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A Citizens Opinion on DAP

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1 A Citizens Opinion on DAP on Sun Jul 27, 2014 9:16 am

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Arresto Menor
G.R.No. 209287
July 1, 2014

Maria C. Araullo et al
Petitioner
v.
Benigno S C. Aquino-
President of the Philippines,
Florencio Abad-Secretary DBM, et al
Respondent

A. Facts

Key Facts:

1. The President promulgated and implemented the Disbursement Acceleration Program (DAP) as a fiscal management policy that promotes acts wherein the General Appropriations Acts (GAAs) Law appropriations, PAPs of the Executive offices, are augmented with actual savings from other executive agency appropriations. The DAP also promote the acts of withdrawal of unobligated allotments and unreleased appropriations from the implementing agencies not considered as savings and unprogrammed funds, for the purposes of augmentation of Executive office projects, activities and plans (PAPs) items without any existing appropriation; or of other offices outside the Executive.

2. The Petitioners are people from sectoral representatives, members of Congress, civil groups and academe in their capacity as citizens and as taxpayers.

Background Facts :

3. The Aquino Administration in its review and cancellation of inherited appropriations and projects from the previous administration that were suspected to be onerous resulted in reduced government spending. The prevailing under spending in government disbursements for the first eight months of 2011 that dampened the country’s economic growth.

4. The DAP was conceptualized in September 2011 introduced in October 2011 and was approved by the President on October 12, 2011 upon the recommendation of the Development Budget Coordination Committee (DBCC) and the Cabinet Clusters, which the purpose is to fast-track public spending and push economic growth. Such government intervention was needed as key programs and projects, most notably public infrastructure, were moving slowly. The need to accelerate public spending was also brought about by the global economic situation as well as the financial toll of calamities in that year. While the economy has generally improved in 2012 and 2013, the use of DAP was continued to sustain the pace of public spending as well as economic expansion. According to the President, the stimulus package’s contribution of 1.3% percentage points to gross domestic product (GDP) growth in the last quarter of 2011 was recognized by the World Bank in one of its quarterly reports.

5. The DAP was terminated on December 28, 2013.

6. During the Supreme Court Oral Arguments on January 28, 2014:
a) In the interpellation by Justice Bersamin, Budget Secretary Florencio Abad expressly admitted the existence of cross-border transfers of funds.
b) The Office of the Solicitor General (OSG) further submits that “in relation to the DAP, the President made available to the Commission on Audit, House of Representatives, and the Commission on Elections the savings of his department upon their request for funds, but it was those institutions that applied such savings to augment items in their respective appropriations.”

7. The Supreme Court, upon careful review of the seven evidence packets, concluded that the “savings” pooled under the DAP were allocated to PAPs that were not covered by any appropriations in the pertinent GAAs. The seven evidence packets contained memoranda, SAROs, and other pertinent documents relative to the implementation and fund transfers under the DAP which the OSG has submitted in support of its argument.

8. On September 25, 2013, Senator Jinggoy Ejercito Estrada delivered a privilege speech in the Senate of the Philippines to reveal that some Senators, including himself, had been allotted an additional P50 Million each as “incentive” for voting in favor of the impeachment of Chief Justice Renato C. Corona. Responding to Sen. Estrada’s revelation, Secretary Florencio Abad of the DBM issued a public statement entitled Abad: Releases to Senators Part of Spending Acceleration Program, explaining that the funds released to the Senators had been part of the DAP and clarifying that the funds had been released to the Senators based on their letters of request for funding.
The statement did not include Senators who vote against the impeachment.

Circumstantial Facts

9. The DAP is implemented by NBC No. 541, an executive issuance statute with provisions :

5.4 All released allotments in FY 2011 charged against R.A. No. 10147 which remained unobligated as of June 30, 2012 shall be immediately considered for withdrawal. This policy is based on the following considerations:
5.4.1 The departments/agencies’ approved priority programs and projects are assumed to be implementation-ready and doable during the given fiscal year; and
5.4.2 The practice of having substantial carryover appropriations may
imply that the agency has a slower-than-programmed
implementation capacity or [that the] agency tends to implement
projects within a two-year timeframe.

