The Society of Honor by Joe America

By Giancarlo Angulo

This is part 4 of 4 in The Budget Series. Parts 1 to 3 covered how the budget works: the overview, how the NEP is generated, and how the budget is managed. This part is about what happens when the rules are bent, and it is about the Supreme Court ruling that inspired both posts.

The question

How have the Constitution’s budget rules been tested in court, and what did the Supreme Court decide in October 2026?

TLDR

• Before 2026 the Court had already struck down the pork barrel (PDAF, 2013) and parts of the Disbursement Acceleration Program (DAP, 2014), and had upheld a presidential veto of budget provisions (1990).
• On October 7, 2026 (released October 20), the Court ruled that the cap on Congress, Article VI, Section 25(1), covers programmed and unprogrammed appropriations together.
• It declared the 2024 and 2025 budgets unconstitutional because of two specific increases, P449.5 billion and P17.992 billion, and permanently barred two provisions of the 2026 budget.
• Unprogrammed appropriations are not banned. They need four conditions, and the Court said a lump sum called SAGIP became “the covert repository” for flood control money.
• Programs already built are protected. The people who wrote and implemented the unconstitutional provisions are not, and the Court said plunder and graft were not before it.
• The Solicitor General has until November 4 to ask for clarification and partial reconsideration. This post is accurate as of October 24, 2026.

How the rules were tested before 2026

• Gonzales v. Macaraig (1990). The President vetoed provisions in the 1989 budget that barred restoring or increasing, through augmentation, items Congress had cut. The Court upheld the vetoes. Those provisions, it said, did not relate to any particular appropriation, so they were “inappropriate provisions” that count as items for the veto. It added that the President cannot veto a true condition while leaving the appropriation, and that the provisions impaired the augmentation power under Section 25(5). Four justices dissented.
• Belgica v. Ochoa (2013). The Court struck down the pork barrel (PDAF) because legislators were choosing and releasing projects after the budget passed. A lump sum with individual allocations made later, the Court said, is a “budget within a budget” that weakens the President’s item veto.
• Araullo v. Aquino III (2014). The Disbursement Acceleration Program (DAP), in which the executive pooled money from slow-moving projects and used it for other projects. The Court partially granted the petitions. It held that a transfer of funds under Section 25(5) is valid only if three things are true: a law authorizes it, the money is savings generated from the same office’s appropriations, and the purpose is to augment an item in the budget law for that same office. It declared three DAP practices unconstitutional: withdrawing unobligated allotments and calling them savings before the end of the fiscal year and without meeting the budget law’s definition of savings; transfers of the executive’s savings to offices outside the executive; and funding projects not covered by any appropriation. It also voided the use of unprogrammed funds without the National Treasurer’s certification that revenue collections exceeded the revenue targets. On reconsideration in 2015 the Court held that total revenue collections must first exceed the total revenue targets before unprogrammed funds can be used. It applied the doctrine of operative fact to projects that could no longer be undone and whose beneficiaries relied in good faith, but not to the DAP’s authors, proponents and implementors.
• The PhilHealth case (December 2025). A budget provision cannot override a law like the Universal Health Care Act. I covered it in part 3 of the UHC Series.

The October 2026 ruling

The cases are Lagman v. Congress, G.R. Nos. 271059, 271347, E-02472 and E-04036. The Court sat en banc and Justice Leonen wrote the decision, dated October 7 and posted on October 20. The Court appointed five amici curiae: Solita Collas-Monsod, Florencio Abad, Franklin Drilon, Benjamin Diokno and Joey Salceda. Oral arguments ran from April 7 to July 14, 2026.

What was challenged. The 2024 budget (RA 11975): Congress raised unprogrammed appropriations by P449.5 billion in the bicameral conference. The 2025 budget (RA 12116): Congress raised the Special Accounts in the General Fund and the DPWH Special Road Fund above what the President proposed. The 2026 budget (RA 12314): its chapter on unprogrammed appropriations. One petition also challenged the President’s certification of urgency for the 2024 bill.

What happened in the 2024 budget. The President’s proposal carried P4,019.8 billion in programmed appropriations and P281.9 billion in unprogrammed, P4,301.7 billion in all. Congress raised the unprogrammed part to P731.4 billion, an increase of P449.5 billion, and left the programmed part at P4,019.8 billion. Behind that flat number the programmed part moved by P564.5 billion up and down. The Court counted 43 new line items worth P303.1 billion in the unprogrammed part, some of them moved over from programmed. It also noted P90 billion less for budgetary support to government corporations, and P175.3 billion more (350.6%) for SAGIP, which the proposal had at P50 billion. The Court said this created “artificial fiscal space” in the programmed part, which paved the way for bigger allocations, led by P175.7 billion more for the Department of Public Works and Highways, and also for medical assistance, cash aid and worker programs.

