Senator Loren Legarda has reiterated the Senate’s full commitment to significantly increasing defense spending for the Armed Forces of the Philippines (AFP), as she raised serious concerns over the slow implementation of the military’s modernization program, citing “funding bottlenecks and obsolete equipment.”

During a recent Senate finance hearing on the proposed 2026 budget of the Department of National Defense (DND) and attached agencies on Tuesday, Legarda highlighted the need to raise defense funding to at least 2% of the country’s Gross Domestic Product (GDP) by 2028, up from the current 1.3%, in line with commitments made by Senate Committee on National Defense. 

“Before 2028, which is really one or two years away from now, the chair has committed that he, along with all of us, will support the funding of at least 2% of GDP for the AFP and the DND, just to make it very clear,” Legarda said.

The senator then turned to the implementation status of the Revised AFP Modernization Program, which was divided into three phases or “Horizons.” 

Horizon 1 (2013 to 2017) and Horizon 2 (2018 to 2022) have both been completed on paper, but many projects remain unfinished.

The Horizon 3, or the final phase of the AFP Modernization Program, will run this year until 2028 and consists of equipment geared for external defense.

Defense Secretary Gilberto Teodoro Jr. said only 39 out of 53 projects under Horizon 1 have been completed, with 14 still pending despite the phase ending eight years ago.

“The bottlenecks were funding, basically. And those were the bottlenecks. Now, the problem is funding plus obsolescence already of the past items,” Teodoro told Legarda. 

The lady senator asked. “If it's obsolete, you'll have to acquire again, and it would require more funding, right?”

Teodoro responded. “No more, Your Honor. We will scrap the rest. That's why we have a re-Horizon 3 already. Although the re-Horizon 3, some of those items also depend on Horizon 2.”

“That is why, your Honor, I was suggesting scrapping the modernization law on the Horizons just to have a completed project in all its aspects, the financing, and the end result that you want, rather than chop it into preliminary, foundational, and actually a lot of requirements that were put in the modernization law are also foundational. These are not even modernization. These are basic necessities,” Teodoro further explained.

The Defense chief is pushing for the scrapping of the remaining items on Horizon 1.

Teodoro also admitted that approximately P96.71 billion worth of projects from Horizon 1 remain unfunded, citing a lack of appropriations and “obsolescence" of originally planned equipment.

Teodoro and Legarda agreed that the slow implementation of the AFP modernization in Horizon 1 was “due to funding gaps.”

“So we, in short, DBM, Congress, meaning both houses, do not fund the modernization according to the need at the time. So if Horizon 1 is 2013 to 2017, there's still an unfunded portion of Horizon 1?,” Legarda asked. 

Teodoro replied. “Yes, Your Honor. Of 96.71 billion in 2013 pesos.”

“It comes quite as a shock that 2013 programs are not yet completely implemented,” Legarda said. “That is perhaps the greatest obstacle — the non-implementation of programs due to funding gaps.”

Reassessing horizons, scrapping obsolete projects

Teodoro said the DND plans to scrap the remaining projects under Horizon 1 due to outdated specifications, saying some items have become irrelevant in today’s evolving security and technological landscape.

Legarda acknowledged this need for strategic reassessment, emphasizing that modernization should not merely focus on hardware acquisition but also on updated military doctrines and new technologies like artificial intelligence and cybersecurity.

“At the time [of Horizon 1], the digital world was not yet this way. AI was not yet there. Blockchain was not yet known,” she remarked.

A significant part of the discussion revolved around Republic Act 10349, which serves as the legal framework for the AFP modernization. 

Legarda and Teodoro both floated the idea of repealing or amending the law to allow a more holistic and flexible approach to defense procurement, moving away from the rigid “Horizon” structure that currently hampers execution.

“Maybe we can just simply repeal it with transitory provisions for payment of past obligations,” she suggested, asking the DND to provide legal recommendations for such a move.

Teodoro confirmed that in 2024, P40 billion was allocated for AFP modernization, with 98.5% of the funds released and fully obligated. However, only 75% of the modernization projects were implemented, raising questions about budget utilization and contract structuring.

It was also revealed that a large portion of the budget went to multi-year contractual obligations from previous Horizons — leaving little room for new acquisitions. 

Of the 2024 funds, P39.3 billion was used to pay for existing contracts, mostly from Horizon 2.

“And if we acquire new projects, then the automatic appropriations on the RAFPMP will balloon because of the debt payments you need to make. Because it's only for the initial down payments that we can do with the free portion,” Teodoro said. 

Despite the limitations, Legarda emphasized that the AFP must be adequately equipped to face emerging threats.

Meanwhile, Teodoro requested the Department of Budget Management (DBM) to increase the DND’s Maintenance and Other Operating Expenses (MOOE), especially as the country anticipates the arrival of major defense assets like the three C-130J aircraft next year, which will significantly increase the agency’s operational expenses.

“So that we can accommodate the newly acquired helicopter, the newly... the past ordered but arriving capabilities. And the most expensive will be the three C-130J models that will come in next year, and the MOOE for those aircraft will be very high,” he said. 

For her part, Legarda sees the need to streamline and align budgeting processes with defense priorities. 

She also supported the inclusion of special provisions in the national budget that would enable foreign loan contracting and flexible funding mechanisms for modernization.