Veto Message of President Aquino to the 16th Congress regarding the General Appropriations Act of 2014

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December 20, 2013


            In fulfillment of the mandate vested in me by our Constitution, I sign into law Republic Act (RA) No. 10633, the General Appropriations Act (GAA) for fiscal year 2014, entitled “AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE, TWO THOUSAND AND FOURTEEN, AND FOR OTHER PURPOSES.”

            Sa pagpasa natin sa Budget na ito, tumutugon tayo sa tawag ng panahon. Tumutugon tayo sa malinaw na atas ng taumbayan na paigtingin ang reporma sa gobyerno. Tumutugon tayo sa pangangailangan ng mga biktima ng mga nagdaang sakuna. Higit sa lahat tumutugon tayo sa hinahangad nating malawakang kaunlaran para sa lahat.


From the beginning of our term, we have been consistent in passing the National Budget on time. I laud Congress for sustaining this judicious tradition of early enactment of the GAA, as opposed to the old regime of frequent budget re-enactment. Because of your affirmative action, you have ensured that the Government will be able to implement urgent and priority programs under our Social Contract with the Filipino People as we enter the new fiscal year.

Ladies and gentlemen of the 16th Congress, the new Budget that you diligently reviewed over the last five months embraces our collective vision for Inclusive Development. Through this Budget, we continue to intensify our investments in capacitating our people through basic services; and to sustain our growth trajectory in a way that creates more opportunities for our people. I also thank the men and women of Congress for helping make this new Budget responsive to the urgent needs of rebuilding communities affected by the recent onslaught of disasters.

This Budget for 2014 intensifies our struggle for good governance, especially in the way the people’s hard-earned taxes are spent. For one, this Budget commences a new Performance-Informed Budget system, which will help us ensure that each peso we spend leads to concrete and measurable results. Fiscal year 2014 also marks the beginning of a new budget era: the Budget-as-Release Document, where allotments for around 90 percent of the Budget are already considered released to agencies on day one of the GAA. This Budget was also shaped by the voices in the grassroots, through the expanded implementation of Grassroots Participatory Budgeting (Bottom-Up Budgeting).

Through this Budget, we continue to journey along the Daang Matuwid. As we do our part in fulfilling our mandate in the remaining two and a half years, our Social Contract with the Filipino People remains our guiding light in bringing our country on the straight path to our collective prosperity.

As we move into the urgent task of implementing this Budget, I hereby register the following comments and observations to the changes introduced in the Budget that I originally submitted to Congress.


Pursuant to the powers vested in me by our Constitution, I hereby directly veto the following provisos and special provisions in the FY 2014 GAA to ensure the faithful implementation of the provisions of the 1987 Constitution and those of applicable laws, rules and regulations.

I call serious attention to Department of Public Works and Highways (DPWH)-Office of the Secretary (OSEC), Special Provision No. 25, “Use of Income,” page 510, which allows the agency to use income, derived from laboratory and testing fees and sub-soil exploration activities for the repair, maintenance and procurement of research, materials and sub-soil exploration equipment, absent a separate substantive law authorizing the same.  This contravenes Section 44, Chapter 5, Book VI of Executive Order (EO) No. 292 (Administrative Code of 1987) which mandates that all income of agencies shall accrue to the General Fund of the Government and deposited in the National Treasury or in a duly authorized depository bank, unless otherwise provided by law. The Court has said time and again that the general appropriations bill cannot include matters that should be properly enacted in a separate legislation (Philippine Constitution Association, et al., vs. Hon. Salvador Enriquez et al., [235 SCRA 506; 532, 1994], citing Henry vs. Edwards, La., 346 So. 2d 153 [1977]).

Moreover, all income of agencies already constitute an integral part of the revenue and financing sources of the National Government for the year, which is the basis of the general appropriations bill.  Consequently, the insertion of this new use of income special provision will result in double programming of said income and reduce the financing sources of this year’s GAA.