5.5 Consistent with the President’s directive, the DBM shall, based on evaluation of the reports cited above and results of consultations with the
departments/agencies, withdraw the unobligated allotments as of June 30,
2012 through issuance of negative Special Allotment Release Orders
(SAROs).

5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and projects of the agencies/OUs
concerned, from which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs
and projects of the agency/OU; or
5.7.3 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. (Underlining supplied)

10. The DBM listed the following as the legal bases for the DAP’s use of
savings, namely:
(1) Section 25(5), Article VI of the 1987 Constitution, which granted to the President the authority to augment an item for his office in the general appropriations law;
(2) Section 38 (Suspension of Expenditure Appropriations), Section 39 (Authority to Use Savings in Appropriations to Cover Deficits) and Section 49 (Authority to Use Savings for Certain Purposes), Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative Code of 1987);

Section 38. Suspension of Expenditure of Appropriations. –
Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees.

Section 39. Authority to Use Savings in Appropriations to Cover Deficits. –
Except as otherwise provided in the General Appropriations Act, any savings in the regular appropriations authorized in the General Appropriations Act for programs and projects of any department, office or agency, may, with the approval of the President, be used to cover a deficit in any other item of the regular appropriations: provided, that the creation of new positions or increase of salaries shall not be allowed to be funded from budgetary savings except when specifically authorized by law: provided, further, that whenever authorized positions are transferred from one program or project to another within the same department, office or agency, the corresponding amounts appropriated for personal services are also deemed transferred, without, however increasing the total outlay for personal services of the department, office or agency concerned.

SECTION 49. Authority to Use Savings for Certain Purposes.—
Savings in the appropriations provided in the General Appropriations Act may be used for the settlement of the following obligations incurred during a current fiscal year or previous fiscal years as may be approved by the Secretary in accordance with rules and procedures as may be approved by the President:
(1) Claims of officials, employees and laborers who died or were injured in line of duty, including burial expenses as authorized under existing law;
(2) Commutation of terminal leaves of employees due to retirement, resignation or separation from the service through no fault of their own in accordance with the provisions of existing law, including unpaid claims for commutation of maternity leave of absence;
(3) Payment of retirement gratuities or separation pay of employees separated from the service due to government reorganization;
(4) Payment of salaries of employees who have been suspended or dismissed as a result of administrative or disciplinary action, or separated from the service through no fault of their own and who have been subsequently exonerated and reinstated by virtue of decisions of competent authority;
(5) Cash awards to deserving officials and employees in accordance with civil service law;
(6) Salary adjustments of officials and employees as a result of classification action under, and implementation of, the provisions of the Compensation and Position Classification Act, including positions embraced under the Career Executive Service;
(7) Peso support to any undertaking that may be entered into by the government with international organizations, including administrative and other incidental expenses;
(Cool Covering any deficiency in peso counterpart fund commitments for foreign-assisted projects, as may be approved by the President;
(9) Priority activities that will promote the economic well-being of the nation, including food production, agrarian reform, energy development, disaster relief, and rehabilitation.
(10) Repair, improvement and renovation of government buildings and infrastructure and other capital assets damaged by natural calamities;
(11) Expenses in connection with official participation in trade fairs, civic parades, celebrations, athletic competitions and cultural activities, and payment of expenses for the celebration of regular or special official holidays;
(12) Payment of obligations of the government or any of its departments or agencies as a result of final judgment of the Courts; and
(13) Payment of valid prior year’s obligations of government agencies with any other government office or agency, including government-owned or controlled corporations.

(3) the General Appropriations Acts (GAAs) of 2011, 2012 and 2013, particularly their provisions on the (a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of savings.


B. Issues

1. Whether or not certiorari, prohibition, and mandamus are proper
remedies to assail the constitutionality and validity of the Disbursement
Acceleration Program (DAP), National Budget Circular (NBC) No. 541,
and all other executive issuances allegedly implementing the DAP.
Subsumed in this issue are whether there is a controversy ripe for judicial
determination, and the standing of petitioners.

