Overview
President Ferdinand Marcos Jr. signed a $115 billion budget on January 5, 2026, while vetoing $1.6 billion in unprogrammed appropriations—slashing discretionary funds to their lowest level since 2019. The move follows months of scandal after former lawmaker Zaldy Co admitted to inserting $1.69 billion in phantom flood control projects into the 2025 budget, implicating Marcos's own cousin, then-House Speaker Martin Romualdez, in an alleged kickback scheme. Co remains at large abroad while seven of sixteen co-accused in the first criminal case are now in custody. In early January 2026, eight DPWH officials pleaded not guilty at their Sandiganbayan arraignment for graft charges over a $4.9 million ghost project.
What started as infrastructure corruption has become a full-blown governance crisis testing whether the Philippine system can hold elites accountable. The DPWH and Independent Commission for Infrastructure formally recommended plunder charges against Romualdez in December 2025—charges now under Ombudsman review. Yet watchdog groups claim $11.8 billion in hidden pork remains embedded across the 2026 budget despite Marcos's vetoes, and Romualdez still received $102 million in DPWH allocables for 2026. Without convictions of high-level figures, critics say this is theater: the 2013 pork barrel scandal produced landmark rulings and Napoles's conviction, but the system simply rebranded PDAF as allocables. The question is whether this time will be different.
Key Indicators
People Involved
Organizations Involved
The lower house of Congress where budget bills originate and where the insertion scandal exploded.
The Senate's investigative arm probing government anomalies and corruption.
The infrastructure agency at the center of the P545.6 billion flood control scandal.
Marcos's response to the scandal: an independent body investigating a decade of infrastructure corruption.
Timeline
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Marcos Signs 2026 Budget, Vetoes P92.5B
BudgetPresident enacts P6.793T budget, cuts unprogrammed appropriations to 2019 levels.
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Marcos Details Veto Rationale in Signing Speech
BudgetPresident frames 2026 budget as "pivotal moment" for governance reform, says 2025 corruption exposure made reform unavoidable. Vetoed 7 of 10 unprogrammed items including GOCC support and CARS program.
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First Sandiganbayan Arraignments Proceed
LegalEight DPWH Region IV-B officials plead not guilty to graft charges over P289.5M ghost flood control project. Pre-conference hearings scheduled through February 2026.
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Government Operates Under Reenacted Budget
AdministrativeMarcos delays signing; Philippines runs on 2025 budget for first days of 2026.
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2026 Budget Ratified by Congress
LegislativeBoth chambers approve P6.793T spending bill, sent to president for signature.
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Congress Ratifies P6.793T Budget
LegislativeBoth chambers approve budget with P695.78B in alleged pork insertions per Makabayan bloc. Romualdez receives P6B in DPWH allocables despite corruption allegations.
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Watchdogs Identify P695.78B in Hidden Pork
InvestigationBayan and Makabayan bloc expose bicam report inflated LGSF from P16B to P57.87B, identify 'hard pork' allocables and 'soft pork' social programs benefiting lawmakers.
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DPWH Seeks Charges Against 87 Individuals
LegalDepartment recommends plunder, malversation, graft and bribery charges against Romualdez, Co, and 85 others to Ombudsman.
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Marcos Orders Arrest of Co, 17 Others
LegalPresident announces warrants issued for Zaldy Co and 17 co-accused; warns fugitives to surrender. Seven eventually detained by early 2026, Co remains at large abroad.
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DPWH and ICI Recommend Plunder Charges vs Romualdez
LegalIndependent Commission and DPWH formally recommend plunder, graft, and direct bribery charges against former Speaker based on P100B+ in contracts to Co-linked firms 2016-2025.
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First Graft Case Filed at Sandiganbayan
LegalOmbudsman files graft and malversation charges against Co, 10 DPWH Region IV-B officials, 5 Sunwest Inc executives over P289.5M ghost Naujan river project.
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Zaldy Co Releases Bombshell Video Confession
TestimonyFormer appropriations chair admits P100B insertions, claims Marcos and Romualdez ordered it.
