These were remitted to the National Treasury by virtue of separate orders.
In a unanimous vote, the Supreme Court, through the ponencia of Associate Justice Amy C. Lazaro-Javier, voted to return the PhilHealth funds that were transferred to the National Treasury.
Amounting to PHP60 billion, these were remitted by the state insurer in three tranches in 2024 by virtue of the Special Provision 1(d) in the 2024 General Appropriations Act (GAA) and the Circular No. 003-2024 of the Department of Finance (DOF).
The clause in the 2024 GAA authorized the return of the fund balance or the excess reserve funds of government-owned or controlled corporations (GOCCs) to the National Treasury to fund unprogrammed appropriations that fiscal year.
As for the DOF-issued circular, it directed the transfer of PHP 89.9 billion to the National Treasury, representing the fund balance or excess reserve funds of the PhilHealth.
Through its earlier temporary restraining order (TRO), the Supreme Court stopped the transfer of the remaining PHP29.9 billion PhilHealth funds and the further implementation of Special Provision 1(d) of the 2024 GAA and DOF Circular No. 003-2024.
But in its decision, the highest court on the land has permanently prohibited the transfer of the remaining fund balance and that the remitted funds amounting to PHP60 billion be returned to PhilHealth through the 2026 GAA.
In addition, the SC also declared void both the Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act (2024 GAA), and the Department of Finance (DOF) Circular No. 003-2024.
The Court also struck down Special Provision 1(d) of the 2024 GAA for being a “rider” or a provision not germane or related to the bill’s purpose.
Based on the Constitution, all provisions of the GAA are required to be germane to its purpose to prevent surprise or fraud upon the legislature and to fairly inform the people of the bills’ subject. With a provision being considered germane if it is particular, unambiguous, and appropriate.
While Special Provision 1(d) is particular in that it relates to the unprogrammed appropriations in the GAA, the SC found the provision ambiguous because it introduced the concept of a “fund balance”—a term not defined in the 2024 GAA.
SPECIAL PROVISION (1)d IMPLIEDLY REPEALED SECTION 11 OF UHCA, SIN TAX LAWS
The SC also ruled that Special Provision (1)d is void because it impliedly repeals Section 11 of the Universal Health Care Act (UHCA) and the Sin Tax Laws.
Under Section 11 of the UHCA, PhilHealth is required to maintain reserve funds up to a ceiling equivalent to two years of projected program expenses.
In contrast, PhilHealth must set aside part of its net income as reserve funds every year, and any unused funds must be invested so that earnings are added back to these reserves. If the reserve funds exceed the ceiling, the excess must be used to increase benefits under the National Health Insurance Program (NHIP) and reduce members’ contributions.
Section 11 also expressly provides that no portion of the reserve fund or its income may be transferred to the National Government or any of its agencies.
The SC ruled that reallocating PhilHealth’s supposed “excess reserve funds” through Special Provision 1(d) and DOF Circular No. 003-2024 makes compliance with Section 11 “impossible.”
“These measures undermine the very nature of PhilHealth funds as pooled resources for social health insurance, hinder the UHCA’s goal of delivering comprehensive and universal healthcare, and ultimately violate the people’s right to health and to an affordable, sustainable, and accessible public health insurance,” according to the court’s presser.
The SC also stressed that Congress cannot repeal Section 11 through the GAA, which may only provide appropriations consistent with existing laws. It cannot amend or overturn substantive policy and that any changes affecting the UHCA, particularly PhilHealth’s reserve funds, must be enacted through separate legislation.
Furthermore, the SC found that Special Provision 1(d) contradicts the Sin Tax Laws, which earmark specific percentages of excise taxes on sweetened beverages, alcohol, and tobacco products exclusively for the UHCA.
The Bureau of Treasury must set aside these amounts for the UHCA’s implementation, and Congress must fully allocate them to PhilHealth through the GAA and these earmarked funds may not be reduced, suspended, or withheld by the legislative branch.
The SC added that while the State may adopt measures to improve the economy, such measures must not contravene what the Constitution itself guarantees: affordable healthcare for all Filipinos, especially the underprivileged.
ON THE PRESIDENT, FINANCE SECRETARY’S ROLES
The SC also ruled that the Finance Secretary cannot, in any capacity, augment any item in the GAA because this power belongs to the President.
In addition, the court ruled that the President did not commit grave abuse of discretion when he certified as urgent House Bill No. 8980—now the 2024 GAA—which dispensed with the requirement of reading on three separate days and the printing and distribution of copies in advance.
“Except in cases of grave abuse of discretion, the authority to decide whether a certification of urgency is valid rests solely with Congress. In this case, Congress approved the President’s certification to expedite the passage of the bill,” the presser read.
The SC also denied the petitioners’ request to determine the liability of the DOF Secretary for technical malversation and/or plunder, ruling that such matters are improper for resolution in this case.
The only issue properly before the court is the validity of the issuances made and whether they were issued with grave abuse of discretion amounting to a lack or excess of jurisdiction.
The Justices who submitted their respective separate opinions also noted that “no criminal liability can attach to the Finance Secretary, who they found to have acted in good faith in implementing Special Provision 1(d).”
MALACAÑANG RESPECTS COURT’S DECISION
Following the release of the decision, the Malacañan Palace said it respected the decision of the Supreme Court on the transfer of PhP60 billion unused funds of the Philippine Health Insurance Corporation (PhilHealth), even as the Office of the Solicitor General will review the decision and decide whether to file an appeal.
“We respect the decision of the Supreme Court. The Office of the Solicitor General will review the ruling and decide on the appropriate course of action to take including the filing of a motion for reconsideration,” said Presidential Communications Office Secretary Dave Gomez in a statement on Friday, December 5.
It was last September when President Ferdinand Marcos Jr. restored PhilHealth’s PhP60 billion excess funds, in recognition of the agency’s improved performance, increased absorptive capacity and expanded benefits to its members in line with the government’s goal of delivering universal healthcare for all Filipinos.
Regarding the fund transfer, Gomez said the Executive simply acted in accordance with the congressional mandate under the General Appropriations Act (GAA) 2024.
“We note that majority of the members of the high tribunal declared as unconstitutional a provision of the General Appropriations Act (GAA) 2024 passed by Congress. We note that the Executive simply complied with the congressional mandate under the said law,” the PCO chief added.
He furthered, “The House of Representatives incorporated the restoration in the General Appropriations bill and the Senate likewise upheld the directive in its committee report.”