The trend. The Court put the history on the record. Unprogrammed appropriations first appeared as a separate item in the 1989 budget and were meant as standby authority, often for foreign-assisted projects. Justice Lopez, citing amicus Salceda, traces standby spending authority back to the 1930s and 1950s, and says every budget since 1987 has had unprogrammed appropriations. The number of purposes under them rose from 16 in 2019 to 24 in 2021, 50 in 2022 and 61 in 2023. They were P187.1 billion in 2019 and peaked at P807.2 billion in 2023, which was 18% of new appropriations. Before 2022, Congress had approved more than the President proposed only four times (2000, 2004, 2008 and 2010), each time by no more than P50 billion. The increases then were P100 billion in 2022, P219 billion in 2023, P449.5 billion in 2024 and P373 billion in 2025 (P204.8 billion after the President’s vetoes). Allotment releases from unprogrammed appropriations were P531.4 billion in 2024 and P218.2 billion in 2025.

SAGIP. The 2024 and 2025 budgets carried an unprogrammed item called Strengthening Assistance for Government Infrastructure and Social Programs: P225.4 billion in 2024 (30.8% of unprogrammed appropriations) and P160.1 billion in 2025. The Court found that its releases paid for many unrelated purposes. In 2024, SAGIP releases were P200.0 billion, and the DPWH received P155.9 billion of that, P146.4 billion of it in five releases between November 11 and December 27. About P85.8 billion went to flood control projects. In 2025 the DPWH received nothing from SAGIP because of the flood control investigations. Congress removed SAGIP from the 2026 budget.

The bicameral conference committee. Both Houses had kept unprogrammed appropriations at P281.9 billion, the same as the President’s proposal, so there was no disagreement on that item. The Court said the committee still had a job, because the two versions differed elsewhere (the Senate had changed almost every agency’s appropriations). But the Court said Tolentino v. Secretary of Finance (1994) “should not be read as giving unfettered discretion” to it, and that ratification by both Houses does not cure a constitutional defect. The Court noted that there were no records of the committee’s discussions, no explanation of its changes, and no supporting documents. At the June 16 oral argument, the Solicitor General, appearing as counsel for Congress, said the bicameral report was the only document Congress had given the government’s lawyers.

What the Court held

• The cap covers both. Article VI, Section 25(1) applies to the total of programmed and unprogrammed appropriations. The text says “appropriations” without qualification. The President’s budget documents, the NEP and the BESF, both show the same P4,301.7 billion for 2024 once unprogrammed appropriations are counted. An unprogrammed appropriation becomes real spending once its trigger conditions are met. Congress may still reallocate, including between the programmed and unprogrammed parts, but any increase in unprogrammed appropriations must be matched by a decrease in programmed ones. The increase also violated the Administrative Code’s rule that Congress may not raise a project’s appropriation above what the President proposed.
• Declared unconstitutional: the P449.5 billion increase (and so the 2024 budget); the P17.992 billion increase to the DPWH Special Road Fund (and so the 2025 budget); and Special Provisions 1(a) and (b) of the 2026 budget, which tied releases of unprogrammed funds to any new or excess revenue “without regard to whether the whole revenue target was exceeded”. The Court permanently barred the Senate, the House, the Office of the Executive Secretary and DBM from implementing those two provisions. It said they violate Article VII, Section 22, which requires the budget to rest on a coherent fiscal program, partly amount to an undue delegation of legislative power, and go against Araullo.
• Why the Road Fund counted. The Road Fund is earmarked by law, but the budget now carries it as a line item in the DPWH budget, which the Court read as “use of income” and so subject to the cap. The Court said the Road Fund can be supplemented, as long as it is not diverted from roads, bridges and drainage.
• Special Accounts in the General Fund. The P12.75 billion increase in 2025 is not covered by the Section 25(1) ban, since those are existing appropriations under special laws. It still violates the Administrative Code, which bars Congress from raising amounts in special provisions above the President’s proposal.
• Unprogrammed appropriations are not banned. They are not a rider (Section 25(2)), and Section 25(4), which applies to special appropriations bills, does not apply. They need four things: no lump sums; new income presumed to go to programmed spending unless there are clear and convincing reasons, such as foreign-assisted projects; priorities set by Congress when there is more than one purpose; and a place within the national fiscal program as a narrow contingent appropriation.
• Foreign-assisted projects. The Court said projects still being negotiated should be itemized in the NEP or BESF. The 2026 proposal had P97.3 billion under “Support to Foreign-Assisted Projects” with no itemization, which it said fell short. It did not strike that item down.
• Lump sums. SAGIP is a prohibited lump sum and “the covert repository of lump sum allocations for DPWH infrastructure like flood control projects”. The Court also held that the 2026 unprogrammed chapter partly works as a lump sum, and it partially abandoned its 2019 ruling in Belgica v. Executive Secretary that unprogrammed funds with listed purposes are not a prohibited lump sum.
• Certification of urgency. The Court upheld the President’s certification of urgency for the 2024 bill. It said the Court can review such certifications for grave abuse of discretion, but the petitioners only pointed to the irregular process and to the re-enactment rule, which was not enough.
• Operative fact. Programs that can no longer be undone, and beneficiaries who relied in good faith, are protected. Authors, proponents and implementors of the unconstitutional provisions are not, unless a proper tribunal finds good faith. The Court added that questions about post-enactment participation by legislators, plunder and graft were not before it.

