Shadow budget shattered

For decades, the Philippine budget process has followed a predictable routine. The executive branch proposes the budget, Congress debates it, and a closed-door Bicameral Conference Committee (the “Bicam”) finalizes the details.

In recent years, lawmakers have heavily altered the national budget, often padding it with changes disguised as standby funds. However, on 20 October 2026, the Supreme Court struck down this practice, declaring the 2024 and 2025 budgets unconstitutional while throwing out key provisions of the 2026 budget.

The landmark ruling, penned by Senior Associate Justice Marvic Leonen, is a fundamental defense of the Constitution’s separation of powers. The High Court explicitly targeted the massive P449.5-billion congressional realignment added to the 2024 Unprogrammed Appropriations, alongside a P17.99-billion spike in the 2025 Special Road Fund.

In doing so, the Court made it clear that Article VI, Section 25(1) of the 1987 Constitution — which forbids Congress from increasing the President’s total recommended budget ceiling — applies to the entire fiscal envelope, including both programmed and unprogrammed allocations.

For years, lawmakers utilized a structural loophole to bypass this ceiling. By taking crucial public works out of the programmed budget and dumping them into the unprogrammed “standby” pool, Congress created what the Court rightfully coined as “artificial fiscal space.”

This space was then filled with massive, localized financial aid programs — or ayuda — which functioned as a modernized, decentralized pork barrel system. Even worse, programs like the Strengthening Assistance for Government Infrastructure and Social Programs were exposed as unconstitutional lump-sum appropriations designed to give the executive post-enactment allocation powers.

Predictably, the political fallout has been immediate. Vice President Sara Duterte and several opposition lawmakers have called on President Ferdinand Marcos Jr. and Congress to explain the structural abuses.

Meanwhile, the executive branch, through the Office of the Solicitor General, has announced plans to file a motion for reconsideration, claiming that the Court’s stringent fiscal guardrails render the unprogrammed funds mechanism “useless” for governance.

However, the Palace’s complaints miss the main point of the ruling: democracy requires budget transparency. The Supreme Court sharply criticized the Bicameral Conference Committee for keeping no records, offering no written explanations for its massive budget shifts, and providing zero supporting documents.

The High Court is right. Creating a multi-trillion-peso national budget behind closed doors is not a legitimate compromise; it is simply dividing political spoils.

This likely explains the recent drama in which some lawmakers grew emotional after the House passed its version of the P7.2-trillion 2027 budget. On social media, the public responded with swift cynicism: “Alam kasi nila na papaldo na naman sila” (They know they’re going to be in the money).

When we asked Congressman Edgar Erice, one of the key petitioners in the Supreme Court case, about those tears on our podcast Anggulo, he admitted he felt deeply embarrassed for his colleagues.

The primary challenge of this ruling is its real-world implementation. To prevent public chaos and protect completed social projects, the Court applied the doctrine of operative fact. This means money already spent under the 2024 and 2025 budgets remains spent, which protects those who authorized the spending.

However, as Sen. Panfilo Lacson and other fiscal watchdogs emphasized, the Supreme Court explicitly stated that this doctrine does not shield officials from criminal, civil or administrative liability if they acted in bad faith.

If the Philippines is to truly end this era of shadow budgets, we challenge the Ombudsman and anti-graft bodies to aggressively investigate how these unconstitutional billions were moved and who benefited from them.

By slamming shut this major backdoor, the Supreme Court has stripped Congress of its favorite excuse: “That’s how it’s always been done.” But a court ruling is only as strong as its enforcement. The scales have been reset.

Now, it is up to the public and independent oversight bodies to stand guard and ensure that the power of the purse is never again used for legalized plunder.