Budget guard rails violated

The Supreme Court (SC) decision that declared unconstitutional specific provisions of the budget laws of 2024, 2025 and 2026 could undeniably cause delay in the approval of the 2027 General Appropriation Bill (GAB). That is, if the House of Representatives of the 20th Congress would insist they did not commit the same abuses in amending the proposed 2027 GAB as with these three previous budget laws.

The 2024 and the 2025 General Appropriations Act (GAA) were passed into law by the 19th Congress while it was the present 20th Congress that approved into law the 2026 GAA.

Currently, the 2027 GAB under House Bill (HB) 10858 contains the P7.2-trillion National Expenditure Program (NEP). They approved it on third and final reading before both chambers adjourned last month for their Undas recess.

President Ferdinand “Bongbong” Marcos Jr. (PBBM) endorsed it for approval by the 20th Congress. Supposedly, the biggest chunk of the 2027 GAB, or as much as P1.10 trillion, went anew the education sector as required under our country’s Constitution.

Dubbed as “The President’s Budget,” the 2027 GAB listed the PBBM administration’s priority projects and programs. But after it goes through Congress, the proposed 2027 GAB will fund not just the NEP but all the Senate and congressional amendments.

These amendments are just another term for budget insertions.

The NEP is the original GAB as approved by PBBM and submitted to Congress by the Department of Budget and Management (DBM). The 2027 NEP and the House-approved 2027 GAB are now pending scrutiny by the Senate finance committee chaired by Sen. JV Ejercito. Since they started the budget hearings, Sen. JV repeatedly vowed to restore a number of foreign-assisted infrastructure projects (FAPs) that were de-funded in the 2027 GAB. Civil society groups reported at least P190 billion worth of NEP infrastructure projects were suspiciously re-aligned in the House-approved 2027 GAB.

In the aftermath of the SC majority ruling handed down on Oct. 7, the flurry of reactions and responses drowned out the sober summation of Chief Justice Alexander Gesmundo’s concurring opinion. The outgoing Chief Justice of the 15-man High Court penned his brief concurring opinion heavily anchored on the recommendations submitted to the SC by former DBM secretary Benjamin Diokno.

Diokno was invited as one of the “amici curiae” in the oral arguments on the several petitions that questioned the three GAAs. He served as DBM chief for the past three presidents of the country and at present sits as one of the Bangko Sentral ng Pilipinas’ Monetary Board members. Out the 10-point “fiscal rules” presented by Diokno, Gesmundo cited two of his recommended “safeguards” to help get PBBM back on track in his final years. The Chief Justice wrote:

Diokno submitted to the SC his paper entitled, ‘Will the Budget Outcome Be Different This Time? On the Road Towards Fiscal Consolidation, Responsibility and Accountability,’ where he proposed fiscal rules that ensure compliance with the Constitution. His proposed Rules Three and Four read as follows:

RULE 3. Honor Foreign Assisted Projects (FAPs).

FAPs are prepared with utmost care. They are the result of extensive feasibility studies, have high economic and social payoffs and are implementation ready. They have the imprimatur and funding support by international financial institutions such as the World Bank and the Asian Development Bank, and bilateral donors. They should not be subject to political bargaining.

Substituting local projects (those identified by legislators which have not gone through extensive benefit-cost analysis and are not implementation-ready) for carefully crafted foreign-assisted projects has two adverse consequences: (1) it delays project implementation and (2) it results to higher commitment fees.

RULE 4. Accept Congress’s right to amend.

During my watch, I recognized that the power of the purse belongs to Congress. However, as a matter of policy, I allowed any amendment to the President’s budget that for as long as it had the effect of improving it. We realize that the executive department does not have a monopoly of good judgment. Hence, I agreed with any proposal that is superior to a proposal in the President’s budget in terms of cost-benefit analysis and for as long as the project is implementation ready.

Otherwise, I promised to consider the legislator’s amendment to the President’s Budget in the next budget cycle.

To my mind, the proposals of Hon. Diokno serve as great starting points for the safeguards which this Court may consider.

As regards the power to create new PAPs (Programs, Activities and Projects), Congress must be able to show that these PAPs are implementation-ready at the very least. Inasmuch as Congress has the power to create new PAPs, this must be balanced with the reality that it is the executive who implements the GAB once it is passed into law.

Hence, creating PAPs which have a low or inexistent chance of implementation leads to the significant risk that the funds appropriated for them will just be wasted. Requiring that these new PAPs be implementation-ready, to my mind, significantly reduces this risk. At the same time, it recognizes Congress’ role as a strong check and balance as it can modify and even change the president’s budgetary suggestions through the creation of new and implementation-ready PAPs.

As regards the power to transfer PAPs from programmed to unprogrammed, and vice versa, Congress must ensure that, at the very least, such transfer does not effectively frustrate the government’s valid and existing obligations, whether locally or internationally.

As explained by Hon. Diokno, the transfer of FAPs from Programmed to Unprogrammed Appropriations not only delays implementation-ready projects which have been vetted by competent third-party organizations, but also results to higher costs for the government.”

Malacañang announced yesterday Solicitor General Darlene Berberabe will file today to the SC a motion for reconsideration on the three GAAs. At the oral arguments, Berberabe kept pressing for “guard rails” under our country’s 1987 Constitution as the best protection against sticky fingers of Congress in its exercise of its power of the purse.

Call them safeguards or guard rails, these have been wantonly violated through these years.