President Benigno S. Aquino III inspects the three newly acquired Agusta helicopters during the 78th Founding Anniversary of the Armed Forces of the Philippines (AFP) at the AFP General Headquarters Grandstand in Camp General Emilio Aguinaldo, Quezon City on Friday (December 20, 2013). This year’s theme is: “Tagumpay Noon, Bayanihan Ngayon, Karangalan Nating Lahat Bukas”. In photo are Defense Secretary Voltaire Gazmin and AFP Chief of Staff General Emmanuel Bautista. (Photo by: Gil Nartea / Malacañang Photo Bureau)

President Benigno S. Aquino III inspects the three newly acquired Agusta helicopters during the 78th Founding Anniversary of the Armed Forces of the Philippines (AFP) at the AFP General Headquarters Grandstand in Camp General Emilio Aguinaldo, Quezon City on Friday (December 20, 2013). This year’s theme is: “Tagumpay Noon, Bayanihan Ngayon, Karangalan Nating Lahat Bukas”. In photo are Defense Secretary Voltaire Gazmin and AFP Chief of Staff General Emmanuel Bautista. (Photo by: Gil Nartea / Malacañang Photo Bureau)

MANILA, July 24 (Mabuhay) – Budget Secretary Florencio Abad on Thursday admitted that the total savings pooled under the controversial Disbursement Acceleration Program reached P237.51 billion, way above the figure initially revealed to the public.

At the same time, Abad maintained the administration’s defense of the Disbursement Acceleration Program before the Senate finance committee even as he professed to recognize the Supreme Court’s “authority and respect its judgment” for declaring key provisions of the controversial stimulus scheme as unconstitutional even as he said the ruling “may undo the progress we’ve done so far” and “will not encourage quick and efficient” use of public funds.

At the hearing, Abad also continued to invoke “good faith” for the DAP and cited the high court ruling, which he said recognized “indisputably” that the program “served the nation well.”

But Senator Joseph Victor “JV” Ejercito, who grilled Abad, noted that while the Executive’s “good intention” was being taken at its face, the law defining the crime of technical malversation was precisely enacted to warn against such intentions.

Abad was among more than 50 officials invited by the committee to a hearing on DAP. Also at the hearing was Finance Secretary Cesar Purisima and National Economic and Development Authority director general Arsenio Balisacan.

Also invited were 51 other officials of the DBM and its attached agencies.

Fielding questions from committee members, Abad confirmed the figures summed up Escudero, based on the data the Budget secretary himself gave: the total amount from such pooled “savings” for which projects were proposed was P167.06 billion, and that P144.3 billion had so far been released.

Abad insisted DAP was necessary in 2011 because of the urgency of reversing the impact of underspending, and to give the Executive the flexibility to prioritize more vital projects by pooling savings from slow-moving ones, among other options.

Asked by Ejercito why the Executive did not run to Congress—which is dominated by Aquino’s allies—Abad had a rather prolonged explanation: that there were, anyway, existing laws (specifically, the 1987 Administrative Code) that gave them that prerogative, as well as the congressional authority given to the Executive to tap into so-called standby appropriations under certain conditions.

In a word, they did not run to Congress to pass a supplemental budget because they could—use their own options, that is.

“Technical malversation, plain and simple – JV”

Ejercito, who sought the probe on DAP, said Abad’s testimony proved the administration was “justifying technical malversation.”

He also brushed aside the government’s “good faith” justification, noting that the “road to hell is paved with good intentions” but that “one cannot juggle the law no matter how good the intention is.”

Abad had been under pressure from various quarters – including the Supreme Court that was hearing nine petitions against DAP – to reveal just two main points of information: first, from what items in the General Appropriations Act did the DBM draw funds or “savings” in order to pool under DAP and what were the amounts involved; and second, where were the DAP funds applied and at whose behest.

For various reasons, the DBM chief did not provide these data until last week, when he released a list of the items for which DAP was used. These raised more questions about how much exactly was pooled under DAP, and what were the items from which the funds were withdrawn; some fiscal experts said that the programs deprived of funding might have been, on hindsight, even more urgent and critical to growth than the projects for which DAP was used, including those coursed through lawmakers.

The high court ruling prompted calls for Abad to either quit or be sacked. However, although he did offer to resign, this was rejected by President Benigno Aquino III during a Cabinet meeting that, in a rare moment, was broadcast live. Aquino himself is now the subject of two impeachment complaints over the DAP.

And while the government has filed a motion for reconsideration, Aquino has continued to defend the discredited spending program and attack the high court, most recently during rites marking the 150th birth anniversary of the hero Apolinario Mabini.

