The Philippines’ highest court has declared a P5 billion allocation for local government units (LGUs) in the 2024 national budget unconstitutional, a ruling that may force the administration to redraw its fiscal blueprint for the coming year.
Background of the contested allocation
In the fiscal year 2024 budget, the executive branch earmarked P5 billion to be disbursed directly to LGUs for development projects and basic services. The fund, introduced through an amendment to the General Appropriations Act, was intended to accelerate infrastructure and social programs at the municipal and provincial levels.
Critics, including several legislators and civil‑society groups, argued that the allocation bypassed constitutional requirements that all national expenditures be justified through the regular budgeting process and that the money could not be earmarked without a specific law authorizing it.
Supreme Court ruling and its legal basis
In a decision delivered by a panel of justices, the Court held that the P5 billion provision violated the constitutional principle of separation of powers and the requirement that the national budget be approved by Congress in its entirety. The justices emphasized that the executive cannot unilaterally create new spending items without legislative approval.
P5 billion LGU fund in 2024 budget unconstitutional
The ruling cited precedents that restrict the executive’s ability to allocate funds outside the framework established by the General Appropriations Act. It also underscored that the Constitution mandates all public expenditures be grounded in law, a safeguard meant to prevent unchecked spending.
Implications for the 2024 budget and LGUs
The decision comes at a critical juncture as the national government finalizes its 2024 fiscal plan. Treasury officials must now re‑examine the budget to remove the contested line item or seek congressional approval through a separate legislative measure.
Local officials, who had anticipated the additional resources for ongoing projects, face uncertainty. Many LGUs had already incorporated the expected funds into their planning cycles, and the shortfall could delay infrastructure works and social service delivery.
President Ferdinand Marcos Jr.'s administration, which has emphasized accelerated development in the provinces, is expected to engage with lawmakers to find an alternative financing route. Legal scholars suggest that the government could propose a new law authorizing the fund, but the process may extend beyond the current fiscal year.
The ruling also sends a broader signal to future administrations about the limits of executive budgeting powers. Observers note that the Court’s stance reinforces legislative oversight and could shape how future budgets allocate resources for LGUs and other sectoral programs.
As the government works to comply with the Court’s directive, LGU leaders are urging the Department of the Interior and Local Government to provide interim guidance and explore other funding mechanisms to mitigate the impact on local projects.
