Malacañang and Congress were left with no choice but to comply with the Supreme Court’s ruling ordering the return of P60 billion to state-run insurer PhilHealth by including the amount in the 2026 national budget, a House leader said Monday, 8 December.

Deputy Speaker Janette Garin made the statement in response to suggestions that the government should instead source the required funds from recovered assets of public officials and private contractors allegedly involved in kickback schemes tied to flood control projects.

Garin strongly objected to the proposal, saying it would amount to a “defiance” of the high court’s directive. She emphasized that placing the funds in the 2026 General Appropriations Act (GAA), rather than relying on potentially prolonged recovery efforts from alleged kickbacks, would ensure the money is legally mandated and beyond future dispute.

“Isn’t it better to already have the money in hand, or be sure that it will definitely come, than having to look for it later?” the former health secretary said.

“I doubt if the assets to be surrendered or recovered would even be enough. As of now, only P110 million has been voluntarily turned over by a Bulacan district engineer. Frozen bank accounts and other assets are valued at P13 billion. Clearly, those are not sufficient,” she added.

Following President Ferdinand Marcos Jr.’s directive in September to return the P60 billion in excess PhilHealth funds to the state insurer, Garin said the House immediately complied by including the amount in the proposed 2026 national budget, a move she said was also supported by the Senate.

“PhilHealth will receive a total of P113 billion: P60 billion in restituted funds and an additional subsidy of P53 billion,” she said.

The transfer of the P60 billion in PhilHealth funds to the national treasury—criticized by some as illegal—stemmed from the issuance of Memorandum Circular No. 003-2024, signed by then Finance Secretary Ralph Recto in April last year.

The memorandum directed government-owned and -controlled corporations (GOCCs), including PhilHealth, to remit idle funds to the national treasury to help finance projects under unprogrammed appropriations (UA) in the 2024 GAA.

UA are “standby funds” outside the regular budget that may be tapped during emergencies or when infrastructure projects, social aid programs, or other initiatives are required. These may only be accessed when government revenues exceed targets or when additional grants or foreign funds are generated.

The P60 billion formed part of PhilHealth’s P89.9 billion in excess funds, which accumulated from the insurer’s dormant funds from 2021 to 2023.

Earlier, the Department of Finance said PhilHealth could end 2024 with roughly P550 billion in unspent funds, despite returning the P89.9 billion to the national treasury.

Several petitioners have questioned the legality of the memorandum, arguing that it may constitute technical malversation or even plunder, as PhilHealth funds were allegedly used for purposes other than those for which they were appropriated.

They maintained that the Constitution does not authorize the transfer of funds derived from public taxes for specific purposes to be used for other ends, except as provided by law.

Meanwhile, scrutiny of flood control projects revealed that funding for a significant portion—some of which were found to be ghost or substandard—was sourced from the UA, raising concerns over possible misuse of public funds.

In 2023 and 2024, some P141 billion was reportedly charged to the UA to finance flood control projects, which have since become the focus of a sweeping corruption probe involving lawmakers, Department of Public Works and Highways officials, and private contractors.

Despite calls to scrap the UA, the House retained P243 billion in standby funds in its version of the 2026 budget, with the bulk earmarked to bankroll infrastructure projects co-financed by foreign governments.