‘Other presidents realigned savings’

MANILA, Philippines - All of President Aquino’s predecessors, from his mother the late President Corazon Aquino to Pampanga Rep. Gloria Macapagal-Arroyo, realigned savings to augment appropriations in the national budget, a practice the Supreme Court has frowned upon.

This information is contained in a Dec. 28, 2013 memorandum sent to the President by three members of his Cabinet composing the economic cluster.

The cluster recommended the termination of the controversial Disbursement Acceleration Program (DAP), since it had “already achieved its objective as a fiscal stimulus measure” and “considering the unwarranted controversy” it had generated.

It said DAP had succeeded in addressing “inefficiencies and leakages in government spending” and in stimulating economic growth.

Budget Secretary Florencio Abad, Finance Secretary Cesar Purisima and Economic Planning Secretary Arsenio Balisacan signed the memo, sent to Aquino through Executive Secretary Paquito Ochoa Jr.

The three secretaries told Aquino that DAP was anchored on Article VI Section 25 of the Constitution, “which gives the President authority to augment appropriations using savings.”

They said post-martial law presidents used this mandate “to address urgent challenges” by using “various mechanisms.”

They said the “Reserve Control Account” or RCA was the first such mechanism used to impose mandatory reserves or savings ranging from five percent to 25 percent of appropriations.

They said Aquino’s late mother employed this mechanism through Administrative Order No. 137, series of 1989.

“The use of the RCA was sustained by the Ramos and Estrada administrations, citing ‘economic difficulties brought about by the peso depreciation,’ as well as the ‘erosion of targeted surplus, resulting from increasing shortfall in revenues for the year’,” they added.

They noted that Arroyo “replaced the RCA with Overall Savings, a mechanism to augment priority programs using savings, including unreleased appropriations and unobligated allotments.”

The economic cluster informed the President that in the first three quarters of 2011, government spending, including that for infrastructure, had slowed down, necessitating the launching of DAP.

“By augmenting expenditure items using savings from programmed appropriations and mobilizing additional revenues for unprogrammed items, DAP enabled the administration to implement programs and projects worth a total of P140.8 billion from 2011 to 2013,” it said.

It stressed that increased government spending “has contributed significantly to the stellar GDP (gross domestic product) growth which, in the first three quarters of 2013, averaged 7.4 percent.”

In his DAP memos to Aquino, Abad invoked not only the Constitution but also the Administrative Code of 1987, which authorized the President to realign savings and augment appropriations.

He quoted Article VI Section 25 of the Constitution, the same provision cited by the economic cluster: “The President may, by law, be authorized to augment any item in the general appropriations law from savings in other items of appropriations.”

Congress, in approving the annual budget law, gives this authority to the President.  

Abad also quoted Sections 38 and 39 of Chapter 5, Book VI of the Administrative Code.

The first section provides: “The President is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any expenditure authorized in the General Appropriations Act.”

The second states: “Any savings in the regular appropriations in the General Appropriations Act for programs and projects of any department, office or agency, may, with the approval of the President, be used to cover a deficit in any other item of the regular appropriations.”

The Supreme Court, in declaring parts of DAP as unconstitutional, disallowed “cross-border” fund realignments from the executive branch to the judiciary, legislative or independent constitutional commissions, and withdrawal of unused funds and their use as savings before the end of a fiscal year.

It also prohibited the allocation of savings for appropriations not contained in the national budget, and use of unprogrammed funds without a certification of availability of cash from the national treasurer. – With Christina Mendez