And why there are grounds for Supreme Court to review its decision on DAP

Exclusive by Raïssa Robles

Could the Supreme Court be wrong?

Are President Benigno Aquino’s actions about the Disbursement Acceleration Program (DAP) constitutional after all?

I ask these questions because I’m looking over something Aquino’s mother, President Cory, signed in 1987.

And former Senator Joker Arroyo knows about it. Or at least he should – because he co-signed it.

What I’m talking about is a 401-page compilation of “rules of governance” that includes an extensive list of presidential powers. It’s called the Administrative Code and it was drawn up in 1987.

From the way I look at it, what PNoy did with DAP IS constitutional because he used the Administrative Code, which the Constitution allows.

Let me explain. Pull up a chair.

This piece took me days to write. When I began, I originally titled it “Butch Abad must be punished”.

Because, to me, Budget Secretary Abad clearly violated the Constitution. How could he have done such an idiotic thing? How could he, a lawyer, have the temerity to violate the Constitution, risking everything the Aquino presidency had worked so hard for? It seemed incomprehensible.

Fourteen Justices of the Supreme Court ruled that the P144.4 billion Disbursement Acceleration Program (DAP) that Abad had put together from various “savings” was partly unconstitutional. The Justices pointed to at least two DAP projects that were in clear violation of Section 25 (5), Article VI of the 1987 Philippine Constitution. This section categorically states that the President, Senate President, House Speaker and Supreme Court Chief Justice can only “augment” the budget “for their respective offices.”

The key word here is the adjective “respective.” It allows the President, Senate President, House Speaker and Supreme Court Chief Justice to increase their budgets provided they do this in their own turf. In other words, no “cross border” transfers are allowed by the Constitution, all 14 Justices said.

What Abad had done, with the written approval of President Benigno Aquino,was to transfer funds he had pulled out from various agencies and slow-moving projects, and then put them together in something he called the DAP .

Abad told the Court that such cross-border transfers were done upon the request of a co-equal branch (through Speaker Feliciano Belmonte for P143.7 million to finish an e-library) and of an independent body (the Commission on Audit for P250 million to fund its IT Infrastructure program and hired more “litigation experts”).

At the very least, Abad could be charged with technical malversation. “Technical”, because unlike in the case of the pork senators, this is not not a case of colossal theft of the people’s money. In fact, ironically, Abad was trying to get more bang for the people’s buck.

But as Supreme Court Senior Associate Justice Antonio Carpio pointed out in his separate concurring opinion, “the road to unconstitutionality is often paved with ostensibly good intentions.”

The Revised Penal Code punishes government officials “who shall apply any public fund or property under his administration to any public use other than that for which such fund or property where appropriated.” Even if the officials did not steal any of that money. It’s called technical malversation. (Article 220, Chapter 4, Book II, Title 7, Revised Penal Code).

You can read more about technical malversation here.

The only way Abad could escape this rap is if his superior President Aquino owed up to having told him to do the cross-border transfers. There’s a precedent-setting case for this that Jose Nolledo, one of the framers of the 1987 Constitution, cited in his book on the Revised Penal Code. It’s G.R. No. 4758 (dated February 16, 1909, it’s a case against Teodoro Santos, treasurer of the town of Polo. You can read the case by clicking here.

This is exactly what Abad did — he pointed to his boss. I was dumbfounded at this: what sort of apparently errant subordinate would pass the buck up to his boss? Wasn’t he supposed to fall on his sword?

Even more surprising: Aquino publicly confirmed and admitted to approving Abad’s requests.

I asked myself, were these two Ateneo boys out of their depth?

Tactically, what Abad did makes sense: Abad goes scot-free, and Aquino as president is immune to suits. He also can’t be impeached because his party mates control Congress. But he loses his immunity once he steps down from office and this cute trick could come back and bite him. And with the sums involved, the punishment would not be light. Meanwhile, there goes his Matuwid na Daan.

Or so I thought.

Through the weekend — in between watching episodes of one of my favorite TV series “Bones” (about forensic experts figuring out crime scenes mainly from skeletons of murder victims) — I went over the facts, trying to figure out what these two seemingly cocky but foolish men were up to.

It wasn’t until Monday morning at breakfast, that it hit me what they were doing. Everything clicked into place after I read Jess Diaz’ piece on DAP and followed up what Jess said. I personally know Jess, we were once colleagues at the Philippine Star.

