MANILA— The Supreme Court (SC) has declared unconstitutional the 2024 and 2025 national budget laws over increases in appropriations beyond the amounts recommended by the President, while permanently prohibiting the implementation of two provisions governing unprogrammed appropriations under the 2026 budget.

In a decision written by Senior Associate Justice Marvic M.V.F. Leonen, the SC En Banc granted the petition of former Albay representative Edcel C. Lagman and others (G.R. No. 271059) and partly granted the petition of Senator Aquilino “Koko” Pimentel III and others (G.R. No. 271347), which challenged the increase in unprogrammed appropriations under the 2024 General Appropriations Act (GAA).

The Court declared Republic Act No. 11975, or the 2024 GAA, unconstitutional after Congress increased unprogrammed appropriations by ₱449.5 billion, effectively raising the total appropriations beyond the amount recommended by the President.

It also granted the petition of Filipinos for Peace, Justice and Progress Movement Inc. and others (G.R. No. E-02472), declaring Republic Act No. 12116, or the 2025 GAA, unconstitutional because Congress increased the Department of Public Works and Highways’ (DPWH) Special Road Fund by ₱17.99 billion, likewise pushing total appropriations beyond the President’s recommendation.

Separately, the Court partly granted the petition of Edgar R. Erice and Leila M. De Lima (G.R. No. E-04036), which questioned the constitutionality of Chapter XLIII of the 2026 GAA, covering unprogrammed appropriations.

The Court struck down Special Provisions 1(a) and 1(b) of the chapter and permanently prohibited the Senate, House of Representatives, Office of the Executive Secretary and acting secretary of the Department of Budget and Management from implementing them.

Limits on unprogrammed appropriations

The SC clarified that unprogrammed appropriations are not unconstitutional per se. These funds serve as contingent or standby appropriations that may be released when specified fiscal conditions are met.

However, the Court said they must have clear limits and safeguards to protect fiscal discipline, transparency and accountability. Without sufficient standards, unprogrammed appropriations could give the Executive unchecked spending authority and undermine funding for programmed projects when anticipated government revenues fail to materialize.

The Court also ruled that the constitutional spending ceiling under Article VI, Section 25(1) applies to the combined total of programmed and unprogrammed appropriations.

Special Provisions 1(a) and 1(b) of the 2026 GAA failed to meet these requirements, the Court found.

The provisions allowed the release of funds based on new or excess revenues without requiring the government to exceed its overall revenue target. The Court said this departed from the original role of unprogrammed appropriations as a deficit-neutral mechanism, undermined the national fiscal program under Article VII, Section 22 of the Constitution, and ran counter to the ruling in Araullo v. Aquino III.

The provisions were also overly broad, lacked standards for prioritizing expenditures among competing purposes, and partly operated as prohibited lump-sum appropriations.

The Court emphasized that unprogrammed appropriations must comply with four conditions:

1. They must not contain lump-sum appropriations.
2. Congress must clearly distinguish the conditions for using new income and additional earnings from nontax revenue sources for programmed and unprogrammed expenditures. New funds should presumptively support programmed expenditures unless clear and convincing reasons, such as foreign-assisted projects, justify placing them under unprogrammed appropriations.
3. Congress must establish sufficient prioritization standards when unprogrammed appropriations cover multiple purposes.
4. Unprogrammed appropriations must remain within the national fiscal program established in the budget and retain their character as narrow contingent appropriations.

₱12.75-billion increase and alleged lump-sum funds

The Court also found that a ₱12.75-billion increase involving certain agencies’ Special Accounts in the General Fund (SAGF) violated Book VI, Chapter 4, Section 25 of the Administrative Code, which prohibits increasing amounts in special provisions beyond those proposed by the President.

It further ruled that the “Strengthening Assistance for Government Infrastructure and Social Programs,” or SAGIP, item under the unprogrammed appropriations of the 2024 and 2025 GAAs constituted a prohibited lump-sum appropriation. The item was removed from the 2026 GAA.

According to the Court, SAGIP gave the Executive post-enactment authority to identify and allocate funds to specific projects, a power constitutionally vested in Congress.

The item effectively became a repository for lump-sum allocations for DPWH infrastructure projects, including flood control works, the Court noted.

Bicameral committee exceeded its authority

The ₱449.5-billion increase in the 2024 GAA’s unprogrammed appropriations resulted from changes made by the Bicameral Conference Committee, including the transfer of programs, activities and projects from programmed to unprogrammed appropriations and significant increases in allocations for SAGIP and support for foreign-assisted projects.

The Court said these adjustments distorted the national budget by creating artificial fiscal space in programmed appropriations, paving the way for increased funding for the DPWH’s basic infrastructure programs, the Sustainable Infrastructure Projects Alleviating Gap (SIPAG), the Department of Health’s medical assistance for indigent patients, the Department of Social Welfare and Development’s Ayuda sa Kapos ang Kita (AKAP) program, and the Department of Labor and Employment’s Tulong Panghanapbuhay sa Ating Disadvantaged or Displaced Workers (TUPAD) program.

The SC reiterated that the Bicameral Conference Committee may act only on provisions where the House and Senate versions of a bill disagree. The nature of those disagreements determines the scope of the committee’s authority and the extent of permissible amendments.

