The following privilege speech by Rep. Neri J. Colmenares (Bayan Muna) on October 14, 2013 at the House of Representatives is an excellent exposition on the unconstitutionality and illegality of Pres. Aquino’s Disbursement Acceleration Program (DAP).

Mr. Speaker, my colleagues, on July 18, 2012, the Department of Budget Management issued a strange Circular, never before issued in Philippine history—National Budget Circular 541. In that Circular, Malacanang declared that due to the “under-spending of various agencies”, the President ordered on June 27, 2012 “the withdrawal of all unobligated allotments of all agencies with low level of obligations as of June 30, 2012 both for continuing and current allotment”.

This means that even if Congress expressly ordered the allotment of funds for a certain project for the 2012 Fiscal Year, said appropriation will be withdrawn by the President if it remained unobligated by June 30, 2012. The said funds are realigned and pooled as Disbursement Acceleration Program (DAP)—the latest and worst form of Presidential pork barrel. It is the highest form of presidential pork barrel because while ordinary pork barrels are provided by law, the DAP is not found in any law, but is a unilateral action through presidential fiat.

The pooled withdrawn allotments, according to Section 5.7 of the same Circular, may be spent or disbursed in the following manner:

1. Reissued later to the original program or projects from which it was withdrawn or realigned to other existing programs and projects of the agency from where it came;
2. Augment existing programs and projects of other agencies; and
3. Fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented within the current year

What is strange about this circular, Mr. Speaker, is that it practically circumvents the appropriations approved by Congress for the year by realigning these to other projects, many of which were never even considered by Congress when it approved the budget, nor found in the General Appropriations Act.

Can Malacanang claim these “midyear” withdrawn funds as savings that it can realign to other items? Unfortunately for the president, such withdrawal is unconstitutional and unlawful.

Firstly, no part of a fund appropriated for a fiscal year can be deemed as savings before the end of that fiscal year. When Congress allocated funds for Fiscal Year 2012, Congress intended that these funds be available for spending in a particular budgetary item for the entire year of 2012. There can be no savings before the end of the fiscal year for which appropriations were made by Congress, otherwise that would be tantamount to a presidential amendment of the appropriations law or vetoing an item in the GAA unilaterally without giving Congress the opportunity to override that veto.

Secondly, the funds do not fall into the category of savings under the law. Not only is the DAP and NBC Circular 541 unconstitutional because there can be no savings midyear, but the funds withdrawn and realigned does not even qualify as savings under the law. Pres. Aquino’s recourse, therefore, to the Constitution, the Administrative Code and even the General Appropriations Act, to justify DAP as a legitimate realignment of savings is without legal basis. The President failed to notice that even the law he cites to define savings does not grant legitimacy to NBC Circular 541 and DAP. He cites Section 54 of RA 10155 or the General Appropriations Act of 2012 as support, when on the contrary it provides that :

“Savings refer to portions or balances of any programmed appropriation in this Act free from any obligation or encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; xxx ; 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 lesser cost.”

Since President Aquino and even NBC Circular 541 admit that the withdrawn funds came from slow moving projects by under spending agencies, there is no way for the projects from which these realigned funds were withdrawn to be considered as “completed, discontinued with finality and abandoned.” In fact, the Circular allows the funds to be reissued to the “original program or project from which it was withdrawn” which means that the said program or project has not been completed or abandoned.

Surely, Pres. Aquino cannot also claim that the same came from balances realized from “improved systems and efficiencies” that enabled the agency to meet the target “at a lesser cost” when in fact the said withdrawal of funds as based on the inefficiency and lack of absorptive capacity.

Thirdly, these realigned funds cannot be spent on items not appropriated by law. Article VI Section 29 (1) of the Constitution provides “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law”. NBC Circular is not even a law and a DBM circular cannot trump the General Appropriations Act approved by Congress.

Even if the Constitution allows for the realignment of savings, the Constitution still requires a law to realign savings, as provided in Article VI, Section 25 (5):
“…the President, the President of the Senate, x x x 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.”

It must be noted that the Constitution prohibits the realigning funds to items not found in the General appropriations law. It only allows the realignment of funds to “augment any item in the general appropriations law”. This absolutely prohibits the passing of a law, much less a DBM circular, that will allow the president to realign savings to any item not found in the budget.
Even “augmentation” as defined by Executive Order 292 (Administrative Code), the General Appropriations Act and the DBM is limited to existing projects and programs found in the GAA. Section 54 of RA 10155 (2012 GAA) defines augmentation thus:

Sec. 54. Meaning of Savings and Augmentation.
X x x x
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.