2. Whether or not the DAP violates Sec. 29, Art. VI of the 1987
Constitution, which provides: “No money shall be paid out of the
Treasury except in pursuance of an appropriation made by law.”

3. Whether or not the DAP, NBC No. 541, and all other executive
issuances allegedly implementing the DAP violate Sec. 25(5), Art. VI of
the 1987 Constitution insofar as:
(a) They treat the unreleased appropriations and unobligated allotments withdrawn from government agencies as “savings” as the term is used in Sec. 25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013;
(b) They authorize the disbursement of funds for projects or programs not provided in the GAAs for the Executive Department; and
(c) They “augment” discretionary lump sum appropriations in
the GAAs.

4. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of checks and balances, and (3) the principle of public
accountability enshrined in the 1987 Constitution considering that it
authorizes the release of funds upon the request of legislators."

5. Whether or not factual and legal justification exists to issue a
temporary restraining order to restrain the implementation of the DAP,
NBC No. 541, and all other executive issuances allegedly implementing
the DAP.


C. HOLDING


1. The petitioners was granted with taxpayers standing due to transcendental importance of the case and the Petition was partially granted.

2. The DAP in its entirety has legitimate and illegitimate acts and practices Only acts and practices violative of Section 25(5), Article VI of the 1987 Constitution and the doctrine of separation of powers, declared as UNCONSTITUTIONAL are limited to :

1. The acts and practices under the Disbursement Acceleration Program, National Budget Circular No. 541 and related executive issuances as follows:

(a) The withdrawal of unobligated allotments from the implementing
agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year
and without complying with the statutory definition of savings contained in the General Appropriations Acts;

(b) The cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive; and

(c) The funding of projects, activities and programs that were not
covered by any appropriation in the General Appropriations Act,

2. The use of the Unprogrammed Fund despite the absence of any proof (certification by the National Treasurer ) that the general condition for its use under the relevant GAAs, i.e., revenue collections were in excess of the original revenue targets, was complied with, and without any justification that the exceptive conditions for such use did concur .

3. Under the principle of operative fact, the liability and remedy for ongoing PAPs affected shall not apply. The liability of executives involved shall be determined by a separate proceedings in a proper court.

D. Opinion

The opinion shall be discussed in the following structure.
1. Actual Controversy
2. Source of Controversy
Savings
Withdrawal of Unobligated Allotments
Unprogrammed Funds
Harmonizing Sec. 38, Sec.39 & Sec.49 of Ch. 5 Book VI E.O.292 Admin Code with Sec25(5) Article VI of 1987 Constitution.
DAP
3. Summary of Opinion


1. Actual Controversy

Under Section 1, Article VIII of the 1987 Constitution, in order for the Court be compelled to perform its duty “to settle actual controversies…, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.”, is that there shall be an actual controversy and that petitioners have a standing to sue.

The grounds held by the petitioners in challenging the constitutionality of DAP had factual basis on a Senator’s revelation and the Budget Secretary’s admission. The act admitted by the respondents had legal basis (See Fact # 10). Clearly in the DAP case there exist a conflict of legal rights and an assertion of opposite legal claims, which comprises a case of an “Actual Controversy” as qualified in Belgica v. Executive Secretary Ochoa (G.R.No. 208566, November 19, 2013).

Although the DAP is terminated as a program, its act may well be committed again through a different name in the future since the purpose it will not cease, even the President himself admitted that past administrations employed programs similar to the DAP. Thus despite being moot, the DAP case is capable of repetition yet evading review.


Sustaining a direct injury as a requisite of being given a Standing was waived by the Court in cases with “Transcendental Importance” following the jurisprudence of CREBA v. ENERGY REGULATORY COMMISSION (ERC) AND MERALCO (G.R. NO. 174697, July 8, 2010).

The elements of Transcendental Importance test are: (1) the character of the funds or other assets involved in the case; (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government; and (3) the lack of any other party with a more direct and specific interest in raising the questions being raised. The facts of the case have met the all the elements since: (1) public funds are involved, (2) there is a real claim of unconstitutionality of the challenged DAP program and (3) only taxpayers are the interested party, therefore the DAP case is a case of transcendental importance .