On the other hand, the Securities and Exchange Commission (SEC) is already authorized to retain income but only up to One Hundred Million Pesos (P100,000,000) pursuant to Section 75 of RA No. 8799 (Securities Regulations Act).  Legally, it should not, therefore be allowed to indirectly use income beyond the amount authorized by law through the Department of Finance-SEC, Special Provision No. 2, “Use of Excess Income,” page 391.  Parenthetically, I hereby affirm that as a matter of sound budgeting policy, agencies already authorized by law to use income should no longer be additionally authorized to use excess income under Special Provision No. 5 of the Unprogrammed Fund.

For these reasons I am vetoing the above-quoted special provisions.


            Equally worth noting is the inclusion of a new special provision as well as revisions made in existing special provisions which, while not subject to direct veto, should nonetheless be placed under conditional implementation.  The well meaning intent of Congress in making these revisions should not make us lose sight of the equally imperative duty of every President, as head of the Executive branch, to faithfully execute the laws of the land pursuant to Sections 1 and 17, Article VII of the 1987 Constitution.


In order to sustain the optimum pace, quality and accountability in budget execution, I am placing General Provisions, Section 59, “Availability of Appropriations,” page 1095, which provides for a two (2) year validity of appropriations for Maintenance and Other Operating Expenses (MOOE) and Capital Outlays in this Act, under conditional implementation.  The series of purposive reform interventions we have introduced over the first semester of my Administration has bolstered the stability and competitiveness of our economy.  Thus, despite the extension of the validity of appropriations for MOOE and Capital Outlays to two (2) years, we shall nonetheless endeavor to obligate all appropriations within the year. This is to recognize and reward agencies that do better planning and timely implementation of programs and projects improving public spending and avoid the escalation of project cost and the deterioration of the quality of services and projects associated with the delay in delivery of said services and projects.

Now, more than ever, is the time to lay the foundation of critical budgeting reforms in order to push departments and agencies to optimize their allocations and foster improved agency performance, thereby enhancing the predictability and urgency of budget implementation. In fine, the Department of Budget and Management (DBM) is hereby directed to issue the guidelines in order that agencies of the National Government implement their programs and projects according to this desired policy.


I likewise note Department of Environment and Natural Resources (DENR)-OSEC, Special Provision No. 1, “Integrated Protected Areas Fund,” page 350, where the agency is authorized to retain seventy five percent (75%) of income from its operation or management of wild flora and fauna, constituted as a trust fund under Section 1 of RA No. 10629 (An Act Providing for the Establishment and Management of National Integrated Protected Areas System). This is, in addition to DENR’s existing use of income authority in order to finance the projects of the National Integrated Protected Areas System. For the proper implementation of this provision, I hereby subject the same to the policies, rules and regulations on the use of income by agencies and creation of trust accounts, which may be consolidated in a joint guidelines to be issued by the DENR and DBM

In like manner, I hereby condition the implementation of Department of Health (DOH)-OSEC Special Provision No. 2, “Hospital Income,” pages 405-406,  to the prohibition on the use of hospital income for the payment of salaries, allowances and other benefits.  This is to optimize the use of income by government hospitals to augment their MOOE and Capital Outlay requirements that are directly related in the delivery of health services.


The marked contribution of micro, small and medium enterprises in sustaining the growth trajectory of our economy validates the continuous provision of support to improve the quality and productivity of these enterprises. Thus, the need to ensure the strategic implementation of Department of Trade and Industry (DTI)-OSEC Special Provision No. 1, “Implementation of Shared Service Facilities,” pages 575-576.  In pursuance of this, I hereby subject the implementation of the above special provision to guidelines to be jointly issued by the DTI and DBM.  The implementing rules and regulations shall include, among others, (i) sufficient parameters in the establishment of business resource centers that are consistent with the organizational policies of DBM; (ii) standard criteria and thorough evaluation in the selection of recipients and/or beneficiaries, particularly on cooperatives and cooperating organizations, to ensure that only legitimate, qualified, and deserving entities, with proven track record and capability to participate in the program; (iii) strategic priority industry clusters that are supportive of the Key Results Area under EO No. 43, s. 2011 (Pursuing our Social Contract with the Filipino People through the Reorganization of the Cabinet Clusters); (iv) compliance by recipients and/or beneficiaries with certain conditions during the period of usufruct, such as provision for maintenance and other related cost to ensure the proper and optimum use of the machinery, equipment, information technology system, and tools and related accessories; and (v) observance of pertinent laws, rules, and regulations on the transfer and use of government property to other government entities or private organizations.


