EDITORIAL
Take two
Two recent Supreme Court decisions examine different uses of the national budget and the constitutional limits that apply to appropriations. The first, Pimentel III v. Matula, concerned the transfer of the Philippine Health Insurance Corporation’s fund balance to the National Treasury. The second, Lagman v. Executive Secretary, concerned the 2024 and 2025 General Appropriations Acts and provisions on unprogrammed appropriations in the 2026 national budget.
In Pimentel III v. Matula, the Court reviewed a provision of the 2024 General Appropriations Act and Department of Finance Circular No. 003-2024, under which PHP89.9 billion in PhilHealth funds was identified for transfer. It ordered the return of PHP60 billion already transferred and permanently prohibited the transfer of the remaining PHP29.9 billion.
The Court held that the challenged budget provision and implementing circular could not override the Universal Health Care Act and the Sin Tax Laws, which earmarked the funds for health purposes. It also found that the provision operated as an inappropriate rider in the appropriations law and addressed the transfer in relation to the constitutional right to health.
In the later decision, the Court declared the 2024 General Appropriations Act unconstitutional because Congress increased unprogrammed appropriations by PHP449.5 billion, raising total appropriations beyond the President’s recommendation. It likewise declared the 2025 General Appropriations Act unconstitutional because Congress increased the Department of Public Works and Highways’ Special Road Fund by PHP17.99 billion, with the same effect on the total recommended appropriations.
For the 2026 national budget, the Court invalidated Special Provisions 1(a) and 1(b) of Chapter XLIII on unprogrammed appropriations. It ruled that unprogrammed appropriations are not unconstitutional in themselves, but must contain clear limits, spending priorities, and safeguards. The Court also stated that the constitutional ceiling applies to the combined total of programmed and unprogrammed appropriations.
The two decisions arose from separate petitions and addressed different budget measures. Pimentel III v. Matula dealt with the transfer of earmarked health funds through an appropriations provision and an implementing circular. Lagman v. Executive Secretary dealt with increases made by Congress beyond the President’s recommended appropriations and with the standards governing unprogrammed appropriations. Together, they set out rules on statutory earmarks, riders in appropriations laws, the constitutional budget ceiling, lump-sum appropriations, and limits on the use of unprogrammed funds. (References: Pimentel III, et al. v. Matula, et al., G.R. Nos. 274778, 275405, 276233, December 3, 2025; Lagman v. Executive Secretary, G.R. Nos. 271059, 271347, E-02472, and E-04036, October 7, 2026.)