The petitioners have standing to sue as taxpayers because disbursement public funds is involved and with it the real interest of taxpayers who contributed to the fund, to challenge any illegal method of using tax money as well as their capacity to suffer from the effects of any illegality. Pascual v. Secretary of Public Works (G.R. No. L-10405, December 29, 1960)

With the above established requirements, the Court has the jurisdiction to exercise judicial power and that the petitioners have the standing to sue.


2. Source of Controversy

a. Savings

The actual controversy over DAP comes from the definition of savings and its application on the implementation of the national budget.

1. The common meaning of the word “Savings” from Webster’s Dictionary provides; “the excess of income over consumption expenditures”.

2. The legal definition can be taken directly from text of the GAA law :

2011 GAA Sec. 60. Meaning of Savings and Augmentation.

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;
(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 lesser cost.


The validity of appropriations is provided in the General Provisions of the 2011 GAA as stated:
Sec. 65. Availability of Appropriations.
Appropriations for MOOE and capital outlays authorized in this Act shall be available for release and obligation for the purpose specified, and under the same special provisions applicable thereto, for a period extending to one fiscal year after the end of the year in which such items were appropriated: PROVIDED,
That appropriations for MOOE and capital outlays under R.A. No. 9970
shall be made available up to the end of FY 2011: PROVIDED, FURTHER, That a report on these releases and obligations shall be submitted to the Senate Committee on Finance and the House Committee on Appropriations. (Boldfacing supplied)

The Savings to be construed under the GAA as unobligated balance appropriation from obligated allotments that had resulted in the finality, which are completion or discontinuance or abandonment, of the “work or purpose” and that contributed to its unencumberance. Further qualification is given by the validity clause of the appropriations: 1 to 2 years for Capital outlay and MOOE. This follow the ordinary concept of savings that it is only after the completion of the works for which the expenditures were made, and lapse of the valid accounting period can savings be savings be realized. Due to the fact that it is possible that purchases can still occur within that remaining period and portion of work.

3. Alleged savings realized from the difference between programmed appropriation and obligation gained from prudent procurement decisions as it will be available after the work had been final is not tenable with GAA definitions since the programmed allotment did not resulted in the finality of the work or purpose.

Thus “GAA defined Savings” are only remaining unobligated appropriations from, a) completed or discontinued or abandoned PAPs ; or b) unpaid salaries; or c) reduced capital cost due to improvements, accounted after expiration validity period and that results in the completion of the work unless discontinued or abandoned.


b. Withdrawal of Unobligated Allotments


From Sec 2(2) Ch.1, Book VI, E.O.-292 Administrative Code, “Allotment “ are referred to as an authorization issued by the Department of the Budget to an agency, which allows it to incur obligation for specified amounts contained in a legislative appropriation.

An unobligated allotment refers to the portion of released appropriations which has not been expended or committed. It is usually a “Capital Outlay and Maintenance and Other Operating Expenses and cannot be considered as “savings” in the middle of the fiscal year as stipulated in Sec 65 of the 2011 GAA.

Augmentation refers to increase in value of appropriation item with decrease in another. Realignment is the transfer of funds without change in the value of an appropriation.

A withdrawn unobligated allotment can only be declared as savings if it complies with the GAA definition and had obtained results for its use in the appropriation for which it was intended.


c. Unprogrammed Funds

One of the sources of the DAP is the Unprogrammed Fund which are profits from fees collected by agencies, proceeds from sales of government assets and dividends from shares of stock in government-owned and controlled corporations. Unprogrammed funds are not savings but revenues, like tax collections, that go directly to the National Treasury. It form part of the unappropriated surplus of the General Fund of the Government and they cannot be spent unless there is an appropriations law.
The condition for the release of the Unprogrammed Fund under the 2011 GAA (and other similar sections) state:
2011 GAA (Article XLV) Special Provision(s)
1. Release of Fund. The amounts authorized herein shall be released
only when the revenue collections exceed the original revenue targets
submitted by the President of the Philippines to Congress pursuant to
Section 22, Article VII of the Constitution, including savings generated
from programmed appropriations for the year x x x. (Boldfacing supplied)

The certificates submitted by the DBM shows only the total dividends or revenue but did not indicate the original revenue targets. In this regard the DBM has failed to show that the express condition in the GAAs has been met for the use of the Unprogrammed Fund.