Jess quoted PNoy as saying that he had authorized Abad’s DAP by approving a seven-page memorandum that the budget secretary had sent him. I recalled reading about a memorandum for the President in the main SC decision penned by Justice Lucas Bersamin. I found this paragraph in Bersamin’s decision:

“The DBM listed the following as the legal bases for the DAP’s use of savings, namely: (1) Section 25(5), Article VI of the 1987 Constitution, which granted to the President the authority to augment an item for his office in the general appropriations law; (2) Section 49 (Authority to Use Savings for Certain Purposes) and Section 38 (Suspension of Expenditure Appropriations), Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative Code of 1987); and (3) the General Appropriations Acts (GAAs) of 2011, 2012 and 2013, particularly their provisions on the (a) use of savings; (b) meanings of savings and augmentation; and (c) priority in the use of savings.

What the heck are Sections 49 and 38 of the Administrative Code, I wondered. It was only when I looked up both that I realized what Abad and PNoy have all along been talking about.

This morning (July 8), I called up former Senator Rene Saguisag and asked him what he thought of my analysis. After listening to me explain, he said the arguments were “legally defensible” and could be the basis for a motion for consideration before the Supreme Court.

I also tried to reach former Senator Joker Arroyo but he was out of town. I left all my phone numbers with him but he has not replied. More on him later.

Briefly, my argument goes this way

The DAP is unconstitutional if you only look at the 1987 Constitution and Chapter 5, Section 38 of the Administrative Code of 1987 – which is what the justices did.

The DAP becomes constitutional if you look at the 1987 Constitution AND Sections 38 and 49 of Chapter 5 of the Administrative Code of 1987.

You need both Section 38 and Section 49, Chapter 5 of the Administrative Code to make DAP LEGAL AND CONSTITUTIONAL.

Without Section 49, DAP becomes illegal and unconstitutional.

The main ruling of Justice Bersamin and the separate concurring opinions of the other Justices discussed the Constitution in conjunction with Chapter 5, Section 38 of the Administrative Code of 1987.

But NOT ONE of them mentioned nor discussed Chapter 5, Section 49 of the Administrative Code of 1987. Because of this, they unanimously ruled that the pooling of funds under DAP and certain cross-border DAP projects violated the Constitution.

In the Constitution, the provision barring the President from doing cross-border transfers of funds is Section 25 (5) of Article VI on the Legislature. It states:

“(5) No law shall be passed authorizing any transfer of appropriations; however, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings to other items of the respective appropriations.”

Simply put, this section means:

Congress cannot pass any law authorizing any transfer of funds that have already been budgeted.

The President, Speaker, Senate President and Chief Justice can increase any items, provided the additional money comes from internal “savings”.

But what if there already existed a law authorizing the President to go beyond the limits set by Section 25 (5), Article VI of the Constitution? If you look at the wording of Section 25 (5) – “No law shall be passed” – the ban is prospective, not retrospective.

What if the existing law happens to be the Administrative Code of 1987?

The Administrative Code of 1987 is a peculiar law.

Monday’s issue of Philippine Daily Inquirer has a story quoting former Senator Joker Arroyo expounding on DAP and the Administrative Code. The following paragraphs caught my eye:

Following Marcos As for reports that the basis of the DAP was the administrative code, Arroyo noted that the country’s previous Presidents, especially Aquino’s own mother, did not avail themselves of this pool of unused funds and savings. He said former President Corazon Aquino steered clear of this because the authority to use the funds—the administrative code—came from the late dictator Ferdinand Marcos. “He (Aquino) did not follow his mother, he followed Marcos,” he added.

Coming from Sen. Joker Arroyo, I found the last paragraph extremely funny. Because you see, Executive Order No. 292 which unveiled the Administrative Code of 1987 was signed by President Cory and her Executive Secretary then – someone named Joker Arroyo.

The Administrative Code is a 401-page document that lists the powers and functions of the three branches of government, especially the powers of the president within the executive branch and in relation to the legislature, judiciary and the Constitutional Commissions.

It was meant to replace the Administrative Code of 1917.

Seven chapters are devoted to the president’s powers on national government budgeting..

The Constitution was ratified on Feb 2 1987. Cory Aquino’s Administrative Code came into effect on July 25 1987, two days before the first post-Martial Law Congress convened.

Now here’s the rub: the 1987 Constitution explicitly states that the Administrative Code is CONSTITUTIONAL.

It’s right there in Section 6, of Article XVIII, Transitory Provisions.

“The incumbent President shall continue to exercise legislative powers until the first Congress is convened.”

