SC rejects transfer of ‘excess’ PhilHealth funds to nat’l treasury
The Supreme Court has voided a special provision of the 2024 budget law and a circular from the Department of Finance (DOF), paving the way for the return of P60 billion in funds to the Philippine Health Insurance Corp. (PhilHealth) that were previously transferred to the National Treasury.
On Sept. 20, President Marcos, in remarks made at Dr. Jose Fabella Memorial Hospital in Manila, said he had already ordered the amount to be returned to the state health insurer so it could be used for the expansion of PhilHealth services.
The amount was part of the “excess” PhilHealth funds totaling P89.9 billion that the DOF, then headed by Ralph Recto, had intended to be moved to the treasury.
At a briefing on Friday, Supreme Court spokesperson Camille Ting said the high court, through Associate Justice Amy Lazaro-Javier, arrived at a unanimous vote declaring void Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act (GAA), as well as DOF Circular No. 003-2024.
The provision 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.
In compliance with provision and the DOF Circular, which directs the transfer of the P89.9 billion to the national treasury, PhilHealth remitted P60 billion in three tranches.
Of PhilHealth’s P89.9-billion excess funds, P20 billion was transferred to the treasury in May 2024, followed by P10 billion in August and P30 billion in October the same year.
The remaining P29.90 billion was supposed to be transferred in November 2024, but was blocked by the Supreme Court’s issuance of temporary restraining order.
In its decision on Friday, the Supreme Court held that the questioned GAA provision was a “rider” in nature and “not germane or related to the bill’s purpose.”
“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,” Ting said, citing the decision.
A provision is considered germane if it is “particular, unambiguous, and appropriate,” she said.
Not defined
While Special Provision 1(d) was specific in the sense that it related to unprogrammed appropriations in the GAA, the Supreme Court found the provision ambiguous because it introduced the concept of “fund balance,” a term not defined in the 2024 GAA.
The high court said the provision was void for implicitly repealing Section 11 of the Universal Health Care Act (UHCA, or Republic Act No. 11223) and the sin tax laws.
Section 11 of the UHCA requires PhilHealth to maintain reserve funds up to a two-year ceiling of projected program expenses. Each year, PhilHealth must set aside part of its net income as reserve funds, and any unused funds must be invested so that earnings are added back to these reserves.
If the reserve funds exceed the ceiling, the Supreme Court said, the excess must be used to increase the benefits under the National Health Insurance Program (NHIP) and reduce members’ contributions.
The 2024 GAA provision was also found to be contrary to the sin tax laws, which earmark specific excise taxes exclusively for the UHCA’s implementation.
“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. Congress cannot reduce, suspend, or withhold these earmarked funds,” the Supreme Court said.
Compliance
Executive Secretary Recto on Friday said the executive department would comply with the Supreme Court order.
“As we always said before the decision was issued, the Executive will follow the Supreme Court’s order, just as we followed and complied with the directive of Congress then to use the dormant funds of GOCCs for the benefit of the people,” he said.
Recto was the finance chief at the time when the fund transfer came to light and drew strong objections from stakeholders in public health sector, civil society groups, and some lawmakers.
“We reiterate that the Executive simply complied with the congressional mandate under the 2024 GAA, and that the [DOF’s] role is solely in revenue generation and debt and deficit management. We believed then, and still believe, that the directive was a common-sense approach to optimize government coffers without resorting to additional borrowing or new taxes,” he added.
‘Right to health’ upheld
Bayan Muna chair Neri Colmenares, one of the petitioners who asked the Supreme Court to stop the PhilHealth fund transfer, said the high court’s decision was a “victory for the right to health.”
“It is a significant development that the Court upheld the right to health of the people. We have long argued that the right to health is self-executing and does not need an implementing law to be a source of right. We can use this decision in cases where the right to health is violated,” Colmenares said in a statement.
Sen. JV Ejercito, one of the principal authors of the universal health care law, described the Supreme Court’s return order as a “welcome correction.”
“From the very beginning, we made it clear that these funds belong to PhilHealth,” Ejercito said. “We should not call this ‘excess funds’ considering that funds set aside for health care are not enough. Many of our countrymen cannot afford to pay for medical and hospital expenses.” —WITH REPORTS FROM LUISA CABATO, JASON SIGALES, KRIXIA SUBINGSUBING AND INQUIRER RESEARCH