Thus, disbursements from the Unprogrammed Fund under the DAP and NBC 541 were in violation of the law.


d. Harmonizing Sec. 38, Sec.39 & Sec.49 of Ch. 5 Book VI E.O.292 Administrative Code with the 1987 Constitution

While the Legislative branch holds the power of the purse, the Executive branch is tasked with implementing the budget. Given the resources and the view of the prevailing fiscal deficit, the authority to manage and respond to incoming contingencies is provided by Sec 38, 39 and 49 of Chapter 5, Book VI of the Administrative Code (see Fact # 10).




By the established principles of statutory construction, the given sections 38, 39 and 49 shall be interpreted as subservient to the intent of the 1987 Constitution as provided in Sec 1(6) Chap. 1 Book VI of the same code as follows:
Section 1. Constitutional Policies on the Budget. –
(6) 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 laws for their respective offices from savings in other items of their respective appropriations.
Under Section38, the power suspend or stop an expenditure is applied on obligated allotments, this cannot be interpreted to mean as unobligated allotments since the words used in the text such as “suspend”, “stop” and “further expenditure of funds” needs a prior beginning before realization, thus, an allotment needs to be obligated before it can suspended or stopped. Although the GAA’s are silent on the standards to be used for final discontinuance of a PAP, the discretion of the President is limited by standard of public interest and welfare. Section 38 does not promote “impoundment” as impoundment operates on the value of the appropriation itself and available only in the circumstance of a national deficit under Sec. 67 of 2011 GAA.

As a general rule, the President is mandated to automatically release the appropriations under the GAA law, however Sec.38 is an exception that can applied in case of a PAP determined to be illegal or involves irregular, unnecessary, excessive, extravagant, or unconscionable uses of government funds and properties.

The President may not need to invoke Sec.38 in case of preventing the commencement of an obsolete or onerous (post veto) GAA appropriation. He can instead disapproved the release of the appropriation which is an exercise of executive power to faithfully execute the law as per the requirement that “funds are utilized and operations are conducted effectively, economically, and efficiently” under Sec 3 Chapter 5, Book VI of the Administrative Code .

Under Sec.39, only if there is a deficit or lack of treasury funds can the funds, considered as savings, can be realigned to a regular appropriation within the same branch. Under Sec. 49, only savings shall be applied in the context of contingency as per the nature of the items on the list.

In the interpretation of statutes, a provision should not be given an interpretation that renders the general Statute it qualifies as entirely inutile or ineffectual. The principle follows from the maxim “Ut magis valeat quam pereat”, that is, we choose the interpretation which gives effect to the whole of the statute – its every word. (Inding v. Sandiganbayan, G.R. No. 143047, 14 July 2004)

It is important to ensure that on implementing Sec.39 and 49, the limitations imposed by Sec 25(5) and 29, Art.VI of the Constitution shall not be violated.

Section 29(1) of Article VI of the 1987 Constitution, expressed state a duty for the Legislature that :

“No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.”

The Executive branch would do well to faithfully obey as well.
Section 39 and Sec.49 shall not be interpreted as to violate the Constitution, thus the savings to be allocated is presumed to be covered by an existing appropriation. More importantly in implementing Sec.49, the value of an obligation to be paid is intended to be substantial enough to be covered by savings alone. The listed items Sec.49(1) to (13) shows “exigency and unpredictability” as its nature, thus the proper appropriation must come from any “Contingency fund” of the GAA, which is a lump sum item suitable for liquidation-type of obligations. Thus construing Sec.49 as a blanket authority to disburse funds to any expenditure or realign bulk allotments to non-GAA appropriation is highly arbitrary for it does not follow the reason of the law.

