Veto Message of President Aquino on the 2011 National Budget

MALACAÑAN PALACE
MANILA
December 27, 2010
THE HONORABLE SPEAKER AND SENATE PRESIDENT, LADIES AND GENTLEMEN OF THE HOUSE OF REPRESENTATIVES
At the dawn of the New Year, I sign into law the first budget of our administration:  Republic Act (R.A.) No. 10147, the General Appropriations Act (GAA) for Fiscal Year (FY) 2011 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 ELEVEN, AND FOR OTHER PURPOSES.”
Karangalan ko pong bigyang buhay ang badyet na ito bilang batas ng Republika ng Pilipinas, at ipatupad ito nang tuwid at tapat sa pagbubukas ng taong 2011.

I. GENERAL COMMENTS
For the first time in over a decade, we have a budget passed on time.  I offer my profound thanks to the men and women of the 15th Congress, especially the House Committee on Appropriations and the Senate Committee on Finance, for responding to my call for genuine governance reform and urgency in responding to the needs of our poor countrymen. Indeed, the punctual passage of this budget allows us to hit the ground running in implementing our electoral campaign promise to uplift the lives of Filipinos through honest and competent governance.
The early passage of our Reform Budget for 2011, in and of itself, is a key step towards transforming the way we manage our nation’s resources. Sa maagang pagsasabatas ng pambansang badyet, pinahihintulutan nating sumilay ang liwanag sa paggastos ng gobyerno.  Higit sa lahat, nais kong idiin na sinasakatawan ng 2011 Reform Budget ang ating “Social Contract with the People.”
Therefore, I sincerely express my appreciation of Congress’ conscientious choice to adopt a national budget that enshrines transparency and accountability, and that establishes a spending program that is unabashedly biased for the poor. As we move into the arena of budget execution, we gain confidence and political adrenalin from the joint support and goodwill extended by Congress to the reforms we have proposed.
However, I must register the following comments and observations to the changes introduced in the Budget I originally submitted to Congress.
II. DIRECT VETO
Pursuant to the powers vested in me by the Constitution, I hereby directly veto the following general and special provisions, as well as specific provisos in the FY 2011 GAA for contravening the provisions of the Constitution and those of applicable laws, rules and regulations:
A. Prior Legislative Authorization for Borrowings in Excess of the Debt Ceiling
I begin with an affirmation of my commitment to fiscal discipline and accountability in the public sector, the very foundation of stability in the macroeconomy.  But while the adoption of a formal debt policy in the form of a debt cap shows sincere effort to manage our fiscal woes, the same has to be gradually implemented over the medium term.  Thus, in the past seven (7) years, we have managed to bring down the public sector non-financial debt from 100.8% in 2003 to 60.8% of Gross Domestic Product (GDP) by the end of 2009.  On the other hand, National Government debt has been reduced during the same period from 77.7% in 2003 to 57.3% of GDP by the end of 2009.
Certainly, the imposition of a fifty-five percent (55%) debt cap at this point in time and the prior legislative approval of borrowings exceeding this ceiling are unduly restrictive as they prevent the Government from taking advantage of favourable market conditions.  The Government should be given the flexibility to borrow responsibly whenever it needs to finance existing mandatory items or provide budgetary support, narrow the budget deficit, refinance existing obligations, and extend the maturity or retire expensive loans.
Instead, I offer the framework of burden sharing among the three branches of the government as espoused in the Fiscal Responsibility Bill.  The deficit-neutral mechanisms on both revenue and spending prescribed in the bill will fortify our collective stance towards a steady decrease in public debt and ultimately improve the fiscal position of our country.
I am therefore, duty bound to veto General Provisions, Section 14, “Government Indebtedness and Guaranty”, page 1223.
B. LEGISLATIVE CONSULTATION DURING BUDGET EXECUTION AND PROGRAM/PROJECT IMPLEMENTATION
As important as burden sharing is the partnership among the branches of government.  An effective partnership between the Executive and Legislative branches, as exemplified in the timely passage of this GAA, is what this Government will strive to sustain.  However, this partnership building cannot infringe on what is clearly an executive function.  I wish to emphasize that under the Constitution, the Executive Branch is primarily responsible and accountable for the enforcement of this Act.
