Do Good Intentions Always Pave the Road to Hell?

Reexamining the Disbursement Acceleration Program (DAP) and Future Prospects for Improved Philippine Fiscal Management

John Simone C. Yrastorza

Edited by Simone Yrastorza

Hyper-Presidentialism and The Philippine Budget Process

The Disbursement Acceleration Program (DAP) issue sparked a huge controversy during the Aquino administration in 2013, a few months after the pork barrel scam on the Priority Development Assistance Fund (PDAF) was revealed. In this paper, a critique of Balisacan’s (2015) article entitled Hyper-Presidentialism in Philippine Budgeting will be made. Mainly, two arguments will be proposed. Firstly, this essay would agree with the author that the tendency for Philippine presidents to practice hyper-presidentialism is very prevalent, which is rooted in the institutions surrounding the political environment of the country. Therefore, the focus must not be restricted alone to changing formal institutions, but to altering informal institutions, as well. Secondly, the merits — and the dangers, when given to the wrong hands — of the DAP will be discussed. Notwithstanding the declared unconstitutionality of the DAP and its irregularities, discretion in fiscal decision-making may actually be beneficial for efficiency as long as stringent oversight is conducted.

In Balisacan’s (2015) article, hyper-presidentialism, a term first coined by Rose-Ackerman et al. (2011), was forwarded to explain Aquino’s presidency and the implementation of the DAP. In summary, hyper-presidentialism refers to the phenomenon when power is concentrated on the president, inconsistent with the concept of co-equal branches of government. In the DAP’s case, the president was able to redefine the definition of savings, as well as transfer funds from the executive to different branches for programs, activities, and projects (PAPs) not enacted in the national budget or the General Appropriations Act (GAA). The possibility was framed due to the government structures, and the formal and informal institutions that prevail in Philippine politics, such as the constitution and the concept of Pangulo, respectively, in which Filipinos tend to follow a single dominant leader instead of viewing the three branches as co-equal to ensure checks and balances among them.

Remnants of the Past: Revisiting the Aquino Administration

The campaign slogan of former President Aquino in 2010 was “Kung walang corrupt, walang mahirap” (Official Gazette of the Republic of the Philippines, 2010), a rhetoric held throughout his term of office. Eventually, he also emphasized that “Good governance is good economics” (World Bank, 2011). It was during his term when the Philippines was overhauled from the “Sick man of Asia” to “Asia’s rising tiger” (The Economist, 2016; World Bank, 2013). Even the business community recognized the country’s economic improvements as the first administration to achieve an investment-grade rating from credit rating agencies in 2013 (ABS-CBN News, 2021).

Nonetheless, Aquino’s administration was not spared by controversies. Even before the release of the Supreme Court decision declaring PDAF unconstitutional (Belgica v. Ochoa, Jr., 2013), the DAP issue immediately emerged. This pertains to the alleged economic stimulus used to address the administration’s underspending in the first few months in office. In summary, the executive branch declared savings from several sources that are not supposed to be classified as savings and appropriated such amounts to other PAPs not enacted in the GAA or the budget.

The Philippines and the New Institutionalism

Constitutionally, the Philippines has three branches of government — the executive, the legislative, and the judiciary — with equal powers and independence. In fiscal management, it is the legislature with the power of the purse — at least on paper. On the other hand, the executive branch through the President, proposes a budget and implements it when enacted. The judiciary has the authority to interpret the laws and declare the constitutionality or unconstitutionality of the other two branches’ actions. However, as Balisacan (2015) argues, this is not the case in reality, because of the prevalence of hyper-presidentialism, in which the President has greater powers than the other branches.

In recent decades, the rise of new institutionalism or new institutional economics (NIE) emerged. In line with North’s (1990) definition, institutions are the formal and informal rules “that human beings devise to shape human interaction” (p. 4). Formal institutions include codified rules, such as constitutions and laws, while informal institutions refer to uncodified rules, such as norms, culture, values, and beliefs, among others (North, 1990). In the book Why Nations Fail, Acemoglu and Robinson (2012) argued that the political institutions that create the economic institutions of a country are responsible for its development or underdevelopment. These are very much in line with Balisacan’s (2015) arguments that the political institutions of the country have allowed for the ineffectiveness of its economic institutions.

