Associate Justice calls unprogrammed appropriations unconstitutional

Supreme Court (SC) Associate Justice Ramon Paul L. Hernando, in a separate concurring opinion regarding the court’s recent ruling on PhilHealth funds, argued that the inclusion of unprogrammed appropriations in the General Appropriations Act (GAA) is unconstitutional and the entire amount should be removed from the national budget.

Hernando’s separate opinion accompanied the SC En Banc’s unanimous decision, which declared unconstitutional the transfer of P60 billion in Philippine Health Insurance Corporation (PhilHealth) funds to the National Treasury and permanently barred the transfer of the remaining P29.9 billion balance.

In his opinion, Hernando stressed that unprogrammed appropriations lack constitutional basis and their insertion into the GAA exposes public funds to potential misuse and corruption. He noted that if certain funds fall outside the scope of the GAA, only Congress, through its power of appropriation, may legally determine how they should be spent by enacting a special appropriations law.

This concern is highlighted by the 2024 national budget, where unprogrammed appropriations were raised by P450 billion. The executive branch initially proposed P281.9 billion in unprogrammed funds under the National Expenditure Program (NEP), but this amount swelled to P731.4 billion in the version ultimately passed and ratified by Congress.

The High Court’s majority decision declared void Special Provision 1(d), Chapter XLIII of the 2024 GAA, along with Department of Finance (DoF) Circular No. 003-2024, citing grave abuse of discretion in their issuance and implementation.

The voided Special Provision 1(d) had authorized the retrieval of fund balances or excess reserve funds from government-owned or controlled corporations (GOCCs) to finance the unprogrammed appropriations within the 2024 GAA.

The DoF subsequently implemented this by directing the transfer of P89.9 billion from PhilHealth, leading to the remittance of P60 billion before the court issued a temporary restraining order.

The SC struck down Special Provision 1(d) primarily on two constitutional grounds. First, the provision was deemed a “rider” — a provision not germane or properly related to the central purpose of the GAA — which is prohibited to prevent legislative fraud and ensure the public is informed of a bill’s subject matter.

It also found the provision related to unprogrammed appropriations ambiguous for introducing the concept of a “fund balance” without proper definition in the 2024 GAA itself. Second, the SC ruled that the provision and the DoF circular were void because they constituted an implied repeal of Section 11 of the Universal Health Care Act and the Sin Tax Laws.

Section 11 of the UHCA explicitly mandates PhilHealth to maintain reserve funds, sets a ceiling equivalent to two years of projected program expenses and expressly prohibits the transfer of any portion of these reserve funds or their income to the National Government.