Before the hearing, Escudero stressed that the high court ruling only declared certain acts under the DAP unconstitutional and not the whole program itself.

The high court decision ruling declared the following unconstitutional:

the withdrawal of un-obligated funds and their declaration as savings

the funding of projects, activities and programs not covered by the General Appropriations Act

the “cross-border” transfer of savings by the executive branch

In a presentation to the Senate before he was questioned, Abad said that there had been increasing public awareness about the DAP over the last 10 months, but claimed it was mostly fueled by “malice and wrong information,” as he alluded to accusations funds from the program had been used to bribe lawmakers into ousting impeached Chief Justice Renato Corona.

He maintained that, “by implementing DAP, we wanted to make sure that funds were properly used so that social services … are delivered to the people, especially the poor, as swiftly as possible, bringing minimal leakages and wastage.”

Why the DAP?

Abad said as soon as Aquino assumed office in 2010, it embarked on a “comprehensive housecleaning of sorts” as part of its efforts to make government transparent and accountable, and to stamp out graft.

He explained that reforms were not just a matter of preventing irregularities but also of clearing up “operational bottlenecks that prevented the quick and efficient delivery of public services to our people.”

In the past, he said, “If funds were released in agency for a particular project, it usually took more a year before the project itself finally started and implemented.”

However, he acknowledged that these efforts led to government spending decreasing “by 11 percent for the first six months of 2011. By the third quarter of the same year, the country’s GDP level peaked only at 3.1 percent, down from the 7.3 percent growth rate.”

By the third quarter of 2011, “it became clear to us we wanted public spending to accelerate enough to spur economic growth, we had to use idle funds, money that was not moving or projects which were not implemented quickly.”

“After careful consideration, we thought it best to use funds lying dormant in various places, such as in agencies where the DBM releases were not used and to use money for fast-moving projects.

‘Not new’

Abad also claimed that, since 1989, previous presidents including the incumbent’s mother, Corazon Aquino, had implemented schemes similar to DAP, using savings from the national budget to fund projects and programs.

From Cory Aquino to former President Joseph Estrada, this was called the “Reserve Control Account.” Former President Gloria Macapagal-Arroyo named her program the “Overall Savings” scheme.

“The Aquino administration uses DAP as a viable solution for accelerating government expenditures. We knew that this could be done. After all the … use of savings, of which DAP is an example, is not a new practice,” Abad said.

The first Aquino administration, he said, pooled P17.953 billion but released only P17.536 billion. “This way of using savings continued … in the Ramos and Estrada administrations.”

Under Ramos, Abad said, the Reserved Control Account totaled P100.457 billion, of which P44.061 billion was released. Estrada used reserves carried over from the Ramos administration, releasing P36.896 billion.

During Arroyo’s presidency, Overall Savings totaled P792.876 billion, but only P189.273 billion was released.

Cross-border savings

Abad also claimed that cross-border transfers of savings are not uncommon.

“For the last 22 years, savings have been used to augment the budgets of Congress, Judiciary and other constitutional bodies independent of all three branches of government,” Abad said.

In 2010, Congress received some P50 million from savings, the court of Appeals got P35 million, and P13.5 million want to the Court of Tax Appeals.

The next year, the Commission on Audit received P143.7 million, and the House of Representatives P45 million.

In 2012, Abad said the House got P250 million through DAP, and the Commission on Elections P4.1 billion. In 2013, the Court of Appeals received P10.133 million, also from DAP.

Administrative Code

Abad also insisted that DAP was legal and allowed under the Administrative Code.

“Chapter 5, Section 38 of the Administrative Code explicitly says that the president is authorized to spend or stop the use funds allotted to an agency and to do the same for all other expenditures in the national budget if public interest so requires,” he said.

He added that the use of savings is also allowed by Section 39 of the Code to cover a deficit and any item in the national budget the president approves, while Section 49 allows the use of savings to settle obligations for the priority activities that will promote the economic wellbeing of the nation.

Abad also denied that DAP was kept secret when it was launched in 2011, calling such claims “ridiculous” and citing media reports about the program.

‘Unrepentant’

Reacting to Abad’s presentation, Renato Reyes Jr., secretary general of the Bagong Alyansang Makabayan, one of the groups seeking Aquino’s impeachment, said the Budget secretary “remains unrepentant over DAP and continues to claim that it was valid and beneficial.”

“It is strange, though, that Abad did not mention how DAP concretely benefited the people,” Reyes added. “He did not comment on the fact that DAP went to additional pork for lawmakers and therefore became a new source of corruption.” (MNS)