SC declares 2024, 2025 budgets, 2026 special provisions ‘unconstitutional’

MANILA — The Supreme Court on Tuesday declared the unconstitutionality of the 2024 and 2025 General Appropriations Act and several special provisions of the 2026 national budget due to increases in the president’s total recommended appropriations through prohibited lump sums.

In a decision penned by Senior Associate Justice Marvic Leonen, the SC En Banc granted the petition of the late lawmaker Edcel Lagman and partly granted the petition of former Sen. Aquilino “Koko” Pimentel III and others, which challenged the P449.5 billion increase in 2024 unprogrammed appropriations made during the Bicameral Conference of the Senate and House of Representatives.

The SC also granted the petition led by civil society group Filipinos for Peace, Justice and Progress Movement Incorporated by declaring as unconstitutional the 2025 national budget due to the P17.99-billion increase to the Special Road Fund of the Department of Public Works and Highways also made by Congress.

It also declared unconstitutional the P12.75-billion increase to certain agencies’ Special Accounts in the General Fund under the 2026 national budget, as these were found to have violated certain provisions of the Administrative Code, which “prohibits increasing amounts in special provisions beyond those proposed by the president.”

The SC said that the P446.5 billion increase in the 2024 unprogrammed funds were executed by the Bicameral Conference Committee composed by contingents from the Senate and House of Representatives through transfers of programs, activities and projects from programmed to unprogrammed appropriations.

Significant increases were also made in the allocation for Strengthening Assistance for Government Infrastructure and Social Programs (SAGIP) and Support to Foreign Assisted Projects.

The SC noted that Congress “severely distorted the budget creating artificial fiscal space in the programmed appropriations” which resulted in increases in allocations in various agencies.

These are the DPWH basic infrastructure programs (BIP), Sustainable Infrastructure Projects Alleviating Gap (SIPAG), DOH’s medical assistance to indigents, DSWD’s Ayuda sa Kapos ang Kita Program (AKAP) and DOLE’s Tulong Panghanapbuhay sa Ating Disadvantaged or Displaced Workers Program (TUPAD).

It also stressed that the Bicameral Conference Committee’s power “exists only when there are disagreeing provisions in the House and Senate versions of the bill.”

“The nature of the disagreeing provisions will determine the scope of their authority and the allowable extent of the changes or amendments to settle the conflicting provisions,” the SC noted.

The Final Arbiter reminded the committee that its proceedings must be “transparent and accountable”, as it noted that there were no records of the panel discussions and its report “did not explain the increases and decreases in budget items” which violates the rules of both Chambers of Congress.

“Neither did the Committee submit any documents supporting the changes in the budget,” the SC stated.

The SAGIP under the 2024 and 2025 unprogrammed appropriations was classified by SC as “prohibited lump sum appropriation” as it gives the Executive “post-enactment identification or allocative powers,” which are constitutionally vested in Congress.

“As such, it became the covert repository of lump sum allocations for DPWH infrastructure like flood control projects,” the High Court stated. 

SAGIP was removed under the 2026 national budget.

The SC ruled that unprogrammed appropriations in itself are not unconstitutional, but it needs “clear limits and safeguards to preserve fiscal discipline, transparency, and accountability.”

“They become constitutionally infirm when they lack sufficient standards, effectively granting the Executive unchecked spending authority that weakens fiscal discipline and undermines funding for programmed projects when estimated government revenues are not realized,” it said.

The SC also declared Special Provisions 1(a) and (b) of Chapter XLIII of the 2026 national budget unconstitutional, calling it “overly broad, lacked prioritization standards, and partly functioned as prohibited lump sum appropriations.”

It noted that “pegging fiscal conditions to any new or excess revenue, without regard to whether the whole revenue target was exceeded, departs from the unprogrammed appropriations’ original feature as a deficit neutral mechanism”.

It also “undermines fiscal discipline and the coherent fiscal program” as deliberated in Article VII, Section 22 of the Constitution, and rejects the SC’s ruling in Araullo v. Aquino III, according to the SC.

As a result, the Court permanently prohibited the Senate, House of Representatives, Office of the Executive Secretary and the Department of Budget and Management Acting Secretary from implementing the said special provisions under the 2026 national budget.

The SC laid out conditions for unprogrammed appropriations to be constitutional which includes absence of lump sums.

The conditions for the use of new income and the government’s additional earnings from non-tax revenue sources “should be clearly differentiated between programmed and unprogrammed expenditures, with Congress presumptively using these new funds for programmed expenditures, except when there are clear and convincing reasons, such as foreign assisted projects, for including them under unprogrammed appropriations.”

Congress should also prescribe sufficient standards in terms of prioritization for spending when there is more than one purpose under the unprogrammed appropriations, according to the SC.

It added that the provision for unprogrammed appropriations should be within the national fiscal program established in the national budget and “consistent with its nature as a narrow contingent appropriation.”