Understanding the SC

ruling on the DAP

What are the main points and highlights of the Supreme Court decision on the
controversial Disbursement Acceleration Program?



MANILA, Philippines On July 1, 2014, the Supreme Court ruled on the
controversial Disbursement Acceleration Program (DAP).
Voting 13-0-1, excluding retired justice Roberto Abad, the High Court ruled 3
schemes under the DAP unconstitutional. Justice Lucas P. Bersamin penned the
main decision, with 6 Justices writing separate opinions Antonio Carpio, Presbitero
Velasco Jr, Arturo Brion, Mariano del Castillo, Estela Perlas-Bernabe, and Marvic
Leonen. (Read the ruling and separate opinions here.)
Justice Teresita de Castro inhibited from the voting, while Velasco, who was on
official leave, gave his vote to Chief Justice Maria Lourdes Sereno.
The High Tribunal ruled as unconstitutional the following:
the creation of savings prior to the end of the fiscal year and the withdrawal of
these funds for implementing agencies
the cross-border transfers of the savings from one branch of government to
another
the allotment of funds for projects, activities, and programs not outlined in the
General Appropriations Act

Here are highlights of the 92-page ruling in Question and Answer format:
What is the issue that the Supreme Court addressed in its resolution
pertaining to the Disbursement Acceleration Program (DAP)?
Petitioners challenged the constitutionality of DAP, which was intended by the
Aquino administration to accelerate government spending. They also questioned
National Budget Circular 541 which, in effect, characterized unreleased
appropriations and unobligated or unused allotments as savings. The question
brought to the Court was whether the Executive exceeded his powers to augment
items in the budget within the executive branch of government.
When exactly did the DAP start?
The closest indication is a memorandum dated October 12, 2011 from Budget
Secretary Butch Abad seeking approval from the President to implement DAP. The
memo listed funding sources that amounted to P72.11 billion (about $1.7 billion)
which could be used for other proposed priority projects among them, National
Housing Authority programs, capitalization of the Bangko Sentral, and peace and
development interventions in the Autonomous Region in Muslim Mindanao.
How was DAP supposed to be implemented and funded?
There were 3 ways identified: (1) by declaring savings from various departments and
agencies derived from pooling unobligated allotments and withdrawing unreleased
appropriations; (2) by releasing unprogrammed funds; (3) by applying the savings
and unprogrammed funds to augment existing programs, activities or projects
(PAPs) or to support other priority PAPs.
Can the President transfer funds?
With limits. While the power to transfer funds from one item to another within the
executive branch existed since 1909, during the time of American Governors-
General, this power was reduced to merely augmenting items from savings. The
1987 Constitution put limits on the Presidents discretion over appropriations during
the budget execution phase (when the budget law is being implemented).
The Constitution authorizes the President, the Senate President, the Speaker, the
Chief Justice, and heads of Constitutional Commissions to transfer funds within their
respective offices; when these funds involve savings generated from appropriations
also for their respective offices; and when the purpose of the transfer is to augment
items in the Appropriations Law again for their respective offices.
How is "savings" defined? How did this issue make DAP problematic?
The Court defined savings as funds that remain unspent after the completion or
discontinuance of a project. Congress provided that appropriated funds are available
for a period of one fiscal year. But in a May 20, 2013 memo, Budget Secretary Butch
Abad sought omnibus authority to consolidate savings and unused funds to finance
the DAP on a quarterly basis. This shortened the period that funds were supposed to
be available for, giving rise to questions about the budget departments own
definition of savings.
How were funds under DAP spent? What are related issues?
According to the Department of Budget and Management (DBM), as of 2013, P144.4
billion (about $3.3 billion) was released to implement programs, activities, projects
(PAPs). In 2011, P82.5 billion (about $1.8) was released, while P54.8 billion (about
$1.2 billion) was released in 2012. About 9% of the total DAP applied to PAPs were
identified by lawmakers.
The DBM also said that 116 PAPs were financed by DAP, each of which had existing
appropriations in the budget. The Office of the Solicitor-General submitted 7
evidence packets in support of this claim, but the Court found that there were
projects not covered by an existing appropriation for example, items under the
P1.6-billion DREAM project under the Department of Science and Technology.
DREAM refers to Disaster Risk, Exposure, Assessment and Mitigation.
Are cross-border transfers or augmentations of the budget allowed?
No. Cross-border transfers refer to the movement of funds from one branch of
government to another. These are allowed only within respective offices thus the
use of DAP funds to augment funds of the Commission on Audit (for its IT
infrastructure program and the hiring of litigation experts in the amount of P143.7
million, or about $3.2 million) and the House of Representatives (for a legislative
library and archives building/e-library in the amount of P250 million, or about $5.6
million) violate the Constitution.
What is the operative fact doctrine and why is it relevant to DAP?
In effect, it says let it be, because the consequences resulting from DAP could no
longer be undone. For instance, the positive results of DAP funding could include
roads, bridges, homes for the homeless, hospitals, classrooms.
Not applying the operative fact doctrine would require the physical undoing and
destruction of these infrastructure a considerable waste. The application of the
doctrine, however, does not exonerate the proponents and implementers of the DAP
unless it is established that they acted in good faith. Rappler.com