The government insisted that the transfer of the P60 billion of the P89.9 billion excess funds of the Philippine Health Insurance Corporation (PhilHealth) to the national treasury was “within legal bounds.”
However, three amici curiae or “friends of the court” who were invited by the Supreme Court (SC) to help in resolving the issue pointed out a possible violation of the Constitution in the fund transfer.
The opposing stands were presented on Tuesday afternoon, Feb. 4, during the oral arguments on three petitions that sought to declare unconstitutional the transfer of PhilHealth’s excess funds to the national treasury.
The stand of the “friends of the court,” in effect, supported the allegations of unconstitutionality pointed out in three petitions that were subjected to oral arguments.
Center of the legal debate on the three petitions is the constitutionality of Special Provision No. 1(d) of the Unprogrammed Appropriations in the 2024 General Appropriations Act (2024 GAA) and Department of Finance (DOF) Circular No. 003-2024 which laid down the guidelines for the implementation of the special provision.
The government, through Solicitor General Menardo I. Guevarra, said the inclusion by Congress of Special Provision No. 1(d) in the General Appropriations Act of 2024 and the DOF’s issuance of Circular No. 003-2024 “are the government’s common-sense approach -- again, within legal bounds -- to temporarily eke out the cash needed for the National Government’s numerous priority programs.”
Guevarra said that under Special Provision No. 1 (d), “the Unprogrammed Appropriations shall be sourced from ‘any remainder resulting from the review and reduction of the GOCC’s (government-owned and controlled corporations) reserve funds to reasonable levels taking into account the disbursements from prior years.’”
Thus, he said that “Congress, in the exercise of its sound judgment considering the exigencies of the times, found it necessary to: (1) direct GOCCs to review and reduce their reserve funds to reasonable levels on the basis of their previous annual disbursements; and (2) once the new level of reserve funds has been determined, to utilize the remainder for the financing of the unprogrammed appropriations.”
He also said that the DOF defined “fund balance” as the unrestricted funds of the GOCCs in the form of cash, investment in securities, and government subsidy, among others.
“In the case of PhilHealth, the fund balance was computed by adding the total amount of government subsidies for indirect contributors (e.g., senior citizens, indigent persons, persons with disabilities) for the years 2021 to 2023, and subtracting the total amount of benefit claims of indirect contributors during the same three-year period,” he added.
During this three-year period, Guevarra said the total government subsidies to PhilHealth amounted to P239.11 billion, while the total benefit claims of indirect contributors amounted to P149.23 billion.
“In particular, the government subsidies exceeded the total benefit claims of indirect contributors by P27.12 billion in 2021, by P23.97 billion in 2022, and by P38.79 billion in 2023, for a total of P89.9 billion,” he said.
Thus, he pointed out that “PhilHealth’s fund balance of PP89.9 billion was thus an accumulation of three years’ worth of government subsidies which had remained unexpended or unutilized as of the end of 2023.”
Guevarra also told the SC that “the P5.7 trillion budget for 2024 could only fund the Programmed Appropriations for specific priority projects that were intended to foster economic and social transformation and mitigate the effects of inflation on basic commodities, as well as to advance the government’s eight-point Socioeconomic Agenda.”
He cited: “In the 2024 GAA, other important programs – from government infrastructures to health-related and other social programs -- were identified but would have to stand by until new or additional financial resources became available. These were the Unprogrammed Appropriations.”
“It might have been less complicated if the National Government simply borrowed money. But then, we must consider that, as of the end of February 2024, the National Government debt was already recorded at P15.18 trillion,” he said.
He added: “Based on a population of 114 million in 2025, every Filipino -- young and old, rich and poor, abled and disabled – is indebted in the amount of P139,000.00 each. This is rather heavy.”
“It is in this cash-starved context that the Congress trained its sight on money that was there but was not being productively utilized. Respondent Congress, in its wisdom, identified the fund balance of government corporations as a source of additional funds to finance the Unprogrammed Appropriations,” he also said.
“This is the legislative wisdom behind Special Provision No. 1(d), as implemented by DOF Circular No. 003-2024. It was the executive and legislative departments’ way of creating and implementing a fiscal policy to boost economic growth without bloating the government’s indebtedness or burdening the people with new tax measures. It is a common-sense approach that does not violate any law, much less the Constitution, in any way,” Guevarra declared.