NBC Circular 541, which provides under Section 5.7.3 for the realignment of savings to “Fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented within the current year”, clearly violates the Constitutional requirement of a law and the GAA requirement that savings fund only “existing projects”.

DAP in 2011

If the NBC Circular 541 is not sufficient to provide legitimacy and legal basis to DAP, the realignment of “savings” in 2011 without even a written circular from the President or the DBM is far worse. That Pres. Aquino started DAP in 2011 long before NBC Circular 541 was issued in October 2012 is admitted by Malacanang. Found in the DBM website is the following press release:

An October 12, 2011 press release from the Department of Budget and Management[1]
New, fast-disbursing projects to be funded from unused 2010, 2011 appropriations
Budget and Management Secretary Florencio B. Abad today said the Aquino government will implement P72.11 billion in additional projects in order to fast-track disbursements and push economic growth in light of the global slowdown and the onslaught of recent calamities.

“While there was a turnaround in our disbursement performance in August, it was not enough. That is why President Aquino instructed his government to execute these additional projects to bolster economic growth in 2011,” he said.

He said fast-disbursing and high-impact projects were selected for inclusion in the Disbursement Acceleration Plan for 2011

The following admissions in the above are fatal to the cause of Pres. Aquino:

(a) P72.11 Billion were withdrawn as savings and realigned to other projects as early as October of 2011
(b) The said realignment was undertaken upon the orders of Pres. Aquino. There was no law that allowed it.
(c) The DAP existed as early as 2011

In sum, DAP realignments and spending are unlawful and unconstitutional despite Circular 541, and the same realignments and spending in 2011 on the mere orders of the President is far more blatantly unconstitutional and unlawful.

Source of DAP

According to a DBM report[2] in the DBM website, the following were the sources of DAP came from the following items in 2011:

Abad explained that these new programs and projects will be provided with appropriation cover by: unreleased appropriations for personal services in 2011, to be pooled as savings and realigned (P30 billion); unreleased appropriations for discontinued or slow-moving projects in 2011 (P482 million); the realignment of 2011 budgetary items within agencies in favour of fast-disbursing projects (P7.75 billion); the 2010 unprogrammed fund, to be supported by windfall dividends from GOCCs (P12.34 billion); and unreleased appropriations for discontinued or slow-moving projects in 2010, which are carried-over as pooled savings in 2011 (P21.54 billion).

There is no way Malacanang can legally justify realigning in October 2011 the “unreleased appropriations for xxx slow moving projects in 2011”. Nor can they legally justify the realignment of “2010 unprogrammed fund” since the revenue collected by government did not overshoot its revenue target. Nor can they justify realigning “2011 budgetary items within agencies” before the end of 2011 because this will violate the 2011 GAA approved by Congress.

DAP Spending

The DBM reported a total of P142.23 Billion spent so far under the DAP, with P83.53 Billion spent in 2011 and another P 58.7 Billion in 2012. In 2013 another 15.13 Billion was released to the DILG “for modernization of the PNP” and “redevelopment of Roxas Boulevard”. These huge amounts were spent on budgetary items many of which were not in the 2011 or 2012 GAA passed by Congress, and Bayan Muna would very much want to hear Malacanang explain if these indeed were in the budget. These questionable items include the following:

(1) P4.5 Billion for MRT 3 to purchase “additional train cars” according to the DBM, when in fact, according to the DOTC, there will be no additional train cars until the end of the term of Pres. Aquino. Again, we urge COA to investigate where this Billion pesos DAP went.
(2) P1.82 Billion for the CPLA and MNLF through the amorphous PAMANA fund. Considering that Bayan Muna has found the DND spending approximately P300 Million in ghost MNLF and CPLA beneficiaries in the previous administration, this nearly 2 Billion pesos expense is highly questionable especially since its not found in the 2011 or 2012 GAA and must be investigated by COA.
(3) P26.9 Billion for GOCCs. These GOCCs, many of which are subject to controversies for the extravagant perks and benefits of its officials, have Billions as budgetary support under the Special Purpose Funds of the GAA, and another Billions in the Unprogrammed funds, will again be given a huge amount under DAP, is surely unconscionable. Again, how these funds were spent must be investigated by COA.
(4) P8.5 Billion “stimulus fund” for ARMM on top of its regular budget of P11.8 Billion. Since the 2012 Budget only allocated P11.8 Billion, then these additional Billions were not found in the 2012 budget
(5) P 625 Million just to conduct a survey on farmers and fisherfolks by DAR and DA
(6) Billions given to legislators including the P50-100 Million given to Senators during the impeachment trial of CJ Renato Corona as exposed by Sen. Jinggoy Estrada, the P475 Billion returned from DAR but realigned by Senators through the TRC, and another millions to congressmen, Sen. Joker Arroyo among others all of which are currently being audited by COA according to its Chairperson.
(7) P1.29 Billion for “Agrarian Reform Communities Project 2 of the DAR. We urge COA to investigate this item considering that this amorphous project of DAR “for agrarian reform beneficiaries” has been the subject of many irregularities including the P900 Million Malampaya fund currently under investigation. This ARC 2 has in fact be the subject of multi billion loan from ADB which has not been utilized for years and yet we pay huge interest for this huge fund which is just lying somewhere in a special account of the government.