The justices. The decision prints no vote count. All 15 members appear on the signature page, and Justice Hernando was on official leave but left a concurring and dissenting opinion. There are 12 separate opinions, and they disagree on the central questions. The table gives each justice’s main points.

Justice	What they wrote
Gesmundo (Chief Justice), concurring	Agrees with the ruling. Adds that the bicameral committee is not limited to the exact subject of the conflicting provisions as long as its changes are germane (Tolentino), and that Congress may create new programs and move items between programmed and unprogrammed appropriations with safeguards: new items must be implementation-ready, and transfers must not frustrate existing obligations such as foreign-assisted projects.
Caguioa, separate concurring	Wants Tolentino expressly abandoned to the extent it gave the committee “carte blanche”. Unprogrammed appropriations are valid, but Special Provision 1(a) is not. He would uphold 1(b) and 1(c), with loan proceeds used only for the projects the loans were secured for. Congress cannot create new programs or reclassify items. He would also strike SAGIP and other broad items in the 2024 and 2025 budgets, including a P5 billion Local Government Support Fund that he calls a presidential pork barrel in substance.
Dimaampao, separate concurring	Agrees unprogrammed appropriations are valid and that Special Provisions 1(a) and (b) are void. Says a challenge to the certification of urgency should target Congress’s acquiescence, and that Section 25(4) is not the only route for spending excess revenue. Reserves on one point: the ceiling should apply to the total, not each item (Sarmiento), so he would void only the excess over the proposal in 2025 (unprogrammed and automatic appropriations together).
Hernando, concurring and dissenting	Would strike all unprogrammed appropriations: no definite source of financing, a rider, and against the Administrative Code. He would void all of them in the 2024 budget and the whole 2026 chapter, says the bicameral committee may only reconcile real disagreements, agrees operative fact should apply, and asks the Court to overturn Belgica (2019). Excess revenue should go through special appropriations bills, which respondents’ survey says take about 50 days to pass.
Villanueva, concurring and dissenting	Unprogrammed appropriations are valid, and Congress cannot raise them above the proposal or move items between the two parts. But the 2024 and 2025 budgets are not unconstitutional “in their entirety”, only the increases. He would uphold Special Provision 1(a) and (b), disagrees with partly abandoning Belgica (2019), and says Congress, not only the committee, adopted the increase. He also objects to the Court saying that the authors and implementors of the budgets remain open to liability: in his view the Court should not be the first to suggest prosecutions.
Inting, separate	Agrees the ceiling covers unprogrammed appropriations. Because both Houses approved the same P281.9 billion, he says the committee’s changes were beyond its authority. Also objects to the DBM Secretary’s power to approve releases under Special Provision 8(b), and says Congress cannot reclassify items.
Gaerlan, separate	Writes about the committee only. Proposes five safeguards: limit it to real disagreements; written records for every substantive change; nothing that is not germane; public proceedings; and enough time for both Houses to review its report.
Lazaro-Javier, concurrence and dissent	Agrees the provisions are void, including the 2025 Special Accounts increase. Says operative fact was decided too early. Would order the Solicitor General and DBM to account for all releases, refer the matter to COA, and say that liability is preserved.
Zalameda, concurring and dissenting	The ceiling covers only the financed expenditure program, so Congress may raise unprogrammed appropriations. But ongoing foreign-assisted projects cannot be moved into unprogrammed just to make room for new items. Congress may create new programs, and the committee may add germane items. He would uphold Special Provision 1(a), (b) and (c), saying Araullo was about the earlier budgets’ wording and its 2015 reconsideration called its reading statutory, not constitutional. He would strike Special Provision 8(b) as an undue delegation, and says the Road Fund increase did not raise the overall expenditure program.
Lopez, concurring and dissenting	Section 25(1) covers programmed appropriations, or at most the total, and not individual line items (Sarmiento v. Treasurer), so the Special Accounts and Road Fund increases were valid. Congress may move items between programmed and unprogrammed within the proposal’s ceilings. The committee acted within Tolentino. Agrees Special Provision 1(a) is void, and wants priorities set in the budget law, releases tied to aggregate excess revenue, and open releases.
Singh, concurring and dissenting	Unprogrammed appropriations are advance special or supplemental appropriations, each with its own ceiling. So Congress may not move items between programmed and unprogrammed or add new programs. She would void the 2024 increase, Special Provision 1(a) only, and the Special Accounts and Road Fund increases. She dissents from barring the committee where both Houses had agreed, would keep Tolentino, and urges mandatory minutes of committee meetings.
Kho, dissenting	Unprogrammed appropriations are unconstitutional as they stand: the budget is left incomplete, and the Executive completes the allocation after enactment. He extends Belgica to the Executive and says special appropriations bills are the safer way to spend new revenue.

