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

Hernando, in his concurring and dissenting opinion to the recent SC En Banc ruling that declared unconstitutional the transfer of P60 billion in PhilHealth funds to the National Treasury, emphasized that unprogrammed appropriations have no constitutional basis and that inserting them into the GAA exposes public funds to potential misuse and corruption.

The magistrate stressed that if certain funds fall outside the scope of the GAA, only Congress — through its power of appropriation — may determine how they should legally be spent by enacting a special appropriations law.

Under the 2024 national budget, Congress raised unprogrammed appropriations by P450 billion. The Executive Branch initially proposed P281.9 billion under the National Expenditure Program (NEP), but this ballooned to P731.4 billion in the version passed and ratified by Congress.

In its ruling, the high court unanimously ordered the return of P60 billion in Philippine Health Insurance Corporation (PhilHealth) funds transferred to the National Treasury and permanently prohibited the transfer of the remaining P29.9 billion balance.

In a majority vote, the SC also declared void Special Provision 1(d), Chapter XLIII of the 2024 GAA, as well as Department of Finance (DOF) Circular No. 003-2024, finding grave abuse of discretion amounting to lack or excess of jurisdiction in their issuance and implementation.

The voided provision had authorized the retrieval of excess reserve funds from government-owned or -controlled corporations (GOCCs) to finance unprogrammed appropriations within the 2024 GAA. This was implemented by the DOF, which directed the transfer of P89.9 billion from PhilHealth.

This resulted in the remittance of P60 billion in PhilHealth funds in three tranches before the SC issued a temporary restraining order.

The Court struck down Special Provision 1(d) on two constitutional grounds.

First, it ruled the provision was a “rider” — a clause not germane or properly related to the central purpose of the GAA, which violates the constitutional requirement ensuring the public is fully informed of a bill’s content. The SC described the section on unprogrammed appropriations as ambiguous for introducing the term “fund balance,” which lacked any definition in the 2024 GAA.

Second, the SC said the provision and the DOF circular were void because they effectively repealed Section 11 of the Universal Health Care Act (UHCA) and provisions of the Sin Tax Laws.

Section 11 of the UHCA requires PhilHealth to maintain reserve funds, establishes a ceiling equivalent to two years of projected program expenses, and expressly prohibits transferring reserve funds or their income to the National Government.