Philippines administration seeks court review of budget ruling

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Philippines budget ruling review

Highlights

The Supreme Court voided a P449.5-billion increase in the 2024 budget and a P17.99-billion boost in the 2025 Special Road Fund, declaring sections unconstitutional.
The Philippine administration directed the Office of the Solicitor General to seek reconsideration, arguing that presidential liability is unwarranted and spending under the 2026 General Appropriations Act can continue while the ruling is pending.
The Supreme Court decision will reshape the 2027 budget process, mandating tighter adherence to transparency, curbs on unprogrammed appropriations, and stronger checks and balances in congressional spending.

Appeal plan and disputed budget provisions

As reported by BusinessWorld Online, Palace Press Officer Clarissa A. Castro said the Office of the Solicitor General has been ordered to file a motion for reconsideration after the Supreme Court voided congressional increases in the 2024 and 2025 budgets and struck down provisions in the 2026 spending law.

Ms. Castro said the administration maintains it did not violate the law and disagrees with parts of the ruling, even as the court said unprogrammed appropriations are not unconstitutional by themselves. The court nonetheless declared the 2024 General Appropriations Act unconstitutional over a P449.5-billion congressional increase in standby funds and the 2025 General Appropriations Act over a P17.99-billion increase in the Special Road Fund.

It also struck down Special Provisions 1(a) and 1(b), Chapter XLIII of the 2026 General Appropriations Act, and permanently barred the Senate, the House of Representatives, the Office of the Executive Secretary and the budget secretary from implementing them. Ms. Castro said the Palace reads the decision as preserving the funding mechanism while making it unusable under conditions that go beyond those set by Congress in 2015.

She said Congress had allowed the release of such funds when collections from even one identified nontax revenue source exceed the target, while the court held that unprogrammed funds may be used only after total collections exceed the total revenue target. The Palace argues this effectively changes the conditions set by Congress and says the President faces no liability for signing budgets that the administration believes complied with the law.

Ms. Castro also said the ruling is not yet final, meaning spending under the 2026 General Appropriations Act can continue for now, although the Palace has not taken a position on whether the affected funds should be spent or suspended while the motion is pending. She added that the government would account for all spending and said no one should face criminal or administrative liability for funds already released to intended beneficiaries in good faith.

Pressure on future budget process

Joy G. Aceron, convenor-director of Government Watch, said the government should secure unreleased funds tied to the P449.5-billion increase in the 2024 budget and the P17.99-billion increase in the 2025 budget. She said those amounts could instead be considered for basic services or measures to ease pressure from inflation and higher fuel prices.

Ms. Aceron said the ruling clarifies the limits of Congress' spending powers and strengthens checks and balances through greater transparency, public participation and accountability in the use of public funds. She also said lawmakers responsible for misuse of unprogrammed appropriations should be held accountable.

With deliberations on the proposed 2027 national budget under way, the ruling is shaping how both the Executive branch and Congress approach the next spending plan. Ms. Aceron said civil society and the public should remain vigilant during the budget process to help prevent a repeat of what she described as congressional abuse.

In the Senate, President Pro Tempore Vicente "Tito" C. Sotto III said the chamber will follow the transparency measures used for the 2026 national budget, including livestreaming deliberations, when reviewing the proposed 2027 budget. He said the Senate will not allow amendments that run counter to the Supreme Court's ruling on unprogrammed appropriations.

Senate Finance Committee Chairman Joseph Victor "JV" G. Ejercito said the Senate will respect the ruling and study its implications for the preparation, approval and implementation of the 2027 national budget. He added that both chambers had refrained from increasing unprogrammed appropriations beyond the National Expenditure Program during deliberations on the 2026 budget and said past practices would not be repeated under his watch.

Philippine sovereign bond market reforms and planned index inclusion were previously covered in our publication, highlighting how these steps could broaden the investor base and improve liquidity. We also noted that the benefits for borrowing costs and investment still hinge on fiscal credibility, governance, and how effectively the government uses any fiscal space for productive, transparent spending.

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