So-called pork barrel funds are part of the national budget intended for "local improvements" that are spent at the discretion of government officials, from the President down to barangay officials.
At the congressional level, these are labeled the Priority Development Assistance Fund (PDAF), previously known as the Countrywide Development Fund. President Aquino has announced that he intends to abolish the PDAF but will retain the lawmakers' discretionary funds under a different, and presumably more corruption-proof, system.
Pork barrel funds are notorious not only for being susceptible to corruption, but also for being used by the executive branch as political leverage with the legislature. Lawmakers in turn use their pork to help win elections, by showering communities with benefits from the fund which are not necessarily based on need but on potential electoral dividends.
It is important to note that discretionary funds are not the monopoly of legislators. The President has his President's Social Fund, while local officials have their Local Development Fund.
See how corruption occurs along the pork trail via this infographic produced by GMA News Online.