Section 25(5) of Article VI of the 1987 Constitution, expressed state a duty for the Legislature that :
Section 25. x x x
x x x x
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 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.
x x x x

The following must concur in order to fulfill the law for transfer savings to be valid, (1) there must be a law authorizing the heads of offices to transfer savings for augmentation purposes-under Sec.59, 2011 GAA, or similar provisions, (2) there must be savings from an item/s in the appropriations of the office, (3) there must be an item requiring augmentation in the appropriations of the office, (4) the transfer of savings should be from one item to another of the appropriations within the same office and (5) Only a head of an office can augment his own respective branch.

Article 25(5) is intended to maintain the separation of power between the co-equal branches in order to prevent patronage politics, based on the deliberations of the 1987 Constitutional Commission (II Record Constitutional Commission 88 July 22, 1986).

Thus the Administrative Code E.O.292, Ch. 5 Book VI statute provisions: section 38, section 39 and section49(9) should be construed with intent as to maintain the separation of power between the co-equal branches in order to prevent patronage politics


e. DAP

1. LEGITIMATE ACTS
From the above laws and definitions, the DAP and its implementing executive issuance, NBC-541 can be view more carefully. The legitimate acts and practices of DAP includes;

(a) Transfer of appropriation of a branch to an appropriation on the same branch from savings of an appropriation under GAA savings definition, made by the Head of that branch according to GAA definition of savings.

(b) Suspension of expenditure authorized in the GAA or obligated allotment, reversion of obligated funds to the National Treasury or General Fund for reservation, as required by public interest under Sec.38 Ch.5 Book VI EO-292 Administrative Code.

(c) Stopping of expenditure authorized in the GAA or obligated allotment as required by public interest, in either of the following manner: completion or final discontinuance or abandonment of the work under Sec.38 Ch.5 Book VI EO-292 Administrative Code.

(d) Withdrawal and transferring or realigning the obligated allotment to an appropriation undergoing a budget deficit for the same branch of government


(e) Withdrawal and transferring or realigning the balance of programmed appropriation (unobligated allotment as savings under GAA definition) to an appropriation undergoing a budget deficit under Sec.39 Ch.5 Book VI EO-292 Administrative Code, for the same branch of government.

(f) Withdrawal and transferring or realigning the balance of programmed appropriation (unobligated allotment as savings under GAA definition) to PAPs listed in Sec.49(9) of a Contingency appropriation during or after exigent conditions under Sec.49 Ch.5 Book VI EO-292 Administrative Code, for the same branch of government.

(g) Augmenting any appropriation of a branch from the balance of programmed appropriation (unobligated allotment as savings under GAA definition) to deficient appropriation for the same branch of government by the Head of that branch, under Section 25(5) of Article VI of the 1987 Constitution.




2. ILLEGITIMATE ACTS

The illegitimate acts and practices of DAP includes;

(a) Any cross-border transfers of the savings of the Executive to
augment the appropriations of other offices outside the Executive.

The is a clear violation of Sec25(5) Art VI of the Constitution since only a Head of Branch or Office can augment appropriation of his own branch through his own department’s savings. This is what can be understand directly from the letter of the law. Its spirit is to strengthen the separation of powers and independence of the Co-equal Branches in order to prevent patronage politics. As aptly stated in Demetrio v. Alba (G.R. No. 71977 February 27, 1987) :
“ the prohibition to transfer an appropriation for an item to another [Sec.16(5)1973Constitution is similar to Sec 25(5) 1987 Constitution], among others, were all safeguards designed to forestall abuses in the expenditure of public funds. ..in view of the unlimited authority bestowed upon the President, "... …opens the floodgates for the enactment of unfunded appropriations, results in uncontrolled executive expenditures, diffuses accountability for budgetary performance and entrenches the pork (barrel) system as the ruling party may well expand [sic] public money not on the basis of development priorities but on political and personal expediency."

(b) The funding of projects, activities and programs that were not
covered by any appropriation in the General Appropriations Act.

This is a direct violation of Sec.29(1) Article VI of the Constitution. The Executive is substituting its will when it spends for something that is not lawfully deliberated and granted by legislature. Article 5 of the Civil Code states:
Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity.

The sections 39 and 49 Ch.5 Book VI EO-292 Administrative Code as an authorizing law for act (b) is not valid since they as to be applied according to the constitution, therefore any act of funding of PAPs that were not covered by any appropriation in the GAA shall be void.


