Members of a militant youth group troop outside the Department of Budget and Management (DBM) and burn photos of DBM Secretary Butch Abad as they call for his and President Benigno Simeon Aquino’s resignation and hold them accountable for the misuse of public funds. INQUIRER FILE PHOTO/JOAN BONDOC
Below are excerpts from the Solicitor General’s motion for reconsideration in the Disbursement Acceleration Program (DAP) case, whose filing was announced by President Aquino in a televised address to the nation on July 14.
The government invokes three basic principles:
— The “presumption of constitutionality and good faith.”
— The “understanding of the constitutional role of the executive in managing the economy,” its “institutional competence and the value of [well-settled] bureaucratic practices.”
— The “constitutional authority of Congress to define savings” and the “minimal role of the Supreme Court [to review] these matters.”
Who defines ‘savings’?
Congress defines “savings” by law.
Article VI, Section 25(5) of the Constitution provides: “No law shall be passed authorizing any transfer of appropriations; however, the President [and the heads of the other departments] 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.”
The Constitution textually commits to Congress the authority to define the term “savings.”
Creating savings
What then President Gloria Macapagal-Arroyo did was merely to reenact the previous year’s budget so that by Day 1 of each year, all the unspent funds from the past year were immediately available for her as savings.
All that an administration bent on accumulating savings has to do is to not pass the budget on time and let the previous budget get automatically reenacted.
This is because under a reenacted budget, all items representing appropriations for a completed work or activity (for example, a P5-billion airport and a P10-billion expressway) are automatically converted into savings and are immediately available for use by the President on the first day of the year.
Thus, by the sheer fact of doing nothing, a President immediately generates savings to the tune of the total amount of all appropriations for the funded projects and activities of the previous General Appropriations Act (GAA).
Budget reforms
President Aquino stopped all that and reformed the budget process.
The timely passage of the budget is an important fact that attests to the demonstrated intent of the President and Budget Secretary Florencio Abad to engage in disciplined spending, that is, according to a program embedded in the GAA and therefore consistent with the wishes of Congress.
This is not only a mark of good faith; it is, more important, also an unmistakable sign of full and diligent compliance with the Constitution.
But that also slowed down public spending.
Fiscal emergency
The DAP was a response to a fiscal emergency—underutilization of public funds … It was a plan to remedy a glut in public funds languishing in agencies with low levels of obligation. The President and Abad did not invent this scenario.
Even the World Bank acknowledged that the “slowdown in disbursements in the first three quarters is partly attributable to measures to improve transparency and accountability in national government agencies.”
It cited, as an example, “a thorough review of the bidding process … conducted by the Department of Public Works and Highways to improve cost-efficiency and transparency of procurement and budget execution.”
This review “inadvertently led to the slowdown in public infrastructure spending as the review uncovered significant procedural and governance issues.”
Sound fiscal management
All other Presidents have used their savings.
The mechanisms used to realize savings under the DAP have existed in one form or another throughout all administrations under the 1987 Constitution.
In the absence of any specific constitutional prohibition, it is the essence of sound management to stop the flow of scarce resources from projects that are failing and not moving, and to reallocate them into projects that have higher chances of success.
The President is authorized by law to stop spending for slow-moving projects.
Under Book VI, Chapter 5, Section 38 of the Administrative Code, the President has the authority to “stop the further expenditure of funds allotted” for slow-moving projects to uphold the public interest of maximizing limited public funds. As this country cannot afford to waste money, it is commonsensical to use limited funds for fast-moving projects that are better able to absorb them.
This is…consistent with what an ordinary citizen understands as savings—the money that remains if the original purpose is fulfilled or defeated.
Power to augment
The President doesn’t have to wait for yearend to declare savings.
To require that savings may only be incurred at or near the end of the year (or the validity of the appropriation) and then mandate that all yearend savings must go to the National Treasury is to operationally defeat the President’s power to augment.
If savings can be declared only near the end of any given year, such as November, this would mean that the President will have to allow public funds to be idle and languish for months while some projects are not moving and then hurriedly augment from November to December.
Cross-border transfers
Cross-border transfers are valid.
“Appropriations” and “savings” are two different, independent constitutional concepts
While Article VI, Section 25(5) prohibits the transfer of “appropriations,” it does not prohibit the transfer of “savings” … Thus, the President may use savings to unilaterally augment items in the executive department but he cannot, on his own, ascertain the existence of a deficiency in an item of appropriation in another department and augment that deficiency.
The Constitution, however, does not prevent the President from transferring the savings of his department to another department upon the latter’s request, provided it is the recipient department that uses the funds to augment its own appropriation.
In such a case, the President merely gives the other department access to public funds but he cannot dictate how they will be applied by that department whose fiscal autonomy is guaranteed by the Constitution.
Doctrine of operative fact
The operative fact doctrine was wrongly applied.
Thus, the doctrine of operative fact applies only to questions involving the problem of undoing acts done prior to a declaration of unconstitutionality of a law or executive act.
[It] is about determining when the judicial declaration of unconstitutionality becomes effective, considering that prior to the declaration, a law or executive act is presumed valid and that people have relied on that validity.
It would indeed be unreasonable if people who were dutiful in following a law would be deprived of certain rights and privileges by the subsequent invalidation of such law.
It speaks of nothing about the liability of so-called authors, proponents or implementers.
The doctrine of operative fact has nothing to do with the potential liability of persons who acted pursuant to a then-constitutional statute, order or practice.
They are presumed to have acted in good faith and the court cannot load the dice, so to speak, by disabling possible defenses in potential suits against so-called authors, proponents and implementers.
Good faith is presumed whereas bad faith requires the existence of facts.
To hold otherwise would send a chilling effect to all public officers whether of minimal or significant discretion, the result of which would be a dangerous paralysis of bureaucratic activity.