Cabinet goes all out for DAP
MANILA, Philippines–With a little help from Senate President Franklin Drilon and other administration senators, Cabinet officials on Thursday tried to convince the Senate finance committee that President Aquino was not “ill-advised” on the Disbursement Acceleration Program (DAP) and that the economic stimulus plan that the Supreme Court had struck down had a legal basis.
Showing up in the Senate in full force, Aquino’s Cabinet officials fielded questions from the senators during a seven-hour hearing, including the wisdom of the spending stimulus funds for stem cell research, paying for an insurance obligation of the corruption-ridden Bureau of Customs and settling a local tax liability of the National Power Corp. (Napocor).
But the Cabinet officials were not asked who among the members of the Senate and the House of Representatives received funds from the DAP, a quiet admission by the Senate investigators that they, too, benefited from the controversial stimulus program.
The senators also could not tell the Cabinet officials that they concealed the DAP from them, because Budget Secretary Florencio Abad beat them to it by saying he presented the program to them in October 2011 as a viable way of accelerating government spending to stimulate the economy.
In fact, he said, it was an old program, having been employed by the first Aquino administration and by the Ramos, Estrada and Arroyo administrations.
And Abad said the DAP funds given to the senators were not bribes for them to vote for the conviction of impeached Chief Justice Renato Corona in May 2012.
Quoting Drilon himself, Abad said “no money was given to lawmakers, only the privilege to propose projects.”
And no senator asked the Cabinet officials about the testimony of Benhur Luy, the principal whistle-blower in the P10-billion pork barrel scam, that P425 million from the DAP went to nongovernment organizations (NGOs) controlled by the racket’s alleged mastermind, businesswoman Janet Lim-Napoles.
Luy said the Department of Budget and Management (DBM) released the money in March and May 2012 to finance projects recommended by Senators Juan Ponce Enrile, Jinggoy Estrada, Ferdinand Marcos Jr., Bong Revilla and Tito Sotto.
He also said the modus operandi Napoles used to access the DAP was the same as the method she employed to bleed the Priority Development Assistance Fund (PDAF)—getting the lawmakers to endorse phantom projects proposed by her bogus NGOs.
But the members of the finance committee headed by Sen. Francis Escudero did not remember, freeing Abad, the main target of the opposition senators’ probing questions, to paint the DAP as a sound stimulus program grounded on law.
Help from Drilon
With a push from Drilon, who received P600 million from the DAP for his projects, Abad cited the legal basis for the nullified stimulus program, the Administrative Code of 1987.
When his turn to question Abad came, Drilon tried to elicit answers from him that bolstered the administration’s defense of the DAP.
Drilon cited a constitutional provision that states that the President, Senate President, House Speaker, Chief Justice and heads of constitutional commissions may, by law, augment any item in the General Appropriations Act for their offices from savings in other items of their appropriations.
Drilon said the Constitution took effect on Feb. 2, 1987, and six months later, the Administrative Code was passed.
“Therefore there is an authority by law for the President, Senate President, Speaker of the House… to augment items in the budget. Isn’t that correct?” Drilon asked.
After getting an affirmative answer from Abad, Drilon continued: “Therefore you relied on the Administrative Code in your action… And it was on this basis that you augmented items in the budget from savings in the General Appropriations Act.”
“That is correct,” Abad replied.
Drilon said that if the Supreme Court ruled that the realigned funds were not savings, the executive branch may have violated the GAA, not the Constitution.
“That has been our position,” Abad answered.
Drilon then asked if Sections 38, 39 and 49 of the Administrative Code had been declared unconstitutional. Abad said that as far as he knew, those provisions had not been voided.
“In truth, all these acts of the executive were made under this Administrative Code?” Drilon asked.
The budget chief submitted a document listing projects out of the P144.37 billion released from the DAP. But he and other Cabinet secretaries were grilled on the prudence of allocating DAP funds to certain projects, such as a stem cell research project.
Some P237.5 billion in savings were pooled from 2010 to 2013, P167 billion was approved by the President and only P144.34 billion was released under the DAP. The balance would be used to bring down the deficit, Abad said.
He said he believed that most of the DAP projects had been implemented, but admitted that the executive branch was at a loss over how to proceed, such as paying contractors, because the Supreme Court decision was unclear on this.
Otherwise, lawmakers, even from the opposition and party-list groups, proposed projects funded from the DAP, Abad said.
Nearly all of the Cabinet officials, led by Cabinet Secretary Rene Almendras, showed up at the Senate finance committee hearing on the DAP.
Voting 13-0, the Supreme Court struck down the DAP, under which pooled savings in the national budget were allotted for high-impact projects to pump-prime the economy beginning 2011.
The court specifically voided a circular allowing the release of savings from the executive department to agencies and projects outside the national budget approved by Congress.
Abad said the Supreme Court’s ruling had a “chilling effect” on the administration’s “momentum for reform.”
He admitted that the executive branch was shocked by the court’s contention that the doctrine of operative fact and presumption of good faith could not apply to the implementers of the DAP.
“This unprecedented departure from the long-held interpretation of the doctrine of operative fact as applied to the actors in the DAP is worrisome because it is discordant with the presumption of good faith and the presumption of regularity that public officials are accorded in the performance of their duties and functions,” Abad said.
“More troubling is the chilling effect of those two stray paragraphs [in the Supreme Court decision] on the Aquino administration’s momentum for reform,” he added.
After all, he said, if public servants were presumed to have acted in bad faith, the bureaucracy would “second-guess” itself before taking “creative action.”
