A massive corruption scandal has plunged President Benigno Aquino's government into its worst political crisis yet, one that threatens to roll back the Philippines' fragile recovery.
Three senators are accused of using billions worth of public "pork barrel" funds to enrich themselves.
By contrast, Mr Aquino is said to have used 160 billion pesos (S$4.56 billion) of the public funds for the country to finance a successful stimulus programme he launched in 2011.
But in a surprise ruling on July 1, the Supreme Court said he usurped Congress' power over the purse and, in so doing, violated the Constitution.
That stimulus plan, known as the Disbursement Acceleration Programme (DAP), cut corners so that funds meant to build roads, bridges and homes - and hence known as pork to curry the favour of voters in the areas that benefit - could be released much more quickly.
The DAP also recapitalised the central bank to better defend the local currency from speculation and volatility, as well as settle longstanding government debts that were just chalking up interest.
Mr Aquino insisted that the "undisputed truth" was that the programme was "good".
It helped the Philippine economy grow to levels unseen in decades.
Last year's 7.2 per cent growth in gross domestic product was second only to China's, he said.
But the Supreme Court essentially told Mr Aquino: The end does not justify the means.
That has set the stage for a clash between the President and the Supreme Court that observers say could lead to a constitutional crisis, bogging down reforms that have so far made the Philippines Asia's economic darling.
Former senator Joker Arroyo, executive secretary of Mr Aquino's mother, the late president Corazon Aquino, and a one-time lawyer of the Aquino family, said Mr Aquino had effectively declared a "state of war" on the Supreme Court.
"As the picture looks presently, the President's policy is to discredit the judiciary and render it impotent, subjugate further Congress and make the President supreme," said Mr Arroyo.
When that happens, he added, flippantly: "Goodbye Constitution. Hurrah to presidential autocracy".
The Supreme Court's ruling, which essentially tells the President he can no longer take short cuts when funding his projects, is also likely to further slow government spending, which has already shrank 6 per cent in April and 4 per cent in May.
His approval rating is already plummeting to all-time lows because of the pork barrel scandal.
A constitutional crisis will make it even more difficult for Mr Aquino to pursue what remains of his economic agenda. Mr Ramon Casiple, executive director of the Institute for Political and Electoral Reform, told Bloomberg: "We have entered a political crisis, and the question is who will win."
This article was first published on July 17, 2014.
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