There was a time when Unprogrammed Appropriations made fiscal sense.

They were designed as contingent appropriations — expenditures authorized by Congress but allowed to be implemented only when specified fiscal conditions materialized after the annual budget had already been enacted.

The logic was straightforward. Revenues might outperform expectations. New financing might become available. A foreign-assisted project might secure loan financing. If additional fiscal capacity genuinely emerged, Congress had already authorized how it could be used.

In that sense, the mechanism served two purposes: it preserved fiscal discipline while retaining legislative control over expenditures that could not yet be financed.

But that fiscal premise has changed. And jurisprudence has changed with it.

The question today is not simply whether Unprogrammed Appropriations are constitutional. The Supreme Court has recognized that they can be, under carefully defined conditions.

The more important question is whether they remain a practical and constitutionally coherent mechanism in today’s fiscal environment.

I believe the answer is: only in a very narrow sense.

The fiscal premise has weakened

For much of the past two decades, the Philippines has operated with persistent deficits, rising public debt, and continuing borrowing requirements.

Under these conditions, genuine improvements in the government’s overall fiscal capacity after the annual budget has been enacted are increasingly difficult to achieve.

That matters because fiscal capacity cannot be measured by looking at one revenue stream in isolation.

This is one of the important lessons of the Supreme Court’s jurisprudence in Belgica. The Court’s treatment of Unprogrammed Appropriations makes clear that the conditions for their release cannot be reduced to isolated fiscal events. The National Government’s fiscal position must be considered as an integrated whole.

That makes constitutional and fiscal sense.

Revenues, borrowing, deficits, debt service, and macroeconomic conditions are interconnected. An increase in one revenue source does not necessarily mean that the government has acquired additional fiscal space.

Indeed, spending the supposed “excess” while the overall fiscal position remains unchanged — or deteriorates — defeats the very discipline that the mechanism was intended to protect. In a budget system that depends on clear sourcing and disciplined execution, the real issue is not whether money exists somewhere in the system, but whether it is genuinely available without distorting the fiscal plan Congress approved.

The irony

Here lies the problem.

The more difficult it becomes to satisfy the genuine fiscal conditions for activating Unprogrammed Appropriations, the greater the temptation to find alternative ways of creating the appearance of fiscal space.

The 2024 budget illustrates this danger.

Congress authorized the transfer of excess or idle funds of government-owned corporations to the National Treasury to help finance Unprogrammed Appropriations. Subsequently, P60 billion was transferred from PhilHealth, with another substantial amount sought from the Philippine Deposit Insurance Corp.

The Supreme Court later declared the PhilHealth transfer unconstitutional.

The significance of that ruling extends beyond PhilHealth.

It illustrates the institutional pressure that arises when a contingent appropriations mechanism survives even though the fiscal circumstances that were supposed to activate it have become increasingly difficult to satisfy.

A mechanism designed to protect fiscal discipline should not create incentives to manufacture fiscal space through cash extractions wrongly categorized as new revenues.

But are Unprogrammed Appropriations unconstitutional?

Not necessarily.

This distinction is important.

The Supreme Court has not declared the mechanism itself unconstitutional. In Belgica v. Executive Secretary, the Court sustained the Unprogrammed Fund in the 2014 General Appropriations Act because the appropriations were sufficiently specific and the conditions for their release were constitutionally permissible.

But Belgica also effectively narrowed the constitutional space within which the mechanism can operate. That is why I would not argue that Unprogrammed Appropriations must simply be abolished. I would argue that their practical constitutional role has become extremely narrow.

And the clearest surviving case is that of foreign-assisted projects.

Foreign-assisted projects are different

Foreign-assisted projects ordinarily have a more definite financing basis. They are supported by executed loan agreements with bilateral or multilateral institutions. The source of financing is therefore identified.

But even here, there is a better constitutional mechanism.

The Constitution itself provides it.

Article VI, Section 25(4) authorizes Congress to enact a special appropriations bill supported by funds actually available, or by a corresponding revenue proposal. Once a foreign-assisted project has secured its financing, Congress can appropriate for it directly. That approach does something Unprogrammed Appropriations should always have done: it preserves Congress’ power of the purse.

Congress authorizes the expenditure. The Executive implements it. The financing is identified. The project is identified. The public can see what is being funded and why. And institutional accountability remains intact.

Better still, where financing is secured early enough, the project can simply be included in the regular budget: the loan proceeds can appear among the sources of financing in the Budget of Expenditures and Sources of Financing, while the project can be included in the National Expenditure Program.

That is what an integrated National Fiscal Program is supposed to accomplish, because it allows legislators and the public to see the full funding picture in one place rather than through contingent releases later on.

We should be careful about automatic appropriations

There has also been discussion about making duly perfected foreign-assisted projects automatically appropriated, similar to debt service.

The analogy is tempting, but it is not persuasive.

Automatic appropriations for debt service protect the government’s creditworthiness and its contractual obligations. A project financed by a foreign loan is different.

The government may be obligated to repay the loan, but the project itself remains a policy choice. Congress should therefore retain the power to examine and authorize the expenditure.

Our own experience — from NBN-ZTE to Northrail and other controversial foreign-funded projects — reminds us why foreign financing should not place a project beyond legislative scrutiny.

Foreign-funded does not mean automatically wise.

And it certainly does not mean constitutionally exempt.

The Constitution already gives us a better way

This is ultimately not an argument about abolishing a budgetary mechanism. It is an argument about using the constitutional mechanism that better fits today’s fiscal reality.

For expenditures dependent on future fiscal capacity, government should wait until that capacity genuinely materializes.

For foreign-assisted projects backed by perfected financing, Congress can enact special appropriations.

For projects known sufficiently in advance, they can be incorporated into the regular National Expenditure Program.

The Constitution already provides the tools.

The deeper principle is simple: a constitutional mechanism should not survive merely because it can still be defended in the abstract. It must continue to serve the constitutional purpose for which it was created.

Unprogrammed Appropriations were designed for genuine fiscal contingencies. Those contingencies have become increasingly difficult to establish.

Belgica has correspondingly narrowed the constitutional conditions under which the mechanism may operate.

What remains is a very narrow space, principally for foreign-assisted projects.

And even there, the Constitution offers something better: special appropriations — a mechanism that respects Congress’ power of the purse, preserves institutional balance, ensures transparency, and strengthens public accountability.

Perhaps, then, the question is no longer whether Unprogrammed Appropriations are constitutional.

The better question is: why continue relying on a mechanism whose fiscal premise has largely disappeared when the Constitution itself already provides a better way?

Atty. Florencio “Butch” B. Abad is a former Secretary of the Department of Budget and Management. He is currently Professor of Praxis at the Ateneo School of Government and Senior Professional Lecturer at the Tañada-Diokno School of Law, DLSU.