The Institutions Surrounding Philippine Politics and Governance

While Balisacan’s (2005) piece did not exactly mention the NIE, the formal structures that paved the way for hyper-presidentialism, as well as the cultural and historical tendency of Filipinos to the concept of a single dominant leader, were briefly tackled. Since the article only briefly discussed these, it is important to supplement these analyses with further discussion.

For instance, in describing the Philippines, Nobel laureate Gunnar Myrdal (1968) singled out the Philippines among countries in South Asia, “Perhaps in no other country in South Asia is political dishonesty so widely recognized, accepted, and talked about as part of the political game” (p. 389). It would be easy to say that this description still holds true today despite being written 55 years ago.

In a deeper historical context, the culture of corruption in the Philippines may be traced back to the Spanish colonial period. In fact, even Rizal’s (2004[1890]) On The Indolence of the Filipinos emphasized the honesty of Filipinos in their transactions with Chinese traders; Filipinos in the 13th century paid obligations even for debts already forgotten by the creditors (De Dios, 2011). It may then be presumed that corruption was brought to the Philippines by the Spanish colonizers. Case in point, Endriga (1985) discussed how bureaucrats during the Spanish colonization period were able to buy and sell government positions at a profit. On another account, Quah (2011) discussed how low salaries and poor working conditions have led to corruption in Spanish bureaucracy. Woods (2006, as cited in Quah, 2011) also pointed out that the governor-generals in the Philippines were just appointments made by the King of Spain on the basis of personal ties.

Williamson (1998) first proposed his “Four Levels of Social Analysis,” where it was theorized that informal institutions like those discussed above tend to be deeply embedded and that it takes hundreds to thousands of years before they are changed or altered. It is no surprise then that despite the removal of colonial powers of both Spain and the United States for more than a century already and the removal of the dictatorial rule, nothing much has changed. Therefore, it is not enough that new laws to counter corruption are enacted. Increased focus on changing the informal institutions that are so embedded in Filipinos’ daily lives should be ensured.

The Merits and the Dangers: An Unorthodox View

This paper joins Balisacan (2015) in calling out the use of the DAP for purposes contrary to its original objectives. For instance, the DAP was used on PAPs that were non-economic, such as stem-cell research, library construction, and the hiring of consultants (Balisacan, 2015). More importantly, the use of DAP for patronage politics, particularly in the case of the City of Muntinlupa and the Province of Bataan — one of the richest cities and one of the least populous provinces, respectively — who received bigger chunks of the DAP (Balisacan, 2015). Additionally, there were also allegations, particularly by Senator Jinggoy Estrada, that legislators who voted for the impeachment of then-Chief Justice Renato Corona received Php50 million each from the DAP (Macaraig, 2013). Indeed, it seems that aside from the DAP’s objectives explicitly stated, it has been used partly for political purposes.

It would be common to hear arguments that the lesser the discretion an official has, the lesser the chance that corruption will be present. First, the issue of discretion will be addressed. Two questions will be posed. The first is from one of Action for Economic Reforms’ (AER) columns, “Is discretion [equal to] corruption” (Galang, 2014b)? Another would be, does using an unconstitutional means necessarily mean that the ends are also ill-intentioned? To be more specific, should the issue really be the constitutionality of such a program, or should it be where the funds were used?

Good or Bad?: The President’s Discretion

Time and again, people have witnessed that government officials and politicians who want to do something illegal just find other ways to do the act through legal means rooted in the loopholes of the laws. Whether these loopholes are included intentionally or unintentionally, if a person is committed to doing such evil actions, the person will always find a way no matter what.

Case in point, the government has implemented several reforms in terms of procurement laws. It has been a common phenomenon among government offices to experience red tape in procurement, even for small ticket items. Yet, it is seen as well how officials and the private sector are able to bypass these laws over technicalities. It is as if the government is just adding new levels of procedures to make the process stricter and longer, but at the same time, corrupt people are keeping up with the game.

Going back to institutions, reforms in legal processes would be inefficacious in the long run if the informal institutions remain as it is. Nonetheless, the presence or absence of discretion does not automatically mean that such will lead to corruption.

