Philippines flood scam: $111 billion budget, 2 scenarios, speaker hires spokesperson, Senator seeks 'repentance', budget insertions in focus (long read)

Manila: A towering house of cards in the Asian country teeters on the brink of collapse.

It threatens a cascade of consequences unlike any other, fuelled by a cocktail of anger and despondency among its young people — as well as retired military generals.

Filipino legislators play a mighty dual role (as both architects and builders) — pulling strings, dictating priorities, carving out budgets (₱6.326 trillion | $111 billion in 2025), and wielding direct influence over project execution via the so-called "tongpats" system.

In at least 60 such projects, the money was released, but are now being probed by the Senate for being "ghosts".

This covers everything from grand schemes to flood control projects.

This virtual fusion of both legislative and executive power is a double-edged sword, long endured by Filipinos with a mix of resignation and hope.

Unfortunately for this cabal of greed, recent typhoons and relentless rains have torn open the very floodgates of their own corruption.

The Philippines has two legislative chambers: the Senate ("Upper House", 24 members) and House of Representatives ("Lower House", with 313 members).

There's a third chamber: the "Bicam", where the magic happens (read below).

Amid the on-going probe into the plunder of public funds, at least two scenarios have emerged.

Best-case scenario: reforms in both Houses, removing the termites, replacing leaky roof, making it sturdier.

Worst-case: a social convulsion, with unknown outcome.

For decades, Filipinos have learnt to live with the culture of "political capture" of public funds.

Calls for reforms have grown louder.

Now, President Ferdinand Marcos Jr who has led calls for reforms, has found himself walking on eggshells.

Recent tremors have already rattled the Senate, toppling its leadership in a sudden coup.

And over at the House of Representatives, whispers of musical chairs have grown. Rep. Martin Romualdez, the president's cousin, has already sandbagged himself against the rising flood of public outcry: he hired a spokesperson for the Speaker of the House.

The public demands nothing less than a sweeping purge. Former police and military officers have started vented their anger in public.

Ferdinand Marcos Sr. — father of the current president — was toppled by a military revolt backed by millions of civilians, ending a 21-year rule marked by tyranny and decline, even as the Philippines’ neighbours surged ahead economically.

A senator, Alan Peter Schramm Cayetano, meanwhile, has made a heartfelt admission: "Everyone is guilty" in budget insertion controversies.

"Repentance", he suggested in a social media post, is key to reform.

Beyond repentance, people are clamouring for a full housecleaning, starting with transparency in the national budget.

Under the 1987 Philippine Constitution, both the Senate and House are mandated to work together in the exercise of their "power over the purse".

Over the nearly fours decades since the Charter was ratified in a plebiscite, some things have changed for the better, i.e. public-private partnerships, speedier internet, more investments, tourists and jobs.

Others have worsened, including Manila traffic, right-of-way snags for government projects and floods.

One toxic lump grew like a cancer cell: the nexus between legislators, executive (notably government engineers), contractors and state auditors, working in cahoots to fleece the public via fake projects.

At the heart of the problem: budget "insertions", aka "black box", made by unseen hands in either the House of Representatives or Senate — or both — in the General Appropriations Act (GAA), enacted by both Houses each year.

The GAA is voluminous document, about 7,000 pages.

Public fury against this perceived evil is palpable.

Now, young Filipinos are threatening to stage street protests, reminiscent of the years of disquiet prior and during the Martial Law years in the 1970s, robbing the country of its precious young minds and hearts in a prolonged, divisive conflict.

Back to the budget insertions, here's how it works, by and large:

The Philippine budget process, as outlined in the Constitution (Article VI, Section 24) and governed by laws like Presidential Decree No. 1177 (revising the budget process), involves four phases:

Insertions primarily occur during the budget legislation phase in Congress.

Budget insertions refer to "amendments" or "new projects" added to the national budget by members of Congress during the legislative process.

These are the key steps in budget insertions:

Budget preparation (executive branch):

The Department of Budget and Management (DBM) and agencies like the Department of Public Works and Highways (DPWH) compile the National Expenditure Program (NEP) submitted by the President to Congress within 30 days of the regular session's opening (around July).