“A bureaucracy [that] shakes in its boots while performing just the bare minimum of its duties,” Abad said. “What a shame if we now presume bad faith of those who have in fact acted in the country’s best interests.”
He said the court ruling that savings and standby appropriations could only be declared at the end of the fiscal year discouraged quick public spending.
The net effect is that by the time the budget is released, implementation of the project “would have begun too late,” Abad said.
Abad also defended the cross-border transfer of funds disallowed by the Supreme Court, saying the practice did not undermine the principle of separation of powers.
“As separate as the three branches of government are, there remains a relationship of interdependence among them, belonging as they are to a single government,” he said. “This interdependence is such that the success of one hinges on the ability of the other two to support it.”
DAP for customs
Sen. Grace Poe quizzed Abad on the allocation of DAP funds for the payment of P2.7-billion obligation of the Bureau of Customs to Philippine Deposit Insurance Corp. (PDIC) and Napocor’s P750-million tax settlement with the municipal government of Pagbilao, Quezon province.
“Why would they need DAP? They’re the customs,” Poe asked.
Finance Secretary Cesar Purisima explained that the customs bureau’s import comprehensive supervision scheme contract with Société Générale de Surveillance (SGS) “didn’t turn out well,” and then state-owned Philippine National Bank (PNB) guaranteed the contract.
When PNB was privatized, the PDIC assumed the guarantee, Purisima said.
“We need to pay that to make sure that the PDIC is healthy to make sure that they have the resources to protect the deposits for all of us,” Purisima said.
He couldn’t recall, however, under which administration the customs bureau hired SGS.
Poe pressed on, saying the customs bureau should have paid for the obligation and it should not have been rescued by the DAP. “Is there no other way that customs can pay for the obligation?” she asked.
Purisima said that as chair of the PDIC, he proposed that the government pay the obligation out of the DAP.
“These are some of the open accounts that had been lingering for some time. In 2011, we were doing some house cleaning. Which one should be eliminated? I could have sat on this, and passed this on to the next administration, or since there was a chance, we should clean it up,” he said.
Sen. Ralph Recto later quizzed Purisima on the same matter. “Why was it included in the P144 billion worth of DAP projects?” he asked. “How did it help our economy? How many jobs were created?”
“Many of the DAP projects I would have approved. I would have problems giving this to PDIC because it did not go through the deliberative process,” he added.
As for the compromise settlement with Quezon, Purisima explained that Quezon raised the realty tax on a Napocor power plant in the early part of the Aquino administration. The Napocor, however, was not subject to local taxes.
“They were threatening to auction off the power plant. That’s when the President intervened, exercising his authority to condone that local tax that Quezon was imposing on the power plant. But there was also recognition, being the host of the plant, they needed some assistance to support the local community,” he said.
Purisima said the Office of Executive Secretary Paquito Ochoa negotiated a settlement package with Quezon to compensate the provincial government for the condonation of the tax.
Abad said the package amounted to P4 billion, which was used to fund infrastructure projects.
“If we are to account for these, then we should go to these implementing agencies?” Poe asked.
Abad said he believed most of the DAP-funded projects had been implemented.
“What the President said is that if you’re in doubt, don’t touch the project,” he said when asked by Escudero to confirm that
Aquino had ordered the suspension of DAP-funded projects.
But responding to senators demanding more details about the projects, Abad said he would next match letters of lawmakers with the list of projects, and would submit these to the Senate.
He said he would upload the list of projects to the government’s and the DBM’s websites.
The list identified every project, implementing agency, special allotment release order details, the programs or projects augmented, and their status, he said.
“We will consult with the legal experts because the Supreme Court is not very clear on this,” he said in reply to a question of how to deal with contractors demanding payment.
Not for landowners
Agrarian Reform Secretary Virgilio de los Reyes denied reports that the DAP was used to pay landowners’ compensation in Hacienda Luisita, owned by Aquino’s family in Tarlac province, until it was awarded to farmers under the agrarian reform program.
De los Reyes said the funds for landowners’ compensation came from the national budget.
Abad confirmed that the President approved the DAP projects and authorized the government’s economic managers to consolidate savings for projects.
“I don’t know if the President was ill-advised. If you look at the outcome of the DAP, even the Supreme Court said that indisputably, the DAP has served the country well. On the contrary, perhaps he got good advice,” he said in reply to a question from Sen. Joseph Victor Ejercito. “It bore fruit. Let me emphasize this: We’ve not increased taxes, except the sin tax.”
After quizzing Abad, Ejercito concluded: “This representation thinks that the administration is trying to justify technical malversation… As they say, the road to hell is paved with good intentions… One can’t juggle funds no matter how good the intention is.”
Stem cell research
Sen. Nancy Binay pointed to the shelved project to rehabilitate the Ninoy Aquino International Airport and the use of the funds for other DAP projects and the allocation of P70 million in DAP funds to stem cell research when so many hospitals lacked beds for patients.
Abad explained that the airport project had to be shelved to give way to a study on the best method to rehabilitate the airport’s Terminal 1.
Explaining the stem cell research, Health Secretary Enrique Ona said he was looking at the preventive, promotive, curative and even rehabilitation needs of the entire health sector.
The stem cell project, which is under the Lung Center of the Philippines, consisted of a laboratory also used for stem cell research, he said. The instruments there would be used for other purposes and the research may help deal with illnesses, he said.
Ona said specialty hospitals had sought the project, which had produced results.
He added that the government bought 8,000 to 10,000 beds for hospitals, though he acknowledged that it needed to buy 5,000 to 10,000 more.–With a report from Leila B. Salaverria
Originally posted at 8:10 pm | Thursday, July 24, 2014