Thus, I am constrained to veto General Provisions, Section 71, “Release of Lump-sum Appropriations”, page 1233, which requires legislative consultation in the release and implementation of all lump-sum appropriations in the GAA.  This general provision will unduly prejudice the implementation of vital programs and projects funded out of said lump-sum appropriations, thereby affecting the efficient delivery of services to our people.
Similarly, I have to veto the proviso “,in consultation with the LGUs, the resident-farmers and fisherfolks and the representatives of the district concerned” under Department of Agriculture (DA)-Office of the Secretary (OSEC), Special Provision No. 3, “Implementation of Farm-to-Market Road Projects”, page 31. Section 52 of R.A. No. 8435 (Agriculture and Fisheries Modernization Act of 1997) simply requires coordination, not consultation, with the local government units (LGUs) and the resident-farmers and fisherfolk in the identification by the DA of priority locations of farm-to-market roads (FMRs).  Indeed, the DA should be given enough latitude and discretion in the execution of FMR projects, to which it is ultimately accountable for.
C. Savings from the Conditional Cash Transfer Program
In the same vein, I am duty bound to veto the proviso under Department of Social Welfare and Development (DSWD)-OSEC, Special Provision No. 3, “Conditional Cash Transfer Program”, page 789, which reads:  “: Provided, Further, That if by the end of third quarter of FY 2011, it has been determined by DBM and DSWD that savings from the full year requirements of the program will be generated, the same shall be utilized to augment the appropriations for basic education, maternal health care and immunization”.
It is enshrined in no less than the Constitution that the power to augment any item in the appropriations of the Executive Branch is exclusive to the President.  It is therefore, axiomatic that this special provision effectively mandates the President to exercise his power to use savings from the Conditional Cash Transfer (CCT) Program by the end of the third quarter of FY 2011 to other programs and projects.
D. decongestion of public secondary schools
As a matter of principle I am vetoing the second paragraph of Department of Education (Deped)-OSEC, Special Provision No. 16, “Government Assistance to Students and Teachers in Private Education”, page 65, to wit:  “The DepEd and Fund Assistance to Private Education (FAPE) shall give priority to graduates of public elementary schools and those coming from areas where there are congested public secondary schools in the implementation of the ESC.  For this purpose, the DepEd shall issue the necessary guidelines to ensure that ESC grantees are qualified and deserving students not only at the time of admission to the Program but also during the continued availment thereof.”
I cannot overstress the prime importance of making basic education open and available to all, especially the underprivileged.  For this reason, the Government Assistance to Students and Teachers in Private Education (GASTPE) Program was established in 1994 to provide financial assistance to poor but deserving students studying in private institutions.  Under the GASTPE, the main scholarship scheme is the Educational Service Contracting (ESC) System, which aims to decongest public secondary schools through scholarship grants in private secondary schools.  The ESC has proven to be the most cost-effective way of decongesting and expanding our public secondary education which is the weakest link in our educational system.
It is thus, imperative for the implementation of the ESC to be made exclusively to graduates of public elementary schools and those coming from areas where there are congested public secondary schools.  Otherwise, the intended purpose of the ESC will be thwarted and our public secondary schools will remain congested.
E. the Pantawid Pamilyang Pilipino Program
At the outset, let me emphasize that the Pantawid Pamilyang Pilipino Program (4Ps) is a poverty reduction and social development strategy of the National Government targeting poor households through the primary provision of cash grants to qualified beneficiaries.  It is not intended to be an anti-insurgency program.  Pursuant to the Program’s core mandate, priority should be given to the poorest households in the municipalities no matter where they are situated.  Thus, the need for me to veto the proviso giving priority to families in municipalities or barangays where there is active insurgency under DSWD-OSEC, Special Provision No. 2, “The Pantawid Pamilyang Pilipino Program”, page 788, stated in this wise:  “: Provided, That in the listing of qualified beneficiary-families under the Pantawid Pamilyang Pilipino Program, the Secretary of Social Welfare and Development shall give priority to those qualified families in municipalities or barangays where there is active insurgency as certified by the Secretary of National Defense upon the recommendation of the head of the provincial or regional army command”.
