‘Missing’ P600-B IRA funds could spark LGUs ‘revolt’

President B. S. Aquino III has had a bad run, but presumably the worst is yet to come. In a parliamentary system or in a more mature and responsive presidential system, he should have long gone, but he has managed to hold on despite the wreckage around him. Since his “I am-not -a-thief” national telecast bombed out, the Supreme Court has voided the first part of his pork barrel system otherwise known as the Priority Development Assistance Fund. The second part, known as the Disbursement Acceleration Program, could also be similarly annulled. But a scandal potentially more ruinous than both could follow, involving an estimated P600 billion belonging to the local government units. So far the national government has failed, or refused, to release this fund.

In declaring the PDAF null and void, the SC called attention to certain constitutional principles, which many had thought were no longer operational , or at least fashionable, under Aquino’s watch. Until the Court spoke, “separation of powers,” “public accountability,” “respect for local autonomy,” etc. had been considered topics for editorial or academic discussion, but no longer parts of the Aquino government.

The SC ruling served to assure the nation that the Court, whatever its limitations, was not prepared to clothe with constitutionality Aquino’s idea of a pork barrel state under a creeping authoritarianism. The ruling not only abolished the PDAF; it allowed the nation to look far beyond, into a number of other cases where the principles invoked by the Court seemed to gain stronger traction.

One of these has to do with an estimated P600 billion in Internal Revenue Allotment funds, which the national government has systematically withheld from LGUs since 1992, in violation of the Constitution, the Local Government Code, the National Internal Revenue Code, and the declared policy to promote employment and accelerate GDP growth.

The Department of Budget and Management website, which shows official disbursements, including the outlawed PDAF, contains no relevant data on the IRA during this period. Some local executives say the Fund is missing---unaccouned for, misused or lost. But more on this later.

The landmark PDAF decision said that in allowing legislators “to wield, in varying gradations, non-oversight, post-enactment authority in vital areas of budget executions,” the PDAF violated the constitutional separation of powers between the Executive and the Legislative Departments. It placed the burden squarely upon the legislators.

This position is shared by much of popular opinion in the media and the public square. But none of it might have happened without the express consent and cooperation of the President, who used the PDAF to oil the passage of the annual budget without thorough examination and debate, and make the lawmakers docile to the political, partisan and even personal wiles and whimsies of the President.

Since 2010, Aquino III has exercised “the power of the purse” vested in Congress. Under the Constitution, all appropriations, revenue or tariff bills and bills authorizing increase of the public debt must originate from the House of Representatives, even though the original recommendation comes from the Executive. Congress has the power to decrease, though not to increase the appropriations recommended by the President, but Aquino has effectively prohibited the exercise of this power by making it clear that he would brook no legislative changes in his budget.

In the wake of the SC ruling, House Speaker Feliciano Belmonte Jr. has promised that the House shall henceforth keep a tighter watch of its powers and prerogatives with respect to the budget. This is a predictable quote, but it remains to be seen, given the barnacles that have grown around the ship of state.

The Court also said that by allowing lawmakers to fund specific projects which they themselves determined, the PDAF violated the constitutional principle on “non-delegability of legislative power.” This is not confined to the Legislative alone. It applies much more demonstrably to the Executive in the case of the so-called Disbursement Acceleration Program.

Reportedly conceived by the Secretary of the Department of Interior and Local Government Manuel Roxas II and Budget Secretary Florencio Abad, the DAP was used as the source or channel of the P50-million “incentives” given to each of the 19 of the 20 senator-judges who had convicted then-Chief Justice Renato Corona at his 2012 impeachment trial. All the DAP disbursements have not been disclosed.

Paradoxically only DAP’s allegedly flawed existence, not its alleged misuse to commit a crime or crimes, has been brought to court. This is probably because the alleged bribery implicates the President, who may not be charged with any crime while in office, except through impeachment.

The constitutional dispute revolves around Section 24 (5) Article VI of the Constitution, which provides: “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 in other items of their respective appropriations.”

Several groups argue that in creating the DAP, Aquino not only acted against the Constitution but also committed other penal offenses. Public expectation is high that the SC would rule on the DAP soon in the same manner it has ruled on the PDAF.

Finally, the Court said the PDAF “impaired public accountability” and “subverted genuine local autonomy.” The reference to these two principles served to highlight two separate situations, namely: Malacanang’s incompetent response to the super-typhoon Yolanda/Haiyan in Tacloban, and some “missing” LGU funds estimated at P600 billion.

In Tacloban, Malacanang tried for about a week to wash its hands of any responsibility for responding to the calamity, insisting that the city government was, and should act as, the “first responder”. Indeed, what else was the city but that, after taking the full fury of the strongest typhoon ever to hit the Philippines? Wasn’t that enough “first response”? Why such a monstrous attempt on the part of the national government to deny immediate action after the “first responder” had been flattened? What kind of generalship was Aquino running?