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Co Alleges Marcos Got P25B Kickback
AllegationZaldy Co claims President personally received P25 billion from budget insertions.
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Infrastructure Spending Plunges 22%
EconomicDPWH project validation freezes contracts; spending drops to P84.9B from prior year.
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Ping Lacson Resigns as Blue Ribbon Chair
PoliticalSenate colleagues pressure him out after aggressive corruption investigation.
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Lacson Reveals Senate Insertions
InvestigationBlue Ribbon chairman discloses almost all senators made P100B+ insertions in 2025 budget.
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Security Aide Testifies About Cash Deliveries
TestimonyOrly Guteza tells Senate he delivered P1.68B in luggage to Romualdez residence.
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House Speaker Martin Romualdez Resigns
PoliticalMarcos's cousin steps down as Speaker amid mounting corruption allegations.
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Marcos Creates Independent Commission for Infrastructure
AdministrativeExecutive Order No. 94 establishes ICI to investigate 10 years of flood control anomalies. Former DPWH Secretary Rogelio Singson, SGV Managing Partner Rossana Fajardo appointed commissioners; Baguio Mayor Benjamin Magalong named special adviser/investigator.
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Contractor Implicates Romualdez in Kickbacks
TestimonyCurlee Discaya testifies at House probe that Speaker received kickbacks from public works contracts.
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Marcos Orders P255.5B Cut from DPWH 2026 Budget
BudgetPresident directs sweeping review, slashing proposed DPWH allocation from P881.3B to P625.8B for 2026 amid corruption findings.
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Senate Blue Ribbon Launches Investigation
InvestigationCommittee begins Philippines Under Water probe into flood control anomalies and budget insertions.
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421 Ghost Projects Confirmed
InvestigationGovernment inspectors find 421 fake flood control works out of 8,000 projects examined.
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Flood Control Corruption Scandal Breaks
InvestigationExposé reveals systemic fraud in P545.6B flood control program with up to 25% kickbacks.
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Marcos Vetoes P194B from 2025 Budget
BudgetPresident cuts P168B in unprogrammed appropriations after 300% increase by Congress.
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Ferdinand Marcos Jr. Becomes President
PoliticalSon of late dictator assumes office, promising economic revival and infrastructure investment.
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Supreme Court Declares PDAF Unconstitutional
Legal14-0 ruling abolished congressional pork barrel system after corruption scandal.
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PDAF Pork Barrel Scandal Exposed
Historical ParallelPhilippine Daily Inquirer revealed P10 billion fraud involving fake NGOs and Janet Napoles, sparking nationwide protests.
Scenarios
Vetoes Restore Credibility, Prosecutions Follow
Discussed by: Budget reform advocates, some economic analysts
Marcos's unprogrammed appropriations cuts mark a genuine turning point. The Independent Commission for Infrastructure produces actionable findings, leading to prosecutions of lawmakers and DPWH officials. Congress, chastened by public outrage and Romualdez's resignation, strips allocables from future budgets. Infrastructure spending recovers as legitimate projects proceed. Economic growth targets stabilize and investor confidence returns. This requires the ICI to overcome political pressure and prosecute high-level figures, and Marcos to allow investigations that touch his administration.
Cosmetic Reform, Pork Barrel Persists
Discussed by: Makabayan bloc, anti-corruption watchdogs, opposition analysts
The vetoes are political theater. The P695 billion that Makabayan claims is hidden across agency budgets remains untouched. No major prosecutions emerge—Co's allegations fade as hearsay, the ICI produces only minor scapegoats. By the 2027 budget cycle, unprogrammed appropriations creep back up under different names. Infrastructure corruption continues at reduced public visibility. The scandal's main achievement: forcing politicians to be more careful about paper trails, not about actual graft.
Marcos Implicated, Administration Collapses
Discussed by: Opposition politicians, some investigative journalists
Co's allegations gain traction. Corroborating witnesses emerge placing Marcos at the center of insertion orders. The ICI investigation stalls, but independent probes or international pressure forces accountability. Impeachment proceedings begin, or Marcos resigns under coalition collapse. This scenario requires smoking-gun evidence and political will among allies to abandon the president—unlikely given the political costs to those who benefited from the same system.