Besides, the recently established Payapa at Masaganang Pamayanan (PAMANA) Program under the Office of the Presidential Adviser on the Peace Process seeks to address poverty and development issues in conflict-affected communities while pursuing its primary task of ending armed conflict and achieving peace through negotiated political settlement. Hence, the needs of families in municipalities where there is active insurgency will be sufficiently addressed through the PAMANA Program.  This way, we can wield the 4Ps as an effective mechanism to fight poverty in the country.
F. Inappropriate provisions and provisos
I likewise, place serious attention to a number of inappropriate provisions and provisos included in this general appropriations law.  These provisions and provisos should not have found their way in this GAA, and should have been covered by separate substantive laws.  Section 25 (2), Article VI of the 1987 Constitution prohibits the inclusion of any provision or enactment in the general appropriations bill which does not relate to any specific item of appropriations therein.
Accordingly, I subject the following provisions and provisos to direct veto:
1. Item (e) of General Provisions, Section 43, “Authorized Deductions”, page 1228, which includes obligations payable  to “Organizations or companies such as banks, non-bank financial institutions, financing companies and other similar entities that have authority to engage in lending and mutual benefits or mutual aid system as stated in their respective constitutions and by-laws approved by government regulating bodies such as Securities and Exchange Commission (SEC), Insurance Commission (IC), Bangko Sentral ng Pilipinas (BSP) and Cooperative Development Authority (CDA)” as among the authorized deductions from the salaries, emoluments and other benefits accruing to any government employee.
The above-quoted proviso which authorizes the deduction of any payable due to the foregoing institutions from the payroll of government employees is a clear infringement on the rights of said employees.  Thus, Section 66, Chapter 10, Title I, Book V of Executive Order (E.O.) No. 292, s. 1987 (The Administrative Code of 1987)  declares it unlawful, except as otherwise provided by law, to draw or retain from the salary due an officer or employee any amount for contribution or payment of obligations other than those due the government or its instrumentalities.
Moreover, enforcement of the contractual obligations of government employees from these private financing institutions is clearly beyond the ambit of government.  Otherwise, government agencies are reduced to mere collecting agents and compelled to discharge a function solely for the benefit of these institutions.
2. The two provisos under DSWD-OSEC, Special Provision No. 1, “Proceeds from Sale of the Welfareville Property”, page 788, which state: (i) first paragraph, “: Provided, That the amount equivalent to fifteen percent (15%) but in no case less than One Billion Five Hundred Million Pesos (P1,500,000,000.00) out of the proceeds of the aforementioned sale shall be allotted and turned over to the local government unit concerned to be utilized for the cost of site development and construction of housing facilities resulting from the on-site relocation of the qualified informal settlers affected by said sale”; and  (ii) second paragraph, “, and with reference to the on-site relocation of qualified informal settlers therein, in coordination/consultation with the local government unit concerned”.
Additionally, I must underscore that the foregoing provisos contravene Section 2 of R.A. No. 5260 (An Act Authorizing A Committee Composed of the Administrator of the Social Welfare Administration, the Auditor General and the Secretary of the Department of General Services to Sell the Welfareville Property Located in the Municipality of Mandaluyong, Province of Rizal, and for Other Purposes) which mandates the exclusive use of the sales proceeds of the Welfareville Property for the establishment of a national children’s home institution, and community services for children in various parts of the country.
Moreover, under Section 39 of R.A. No 7279 (Urban Development and Housing Act of 1992), the LGUs in coordination with national government agencies and offices shall be responsible for the relocation of informal settlers in their respective localities.  For said purpose, the LGUs are authorized under the same law to impose an additional one-half percent (0.5%) tax on assessed value of all lands in urban areas in excess of fifty thousand pesos (P50,000.00) to be used for their urban development and housing program.
3. Other Executive Offices (OEOs)–Philippine Drug Enforcement Agency, Special Provision No. 2, “Hazard Duty Pay”, page 899.
