The Supreme Court Just Voided the 2024 and 2025 Budget Laws

If you have ever wondered where the big money in the national budget goes, this week gave you a clue.

The Supreme Court has declared the whole 2024 and 2025 budget laws unconstitutional, along with the 2026 budget’s rules on unprogrammed appropriations. The 121-page decision is dated Oct. 7 and was made public on Tuesday, Oct. 20. The justices voted 13-2, according to the court’s spokesperson.

The 2024 budget fell because of a pot of money most people never hear about. The 2025 budget fell because Congress added P17.99 billion to the public works department’s Special Road Fund, which pushed the total above what the President had asked for.

What Are Unprogrammed Funds, Anyway?

Unprogrammed appropriations are standby funds. They sit in the budget but can only be released when certain conditions are met, such as when the government collects more revenue than expected.

For 2024, the executive branch asked for P281.9 billion in these funds in its National Expenditure Program. By the time Congress passed the budget, the amount had grown to P731.4 billion.

The court said Congress committed grave abuse of discretion by adding that P449.5 billion. Under the Constitution, it said, Congress cannot increase the President’s total recommended appropriations, and that total covers both programmed and unprogrammed funds.

The court did not ban standby funds. According to reports of the ruling, they must have no lump sums, clear priorities, consistency with the national fiscal program and separate conditions for using new and excess revenues. For 2026, it voided the special provisions on unprogrammed funds, calling them “overly broad.”

Does This Mean the Money Already Spent Comes Back?

No. Court spokesperson Camille Ting said programs that were already carried out and cannot be undone, where beneficiaries acted in good faith, stay valid under the doctrine of operative fact. “So … there will be no funds returned in that case,” she said. That covers at least P467 billion in increases the court flagged.

Ting said anyone who may face criminal or administrative liability should answer for it before the proper tribunals. Senate President Pro Tempore Vicente Sotto III and Sen. Panfilo Lacson both said funds not yet spent may no longer be released.

The Department of Budget and Management said it is working with the Office of the Solicitor General and other offices to study the ruling’s legal, fiscal and operational effects before deciding its next steps.

Former finance undersecretary Cielo Magno said the DBM should stop releasing the affected funds “out of courtesy.”

Why Is the Palace Pushing Back?

The ruling is not yet final. The Solicitor General has 15 days from notice to ask the court to reconsider, and Malacañang says it will.

“We respectfully request the Supreme Court to reexamine its decision. The Office of the Solicitor General has also been directed to file a motion for reconsideration,” said Palace Press Officer Claire Castro.

Castro argued that the decision kept the mechanism on paper but set conditions that make it very hard to use. “It has rendered this mechanism useless and no longer usable for government programs,” she said.

She also said that since 2015, Congress has allowed these funds to be released when collections from even one specified nontax revenue source beat the target. “The Marcos administration merely followed this policy,” Castro said.

What Is the Senate Promising for 2027?

The ruling lands while senators are reviewing the House-approved P7.2-trillion budget for 2027.

“Let me assure the Filipino people: what transpired in past budget deliberations will not happen under my watch in the proposed 2027 national budget,” said Sen. JV Ejercito, who chairs the finance committee.

Sen. Panfilo Lacson said the timing helps. “It couldn’t have come at a better time when the House version of the 2027 General Appropriations Bill is undergoing scrutiny by the Senate,” he said. He added that the Senate may restore “hundreds of billions” of pesos in House cuts and realignments, including funds for foreign-assisted projects and flood control.

Lacson, who was not a senator when the 2024 and 2025 budgets passed, called them the worst budgets Congress has passed since the 2013 budget, whose Disbursement Acceleration Program the court also struck down.

Sotto, who was also not in the Senate for those two budgets, said deliberations would again be livestreamed. “If these fall into the category of what the Supreme Court said, we will not allow it in the Senate,” he said.

READ: The PBBM’s ₱351B Flood Control Plan, Explained

Is the 2027 Budget Already in the Clear?

Public finance expert Zy-za Suzara said the ruling will have limited immediate impact on the 2027 budget, but Congress “cannot increase the level” of unprogrammed funds.

Watchdogs are already flagging other items. At a Senate hearing, the People’s Budget Coalition pointed to nearly P190 billion in agricultural infrastructure insertions by the House. Co-convenor Kenneth Abante said one P23-million farm-to-market road meant for Nueva Ecija had coordinates in the ocean near Philippine Rise.

Over the next few weeks, the Palace will try to change the court’s mind while the Senate works on a 2027 budget that now has to meet the court’s conditions. The final bill will show whether those conditions held.