Is the DAP unconstitutional?

Fernando Fajardo

On 19th November 2013, voting 14-0, the Supreme Court declared as unconstitutional the Priority Development Assistance Fund (PDAF) or “pork barrel.” What about the Disbursement Acceleration Fund (DAP) that very few people knew or understood before Senator Jinggoy Estrada exposed it during his privilege speech before he went to the US?

Until now, the question is not yet answered? And being not a lawyer, I dare not say it is constitutional or unconstitutional. However, for the enlightenment of anyone interested in the fate of DAP, let me share with you what I gathered from the website of the Department of Budget and Management.

The DBM says that the DAP is a stimulus package under the Aquino administration designed to fast-track public spending and push economic growth. This covers high-impact budgetary programs and projects which will be augmented out of the savings generated during the year and additional revenue sources. The DAP was conceptualized in September 2011 and introduced in the following month with approval of the President. The government was underspending for the first eight months of 2011 that dampened the country’s economic growth.

Such type of intervention was needed as key programs and projects, most notably public infrastructure, were moving slowly. Another reason for its need was also the global economic slowdown as well as the financial toll of calamities that came during the year. The economy has generally improved in 2012 and 2013 but the use of DAP was continued to sustain the pace of public spending as well as economic expansion.

Before the DAP was introduced, national government disbursements from January to September shrank by 7 percent year on year and was below program by 16 percent. Because of DAP and other related measures, public spending in the fourth quarter of 2011 grew year-on-year by a whopping 32.5 percent and was above program by 11.8 percent. In 2011, the positive effect of DAP was also seen on the accelerated Gross Domestic Product (GDP) growth.

DAP not only helped push GDP growth; services funded through DAP—such as transport, tourism and agriculture infrastructure—also supported more economic activity. In addition, the DAP expanded the delivery of key services to the people, such as the provision of healthcare services and the construction of school buildings. More important, programs and projects funded through DAP supported the administration’s socio-economic development agenda, as outlined in President Aquino’s Social Contract with the Filipino people.

How much were the programs and projects funded through DAP in 2011, 2012, and 2013? For 2011-2012, a total of P142.23 Billion was released for programs and projects identified through the DAP, of which P83.53 Billion is for 2011 and 58.70 Billion is for 2012. In 2011, the amount was used to provide additional funds for programs/projects such as healthcare, public works, housing and resettlement, and agriculture, among others. While in 2012, these were used to augment tourism road infrastructure, school infrastructure, rehabilitation and extension of light rail transit systems, and sitio electrification, among others.

In 2013, about P15.13 Billion has been approved for the hiring of policemen, additional funds for the modernization of PNP, the redevelopment of Roxas Boulevard, and funding for the Typhoon Pablo rehabilitation projects for Compostela Valley and Davao Oriental.

The programs and projects submitted to the DBM must meet the following conditions: a) Fast-moving or quick-disbursing, e.g. the payment of obligations incurred from premium subsidy for indigent families in the National Health Insurance Program; b) Urgent or priority in terms of social and economic development objectives, e.g. the upgrading of equipment and facilities for specialty hospitals, rehabilitation of Light Rail Transit and Metro Rail Transit, and the Disaster Risk and Exposure Assessment for Mitigation (DREAM) program of DOST; c) Programs or projects performing well and could deliver more services to the public with the additional funds e.g. Training for Work Scholarship Program of DOLE-TESDA.

Some of the items funded through the DAP are expenditures which are mandated by law, such as capital infusion for the Bangko Sentral ng Pilipinas (R.A. 7653, Section 2) out of the augmented Budgetary Support to Government Corporations-Others. The legislators have also endorsed programs and projects for the social and economic benefit of their constituents, such as medical assistance and local infrastructure projects. The proposals were funded through DAP as they are existing budgetary items in the GAA and compliant with the conditions stated above.

Of the total DAP approved by OP for 2011-2012 amounting to a total of P142.23 Billion only 9 percent was released to programs and projects identified by legislators. These were not released directly to legislators but to implementing agencies. Funds used for programs and projects identified through DAP were sourced from savings generated by the government, the reallocation of which is subject to the approval of the President; as well as the Unprogrammed Fund that can be tapped when government has windfall revenue collections, e.g., unexpected remittance of dividends from the GOCCs and Government Financial Institutions (GFIs), sale of government assets.

Savings were sourced from: a) the pooling of unreleased appropriations such as unreleased Personnel Services appropriations which will lapse at the end of the year, unreleased appropriations of slow moving projects and discontinued projects per Zero-Based Budgeting findings; and b) the withdrawal of unobligated allotments, also for slow-moving programs and projects, which have earlier been released to national government agencies. In line with laws on the use of savings (see below), DBM ensured that programs and projects funded through DAP have an appropriation cover; meaning, these are existing programs and projects in the General Appropriations Act (GAA) that can be augmented by such savings.

There it is.