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 President’s 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 Comissions 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 department’s 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 implementors of the DAP – unless it is established that they acted in
good faith. – Rappler.com