MANILA — The Supreme Court has ordered the return of P60 billion in PhilHealth funds earlier transferred to the National Treasury and permanently barred the transfer of the remaining P29.9 billion balance, following a unanimous ruling penned by Associate Justice Amy C. Lazaro-Javier.

The Court also declared void, through a majority vote, Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act (GAA), and Department of Finance (DOF) Circular No. 003-2024 for being issued and implemented with grave abuse of discretion amounting to lack or excess of jurisdiction.

Special Provision 1(d) authorized the return of the fund balance or excess reserve funds of government-owned or controlled corporations (GOCCs) to the National Treasury to fund unprogrammed appropriations under the 2024 GAA. The DOF circular directed the transfer of P89.9 billion representing PhilHealth’s supposed excess reserve funds.

In compliance, PhilHealth remitted PHP 60 billion in three tranches before the Court issued a temporary restraining order (TRO) halting the transfer of the remaining P29.9 billion and stopping further implementation of the provision and the DOF circular.

The SC ruled that Special Provision 1(d) was a rider, as it was not germane to the purpose of the GAA. It found the provision ambiguous for introducing the undefined term “fund balance,” and held that it effectively repealed Section 11 of the Universal Health Care Act (UHCA) and the Sin Tax Laws.

Under the UHCA, PhilHealth must maintain reserve funds equivalent to two years’ projected program expenses, invest unused reserves, and use any excess only to increase benefits or lower contributions. No part of these funds may be transferred to the National Government or its agencies.

The Court said reallocating PhilHealth’s “excess reserve funds” made compliance with Section 11 “impossible,” undermining PhilHealth’s pooled resources for social health insurance and violating the constitutional rights to health and to affordable, sustainable, and accessible public health insurance.

The Court stressed that Congress cannot repeal Section 11 through a GAA, which can only appropriate funds in accordance with existing laws. Any change to the UHCA must be enacted through separate legislation.

The SC also found that Special Provision 1(d) contradicted the Sin Tax Laws, which earmark excise tax revenues for the UHCA and require full allocation to PhilHealth. These funds cannot be reduced, suspended, or withheld.

The Court added that economic measures must not contravene constitutionally guaranteed rights, especially healthcare for underprivileged Filipinos.

It also ruled that the Finance Secretary cannot augment any item in the GAA, as this power rests solely with the President.

The SC further held that the President did not commit grave abuse of discretion when certifying House Bill No. 8980 — the 2024 GAA — as urgent. It said only Congress may decide on the validity of the certification unless grave abuse is shown, and Congress accepted the certification to expedite the bill’s passage.

The Court denied petitioners’ request to determine the DOF Secretary’s liability for technical malversation or plunder, saying the case only concerned the validity of the issuances and potential grave abuse of discretion. It noted that several justices found the Finance Secretary to have acted in good faith.

The P60 billion earlier remitted will be returned to PhilHealth through the 2026 GAA.

Separate Opinions

Senior Associate Justice Marvic M.V.F. Leonen said the President’s certification of urgency was invalid due to the absence of an emergency and argued that the entire 2024 GAA should be voided, with the 2023 budget reenacted.

Associate Justice Alfredo Benjamin S. Caguioa said Congress exceeded its authority by increasing unprogrammed appropriations beyond what the President proposed, undermining the Executive’s policy priorities.

Associate Justice Ramon Paul L. Hernando held that unprogrammed appropriations are unconstitutional and should be removed entirely.

Associate Justice Henri Jean Paul B. Inting said the President’s certification was based on a reasonable assessment of national needs.

Associate Justice Rodil V. Zalameda agreed that the transfer was unconstitutional but cautioned against a blanket invalidation of the provision and circular, adding that good faith should be recognized and that the ruling should not automatically affect the PDIC’s fund transfers.

Associate Justice Samuel H. Gaerlan said invalidating the issuances does not negate the Finance Secretary’s good faith nor create a basis for liability.

Associate Justice Ricardo R. Rosario emphasized that grave abuse of discretion does not equate to criminal liability.

Associate Justice Jhosep Y. Lopez said the ruling should be limited only to the transfer of PhilHealth funds.

Associate Justice Japar B. Dimaampao said the provision and circular should not be entirely invalidated because they can be harmonized with the UHCA and the Sin Tax Laws.

Associate Justice Jose Midas P. Marquez said Special Provision 1(d) enjoys the presumption of constitutionality, is unambiguous, and contains sufficient standards.

Associate Justice Maria Filomena D. Singh said the transfer diverted funds intended for indigents, senior citizens, and persons with disabilities, weakening PhilHealth’s ability to deliver universal healthcare.

Associate Justice Raul B. Villanueva argued that Special Provision 1(d) did not directly repeal the UHCA and Sin Tax Laws and should apply to GOCCs without charter restrictions on fund transfers.