Impoundment Provision in the GAA Must be struck down

The President may argue to that the GAA itself gives him the power to realign because it contains an impoundment provision. It is my considered opinion, my colleagues Mr. Speaker, that this impoundment provision castrates Congress and when we approve this provision in every GAA, we are in essence surrendering our plenary powers under the Constitution as the approving authority of the national budget. The impoundment provision must be struck down as unconstitutional because it allows for impoundment without the need for approval of Congress. This practically subverts the constitutional role of congress as the approving authority of the national budget.

Even if the impoundment provision in the GAA grants the President superior power over Congress on the issue of the national budget, still Section 64 and 65 of the GAA of 2012, does not allow for the DAP, to wit:

Sec. 64. Prohibition Against Impoundment of Appropriations. No appropriations authorized under this Act shall be impounded through retention or deduction, unless in accordance with the rules and regulations to be issued by the DBM: PROVIDED, That all the funds appropriated for the purposes, programs, projects and activities authorized under this Act, except those covered under the Unprogrammed Fund, shall be released pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.

Sec. 65. Unmanageable National Government Budget Deficit. Retention or deduction of appropriations authorized in this Act shall be effected only in cases where there is an unmanageable national government budget deficit.
Unmanageable national government budget deficit as used in this section shall be construed to mean that (i) the actual National Government budget deficit has exceeded the quarterly budget deficit targets consistent with the full-year target deficit as indicated in the Budget of Expenditures and Sources of Financing submitted by the President and approved by Congress pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear economic indications of an impending occurrence of such condition, as determined by the Development Budget Coordinating Committee and approved by the President.

Firstly, this impoundment clause must be read together with Section 65 which only allows the retention or deduction of appropriations in cases of “unmanageable national budget deficit”. Budgetary under spending by government agencies cannot be deemed an “unmanageable” budget deficit, but, on the contrary, may even result in savings, not deficit, if said funds remain unspent at the end of the year.

Secondly, the impoundment clause does not grant authority to the President to realign savings to non-existent projects not found in the GAA. We contend that the impoundment clause must be deleted by Congress and in lieu thereof, we incorporate in the 2014 GAA the anti impoundment provision found in Senate Bill 3121 filed by then Sen. Benigno S. Aquino III in 2009, which requires congressional approval of any impoundment of the president “within 60 days from the date of the President’s request for impoundment”. It absolutely prohibits impoundment should Congress withhold approval of the request.

Even if we deem the impoundment provision in the GAA of 2011 and 2012 as providing Pres. Aquino extraordinary powers over the budget, said provision does not save the DAP from its fatal infirmities.

DAP is a presidential pork barrel

The president has a huge amount of presidential pork—a fund, the disposition of which rests on the discretion of the pork holder to select the projects and their beneficiaries. Presidential pork, comes in various forms, such as lump sum amounts in the budget , over all savings, off budget lump sums such as the Malampaya fund, and most recently, the Disbursement Acceleration Program.

With these amounts under the control of the President, Congress has lost control of the power over the purse. Because the president can realign the budget anytime of the year, from projects approved by Congress, to projects and budgetary items not found in the GAA approved by Congress, the President has practically castrated Congress of its power to appropriate funds. The President in essence, drafts the budget, approves the budget and implements the budget, a form of budgetary dictatorship that is not only a source of graft and corruption but also patronage politics.

Mr. Speaker, my colleagues, the exercise of this power not only violates the Constitution but is an insult to Congress. While we ask the Supreme Court to declare the DAP and all forms of pork barrel unconstitutional, we ask Congress to take back the power of the purse and expressly prohibit the DAP and delete the impoundment provision in the general appropriations act. #

[1] Please see DBM website dbm.gov.ph
http://www.gov.ph/2011/10/12/aquino-goverment-pursues-p72-11-b-disbursement-acceleration-plan/ sighted October 12, 2013.

[2] http://www.gov.ph/2011/10/12/aquino-goverment-pursues-p72-11-b-disbursement-acceleration-plan/ sighted on October 13, 2013.


4 thoughts on “The Unconstitutional and Unlawful Disbursement Acceleration Program: Presidential Pork in its Worst Form

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