Wasn’t there a National Disaster Risk Reduction and Management Council whose duty it was to look after the people’s safety and well-being before, during and after the disaster? And wasn’t Roxas the agency’s vice chairman for “Disaster Preparedness”? Why was he, together with Aquino, insisting that Tacloban Mayor Alfred Romualdez be the one to blame for Roxas’s patent failure to perform?

At a time when everybody was trying to help, Aquino and Roxas seemed more eager to impose their partisan politics upon Tacloban. Aquino refused to show the slightest civility to the city mayor whom he rapped for not preparing enough for the super typhoon, while Roxas sought control of the city as a precondition for the national government’s official intervention.

The situation changed only after CNN and the rest of the world media exposed the government’s incompetence, and international aid from the US, UK, Japan, Australia, Canada, Europe, the UN, ASEAN, Korea, India, China, UAE, the Gulf countries and many others began to pour in. But as foreign ships, planes, transport units, troops, medical and paramedical personnel and relief workers with all their equipment and relief supplies converged upon Tacloban, an unsigned message went viral in the social media thanking the President profusely for all the help that had poured in, but clearly identifying the “Mr. President” as President Barack Obama of the US, rather than the laidback president of the Philippines.

Now, what have they done to the LGUs? It has been long noted that while Aquino was trying to indulge the Congress’ appetite for “pork” to the point of gluttony, he appeared, in contrast, to be trying to starve the LGUs by withholding their share of the national internal revenue taxes, which by law should be released to them automatically. To be fair, this highly questionable practice did not start with Aquino, but it simply became worse under him.

This has subverted the letter and spirit of the Constitution, the Local Government Code, and the National Internal Revenue Code, and set back the LGUs economic development programs. Nothing exposes Aquino’s hypocrisy in claiming that the DAP was needed to pump prime the economy and accelerate GDP growth more clearly than this effort to deprive the LGUs of their own funds, which had the effect of slowing economic activity in the provinces, cities, towns and barangays.

Under Sec. 6 of Article X of the Constitution, “Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.” To implement this provision, Republic Act 7160, otherwise known as the Local Government Code, provides that LGUs “shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year, as follows: a) On the first year of the effectivity of this Code, thirty percent (30%); b) On the second year, thirty-five percent (35%); c) On the third year and thereafter, forty percent (40%).”

RA 8424, otherwise known as the National Internal Revenue Code, in turn defines “national internal revenue taxes” to include income tax, estate and donor’s taxes, value-added tax, other percentage taxes, excise taxes, documentary stamp taxes, and such other taxes as hereafter may be imposed and collected by the Bureau of Internal Revenue.

Some of these taxes (particularly on imported goods) are collected by the Bureau of Customs as the mandated agent of the BIR. These include value-added tax, excise taxes, and documentary taxes. Since 1992, however, the BIR has failed to include the BOC collections as part of the legally mandated tax base for the computation of the IRA, thereby depriving the LGUs of P498,854,388, 154. 93 as of 2012, according to one petition before the Supreme Court, or roughly P600 billion as of today, according to some estimates. Included in this computation is the amount of P60.75 billion used as capital outlays in the 2012 General Appropriations Act.

The amount is infinitely bigger than the alleged P10-billion pork barrel scam involving Janet Lim Napoles and some legislators, and the P132.7 billion or so DAP funds, from which Aquino drew the P1.1 billion payoff to the senators who had convicted Corona in the 2012 Senate impeachment trial.

Local executives believe the exclusion of the BOC collections from the tax base not only defrauds the LGUs of their just internal revenue shares. It also artificially inflates the government’s total revenue as the basis for its annual budget. But above all, it further centralizes power where decentralization is needed, undermines local autonomy where it ought to be strengthened, destabilizes the political situation where greater stability could be served, widens economic and social inequality and slows down GDP growth and the development of local communities.

Many fear that Malacanang’s continued failure to release the LGU funds could fan widespread dissatisfaction with Aquino. While not too many are prepared to sympathize with lawmakers who had lost their PDAF, very few could fail to see that the LGUs have been robbed, and continue to be robbed.

Some have theorized that the LGUs’ share of the IRA being withheld now would ultimately be released before the 2016 presidential election as a “gift” from Roxas, who hopes to be anointed as Aquino’s LP presidential candidate. True or not, this is coming out of the grapevine, and local executives are angry and not likely to put up much longer with it.

After the President’s resounding SC defeat on the PDAF, the mass anger he has provoked and the savage attack he has drawn from the international media, including from some of his old attack dogs in the conscript press, for his execrable handling of the initial situation in Tacloban, Aquino cannot afford to risk a possible ‘revolt’ of the LGUs.

But the threat of that is real---as real as a receding hairline or smoker’s cough.

fstatad@gmail.com

http://manilastandardtoday.com/2013/11/25/-missing-p600-b-ira-funds-could-spark-lgus-revolt-/