4. Budgetary Support to Government Corporations (BSGC), Special Provision No. 7, “DAP Training Program”, page 974.
5. The program/project “Partido Development Administration” and implementing agency “PDA” under item D. Financial Assistance of the Priority Development Assistance Fund (PDAF), Special Provision No. 1, “Use of Fund”, page 1011. It bears stressing that the items enumerated in the PDAF menu are all priority development programs and projects.  However, the PDA is not a program/project but is actually a corporate entity created by virtue of R.A. No. 7820 (Partido Development Administration Act of 1994) and composed of member-municipalities with the prime objective of accelerating the development of lagging regions and districts through an integrated and coordinated approach.
6. Unprogrammed Fund, Special Provision No. 5, “Share of the City of Baguio in the Gross Income Taxes Paid by All Locators Doing Business at the Loakan Economic Zone”, page 1015. It is worth noting that the payment of the share of the City of Baguio from the gross income taxes erroneously paid by locators doing business at the Loakan Economic Zone to the Bureau of Internal Revenue (BIR) is not a proper use of the General Fund Adjustments under the Unprogrammed Fund.  Instead, the amount being claimed should be certified by the BIR and the Bureau of the Treasury and validated by the Department of Budget and Management (DBM) before the same may be appropriated in the programmed portion in the GAA.
7. The last proviso under Budgets of Department of Energy-Attached Corporations–National Power Corporation (NPC), Special Provision No. 1, “Budget Flexibility”, page 1217, which states:  “: Provided, Furthermore, That employees separated from the service as a result of  the organization of the NPC shall be entitled to benefits provided for in R.A. No. 8291 or other existing retirement/separation laws.”
Moreover, said proviso may be construed as a legal basis of the NPC to augment funds for the grant of retirement or separation benefits, the payment of which ought to have been included in their submitted Corporate Operating Budget.
G. Payment of total administrative disability pension under the unprogrammed fund
Finally, I am compelled to veto Unprogrammed Fund, Special Provision No 8, “Payment of Total Administrative Disability Pension”, page 1015. It must be emphasized that the use of the Unprogrammed Fund requires compliance with the conditions imposed under Special Provision No. 1 thereof.   Considering that the expenditure item covered by this provision will be a recurring expense of the government, the new funding source to be identified for said purpose should likewise be recurring. 
III. CONDITIONAL IMPLEMENTATION
I likewise observe the inclusion of new special provisions as well as revisions made in existing special provisions which, while spared from direct veto, should nonetheless be placed under conditional implementation.  While Congress’ intention in making said inclusions and revisions is beyond reproach, the proper execution of this Act in relation to pertinent provisions of laws, rules and regulations impels me to specify conditions or require the issuance of guidelines for consistency and uniformity in the application and operation of all the provisions in this GAA.
Accordingly, I hereby subject the following special provisions to conditional implementation.
A. RETENTION OF income by the food and drugs administration
In the interest of ensuring the financial sustainability of the Food and Drugs Administration (FDA), five (5) years after the passage of R.A. No. 9502 (Universally Accessible Cheaper and Quality Medicines Act of 2008), I find it necessary to require submission by the FDA to DBM of a five-year (5-year) program, detailing its financial plan and its target activities and physical goals.  Without said 5-year program, the FDA would be hard-pressed in attaining self-sufficiency by the year 2013 consistent with the intent and objective of Section 31 of R.A. No. 9502.  Indeed, the FDA was authorized to retain its income with the end in view of attaining financial independence within the said 5-year period.  Therefore, the authority of FDA to retain its income under Department of Health (DOH)–OSEC, Special Provision No. 3, “Use of Income of the Food and Drugs Administration (FDA)”, page 465 is subject to approval by the DBM of its 5-year program.
B. construction of Farm-to-market road projects
In compliance with the requirement of Section 52 of R.A. No. 8435, the construction of FMRs under DA-OSEC, Special Provision No. 3, “Implementation of Farm-to-Market Road Projects”, page 31 shall be a priority investment of the LGUs and are thus, required to provide a counterpart of not less than ten percent (10%) of the project cost subject to their Internal Revenue Allotment level.  Likewise, the DA shall identify eighty percent (80%) of the appropriations for FMRs in coordination with the LGUs and the resident-farmers and fisherfolk taking into account the number of farmers and fisherfolk, and their families who shall benefit therefrom and the amount, kind and importance of agriculture and fisheries products produced in the area.
