Crooks incorporated: Pushers, enablers, players gaming the system in band

(Part 1)

Today the trading of mud between those who accuse, investigate, and claim corruption in flood control and other projects in the Philippines has become ritualistic. Just a few admit, and more rant about, the corruption, silent and evasive though about how they pushed, enabled, and played it. Pass the blame, deny any part in the wrongdoing, eschew getting any share from the spoils, preserve claimed honor — it’s our ritualistic name-and-shame game that we might call the failure of nobility.

In the circle of corruption, pushers, enablers, and players abound. Those inside and outside the government are gaming the system, assisted or triggered by incompetence, negligence, ambition, greed, or all these in a bundle. Flood control projects that are ghost or bad, kickbacks and commissions fleeced off contracts, are a series of acts of many, and involve not just one or a few persons and agencies.

THE BUDGET CYCLE, AS INTENDED
And yet the process they are gaming was supposed to limit, if not block, foul play, as well as ensure accountability at every step.

The Administrative Code of 1987 (EO 292) devotes Book VI to National Government Budgeting. It provides the budget policy and approach and divides the process into four stages: Budget Preparation, Budget Authorization, Budget Execution, and Budget Accountability. This is more commonly referred to as the Budget Cycle.

The first stage is Budget Preparation, which is led by the Executive Branch. Each head of department, office, or agency of the National Government submits a request for its annual appropriation to the Department of Budget and Management (DBM). These requests are meant to reflect the agency’s plans, priorities, and funding needs for the coming year. The DBM then reviews these submissions. Once these proposals are consolidated, they form the National Expenditure Program (NEP). The President submits the NEP to Congress as the official proposal for the national budget, pursuant to Article VII, Section 22 of the 1987 Constitution.

After the NEP is submitted, the process enters the second stage: Budget Authorization. Congress deliberates on the proposed budget through committee hearings and plenary debates. Their task is to examine the proposals, make necessary adjustments, and ultimately pass the General Appropriations Act (GAA), which becomes the legal basis for government spending in the following fiscal year.

With the GAA in place, Budget Execution begins. In this phase, the focus shifts to carrying out the plans approved in the budget. The DBM releases funds to agencies according to the amounts and purposes stated in the GAA. Agencies then implement their programs, projects, and activities, procure goods and services, and deliver outputs such as infrastructure and social services.

The final stage is Budget Accountability. Agencies report back on how they used the funds and what they accomplished with them. These reports, covering both financial information and physical results and showing whether projects were completed and goals were met, are subject to the DBM’s continuing review. The Commission on Audit (CoA) plays a central role in this stage by independently reviewing and auditing these reports.

By design, the national budget cycle is meant to be airtight. Each stage embeds checks and balances to ensure efficiency, integrity, and accountability throughout the process.

At the budget preparation stage, several safeguards are in place to ensure that government spending plans are aligned with national priorities, formulated in an inclusive manner, and follow technical and financial standards.

PROCESS SAFEGUARDS
A key safeguard in this process is the use of a two-tier budgeting approach, designed to separate ongoing commitments from new initiatives. Tier 1 covers the estimated actual cash requirements for ongoing programs, activities, and projects (P/A/Ps) at their current scope and quality. This ensures that essential services and continuing operations are sustained without disruption.

Tier 2 is for proposals to scale up or expand existing P/A/Ps, or to introduce new priority initiatives. These proposals must be aligned with the Philippine Development Plan (PDP) and the government’s Budget Priorities Framework. Tier 2 proposals are evaluated against several criteria, among which are available fiscal space, agency absorptive capacity, and implementation readiness that includes feasibility studies, detailed engineering designs, and annual procurement plans, among others.

The Budget Call, the formal guide for all departments, offices, and agencies as they prepare their budget submissions, instructs agencies to include performance measures in their proposals. This performance-based budgeting approach is intended to make the process more results-oriented and to provide a basis for monitoring and evaluation throughout implementation. Agencies are also assumed to have citizen engagement mechanisms as part of the process, encouraging civil society and community stakeholders to provide feedback on proposed programs and projects.

Taken together, these safeguards are designed to make the budget preparation process transparent and responsive to real needs.

During Budget Authorization, the main safeguard is legislative oversight. The power of appropriation, commonly referred to as the “power of the purse,” belongs to Congress. Under the Constitution, no money shall be paid out of the treasury except in pursuance of an appropriation made by law.

The National Expenditure Program submitted by the President becomes the basis for the General Appropriations Bill (GAB). This bill undergoes the full legislative process, beginning in the House of Representatives, where the Committee on Appropriations and its subcommittees hold hearings.

At these hearings, agency heads and officials are required to defend their proposed budgets, explaining the programs and projects they seek to fund. The committee and subcommittees review the proposals, questioning assumptions, and scrutinizing the justifications for the line items. Based on these hearings, the committee may propose amendments to realign or reduce certain appropriations.

The Senate Committee on Finance conducts its own set of hearings in preparation for when the House-approved GAB is transmitted to the Senate. If the Senate makes amendments to the House-approved GAB, a bicameral conference committee is convened to reconcile conflicting provisions. Once the bicameral report is finalized, it is submitted back to both chambers for ratification. After ratification, the enrolled bill is sent to the President for signature, to become the General Appropriations Act, the official law governing government spending for the fiscal year.

Congressional deliberations provide a layer of public transparency. This open process allows not only lawmakers, but also the media, civil society, and ordinary citizens to observe and scrutinize how funds are being allocated.

The power of appropriations is subject as well to a number of limitations to prevent its abuse.

While Congress may reallocate or realign budget items in the NEP/GAB, Article VI Section 25 (1) of the Constitution prohibits Congress from increasing the total appropriations recommended by the President. This limitation serves as a safeguard against runaway spending and protects the overall fiscal balance of the government.

By jurisprudence (Belgica v. Ochoa, G.R. Nos. 208566, 208493 & 209251, Nov. 19, 2013), the GAA cannot provide Congress with any post-enactment authority over project identification, fund release, or fund realignment. According to the Court, such power would have the effect of allowing legislators “to intervene and/or assume duties that properly belong to the sphere of budget execution,” which would be unconstitutional as these would violate the separation of powers.

In the same case, the Court held that not only are post-enactment authorities not permitted, the delegation of such authorities to individual legislators is also of itself unconstitutional. The power of appropriation can only be exercised by Congress itself through legislation, and not by individual legislators.

(To be continued.)

Nepomuceno Malaluan, Malou Mangahas, and Jenina Joy Chavez are co-convenors of the Right to Know, Right Now! (R2KRN) Coalition.