Business World, 8 January 2013

The Aquino administration which has expressed strong commitment to openness and fiscal responsibility has made monitoring of government projects even more difficult. At the same time, it has reneged on its promise to improve governance by building up public institutions. It has weakened rather than strengthened budget rules.

The Philippine Constitution states clearly the assignment of fiscal responsibility. The President prepares the national budget and submits the same to Congress for authorization. Congress reviews and amends the budget and finally authorizes it. Then the President executes the budget as approved by Congress, subject to his line-item veto.

In fact, the Constitution is quite strict on the implementation of the budget. Article VI, Section 25 (5) states: “No law shall be passed authorizing any transfer of appropriations; however, the President, 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.”


Yet, a huge chunk of the national budget — about 155 billion in the case of DPWH and 28,6 billion in the case of DoTC — may be realigned right after it has been signed into law, without prior approval by the President and Congress.

Special Provision (9) in the DoTC’s budget [General Appropriations Act of 2013, p. 1144] provides:

“Realignment of Funds. The Secretary of Transportation and Communications is authorized to approve: (a) realignment of allotment released from appropriations of the Department from one project/scope or work to another: PROVIDED, that (i) the realignment shall be made only once to another project/scope of work within the same category, as the original project and within the same DOTC implementing unit; and (ii) the allotment released has not been obligated for the original project/scope of work; and (b) realignment of unutilized allotment from a project/scope of work that are: (i) still available after completion or fiscal discontinuance or abandonment of work, activity, or purpose for which the allotment is authorized; or (ii) realized from the implementation of measures resulting in improved systems and inefficiencies allowing for lesser costs in project implementation: PROVIDED, FURTHER, That the realignment shall be made to an existing program, activity or project of the Department and within the same DOTC Implementing Unit: PROVIDED, FINALLY, That the Secretary of Transportation and Communications shall inform the DBM, in writing, of every such realignment within five (5) calendar days from its approval and shall post the realignment on the DOTC website the same period.” xxx

“Implementation of this provision shall be subject to guidelines to be prepared by the DOTC.”

The same privilege to realign funds has been given to the DPWH Secretary. Worse, both secretaries may prepare the implementing rules without getting the approval, or even concurrence of the DBM Secretary, the President’s alter ego on budgetary matters. What do you have to say, Secretary Abad?

What is anomalous is that the President did not even seek from Congress the DoTC Secretary’s power to realign funds. He certainly did not include it in his 2013 Budget submission to Congress. Yet, Congress inserted it, and the President, willingly or through negligence, allowed it by not exercising his line-item veto power. What a mess!

It takes about a year to prepare a budget and have it approved by Congress. Yet, after the budget has been prepared and approved by Congress, the secretaries of two favored agencies — Public Works and Highways and Transportation and Communications — may still replace authorized programs and projects with new ones. It reflects sloppiness on the part of DBM. At the same time, it shows how poorly legislators regard their power of the purse.

This is not a trivial matter. In fact, it violates the essence of congressional authorization in the use of public funds. Imagine replacing multibillion project A which has been incorporated in the President’s budget, and after a review by both houses of Congress, has been approved being replaced by an entirely new project B.

What could possibly justify such substitution? That project B is a better project than A? This raises a lot of legal and policy questions. First, can such substitution be even done without prior approval of the President and Congress? It implies a significant reassignment of power from one branch of government to another, from Congress to the President, and from the President to his select cabinet members — the DPWH Secretary and the DOTC Secretary. Doesn’t this make the entire budget process a joke?

Second, what happened to the much-vaunted zero-based budgeting (ZBB)? Had ZBB been seriously applied, there would have been no need for project substitution. Was it a failure of the ZBB approach? Or was ZBB just a passing fad rather than a serious budget reform?


Third, this makes monitoring of government programs and projects even more difficult. Policy think tanks, scholars, politicians, and the general public monitor programs and projects to see whether those authorized by Congress are being implemented properly and efficiently. Yet, the realignment of projects the DPWH and DoTC secretaries after Congress has approved the budget makes the monitoring of projects an even more tedious task. It’s like shooting a moving target. And it doesn’t foster openness.

Fourth, this makes the budget process in the future potentially messier. What if other department secretaries ask for the same power to realign funds as now enjoyed by the DPWH secretary and the DoTC secretary? What if individually Mr. Aquino’s secretaries lobby with Congress for the power to realign even if the President has not requested for the same?

By now, the absurdity of this budget mess should be clear. There’s plenty of blame to share around. DBM authorities should share blame for first, letting the insertion of the special provision on realignment of fund and second, for not asking the President to exercise his line-item veto power.

The members of Congress should share blame for not exercising the power of the purse. Congress has failed to scrutinize the budget carefully.

The President should share blame for not being hands-on in preparing the budget and for failing to exercise his line-item veto power. At the very least, he should reprimand the Cabinet member (s) who allowed the diminution of his presidential power to implement the budget.