The 2026 budget. The executive proposed P249.9 billion in unprogrammed appropriations, and the bicameral conference committee approved P243 billion. The President signed the P6.793 trillion budget on January 5, 2026 and vetoed P92.5 billion, all of it unprogrammed, leaving about P150.9 billion, the lowest since 2019.

What happens next. The Solicitor General will ask for clarification and partial reconsideration, and has until November 4. The Budget Secretary says nothing has been released under the two voided provisions, and that 2026 releases from unprogrammed appropriations have been only for foreign-assisted projects.

Constraints

• Congress cannot add to the President’s total. The majority says it can cut and realign, including between the programmed and unprogrammed parts, as long as the total does not rise. Justices Caguioa, Singh, Inting and Villanueva would not let it move items between the two parts at all.
• Unprogrammed appropriations must meet the four conditions, and releases are tied to total revenue collections exceeding the revenue targets, not to a single revenue source.
• The protection for programs already built does not cover the officials who wrote and carried out the unconstitutional provisions.

For a future post

Three questions came out of the ruling that this post only touches:

• Unprogrammed appropriations in detail. The Court allowed them but set four conditions. What does each condition mean in practice, how did the line grow (the justices cite P50 billion in 2010, P100 billion in 2022, P219 billion in 2023), and what does the 2027 proposal’s P112.0 billion look like next to that?
• The bicameral conference committee. The Court limited what the committee can change, and Justices Gaerlan and Singh each propose safeguards, such as written records of every substantive change and mandatory minutes. What would a committee that follows those rules look like, and what do the House and Senate rules say today?
• After the appeal. The Solicitor General has until November 4 to file a motion. What did the Court’s order mean for releases already made in 2024 and 2025, and what changes in the 2027 budget?

What I’m unsure about

• I read the Supreme Court’s decision, all 121 pages, and all 12 separate opinions, but from scans that I converted to text by machine, so a page number or a figure may be misread. The Court’s text is the authority.
• The vote count is not printed in the decision.
• The decision is not always consistent with itself. Its dispositive part calls the 2026 chapter both “Chapter XLIII” and “Chapter XLII”, and one sentence on page 9 gives the 2025 increase as P204.8 billion while its table gives P373 billion. I take the second to be the figure before the vetoes and the first the figure after them.
• The Solicitor General’s motion may change the picture. Check for updates after November 4.
• I have not audited any agency. The numbers are as published by the Court, DBM and the news reports linked below.

What I’d like readers to do

Correct a number, point me to a part of the decision I misread, or tell me what you think happens next.

Why this series

The problem solving series is about trying to chip at the problems of the Philippines. It is about finding solutions that may work because we will never admit defeat.

Sources

• Supreme Court decision, G.R. Nos. 271059, 271347, E-02472 and E-04036 (October 7, 2026) and the Court’s press release (October 20, 2026)
• Supreme Court case page with the 12 separate opinions
• Philstar: SC declares provisions of 2024, 2025, 2026 budgets unconstitutional (October 21, 2026); SolGen seeks review (October 22); OSG seeks hold on use of 2026 appropriations (October 23); items vetoed from the 2026 budget (January 5, 2026)
• Rappler: bicam approves P243-B unprogrammed funds
• Gonzales v. Macaraig, G.R. No. 87636 (November 19, 1990)
• Belgica v. Ochoa, G.R. No. 208566 (November 19, 2013) and Araullo v. Aquino III, G.R. No. 209287 (July 1, 2014)
• 1987 Constitution, Art. VI Sec. 24 to 27, 29; Art. VII Sec. 22
• UHC Series, part 3: Whose money? The PhilHealth reserve rule, the Supreme Court and the numbers

The Budget Series

Problem Solving the Philippines: The Budget Series.

• Part 1: Who does what in the national budget, and where the money goes
• Part 2: How the National Expenditure Program is generated
• Part 3: How the national budget is managed
• Part 4: How the rules of the budget have been tested (this post)

Lovingly made with Claude.