PHL’s 2025 budget law faces legal challenges

By Kenneth Christiane L. Basilio, Reporter

THE PHILIPPINES’ P6.326-trillion budget this year faces legal hurdles due to unresolved issues stemming from priority allocations and allegedly shady legislative maneuvers in its drafting last year, analysts said at the weekend.

A legal victory for its critics could jeopardize Philippine growth prospects, they added.

“The approved budget for 2025 is evidently driven by the need to appease politicians rather than to address genuine needs of the Filipino people,” former Finance Undersecretary Cielo D. Magno said in a Facebook Messenger chat. “This explains the clearly unconstitutional acts that have been woven into the budget.”

Philippine President Ferdinand R. Marcos, Jr. signed into law the 2025 General Appropriations Act on Dec. 30 but vetoed P194 billion worth of line items that he said were inconsistent with his government’s priorities.

These include appropriations for certain programs of the Department of Public Works and Highways (DPWH) and unprogrammed funds that increased four times, he said.

The budget was again put in the spotlight in mid-January after his predecessor Rodrigo R. Duterte said the budget bill had blank line items whose amounts were later filled out by the Executive branch. Mr. Marcos has accused the tough-talking leader of peddling a lie.

The blank line items contained in the budget were to projects under the Agriculture department, such as irrigation and farm-to-market roads, according to a copy of the budget’s bicameral conference committee report obtained by BusinessWorld.

“If there is truth in the allegation that there were blank items in the bicameral version of the General Appropriations bill, then this will be another ground to question its legality,” Ephraim B. Cortez, president of National Union of Peoples’ Lawyers, said in a Viber message. “This means that the bill was not complete when it was finally approved by Congress.”

Ms. Magno said changing the version of the budget bill approved by lawmakers is prohibited. “There are no additions or amendments that can be made after this point.”

The Philippine Senate and House of Representatives ratified the budget bill on Dec. 11, hours after the bicameral conference committee members reconciled their differences. “After the conference committee has reconciled the provisions for the Senate and House versions of a bill, it signs the report that becomes the basis for the General Appropriations Act,” she pointed out.

“Congress could not have legally filled in any blanks because the legislative process ended after both Houses ratified the reconciled version,” she said. “The Executive branch could not have filled in the blanks either because appropriation is a legislative function.”

Congress should publish the enrolled bill of the budget so the public could check whether there were really blank items, she added.

“Once a bill becomes an enrolled bill, then no changes can be made to it,” Michael Henry Ll. Yusingco, a constitutionalist and senior research fellow at the Ateneo Policy Center, said in a Facebook Messenger chat. “Any change done to an enrolled bill which later becomes law will make this law unconstitutional.”

He added that Mr. Marcos’ certification of the budget bill as urgent was invalid in the absence of a public emergency or calamity.

Civic groups have flagged issues hounding the 2025 budget including allegations that funding for public works dwarfed the budget for education.

“The budget violates the constitutional mandate that the state should give priority to education,” Mr. Cortez said.

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The law allotted P1 trillion for the education sector, 4.3% higher than the P1.007-trillion funding for the DPWH.

“While it appears that the education sector got the biggest budget allocation of P1.055-trillion… they included in the education budget the allocations for institutions not considered part of basic or tertiary education,” Mr. Cortez said, referring to military and police academies.

“They lumped them with the education budget to make it appear that it got the highest allocation in the 2025 budget,” he added.

The budget law also violated the 2019 Universal Healthcare Act and Sin Tax Reform Act of 2012, which could also be grounds for its unconstitutionality, according to Filomeno S. Sta. Ana III, Action for Economic Reform coordinator.

Lawmakers scrapped P74 billion in state subsidies for the Philippine Health Insurance Corp. (PhilHealth), citing its ample reserve funds.

“The revenues from tobacco, e-cigarette and sweetened beverage excise taxes are exclusively and strictly for PhilHealth,” he said in a Viber message.

The Philippine government would likely re-enact the 2024 national budget should the Supreme Court void the 2025 spending plan, Ms. Magno said. “This does not preclude congress from enacting another budget, hopefully one that is free from constitutional doubt,” she added.

Voiding the budget law could dampen Philippine economic growth, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

“A bigger risk over the past 10 to 20 years has been a re-enacted budget since this would mean lower government spending than was originally planned, which could slow domestic product growth,” he told BusinessWorld.

The government targets 6% to 8% economic growth this year.

A re-enacted budget could cut funding for infrastructure, education and key government priority programs, he added.

It could also disrupt state operations, affecting industries that rely on public spending, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

“Investor confidence would likely be disturbed, as questions about governance, transparency and adherence to constitutional processes will emerge, leading to potential capital flight, a weaker Philippine peso and reduced foreign direct investments,” he added.

The “political capture” of the national budget should be fixed with more transparency and accountability, more responsible decision-making and oversight by a Congress with more integrity, Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, said in a Viber message.

Civic groups should also be allowed to have a say in the crafting of the budget, Renato B. Magtubo, a former congressman and chairman of Partido Manggagawa, said via Viber. “There should be a sectoral consultation to address budget issues or concerns.”