For consistency in the implementation of all calamity-related funds, the procedure and conditions in the release of funds under Rehabilitation and Reconstruction Program, Special Provision No. 1, “Release and Use of Fund,” pages 873-874, shall follow those required under Special Provision No. 1 of the National Disaster Risk Reduction and Management Fund. This way, the release of funds for all types of calamities are harmonized and the recommendations made thereon are in consideration of all other existing sources and previous releases of funds.


Of similar import is the mention of Memorandum Circular No. 61-A dated November 28, 1993 under Allocations to Local Government Units (ALGU)-Special Shares of LGU in the Proceeds of National Taxes, Special Provision No. 3, “Use, Allocation and Release of LGU Share in Excise Taxes from Locally Manufactured Virginia-Type Cigarettes,” page 848.  In light of the recent Supreme Court decision in Greco Antonious Beda B. Belgica et al., vs. Honorable Secretary Paquito N. Ochoa, Jr., et al., (G.R. Nos. 208566, 208493, 209251, November 19, 2013), which decreed that any form of post-enactment authority in the implementation of the budget is unconstitutional, the provision in said circular on legislative consultation in the allocation of the shares of cities and municipalities in the congressional districts of a beneficiary province is no longer operative.  Accordingly, the DBM is hereby directed to issue the guidelines to ensure the correct implementation of this special provision.


The earmarking of specific appropriations for selected local government units (LGUs) under the ALGU-Local Government Support Fund, Special Provision No. 1, “Local Government Support Fund,” page 850, may not be consistent with the objectives and prioritization of the Local Government Support Fund.  Accordingly, I hereby direct the DBM to issue the guidelines in the equal availment of the Fund by LGUs.  Indeed, National Government support ought to be responsive to the actual requirements of LGUs in the interest of genuine local development.


I similarly place under conditional implementation General Provisions, Section 46, “Authorized Deductions,” page 1092, particularly on the inclusion of “Other government financial institutions not listed in item (a) hereof such as banks and other similar entities that have authority to engage in lending as approved by the appropriate government regulating bodies”.   It compels me to note that the automatic deduction of loan payments to these institutions from the hard earned salaries of government employees is beyond the ambit of governmental functions.  Otherwise, government agencies become mere collecting agents which discharge functions solely for the benefit of these institutions.  Accordingly, the deduction of loan payments from other government financial institutions not listed in item (a) of Section 46 shall be subject to the written consent of the employees concerned and shall not entail additional cost on, nor prejudice or disrupt the operations of, the employer-agency.


I take note of the following special provisions, and hereby express my views thereon:


            Once again, I am confident that the leadership of both Houses of Congress will implement Congress of the Philippines, Special Provision No. 2, “Organizational Structure of the Senate, the House of Representatives, the Senate and House of Representatives Electoral Tribunals and the Commission on Appointments,” page 8, in accordance with the pertinent provisions of law.  Particularly, the leadership of Congress and the institutions covered by the foregoing special provision shall faithfully observe the constitutional principle of salary standardization, which Congress itself enshrined as a state policy in RA No. 6758 (Compensation and Position Classification Act of 1989), Congress Joint Resolution No. 1 dated March 7, 1994, and RA No. 6686 (An Act Authorizing Annual Christmas Bonus), as amended by RA No. 8441 (An Act Increasing the Cash Gift).