(c) The withdrawal of unobligated allotments from the implementing
agencies, and the declaration of the withdrawn unobligated allotments and
unreleased appropriations as savings prior to the end of the fiscal year and without complying with the GAA definition of savings.

The DAP and its implementing executive issuance: NBC 541 can permit this to occur, (see circumstantial fact) with this provision:

5.5 Consistent with the President’s directive, the DBM shall, based on evaluation of the reports cited above and results of consultations with the
departments/agencies, withdraw the unobligated allotments as of June 30,
2012 through issuance of negative Special Allotment Release Orders
(SAROs).

5.7 The withdrawn allotments may be:
5.7.3 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.

The circumstance is ripe with opportunities for corruption. A collusion between the Executive and Legislature can bloat an appropriation; to let say Php 10B when, by proper vendor appraisal, the firm cost to complete is only Php 1B and will be the same value when awarded. If released to the full appropriation value, the unobligated allotment of Php 9B, which is the balance, can be claimed as “savings” since “it is still available after completion of the project”. While innocently invoking Sec.49 Ch.5 Book VI Administrative Code, the so called “savings” can be : “used for the settlement of the following obligations …(9) Priority activities that will promote the economic well-being of the nation, including food production, agrarian reform, energy development, disaster relief, and rehabilitation.” which the Executive can claim under that provision, as not needing legislative appropriation. The PAPs in this process may invite bogus NGO’s to implement it and from there the funds can be channeled to the Legislators and Executive involved.

The act of declaring as “savings” of an unobligated allotment and unreleased appropriations while contrary to GAA definitions, is faulty because it qualifies the allotment as funds for non-appropriated PAPs when Sec.49 Ch.5 Book VI EO-292 Administrative Code is invoked. This gives the PAPs a legal facade to continue when it is really being unconstitutional.

The DAP and its implementing executive issuance: NBC 541 can permit to occur a scenario of “Executive and legislative collusion, bloated appropriations, funds as defective savings and in-border or cross-border transfer of funds to non-appropriated PAPs” and therefore the illegitimate acts should be strictly prohibited.















3. Summary of Opinion

The current Aquino administration had inherited suspicious and onerous contracts formed by the connivance of both legislators and executives of the previous administration. The power to veto appropriations for these contracts had already lapsed. In the interest of the public, the President can stop these expenditures under Sec.38 Ch.5 Book VI E.O.292, but it will be unfaithful of him not to execute the GAA law. The only proper recourse, instead of resorting to unconstitutional acts of the DAP is to bring the matter to the proper court and have the facts tried. Only legislators can amend a law and enact a supplemental budget to get the current PAPs receive the previous appropriations. They may not accede to the urgency, but in order to promote the common good of the people in a nation under the rule of law, let expediency be a burden to all.

The DAP being a policy cannot be stricken down as a whole since only certain acts warrants such judgment. Care had been taken to adopt a standard of review that is narrowly tailored to serve the interest of justice and not intrude on the role of the executive to govern.

With the above premises, therefore I agree with Supreme Court decision to declare illegitimate acts and practices under the DAP as unconstitutional.

Final Note

As a private citizen, I believe that it is not commendable for the Executive to advocate the abhorrent acts in behalf of “good faith” as the way to bring expediency of public welfare, because the principle that “the end does not justify the means” is still a valuable precept uphold.

Our nation is full of hard lessons learned, one example, from a bona fide intention of a proclaimed law to give discretional flexibility, the nation ultimately suffered, as declared in Demetrio v. Alba. Under the succeeding administration after martial law, our people again experienced the effects of graft and corruption because of our leaders’ overly reliance on “good faith”.

And this time around, dictatorship is bound to happen… again, from the planted seeds of “good faith”. The public should stand vigilant. Given the enormous power the people conferred to the state , it is not enough for our leaders to say:
“Believe us. Our actions are done in good faith, the results speaks for itself.”

We had suffered enough when that trust has been breached!

Our Nation is built on the firm foundation that our sovereignty cannot rely on the good intentions of our leaders. It depends on our “law-1987 Constitution” to constrain the power our leaders.

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