SC upholds unprogrammed funds, strikes down unconstitutional budget increases

The Supreme Court has upheld the constitutionality of unprogrammed appropriations, clarifying that the government may use these standby funds provided their release complies with constitutional safeguards.

In a decision penned by Senior Associate Justice Marvic Leonen, the High Court recognized the need for flexibility in government spending while emphasizing that Congress and the executive branch must operate within constitutional limits.

Unprogrammed appropriations are standby budget allocations that may be released when specific funding conditions are met, including additional government revenues or approved loans for foreign-assisted projects.

Unlike regular appropriations, these funds do not have guaranteed financing when the annual national budget is enacted.

The Court, however, ruled that Congress cannot increase appropriations beyond the constitutional limits governing the President's proposed budget.

It struck down Congress' P449.5-billion increase in unprogrammed appropriations under the 2024 national budget, which raised the allocation from the proposed P281.9 billion to P731.4 billion.

The High Court also invalidated a P17.992-billion increase in the Special Road Fund under the 2025 budget, along with two provisions governing the release of unprogrammed appropriations under the 2026 budget.

Certain increases in special accounts were likewise found to have violated existing budget rules.

The Court emphasized that its ruling did not make all unprogrammed appropriations unconstitutional or automatically require the return of funds already spent.

Under the doctrine of operative fact, completed government programs whose effects can no longer be reversed may be recognized when beneficiaries acted in good faith.

The decision also clarified the constitutional responsibilities of Congress and the President in the national budget process.

While the President prepares and proposes the national budget, Congress exercises the power to appropriate public funds within constitutional limits.

The bicameral conference committee, tasked with reconciling differences between the House and Senate budget versions, must likewise observe these restrictions.

Several justices issued separate opinions agreeing with the ruling's outcome while expressing different views on its legal reasoning, particularly concerning congressional authority and the consequences of invalidating budget provisions.

The Supreme Court stressed that unprogrammed appropriations must remain limited funding mechanisms for unforeseen needs and cannot be used to circumvent constitutional spending restrictions.

The decision is not yet final and executory.