C. implementation of the Educational Service Contracting System
Consistent with the core mandate of the ESC System to decongest public secondary schools through scholarship grants in private institutions, I hereby direct the implementation of the ESC System under Deped-OSEC, Special Provision No. 16, “Government Assistance to Students and Teachers in Private Education”, page 65 to be made exclusively to graduates of public elementary schools and those coming from congested public secondary schools.  Otherwise, the intended purpose of the ESC will not be achieved and our public secondary schools will remain congested.  For this purpose, the DepEd is hereby tasked to issue the necessary guidelines to ensure, among others, that the ESC grantees are qualified and deserving students not only at the time of admission to the Program but also during the continued availment thereof.
D. provisions on educational facilities
In the same manner, the implementation of the special provisions below should be placed under conditional implementation.  I hereby tasked the DepEd to issue the pertinent guidelines to reflect the following conditions:
1. DepEd-OSEC, Special Provision No. 7, “Provision for Educational Facilities”, page 64.
The provision for educational facilities under the DepEd budget should cover the requirement for the acquisition of equipment for instructional purposes.
2. DepEd School Building Program, Special Provision No. 1, “Use and Allocation of Fund”, page 990.
It is self-evident that for every construction of school building, there is an associated duty to provide the corresponding school desks, furniture, fixtures and equipment for instructional purposes.  Otherwise, the provision for educational facilities would be deficient to the prejudice of our public education system.
Additionally, the allocation of school buildings under the School Building Program should be based on the Section 4 of R.A. No. 7880 (Fair and Equitable Access to Education Act).
E. reconstruction of school buildings
Of particular interest is the inclusion of the following new special provisions both meant to address the reconstruction of school buildings destroyed by calamities.  Notwithstanding said provisions, I understand that the Calamity Fund may also be tapped for the reconstruction works in connection with the occurrence of calamities.  Thus, I order the DepEd and DBM to jointly issue the guidelines to harmonize these provisions and avoid double funding for the same purpose.  This way, funds are optimized and made available in time for project implementation and not before.
1. DepEd-OSEC, Special Provision No. 9, “Quick Response Fund”, page 64.
This new special provision establishes the Quick Response Fund (QRF) under the DepEd budget which authorizes the immediate release of twenty-five percent (25%) of said Fund within thirty (30) days from approval of this GAA.  Said amount shall be used exclusively as stand-by fund for the repair, rehabilitation, reconstruction, and/or replacement of school buildings and facilities affected by calamities. It appears that the inclusion of this QRF is to facilitate the procurement process of DepEd in respect to the bidding of the foregoing activities.
The intent of the QRF, however, is to provide a stand-by fund for the immediate response to calamities in order to normalize the situation as quickly as possible.  It is not meant to facilitate the procurement process with respect to bidding activities.
2. DepEd-OSEC, Special Provision No. 21, “School Building Insurance”, page 66.
On the other hand, this new special provision appropriates an amount for the payment of insurance premiums of school buildings in calamity prone areas which shall be exclusively insured with the Government Service Insurance System.  The DepEd and DBM should ensure the full optimization of the insurance proceeds accruing to the government so that the Calamity Fund is better used for other priority activities.
F. CLUSTERing of Laboratory schools
To protect the existing policy on the maintenance of laboratory classes by State Universities and Colleges (SUCs), clustered laboratory classes in campuses located in island provinces whose municipalities are surrounded by bodies of water but adjacent to each other established pursuant to the second proviso of SUCs, Special Provisions Applicable to All State Universities and Colleges, Special Provision No. 9, “Maintenance of Laboratory Classes”, page 377 should still comply with the maximum five hundred (500) students per laboratory class with a ratio of one (1) teacher for every twenty-five students.
Relatedly, clustered laboratory classes in campuses located in island provinces are not exempted from the mandated transfer of excess secondary school teaching positions to DepEd.  Consequently, notwithstanding the inclusion of the second proviso under SUCs, Special Provisions Applicable to All State Universities and Colleges, Special Provision No. 10, “Transfer of Secondary School Teaching Positions from SUCs to DepEd”, page 377, all secondary school teaching positions in clustered laboratory classes in excess of the required number referred to in the preceding paragraph should be transferred to the DepEd.