Budget (In)Flexibility: A Double-Edged Sword

The Supreme Court decision has recognized that the DAP has served and achieved its objectives (Collas-Monsod, 2014a). As the decision puts it, “[I]t has been adequately shown as to be beyond debate that the implementation of the DAP yielded undeniably positive results that enhanced the economic welfare of the country” (Araullo v. Aquino III, 2014). Additionally, Associate Justice Leonen recognized that the program had good intentions, was used for efficiency and effectiveness, and benefitted the Filipino people (Araullo v. Aquino III, 2014). Even a World Bank (2012) report recognized that the DAP contributed to 1.3% of economic growth for the quarter when the DAP started in 2011.

While there are indeed undesirable and corrupt practices surrounding the DAP, the merits of it must not be left behind, which have not been talked about, especially in mainstream news sources. While it is recognized that the constitutionality of DAP was legally problematic, the DAP may actually be a functional fiscal program, except for the fact that it was used for political purposes. This is aside from the program’s legalities that, out of luck, are not aligned with the existing Philippine legal rules. However, by declaring the DAP unconstitutional, potential benefits have also been missed, including efficiency and the possibility of better fiscal management. As AER’s Filomeno Sta. Ana (2016) pointed out, “Do not throw the baby out of with the bathwater.”

Discretion is not necessarily disadvantageous. As in any private or public organization, they all have plans, including a financial or budget plan. It is common knowledge that a plan is just a guide and will definitely not be achieved flawlessly considering different internal and external factors, therefore justifying the need for discretion (Galang, 2014a). As the New Public Management (NPM) paradigm forwards, borrowing private sector practices, such as having a certain level of discretion and control may lead to better efficiency (Hood, 1991). In fact, Osborne and Gaebler’s (1992) Reinventing Government presented actual cases of practices similar to the DAP (Galang, 2014a).

More importantly, the inflexibility of the budget was cited in the Philippine Human Development Report (PHDR) 2009 as a factor that possibly hinders human development and governance (Collas-Monsod, 2014b). As the report puts it, “The budget… does not allow greater investment or innovation in the delivery of public services, human development or otherwise…” (PHDN et al., 2009, p. 42). Hence, by heavily disallowing innovative fiscal management practices, it is as if the government is also the one adding obstacles to and hampering the country’s development path. Nevertheless, oversight by the government itself and civil society over discretionary decisions shall be more stringent so that the discretion would not be free from accountability. After all, budget flexibility and discretion over decisions are double-edged swords.

Moving Forward: Prospects for an Improved Philippine Fiscal Management

The view that increasing the discretionary powers of a government official is innately good or bad was problematized in line with other public administration paradigms. Aside from changing formal institutions, informal institutional shifts are necessary to reduce the risk of people being pushed to bypass formal institutions and find loopholes surrounding them, as well as ensure that officials with discretionary authority use this accordingly.

It was argued that discretionary powers are possibly beneficial to efficiency, human development, and governance, as long as used responsibly, and are still subject to oversight by both the government and civil society. Nonetheless, the author joins the critics of the DAP in calling out the political and corrupt uses of the DAP to gain loyalty and influence. On the other hand, reforms in legal rules to allow potentially beneficial practices, like discretionary decision-making and the DAP, are also necessary.

Hence, instead of scrapping out the entirety of programs deemed unconstitutional or illegal, the government must learn to adopt the good and best practices that are legal and may be advantageous to governance. After all, doing this is not to increase the power of the officials but for the people who will benefit from these innovations. However, unless the informal institutions embedded within Philippine politics, particularly corruption, are changed, discretion would do more harm than good. No level of discretion nor safeguards would be deemed enough if the culture of corruption remains embedded among public officials.

John Simone C. Yrastorza is an undergraduate student majoring in Public Administration at the University of the Philippines National College of Public Administration and Governance (UP NCPAG). In 2023, he was part of the Summer School Program of the London School of Economics and Political Science (LSE), where he completed a course on International Development. His academic and research interests encompass the political economy of development, development in historical perspective, East Asian developmental states, Philippine economic history, fiscal administration, and the intersections among poverty, gender, labor, and development.

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