The Court also criticized the committee’s lack of transparency and documentation. It noted that there were no records of its discussions, its report did not explain increases and decreases in budget items, and it did not submit supporting documents for the changes.

These shortcomings violated the rules of both chambers, the Court said, emphasizing that bicameral proceedings must be transparent and accountable.

Doctrine of operative fact

For the 2024 and 2025 GAAs, the SC ruled that the doctrine of operative fact applies only to irreversible programs whose beneficiaries acted in good faith.

The doctrine recognizes that certain consequences of an act later declared unconstitutional may be preserved under limited circumstances. However, it does not automatically protect the authors, proponents or implementers of the challenged measures from criminal, civil or administrative liability.

Such protection applies only if the proper tribunals expressly determine that the individuals concerned acted in good faith.

Separate opinions

The justices issued differing opinions on the constitutionality of unprogrammed appropriations, the scope of congressional authority over the budget and the safeguards needed for the release of public funds.

Chief Justice Alexander G. Gesmundo agreed that unprogrammed appropriations are constitutional when used as limited standby authority to respond to changing circumstances and crises without undermining the national fiscal program. He maintained that Congress cannot increase the unprogrammed appropriations proposed by the Executive and that any increase must be matched by a corresponding reduction in programmed appropriations.

Associate Justice Alfredo Benjamin S. Caguioa likewise said unprogrammed appropriations are not unconstitutional per se but must comply with constitutional safeguards. He maintained that lump-sum appropriations may be permissible if they do not effectively become pork-barrel funds. He also called for abandoning the doctrine in Tolentino v. Secretary of Finance that allows the Bicameral Conference Committee to amend provisions already agreed upon by both chambers.

Associate Justice Ramon Paul L. Hernando took a stricter position, arguing that unprogrammed appropriations in the GAA are unconstitutional because they lack identified funding sources required by the Constitution. He said additional or excess revenues should instead be allocated through a special appropriations law.

Associate Justice Amy C. Lazaro-Javier agreed that provisions on unprogrammed appropriations and the SAGF in the 2024, 2025 and 2026 GAAs were unconstitutional because they exceeded the President’s proposed spending limits and loosened the rules governing contingent funds. However, she said the Court should defer applying the doctrine of operative fact until a complete accounting of released funds and their use had been established.

Associate Justice Henri Jean Paul B. Inting agreed that the 2026 provisions were invalid because they permitted the release of funds based on excess collections from a single nontax revenue source or on new revenues excluded from the budget, even if total government revenues had not exceeded their targets. He also argued that Congress cannot reclassify items between programmed and unprogrammed appropriations because budget preparation and project prioritization fall under the Executive’s functions.

Associate Justice Rodil V. Zalameda agreed that unprogrammed appropriations are not inherently unconstitutional and can help the government respond to extraordinary or unforeseen needs when safeguards are observed. However, he disagreed that Congress had unconstitutionally increased unprogrammed appropriations in the 2024 GAA, maintaining that the constitutional restriction on increasing the President’s proposed budget applies to government operating funds, not contingent or standby appropriations.

Associate Justice Samuel H. Gaerlan called for stricter safeguards on the Bicameral Conference Committee, including limiting its work to actual disagreements between the chambers, requiring written records of major changes, prohibiting unrelated provisions, opening proceedings to the public and giving both chambers adequate time to review committee reports. He said the committee should serve as “a bridge between two chambers” that completes the legislative process, not “an alternative legislative procedure.”

Associate Justice Jhosep Y. Lopez agreed that unprogrammed appropriations are not unconstitutional per se but disagreed that Congress is prohibited from increasing them beyond the President’s proposal. He maintained that Article VI, Section 25(1) applies only to programmed appropriations supported by identified funding sources and not to contingent or standby funds.

Associate Justice Japar B. Dimaampao also considered unprogrammed appropriations constitutional, noting that no constitutional provision expressly prohibits them. He said their inclusion in the GAA does not violate the separation of powers because Congress itself authorizes and approves the appropriations, meaning there is no “tug-of-war between the two co-equal branches of government.”

Associate Justice Antonio T. Kho Jr. disagreed with the view that unprogrammed appropriations are constitutional, arguing that the system allows the Executive to determine specific projects, funding amounts and spending priorities after the budget has been enacted. He emphasized that Congress holds the primary power of the purse and must make essential spending decisions through legislation, while the Executive is responsible for implementing the budget.

Associate Justice Maria Filomena D. Singh agreed that unprogrammed appropriations are not unconstitutional per se, viewing them as advance enactments of supplemental or special appropriations subject to their own budget ceiling. However, she disagreed that the Bicameral Conference Committee was barred from recommending an increase simply because both chambers had previously approved the same amount. She said the constitutional issue arises when the increase exceeds the President’s proposal.

Associate Justice Raul B. Villanueva likewise considered unprogrammed appropriations constitutional as long as their amounts do not exceed those proposed by the President in the National Expenditure Program. Once the proposed budget has been submitted to Congress, he said, lawmakers cannot freely increase unprogrammed appropriations and must adhere to the purposes identified in the proposal.