The Supreme Court Voids ₱449.5 Billion in Budget Insertions: What the 2024–2026 GAA Ruling Means

Unprogrammed funds survive, but Congress may not use them to break the President's spending ceiling, and the officials behind the increases are not shielded.

Last reviewed: October 24, 2026General legal information, not legal advice
What happened: On October 20, 2026 the Supreme Court announced its En Banc decision, dated October 7, 2026 and written by Senior Associate Justice Marvic M.V.F. Leonen, in four consolidated cases against the 2024, 2025 and 2026 budgets: G.R. No. 271059 (Lagman et al. v. Congress), G.R. No. 271347 (Pimentel III et al. v. Bersamin et al.), G.R. No. E-02472 (Filipinos for Peace, Justice and Progress Movement v. House of Representatives) and G.R. No. E-04036 (Erice et al. v. Senate). It declared the 2024 GAA unconstitutional over a ₱449.5 billion congressional increase in unprogrammed appropriations, the 2025 GAA unconstitutional over a ₱17.99 billion increase to the DPWH Special Road Fund, and two release provisions of the 2026 GAA void. It also held that unprogrammed appropriations are not unconstitutional per se. The decision is not yet final: on October 21 Malacañang said it would seek reconsideration.

The Supreme Court ruled that Congress broke the Constitution's budget ceiling by adding ₱449.5 billion in unprogrammed funds to the 2024 budget and ₱17.99 billion to the 2025 Special Road Fund. Unprogrammed appropriations stay valid within the President's total and with clear standards. Good-faith programs stand; the officials behind the increases can still be held liable.

Legal question

Can Congress raise unprogrammed appropriations or special accounts above what the President proposed, so long as the programmed budget stays within the President's figures — and if it cannot, what happens to money already spent and to the officials who wrote and released it?

Applicable laws and rules

Why this matters

Unprogrammed appropriations are standby spending authority in the General Appropriations Act that can be released only when extra revenue or foreign loan proceeds materialize. In the 2024 budget they grew from the President's proposed ₱281.9 billion to ₱731.4 billion in the bicameral conference committee. Because programmed items were moved into the standby column, the programmed budget kept room for new allocations to DPWH infrastructure, DOH medical assistance, the DSWD's AKAP and DOLE's TUPAD. The Court has now drawn the line that will govern every future budget, including the 2027 budget the Senate is reviewing now. For background on how unprogrammed appropriations work and the separate December 2025 PhilHealth fund ruling, see What Are Unprogrammed Funds?

It matters to individuals too. The ruling decides whether money already spent under those budgets must be clawed back (largely no) and whether the legislators and executives who wrote and released the increases can be investigated (yes, unless a tribunal finds good faith).

What the Court struck down

What the Court upheld: unprogrammed funds as such

The Court held that unprogrammed appropriations are not unconstitutional per se. They become constitutionally infirm when they lack sufficient standards, effectively handing the Executive unchecked spending authority and starving programmed projects when revenue estimates are not met. Going forward, they must satisfy four conditions:

  1. No lump sums in unprogrammed appropriations, in any case.
  2. New income and additional non-tax earnings presumptively fund programmed expenditures. Congress may place them under unprogrammed appropriations only for clear and convincing reasons, such as foreign-assisted projects, and must differentiate the conditions clearly.
  3. Prioritization standards must be prescribed when an unprogrammed appropriation covers more than one purpose.
  4. Consistency with the national fiscal program in the President's budget, as a narrow contingent appropriation.

The ceiling applies to the whole budget

The central holding concerns Article VI, Section 25(1), which bars Congress from increasing the appropriations the President recommends. Defenders of the 2024 budget argued that the ceiling covers only programmed spending, because unprogrammed items are contingent and may never be released. The majority rejected that: the ceiling applies to the total of programmed and unprogrammed appropriations. Leaving the programmed total unchanged while inflating the standby column is still an increase.

In the Court's words, the purpose of Section 25(1) "is to maintain fiscal discipline and prevent excessive public expenditures that could balloon the budget deficit," and the limit "requires that the national budget be anchored on the Executive's projections of revenues and expenditures and on a coherent fiscal plan based on actual economic realities."

