271059/271347/E-02472/E-04036 Representative Edcel C. Lagman, substituted by Albay First District Representative Krisel B. Lagman, et al. Vs. The Congress of the Philippines, et al./Aquilino “Koko” Pimentel III and Pantaleo “Bebot” Alvarez Vs. Lucas P. Bersamin, in his capacity as executive secretary, and Amenah F. Pangandaman, in her capacity as secretary of the Department of Budget and Management/Filipinos for Peace, Justice and Progress Movement, Inc. (FPJPM), represented by its president and chairperson, Joseph F. Cadsawan, and Gloria T. Puzon, chapter Officer Vs. The House of Representatives, et al./Edgar R. Erice and Leila De Lima Vs. The Senate of the Philippines, et al. — Official PDF

Decision 43 G.R. Nos,- 271059, 271347, E-02472 and. E-04036 budgetary deficits-i.e., government expenditures in excess of its ordinary revenues210-are allowed, the deficit must be kept within a ratio or percentage set by economic managers, and with the eventual target to lower the deficit to zero over time.211 The expectation is that "the budget can be balanced over a longer period oftime."212 However, for two decades, government operations have resulted in "persistent fiscal deficits, increasing public debt, and continuing borrowing requirements."213 Literature suggests that persistence of deficits, as well as inexorable rise in public sector indebtedness, are primarily caused by institutional factors as inadequate fiscal discipline and weak fiscal management.214 In Promoting Fiscal Discipline, Manmohan S. Kumar and Teresa Ter-Minassian cites the main underlying cause for fiscal irn;liscipline: The lack of fiscal discipline generally stems-from the injudicious use of discretion in formulating and implementing budgetary policies. 1l1e benefits of such discretion are well known in helping policymakers respond to unexpected shocks to reduce disruptive consequences. Discretion also allows elected political representatives to fulfill their mandates through tax and spending decisions. But, as is generally acknowledged, discretion can be misused, which results in deficit bias and procyclical policies. These, in turn, lead to weak fiscal positions, rising debt levels, and over time, a loss in policy credibility.215 Deficits may be covered by excess or new revenues, as well as local and foreign borrowings. Consequently, maintaining a deficit through the years poses danger in terms of the country's indebtedness. For 2023 and 2024, the actual payment of interest was higher than the programmed interest in the GAA: Interest Pavments· Programmed v Actual 2023 . 2024 2025Turelim) . Programmed PHP 582.3B PHP 670.SB PHP 848B (BESF/GAA) Actual216 PHP 628.3B PHP 763.3B PHP 864.lB Variance +PHP 46B +PHP 92.88B +PHP 16.lB (+7.9%) (+13.8%) (+l.9%) be proposed, unless it is supported by a proposal creating an additional source of funds sufficient to / cover the same. Proposals creating additional sources of funds shall be prepared in the form ofrevenue bills. (Emphasis . supplied) • 210 TSN, April 7, 2026 Oral Arguments, pp. 71-72. 21' TSN, April 7, 2026 Oral Arguments, pp. 85-88. 212 TSN, April 7, 2026 Oral Arguments, p. 85. 213 Amicus Curiae Florencio "Butch" Abad's Undated Memorandum, p. 12. '14 MANMOI IAN S. KlJMJ\R, /\Nil TERlcSJ\ Trn-MINJ\SSIAN. PROMOTING FISCAL DISCIPUNE 2007. 215 Id. at 3. ' 216 OSG Compliance dated April 17, 2026, Annex 0,