One of the “friends of the court,” public budget analyst Zy-za Nadine Suzara told the SC the enactment of the national budget resurrected the port barrel scheme that had been declared unconstitutional in 2013.
“The new scheme of funding pork barrel circumvents the SC's 2013 ruling in Belgica vs the Executive Secretary which declared as unconstitutional any form of post enactment authority in the budget by legislators,” Suzara said.
The new scheme, she said is being undertaken by Congress by deliberately defunding strategic infrastructure and development programs and projects and transferring them to unprogrammed appropriations.
Citing the 2024 GAA, Suzara said Congress either fully or partially defunded multiple programs of various departments and agencies, such as the Metro Rail Transit Line 4, the Revised Armed Forces Modernization Fund, Universal Access to Tertiary Education, Cold Storage Expansion, Social Pension for Indigent Senior Citizens, and the Pension and Gratuity Fund.
She pointed out that from the proposed level of P282 billion in the National Expenditure Program (NEP), the unprogrammed appropriations in the 2024 GAA ballooned to P732 billion resulting in an excess of P450 billion.
To provide cash cover to the “bloated unprogrammed appropriations,” Congress introduced Special Provision No. 1(d) which provides that the fund balance of GOCCs, including PhilHealth, be the sources of financing, she said.
She also said that the 2024 GAA shows that an “avalanche of funding” went to departments where the hard and soft projects of legislators are traditionally lodged like those of the Department of Public Works and Highways (DPWH), Department of Social Welfare and Development (DSWD), Department of Agriculture (DA), Department of Health (DOH), and Department of Labor and Employment (DOLE).
“The unprogrammed fund is no longer a list of general line items that could provide standby appropriations as it has always been used. It has morphed into a long list of line items that were eliminated by Congress in exchange for funding their pork barrel in programmed appropriations. Congress has certainly found a way to circumvent the prohibition on post enactment intervention, mangling the budget as it undergoes legislation,” she stressed.
IBON Foundation Executive Director Sonny Africa, also a “friend of the court,” agreed with the position of the petitioners that the PhilHealth reserved funds should be used to increase the program benefits and to decrease the amount of members’ contributions as mandated under Section 11 of the Universal health Care Act (UHCA).
Africa also shared Suzara’s views on the higher budget allocation for infrastructure projects compared to the health and education sectors.
“Infrastructure spending is over three and a half times higher than spending on health and it is actually even larger than education, which arguably breaches the constitutional provision that health and education should be given the highest share of the budget,” he said.
He also said that unprogrammed appropriations are part of the budget mentioned in the Constitution whose appropriation may not be increased by Congress.
“There is much reason to conclude that the budget process is flawed and needs fixing. So much needs to be done to institutionalize a process… towards a budget that addresses the most urgent needs of the economy and the people,” he added.
Dr. Beverly Ho, another “friend of the court,” told the SC that instead of transferring the funds to the national treasury, PhilHealth should "maximize" its legal instruments and financial resources, "not only to provide insurance coverage to every Filipino, but to expand benefits to a level necessary to finance and provide healthcare that Filipinos deserve."
"The opportunity to have our healthcare system that Filipinos can be proud of is actually here. The opportunity is before our eyes and we just need to make sure that the resources are actually translated to actual benefits…,” she said.
The SC will resume the oral arguments on Feb. 25.
The petitions against the transfer PhilHealth funds were filed by the groups of Sen. Aquilino Pimentel III and Bayan Muna Chairperson Neri Colmenares, and 1SAMBAYAN Coalition together with members of the University of the Philippines Law Class 1975, Senior for Seniors Association, Inc., Kidney Foundation of the Philippines, and other private individuals.
Named respondents in the petitions were Department of Finance (DOF) Secretary Ralph G. Recto, the House of Representatives represented by Speaker Ferdinand Martin Romualdez, the Senate represented by Senate President Francis Chiz Escudero; Executive Secretary Lucas P. Bersamin; and PhilHealth.
The three petitions pleaded for the issuance of a temporary restraining order (TRO).
Last Oct. 29, the SC issued a TRO that stopped the transfer of the funds.
However, at the time the TRO was issued, a total of P60 billion in PhilHealth’s excess funds had been transferred to the national treasury – P20 billion last May 10, P10 billion last August 21, and P30 billion last Oct. 16.