I also wish to clarify that the creation of new positions and the grant of retirement gratuities and separation pay shall be funded from appropriations or available savings of the institutions mentioned in this provision.  Most importantly, I trust that these same institutions shall faithfully observe Section 8, Article IX-B of the 1987 Constitution, which prohibits the payment of additional compensation, and the requirements of other relevant laws.


I salute our teachers for the pivotal role they play in shaping young minds, and in their unwavering commitment to the education of our youth.   In this regard, I submit that the title of Special Provision(s) Applicable to the State Universities and Colleges, Special Provision No. 14, “Regularization of Qualified Part-Time Faculty,” page 337, should not be construed as an automatic hiring of part-time  teachers on regular status.  Instead qualified part-time teachers shall be prioritized in said hiring, subject to the relevant laws and civil service rules on appointment.


The series of calamities that has befallen our nation has underscored yet again how proper planning and foresight could mitigate the devastation brought by calamities and, to a great extent, save lives and lessen the upheaval of our people in times of crisis.    Taking stock of this, I hereby affirm that the Quick Response Fund lodged under the budgets of front-line agencies in times of calamities is more effective when utilized as well for the pre-positioning of goods, emergency response units, and other allied support items and equipment in order that the situation and living conditions of people in communities or areas stricken by calamities, epidemics, crises, and catastrophes are normalized as quickly as possible.

The following special provisions are thus, covered by the above general observation:

1. Department of Agriculture-OSEC, Special Provision No. 14, “Quick Response Fund,” pages 27-28;

2. Department of Education-OSEC, Special Provision No. 19, “Quick Response Fund,” page 67;

3. DOH-OSEC, Special Provision No. 22, “Quick Response Fund,” page 409;

4. Department of National Defense (DND)-OSEC, Special Provision No. 1, “Quick Response Fund,” page 481;

5. DND-Office of Civil Defense, Special Provision No. 1, “Quick Response Fund,” page 486;

6. DPWH-OSEC, Special Provision No. 22, “Quick Response Fund,” page 510;

7. Department of Social Welfare and Development-OSEC, Special Provision No. 6, “Quick Response Fund,” pages 553-554; and

8. Department of Transportation and Communications-OSEC, Special Provision No. 8, “Quick Response Fund,” page 591.


As a final note, I must underscore that there were changes, increases, reductions and new budgetary items introduced in this Act that may not have been considered in the formulation of the performance targets of agencies, which now form part of this Act.  In the interest of genuine transparency and accountability in government spending, these modifications, once implemented, should therefore carry with it corresponding adjustments in the committed performance targets of the agencies concerned.


Sa pamamagitan ng paggugol para sa malawakang kaunlaran, iniaalay natin ang pagbabago para sa lahat ng Pilipinong nais umahon mula sa mga pagsubok. Lahat ng ating pinaghirapan ay para sa tagumpay ng bawat mamamayan.

This Budget for Inclusive Development is a Budget that we owe the people. They have been demanding a Budget that truly responds to their needs. It is our sworn duty to ensure that the people benefit from each peso spent by the government.

The outpouring of our people’s outrage against abuses in the use of public funds has resulted in fundamental changes in our budgeting system. The immediate response and unequivocal stand by Congress against such abuses is a key step towards installing greater transparency in government, reforming public institutions along clear roles and accountabilities, and deepening the stake of our people in the way their government is run.

Our collective struggle for Paggugol na Matuwid is not yet over. This is why, from now to 2016, we commit to continue installing bold and game-changing reforms in government budgeting. We continue to ensure that our budgetary priorities from now to 2016 are aligned to our vision of Inclusive Development. We continue to ensure that each peso we spend empowers our people, regardless of status of birth, to shape their destiny through their own ability and hard work.

As the servant of the people, I shall ensure that the government will properly, efficiently and transparently implement this GAA in a timely, inclusive, and transparent manner beginning January 1, 2014.

Very truly yours,

Senate of the Philippines
Pasay City