Why the 2026 release triggers fell

Special Provisions 1(a) and 1(b) of the 2026 GAA allowed unprogrammed funds to be released based on excess collections from any individual non-tax revenue source, or on new revenue, even if total revenue targets were not exceeded. The Court reaffirmed Araullo v. Aquino III: release requires that aggregate collections exceed the total revenue targets in the Budget of Expenditures and Sources of Financing. Pegging triggers to isolated sources creates what the Court called an "artificial surplus," abandons the deficit-neutral design of unprogrammed funds, and undermines the coherent fiscal program required by Article VII, Section 22. The provisions were also overly broad, lacked prioritization standards, and partly worked as prohibited lump sums.

The bicameral conference committee

The Court reiterated that the bicameral conference committee has power only over disagreeing provisions of the House and Senate versions, and the nature of the disagreement fixes the scope of what it may change. It found no records of the committee's discussions, a report that did not explain its increases and decreases, and no supporting documents, in violation of the rules of both chambers. Associate Justice Caguioa, concurring, urged the Court to expressly abandon Tolentino v. Secretary of Finance (G.R. No. 115455, August 25, 1994) insofar as it lets the committee amend provisions both chambers had already agreed on; Associate Justice Gaerlan proposed written records, public proceedings and time for both chambers to review its report.

Money already spent: the operative fact doctrine

An unconstitutional law is generally void from the start, but the operative fact doctrine recognizes effects that cannot fairly be undone. The Court applied it to the 2024 and 2025 GAAs, but narrowly: it covers only irreversible programs whose beneficiaries acted in good faith. So, for example, a person who in good faith received medical assistance or TUPAD wages funded by those budgets would ordinarily not be asked to return it. The ruling does not automatically require funds already spent to be returned.

The protection stops there. In the Court's words: "this protection does not extend to the authors, proponents, and implementors of the aforementioned laws. These officials remain subject to criminal, civil, and administrative liability unless the proper tribunals explicitly find that they acted in good faith." Associate Justice Lazaro-Javier would have deferred applying the doctrine until there is a full accounting of what was released and how it was used.

Who could be held liable, and where

The decision does not itself charge anyone. It leaves liability to "the proper tribunals." In practice, criminal and administrative cases against public officials over public funds are investigated and prosecuted by the Office of the Ombudsman (see Ombudsman lifestyle checks), and cases against high-ranking officials are tried by the Sandiganbayan. Civil liability to return disbursed funds typically runs through Commission on Audit disallowances. In each forum, the official may raise good faith, and the tribunal, not the Supreme Court, decides it. Each case will turn on its own facts.

Where the justices split

Most justices agreed that unprogrammed appropriations are valid in principle; they divided over the ceiling. Chief Justice Gesmundo agreed that any increase in unprogrammed funds must be offset by a corresponding decrease in programmed funds. Associate Justices Zalameda and Lopez disagreed with the majority on the 2024 budget, reading Section 25(1) as covering only programmed appropriations. Associate Justice Hernando would hold unprogrammed appropriations unconstitutional because they lack identified funding sources, and Associate Justice Kho dissented from the holding that they are valid, on the ground that they let the Executive choose projects after enactment. Associate Justices Inting (on the 2026 release triggers), Singh (on the committee's power), Villanueva (on the ceiling) and Dimaampao (on separation of powers) also wrote separately.

What individuals should know

If you received government assistance funded by these budgets in good faith, the ruling does not require you to pay it back. The operative fact doctrine protects completed, irreversible programs and their good-faith beneficiaries.

If you are a taxpayer or follow public finance, watch three things: the motion for reconsideration Malacañang announced on October 21, 2026, which disputes the requirement that total revenue collections exceed the overall target before unprogrammed funds are released; how Congress writes the unprogrammed appropriations in the 2027 budget under the four conditions; and whether the Ombudsman opens cases against the authors and implementors of the 2024 and 2025 increases. Challenges like these were brought directly to the Supreme Court by legislators, former legislators and civic groups, as Lagman, Pimentel and the other petitioners did.

If you are a public official involved in budget preparation or release, the safe course is documentation: the Court faulted the absence of records, and good faith must be shown before a tribunal, not assumed.

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