Moreover, the Commission on Higher Education (CHED) is hereby directed to issue the guidelines in the proper implementation of the afore-mentioned special provisions with respect to rules and parameters in the clustering of laboratory classes in campuses located in island provinces
G. DOH-OSEC, Special Provision No. 15, “Health Facilities Enhancement Program”, page 467.
I wish to emphasize that in compliance with our commitment to the Millennium Development Goals, particularly to improve maternal health, the amount appropriated for the Health Facilities Enhancement Program under the DOH includes the P5.7 Billion provision for Basic Emergency Obstetrical and Neonatal Care (BemONC).  The remaining P1.4 Billion is dedicated for the upgrading of hospitals and enhancement of health facilities.
H. DSWD-OSEC, Special Provision No. 6, “Disbursements of CCT Funds”, page 789.
I note with grave concern this new special provision in as much as it authorizes the DSWD to deposit the amount of cash grants released by the DBM under the CCT Program to a government depository bank or in the absence thereof, in rural and other thrift banks duly accredited by the Bangko Sentral ng Pilipinas (BSP) and such other means of remittance. Considering the inherent restrictions and limited coverage of rural and other thrift banks, there are serious accountability and security concerns in treating them in the same level as authorized government depository banks.  Moreover, given the sheer volume of transactions and aggregate amount involved in the implementation of the CCT Program it is imperative that the implementation of this provision be circumscribed with these considerations in mind.
In view thereof, the DSWD shall tap the services of authorized government depository banks for the implementation of the CCT Program.   The latter, may, however, enter into agreements or undertaking with rural and other thrift bank and such other means of remittances duly accredited by the BSP, with the objective of facilitating the receipt of cash by the intended beneficiaries.   The DSWD and DBM will jointly craft the guidelines for the purpose.
I. Department of the Interior and Local Government (DILG)–Philippine National Police (PNP), Special Provision No. 8, “Maintenance and Other Operating Expenses (MOOE) of the Operating Units of the PNP”, page 499.
While I fully support the objective of this new special provision, there is a need to underscore the technical capacity and support entailed in the release of appropriations directly to the provincial, district, city and municipal stations of the PNP.  I believe, therefore, that the appropriations for maintenance and other operating expenses, required under this provision to be distributed within five (5) days to the said operating units, refer to the cash allocation and not the allotment which will continually be released to the Police Regional Offices.  Accordingly, the guidelines required under this special provision should be able to reflect the foregoing understanding and arrangement.
J. Priority in the use of funds
Inherent in the execution of any appropriations law is the identification of priority programs and projects.  Such determination is appropriately lodged with the Executive Branch given its fundamental know-how and experience in the implementation of programs and projects of the government.  With this in mind, I hereby subject the implementation of Department of Transportation and Communications (DOTC)-OSEC, Special Provision No. 7, “Transport Studies Fund”, page 823 to the issuance of guidelines by the DOTC to ensure that the use of the Transport Studies Fund in the conduct of feasibility studies conforms with its overall traffic decongestion program.
On the other hand, the CHED is directed to issue the necessary guidelines to harmonize the priority courses identified by Congress under OEOs-CHED, Special Provision No. 3, “Funds for Scholarship”, page 868 with the courses currently being offered by said agency under its scholarship program.
K. BSGC, Special Provision No. 6, “Budgetary Support to the National Housing Authority”, page 973.
This special provision now includes the resettlement programs for families in danger or risk areas and families affected by calamities, and families affected by other government infrastructure projects as among the purposes of the subsidy given to the National Housing Authority (NHA) for its Resettlement Program  However, I understand that the NHA has already programmed said subsidy for the relocation and resettlement of families whose houses were totally damaged by typhoons Ondoy and Pepeng and those affected by priority infrastructure projects.  In order, therefore, not to hamper the proper and efficient implementation of NHA’s Resettlement Program for FY 2011, implementation of this provision is subject to guidelines to be jointly issued by the NHA and DBM
L. Increases IN APPROPRIATIONS
In line with our established policy on the observance of fiscal prudence and responsible financial management, all allowable  increase in appropriations in this Act, such as, but not limited to those covered in the following special provisions,  should carry with it a corresponding increase in the respective outputs and improved outcomes of the agencies concerned.