In short, it was a mind-boggling one-off deal. Section 6 of the Transitory Provisions of the 1987 Constitution allowed Pres. Cory to write herself any bunch of laws BEFORE the very first (ever) Congress convened.

To state once again: the 1987 Constitution says the Administrative Code is constitutional.

What does this mean? For nearly six months after the ratification of the 1987 Constitution, Pres. Cory had decree-making powers just like Marcos.

What Sen. Joker, however, failed to tell Inquirer was that – as Pres. Cory’s Executive Secretary then, he played a key role in wielding such powers. And it clearly was not Marcos who enacted the Administrative Code of 1987.

The Administrative Code is not a mere Executive Order. It has the status of a law. The Constitution gave it the status of a law.

This was why I wanted to talk today to Sen. Joker Arroyo, to clarify what he told The Inquirer. And to ask him – are you saying that The Administrative Code of 1987 is the legal basis for pooling unused funds and savings, which President Aquino did with the DAP? Unfortunately, Joker Arroyo has not returned my call.

So I asked ex-Senator Saguisag, who was once in Malacañang Palace together with Joker Arroyo as Pres.Cory’s spokesman, to interpret for me what Sen. Joker was implying. Saguisag replied to me,

“Well, apparently, dahil sinasabi ni Joker yata na hindi ginamit. So it (the legal basis for pooling funds) must have been there. Kung sinasabi ni Joker it was there but it was not used, de ginamit siguro ni Butch at ni Noynoy.”

The same Constitution said an existing law would continue to remain in effect provided it is “not inconsistent” with the Constitution.

Now let’s examine whether Sections 38 and 49 of the Administrative Code that Abad cited as the main bases for DAP are “not inconsistent” with Section 25 (5) of Article VI of the 1987 Constitution.

Section 23 (5) states:

“(5) No law shall be passed authorizing any transfer of appropriations; however, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings to other items of the respective appropriations.”

I believe Section 23 of the Constitution did not revoke Sections 38 and 49 of the Administrative Code (which Abad cited) because Sections 38 and 49 do not clash with Section 23 of the Constitution, which is prospective in nature – “no law shall be passed”.

Since the Constitution’s Transitory Provisions accepted the enactment of the Administrative Code, then the Code does not fall within the ambit of Section 23.

When I ran this argument by Sen. Saguisag, he told me it was also “legally defensible.”

So it appears, Sections 38 and 49 of the Administrative Code are still valid and in effect. In fact, the Supreme Court Justices treated the Administrative Code as a valid and binding law. Except that they forgot to examine Section 49 in conjunction with the DAP, Section 38 and the Constitution.

Why do Sections 38 and 49 have to go hand-in-hand to make DAP constitutional?

Here is what I think Abad and Pnoy did, using Sections 38 and 49.

Section 38 gives the President the power to stop spending on any project. This naturally would result in “savings”. Section 49 gives the President the power to pool these savings “for certain purposes”. In PNoy’s case, he called the pooled fund DAP.

Both sections 38 and 49 of the Administrative Code fall under CHAPTER 5 entitled “BUDGET EXECUTION”.

You will notice, Section 38 gives the President of the Philippines the power to suspend and even stop spending on a project of “any agency” – not just in the executive branch of government, it seems, but in “any” government agency. And the President only has to cite one reason to suspend or stop a project – “whenever in his judgment the public interest so requires.” That’s all.

Read for yourself Section 38:

Section 38. Suspension of Expenditure of Appropriations. – Except as otherwise provided in the General Appropriations Act and whenever in his judgment the public interest so requires, the President, upon notice to the head of office concerned, is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the General Appropriations Act, except for personal services appropriations used for permanent officials and employees.

Justice Bersamin looked at Section 38 of the Administrative Code. But because he did not look at Section 49, he concluded that Abad and PNoy erred. Bersamin said:

“Moreover, the DBM did not suspend or stop further expenditures in accordance with Section 38, supra, but instead transferred the funds to other PAPs” (Program. Activity or Projects).”

I also read the five separate and concurring opinions of Justices Arturo Brion, Antonio Carpio, Marvic Leonen, Estela Perlas-Bernabe and Mariano del Castillo. They discussed Section 38 but were all silent on Section 49.

If they had looked at Section 49, they would have read that this section gives the President and Budget Secretary vast powers to use “savings in the appropriations”.

They might not have noticed this because at first glance, the list for when the President can use the power to pool and use savings seems innocuous.

