The Supreme Court (SC) upheld the primacy of the Universal Health Care Act over provisions inserted into the 2024 General Appropriations Act (GAA) that allowed the Department of Finance (DoF) to sweep up excess funds from state firms.

SC spokesperson Camille Ting said the court ordered the return of P60 billion in PhilHealth funds that had been transferred to the National Treasury and permanently prohibited the transfer of the remaining P29.9 billion under the DoF directive.

The SC decision said the finance secretary cannot, “in any capacity, augment any item in the GAA because this power belongs to the President.”

The DoF issued a directive for the Philippine Health Insurance Corp. to surrender P89.9 billion to the National Treasury to trigger the funding of Unprogrammed Appropriations (UA) in the national budget.

Crucial projects bumped off from agencies to make space for pork barrel projects were contained in the UA.

The budget provision and the DoF directive were struck down by the Supreme Court which said both undermined the Universal Healthcare Act (UHC), which prohibits the use of PhilHealth reserves except for health projects.

It also ruled that the President did not commit a grave abuse of discretion when he certified the 2024 GAA, which contained the questioned provisions, as urgent.

The SC also denied the petitioners’ request to determine the liability of the finance secretary for technical malversation and/or plunder, ruling that “such matters are improper for resolution in the 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,” the SC said.

The majority of the magistrates voted to void Special Provision 1B in the 2024 GAA and Department of Finance Circular 003-2024.

It found these measures effectively repealed Section 11 of the UHC and were in conflict with the Sin Tax Law.

2-year reserves required

Under Section 11 of the UHC, PhilHealth is required to maintain reserve funds equivalent to two years of projected program expenses.

The law mandates that portions of PhilHealth’s net income be set aside as reserve funds, invested to earn income. It is used to increase benefits or reduce member contributions if the reserve exceeds its ceiling.

The High Court said reallocating the supposed excess funds made compliance with Section 11 impossible.

“The GAA may provide appropriations consistent with existing laws, but it cannot amend or repeal substantive policy,” the Court said.

The ruling emphasized that changes affecting the UHC, particularly PhilHealth’s reserve funds, must come through separate legislation.

It also stressed that Congress cannot reduce, suspend, or withhold earmarked funds from excise taxes on sweetened beverages, alcohol, and tobacco products, which the Sin Tax Law allocates exclusively for the UHC’s implementation.

Recto abides by ruling

Executive Secretary Ralph Recto said he respects the SC decision.

“We respect the Supreme Court’s decision ordering the return of the PhilHealth remittance of unused funds worth P60 billion,” Recto said.

“As we have always said, even before the decision came out, the Executive will comply with the order of the Supreme Court, just as we followed and heeded the directive of Congress before to use the idle funds of the GOCCs for the benefit of the people.”

Recto said, “We reiterate that the Executive simply complied with the congressional mandate under the 2024 GAA, and that the Department of Finance’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.”

“Rest assured, the administration of President Marcos Jr. remains fully committed to maximizing government resources so that no Filipino is ever denied healthcare. Our goal remains the same: to make every hard-earned peso of the Filipino taxpayer count — for our people, for their families, and for their health,” Recto said.

Acting Communications Secretary Dave Gomez, in a separate statement, said the Office of the Solicitor General will review the ruling and decide the appropriate course of action.

“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,” he said.