Supreme Court Intervenes, Budget System Overhauled
Discussed by: Constitutional law experts, judicial reform advocates
Following the 2013 PDAF precedent, petitioners bring unprogrammed appropriations and allocables before the Supreme Court. The Court rules that the current implementation violates constitutional budget principles, forcing structural reform. Congress must redesign appropriations to meet transparency and specificity requirements. This path worked in 2013, but the Court has since been criticized for selective enforcement, and political pressure on justices is intense given the scale of interests involved.
Ombudsman Files Plunder, But Elite Immunity Holds
Discussed by: Legal analysts, anti-corruption advocates citing PDAF precedent
The Ombudsman files plunder charges against Romualdez and other high-level figures in early 2026, creating headlines and appearing to deliver accountability. Cases proceed to Sandiganbayan, but follow the PDAF pattern: drawn-out litigation, acquittals on technicalities or reasonable doubt, and only mid-level scapegoats convicted. Romualdez might be barred from holding office during trial under preventive suspension, but ultimately escapes conviction through superior legal resources and political connections. Meanwhile, DPWH engineers and contractors serve as sacrificial lambs—several get convicted like Napoles did in PDAF, satisfying public demand for 'someone' to be punished without threatening the political class. The system demonstrates it can prosecute corruption, just not at the levels where it originates.
Historical Context
2013 Pork Barrel Scandal and PDAF Abolition
2013-2018What Happened
Businesswoman Janet Napoles orchestrated a P10 billion fraud using fake NGOs to siphon lawmakers' Priority Development Assistance Fund allocations. Whistleblower Benhur Luy exposed the scheme after being rescued from detention. The Philippine Daily Inquirer's exposé sparked nationwide protests in August 2013.
Outcome
Short term: Supreme Court declared PDAF unconstitutional in November 2013 by 14-0 vote, abolishing congressional pork barrel.
Long term: Napoles convicted of plunder in 2018. Three senators faced charges. System renamed but discretionary allocations persisted through 'allocables' and unprogrammed funds.
Why It's Relevant
Shows that even landmark Supreme Court rulings and prosecutions don't eliminate pork barrel—the system adapts. Unprogrammed appropriations and DPWH allocables are the new PDAF.
2014 Disbursement Acceleration Program Controversy
2011-2014What Happened
President Benigno Aquino III's administration created the DAP, moving $3.6 billion in unspent funds between 2011-2013 to accelerate infrastructure projects. Critics compared it to pork barrel. In July 2014, the Supreme Court ruled key DAP mechanisms unconstitutional. Aquino publicly criticized the Court and insisted DAP was different from PDAF.
Outcome
Short term: Supreme Court declared DAP unconstitutional, forcing budget reforms and constraining executive realignment authority.
Long term: No officials prosecuted. Aquino served full term. Demonstrated limits of executive budget flexibility but also showed political elite faces minimal personal consequences.
Why It's Relevant
Established that both legislative and executive branches exploit budget flexibility for discretionary spending, and that Supreme Court intervention doesn't guarantee accountability beyond institutional rulings.
2019 Delayed Budget Enactment
Late 2018 - April 2019What Happened
Congress failed to pass the 2019 budget on time due to disputes over allocations and accusations of insertions. The Philippines operated under a reenacted 2018 budget for the first quarter of 2019, freezing new programs and infrastructure projects.
Outcome
Short term: Economic growth slowed to 5.6% in Q1 2019, the lowest in four years, partly attributed to budget delays freezing government spending.
Long term: Unprogrammed appropriations for 2019 remained at minimal levels. The delay served as a benchmark for fiscal restraint that Marcos now references.
Why It's Relevant
The 2019 budget represents the 'lowest' unprogrammed appropriations level that Marcos claims to have returned to with his 2026 vetoes—making it the standard for what minimal discretionary spending looks like.