Noy wants DAP-type rules on savings

MANILA, Philippines - He may have toned down his tirades against the Supreme Court (SC), but President Aquino is not about to give up his fight to continue impounding public funds as “savings” that he can realign before the end of the fiscal year.

Upon the President’s request, the two chambers of Congress are working on either a law or a joint resolution that will allow him to impound funds from slow-moving projects, classify these as savings and use them for purposes at his discretion.

The President wants to impound “savings” as early as the end of the first semester, or midyear – a practice implemented under his Disbursement Acceleration Program (DAP).

And if an administration ally, Eastern Samar Rep. Ben Evardone of the Liberal Party, would have his way, funds could be classified as savings as often as every three months, as he filed Bill 4770 for this purpose.

The proposal echoes that of Budget Secretary Florencio Abad, who reportedly wants savings declared on a quarterly basis. It prompted a party-list congressman to remark that the President wanted to legalize DAP and clip Congress’ power of the purse.

The 13 SC justices, in their unanimous 92-page ruling that struck down the DAP, made it clear that since Congress appropriated funds for specific projects of government agencies for utilization within an entire year, no savings can be declared until that period is over.

“The executive could not circumvent this provision by declaring unreleased appropriations and unobligated allotments as savings prior to the end of the fiscal year,” Justice Lucas Bersamin, who wrote the SC ruling, warned on page 67 of the decision.

Bersamin was referring to Section 28, Chapter 4, Book 6 of the Administrative Code. A portion of the provision, titled “Reversion of Unexpended Balances of Appropriations, Continuing Appropriations,” clearly prohibits the use of unused funds in advance.

Part of the provision reads: “Unexpected balances of appropriations authorized in the GAA shall revert to the unappropriated surplus of the General Fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent legislative enactment...” The GAA is the General Appropriations Act.

But Aquino, in his 2015 budget message to Congress, stands by the voided DAP.

“We saw it fit to clarify the definition and use of savings and augmentation in light of our policy to push agencies to spend their budgets, or else to lose it,” he declared on page 14 of his budget message, reiterating his administration’s “use it or lose it” defense of the stimulus program.

“Given that this proposed budget will be valid for one year, it will be counter-intuitive to allow the declaration of savings and augmentation of deficient budget items only at the end of the year,” Aquino explained to members of the Senate and House of Representatives.

He declared: “Thus, the proposed general provisions of this budget seek to allow the declaration of savings by the end of the first semester – a realistic timeframe, as it gives enough time for the implementation of augmented programs and projects.”

Those who filed the petition against DAP in the SC had argued that by withdrawing funds for unobligated allotments in the middle of the fiscal year, it in effect deprived funds for programs and projects with existing appropriations under the GAA.

The 13 justices – including Aquino’s four appointees Chief Justice Ma. Lourdes Sereno, Bienvenido Reyes, Estela Perlas-Bernabe and Marvic Leonen – unanimously agreed and warned against early utilization of appropriated funds for the President’s discretionary spending.

“We agree with the petitioners,” the SC stated, noting that it was in itself a “constitutional infirmity” as it shortened the availability of appropriations for MOOE and capital outlays when Congress provided a one-year availability of funds.

At one point, according to Bersamin, Abad – touted as the DAP architect – wanted to withdraw unutilized funds not just on a semi-annual but quarterly basis.

This was also evident in Abad’s memoranda wherein he sought and was granted “omnibus authority” by Aquino to consolidate savings and unutilized balances to fund the DAP.

Impractical

In filing Bill 4770, Evardone said the SC’s definition of savings is impractical.

“Public funds have to be utilized in a timely manner. We cannot tie the hands of the three branches of government, including the judiciary and constitutional commissions, for one year before allowing them to use savings for critical needs and services,” Evardone argued.

Rep. Terry Ridon of party-list group Kabataan noted that President Aquino, in his P2.6-trillion 2015 budget proposal, has made a new definition of “savings.”

“A cursory reading of the variances between the savings definition in the current GAA and the proposed 2015 NEP (National Expenditure Program) shows that the Aquino administration is attempting to legalize DAP and is actually paving the road for DAP’s re-emergence in the near future,” Ridon said.

He said the Department of Budget and Management and not Aquino himself made the new definition.

Evardone’s bill seeks to allow the president, chief justice, Senate president, House speaker, ombudsman and heads of constitutional offices enjoying fiscal autonomy to use savings in their respective offices on a quarterly basis, or at the latest, within six months.

Under the measure, savings could be generated before the start of a project, activity or program or PAP such as when implementation is overtaken by a natural calamity during the implementation phase, like when a PAP is discontinued, and upon PAP completion.

Savings can also be realized from unpaid compensation or benefits, and from improved systems and efficiencies.

The bill seeks to authorize agency heads to use saved funds to augment any item of appropriation in the budgets of their respective agencies or offices.

They cannot fund any project, activity or program that is not covered by an item of appropriation in their budgets. They also cannot make “cross-border” fund transfers.

In its ruling on DAP, the SC prohibited such transfers – meaning realignment of funds from one branch of government to another. The prohibition also covers the ombudsman and constitutional commissions with fiscal autonomy.

The Evardone bill also provides that priority in the use of savings should be given to the payment of compensation and other benefits, contractual obligations and appropriation deficiencies.

Unspent savings within the first six months of the fiscal year and at yearend will revert to the national treasury.

Evardone said his proposal aims to speed up the spending of public funds.

“Accelerated public spending contributes to economic growth,” he said.

Wider definition

Ridon said he compared the language of the current outlay and Aquino’s 2015 budget proposal and discovered that new provisions were introduced, “such as those on ‘non-commencement,’ ‘unforeseen modifications’ and ‘re-assessment’ of PAPs, which effectively widened the definition of savings.”

“Under the new definition, the DBM did away with the requirement of finality (of project completion), thus expanding the president’s discretion over public funds and vastly clipping the congressional power of the purse,” he said.

He said the new language “violates the four principles laid down by the Supreme Court governing the definition of savings.”

Ridon, who is a lawyer, pointed out that the tribunal ruled that the power of the purse or appropriation of public funds belongs to Congress, and that Congress, in authorizing the president to augment appropriations, diminishes such power.

The tribunal also declared that savings should be actual cash, and not “something that is merely theoretical, possible, potential, or hypothetical,” Ridon added.

Speaker Feliciano Belmonte Jr. has said Congress can define savings without going against the SC ruling on DAP.

He said there is no such definition in the Constitution.