In denying a critic’s motion for partial reconsideration and partially granting the government’s own motion for a review of the July 1, 2014 ruling, the high court voted 13-0 to scrap the prohibition on “funding of projects, activities and programs that were not covered by any appropriation in the General Appropriations Act,” according to an official brief distributed to reporters.

At the same time, it affirmed the illegality of the three other budget practices assailed in the original decision, namely:

• withdrawal of unobligated allotments from implementing agencies and declaration as “savings” of withdrawn unobligated allotments and unreleased appropriations before the end of the fiscal year;

• cross-border transfers of savings from the Executive to augment appropriations of other offices; and

• use of unprogrammed funds despite absence of the National Treasurer’s certification that revenue collections exceeded targets.

The DAP was a stimulus scheme, approved by President Benigno S. C. Aquino III on Oct. 12, 2011, to fast-track public spending and prod economic growth.

In yesterday’s ruling, the high court said “certain declarations in our July 1, 2014 decision are modified in order to clarify certain matters and dispel further uncertainty.”

The ruling also said DAP programs, activities and projects “remain valid under the operative fact doctrine,” under which acts done pursuant to a law that was subsequently declared unconstitutional remain valid.

It also narrowed the scope of legal liability to DAP’s “authors” and removed “proponents and implementors.”

At the same time, the court also said its July 2014 ruling “did not result in throwing out the presumption of good faith or outrightly imputing bad faith to authors, proponents and implementors of DAP,” explaining this means the burden of proof in trial court hearings is on accusers of the program’s agents.

Saying the latest ruling “eases off the uncertainty” that has weighed on state spending and, consequently, growth, Budget Secretary Florencio B. Abad described the decision as a net positive for government, adding it would be instrumental in enabling the economy to hit a 7-8% growth target this year.

“The impact is generally favorable,” Mr. Abad replied in an interview at the sidelines of a mining industry event in Manila when sought for comment.

“It allows us more leeway to get the bureaucracies, the agencies to spend for programs and projects,” he explained.

“You will now have a regime that is more certain and predictable,” he added, referring to the July ruling’s chilling effect on government offices.

The high court itself acknowledged the positive contributions of DAP to the economy, saying: “The Court asserted that its decision did not declare the en masse invalidation of the 116 DAP-funded projects as the Court itself recognized the encouraging effects of the DAP on the country’s economy and acknowledged its laudable purposes.”

Looking forward, Mr. Abad said the ruling could support efforts to hit this year’s growth target.

“It will also have positive impact on growth,” he said.

“With Yolanda rehab and reconstruction programs also under way, 7% is definitely doable.”

Gross domestic product (GDP) growth managed to close in on the official 6.5-7.5% official full-year target for 2014 after a five-quarter-high 6.9% expansion in October-December. Last quarter’s spike was fueled in part by a surprising 9.8% hike in state disbursements, which historically contribute about a tenth to GDP.

Crawling farm sector output and lower-than-programmed -- and at times even contracting -- state spending had weighed on growth for much of last year.

Latest available official data show state spending on infrastructure increased 7% annually as of September, but fell 29.8% short of the P278.6-billion program for those nine months.

Copies of the ruling were not immediately available. Supreme Court Public Information Office Chief Theodore O. Te emphasized the finality of yesterday’s ruling, telling reporters in a press briefing yesterday: “Under the Rules of Court, the Court entertains only one motion for reconsideration.”

Solicitor-General Florin T. Hilbay described yesterday’s ruling via his Twitter account as a “de facto reversal” of the July 2014 decision, but was not immediately available to clarify the statement.

Although he acknowledged that DAP “by and large remains unconstitutional,” Bagong Alyansang Makabayan Secretary-General Renato M. Reyes, Jr. -- himself a critic of the program -- said in a statement “the SC modifications related to the third act...will present serious challenges to critics...The modification is a step back for the SC.”

At the same time, he said “the latest SC decision should now pave the way for holding President Aquino and DBM Secretary Butch Abad accountable for large-scale corruption, bribery and malversation of public funds.”

“They are the principal authors of DAP who should be investigated and made accountable. (Mr.) Abad concocted the DAP while (Mr.) Aquino signed all the DAP memoranda that illegally pooled the savings from various implementing agencies.”

Sought for comment, University of the Philippines economist Benjamin E. Diokno, himself a former Budget secretary from July 1998 to January 2001, said he had to read the entire ruling first, but noted “[i]t has far-reaching implications on the use of public funds and the need for policy makers to follow existing budget rules.”

European Chamber of Commerce of the Philippines Executive Vice-President Henry J. Schumacher said in a text message that “for continuity reasons, the SC clarification makes sense and is welcome.”

American Chamber of Commerce of the Philippines Senior Advisor John D. Forbes said in a separate text message: “I am not a budget expert, but I can say that the Philippines very badly needs much better physical and social infrastructure and the purpose of the DAP was consistent with meeting this challenge.” -- VAAFN with ICCD and DEDS

Source: Business World Online