Abad: SC ruling may undo economic progress

Ayee Macaraig

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Abad: SC ruling may undo economic progress
'The Philippines did not become one of Asia's best economies, a pioneer in transparency and accountability, by playing it safe. We did it by bold innovation,' Budget Secretary Florencio Abad tells a Senate panel

MANILA, Philippines – “Mustn’t the law encourage innovation?”

Budget Secretary Florencio Abad raised this question as he faced the Senate to defend the administration’s controversial spending program, saying a Supreme Court decision declaring key acts under it unconstitutional could reverse economic growth in one of Asia’s best performing economies.

During a Senate inquiry on Thursday, July 24, Abad said the “rigid parameters” laid out in the Court ruling on the Disbursement Acceleration Program (DAP) will discourage quick public spending necessary to boost the economy, a concern earlier expressed by President Benigno Aquino III. (READ the full text of Abad’s speech and view his Powerpoint presentation here)

“While I bow to the wisdom of the Supreme Court, I must say, with all due respect, that its decision on these issues may undo the progress we have achieved so far,” Abad said.

The secretary also announced that he is giving Congress a complete list of the projects funded under DAP, including the name of the project, implementing agency, Special Allotment Release Order (SARO) details, activities and status. This follows criticism of the government’s belated release of full details of the DAP.

Abad discussed the need for two out of 3 of the acts under DAP that the Supreme Court declared unconstitutional:

  • “The withdrawal of unobligated allotments from the implementing agencies, and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year”
  • The so-called cross-border transfers of the savings of the executive branch to other branches of government 

Abad said the ruling meant that savings can only be declared at the end of the fiscal year.

He added that the “sluggish movement” of fund releases will compromise government’s “spending performance.” 

“If we’re to follow the Supreme Court ruling on standby appropriations, the new sources of revenues should be considered as whole, not individually, and can be declared only at the end of fiscal year. The Supreme Court decision defeats the purpose of standby appropriation as authorized by Congress,” he said.

Abad also defended the so-called cross-border transfers, or the executive branch’s decision to give funds to other branches of government and to constitutional commissions like the Commission on Audit and the Commission on Elections (Comelec).

He cited what he said was the need of Comelec to buy Precinct Count Optical Scan (PCOS) machines for the 2013 senatorial elections because there was no more time to ask Congress for funds.

“With the elections looming near, restoring to supplemental funding through Congress was not practical, leaving Comelec with no other option but to seek the executive’s assistance to ensure that we did not return to manual elections.”

“As separate as the 3 branches of government are, there remains a relationship of interdependence among them, belonging as they are to a single government. This interdependence is such that the success of one hinges on the ability of the other two to support it,” Abad added. 

The DAP was the administration’s program meant to address underspending to boost economic growth, spanning 2011 to 2013. Yet the Court ruled that key acts under DAP violated the separation of powers between the branches of government.

Liability provision ‘shock, shame’

Abad devoted the length of his speech to echoing the President’s defense of the economic benefits and legality of DAP, and also implicitly questioned the Court ruling.

He particularly drew attention to the portion of the decision saying that the authors of DAP can be held liable unless they are able to prove in court that they acted “in good faith.” 

Abad said, “It was therefore a shock to us in the executive to find that the Supreme Court ruling bore two startling paragraphs.”

Quoting the separate opinion of Associate Justice Marvic Leonen, Abad pointed out that the authors of DAP should bear no liability.  “The presumption of good faith is a universal one. It assures the fundamental requisites of due process and fairness. It frames a judicial attitude that requires us to be impartial.”


Abad added: “More troubling is the chilling effect of those two stray paragraphs on the Aquino administration’s momentum for reform. Because if public servants are presumed to have acted in bad faith in the course of their reform efforts, we can only expect a bureaucracy that second-guesses itself before taking creative action.”

He also challenged the Supreme Court to be “inventive” in helping the executive address the people’s needs.

“The Philippines did not become one of Asia’s best-performing economies by playing it safe. We did not become global pioneers in government transparency and openness by playing it safe …. Shouldn’t law respond as inventively and legitimize these measures?”

DBM responding to DAP ruling

He also rejected claims that the DAP is “pork barrel,” “bribery,” and was unheard of until the controversy sparked by the privilege speech of Senator Jinggoy Estrada in 2013.

“DAP is a spending reform measure to catalyze economic growth. We want that funds be properly used to deliver social services swiftly with minimal leakages and wastage,” he said.

“The administration launched DAP with no fanfare except for a [Department of Budget and Management] DBM statement. When DAP made headlines in 2013, we were told nobody heard of it, that it was kept under wraps to avoid accountability. This is ridiculous. DBM announced DAP and the launch was covered by major broadsheets.”

Abad said DAP had a “certain, far-ranging positive effect” on the economy and lives of citizens, leading to a 7.23% growth in GDP in 2013.

Yet he said the DBM is also taking measures to respond and comply with the ruling.

“The SC ruling didn’t paralyze us to inaction. We’re finding ways to address ruling in budget preparations, tighten policies, operations. We are codifying budget operations. We are discussing with Congress how to address the ruling.”

Read Abad’s full remarks here.

‘Amend budget law’

Malacañang is hoping that lawmakers would consider amending existing laws or passing new measures to provide clarity on the use of savings, following legal questions raised by the use of funds under the DAP.

Palace Communications Secretary Herminio Coloma Jr made the statement in a news briefing on Thursday, July 24, when asked how the government planned to resolve the issue of cross-border transfer of funds, after the High Court rules on its appeal to reverse the tribunal’s decision. 

“Since what’s being discussed is the interpretation of the law, lawmakers may consider pursuing amendments in existing laws or enacting new laws to provide clarity to all those discussions arising from the DAP,” Coloma said in Filipino. 

He said Malacañang is “counting on” the lawmakers to “perform their role in that regard as provided by the Constitution on the separation of powers.”

Coloma said these amendments would focus on the provisions on government savings and means to augment savings.

He said when the DAP was implemented to accelerate the completion of programs and projects during the period f 2011, 2012 and 2013, the administration believed its actions were in accordance with the provisions of the laws namely, the General Appropriations Act of 2011, 2012 and 2013.

“In drafting the General Appropriations Act of 2015, lawmakers and the Executive will have a chance to study and review the provisions affected by the Supreme Court decision so that there will be smooth passage of the budget in 2015,” Coloma said.

He said that when Development Budget Coordinating Council faces the Joint Appropriations and Finance Committee hearing of the House and the Senate on the proposed 2015 National Expenditure Program (NEP), this “could well be an opportunity to present certain proposals on how the proposed GAA for 2015 may be framed in such a way that it will be compliant with the Supreme Court decision.” – Rappler.com 


Related stories:

Full text: Abad: DAP is innovative governance 


After DAP, Congress to clarify meaning of savings


Nancy Binay grills Abad: DAP hijacks fiscal independence


Aquino Senate allies help admin defend DAP


Abad, Cabinet in full force to defend DAP


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