Whoever drafted this Code cleverly buried one of the the most important powers of the President in Section 49 – the power to impound and juggle funds. Here is Section 49: pay close attention to numbers 9 and 10:

SECTION 49. Authority to Use Savings for Certain Purposes.—Savings in the appropriations provided in the General Appropriations Act may be used for the settlement of the following obligations incurred during a current fiscal year or previous fiscal years as may be approved by the Secretary in accordance with rules and procedures as may be approved by the President: (1) Claims of officials, employees and laborers who died or were injured in line of duty, including burial expenses as authorized under existing law; (2) Commutation of terminal leaves of employees due to retirement, resignation or separation from the service through no fault of their own in accordance with the provisions of existing law, including unpaid claims for commutation of maternity leave of absence; (3) Payment of retirement gratuities or separation pay of employees separated from the service due to government reorganization; (4) Payment of salaries of employees who have been suspended or dismissed as a result of administrative or disciplinary action, or separated from the service through no fault of their own and who have been subsequently exonerated and reinstated by virtue of decisions of competent authority; (5) Cash awards to deserving officials and employees in accordance with civil service law; (6) Salary adjustments of officials and employees as a result of classification action under, and implementation of, the provisions of the Compensation and Position Classification Act, including positions embraced under the Career Executive Service; (7) Peso support to any undertaking that may be entered into by the government with international organizations, including administrative and other incidental expenses; (8) Covering any deficiency in peso counterpart fund commitments for foreign-assisted projects, as may be approved by the President; (9) Priority activities that will promote the economic well-being of the nation, including food production, agrarian reform, energy development, disaster relief, and rehabilitation. (10) Repair, improvement and renovation of government buildings and infrastructure and other capital assets damaged by natural calamities; (11) Expenses in connection with official participation in trade fairs, civic parades, celebrations, athletic competitions and cultural activities, and payment of expenses for the celebration of regular or special official holidays; (12) Payment of obligations of the government or any of its departments or agencies as a result of final judgment of the Courts; and (13) Payment of valid prior year’s obligations of government agencies with any other government office or agency, including government-owned or controlled corporations.

Numbers 9 and 10 extend the president’s powers to pool and deploy savings beyond the executive branch to all other branches of government.

Is this inconsistent with the Constitution?

That is what the Justices would have to determine.

But I would argue that 9 and 10 both add – not subtract – to the power that the President is given under Section 23 (5) of the Constitution. Because after all, the President is the main implementer of the national budget and he has the widest perspective of how much revenues are coming in and how much is being spent.

To recap, the following is what I think PNoy and Abad did: Using the President’s power under Section 38 to suspend or stop projects, they managed to generate savings. Then they justified the pooling and cross-border transfers of such savings in order to stimulate the economy. They called this DAP and they justified the pooled fund by pointing to Section 49 of the Administrative Code, which allows them to do this for:

(9)Priority activities that will promote the economic well-being of the nation, including food production, agrarian reform, energy development, disaster relief, and rehabilitation. Repair, (10)improvement and renovation of government buildings and infrastructure and other capital assets damaged by natural calamities;

Justice Bersamin had pointed out that Section 28 of the Administrative Code was a limitation of the presidential power to use savings because it orders “Unexpended balances of appropriations” to be reverted to the General Fund at the end of the fiscal year. However, Section 28 would no longer come into play if these “unexpended balances” would have been spent before the end of the fiscal year by using Section 49.

Neat, huh.

And dangerous, too.

It gives the Executive branch vast powers for fund juggling and for other things as well.

Under a President who wants to do good for the nation, such powers are useful. But under a President who has other motives, such powers can greatly harm the nation. I wonder how the other presidents before PNoy used these powers.

I do believe the Filipino people have a reason to ask the Supreme Court to review its ruling on DAP, in the context of Sections 38 and 49 of the Administrative Code.

Congress should also review the vast powers of the President under the Administrative Code. Because who knows what succeeding presidents will do with these powers?

How did Butch Abad and PNoy know about Section 49?

PNoy’s mom enacted the Code. Abad was once her Agrarian Reform secretary. My guess is, his department had benefited from the pooling of such savings since agrarian reform is one of the authorized activities to use such savings.

If PNoy can convince the court that his mom’s Administrative Code is what makes DAP legal and constitutional, then he can thank his mom for saving him from jail and the people’s wrath.

What we as citizens should keep in mind is this: The Administrative Code is still in effect and can be used by ANY President. Isn’t it perhaps time for Congress to look at the Code and review the awesome powers it gives the President?

The next piece I will be posting is on Butch Abad and Janet Lim Napoles

You can examine the Administrative Code of 1987 here.