1. Department of Environment and Natural Resources–OSEC, Land Registration Authority, Special Provision No. 1, “Use of Income”, page 412.
2. DILG-OSEC, Special Provision No. 2, “Enhancing LGU Capacity on Climate Change Adaptation and Disaster Risk Management Framework”, page 483.
M. USE AND RELEASE OF FUNDS
In keeping with my judicially recognized authority to regulate fund releases, implement payment schedules, and take charge of various operational aspects of budgeting, I hereby direct the issuance of guidelines by the agencies concerned in the efficient and effective implementation of the below-enumerated special provisions.
1. Allocation to Local Government Units-Financial Subsidy to Local Government Units, Special Provision No. 1, “Use of Fund”, page 979.
2. Calamity Fund, Special Provision No. 1, “Use and Release of Fund”, page 986.
Additionally, I caution the inclusion of pre-disaster activities such as preparation of relocation sites/facilities, and training of personnel engaged in direct disaster in the use of the Calamity Fund.  While said purpose is laudable, the same must be weighed against the imperious need of maintaining sufficient provision under the Calamity Fund for actual calamities and prevent its full utilization for pre-disaster activities.  Moreover, I note that the provision for pre-disaster activities are embedded and subsumed in the programs and projects of various implementing agencies under this Act.
3. PRIORITY DEVELOPMENT ASSISTANCE FUND
To ensure the effective and efficient use of public funds, the DBM is hereby directed to issue the guidelines in the implementation of the below-cited special provisions to ensure that the identification of projects and/or designation of beneficiaries shall conform to the priority list, standard or design prepared by the implementing agencies concerned.  Preference should likewise be given to projects located in the 4th to 6th class municipalities and/or priority afforded to indigents identified under the National Household targeting System for Poverty Reduction, as the case may be.
Moreover, in consideration of the approved fiscal program of the government, fifty percent (50%) of the allocation for each legislator and the Vice-President shall be released in the first semester and the remaining fifty percent (50%) in the second semester.
a. PDAF, Special Provision No. 1, “Use of Fund”, pages 1009-1012.
b. PDAF, Special Provision No. 2, “Allocation of Funds”, page 1012.
c. PDAF, Special Provision No. 3, “Release of Funds”, page 1012.
4. Unprogrammed Fund, Special Provision No. 7, “Support for Infrastructure Projects and Social Program”, page 1015.
Finally, for the uniform application of this special provision, the DBM is directed to coordinate with the various agencies concerned and formulate a set of standards and criteria in the availment of Purpose 5, Support for Infrastructure Projects under the Unprogrammed Fund.
IV. GENERAL OBSERVATION
I likewise note the changes made in some special and general provisions which compel me to express my interpretations thereon.
A. Congressional oversight
The invaluable role of an oversight committee in providing checks and balance in government is unquestionable.  It prevents  abuse of power and guards against fraudulent practices in government.  However, as pronounced by the Supreme Court in the case of ABAKADA Guro Party List, et al, vs. Purisima, et al. (562 SCRA 251, 2008) any post-enactment congressional measure such as the creation of congressional oversight committees should be limited to scrutiny and investigation.
I am confident that Congress will be mindful of these limitations in the exercise of its congressional oversight functions under the following provisions in the GAA.   
1. General Provisions, Section 98, “Oversight Committees on Public Expenditures”, page 1237.
2. DSWD-OSEC, Special Provision No. 5, “Oversight Committees”, page 789.
B. Congress, 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 9.
I have complete trust and confidence in the leadership of both Houses of Congress that they will faithfully adhere to the constitutional principle of salary standardization enshrined as a state policy under R.A. No. 6758 (Compensation and Position Classification Act of 1989), as amended by the Senate and House of Representatives Resolution No. 1, s. 1994 and Joint Resolution No. 4, s. 2009, and R.A. No. 6688 (An Act Authorizing Annual Christmas Bonus), as amended by R.A. No. 8441and (An Act Increasing Cash Gift)
Likewise, I wish to note that the scrap and build policy and such other organization, staffing, compensation and position classification standards should be applied in any adjustment or modification in the organizational structure of these institutions.   Moreover, the creation of new positions as well as the grant of retirement benefits and separation pay, as the case may be, under this special provision should be funded from the appropriations or available savings of said institutions.
