Confederation for Unity, Recognition and Advancement of Government Employees; losing senatorial candidate Greco Antonious Beda B. Belgica and two others; lawyer Manuelito R. Luna; Integrated Bar of the Philippines; Philippine Constitutional Association; Jose Malvar Villegas Jr.; militant leaders and party-list lawmakers; and former Iloilo Representative Augusto L. Syjuco, Jr. — Mikhail Franz E. Flores and Bettina Faye V. Roc with reports from Ailyn D. Galura and Daryll Edisonn D. Saclag



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