Gov’t faces lawsuits over P5B in projects
MANILA, Philippines—The government risks facing thousands of lawsuits for its failure to pay for at least P5 billion worth of infrastructure projects and supply contracts funded by the pork barrel of legislators, after the Supreme Court declared the Priority Development Assistance Fund (PDAF) unconstitutional five months ago.
Budget Secretary Florencio Abad Jr. said the executive branch was “caught in a bind” by the ruling since it could not honor its obligations to thousands of contractors and suppliers without risking the ire of the high court for violating its decision and the Commission on Audit which would disallow such fund releases.
In its decision, the high court said funds allotted in 2013 for PDAF projects must be returned to the National Treasury if no notice of cash allotment (NCA) had been issued for the projects. The Department of Public Works and Highways immediately issued a memorandum suspending all ongoing projects funded by the pork barrel and stopping any further payments.
Acting on the Department of Budget and Management’s request, the Office of the Solicitor General filed a motion in February seeking a clarificatory order from the high court allowing the reissuance of NCAs issued prior to the November 2013 court ruling but which had lapsed, and to guide the DBM and other agencies in the payment of PDAF-funded projects.
The NCA is a cash authority issued by the DBM to fund expense items approved through a special allotment release order (Saro).
“To date, the SC has not responded to the OSG’s motion. Meantime, payments are withheld,” said Abad in a text message.
In its motion, the solicitor general said the court decision limiting the disbursement of the remaining pork barrel funds to projects with NCAs would adversely affect implementing agencies that had already signed contracts or awarded projects to construction firms and suppliers.
“Since they can no longer comply with their obligations to pay, such implementing agencies now face the risk of lawsuits for breach of contractual obligations entered into in good faith, which contracts may have been already fully or partially executed consistent with existing obligations supported by Saros,” the solicitor general said.
“The decision affects transactions entered into not only in 2013 but in 2012. In the Department of Public Works and Highways alone, there could be more than 17,000 breached contracts which could well translate into more than 17,000 complaints.”
Abad explained that the ruling would affect projects that the DBM implemented under the common fund concept which it adopted to accelerate the payment of completed projects.
“The SC only allows projects to proceed and payments made if an allotment has been issued, obligated and an NCA has been issued. In a common fund system, an NCA is not assigned to a particular project but to a pool of projects,” said Abad.