I am likewise confident that Congress will remain steadfast in its commitment to the fundamental policy set forth under Section 8, Article IX-B of the 1987 Constitution, which prohibits the payment of additional compensation, as well as the requirements of other relevant laws.
C. Transfer of Personnel Appropriations
Let me clarify that the transfer of the personnel under the following special provisions should not cause any diminution in the salaries nor loss of rank and seniority of the personnel concerned.  Moreover, the transfer contemplated in these special provisions  should be limited to filled positions and those that can be absorbed by the Surigao State College of Technology to ensure the continued implementation of the Revised Compensation and Position Classification Plan for Faculty Positions of the affected personnel.
1. SUCs, Surigao State College of Technology, Special Provision No. 1, “Transfer of Personnel and Appropriations of the Surigao del Norte College of Agriculture and Technology (SNCAT) to the Surigao State College of Technology (SSCT)”, page 369.
2. Department of Labor and Employment–Technical Education and Skills Development Authority, Special Provision No. 5, “Transfer of Personnel and Appropriations of the Surigao del Norte College of Agriculture and Technology (SNCAT) to the Surigao State College of Technology (SSCT)”, page 548.
D. BSGC, Special Provision No. 11, “Subsidy to the PIDS”, page 974.
I wish to note that the subsidy given to the Philippine Institute for Development Studies is not limited to the conduct of policy studies but also covers general management and supervision, publication, seminars and management systems services and project services, and the operations of the Philippine APEC Study Center Network.
E. BSGC, Special Provision No. 14, “Support for the Agriculture and Fisheries Modernization Program”, page 974.
Finally, in order to avoid any confusion, allow me to elucidate that the subsidy given to the Philippine Crop Insurance Corporation shall be used exclusively for the payment of crop insurance premium of subsistence farmers as provided under BSGC, Special Provision No. 10, “Subsidy to the Philippine Crop Insurance Corporation”.
V. INCREASES and reductions in appropriations AND NEW BUDGETARY ITEMS
As a final note, there were changes, increases, reductions and new budgetary items introduced by Congress in the FY 2011 GAA.  I hereby declare that such changes, increases, realignments and new items shall be subject to the National Government’s cash program and prudent observance of responsible fiscal management, and to applicable rules and procedures during budget implementation, including Presidential approval pursuant to Section 25 (5), Article VI of the 1987 Constitution, and in accordance with the requirements of Section 35, Chapter V, Book VI of E.O. No. 292.
More importantly, let me reiterate that the release of all allowable increase in appropriations should carry with it a corresponding increase in the respective outputs and improved outcomes of the agencies concerned.
VI. CLOSING STATEMENT
Like the break of dawn and the daylight that follows, this FY 2011 Reform Budget truly ushers in a bright new beginning in the governance of our country. This is but a fitting start for our Platform of Change, our Social Contract with the People that became our Administration’s commitment with the People on June 30, 2010.
In this Contract, we pledge transparency and accountability in the affairs of government, leading it to the straight and righteous path to meaningful reform. We commit to fulfill our promise to improve the lives of Filipinos, especially our poor and marginalized who urgently need a helping hand through quality education, public health, social protection, and social justice. We also ensure a space for honest investors and businessmen to enter into fair, mutually beneficial and productive partnerships with Government to build infrastructures and undertake other economic activities that generate more employment.
All these will become possible on January 1, 2011 with today’s enactment of the 2011 General Appropriations Act (R.A. No. 10147).
With the sense of duty of the men and women of Congress and the trust and confidence of a sizeable majority of the Filipino populace resting on our shoulders, we will steadfastly lead a government that cares for the people and works for a brighter future. Mamumuno tayo at gagabayan natin ang ating bayan tungo sa daang matuwid.
Very truly yours,
(Sgd.) BENIGNO S. AQUINO III