Business World 28 December 2011

Under the 1987 Constitution of the Republic of the Philippines the assignment of power with respect to public finances is as clear as water: the President proposes, Congress authorizes, and the President executes the budget in accordance with the terms and conditions set in the Constitution and the General Appropriations Act. It further provides: “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.”

Some flexibility in budget implementation is allowed through the process of augmentation. Article VI, Section 25(5) provides: “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.”

The process of augmentation is restricted in two ways. First, savings have to be generated from other items in their respective appropriations; in the case of the Executive Department, savings have to be generated from within the budgets of agencies and offices within the Executive Department. Second, the item to be augmented has to be previously authorized by Congress. Augmenting a non-existing budget item — for example, the P750-million assistance to Quezon province to service the province’s indebtedness to the the National Power Corp. as part of the P72-billion Disbursement Acceleration Plan — is not allowed.

Yet, the Aquino government surprised the world, including the members of Congress, by coming up with a P72-billion fiscal stimulus to make up for its serious underspending during the first nine months of the year. Where did the P72 billion come from? In which particular items in the budget were the savings generated?

Assuming that indeed there were savings of such magnitude, were members of Congress who, under the 1987 Constitution, have the power of the purse, consulted on where the savings were to be spent? It would have been different, and certainly would not require Congressional imprimatur, if only a few millions or at most hundreds of millions are involved in the process of augmentation.


But P72-billion augmentation? It would have been prudent, fiscally responsible, transparent and respectful of a coequal branch of government if the President had consulted with Congress in the design and authorization of the P72-billion spending augmentation.

Surprisingly, nobody raised a howl when the new spending program was announced. Not even a peep. Encouraged, Budget Secretary Abad has announced that a new P20-billion spending program is in progress.

And precisely because legislators seem to have abdicated their power of the purse, the Executive has been implementing the budget without regard for the restrictions imposed by the Constitution and by Congress.

For example, in the 2011 budget, Congress authorized, and the Development Budget Coordination Committee (DBCC) has programmed, P20.5 billion for subsidy to various agencies and government corporations. As of November 30, 2011, the Executive has spent P37.3 billion, almost twice what was programmed. How were the savings generated? Is the new spending program augmenting existing items in the budget or entirely new ones?

Another example: in the 2011 budget, Congress authorized, and DBCC has programmed, only P1.8 billion as equity contribution to government corporations. As of November 30, 2011, some P12.4 billion has been disbursed, or more than six times the original authorized amount.

These huge augmentations of funds deserve some questions, at the very least. They raise serious legal questions. And they undermine the congressional power of the purse.

This pattern of behavior is a major departure from the practice during the time of the late President Cory Aquino. I recall that after the Mt. Pinatubo eruption there was a need for more funds for relief and rehabilitation. Mrs. Aquino submitted to Congress a supplemental budget of P10 billion which Congress subsequently approved. Yes, the 1987 Constitution allows the submission of a supplemental budget for specific purposes.

The Cory Aquino way was compliant with the 1987 Constitution. It was a transparent, fiscally responsible, and proper way of responding to unforeseen events. Equally important it demonstrate respect for a coequal branch of government.

Strengthen, not undermine, political institutions

Why didn’t Mr. Aquino go to Congress for the fiscal stimulus program? I guess he does not have the courage to face Congress and ask for additional spending authority when the 2011 budget that Congress passed with admirable speed remains unspent.

And perhaps he does not have much respect for legislators. One extreme view is that today’s Congress is like a jukebox ( for the Generation Y, a jukebox is a machine that automatically plays a selected musical recording when a coin is inserted). It does whatever the President asks it to do.

Here’s a sad observation: What happened to Congress during the entire term of Mrs. Arroyo, is happening under Mr. Aquino’s watch. During Arroyo’s term, Congress has conceded, completely, its power of the purse to the President. Under Aquino’s term, the same thing is happening. Things have not changed. But this is not the right path.

For the 2011 and 2012 national budgets, Congress has passed the President’s budget practically unchanged. There’s nothing wrong with that. What’s wrong is that Congress has sit idly by while the President failed to implement the budget according to what Congress has written into the general appropriations act. Worse, the Executive Department has drastically altered priorities and came up with new funding requirements for items not previously authorized by Congress.

But why has Congress allowed the Executive to slice and dice the national budget, massively rearranging budget priorities, without congressional review and imprimatur? Is the power of the pork so overwhelming and totally intimidating that legislators, friends or foes of the administration, don’t have the courage to ask questions on where all these funds, some P70 to 90 billion, are being sourced?

It’s been a quarter century since democracy was restored in the Philippines. And its been more than two decades since the Cory Constitution was adopted and embraced by Filipinos. Our national leaders should be steadfast in their commitment to strengthen rather than weaken political institutions as envisioned in the 1987 Constitution.

What we need are a few good men who are willing to ask the right questions even at the risk of losing their pork.

What is at stake here is the congressional power of the purse, the independence of Congress from the Executive, and the constitutional provision that every peso that is paid out of the Treasury shall have an appropriation’s cover.

In keeping with the desire to improve governance, what our national leaders need to do is to strengthen, not undermine political institutions. The massive reordering of the national budget, after it has been approved by the legislature, may be the norm in authoritarian regimes, but such practice is unacceptable in well performing democratic societies.