SC orders return of P60 billion funds to PhilHealth

The Supreme Court has unanimously ruled that the P60 billion funds transferred to the national treasury must be returned to the Philippine Health Insurance Corp. through the 2026 General Appropriations Act.

In its 136-page ruling, the High Court declared the Special Provision 1(d) of the 2024 GAA as unconstitutional. This provision had attempted to use PhilHealth's fund balance for other government spending.

The SC ruled against Special Provision 1(d), which allowed government-owned or controlled corporations to transfer their fund balances or excess reserves to the National Treasury. This transfer was intended to finance unprogrammed appropriations within the 2024 GAA.

The Court struck down this provision for being a "rider," which means that a provision not germane or related to the bill’s purpose.

The SC emphasized that "The Constitution requires all provisions of the GAA to be germane to its purpose to prevent surprise or fraud upon the legislature and to fairly inform the people of the bills’ subject."

The Court also noted the provision was problematic because it introduced the concept of a "fund balance"—a term that was not defined in the 2024 GAA.

It also noted that Special Provision 1(d) effectively nullified Section 11 of the Universal Health Care Act and the Sin Tax Laws.

"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 as they undermine the very nature of PhilHealth funds as pooled resources for social health insurance, among others," it said, stressing that Congress cannot repeal Section 11 through the General Appropriations Act.

Meanwhile, it also said that special provisions contradicted the sin tax law, which imposes excise taxes on products considered harmful, such as alcohol, tobacco, and sweetened beverages.

The SC also ruled that the Finance Secretary has no authority to increase or add to any GAA item, as that power is reserved exclusively for the President.

It, however, permanently barred the transfer of the remaining P29.9 billion fund balance.

Meanwhile, the SC denied the petitioners’ request to determine the liability of the finance secretary, previously occupied by Ralph Recto at the time, for technical malversation and/or plunder, ruling that such matters are improper for resolution in this case.

"The only issue properly before it is the validity of the issuances and whether they were issued with grave abuse of discretion amounting to a lack or excess of jurisdiction," it said.

Justices' opinion also said 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)."

The Supreme Court said the President acted within his rights when he labeled the 2024 GAA urgent, skipping the usual steps of reading it three times and distributing copies beforehand.