SC: Congress cannot abuse power of the purse

The Supreme Court has ruled that Congress cannot arbitrarily transfer Programs, Activities, and Projects (PAPs) from programmed to unprogrammed appropriations, or vice versa, if the reallocation violates the government’s existing obligations.

In a decision by the SC En Banc 20 October 2026, Chief Justice Alexander Gesmundo clarified that while the legislative branch holds the constitutional "power of the purse," this authority is not absolute and remains strictly bound by constitutional limitations and the state's prior fiscal commitments.

The landmark ruling addresses the growing legislative practice of expanding the unprogrammed funds ceiling during bilateral conference committee hearings—a mechanism critics have long flagged as a breeding ground for congressional insertions and pork-barrel-type allocations.

The high court's decision stems from a scrutinized petition questioning the constitutionality of massive adjustments made to recent national budgets.

At issue specifically, were a ₱449.5-billion hike in unprogrammed appropriations under the 2024 General Appropriations Act (GAA) and a subsequent ₱17.99-billion spike in the Department of Public Works and Highways' (DPWH) Special Road Fund for the 2025 fiscal year.

In the national budget framework, the two fund classifications serve entirely different economic purposes, one is programmed appropriations which is line items with definitive, guaranteed funding sources that are ready for immediate implementation within the fiscal year.

Second is unprogrammed appropriations which is standby financial reserves that can only be tapped if the government hits specific revenue windfalls or secures newly approved foreign loans.

Chief Justice Gesmundo in his opinion, pointed out that when lawmakers casually move vital projects from the programmed to the unprogrammed column, they are effectively defunding operations that may already be tied to binding contracts, essential public services, or sovereign debts.

The top magistrate heavily underscored the real-world economic dangers of these arbitrary legislative adjustments, warning that they could directly damage the Philippines' monetary reputation on the global stage.

Gesmundo noted, "The power of the purse must be exercised with fiscal responsibility," emphasizing that the state cannot back out of contractual obligations simply because Congress decided to shuffle funds mid-year.

When the executive branch signs agreements with private contractors, international suppliers, or foreign development banks, it guarantees funding through the programmed budget.

When these projects are relegated to the unprogrammed "standby" pool risks triggering institutional defaults.

Fiscal experts said, such unpredictability signals instability to international credit rating agencies and threatens to drive up the borrowing costs of the country.

The ruling reinforces the constitutional mechanism outlined in Section 25(1), Article VI of the 1987 Constitution, which explicitly prohibits Congress from increasing the total budget layout proposed by the Executive branch in the National Expenditure Program (NEP).

Lawmakers have the discretion to reallocate funds, but the Supreme Court clarified that they cannot use unprogrammed funds as a loophole to bypass the total budget ceiling.

It said that if Congress adds money to the standby pool, it must legally offset that amount by subtracting it from the programmed section, ensuring the overall budget cap remains unbroken.

While the high bench ultimately left the operational mechanics of correcting the current national budget to the co-equal branches of government, the decision stands as a stern judicial warning: "Budgetary power is a mechanism for economic governance, not a blank check for politicians."