Palace extra cash: P352.7B

Budget Secretary Florencio Abad: DBM circular produced P352.7 billion in extra funds for Malacañang. PHOTO BY LYN RILLON

MANILA, Philippines–The budget impounding system that the Supreme Court found unconstitutional put an estimated P133 billion in overall savings and another P219.73 billion in unprogrammed funds at the disposal of the executive branch in just two years.

Thanks to National Budget Circular No. 541, the government generated P67.47 billion in overall savings in 2011 and P65.62 billion in 2012, budget documents showed.

On top of the savings were unprogrammed funds, described as “standby appropriations” authorized by Congress under specific conditions. These amounted to P66.91 billion in 2011, the year the Disbursement Acceleration Program (DAP) was introduced, and P152.82 billion in 2012.

But the Supreme Court rejected practices done under the budget circular, which it tied to the DAP that pooled savings from various agencies and transferred to others to help stimulate the economy.

The high court declared unconstitutional “the withdrawal of unobligated allotments of the implementing agencies and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying to the statutory definition of savings contained in the General Appropriations Act.”

The circular allowed the Department of Budget and Management (DBM) to withdraw “unobligated allotments of agencies with low levels of obligations as of June 20, 2012, both for continuing and current allotments.”

“Withdrawn allotments” could then be used to “augment existing programs and projects of any agency [emphasis by DBM] and to fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented during the current year.”

Budget Secretary Florencio Abad issued the circular on July 18, 2012.

Pork barrel boosted

The DBM said earlier that only P142.23 billion was released for DAP projects in 2011 and 2012. Of the amount, P12.8 billion was made available to legislators, essentially raising their P24.8-billion pork barrel in each of those years.

On its website, the DBM said the DAP came from “savings generated during the year and additional revenue sources.”

Of the overall savings in 2011, the executive branch “transferred to” Congress P45 million in a cross-border scheme the high tribunal would later rule as unconstitutional.

In 2012, P207 million was “transferred from” Congress, but it received in return another P250 million from the executive branch.

Corona trial

Malacañang came under fire last year for using DAP money allegedly as an incentive for senators to convict in 2012 then Chief Justice Renato Corona at his  impeachment trial.

The Palace denied the allegation, but Abad had admitted releasing P1.11 billion in lump-sum appropriations to 20 senators, six months after Corona was ousted.

The amount of savings moved to Congress was dwarfed by the P19.72-billion fund realigned to augment government-owned and -controlled corporations (GOCCs) in 2011. The following year, P25.38 billion was transferred to GOCCs as a form of “budgetary support.”

Communications Secretary Herminio Coloma Jr. on Thursday did not say whether Abad would be asked to explain National Budget Circular No. 541, the perceived backbone of the DAP.

Coloma said the Palace still had to “understand fully” the high court’s 92-page decision on the DAP.

Asked if the President was given an idea of how powerful the DBM had become because of the budget memorandum, he said: “Well, in the final analysis, the President is the Chief Executive and the members of the Cabinet are [his] alter ego.”

“[They] performed the role of alter ego and whatever role that they perform is only an extension of the personality of the President himself,” he added.

Under fire over the DAP, the DBM said the mechanism had been approved by Aquino on Oct. 12, 2011, “upon the recommendation of the Development Budget Coordinating Committee (DBCC) and the Cabinet clusters.”

The DBCC is jointly chaired by Abad and Socioeconomic Planning Secretary Arsenio Balisacan. It also includes Executive Secretary Paquito Ochoa Jr., Finance Secretary Cesar Purisima and Bangko Sentral Governor Amando Tetangco.

Coloma said there was no need for the President to apologize to his “bosses,” the public, over the DAP debacle because the executive branch crafted the economic stimulus program in good faith.

“Of course, if you will apologize, it means you did something wrong. We committed no wrong,” he said.

The Supreme Court ruled only on the constitutionality of the DAP and not the liability of its implementers.

Even so, the question raised by the critics of the President and the public is who would be made accountable for what could be considered the biggest legal blow, not to mention embarrassment, to his four-year-old administration.

The buck stops here

Asked if Abad has offered to resign following the high court’s landmark decision, Coloma said he had “no information on that.”

Does the buck stop with the President? “I believe that is a principle that is well recognized,” Coloma said.

The Supreme Court said the DAP violated “the doctrine of separation of powers,” as well as Section 25, Article 7 of the Constitution, which cited exemptions to the prohibition against the reappropriation of government funds.

The high court also barred the practice of “funding projects, activities and programs that were not covered by any appropriation in the General Appropriations Act.”

Good faith, due diligence

Despite all this, Coloma said “the executive branch exercised good faith and due diligence, in accordance with existing laws and pertinent auditing rules and procedures.”

“We believe we have been abiding by and complying with such lawful processes. We will review the decision further to gain a more comprehensive understanding of its ramifications and study the appropriate legal options,” Coloma added.

He also took note that the high court had actually “affirmed” Aquino’s authority as Chief Executive to implement the DAP “as a stimulus program to achieve economic growth and as an administrative system of prioritizing spending in the execution of the national budget.”

“It is in the interpretation of the Constitution and applicable laws on the fine details of budget execution that the views of the executive and the Supreme Court diverged,” he said.

Palace on defensive

The Supreme Court also placed the Palace on the defensive when it said that the proponents of the DAP should be able to prove that it had implemented “in good faith” the savings-impounded mechanism crafted by the DBM.

Asked how the Palace would be able to prove “good faith,” Coloma said the administration had always followed the legal processes that include “pertinent auditing rules and procedures.”

“There are already built-in mechanisms for accountability and committed as we are to the good governance principles,” Coloma said.

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