This includes proposed allocations based on priorities, with agencies like DPWH having a "special status" allowing them to consolidate regional proposals directly into the NEP.

Budget legislation in Congress (where insertions happen):

The House of Representatives and Senate hold separate deliberations.

Lawmakers propose amendments, including "new expenditure items" (i.e. insertions), as long as they do not exceed the President's total proposed budget.

These can be introduced at any stage of deliberations, often justified as addressing local needs or "unrequested" priorities.

A common tactic is the "budol scheme" (a colloquial term for manipulation): "Bawas" (reduction) of programmed funds, transferring them to unprogrammed appropriations; "Dagdag" (insertion) of new items into the vacated spaces; and "Habol" (pursuit) to secure release.

The bicameral conference committee (bicam) — a joint panel of House and Senate members — reconciles differences between the two chambers' versions.

This "third chamber" is where many opaque insertions occur, often in closed-door sessions, adding billions in projects (e.g., ₱142.7 billion / $2.51 billion) in alleged "bicam" insertions for the 2025 budget, mostly for DPWH flood control).

Critics call it a "black box" due to lack of transparency.

Presidential approval: The reconciled GAA goes to the President, who can veto specific items (line-item veto) but cannot add funds. Vetoed items, like ₱95.3 billion in 2019 insertions, are often those deemed unconstitutional or unprogrammed.

Execution and accountability: DBM releases funds via Notices of Cash Allocation (NCA) or Special Allotment Release Orders (SARO).

Congressional insertions often fall under "for later release" if lacking due diligence, delaying implementation. The Commission on Audit (COA) audits for accountability.

Insertions are common in infrastructure-heavy budgets, with DPWH receiving the bulk (e.g., ₱556 billion / $9.77 billion in 2019 NEP).

In 2025, ₱783 billion in insertions required SAROs before release, per DBM guidelines.

Budget insertions have been repeatedly linked to corruption, enabling the misappropriation of public funds on a massive scale.

Here's why they contribute significantly:

Lack of transparency and due diligence

Insertions bypass rigorous executive vetting (e.g., feasibility studies, clearances). Many are "ghost projects" or non-existent infrastructure, with only 30-40% of funds reaching actual construction.

In flood control (a DPWH focus), up to 70% of allocations (potentially ₱1.089 trillion since 2023) is lost to corruption, per Greenpeace and Senate estimates.

Contractors testify to siphoning via fake bids, with favoured firms like those linked to the Discaya family securing ₱31 billion in projects from 2022-2025.

Despite the 2013 Supreme Court ban on discretionary pork (e.g., PDAF scam involving ₱10 billion in theft via Janet Napoles), insertions serve as a loophole for "hyperlocal" projects benefiting politicians' districts or allies.

The 2025 budget saw ₱142.7 billion in bicam insertions, mostly for flood control in areas like Bulacan, enabling theft through overpricing, kickbacks and bribery.

This echoes historical cases like the Malampaya scam (₱366 million plunder) and AFP funds theft (P303 million).

Corruption drains 20% of the annual budget (₱1.2 trillion or $13.35 billion yearly), per the Ombudsman.

In flood control alone, ₱42.3-₱118.5 billion was lost from 2023-2025, as per the Department of Finance (DoF), crimping GDP growth by preventing 95,000-266,000 jobs and exacerbating climate disasters (e.g., leptospirosis surges from unbuilt flood defences).

It's "klepto-spirosis" (corruption-fueled disease spread), as termed by advocates. Broader graft, including insertions, has led to 33,772 cases before the Sandiganbayan (10,094 malversation, 7,968 graft as of 2016), with ongoing probes into officials.

Collusion between lawmakers, agencies (e.g., DPWH officials contacting senators for early insertions), and contractors creates a white-collar crime syndicate.

Senate hearings (e.g., Sen. Ping Lacson's "Flooded Gates of Corruption" speech) reveal up to 50% of ₱2 trillion in 15-year flood funds lost, with only 40% implemented.