The Office of the Solicitor General (OSG), the government’s principal law officer and legal defender, will no longer appeal the Supreme Court’s (SC) decision that declared unconstitutional the transfer of the P89.9 billion excess funds of the Philippine Health Insurance Corporation (PhilHealth) to the National Treasury.

“The Office of the Solicitor General affirms its respect for the Supreme Court’s ruling and will not move for reconsideration of the PhilHealth case,” said Solicitor General Darlene Marie B. Berberabe in a statement on Friday, Dec. 26.

Early this month, the SC handed down a decision that declared unconstitutional and voided, for grave abuse of discretion, a special provision in the 2024 General Appropriations Act (GAA) that authorized the return of excess reserve funds of government-owned or controlled corporations (GOCCs) to the National Treasury to fund unprogrammed appropriations.

Nullified by the SC, in a decision written by Associate Justice Amy C. Lazaro-Javier, was Special Provision 1(d), Chapter XLIII of the 2024 GAA, and Department of Finance’s (DOF) Circular No. 003-2024 that directed the transfer of P89.9 billion PhilHealth funds to the National Treasury.

With the ruling, the SC ordered the return to PhilHealth of the P60 billion already transferred to the National Treasury and permanently stopped the transfer of the remaining P29.9 billion.

Resolved by the SC were the three petitions filed by the groups of Aquilino Pimentel III, Bayan Muna Chairman Neri Colmenares, and 1Sambayan Coalition.

“We accept its guidance, and the government moves forward with full respect for the Court’s authority and wisdom,” Berberabe said.

The solicitor general admitted that “government may at times differ in approach to public policy, especially in the difficult task of managing fiscal space given government’s limited resources.”

“We remain, however, united under the Constitution. The Supreme Court has now clarified the constitutional path,” she also said.

In its decision, the SC pointed out that 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.

It explained that a provision is considered germane if it is particular, unambiguous, and appropriate.

While Special Provision 1(d) is particular in that it relates to the unprogrammed appropriations in the GAA, the SC found the provision ambiguous because it introduced the concept of a “fund balance” – a term not defined in the 2024 GAA.

At the same time, the SC ruled that Special Provision (1)d is void because it impliedly repeals Section 11 of the Universal Health Care Act (UHCA) and the Sin Tax Laws.

Under Section 11 of the UHCA, the SC said that PhilHealth is required to maintain reserve funds up to a ceiling equivalent to two years of projected program expenses.

Thus, it said, 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 SC said the excess must be used to increase benefits under the National Health Insurance Program (NHIP) and reduce members’ contributions.

It also pointed out that Section 11 expressly provides that no portion of the reserve fund or its income may be transferred to the National Government or any of its agencies.

Thus, the SC ruled that reallocating PhilHealth’s supposed “excess reserve funds” through Special Provision 1(d) and DOF Circular No. 003-2024 makes compliance with Section 11 impossible.

It said these measures undermine the very nature of PhilHealth funds as pooled resources for social health insurance, hinder the UHCA’s goal of delivering comprehensive and universal healthcare, and ultimately violate the people’s right to health and to an affordable, sustainable, and accessible public health insurance.

The SC stressed that Congress cannot repeal Section 11 through the GAA, which may only provide appropriations consistent with existing laws.

It stressed that Congress cannot amend or overturn substantive policy and that any changes affecting the UHCA, particularly PhilHealth’s reserve funds, must be enacted through separate legislation.

The SC further found that Special Provision 1(d) contradicts the Sin Tax Laws, which earmark specific percentages of excise taxes on sweetened beverages, alcohol, and tobacco products exclusively for the UHCA.

The Bureau of the Treasury must set aside these amounts for the UHCA’s implementation, and Congress must fully allocate them to PhilHealth through the GAA, the SC said.

It added that Congress cannot reduce, suspend, or withhold these earmarked funds.

It stressed that while the State may adopt measures to improve the economy, such measures must not contravene what the Constitution itself guarantees -- affordable healthcare for all Filipinos, especially the underprivileged.

Also, the SC said that the Finance Secretary cannot, in any capacity, augment any item in the GAA because this power belongs to the President.

It ruled that the President did not commit grave abuse of discretion when he certified as urgent House Bill No. 8980, now the 2024 GAA, which dispensed with the requirement of reading on three separate days and the printing and distribution of copies in advance.

It said that except in cases of grave abuse of discretion, the authority to decide whether a certification of urgency is valid rests solely with Congress.

In this case, Congress approved the President’s certification to expedite the passage of the bill.